sinogreatwallco.,ltd. 2016annualreport

Sino Great Wall Co., Ltd. 2016 Annual Report

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Sino Great Wall Co., Ltd.

2016 Annual Report

April 2017


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I. Important Notice, Table of Contents and Definitions

The Board of Directors and the directors, Supervisory Committee and supervisors and Senior Executives ofthe Company hereby warrant that at the year , there are no misstatement, misleading representation or importantomissions in this report and shall assume joint and several liability for the authenticity, accuracy and completenessof the contents hereof.

Mr.Chen Lue , The Company leader, Mrs. Cui Hongli, Chief financial officer and the Mrs. Xian Zhijuan, theperson in charge of the accounting department (the person in charge of the accounting )hereby confirm theauthenticity and completeness of the financial report enclosed in this annual report.

All the directors attended the board meeting for reviewing the Annual Report.

BDO China Shu Lun Pan CPAs (Special General Partnership) has issued a standard unqualified audit report forthe company. In 2016,This annual report involves the forecasting description such as the future plans, and doesnot constitute the actual commitments of the company to the investors. The investors should pay attention to theinvestment risks.

The company has detailedly described the possible risks existed in the company’s business operation and thecountermeasures, please refer to the contents about the possible risks for the company’s future development in thefourth section-Discussion and Analysis of Business Operation in this report.

The company's profit distribution plan for the year is: Based on the company's existing share capital of1,698,245,011 shares, it’s proposed that the company will distribute cash dividend of RMB 0.60 per 10 shares (taxinclusive), with no bonus shares and no increasing shares by converting capital reserves into share capital.


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Table of Contents

I.Important Notice, Table of contents and Definitions

II. Basic Information of the Company and Financial index

III. Outline of Company Business

IV. Management’s Discussion and Analysis

V. Important Events

VI. Change of share capital and shareholding of Principal Shareholders

VII. Situation of the Preferred Shares

VIII. Information about Directors, Supervisors and Senior Executives

IX. Administrative structure

X. Corporate Bond

XI. Financial Report

XII. Documents available for inspection


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Definition

Terms to be defined Refers to Definition

Company Law Refers to Company Law of the People’s Republic of China

Securities Law Refers to Securities Law of the People’s Republic of China

“CSRC” Refers to China Securities Regulatory Commission

Company,The Company, Sino Great Wall Refers to Sino Great Wall Co., Ltd.

Sino International Refers to Sino Great Wall International Engineering Co., Ltd.

BDO Refers to BDO China Shu Lun Pan Certified Public Accountants LLP

SZSE Refers to Shenzhen Stock Exchange

Reporting period Refers to January 1,2016 to December 31,2016

Yatian Decoration Refers to Shenzhen Yatian Decoration Design Engineering Co., Ltd.

Union Development Refers to Union Development Group Co., Ltd.

Union Holdings Refers to Union Holdings Co., Ltd.

Rich Crown Investment Refers to Rich Crown Investment Co., Ltd.


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II. Basic Information of the Company and Financial index

I．Company Information

Stock abbreviation: Sino Great Wall Sino-B Stock code： 000018 200018

Change of stock Abbreviation

（If any）Nil

Stock exchange for listing Shenzhen Stock Exchange

Name in Chinese 神州长城股份有限公司

Chinese Abbreviation 神州长城神州 B

English name (If any) Sino Great Wall Co., Ltd.

English Abbreviation (If any) Sino Great Wall Sino-B

Registered address 26 Kuipeng Road, Kuiyong Town, Longgang District, Shenzhen

Postal code of the Registered

Address518119

Office Address Sino Great Wall Building, No.3 Jinxiu Street,Economic Technology Development Zone , Beijing

Postal code of the office

address100176

Internet Web Site www.sgwde.com

E-mail [email protected]

II. Contact person and contact manner

Board secretary Securities affairs Representative

Name Yang Chunling Liu Guofa

Contact address

Sino Great Wall Building, No.3 Jinxiu

Street,Economic Technology Development

Zone , Beijing

Sino Great Wall Building, No.3 Jinxiu

Street,Economic Technology Development

Zone , Beijing

Tel 010-89045855 010-89045855

Fax 010-89045856 010-89045856

E-mail [email protected] [email protected]

III. Information disclosure and placed

Newspapers selected by the Company for information

disclosureSecurities Times and Hongkong Commercial Daily.

Internet website designated by CSRC for publishing

the Annual report of the Companyhttp: // www.cninfo. com. cn

The place where the Annual report is prepared and

placed

Secutities Department , Sino Great Wall Building, No.3 Jinxiu

Street,Economic Technology Development Zone , Beijing


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IV.Changes in Registration

Organization Code 91440300618801483A

Changes in principal business activities

since listing (if any)

On October 13, 2015, the company held the 26th board meeting of the sixth session

board of directors, at which the Proposal on Alteration of the Company’s Business

Scope was examined and approved. In the light of the major asset restructuring

conducted by the company, the main business of the company shall be significantly

changed. In order to meet the company’s development requirements, the company

planned to change the company’s business scope to “Engineering design and

construction, infrastructure investment, new energy construction and investment,

medical investment, life technology research and development, equipment

manufacturing, defense equipment, financial investment and real estate development

(Finally, the business scope shall be the business scope approved by the Administration

for Industry and Commerce) from the original business scope of “Production and

operation of the textile industry products and its required raw materials, accessories,

machinery and equipment, all kinds of fabrics and clothing and providing related

services(Do not contain the products included in the existing license management, if

has a license, then it will execute by the license). The Proposal on Alteration of the

Company’s Business Scope was examined and approved in the 2015 second

extraordinary general shareholder meeting which was convened on October 29, 2015,

Changes is the controlling shareholder in

the past (is any)

On October 14, 2015, the company completed the share-issuing of a total of

251,849,593 shares issued to 17 transaction objects such as Chen Lue for purchasing

related assets, of which the issuing price is RMB 9.84 per share. Of which Chen Lue

Holdings held 138,340,890 shares, taking for 32.86% of the company’s share capital,

The Largest shareholder of the company was changed to Mr. Chen Lue form Union

Holdings Co., Ltd. And the actual controller of the Compnay was changed to Mr.

Chen Lue from Union Developemnt Co., Ltd.

On Nov 27, 2015, the company completed the non-public share-issuing to purchase the

assets and raise the matching funds. The total share quantity of the non-public

share-issuing for raising funds is 25,914,633 shares, with issuing price of RMB 9.84

per share, of which Chen Lue subscribed 14,735,772 shares of the newly increasing

shares. After completing the non-public share-issuing, the company’s total share capital

shall be changed to 446,906,582 shares, of which Mr. Chen Lue holds 153,076,662

shares, taking for 34.25% of the company’s total share capital, remained as the

company’s actual controlling shareholder and the actual controller.

On May 6,2016, the company held the sharelolders meeting in 2016, at which the

Proposal concerning preplan for profit Distribution and Dividend Distribution for 2015

o was examined and approved.upon the base of total share capital of 446,906,582

shares on the date of December 31, 2015, 28 shares were increased for every 10 shares

to all the shareholders by converting capital reserve into share capital, so the total share


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capital were 1,698,245,011 shares after such share increasing by converting capital

reserve into share capital. of which Mr. Chen Lue holds 582,944,556 shares, taking for

34.33% of the company’s total share capital, remained as the company’s actual

controlling shareholder and the actual controller.

V. Other Relevant Information

CPAs engaged

Name of the CPAs BDO China Shu Lun Pan Certified Public Accountants LLP

Office address： 10/F of the No.7 Building, No16 Yard, Mid of West 4th Ring Road, Haidian DDistrict, Beijing

Names of the Certified Public

Accountants as the signatoriesLiao Jiahe, Xu Shibao

The sponsor performing persist ant supervision duties engaged by the Company in the reporting period.

√Applicable □Not applicable

Sponsor name Office address Representatives Period of supervision and guide

Huatai United Securities Co.,

Ltd.

6/F,AUnit, Fengming

International Building, No.22,

Fengsheng Hutong, Xicheng

District, Beijing

Jia Chunhao, Mao Dawei, Wu

Wenmin

September 27, 2015 to

December 31,2018

The Financial advisor performing persist ant supervision duties engaged by the Company in the reporting period√ Applicable □Not applicable

Advisor Name Office address Representatives Period of supervision and guide

Huatai United Securities Co.,

Ltd.

6/F,AUnit, Fengming

International Building, No.22,

Fengsheng Hutong, Xicheng

District, Beijing

Jia Chunhao, Mao Dawei, Wu

Wenmin

September 27, 2015 to

December 31,2018

VI.Summary of Accounting data and Financial index

May the Company make retroactive adjustment or restatement of the accounting data of the previous years due tochange of the accounting policy and correction of accounting errors.

□Yes √No

2016 2015Changed over last year

（％）2014

Operating Gross income（RMB） 4,664,999,117.17 4,010,358,999.58 16.32% 2,754,684,893.91

Net profit attributable to the

shareholders of the listed company

（RMB）

473,661,862.67 346,648,651.48 36.64% 186,857,504.45

Net profit after deducting of

non-recurring gain/loss attributable470,274,602.37 347,196,614.68 35.45% 183,801,389.95


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to the shareholders of listed

company（RMB）

Cash flow generated by business

operation, net（RMB）-1,687,875,813.94 -292,051,257.08 -30.00% 163,847,389.34

Basic earning per

share(RMB/Share)0.28 0.4 -30.00% 0.74

Diluted gains per

share(RMB/Share)(RMB/Share)0.28 0.40 -30.00% 0.74

Net asset earning ratio（%） 31.18% 34.52% -3.34% 24.54%

End of 2016End of

2015

Changed over last year

（％）End of 2014

Gross assets（RMB） 7,986,178,961.63 4,017,462,824.63 98.79% 2,447,572,750.57

Net assets attributable to

shareholders of the listed company

（RMB）

1,777,948,117.49 1,282,256,738.74 38.66% 761,471,188.44

Ⅶ.The differences between domestic and international accounting standards

1．Simultaneously pursuant to both Chinese accounting standards and international accounting standardsdisclosed in the financial reports of differences in net income and net assets.

□ Applicable √ Not applicable

2. Differences of net profit and net assets disclosed in financial reports prepared under overseas andChinese accounting standards.

□ Applicable √Not applicable

Ⅷ.Main Financial Index by Quarters

In RMB

First quarter Second quarter Third quarter Fourth quarter

Operating income 924,667,155.55 1,028,907,599.96 1,280,022,467.68 1,431,401,893.98

Net profit attributable to the

shareholders of the listed company76,587,282.98 125,712,133.66 100,866,553.43 170,495,892.60

Net profit after deducting of

non-recurring gain/loss attributable

to the shareholders of listed

company

76,587,282.98 99,349,882.17 100,801,973.68 193,535,463.54

Net Cash flow generated by

business operation-318,972,753.01 -937,643,206.19 -429,722,866.27 -1,536,988.47


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Whether significant variances exist between the above financial index or the index with its sum and the financialindex of the quarterly report as well as semi-annual report index disclosed by the Company.

□ Yes √No

Ⅸ.Items and amount of non-current gains and losses

√Applicable □Not applicableIn RMB

Items Amount (2016) Amount (2015) Amount (2014) Notes

Non-current asset disposal

gain/loss(including the write-off part for

which assets impairment provision is made)

-564,833.40 -81,112.15 -137,889.40

Govemment subsidy recognized in

currentgain and loss(excluding those closely

related to the Company’s business and

granted under the state’s policies)

108,121.33 342,246.00

Capital occupation charges on

non-financialenterprises that are charged to

the profit/loss for the reporting period

5,214,416.45

Profit due to the situation where

investmentcosts for the company to obtain

subsidiaries, assoiates and joint ventures

are lower than the enjoyable fair Value of

indetifiable net assets of investees when

making investments

1,783,284.99

Profit/loss on fair value changes of

transactional financial assets and liabilities

& investment profit on disposal of

transactional financial assets and liabilities

as well as financial assets available for sale ,

except for effectively hedging business

related to normal business operations fo the

Company

443,065.98 60,407.78

Non-operating incomeand expense other

than the above5,296,814.65 -905,796.34 -1,062,500.49

Less: Amount of influence of income tax 3,668,000.60 -96,699.29 1,018,319.84

11,192.65

Total 3,387,260.30 -547,963.20 3,056,114.50

For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 oninformation disclosure for Compaines Offering their Securities to the Public-Non-recurring Gains and Losses andits non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure


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for Companies offering their securities to the public-non-recurring Gains and losses which have been defined asrecurring gains and losses, it is necessary to explain the reason.



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III. Outline of Company Business

Ⅰ.Main Business the Company is Engaged in During the Report Period

Whether the company needs to comply with the disclosure requirements of the particular industry

No

Sino Great Wall’s main business has two aspects: the first is construction of engineering projects, and thesecond is medical & health industry investment and management. The business of construction of engineeringprojects mainly includes international and domestic large-scale project contracting, with the international businessmainly centering on the countries and regions along “One Belt, One Road”, and currently, the internationalbusiness covers many countries and regions such as the Middle East, Southeast Asia and Africa. The Businessscope covers building project, infrastructure project, commercial complex project etc. For the domestic business,with the company’s continuous improvement of construction qualifications, the company’s construction income inPPP projects, building construction, municipal Engineering, infrastructure and new energy field has gradually tookthe dominant position, while the proportion of income of pure decoration business slightly decreased. The medical& health industry investment and management mainly adopts a number of ways such as the acquisition of theexisting hospital, the construction of the new hospital and operating hospital PPP project to enter the operationand management of medical & health industry, thus to achieve the development of both the construction businessand the medical & health business.

Currently, the company’s construction qualifications include: first-class qualification as general contractorof housing & construction project, first-class qualification as specialized contractor of architectural decorationengineering design and construction, first-class qualification as specialized contractor of building curtain wallengineering, first-class qualification as specialized contractor of ground foundation engineering, first-classqualification as specialized contractor of firefighting facilities engineering, first-class qualification as specializedcontractor of waterproof anti-corrosion insulation engineering, second-class qualification as general contractor ofmechanical and electrical engineering construction, second-class qualification as specialized contractor of bridgeconstruction, second-class qualification as general contractor of petrochemical engineering construction,second-class qualification as general contractor of municipal public engineering construction, second-classqualification as specialized contractor of tunnel construction, second-class qualification as specialized contractorof fabrication and installation of hydraulic metal structure, second-class qualification as general contractor ofwater conservancy and hydropower project construction, third-class qualification as general contractor of railwayengineering construction, second-class qualification as general contractor of metallurgical engineeringconstruction, qualification regardless of grades as specialized contractor of special engineering, third-classqualification as specialized contractor of highway pavement engineering, third-class qualification as specializedcontractor of highway subgrade engineering etc. The scope covers the engineering qualifications of building,highway, railway, municipal utilities, water conservancy and hydropower, petrochemical, electric power and othertypes of engineering.

The medical and health business introduced pundits in the medical field and technical experts together withsenior talents to set up a competitive medical team. There are a number of project teams set up all over the country,initially completed the medical& health industry layout. In 2016, it has purchased Wuhan Commercial and


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Vocational Hospital Co.,Ltd, won the bids of many PPP medical and health projects such as PPP project ofRelocation of Luyi People's Hospital of Henan Province and the PPP project of Overall Relocation of HuichangCounty People's Hospital of Jiangxi, so the medical and health business has been developed smoothly.

Ⅱ.Major Changes in Main Assets

1. Major Changes in Main Assets

Main assets Major changes

Equity assets No change of present period compared with initial period

Fixed assets 193.03% increased in the present period compared with initial period, mainly caused bythe acquisition of Wuhan commercial worker hospital

Intangible assets 1045.94% increased in the present period compared with initial period, mainly caused bythe acquisition of Wuhan commercial worker hospital

construction in process100% decreased in the present period mainly owing to the completion of tower craneinstallation in Kuwait project and completion construction of the factory in Suzhou citycarried over to the fixed asset.

Goodwill7.76 increased in the present period mainly owing to the acquisition of Wuhancommercial worker hospital, Sichuan Dinghui Construction Co.,Ltd as well as SichuanHaoyao Construction Engineering Co., Ltd.

2. Main Conditions of Overseas Assets

√ Applicable □ Not applicable

Content of

assets

Reason for

the formationAsset size Location

Operation

mode

Control

measure to

ensure the

secutity of

assets

Income(RMB

)

Foreign

assets

accounted for

net assets of

the Company

Whether exist

significant

impairment

risk

Fixed assets Overseaspurchasing oftower crane& vehicles

32,087,873.08 Kuwait,Cambodia,Qatar,Algeria

1.76% No

Ⅲ.Analysis On core Competitiveness


No

Sino Great Wall Co.,Ltd is a leading construction & engineering contractor in China with business coversvarious types construction & engineering contracting. The implementation of the National Strategy of “One Belt,One Road” will provide a good opportunity for the company's overseas business development. The companycontinues to increase efforts to open up overseas markets, thus the overseas project orders and the revenue have


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maintained a rapid annual growth rate. With the continuous improvement of relevant construction qualifications,the company’s domestic business also will have a lot of good opportunities as the country has been continuouslypromoted PPP projects. The company's comprehensive strength, overseas influence and market competitivenesshave increased year by year.

1. Strategic positioning advantage

The “Construction & Engineering contracting” and “Medical & Health Business” will be the company’s twostrategic directions for future development. In 2013, the company set up the development goal “Making biggerand stronger overseas business, and to become the world's leading international comprehensive construction &building service provider”. In 2015, the company set up the “Medical & Health business” as another essentialdevelopment direction. All of those are to comprehensively cater the needs of the national strategies of “One Belt,One Road” and “Medical & Health Industry Development”. The good prospects of “One Belt, One Road” projectsand “Medical & Health Industry” will provide a broad market space for the company’s business development. Interms of engineering contracting, the early-development advantage of overseas business enables the company tohave rich management experiences and high-quality customers and establish talented teams, thus laid a solidfoundation for the company’s overseas business development. In terms of the Medical & Health business, thecompany has set up project teams in many domestic places such as Sichuan, Henan and Hubei, and the companyhas purchased Wuhan Commercial and Vocational Hospital Co.,Ltd and won the bids of many medical and healthPPP projects. Also, the company has established cooperative relationships with many hospitals and has recruitedmany kinds of talents in terms of medical, hospital management, investment and financing etc, thus provided astrong support for the Medical & Health business development.

2. Standardized and high-efficient management system, fully market-oriented operation mechanism

With the increasingly expanding of the company scale and business scope, the management for the companyis becoming more complex. However, the company timely set up the sound management system and theauthorization system to standardize the approval procedures, reduce the management hierarchy tiers and improvethe work efficiency and execution, thus ensured the efficient operation of the company’s business operation. Forthe operation mechanism, the company bravely faces the fierce competition in the market, adheres to themarket-oriented development, respects the objective laws of the market and constantly improves its managementlevel, thus to timely response to changes in the market and continuously improve the company's market image,construction quality and profitability.

3. Integrated design and construction advantages

The company has a wide range, high-ranking construction qualifications, and the company has integrateddesign and construction experiences and good project management capabilities, so the company is able to provideintegrated design and construction services in terms of civil engineering, decoration, mechanical and electricalinstallation and full industry chain of curtain wall, and the company can independently complete the wholeprocess of construction project. The company can form a comprehensive advantage in the field of buildingengineering, so it can reasonably schedule the procurement, labor use and construction plan, as well as thecompany can constantly optimize the process to reduce the project costs. The company’s excellent design ability,sound construction quality, high-efficient construction planning and the comprehensive high-quality servicegreatly enhanced the customers’ satisfaction.

4. Costs advantages and quality-control advantages

The core management staff of the company all have more than 10 years experiences of building andengineering construction. Upon the deep understanding of the industry, the company established a relativelyperfect material procurement, labor management and quality control system. Through the price ceiling mode for


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procurement, the company screens the suppliers in the early stage of a project, thus to ensure that the procurementcosts of the project materials would be in a reasonable scope. By locking the technical requirements and timerequirements of the project, the company can lock the labor costs. The company has set up strict quality-controlsystem for the design drawing, raw material procurement and each aspect of the project construction management,thus to strictly ensue the project construction quality, so the company has won good reputation and got trust andrecognition by a great number of customers.


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IV. Management’s Discussion and Analysis

Ⅰ.General

1. Overall overview of business condition

The year of 2016 is the beginning year of China's "13th Five-Year" plan, and it also is the crucial year for thesupply-side structural reform. Although the world economic growth is still slow, the China’s economy has shownsigns of stabilized recovery after the bottoming under the impact of positive fiscal policy, adaptive monetarypolicy and the real-estate policy. Under the background of the new economical normal, the company firmlyadheres to the development concept of “International development” and closely follows up the nationalstrategy of “One Belt, One Road”, seizing the opportunity and actively going abroad for development. Thecompany continuously increases the efforts of business development in the countries and regions along “One Belt,One Road”. Meanwhile, the company actively seeks the cooperation with domestic and foreign well-knowncompanies, tapping into each other’s advantage to continuously expand the cooperative fields. In 2016, theamount of the overseas bids won by the company and the new signing orders exceeded RMB 27 billion, so theplenteous orders will provide a solid safeguard for the company’s operating performance in the next few years.

In 2016, China continued to strongly promote the PPP project. Based on the “Guidance on the Promotion ofcooperation model between government and social capital in the field of public service” released in 2015, thegovernment further released other official documents such as “Notice on promoting asset securitization related togovernment and social capital cooperation (PPP) project in traditional infrastructure field”. Under China’s strongpromotion of PPP project construction, the domestic PPP project business continues to heat up and the investmentin infrastructure has been picking up. The company precisely judged the timing and timely seized theopportunities, so the company carried out merger and acquisition of enterprises in the same industry and perfectedthe construction qualifications. Therefore, the company’s domestic business has been effectively extended anddeveloped, and the company has made the successful transformation and upgrading from the previous mainbusiness of decoration, thus becoming a comprehensive construction & building service provider with generalcontracting ability of construction, which greatly improved the company’s s core competitiveness and thecomprehensive strength.

In 2016, for the investment in the medical field, the company completed the purchase of Wuhan Commercialand Vocational Hospital Co.,Ltd (hereinafter referred to as the "Wuhan Commercial and Vocational Hospital").The hospital PPP business achieved a good start, and then the company won the bids of Relocation of Henan Luyihospital, Guizhou Zhongshan Hongqiao City Hospital Project, the PPP project of Overall Relocation of HuichangCounty People's Hospital and the PPP construction project of Lingbao First People's Hospital etc. The signing andimplementation of the above projects will provide a strong support for the company's future operatingperformance.

Based on the analysis and judgment of the status quo and the future prospects of the domestic andinternational construction market and the medical & health industry, the company will continue to enhance theproject contracting and investment along “One Belt, One Road”, increase the investment in the domestic medical& health industry and PPP business, constantly improve the company’s management level, perfect and upgradethe existing qualifications, strongly expand overseas markets, actively participate in the domestic infrastructurePPP projects and promote the sound implementation of more projects, thus to keep a stable, harmonious


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development for the company’s domestic and international business and continuously improve the company’sprofitability.

In 2016, the company realized operation income of RMB 4.665 billion, an increase of 16.32% from the lastyear; realized the operating profits of RMB 556million, an increase of 28.99% from the last year; and the netprofit attributable to the parent company was RMB 474 million, an increase of 36.64% from the last year.

In 2016, the main work carried out by the company is as follows:

1) Improved the construction qualifications for domestic building & engineering construction, extended theindustry chain.

In 2016, the main income of the domestic business was still from the traditional decoration business. In orderto better expand the domestic business and extend the industrial chain, the company bought out Sichuan Ding HuiConstruction Engineering Co., Ltd (the current name is Sino Great Wall Southwest Construction Engineering Co.,Ltd), and the company obtained the share-control of Sichuan Hao Yao Construction Engineering Co., Ltd (Now isSino Great Wall Jianye Construction Engineering Co., Ltd) by the way of capital increase and becoming ashareholder, so the company has improved the construction qualifications for domestic building & engineeringconstruction, and has expanded the qualification field from the previous decoration for constructions to a numberof new fields such as housing &building construction, municipal public facility, highway, water conservancy andhydropower, petrochemical and power engineering. Therefore, the company has greatly expanded the company’sbusiness scope and enhanced the company’s market competitiveness and influence, thus laid a solid foundationfor the further improvement on the company’s business performance and profitability.

2) Achieved good results in the overseas business developmentIn 2016, benefiting from the strong promotion of “One Belt, One Road” policy, relying on the company’s goodreputation in the overseas construction and the company’s rich construction experience and upon the company’shard-working, the company’s overseas business achieved a rapid growth. In 2016, the company has won the bidsand/or large orders in a number of countries and regions such as Indonesia, Algeria, Burma, Congo, Laos,Kampuchea, and the total amount of those orders exceeds RMB 27 billion. After several years of unremittingefforts and careful cultivation, the company's overseas business development has entered into the fast lane, and theabove orders will provide a strong guarantee for the company's business performance in the next few years.(3) Made a good start in the medical & health industry

In 2016, the company achieved a good start in the medical & health industry, and then the company won thebids of a number of hospital PPP projects including Relocation project of Henan Luyi hospital, GuizhouZhongshan Hongqiao City Hospital Project, the PPP project of Overall Relocation of Huichang County People'sHospital and the PPP construction project of Lingbao First People's Hospital. The company has trained andcultivated the professional medical management and marketing team.

(4) Fully respecting talents and giving opportunities to talented people, and continuously drawing in talentsThe enterprise competition is ultimately the talents competition, so the company always adheres to the value of“people-oriented, giving full respect and opportunities to talents”. The company highly values the humanresources and talents cultivation. According to the company’s business development plan, the companycontinuously draws in exterior talents and cultivates the inner talents. The company has continuously improvedthe quality and level of the technical team and management team of the company, as well as provided a gooddevelopment platform for various types of talents. By perfecting the personnel training mechanism and theperformance evaluation and incentive evaluation mechanism etc, the company would attract more talents andretain the talents, thus to provide a good talent reserve for the company‘s healthy, sustainable development.

（5）Standardize company instruction and enhance management


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In 2016, based on reality, the company revises and improves a series of instructions including Articles ofAssociation and Rule of Procedure of Shareholders' Meeting to further improve the corporate governance and tobuild a management system and internal control system in a more scientific and rigorous way and to manage andstandardize the company, its subsidiaries and detailed businesses in more layers for improving Enterpriseoperation management level. Provide a solid system guarantee for the development of all business and effectivelyimprove the management of the company and reduce the risk of company’s operation.

The company, a fast developing construction one, issues shares to Sino Great Wall (Beijing) Investment Co.,Ltd. and Beijing Anben Medicare investment Co., Ltd. and Mr. Zheng Jihua and gets fund of 2.5 billion Yuan forthe company’s high demand of circulating funds and assets in the development and operation and for reducing thecompany’s debt asset ratio, optimize capital structure and for enhancing the company’s capital strength. OnFebruary 16, 2017, the company held Board of Directors and reviewed Resolution on Adjusting Private EquityPlacement Scheme of The Company and adjusted the total capital to be 900 million Yuan. Currently privateequity placement A share of the company gets the approval of Issuance Examination of China SecuritiesRegulatory Commission. The fund of private equity placement is used for supplying circulating fund and repayingbank loan, which lays a solid foundation of company’s business and improves the comprehensive competence ofthe company further.

Ⅱ.Main business analysis

1. General

Refer to relevant contents of “1.Summarization” in “Discussion and Analysis of Management”.

2. Revenue and cost

(1)Component of Business Income

In RMB

2016 2015Increase /decrease

Amount Proportion Amount Proportion

Total business

income4,664,999,117.17 100% 4,010,358,999.58 100% 16.32%

Industry

EPC 3,118,359,658.51 66.85% 1,513,458,850.56 37.74% 106.04%

engineering design 12,669,951.31 0.27% 19,919,636.46 0.50% -36.39%

Decoration work 1,452,138,348.28 31.13% 2,455,199,964.42 61.22% -40.85%

Medical service

revenue81,593,110.43 1.75%

Other 238,048.64 0.01% 21,780,548.14 0.54% -98.91%

Product


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4,664,999,117.17 100.00% 4,010,358,999.58 100.00% 16.32%

Area

Domestic 1,478,928,295.44 31.70% 2,436,352,972.25 60.75% -39.30%

Overseas 3,186,070,821.73 68.30% 1,574,006,027.33 39.25% 102.42%

(2)Situation of Industry, Product and District Occupying the Company’s Business Income and OperatingProfit with Profit over 10%√ Applicable □Not applicable


NoIn RMB

Turnover Operation costGross profit

rate(%)

Increase/decrease

of revenue in the

same period of

the previous

year(%)

Increase/decrease

of business cost

over the same

period of

previous year (%)

Increase/decrease

of gross profit

rate over the same

period of the

previous year (%)

Industry

EPC 3,118,359,658.51 2,180,789,521.13 30.07% 106.04% 82.54% 9.01%

Decoration works 1,452,138,348.28 1,215,243,366.01 16.31% -40.85% -37.99% -3.77%

Product

Area

Domestic 3,186,070,821.73 2,234,413,513.88 29.87% 102.42% 87.03% 5.77%

Overseas 1,478,928,295.44 1,224,964,230.78 17.17% -39.30% -37.83% -1.96%

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted mainbusiness based on latest on year’s scope of period-end.

□ Applicable √Not applicable

(3)Whether the Company’s Physical Sales Income Exceeded Service Income

□ Yes √No

(4)Degree of Performance of the Significant Sales Contract Signed up to this Report Period

√ Applicable □Not applicable


19

No Contracting party Name of ProjetAmount of

contract

Progress of project Date of

contract

1PT.Cipta karya bersama

lestariIndonesia Emerald Apartment RMB 314 million

Yet to be put into

operation2016/3/8

2 Mottamma Holdings Ltd. Myanmar M-Tower project

USD80 million

（about RMB

550 million

Pile foundation

completed, operation of

Basement Waterproof

Started

2016/05/31

3Oxley Consultancy &

Management Co., Ltd.Myanmar MIN Residence project

USD 120 million

（about RMB830

million）

Yet To Be Put Into

Operation 2016/6/1

4Oxley Gem (Cambodia)

Co., Ltd

Comprehensive Development

Project (Project PP50), Floor 55,

Village 14, Hun Sen Road,

Cambodia

USD 285 million

（about

RMB1.97 billion）

Pile Foundation

Completed2016/6/1

5Banque Congolaise de

l'Habitat (BCH)

General Contracting for 5000

modern comfortable housings in The

Republic of Congo

USD 300 million

（about RMB 2

billion）

Yet To Be Put Into

Operation 2016/6/29

6Pt. Wangxiang Nickel

Indonesia

General Contracting for Project PC,

Production Line t, Iron-nickel Plant

PKEF, Morowali County, West

Sulawesi Island, Indonesia

RMB 1.5015

billion

Operation Started

2016/8/1

7VERITAS ARCHITECTS

SDN BHD

Angsana Apartment Project,Penang

Island,Malaysia

Myr 167.7892

million（about

RMB 260

million）

Process for Fundamental

Rebars of Temporary

Tower Crane Completed2016/8/8

8

Xinjianye Group Co., Ltd.

Taiwenlong Group Co.,

Ltd.

Cambodia Penh Shuangzhi Building

World Trade Center

USD 2.7billion

（about RMB

1.8781 million）

Yet To Be Put Into

Operation 2016/12/29

SubtotalAbout RMB 35.5

billion

(5)Component of business cost

Industry Category

In RMB

Industry Items2016 2015 Increase

/decreaseAmount Proportion Amount Proportion


20

EPC Labor wages 627,669,828.27 18.14% 227,743,800.08 7.20% 175.60%

EPC Material 1,326,646,537.37 38.35% 695,054,284.77 21.96% 90.87%

EPC Other 226,473,155.49 10.77% 271,915,654.94 8.59% 37.07%

Medical service

revenue57,672,498.15 1.67%

Engineering

design6,239,359.37 0.18% 10,603,822.07 0.34% -41.16%

Decoration works Labor wages 276,123,560.64 7.98% 547,781,369.10 17.31% -49.59%

Decoration works Material 770,503,604.30 22.27% 1,359,863,294.41 42.95% -43.34%

Decoration works Other 168,616,201.07 0.63% 52,064,960.29 1.65% -58.10%

Notes

(6)Whether Changes Occurred in Consolidation Scope in the Report Period

√ Yes □No

1. Companies into merger range newly in this stage

In 2016, the company founded Sino Great Wall Medicare investment Co., Ltd., Sino Great WallInfrastructure Investment Co., Ltd. and Wuhan Vocational Hospital Co., Ltd. wholly owned by the company bycash offer, Sino Great wall Xinan Construction Co., Ltd. (Original name: Sichuan Dinghui Construction Co., Ltd.)which is wholly bought by subsidiary Sino International, Sino Great Wall Construction Co., Ltd. (Original name:Sichuan Haoyao Construction Co., Ltd.) is 60% bought by share issue by the company. Meanwhile, SinoInternational founded newly subsidiaries called Sino Great wall Property (Hubei) Co., Ltd. and Sino Great wallDevelopment (Hengqin) Co., Ltd. Then the above newly founded companies and newly bought companies beganto be into the merger range of the company since 2016.

2. Companies not into merger account range in this stage

In 2016, Sino International cancelled holding companies called Sino Heji Recycled Material Co., Ltd., whichwas not in the merger range.

(7)Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in theCompany’s Report Period

□Applicable √ Not applicable

(8)Situation of Main Customers and Main Supplier

Information of the Company’s top 5 customers

Total sales amount to top 5 sales customers (RMB) 2,806,001,475.3

Proportion of sales to top 5 customers in the annual 60.15%


21

sales(%)

Information of the Company’s top 5 customers

No Name Amount（RMB） Proportion %

1 Customer1 902,018,306.43 19.34%

2 Customer2 768,677,450.02 16.48%

3 Customer3 577,372,398.63 12.38%

4 Customer4 395,300,992.03 8.47%

5 Customer5 162,632,328.22 3.49%

Total -- 2,806,001,475.33 60.16%

Principal suppliers

Information of the Company’s top 5 suppliers

Total Purchase amount to top 5 sales suppliers (RMB) 210,324,623.20

Proportion of purchase to top 5 suppliers in the annual

purchase(%)14.11%

Information about the top 5 suppliers

No Name Amount（RMB） Proportion%^

1 Customer1 80,345,978.27 3.83%

2 Customer2 70,016,472.60 3.34%

3 Customer3 69,059,944.85 3.29%

4 Customer4 65,091,067.63 3.10%

5 Customer5 45,011,071.35 2.15%

Total -- 329,524,534.70 15.71%

Notes


3.Expenses

In RMB

2015 2015Increase/Decrea

se(%)Notes

Sale expenses30,318,688.27 13,686,172.10 121.53%

Due to the reduction of marketing

personnel

Administration expenses

313,930,733.56 154,562,327.86 103.11%

Due to the increase of overseas

branches and the increase of domestic

and overseas departments such as

group, optoelectronic and medical.

Financial expenses 127,437,227.95 54,866,402.02 132.27% For the increase in the Company’s


22

short-term loan and long-term loan as

well as the increase in overseas L/G

amortization

4.R& D Expenses


In order to enhance the core competence of the company and to meet the demand of constant development, thecompany focuses on researching decoration design and general contracting and so on. Currently each project shallbe operate as plan. Through practical application, it can get good economic and social benefit.

Situation of Research and Development Input by the Company

2016 2015 Increase /decrease

Number of Research and

Development persons (persons)191 189 1.06%

Proportion of Research and

Development persons7.83% 11.24% -3.41%

Amount of Research and

Development Investment (In

RMB)

139,163,839.18 133,143,918.79 4.52%

Proportion of Research and

Development Investment of

Operation Revenue

2.98% 3.32% -0.34%

Amount of Research and

Development Investment

Capitalization (In RMB)

0.00 0.00

Proportion of Capitalization

Research and Development

Investment of Research and

Development Investment

0.00% 0.00%

The Reason of the Prominent Change in Total Amount of Research and Development Input Occupying theBusiness Income Year on Year□Applicable √Not applicable

Explanation of the Reason for Substantial Changes in the Research and Development Input’s Capitalization Rateand Its Reasonableness


5.Cash Flow

In RMB

Items 2016 2015 Increase/Decrease(%)


23

Subtotal of cash inflow received

from operation activities4,618,123,624.04 4,257,440,458.70 8.47%

Subtotal of cash outflow

received from operation

activities

6,305,999,437.98 4,549,491,715.78 38.61%

Net cash flow arising from

operating activities-1,687,875,813.94 -292,051,257.08 -477.94%%

Subtotal of cash inflow received

from investing activities121,565,115.12 2,494.86 4,872,522.72%

Subtotal of cash outflow for

investment activities246,357,420.64 28,713,135.66 758.00%


investment activities-124,792,305.52 -28,710,640.80

Subtotal cash inflow received

from financing activities3,527,919,898.49 1,805,738,341.24 95.37%

Subtotal cash outflow for

financing activities1,348,742,579.57 1,146,676,943.40 17.62%


financing activities2,179,177,318.92 659,061,397.84 230.65%

Net increase in cash and cash

equivalents360,959,565.60 338,985,801.91 6.48%

Notes to the year-on-year change of the relevant data

√Applicable □ Not applicable

1. Net cash flows from operating activities decreased significantly over the previous year, which was mainly dueto the short period of credit accounts of overseas project suppliers.2. The net cash flow from financing activities increased compared to the last year mainly due to the increase ofbank loans in the current period.

Notes to the big difference between cash flow from operating activities and net profit in the reporting year


The large difference between the company’s net cash flows from operating activities and the net profits of the yearin the reporting period was mainly due to the increase of operating receivables.

Ⅲ.Analysis of Non-core Business


Ⅳ.Condition of Asset and Liabilities

1.Condition of Asset Causing Significant Change


24

In RMB

End of 2016 End of 2015Proportion

increase/decre

ase

Notes to the significant changeAmount

Proportion

in the total

assets(%)

Monetary funds 1,340,815,821.83 16.79% 695,384,561.31 17.31% -0.52%

Account

receivable3,725,170,208.31 46.65% 2,352,808,087.33 58.56% -11.91%

Inventory 332,904,930.36 4.17% 168,133,668.91 4.19% -0.02%

Fixed assets 128,483,747.74 1.61% 43,846,215.63 1.09% 0.52%

Construction in

process10,016,928.24 0.25% -0.25%

Short-term loans 1,966,058,357.59 24.62% 225,408,496.07 5.61% 19.01%

Long-term loans 786,858,878.82 9.85% 30,140,649.14 0.75% 9.10%

2.Asset and Liabilities Measured by Fair Value


3. Restricted asset rights as of the end of this Reporting Period

Ⅴ.Investment situation

1. General


Investment Amount in 2016(RMB) Investment Amount in 2015(RMB) Change rate

2.Condition of Acquiring Significant Share Right Investment during the Report Period√ Applicable □ Not applicable

In RMB

Name

of the

Compa

ny

Investe

d

Main

Busines

s

Investm

ent

Way

Investm

ent

Amoun

t

Share

Proport

ion %

Capital

SourcePartner

Investm

ent

Horizo

n

Product

Type

Progres

s to the

balance

sheet

date

expecti

ng

earning

s

Gain or

Less or

the

Current

Investm

ent

Whethe

r to

Involve

in

Lawsuit

Date of

Disclos

ure(Not

e 5)

Disclos

ure

Index

Wuhan

Comme

rcial &

medical

service

Purchas

e

970000

00100%

Self

fund

Long-te

rm

Acquisi

tion

complet

NoMay

11,2016

http//.w

ww.cni

nfo.co


25

Vocatio

nal

Hospita

l Co.,Lt

d

ed m.cn

Great

Wall

Industr

y

Engine

ering

Co.,

Ltd.

Constru

ction

Increas

e

capital

900000

0060%

Self

funds

Long-te

rm

Capital

increas

e has

been

complet

ed

No

Novem

ber

10,201

6

http//.w

ww.cni

nfo.co

m.cn

3.Situation of the Significant Non-equity Investment Undergoing in the Report Period


4.Investment of Financial Asset

（1）Securities investment


The Company had no securities investment in the reporting period.

（2）Investment in Derivatives


The Company had no investment in derivatives in the reporting period.

5.Application of the raised capital


（1）General application of the raised funds

√ Applicable □ Not applicableIn RMB’0000

Year of

Raising

Way of

Raising

Total

raised

capital

Total

Amount of

the Raised

Fund Used

Total

amount of

Raised

Funds

Amount of

raised

capital of

which the

purpose

Accumulat

ive amount

of raised

capital of

which the

Proportion

of raised

capital of

which the

purpose

Total

Amount of

the

Unused

Raised

Use and

Whereabo

uts of the

Unused

Amount of

the Raised

Fund with

over 2

Years’


26

at the was

changed in

the report

period

purpose

has been

changed

has been

changed

(%)

Fund at

the

Current

Period

Raised

Fund

Idling

2015Stocks

issue25,500 3,366.36 4,966.36 0 0 0.00% 20,533.64

In the

special

account to

raise funds

in storage

0

Total -- 25,500 3,366.36 4,966.36 0 0 0.00% 20,533.64 -- 0

Notes to use of raised capital

Upon the approval from the CSRC with the document of the 2015-No.1774 Zheng Jian Xu Ke -Reply of the Major Asset

Restructuring and the Issue of Shares to Objects such as Chen Lue to Purchase Assets and Raise Matching Funds by Shenzhen

Victor Onward Textile Industrial Co., Ltd, Sino Great Wall International Engineering Co.,Ltd( hereinafter referred to as: “company

or the company”) had non-publicly issued 25,914,633 shares of RMB common share(A share), of which the par value per share was

RMB 1.00, the issuing price per share was RMB 9.84, the total funds raised was RMB 254,999,988.72, and after deducting the

issuance expenses of RMB 14,500,000.00 directly from the raised funds, the actual net amount of the raised funds is RMB

240,499,988.72.

（2）Promised projects of raised capital

√ Applicable □ Not applicableIn RMB’0000

Committed investment

projects and investment

Project

changed(i

ncluding

partial

change)

Total

raised

capital

invested

as

commited

Total

investme

nt after

adjustme

nt (1)

Amount

inested in

the

reporting

period

Accumul

ated

amount

invested

at the end

of the

reporting

period(2)

Investme

nt

progress

ended the

reporting

period(%

)(3)=(2)(

1)

Date

when the

project

has

reached

the

predicted

applicabl

e status

Benefit

realized

in the

reporting

period

Has the

predicted

result be

realized

Has any

material

change

taken

place in

feasibility

Committed investment projects

1. Overseas marketing

network construction

project

No 10,000 10,000 3,226.51 3,226.51 No No

2.Informatization

Construction Phase IINo 2,500 2,500 27.6 27.6 No No

3.Related taxes and

agency fees of this

transaction

No 13,000 13,000 112.25 1,712.25 No No


27

Subtotal of committeed

investment projects25,500 25,500 1,600 4,966.36

Investment orientation for und arising out of plan

Total -- 25,500 25,500 3,366.36 4,966.36 -- -- 0 -- --

Situation about not

coming up to schemed

progress or expected

revenue and the reason

( in specific project0

Not applicable

Notes to significant

change in feasibility of

the project

Not applicable

Amount, application

and application

progress of the

unbooked proceeds

Not applicable

About the change of

the implementation site

of the projects invested

with the proceeds

Not applicable

Adjustment of the

implementation way of

investment funded by

raised capital

Not applicable

About the initial

investment in the

projects planned to be

invested with the

proceeds and the

replacement

Not applicable

Using the idle proceeds

to supplement the

working capital on

temporary basis

Not applicable

Balance of the

proceeds in process of

project implementation

and the cause

Not applicable

About application and

status of the proceeds

unused

The company will use the raised money 150 million Yuan to supply circulating money and the

remaining 55.6849 million Yuan will be saved in raised money account.


28

Problems existing in

application of the

proceeds and the

information disclosure

or other issues

No

（3）Changes of raised funds projects


The Company had no raised funds in company reporting period.

VI. Sales of major assets and equity

1. Sales of major assets


The Company had no sales of major assets in the reporting period.

2.Sales of major equity


Ⅶ.Analysis of the Main Share Holding Companies and Share Participating Companies


Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the CompanyIn RMB

Company

NameCompany type

Sectors

engaged in

Registered

capitalTotal assets Net assets Turnover

Operating

profitNet Profit

Sino Great

Wall

International

Engineering

Co., Ltd.

Subsidiaries

General

contracting,

subcontractin

g,

engineering

survey and

design;

professional

contracting;

architectural

decoration

engineering;

architectural

curtain wall;

470,136,0997,493,324,70

3.87

1,707,478,63

3.38

4,583,167,95

8.10

597,298,486.

46

487,695,725.

96


29

project and

technology

study and

experimental

development;

sell building

material,

machinery,

hardware,

plastic

articles;

technology

development,

technology

consultation,

technology

service;

goods import

and export;

technology

import and

export; agent

import and

export.(After

delivering

this license,

you shall get

administrativ

e license

from civil

plan

committee

and civil

residential

committee. It

shall be filed

in civil

ministry of

commerce.)

Acquirement and disposal of subsidiaries in the Reporting period


Company nameThe method of obtaining and handling

subsidiaries during the report period

The influence to the whole production and

performance


30

Wuhan Commercial & Vocational

Hospital Co.,LtdAcquisition

Luyi Shuguang medical industry

investment and Construction Co., LtdInvestment

Notes

Sino Great wall International Construction Co., Ltd. is a subsidiary of the company and is the main of income andprofits of the company, which accounts for more than 90% of all the company’s operating income and net profitand the rest subsidiaries account for less than 10% of all the company’s operating income and net profit, whichweight less in the whole company’s operation.

Ⅷ.Special purpose vehicle controlled by the Company


Ⅸ.Prospect for future development of the Company

1.Strategy of the Company’s Development

1. Building construction:

Economic development of our country has a new trend with structure adjustment, steady enhancement andupgrading of industrial transformation. It is estimated that our economic trend will adjust from high-speedadjustment to middle-high increase with the reduction of fixed asset investment increase rate of the whole societyin the future. For a middle or long time, development of national construction industry will change formhigh-speed increase to moderate increase. Although national construction industry develops steadily, the potentialof whole industry remains great. Our country pushes greatly the public service on APP and infrastructure project,which will promote the great development of related lines. Our company is engaged in construction, body of PPPproject, which can share the continuity and steady profits from construction, investment and operation of PPPproject. In recent years, property investment develops steadily, but it still increases in every year. With the rapidincrease of urbanization, the demands of resident’s house improving and living condition needs a long time,construction market still has a bright future.

The implementation of “the Belt and Road” policy will boost the development of construction in nations andareas along the sea and create an opportunity for national construction enterprises. As a renown internationalconstruction contractor, based on the reputation and market image cumulated for many years, the company willexert first-move advantages on overseas business, talent advantages, management advantages and customeradvantages to ensure the rapid growth of overseas business and fully enjoy the great benefits of “the Belt andRoad” policy.

2. Healthcare:

“13th Five-Year Plan” plans out “Health China”. Medicare industry is of great concern. In 2013, StateCouncil issued Suggestion on Stimulating the Development of Health Service Industry. In 2015, Ministry ofPublic Health and other four ministries successively issued Guidance on Pilot Projects of the Public HospitalReform and Suggestion on Building Medical Organization by Encouraging and Guiding Social Capital andother standard files. With the issuance of a series of strategies and standard files, construction and industry


31

development on medical and health industry step a new historical stage. The health demand of vast amount ofpopulation and constant growth of the mass provide a great market space for the development of all medicaland health industry.

(II) The Company’s Development Strategy

The company focuses its development strategy on two aspects: one is to strengthen the project contracting andinvestment of the Belt and Road Initiative, and the other is to enhance the domestic medical investment. Atpresent, the company has possessed abundant projects in Southeast Asia, South Asia, the Middle East and Africa,and aside from intensifying the exploitation of and investment to the countries in the above-mentioned regions,the company will take the efforts to explore North America, South America, Australia, Europe and other high-endmarkets as core for the next step. In the field of medical investment, more funds will be disposed, apart from theinvestment of hospital construction in PPP mode, in the acquisition of mature hospitals, the distribution of medicale-commerce, the introduction of advanced medical technology and services from abroad. Centering around thedevelopment strategies of “enlarging and strengthening overseas business to become an integrated internationalconstruction services supplier” and “developing the health-care industry”, in the future, the company will devotemajor efforts to developing abroad business and arranging the medical industry so as to enhance its capacity forcore competitiveness and profit constantly and eventually strive to build itself into a prominent business groupdeveloped by the mutual driving forces of construction and health-care industry.

(III) The Company's Business Plans

In 2017, focusing on the development strategies laid down by the Board of Directors, the company will givepriority to launch the following activities:

(1) To promote the development of domestic business and actively participate in the construction of PPP projects

The year of 2017 will witness the company intensifying the expansion of domestic business. Thus, on thebasis of improving its construction qualification and capacity, the company will take positive part in theconstruction of PPP projects, expand its business scope in health-care, infrastructure and other fields and itsdevelopment scale of architectural ../../../Program Files (x86)/Youdao/Dict/7.0.1.0227/resultui/dict/%3fkeyword=ornamentbusiness, increase its domestic business income and profits, and enhance its comprehensive strength and corecompetitiveness as well.

(2) To enlarge the influence of overseas market and the share of overseas business

In 2017, the company will make continuing efforts to explore overseas market thoroughly and strengthen theexchanges and cooperation with governments of the foregoing countries and regions. With a full grasp of theconstruction project opportunities from the countries and regions along the line of the Belt and Road, it willcontinuously extend the scale of its overseas business and enhance the foreign influence of the brand Sino GreatWall.

(3) To maintain the implementation of development projects for medical business and cultivate new profitgrowth point

For the year of 2017, taking full advantage of the good opportunities provided by the national health-carereform, the company will play a positive role in expanding the business in the area of medical health service,acting to implement the construction of hospital PPP projects that have won the bid, and continuing to exploit newhospital PPP projects as well as planning and developing in-depth cooperation in relation with medical business.

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../../Program Files (x86)/Youdao/Dict/7.0.1.0227/resultui/dict/%3fkeyword=ornament


32

(4) To promote private issuing of share and enhance the capital strength of the company

On July 7, 2016, the 10th meeting of the 7th Board of Directors was convened to deliberate and approve theProposal on the Plan of non-public Issuing of A-Share by Sino Great Wall Co., Ltd and plan to issue shares toSino Great Wall (Beijing) Investment Co., Ltd, Beijing Anben Medical Investment Holdings Ltd and Mr. ZhengJihua, raising funds of RMB 2.5 billion. On October 14, 2016, the 16th meeting of the 7th Board of Directors wasconvened to examined and adopted the Proposal on Adjustment to the Current Plan ofnon-public Issuing ofA-Share by Sino Great Wall Co., Ltd, adjusting the total raised fund to RMB 900 million. On March 22, 2017, theapplication for non-publi issuing of A-share has been examined and approved by the Issuance ExaminationCommission of CSRC, but at present the official documents approved by CSRC has not yet been received.

In 2017, the Company will fully seize the favorable opportunities brought by One Belt One Road strategy andPublic-Private-Partnership project construction which the nation vigorously implements. To make a furtherperfection for overseas and domestic marketing networks, the Company will strive to exploit and develop newhigh-quality customers. To make a further perfection for the Company’s relevant construction qualification, theCompany will enlarge the scope of its building construction for offering comprehensive solutions with moreperfection and higher quality to customers. The Company will reinforce and enlarge the brand awareness whichhas been formed and the market share to constantly improve its core competitiveness and profitability.

3.Main Risks faced by the Company and Solutions

(1)Influence of Macro Economy and Policy

The construction industry and the health-care industry, in which the Company are engaging, are influencedgreatly by macro economy and policies. The uncertainty in international and domestic economic situation and thechanges of national policy will bring potential risks to the Company’s market development and operatingmanagement.

Solutions: Pay constant attention to the international and domestic economic situation to make reasonableprejudgement. Make timely adjustment for operating strategy and marketing policy and make pre-arrangedplanning which copes with market changes to guarantee the smooth realization for business goals in 2016.

(2)Risks Aggravated by the Market Competition

With more competitions which domestic enterprises and international construction market take part in, theCompany’s overseas business operating will be impacted more or less.

Solutions: Strengthen team construction and take first-mover advantage of the Company’s overseas business.Draw lessons from the past, improve the capacity of management and control for the Company’s own projects toconstantly heighten the Company’s core competitiveness.

(3)Management Risks Brought by Constant Business Scope Enlargement

In views of the period where the Company is in speedy development, the Company has transferred from thesub-contractor of professional decoration to the general contractor of building construction, and the speedydevelopment in overseas business puts forward higher demands to the Company’s organization operating andproject management.

Solutions: Strengthen learning and training, constantly improve the quality of the on-the-job managers andtechnicists, introduce high-level personnel and improve the overall management capacity and the technicalcapacity of the Company to fully adapt to the pace of the Company’s speedy development

Ⅹ.Particulars about researches, visits and interviews received in this reporting period

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33

1.Particulars about researches, visits and interviews received in this reporting period


Reception time Way of reception Types of visitors Basic index

January 20,2016 Onsite investigation Organization

The interactive relation with the

investors on Shenzhen Stock Exchange

platform about Sino Great Wall

International Engineering Co., Ltd:

Record of the investors relations

activities on January 20, 2016.

February 1,2016 Onsite investigation Organization






activities on February 1, 2016.

March 3,2016 Onsite investigation Organization






activities on Marh 3, 2016.

March 11,2016 Onsite investigation Organization






activities on March 11, 2016.

May 4,2016 Onsite investigation Organization






activities on May 4, 2016.

May 24,2016 Onsite investigation Organization






activities on Maty 24, 2016.

September 2,2016 Onsite investigation OrganizationThe interactive relation with the



34




activities on September 2, 2016.

November 17,2016 Onsite investigation Organization






activities on November 17, 2016.

December 23,2016 Onsite investigation Organization






activities on December 23, 2016.

Reception times 9

Reception agency amount 40

Reception personal number 0

Others 0

Whether to disclose, reveal or disclose non-public

material informationNo


35

V. Important Events

ⅠSpecification of profit distribution of common shares and capitalizing of common reserves

Formulation, implementation and adjustment of profit distribution policy of common shares especially cashdividend policy during the reporting period√ Applicable □Not applicable

On August 25, 2016, the 12th meeting of the 7th Board of Directors was convened to deliberate and approve theProposal on the Amendment of the Articles of Association, of which, the amendments include Article 162, ProfitDistribution Policy of the Articles of Association.On December 16, 2016, the third Ppovisional Shareholders Meeting in 2016 was convened to deliberate andapprove the Proposal on the Amendment of the Articles of Association.

The details are as follows:

Article 162 Profit Distribution Policy

The company's profit distribution shall attach

importance to the reasonable investment return for

investors, especially the small and medium-sized

investors, and take into account its sustainable

development, establish a sustained, stable and

positive dividend policy, and adopt the methods of

profit disribution in cash, stock, the combination of

cash and stock or other ways permitted by laws or

regulations.

(1) The Principle of Profit Distribution

The company shall implement a sustained and

stable profit distribution policy, pay attention to the

reasonable investment return for investors and give

consideration to its long-term and sustainable

development; the company's profit distribution must

not exceed the cumulative distributive profit.

(2) The Forms of Profit Distribution

The company can adopt the methods of profit

distribution in cash, stock or the combination of cash,

or other ways permitted by laws or regulations and

shall give priority to the method of cash dividends.

Article 162 Profit Distribution Policy

The company's profit distribution shall attach importance

to the reasonable investment return for investors, especially

the small and medium-sized investors, and take into account

its sustainable development, establish a sustained, stable and

positive dividend policy, and adopt the methods of profit

disribution in cash, stock, the combination of cash and stock

or other ways permitted by laws or regulations.

(1) The Principle of Profit Distribution

The company shall implement a sustained and stable

profit distribution policy, pay attention to the reasonable

investment return for investors and give consideration to its

long-term and sustainable development; the company's profit

distribution must not exceed the cumulative distributive

profit.

(2) The Forms of Profit Distribution

The company can adopt the methods of profit distribution

in cash, stock or the combination of cash, or other ways

permitted by laws or regulations and shall give priority to the

method of cash dividends.

(3) The Specific Conditions and Proportion of Cash

Dividends



36

(3) The Specific Conditions and Proportion of Cash

Dividends

1, The implementation of cash dividends must satisfy

simultaneously the following conditions:

(1) The earnings per share of the year shall not be less

than 0.1 yuan;

(2) The cumulative distributive profits per share of the

year shall not be less than 0.2 yuan;

(3) Unqualified audit reports of the company's annual or

semi-annual financial statements shall be issued by the

audit institution;

(4) No events such as major investment plans or

major cash expenditures occured (excluding the

fund-raising projects).

Major investment plan or major cash expenditure

refers to the accumulated expenditures of the

company’s planed foreign investment, assets

acquisition or equipment purchase, house buildings

and land-use rights in the next 12 months reach or

exceed 30% of the latest total audited assets of the

company and the expenditures above-mentioned must

exceed RMB 50 million.

2, the Provisions on Proportion of Cash Dividends

(1) The company shall maintain the continuity and

stability of the profit distribution policy. Under the

conditions that satisfying cash dividends, the yearly

profits distributed with cash shall be no less than

10% of the distributive profits achieved in the year,

and within any three consecutive years, the profits

distributed with cash shall be no less than 30% of the

average distributive profits achieved in the three

consecutive years;

(2) The distributive profits un-allocated of the year can

be allocated in subsequent years;

(3) The profit distribution shall not exceed the scope

of the cumulative distributive profits, and shall not

impair the company's continuous operation ability.

(4) Time Interval of the Dividend Distribution

1, The implementation of cash dividends must satisfy

simultaneously the following conditions:

(1) The earnings per share of the year shall not be less than

0.1 yuan;

(2) The cumulative distributive profits per share of the year

shall not be less than 0.2 yuan;

(3) Unqualified audit reports of the company's annual or

semi-annual financial statements shall be issued by the audit

institution;

(4) No events such as major investment plans or major

cash expenditures occured (excluding the fund-raising

projects).

Any event meeting any of the following criteria constitute

a major investment plan or major cash expenditure:

1) The accumulated expenditures of the company’s planed

foreign investment, assets acquisition, equipment purchase,

loan return and bond redemption that has already been

implemented in the year or will be implemented in the next

12 months reach or exceed 50% of the latest total audited

assets of the company and the expenditures above-mentioned

must exceed RMB 50 million;

2) The accumulated expenditures of the company’s

planed foreign investment, assets acquisition, equipment

purchase, loan return and bond redemption that has already

been implemented in the year or will be implemented in the

next 12 months reach or exceed 30% of the latest total

audited assets of the company and the expenditures

above-mentioned must exceed RMB 50 million.

2, the Provisions on Proportion of Cash Dividends

(1) The company shall maintain the continuity and

stability of the profit distribution policy. Under the

conditions that satisfying cash dividends, the yearly profits

distributed with cash shall be no less than 10% of the

distributive profits achieved in the year, and within any three

consecutive years, the profits distributed with cash shall be

no less than 30% of the average distributive profits achieved

in the three consecutive years;

(2) The distributive profits un-allocated of the year can be

allocated in subsequent years;


37

Under the conditions that satisfying cash

dividends, the company will actively adopt cash

dividends as the method of dividend distribution. In

principle, cash dividends will be implemented

annually, and Board of Directors can propose the

company to implement medium-term cash dividends

in accordance with the company profitability and

financial needs.

(5) The Issuance Conditions of Share Dividends

Based on the annual earnings and cash flow and on

the premise of guaranteeing the minimum cash

dividend ratio and the reasonable equity scale and

ownership structure, the company can pay attention

to synchronizing equity expansion with business

growth and consider to take the method of share

dividend to distribute profits.

(6) Differentiated Cash Dividend Policies

The Board of Directors shall take into account

such factors as the characteristics of the industry the

company engage, the development stages, its own

business models, profitability and whether there are

major capital expenditure arrangements, distinguish

the following situations, and propose differentiated

cash dividend policies in accordance with the

procedures stipulated in the Article of Association:

1, If a profit distribution occurs when the

company is in mutual development stage and has no

major capital expenditure arrangements, the cash

dividends shall account for at least 80% of the total

profits to be distributed;

2, If a profit distribution occurs when the

company is in mutual development stage and has

major capital expenditure arrangements, the cash

dividends shall account for at least 40% of the total


3, If a profit distribution occurs when the company is

in growth stage and has major capital expenditure

arrangements, the cash dividends shall account for at

least 20% of the total profits to be distributed;

4, If the company's development stage is hard to

(3) The profit distribution shall not exceed the scope of the

cumulative distributive profits, and shall not impair the

company's continuous operation ability.

(4) Time Interval of the Dividend Distribution

Under the conditions that satisfying cash dividends, the

company will actively adopt cash dividends as the method of

dividend distribution. In principle, cash dividends will be

implemented annually, and Board of Directors can propose

the company to implement medium-term cash dividends in

accordance with the company profitability and financial

needs.

(5) The Issuance Conditions of Share Dividends

Based on the annual earnings and cash flow and on the

premise of guaranteeing the minimum cash dividend ratio

and the reasonable equity scale and ownership structure, the

company can pay attention to synchronizing equity expansion

with business growth and consider to take the method of

share dividend to distribute profits.

(6) Differentiated Cash Dividend Policies

The Board of Directors shall take into account such

factors as the characteristics of the industry the company

engage, the development stages, its own business models,

profitability and whether there are major capital expenditure

arrangements, distinguish the following situations, and

propose differentiated cash dividend policies in accordance

with the procedures stipulated in the Article of Association:

1, If a profit distribution occurs when the company is in

mutual development stage and has no major capital

expenditure arrangements, the cash dividends shall account

for at least 80% of the total profits to be distributed;


mutual development stage and has major capital expenditure

arrangements, the cash dividends shall account for at least

40% of the total profits to be distributed;


growth stage and has major capital expenditure arrangements,

the cash dividends shall account for at least 20% of the total


4, If the company's development stage is hard to distinguish but


38

distinguish but there are major capital expenditure

arrangements, the distribution of cash dividends can be

dealt with in accordance with the preceding provisions.4

(7) The Specific Conditions, Decision-making Process

and Mechanism to Adjust Profit Distribution Policy

Considering the production and management,

investment planning, long-term development needs

and external business environment, when the

adjustment or change to the profit distribution policy

determined by the Article of Association is absolutely

necessary, the scheme for adjustment or change shall

be drawn up by and submitted to the general meeting

of shareholders by the Board of Directors for

diliberation. When the general meeting of

shareholders deliberates the change for profit

distribtion policy, it is a must that the deliberation is

past by 2/3 of the voting rights held by the

shareholders present at the meeting and convenience

is provided for the small and medium shareholders to

attend the general meeting of shareholders.

Independent directors shall express their explicit

independent opinions on the adjustment or change of

profit distribution policy, and the Board of

Supervisors shall publish the audit opinion.

(8) The Decision-making Process of Profit

Distribution Policy

The annual profit distribution plan of the

company shall be proposed and laid down by the

company’s management and Board of Directors with

the consideration of the provisions of the Article of

Association, profitability, capital needs and

shareholder return planning, and be deliberated and

approved by the the general meeting of shareholders

after being reviewed by the Board of Directors.

Independent opinions to the profit distribution plan

shall be made and publicly disclosed by independent

directors.

(9) The Board of Directors shall carefully study

and demonstrate the timing, conditions, minimum

proportions, conditions for adjustment and other

decision-making rocedural requirements of the cash

dividend distribution in the process of deliberating

there are major capital expenditure arrangements, the distribution

of cash dividends can be dealt with in accordance with the

preceding provisions.

(7) The Specific Conditions, Decision-making Process and

Mechanism to Adjust Profit Distribution Policy

Considering the production and management, investment

planning, long-term development needs and external business

environment, when the adjustment or change to the profit

distribution policy determined by the Article of Association is

absolutely necessary, the scheme for adjustment or change

shall be drawn up by and submitted to the general meeting of

shareholders by the Board of Directors for diliberation. When

the general meeting of shareholders deliberates the change

for profit distribtion policy, it is a must that the deliberation is

past by 2/3 of the voting rights held by the shareholders

present at the meeting and convenience is provided for the

small and medium shareholders to attend the general meeting

of shareholders. Independent directors shall express their

explicit independent opinions on the adjustment or change of

profit distribution policy, and the Board of Supervisors shall

publish the audit opinion.

(8) The Decision-making Process of Profit Distribution

Policy

The annual profit distribution plan of the company shall

be proposed and laid down by the company’s management

and Board of Directors with the consideration of the

provisions of the Article of Association, profitability, capital

needs and shareholder return planning, and be deliberated

and approved by the the general meeting of shareholders after

being reviewed by the Board of Directors. Independent

opinions to the profit distribution plan shall be made and

publicly disclosed by independent directors.

(9) The Board of Directors shall carefully study and

demonstrate the timing, conditions, minimum proportions,

conditions for adjustment and other decision-making

rocedural requirements of the cash dividend distribution in

the process of deliberating and making the profit distribution

plan; the independent directors shall express explicit

opinions on it. The recommendations of the management, the

key points of the speech by shareholders attending the

meeting, the opinions of independent directors, the vote the

Board of Directors and other contents shall be recorded in


39

and making the profit distribution plan; the

independent directors shall express explicit opinions

on it. The recommendations of the management, the

key points of the speech by shareholders attending

the meeting, the opinions of independent directors,

the vote the Board of Directors and other contents

shall be recorded in detail and be properly kept as the

company archives in written form.

(10) The general meeting of shareholders shall

vote the profit distribution plan proposed by the

Board of Directors according to the laws and rules. In

the deliberation of the specific scheme for cash

dividends, the general meeting of shareholders shall

communicate and exchange actively with the

shareholders, especially the small and medium

shareholders, through multiple channels, fully heed

the opinions and demands of the small and medium

shareholders and respond to their concerns in a

timely manner. The Board of directors shall complete

the distribution of dividends (or shares) within 2

months after the resolution of profit sharing plan

made by the general meeting of shareholders.

(11) When the company get the annual profits but

the management and the Board of Directors do not

propose and draw up the cash dividend plans, the

management needs to submit to to the Board of

Directors a detailed overview to this issue, including

the reasons for not distributing the dividends and the

purpose and using plan of the retained funds which

are not distributed, and independent opinions to the

profit distribution plan shall be made and publicly

disclosed by independent directors; the overview will

be deliberated by the the general meeting of

shareholders after being reviewed and approved by

the Board of Directors and it will be stated to the

general meeting of shareholders by the Board of

Directors.

(12) The company shall disclose the

implementation of profit distribution plans and cash

dividend policies in the annual report and

semi-annual report in strict accordance with the

relevant provisions. When the company get the

annual profits but no cash dividend plans are

detail and be properly kept as the company archives in

written form.

(10) The general meeting of shareholders shall vote the

profit distribution plan proposed by the Board of Directors

according to the laws and rules. In the deliberation of the

specific scheme for cash dividends, the general meeting of

shareholders shall communicate and exchange actively with

the shareholders, especially the small and medium

shareholders, through multiple channels, fully heed the

opinions and demands of the small and medium shareholders

and respond to their concerns in a timely manner. The Board

of directors shall complete the distribution of dividends (or

shares) within 2 months after the resolution of profit sharing

plan made by the general meeting of shareholders.

(11) When the company get the annual profits but the

management and the Board of Directors do not propose and

draw up the cash dividend plans, the management needs to

submit to to the Board of Directors a detailed overview to this

issue, including the reasons for not distributing the dividends

and the purpose and using plan of the retained funds which are

not distributed, and independent opinions to the profit

distribution plan shall be made and publicly disclosed by

independent directors; the overview will be deliberated by the

the general meeting of shareholders after being reviewed and

approved by the Board of Directors and it will be stated to the

general meeting of shareholders by the Board of Directors.

(12) The company shall disclose the implementation of

profit distribution plans and cash dividend policies in the

annual report and semi-annual report in strict accordance

with the relevant provisions. When the company get the

annual profits but no cash dividend plans are proposed, the

reasons for not distributing the dividends and the purpose and

using plan of the retained funds which are not distributed

shall be expounded in the annual report.

(13) The Board of Supervisors shall supervise the

implementation of the company's profit distribution policies and

the shareholder return plans as well as the decision-making

process executed by the Board of Directors and the management.

When the company get the annual profits but no cash dividend

plans are proposed, the Board of Supervisors shall make a special

statement and comment on the implementation of relevant policies

and plans.


40

proposed, the reasons for not distributing the

dividends and the purpose and using plan of the

retained funds which are not distributed shall be

expounded in the annual report.

(13) The Board of Supervisors shall supervise the

implementation of the company's profit distribution

policies and the shareholder return plans as well as the

decision-making process executed by the Board of

Directors and the management. When the company get the

annual profits but no cash dividend plans are proposed,

the Board of Supervisors shall make a special statement

and comment on the implementation of relevant policies

and plans.

Special explanation on cash dividend policy

Satisfy regulations of General Meeting or requirement of Article

of Association (Yes/No)Yes

Well-defined and clearly dividend standards and proportion

(Yes/No)Yes

Completed relevant decision-making process and mechanism

(Yes/No)Yes

Independent directors perform duties completely and play a

proper role (Yes/No) YYes

Minority shareholders have ample opportunities and their

legitimate rights and interests are effectively protected (Yes/No)Yes

Condition and procedures are compliance and transparent while

the cash bonus policy adjusted or changed (Yes/No)Yes

The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve intoshare capital in the past three years(with the reporting period inclusive):

Profit distribution preplan for 2014：

1 As audited by Da Hua Certified Public Accountants(Special General Partnership) , the total profit of theCompany for 2014 is RMB4,740,872 , After deduction of minority gains and losses of RMB-3,709 and incometax expenses of RMB 453,676, net profit is RMB4,290,905,the total year-end undistributed profit isRMB-103,768,226. The Company is neither to distribute profit nor to capitalize capital surplus for the currentyear.

Profit distribution plan for 2015：

based on the 2015 total share capital of 446.906582 million shares, The Company will transfer the capitalreserve to increase capital stock, 28 shares for every 10 shares.


41

Dividend distribution of the latest three years

In RMB

YearCash dividend

(Including Tax)

Net profit

attributable to the

over of the parent

company in the

consolidated

financial statements

Ratio in net profit

attributable to the

parent company in

the consolidated

financial statements

Amount of cash

dividends from cash

offer to repurchase

shares of the funds

Proportion of cash

dividends from cash

offer to repurchase

shares of the funds

2016 101,894,700.66 473,661,862.67 21.51% 0.00 0.00%

2015 0.00 346,648,651.48 0.00% 0.00 0.00%

2014 0.00 186,857,504.45 0.00% 0.00 0.00%

In the reporting period, both the Company’s profit and the parent company’s retained earnings were positivehowever not cash dividend distribution proposal has been put forward.□Applicable □ Not appliable

II.Profit distribution plan and capitalizing of common reserves plan for the Period


Bonus shares for every ten shares(Shares) 0

Cash dividend for everty ten shares

(Yuan)(Tax-included)0.60

Distribute additional (shares)for 10 shares 0

A total number of shares as the distribution

basis(shares)1,698,245,011

Total cash dividend (Yuan)(Tax-included) 101,894,700.66

Proportion of cash dividend in the distributable

profit (%)100.00%

Cash dividend distribution policy

If the company’s development is at the growth stage with arrangements of significant capital expenditures, the minimum proportion

of cash dividend in the profit distribution should reach 20%.

Details of proposal of profit distribution preplan or share conversion from capital public reserve

The Audit Report of LHZ(2017) No. 0263 issued by BDO China Shu Lun Pan Certified Public Accountants LLconfirmsthat the company's net profit of 2016 that belongs to the shareholders is RMB 465,758,169.92. According to theArticle of Association, 10% of the profit, RMB 46,575,816.99, is drawn as the legal accumulation fund of thecompany; At the end of this year, plus the profit of RMB 755,308,636.19, which was not distributed at thebeginning of last year, the profit serving as the distributive dividends for all shareholders is RMB1,174,490,989.12. The company intends to distribute the cash dividends of RMB 0.60 yuan per 10 shares (tax incl.)to all shareholders, taking the total equity of RMB 1,698,245,011 on December 31, 2016 as the base, with a totaldistribution of RMB 101,894,700.66. The remaining un-allocated profit of RMB 1,072,596,288.46 will be carriedover to the next year.


42

III.Commitments to fulfill the situation

1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of thereporting period made by the company, shareholder, actual controller, acquirer, director, supervisor,senior management personnel and other related parities.


CommitmentCommitment

makerType Contents

Time of

making

commitment

Peiod

of

commi

tment

Fulfil

lment

Commitment on share reform No No No No

Commitment in the acquisition report

or the report on equity changesNo No No No

Commitments in assets reorganizationChen Lue, He

Feiyan

Stock

lock

Shares acquired by purchases of assets

through issuing shares: “I will not

transfer the new shares of Victor

Onward Holdings acquired through this

restructuring, including but not limited

to the public transfer through the stock

market or by agreement, and I will not

entrust anybody else to manage my

shares of Victor Onward Holdings,

within 36 months from the date new

shares list and before the date I’ve

carried out my obligations of

performance compensation under this

restructuring(subject to whatever is

early, hereinafter referred to as “lock-up

periods”). If the closing price of shares

of Victor Onward Holdings were lower

than this issue price for 20 continuous

trading days in 6 months after the

restructuring transaction has been

completed, or the final closing price

were lower than this issue price 6

months after the transaction has been

completed, the lock-up periods of my

shares of Victor Onward Holdings are

automatically prolonged for 6 months.

(The above-mentioned issue price will

be calculated according to the price

after the adjustment of ex-dividend, etc.

March

19,2015

36

month

s

Strict

perf

ormi

ng


43

if ex-dividend behaviors of the

company, including distribution of

dividends, giving bonus, conversion of

share capital, rationing shares, and etc.,

were happened during the

above-mentioned periods. If the

restructuring transaction were March

19,2015 36 mont hs Strict perfor ming

Shenzhen Victor Onward Textile

Industrial Co., Ltd. The Third Quarterly

Report 2015. 14 investigated by judicial

authorities or China Securities

Regulatory Commission due to false

record, misleading statement or major

omission of the information provided or

disclosed, I will not transfer my shares

of the company before the conclusion of

the case has been made clear. After the

above-mentioned lock-up periods, I will

sell or transfer the new shares of the

company acquired from this

restructuring following relevant

regulations of China Securities

Regulatory commission and Shenzhen

Stock Exchange.

Chen LueStock

lock

Shares acquired by matching funds

raised: “I will not transfer the new

shares of Victor Onward Holdings

acquired through this issuing by any

way, including but not limited to the

public transfer through the stock market

or by agreement, within 36 months from

the date new shares list. If regulation

rules or regulators have longer

requirements for lock-up periods, it

should be executed accordingly.

March

19,2015

36

month

s

Strict

perf

ormi

ng

Chen Lue

No

capital

occupa

tion

Up to the issue day of the letter, I and

other corporations controlled by me

haven’t possessed funds of Sino Great

Wall; After the transaction is completed,

I and other companies controlled by me

(if any), except for listed companies and

their holding subsidiaries, will not

possess the funds of listed companies or

March

19,2015

Long-t

erm

Strict

perf

ormi

ng


44

Sino Great Wall by any way, including

cash in advance, other expenses, direct

or indirect loans, assumption, etc. and

try our best to avoid fund intercourse

with listed companies or Sino Great

Wall, which has nothing to do with

normal operations. If Sino Great Wall

got penalized by government

administration departments due to the

money lending which was happened

before the transaction, I will bear the

total compensation for the company’s

loss resulting from it by cash in order to

guarantee Sino Great Wall won’t suffer

any loss. Meanwhile, I will actively

urge Sino Great Wall to establish

complete inner control system and

funds management system within lawful

authority.

Chen Lue

Cash

compe

nsatio

n

In view of the fact that the houses

rented by Sino Great Wall and it’s son

subsidiaries, subsidiaries, haven’t rental

registration, I promise, if Sino Great

Wall and its son subsidiaries,

subsidiaries, were penalized by real

estate management department or

suffered other losses resulting from it, I

agree to compensate the loss of the

company by cash.

March

19,2015

Long-t

erm

Strict

perf

ormi

ng

Chen Lue

Cash

compe

nsatio

n

During the reporting period, the project

which Sino Great Wall is involved in is

the decoration engineering construction

project of Libo Grand Hotel (hereinafter

referred to as “Libo project”) which the

company contracted before the bidding

process. Sino Great Wall is not involved

in any other projects except for Libo

project before bidding process. As to the

violating issues existed in the Libo

project, I promise as follows: if Sino

Great Wall got penalized by government

administration departments or suffered

any economic loss resulted from it, I

will compensate the company by cash;

March

19,2015

Long-t

erm

Strict

perf

ormi

ng


45

Meanwhile, I, within lawful authority,

will also promise to urge the company

to undertake related construction

projects legally so as to avoid violating

issues happened before implementation

of bidding process, i.e., at the time for

construction again.

Chen Lue

Cash

compe

nsatio

n

“1. Up to October 13th,2014, the related

expenses of the litigation and arbitration

cases, including the actual price,

compensation, penalty, ligation costs,

etc. which the parent-subsidiary

companies of Sino Great Wall needs to

pay caused by the final results of

ligation and arbitration cases, exceed

the amount of liabilities which

recognized in the “Audit Report” made

for Sino Great Wall by Ruihua CPA

(Special Ordinary Partnership) on the

basis of the audit base day of July 31st,

2014, I promise to bear the balance by

cash unconditionally so as to guarantee

the parent-subsidiaries of Sino Great

Wall won’t suffer any loss. 2. This

commitment letter is irrevocable.

March

19,2015

Long-t

erm

Strict

perf

ormi

ng

Chen Lue

Cash

compe

nsatio

n

1. On condition that ownership defect

exists in the lease of house property of

parent-subsidiary companies of Sino

Great Wall and its subsidiary

corporation, which resulted in inability

for parent-subsidiary companies of Sino


corporation to continue leasing this

house property but having to relocate,

or parent-subsidiary companies of Sino


corporation can’t timely find suitable

workplace for lawful operation in

related area, I will undertake to

compensate by cash for


Great Wall’s losses which are caused by

operation and finance due to the

above-mentioned matters. 2. I undertake

March

19,2015

Long-t

erm

Strict

perf

ormi

ng


46

to unconditionally bear the relevant

fines by cash for parent-subsidiary

companies of Sino Great Wall on

condition that the rental house property

of parent-subsidiary companies of Sino


corporation is in absence of handling

procedures for filing house

leasing ,which resulted in that



corporation are fined by property

administrative department. 3.The

commitment letter is irrevocable.

Chen Lue

Cash

compe

nsatio

n

“In condition that parent-subsidiary

companies of Sino Great Wall or its son

subsidiary haven’t paid social security

or housing fund for staff according to

law, which resulted in any losses to Sino

Great Wall , including the competent

authorities’ requirement for Sino Great

Wall or its subsidiary to make

supplementary payment, to be punished

and resourced, I will bear by

full-amount cash for the fee of

supplemental payment and the expense

and fee for being punished or resourced,

which is to guarantee Sino Great Wall

and its subsidiary to avoid suffering

from any loss ”.

March

19,2015

Long-t

erm

Strict

perf

ormi

ng

Chen Lue

Cash

compe

nsatio

n

“At present, Suzhou Lvbang has

possessed one state-own land use right,

of which the land certificate is Suzhou

Guo Yong(2014) No.Y2014086”,

locates in Danan Village, Dadian Town,

Yongqiao District, Suzhou City with

32,966 square meters of area and the

purpose for industry. Suzhou Lvbang

possesses its own factory with 9,843.87

square meters of area above-mentioned,

which is the building reserved on the

former selling land. Suzhou Lvbang is

carrying out refurnishing and

reconstruction for this factory and has

March

19,2015

Long-t

erm

Strict

perf

ormi

ng


47

acquired “License of Construction Land

Planning ”with No.2014-08-001

approved and issued by Yongqiao

District, Suzhou City’s housing and

rural construction bureau, of which

other examination and approval

procedures of construction are in the

process of handling “I undertake to

actively supervise and urge Suzhou

Lvbang on handling procedures of the

approval process involved with factor

refurnishing and reconstruction, and

which is suffered from administrative

punishment by relevant competent

authorities in reason of claiming

certificate of title, or in which any

dispute or controversy exist in

construction and ownership, which shall

be my responsibility to carry out

solution, and I undertake to compensate

by cash for Suzhou Lvbang’s losses

which are due to this matter,

guaranteeing no losses occur to Sino

Great Wall and Suzhou Lvbang for this

matter.

Chen Lue

Cash

compe

nsatio

n

“According to the “Agreement of

Significant Asset Replacement and

Issue of Share to Buy Asset”(hereinafter

referred to as “Agreement”) signed

among Victor Onward Holdings, all

shareholders of Sino Great Wall and

Union Development Group Co., Ltd

(hereinafter referred to as“ Union

Group”) on October 13, 2014, all the

creditor’s rights and liabilities related to

place-out asset before the delivery date

of Victor Onward Holdings shall be

Union Group’s responsibility to carry

out solution; After the asset delivery

date, if any losses occur to Victor

Onward Holdings in reason of the

liability transfer of asset delivery,

personnel placement, unsettled dispute

or controversy and other compensation

March

19,2015

Long-t

erm

Strict

perf

ormi

ng


48

related to place-out asset, payment

obligation and punishment, Union

Group or the specified third party shall

sufficiently compensate all losses for

Victor Onward Holdings for the above

matters. I undertake, if Union Group

and the specified third party refuse to

compensate the losses caused by the

above mentioned matters for Victor

Onward Holdings according to

the“ Agreement”, I will compensate by

cash for the Victor Onward Company

within 5 working day in advance.

Meanwhile, I will reserve the resource

rights for Union Group and the

specified third party “.

Chen Lue , He

Feiyan

Perfor

mance

commi

tment

According to“ Agreement of Shenzhen

Victor Onward Textile Industrial Co.,

Ltd., Chen Lue and He Feiyan

Concerning on Performance

Compensation” and its supplemental

agreement , Chen Lue’s promised Sino

Great Wall that the net profit deducted

by incidental losses and attributable to

the parent companies’ owners after

audition of 2015, 2016 and 2017 shall

be respectively more than RMB 345.8

million, RMB 438.5 million and RMB

538.2 million. If the net profit of Sino

Great Wall is less than the promised net

profit mentioned above , Chen Lue and

He Feiyan will compensate for listed

company in accordance with

“Performance Compensation

Agreement” and its supplemental

agreement

May

11,2015

Long-t

erm

Strict

perf

ormi

ng

Chen Lue; He

Feiyan, Wuxi

Hengtai

Jiuding Assets

Management

Centre

（LP）;Yantai

Zhaoxuan

Indepe

ndent

compe

tition

1. This reorganization is planned to

place in asset. At present, complete

separation has existed between me or

other enterprises under my possession

(if any) and the listed company in staff,

asset, finance, institution and business

of Sino Great Wall. Independence exists

in both staff, asset, finance, institution

September

30,2015

Long-t

erm

Strict

perf

ormi

ng


49

Yuantai

Jiuding

Venture

Investment

Centre

（LP）;Suzho

u Taiyao

Zhongshan

Jiuding

Investment

Centre

（LP）;Jiaxing

Jiahe Jiuding

Investment

Centre（LP）

and business and no confusion exists. 2.

I undertake, after this reorganization, to

ensure the continued complete

separation between me or other

enterprises under my possession(if any)

and the listed company in staff, asset,

finance, institution and business,

sustaining the independence in the listed

company’s staff, asset, finance,

institution and business, as follows:

(1).The Ensurance of Independence for

Listed Company’s Personnel Ensure

that the general manager, the

vice-general manger, the chief financial

officer, the board secretary and the

senior executives of the Company only

accept salary in listed company,

including no holding of any post except

director and supervisor in my enterprise

or other enterprises under my

possession. 2.Ensure the complete

independence exists among the listed

company’s labor, personnel, and salary

management and me. 3. The director,

supervisor, general manager and other

senior executives recommended by me

have all been through the legal

procedures, and I will not intervene the

company’s board and the shareholder’s

decision for appointing and dismissing

personnel by exercising official power.

(2)The Ensurance of the Asset

Independence of Listed Company

1.Ensure that the listed company

possesses business system related to

operation and the relevant

completely-independent asset. 2.Ensure

that no occupation of mine exists in

capitals and assets of the listed

company. 3.The Ensurance of the

Financial Independence of Listed

Company 1.Ensure that the independent

finance department and the independent

financial calculating system set up by


50

the listed company, which possess

normative and independent financial

and accounting rules. 2. Ensure that the

listed company independently opens a

bank account, not sharing the same

bank account with me. 3.Ensure that the

financial staff of the listed company

holds no part-time post in my enterprise

and other enterprises under my

possession. 4. Ensure that the listed

company pays taxes according to law. 5.

Ensure that the listed company makes

the financial decision-making

independently, I will not intervene the

utilization of the listed company’s

capital. (4)The Ensurance of the

Institutional Independence of Listed

Company 1.Ensure that the listed

company sets up perfect governance

structure for the share company’s legal

person, which possesses independent

and complete institutional framework

2.Ensure that the shareholder’s meeting,

the board of director, the independent

director, the supervisor and the general

managers exercise official powers

according to laws, regulations and

articles of incorporation (5)The

Ensurance of the Business

Independence of Listed Company 1.

Ensure that the listed company

possesses the asset, staff, qualification

and ability for independently holding

business activities, which possesses the

independent, autonomous and sustain

operation ability catering to the market.

2. Ensure that I will not intervene the

listed company’s business activities

except exercising shareholder’s rights.

3.Ensure that I or other enterprises

under my possession will avoid working

on the listed company’s main business

which possesses substantial

competition. 4. Ensure to reduce the


51

related transaction between me and the

listed company or between other

enterprises under my possession and the

listed company as much as possible;

When confirming necessary but

unavoidable related transaction, I will

ensure the fair operation according to

the principle of market culture and the

fair price, and fulfill the transaction

procedures and the obligation of

disclosing information according to

relevant laws and regulations and

normative document.

Chen Lue; He

Feiyan;Wuxi

Hengtai

Jiuding Assets

Management

Centre（LP）;

Yantai

Zhaoxuan

Yuantai

Jiuding

Venture

Investment

Centre

（LP）;Suzho

u Tianyao

Zhongshan

Jiuding

Investment

Centre（LP）;

Jiaxing Jiahe

Jiuding

Investment

Centre（LP）

Relate

d

transac

tion

“Once I or our unit acquire the

newly-added share of Victor Onward

Company through this transaction, no

transfers will occur in any way within

12 months from the listing date,

including but not limited to public

transfer by securities market or transfer

by agreement, and no entrusting for

others to manage my holding share of

Victor Onward Holdings . Once the

above-mentioned lockup period expires,

I will implement the selling or

transferring of the newly-added share of

Victor Onward Holdings according to

the relevant provision of CSRC and

SZSE.

March

19,2015

Lont-t

erm

Strict

perfo

rming

Union

Development

Group Co.,

Ltd.

Incom

e

dispos

al

During the assets reorganization, the

house property and land without

property certificate in the disposed

assets within the plant area of Kuixin

Community of Kuichong Street of

Longgang District and the expected

compensations, as well as the expected

compensations concerning to the

March

19,2015

Long-t

erm

Strict

perfo

rming


52

regaining of plots planned as schools

within the right of land use of Nanyou

Industrial Park of Nanshan District have

not been recorded in the assessment.

Therefore, Union Group promises that

after the reorganization, if Union or a

third party appointed by Union receives

compensations or incomes related

toabove-mentioned disposed assets

which are house property and land

without property certificate as well as

regaining of plots planned as schools,

Union will return the benefits to Victor

Onward Holdings, in 10 working days

since the collection. The actual costs

and fees during the possession of the

house property and land and the paid as

well as the unpaid but necessary costs

and fees for the reception of the

above-mentioned benefits for Union

Group or its third party will be deducted

from the income. The specific benefits

and payable costs and fees should be

confirmed jointly by Union Group and

Victor Onward Holdings based on the

actual situations. （Notes:On June 25,

2015,All shareholders of Victor Onward

Holdings, Union Group and Sino Great

Wall Signed supplementary agreement,

and specified that the land and houses

without ownership certificate of Victor

Onward Holdings located at the factory

area of Kuixin community of Kuichong

street office of Longgang district (the

land area is about 50,000 square meters,

the built-up area of houses is about

25,000 square meters, among them

about 18,000 square meters of buildings

at built-up area are within the plan of

removal and collection of government，

hereinafter referred as “undocumented

property) still belongs to Victor Onward

Holdings. And the benefits and risks of

the real estate without certificate are


53

enjoyed and assumed by Victor Onward

Holdings.”

Union

Development

Group Co.,

Ltd

Cash

compe

nsatio

n

According to the Term 5.5.3 of

Agreement on Major Asset

Replacement and Asset Purchase

Through Issuing Shares (hereinafter

referred to as Agreement) signed on

October 13, 2014 by the company and

all shareholders of Victor Onward Co.

Ltd.. and Sino Great Wall, Victor

Onward Holdings should obtain the

letter of approval concerning the

transferred debts of the disposed assets

from the creditor (including the

guarantee, similarly hereinafter) before

the date of assets delivery. In the

situation of debts on Victor Onward

Holdings due to the absence of

creditor’s consent, the company or the

third party appointed by the company is

in charge of paying off debts or

reaching agreement on the solution with

the creditor. When there are losses

caused by improper solutions of the

company or the third party appointed by

the company, the company or the third

party appointed by the company will

fully compensate for the caused losses

of Victor Onward Holdings in 5

working days after receiving the notice.


Agreement, after the date of assets

delivery, any compensations,

obligations of payment and penalties

caused by disposed assets as well as

unsettled disputes in Victor Onward

Holdings will be undertaken and solved

by the company or the third party

appointed by the company, and Victor

Onward Holdings assumes no

responsibility. When there are losses

caused by it, the company or the third

party appointed by the company will

fully compensate for the caused losses

March

19,2015

Long-t

erm

Strict

perfo

rming


54

of Victor Onward Holdings in 5

working days after receiving the notice.


Agreement and based on the principle

of “staff arrangement according to the

assets”, the labor relations, social

insurance relations including pension,

medical treatment, unemployment,

working injury and maternity, and other

liable welfare and salary of all the staff

in Victor Onward Holdings. (including

but not limited to on-post Shenzhen

Victor Onward Textile Industrial Co.,

Ltd. The Third Quarterly Report 2015.

25 employees, employees awaiting job

assignments, retired employees,

retained employees with suspend salary,

transferred employees, and temporary

employees, etc) will be transferred to

the company or the third party

appointed by the company.

Compensations or related matters (if

any) due to the termination of labor

relationship in advance with Victor

Onward Holdings, the company or the

third party appointed by the company

will be in charge of the payment. The

company promises that for the losses

caused by matters such as the

above-mentioned debt transfers of

disposed assets, personnel arrangement,

unsettled disputes, potential debts,

payment obligations and penalties, the

company or the third party appointed by

the company will fully compensate for

the losses of Victor Onward Holdings

due to the above-mentioned matters

based on the Agreement in cash.

All directors

of the

company

Fill

returns

1.Guarantee that interest will be

transferred to other units or individuals

which are with compensation or without

fair conditions, neither other ways

which are harmful to the Company’s

interest will be adopted;2.Guarantee

July 7,2016Long-t

erm

Strict

perfo

rming


55

restraint conduction for the duty

consuming behavior of directors and

senior managers;3.Guarantee that no

capital of the Company will be

employed for engaging in investment or

consumption which are not involved

with duty performance;4.Guarantee that

the compensation system formulated by

the board of director or Compensation

and Assessment Committee is linked

with the exertion situation of the

Company’s return filling solution;5.

Shall stock incentive mechanism

subsequently be introduced by the

Company, the exertion condition of the

Company’s stock incentive mechanism

which is intended to be published is

guaranteed to be linked with the

exertion situation of the Company’s

return filling solution;6.When stock

incentive mechanism is intended to be

carried out subsequently , I promise,

within the legal range, to prompt the

exertion condition of the Company’s

stock incentive mechanism which is

intended to publish is guaranteed to be

linked with the exertion situation of the

Company’s return filling solution;7. I

promise the commitments above will be

fulfilled strictly, and guarantee actual

fulfillment for the Company’s return

filling solution. Shall any commitments

be violated or be refused to fulfill by

me, I will fulfill corresponding

obligations of explanation and apology

according to relevant regulations of

Guidance on First Issue, Refinancing,

Major Asset Reorganization and

Dilution for Return at Sight by CSRC,

and will approve the supervision

measures or self-discipline supervision

measures made by CSRC, SZSE and

China Association for Public

Companies. Any losses occurred upon


56

he Company or the shareholders, I am

willing to undertake the responsibility

for corresponding compensation in

accordance with laws.

Chen Lue, He

Feiyan

Fill

returns

Guarantee that no operating

management will be intervened with

exceeded authority, and no interest of

the Company will be expropriated.

July 7,2016Long-t

erm

Strict

perfo

rming

Commitments make in initial public

offering or re-financingNo No No No

Equity incentive commitment No No No No

Other commitments for medium and

small shareholdersNo No No No

Completed on time(Y/N) Yes

If the commitments is not fulfilled on

time, shall explain the specify reason

and the next work plan

Nil

2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is stillin the forecast period, the company has assets or projects meet the original profit forecast made and thereasons explained


IV.Particulars about the non-operating occupation of funds by the controlling shareholder


No non-operating occupation from controlling shareholders and its related party in the period.

V.Explanation of the Supervisory Committee and Independent Directors (If applicable)on the QualifiedAuditor’s Report Issued by the CPAs.


VI.Explain change of the accounting policy, accounting estimate and measurement methods as comparedwith the financial reporting of last year.

√Applicable □Not applicableNil


57

VII.Explain retrospective restatement due to correction of significant accounting errors in the reportingperiod


No major accounting errors within reporting period that needs retrospective restatement for the Company in theperiod.

VIII.Explain change of the consolidation scope as compared with the financial reporting of last year.


1. Companies into merger range newly in this stage

In 2016, the company founded Sino Great wall Medicare investment Co., Ltd., Sino Great wallInfrastructure Investment Co., Ltd. and Wuhan Vocational Hospital Co., Ltd. wholly owned by the company bycash offer, Sino Great wall Xinan Construction Co., Ltd. (Original name: Sichuan Dinghui Construction Co., Ltd.)which is wholly bought by subsidiary Sino International, Sino Great wall Changcheng Construction Co., Ltd.(Original name: Sichuan Haoyao Construction Co., Ltd.) is 60% bought by share issue by the company.Meanwhile, Shenzhou International founded newly subsidiaries called Sino Great wall Property (Hubei) Co., Ltd.and Sino Great wall Development (Hengqin) Co., Ltd. Then the above newly founded companies and newlybought companies began to be into the merger range of the company since 2016.

2. Companies not into merger account range in this stage

2In 2016, Sino International cancelled holding companies called Sino Heji Recycled Material Co., Ltd.,which was not in the merger range.

IX. Engagement/Disengagement of CPAs

CPAs currently engaged

Name of the domestic CPAs BDO China Shu Lun Pan Certified Public Accountants LLP

Remuneration for domestic accounting firm

(RMB’0000)115

Continuous life of auditing service for domestic

accounting firm2

Name of domestic CPA Liao Jiahe, Shu Shibao

Has the CPAs been changed in the current period√ Yes □No

Whether to change the accounting firm during the audit period

□ Yes √No

Description of the CPAs, financial adiver or sponsor engaged for intemal control auditing


In the current year, the company engaged BDO China Shu Lun Pan Certified Public Accountants LLP as theinternal control audit accounting firm, during the period, the company totally pays RMB 0.35million for the


58

internal control audit expenses.

X.Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report


XI.Bankruptcy reorganization


No bankruptcy reorganization for the Company in reporting period.

XII.Significant lawsuits and arbitrations of the Company


No significant lawsuits and arbitrations occourred in the reporting period.

XIII.Situation of Punishment and Rectification


No penalty and rectification for the Company in reporting period.

XIV.Credit Condition of the Company and its Controlling Shareholders and Actual Controllers


XV.Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan orOther Employee Incentive Measures


The second meeting of the seventh board of directors, the second meeting of the seventh board of supervisors andthe 2015 third extraordinary general shareholder meeting were respectively convened by the company on Nov 5,2015 and Nov 23, 205, at which the Proposal on the First Phase of Employee Stock Ownership Plan (draft) ofShenzhen Victor Onward Textile Industrial Co., Ltd was examined and approved.Please refer to the published on November 7, 2015, the securities times, the Hong Kong Commercial Daily andcninfo (www.cninfo.com.cn) on the relevant announcement.

On December 24, 2015, the company as the asset trustor of the ESOP asset management plan, together with theasset manager- Xingzheng Securities Asset Management Co.,Ltd and the asset trustee- China Everbright BankCo.,Ltd signed the contract of No.57 Xing Zheng Zi Guan Xin Zhong Assets Management Contract of theCollection Assets Management Plan which concretely explained and stipulated the information included the basicinformation of the collection plan, participating in and withdrawal of the collection plan, guarantee, classificationof the collection plan, the management methods and the management rights of the customer assets in thecollection plan, the establishment of the collection plan, the expenses of the collection plan, the proceeds and itsdistribution of the collection plan, investment philosophy and investment strategy, investment decision-making


59

and risk control, restrictions and prohibited behaviors of investment, information disclosure of the collection plan,transfer of the share of the collection plan, non-transaction transfer ownership and freezing and so on.Please refer to the published on December 29, 2015, the securities times, the Hong Kong Commercial Daily andcninfo (www.cninfo.com.cn) on the relevant announcement.

As of January 7, 2016, the company’s first phase of the employee stock ownership plan has completed theshare-purchasing by means of buying in the secondary security market, of which the average position price isRMB44.7578 per share, the total purchase quantity is 833,187 shares which account for 0.1864% of thecompany's total share capital, and the total turnover is RMB37,291,630. The lock-up period of the sharespurchased under the plan is 12 months commenced from the date of this announcement.

Please refer to the published on January 8, 2016, the securities times, the Hong Kong Commercial Daily andcninfo (www.cninfo.com.cn) on the relevant announcement.

XVI.Material related transactions

1. Related transactions in connection with daily operation


Relatedparties

Relationship

Type oftrade

Subjectsof therelatedtransactions

Principle of

pricingthe

relatedtransactions

Price oftrade

Amountof tradeRMB0’000

Ratio insimilartrades

Trading

limit

approve

d

（RMB

’0000）

Whethe

r over

the

approve

d

limited

or not

(Y/N)

Way ofpaymen

t

Marketprice ofsimilartrade

available

Date ofdisclosu

re

Indexof

information

disclosure

Qinghai

Heyi

Trade

Co., Ltd.

The

compan

y where

the

Compan

y’s

director

holds

the post

of legal

person

Procure

ment of

goods/s

ervices

Material

Goods

Market

price

Market

price1,959 6,000 No

Quarterl

y

settleme

nt

Give the actual situation in the report

period where a forecast had been

made for the total amounts of routine

related-party transactions by type to

occur in the current period(if any)

According to the 2016 routine operational needs and the current market price of the

procurement materials, the company is expected to complete the routinely related-party

transactions of total RMB 60 million with the related party Qinghai Heyi Commerce Co.,

Ltd, which had been deliberated and approved by the 2015 annual general meeting of

shareholders. In 2016, the amount of the actual transactions with Qinghai Heyi Commerce


60

Co., Ltd is RMB 19.59 million, which doesn’t surpass the approved transaction limit.

2. Related-party transactions arising from asset acquisition or sold


No related transactions by assets acquisition and sold for the Company in reporting period.

3. Related-party transitions with joint investments


No main related transactions of joint investment outside for the Company in reporting period.

4. Credits and liabilities with related parties


Was there any non-operating credit or liability with any related party?□ Yes √ Not

Nil

5. Other significant related-party transactions


No other material related transactions.

XVII.Particulars about significant contracts and their fulfillment

1. Particulars about trusteeship, contract and lease

(1) Trusteeship


No trusteeship, contract or leasing for the Company in reporting period.

(2) Contract


No any contract for the Company in the reporting period.

(3) Lease


No any lease for the Company in the reporting period..


61

2.Guarantees


（1）Guarantees

In RMB’0000

Guarantee of the Company for the controlling subsidiaries (Exclude controlled subsidiaries)

Name of the Company

Relevant

disclosure

date/No. of

the

guaranteed

amount

Amount of

Guarantee

Date of

happening

(Date of

signing

agreement)

Actual

mount of

guarantee

Guarantee type Guarantee term

Complete

implementa

tion

or not

Guarantee

for

associated

parties

(Yes or no)

Total of external guaranteeapproved in the report term (A1) 0

Total of external guaranteeactually occurred in thereport term (A2)

0

Total of external guaranteeapproved as of end of report term(A3)

0Total of external guaranteeactually occurred as of endof report term (A4)

0

Guarantee of the company for its subsidiaries

Guarantee provided to

Amount ofguaranteeand date ofdisclosure

Amount ofthe

guarantee

Actual date ofoccurring

(signing date ofagreements

Actualamount ofguarantee

Type ofguarantee Term Complete

d or notRelatedguarantee

Sino Great Wall 15,000













Sino International 10,000




62







Guarantee of the subsidiaries for the controlling subsidiaries

Name of the

Company

guaranteed

Relevant

disclosure

date/No. of

the

guaranteed

amount

Amount

of

guarantee

Date of

happening

(Date o

signing

agreement)

Actual

mount of

guarantee

Guarantee

type

Guarantee

term

Complete

implemen

tation

or

not

Guarante

e

for

associate

d

parties

(Yes or

no)

The Company’s total guarantee(i.e.total of the first three main items)

Including：

Description of the guarantee with complex method

（2）Illegal external guarantee


Nil

3.Situation of Entrusting Others for Managing Spot Asset

(1)Situation of Entrusted Finance


Nil

(2)Situation of Entrusted Loans


63


Nil

4. Other significant contract

XVIII.Explanation about other significant matters

√ Applicable □ Not appliable

On July 7, 2016, the 10th meeting of the 7th Board of Directors and the 7th meeting of the 7th Board ofSupervisors were convened to examined and adopted the related proposals on non-publci Issuing of Shares. OnJuly 25, 2016, the 2nd provisional general meeting of shareholders was convened to deliberate and approve therelated proposals on Private Issuing of Shares.

On October 14, 2016, CSRC Receipt Notice on Administrative Licensing Application released by CSRC wasreceived. The application documents for administrative licensing submitted by the company were reviewed andconsidered to be complete and conform to the legal form by CSRC, and the administrative licensing applicationwas accepted by CSRC.

On December 2, 2016, CSRC Feedback Notice on the Review of Administrative Licensing Projects by CSRC wasreceived. The company took a prompt action to check the relevant problems seriously with agencies such as thesponsor institution, Zhongde Securities Co., Ltd, analyzed and replied the problems one by one in accordance withthe request of the Feedback and made a public disclosure on December 27.

The company's project of private issuing of A-share remains the examination and approval by CSRC and gettingthe approval is still uncertain. The company will comply with its duty of information disclosure according to theprogress of the project, and kindly ask the investors to pay attention to the investment risk.

XIX.Major issues of subsidiary

√ Applicable □ Not appliable

1, In May 2016, the company made an acquisition of 100% equity ownership of Wuhan Commercial StaffHospital LLC, the details of which can be acquired on the Notice of the Equity Ownership Acquisition of WuhanCommercial Staff Hospital LLC by Sino Great Wall Co., Ltd. published on www.cninfo.com.cn on May 11, 2016;

2, In November 2016, the wholly-owned subsidiary, Sino Great Wall International Engineering Co., Ltd. acquired60% of the equity ownership from Sichuan Haoyao Construction Co., Ltd by means of increasing in capital andstock, the details of which can be acquired on the Foreign Investment Notice of the Investment by CapitalIncrease and Stock Expansion and the Plan to Establish A Subsidiary by the Wholly-owned Subsidiary of SinoGreat Wall Co., Ltd published on www.cninfo.com.cn on November 10, 2016.





64

VI. Change of share capital and shareholding of Principal

Shareholders

Ⅰ.Changes in share capital

1. Changes in share capital

In shares

Before the change Increase/decrease（+，-） After the Change

Amount Proporti

onShare

allotm

ent

Bon

us

shar

es

Capitalization

of common

reserve fund

Othe

rSubtotal Quantity

Proportio

n

1.Shares with conditional

subscription277,880,626 62.18% 778,065,752

-374

,910,

567

403,155,185 681,035,811 40.10%

3.Other domestic shares 277,880,626 62.18% 778,065,752

-374

,910,

567

403,155,185 681,035,811 40.10%

Including ：Domestic

Legal person shares99,888,348 22.35% 279,687,374

-337

,096,

050

-57,408,676 42,479,672 2.50%

Domestic natural person

shares177,992,278 39.83% 498,378,378

-37,

814,

517

460,563,861 638,556,139 37.60%

II.Shares with

unconditional subscription169,025,956 37.82% 473,272,677

374,

910,

567

848,183,244 1,017,209,200 59.90%

1.Common shares in

RMB99,604,053 22.29% 278,891,349

374,

910,

567

653,801,916 753,405,969 44.36%

2.Foreign shares in

domestic market69,421,903 15.53% 194,381,328 0 194,381,328 263,803,231 15.54%

III. Total of capital shares 446,906,582 100.00% 1,251,338,429 1,251,338,429 1,698,245,011 100.00%

Reasons for share changed


In 2016, upon the base of total share capital of 446,906,582 shares on the date of December 31, 2015, 28 shareswere increased for every 10 shares to all the shareholders by converting capital reserve into share capital,


65

therefore the total increased shares by converting capital reserve into share capital were 1,251,338,429 shares, sothe total share capital were 1,698,245,011 shares after such share increasing by converting capital reserve intoshare capital.

Approval of Change of Shares


Ownership transfer of share changes


Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable tocommon shareholders of Company in latest year and period


Other information necessary to disclose for the company or need to disclosed under requirement from securityregulators


2. Change of shares with limited sales condition


In shares

Shareholder NameInitial Restricted

Shares

Number of

Unrestricted

Shares This Term

Number of

Increased

Restricted Shares

This Term

Restricted Shares

in the End of the

Term

Reason for

Restricted Shares

Date of

Restriction

Removal

Chen Lue 138,248,490 0 387,095,772 525,344,262

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2018

Chen Lue 14,735,772 0 41,260,162 55,995,934

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

November

27,2018

Shanghai Financial

Development

Investment

20,079,080 76,300,504 56,221,424 0The major asset

restructuring andOctober 14,2016


66

Fund(LP) the issue of

shares to

purchase assets

and raise

matching funds

He Feiyan 14,421,173 40,379,284 54,800,457

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2018

Jiutai Fund－Bank

of

Communications－

Jiutai Huitong

No.2 specific

customer asset

management plan

11,178,861 42,479,672 31,300,811 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

November

27,2016

Wuxi Hengtai

Jiuding Assets

Management

Centre（LP）

10,087,004 38,330,615 28,243,611 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Foshan Haihui

Heying Venture

Investment

Partnership（LP）

10,039,540 38,150,252 28,110,712 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Jiangxi Taihao

Venture Investment8,366,284 31,791,879 23,425,595 0 The major asset October 14,2016


67

Centre(LP） restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

Yantai

ZhaoxuanYuantai

Jiuding Venture

Investment

Centre(LP)

8,353,354 31,742,745 23,389,391 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Suzhou Tianyao

Zhongshan Jiuding

Investment

Centre(LP)

7,551,634 28,696,209 21,144,575 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Jiaxing Jiahe

Jiuding Investment

Centre(LP)

7,499,912 28,499,666 20,999,754 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Beijing Xinhe

Taida Investment

Management

Centre(LP)

6,693,140 25,433,932 18,740,792 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016


68

Wu Chenxi 5,019,770 19,075,126 14,055,356 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Beijing Longbai

Huirun Investment

Management

Centre(GP)

5,019,770 19,075,126 14,055,356 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Zhu Lijun 3,346,514 12,716,753 9,370,239 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Shenzhen

Septwolves

Shenglian Equity

Investment Fund

Co., Ltd.

3,346,514 12,716,753 9,370,239 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

Feng Renyi 1,673,255 6,358,369 4,685,114 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

October 14,2016


69

matching funds

Shenzhen Jiayuan

Qihang Venture

Investment

Company(LP)

1,673,255 6,358,369 4,685,114 0

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2016

He Sen 430,904 0 1,206,531 1,637,435

The major asset

restructuring and

the issue of

shares to

purchase assets

and raise

matching funds

October 14,2018

Total 277,764,226 375,246,299 777,739,833 637,778,088.2 -- --

II.Issuing and listing

1.Explanation of the Situation of the Security Issue(No Preferred Shares) in the Report Period□Applicable √ Not applicable

2.Change of asset and liability structure caused by change of total capital shares and structure


In the report period, upon the base of total share capital of 446,906,582 shares on the date of December 31, 2015,28 shares were increased for every 10 shares to all the shareholders by converting capital reserve into share capital,therefore the total increased shares by converting capital reserve into share capital were 1,251,338,429 shares, sothe total share capital were 1,698,245,011 shares after such share increasing by converting capital reserve intoshare capital.

3.About the existing employees’ shares

□Applicable√Not applicable


70

III.Shareholders and actual controlling shareholder

1. Number of shareholders and shareholding

In Share

Total number

of common

shareholders at

the end of the

reporting

period

59,940

Total

shareholders at

the end of the

month from the

date of disclosing

the annual report

The total number o

f preferred shareho

lders voting rights

restored at period-e

nd

(if any)(See

Notes 8)

0

Total

preferred shareh

olders at the end

of the month

from the date of

disclosing the

annual report

0

Shareholding of shareholders holding more than 5% shares

ShareholdersNuture of

shareholder

Proporti

on of

shares

held（%）

Number of

shares held at

period -end

Changes in

reporting

period

Amount of

restricted

shares held

Amount of

un-restricted

shares held

Number of share

pledged/frozen

State of

shareAmount

Chen LueDomestic

Natural person34.33% 582,944,556 +429,808,094 582,109,696 834,860 Mortgage

434,660,59

4

STYLE-SUCCESS

LIMITED

Foreign legal

person5.47% 92,970,910 +68,504,881 0 92,970,910

Union Holdings

Co., Ltd.

Domestic Non-

State-owned

legal person

5.18% 87,935,921 +44,794,889 0 87,935,921

He FeiyanDomestic

Natural person3.23% 54,800,458 +40,379,285 54,800,458 0

Jiutai Fund－Bank

of

Communications－

Jiutai Huitong

No.2 specific

customer asset

management plan

Other 2.50% 42,479,672 +31,300,811 42,479,672 0

Rich Crown

Investment Co.,

Ltd.

Foreign legal

person1.37% 23,235,313 +17,120,757 0 23,235,313

Jiangxi Taihao

Venture Investment

Centre(LP）

Domestic Non-

State-owned

legal person

1.11% 18,791,879 +10,425,595 0 18,791,879

Bank of China－ Other 1.07% 18,200,320 0 18,200,320


71

Fortis Income

Growth Securities

Investment Fund

ICBC－Huitianfu

private activity of

hybrid securities

investment fund

Other 1.02% 17,292,602 0 17,292,602

China National

Petroleum

Corporation

Pension Plan－

ICBC

Other 0.88% 14,982,390 0 14,982,390

Strategy investors or general legal

person becomes top 10 shareholders

due to rights issued (if

applicable)See Notes 3）

Nil

Explanation on associated

relationship among the aforesaid

shareholders

The largest shareholder of Mr. Chen Lue and the Fourth largest shareholder of Ms. He Feiyan

aforesaid are persons acting in concernp; The controlling shareholder of the above-mentioned

third shareholder Shenzhen Union Holdings Co.,Ltd. and sixth shareholder Rich Crown

Investment Co., Ltd.. Is Union Development Group Ltd. whether the other shareholders have

associated relations are unknown.

Shareholding of top 10 shareholders of unrestricted shares

Name of the shareholder Quantity of unrestricted shares held at the end of the reporting periodShare type

Share type Quantity

STYLE-SUCCESS LIMITED 92,970,910

Foreign

shares

placed in

domestic

exchange

92,970,910

Union Holdings Co., Ltd. 87,935,921

RMB

Common

shares

87,935,921

Rich Crown Investment Co., Ltd. 23,235,313

Foreign

shares

placed in

domestic

exchange

23,235,313

Jiangxi Taihao Venture Investment

Centre(LP）18,791,879

RMB

Common

shares

18,791,879

Bank of China－Fortis Income 18,200,320 RMB 18,200,320


72

Growth Securities Investment Fund Common

shares

ICBC－Huitianfu private activity of

hybrid securities investment fund17,292,602

RMB

Common

shares

17,292,602

China National Petroleum

Corporation Pension Plan－ICBC14,982,390

RMB

Common

shares

14,982,390

Qinghai Heyi Mining Co., Ltd. 13,356,984

RMB

Common

shares

13,356,984

Jiangwei 9,761,860

RMB

Common

shares

9,761,860

Shanghai Financial Development

Investment Fund(LP)9,540,962

RMB

Common

shares

9,540,962

Explanation on associated

relationship or consistent action

among the top 10 shareholders of

non-restricted negotiable shares and

that between the top 10 shareholders

of non-restricted negotiable shares

and top 10 shareholders

The controlling shareholder of the above-mentioned largest shareholder Shenzhen Union

Holdings Ltd. and third shareholder Rich Crown Investment Co., Ltd.. Is Union Development

Group Ltd.

Notes to the shareholders involved

in financing securities (if any)(See

Notes 4)

Nil

Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have abuy-back agreement dealing in reporting period.

□ Yes √ No

The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Companyhave no buy –back agreement dealing in reporting period.

2.Controlling shareholder

Nature of Controlling Shareholders: Natural Person Holding

Type of Controlling Shareholders: Natural Person

Name NationalityWhether to obtain the right of abode in other countries

or regions

Chen Lue China No

Main occoupations and duties Chairman and General Manager of the Company


73

Situation of domestic and abroad holding

listed companies in the reporting period.Nil

Change of the actual controller in the reporting period□Appliable √ Not applicable

Nil

3．Information about the controlling shareholder of the Company

Actual controller nature：Domestic naturaol person

Actual controller type：Natural person

Name NationalityWhether to obtain the right of abode in other countries or

regions

Chen Lue China No

Main occoupations and duties Chairman and General Manager of the Company

Situation of domestic and abroad holding

listed companies in the part 10 yearsNil

Changes of the actual controller in the reporting period

□Applicable √Not applicable

No Changes of the actual controller in the reporting period

Block Diagram of the ownership and control relations between the company and the actual controller

The actual controller controls the company by means of trust or managing the assets in other way


4.Particulars about other legal person shareholders with over 10% shareheld



74

5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, RestructuringParty and Other Commitment Subjects



75

VII. Situation of the Preferred Shares

□ Applicable √ Not Applicable

The Company had no preferred shares in the reporting period


76

VIII. Information about Directors, Supervisors and Senior Executives

I. Change ein shares held by directors, supervisors and senior executives

Name PositionsOffice

statusSex Age

Starting date

of tenure

Expiry

date of

tenure

Shares held

at the

year-begin(s

hare)

Amount

of shares

increase

d at the

reportin

g

period(s

hare)

Amount

of shares

decrease

d at the

reportin

g

period(s

hare)

Other

changes

increase/dec

rease

Shares held at

the

year-gegin(sh

are)

Chen Lue

Board

chairman,

General

Manager

In office Male 46October

29,2015

October

28,2018153,136,462 270,000 0 429,538,094 582,944,556

Hu

YongfengDirector In office Male 54

May

12,2000

October

28,20180 0 0 0 0

Li Erlong

Director,

Deputy

General

Manager

In office Male 41October

29,2015

October

28,20183,000 0 0 8,400 11,400

Liang

Rong

Director,

Deputy

General

Manager

In office Male 47October 29,

2015

October

28,20180 0 0 0 0

Wang Lei Director In office Male 53October 29,

2015

October

28,20180 0 0 0 0

Ban Bin Director In office Male 31October 29,

2015

October

28,20180 0 0 0 0

Tang

Jianxin

Independ

ent

Director


2015

October

28,20180 0 0 0 0

Zhang

Yufeng

Independ

ent

Director


2015

October

28,20180 0 0 0 0

Jiang

Chonggua

ng

Independ

ent

Director


2015

October

28,20180 0 0 0 0


77

Dong

Binggen

Chairman

of the

superviso

ry

committe

e

In office Male 67June

26,2002

October

28,201

8

0 0 0 0 0

Huang

Shengde

Superviso

rIn office Male 45

October 29,

2015

October

28,20180 0 0 0 0

Wu

Xiaoming

Superviso

rIn office Male 36

October 29,

2015

October

28,20180 0 0 0 0

Cui

HongliCFO In office Female 44

October 29,

2015

October

28,20180 0 0 0 0

Yang

Chunling

Secretary

to the

board of

directors

In office Female 45October 29,

2015

October

28,20180 0 0 0 0

Song

Chenling

Deputy

General

Manager

Retired Female 44October

29,2015

Septemb

er

27,2016

0 0 0 0 0

Total -- -- -- -- -- -- 153,139,462 270,000 0 429,546,494 582,955,956

II. Change in shares held by directors, supervisors and senior executives

√ Appicable □Not applicable

Name Positions Types Date Reason

Song ChenlingDeputy General

ManagerRetired

September

27,2016Personal reasons

III.Posts holding

Work Experience in the past five years of Directors, supervisors and senior Executives in Current office

(1) Director

Mr. Chen Lue, male, Chinese nationality, no overseas permanent residence, born in April 1970, currently thedoctoral students of accounting specialty in Wuhan University, Senior Management MBA of Guanghua School ofManagement of Beijing University, Senior Management MBA of School of Economics and Management ofTsinghua University, Bachelor in major of Food Science and Nutritional Engineering of China AgriculturalUniversity, senior engineer. He had served as a technician in Zhuhai Fisheries Group Canned Food Factory,project manager in Guangdong Yuexi Construction Company, vice general manager in Guizhou ConstructionEngineering Group Dongguan Company, vice general manager in Shenzhen Great Wall Furniture DecorationEngineering Co., Ltd. Currently, he is the Vice Chairman of Beijing Decoration Association, Director ofInformatization Committee of China Building Decoration Association, director of information technology


78

committee, executive member of China Building Decoration Association, the first chairman of Beijing-ZhanjiangBusiness Association. From June 2006 to September 2014, he was the chairman of the Great Wall ConstructionEngineering Co. Ltd; from December 2007 to September 2014, he served as the general manager of the GreatWall Construction Engineering Co. Ltd; from May 2011 to September 2014, he served as the supervisor of SinoGreat Wall Construction Engineering (Liaoning) Co., Ltd. since 2001, he has been the executive director andchairman of the board of the Sino Great Wall International Engineering Co., Ltd; since November 2007, he hasbeen the executive director of Sino Great Wall (Beijing) Decoration Design Co., Ltd; since February 2011, he hasbeen the supervisor of Sino Great Wall Decoration Engineering (Shenyang) Co., Ltd; since April 2014, he hasbeen the executive director and general manager of Sino Great Wall Investment (Beijing) Co., Ltd; sinceSeptember 2015, he has been the chairman and the general manager of Sino Great Wall Cubic Investment Co.,Ltd; since October 2015, he has been the chairman of the board and the general manager of the company.Mr. Hu Yongfeng, Chinese nationality, no overseas permanent residence ,male, born in July 1962, graduated fromEast China Textile Engineering College in 1983, bachelor, senior engineer.

Mr. Li Erlong, Chinese nationality, no overseas permanent residence, male, was born in September 1975,graduated from the Shandong Building Materials Engineering College, MBA of Tsinghua University. He hadserved as the assistant to director of the National Building Materials Quality Supervision and Inspection Center,the researcher for the China-Africa R&D Center of Artificial Crystal. Since March 2005, he has been served as thegeneral manager of the Sino Great Wall International Engineering Co., Ltd; since November 2007, he has beenthe general manager of Beijing Sino Great Wall Decoration Design Co., Ltd.; since June 2014, he has been theexecutive director of the Sino Heji Environmental-protection Material Co., Ltd; since September 2015, he hasbeen the director of Sino Cubic Investment Co., Ltd; since October 2015, he has been the company’s director andvice general manager.Mr. Wang Lei, Chinese nationality, no overseas permanent residence, male, born in March 1963, seniormanagement MBA of School of economics and management of Tsinghua University, currently pursuing thefinance EMBA of PBC School of Finance, senior engineer. He had Served as the general manager of AnshanYongxin Engineering General Contracting Company, vice president of Chinese Enterprises Investment Company,director and general manager of Henan Shunyuan Aluminum Industry Co.,Ltd, director and vice chief-economistof Henan Coal Chemical Industry Group Co., Ltd. Since April 2013, he has been the chairman of Shanghai

Heyi Supply Chain Management Co., Ltd.; since October 2015, he has been the company’s director.Mr. Bai Bin, Chinese nationality, no overseas permanent residence, male, born in 1985, master of law,

possesses vocational qualification of lawyer and law. He had successively served as the lawyer of Beijing JingdaLaw Firm, investment manager, Investment Director, general manager of the asset management department andso forth posts of Kunwu Jiuding Investment Management Co.,Ltd. Currently, he is the general manager of JiuxinAsset Management Co.,Ltd, director of Sino High-speed Rail technology Co.,Ltd, director of Beijing UTSInternational Travel Service Co., Ltd, director of Sino Great Wall International Engineering Co., Ltd, director ofSichuan Dawei Science and Technology Co., Ltd and so on. Since October 2015, he has been the company’sdirector.

Mr. Tang Jianxin, male, Chinese nationality, no overseas permanent residence, born in December 1965, Doctor,Professor, doctoral supervisor, registered auditor, Certified Public Valuer. He had served as the deputy director inHainan Spring Auditor Firm, independent director of Wuhan Zhongnan Commercial Group Co., Ltd, independentdirector of Wuhan Sanzhen Industry Holding Co., Ltd. Since 1995, he has been teaching at Wuhan University.Currently, he is the professor and dean of accounting department of Wuhan University. From June 2008 to June


79

2014, he had been served as the independent director of Wuhan Zhongnan Commercial Group Co., Ltd.; fromJune 2009 to July 2015, he had been served as the independent director of Wuhan Sanzhen Industry Holding Co.,Ltd; since August 2010, he has been the independent director of Shenzhen Hua Pengfei Modern Logistics Co., Ltd;since November 2011, he has been the independent director of Wuhan Zhongbai Group Co., Ltd.; since May 2013,he has been the independent director of Pingdingshan Tianan Coal Industry Co., Ltd; since October 2015, he hasbeen the independent director of the company.

Mr. Zhang Yufeng, male, Chinese nationality, no overseas permanent residence, born in November 1963,Master's degree, EMBA of PBC School of Finance of Tsinghua University. He had served as the principal staffmember of the discipline inspection team stationed in Ministry of health from the Commission for DisciplineInspection of the Central Committee of the CPC, Project Manager of China Hualian Real Estate Company, projectmanager of the Import and Export Department of China Construction Engineering Corporation, lawyer of GreatWall Law Firm of Department of Commerce. Currently, he is the director of Beijing Great Wall Law Firm; sinceJune 2011, he has been the independent director of NetPosa Technologies Ltd; since May 2013, he has been theindependent director of Bank of Langfang; since October 2015, he has been the independent director of thecompany.Since October 2016, he has been the independent director of Dezhan Health Co., Ltd., Since February2017, he bas been the independent director of Nanhuihuang Technology Co., Ltd.Mr. Jiang Chongguang, male, Chinese nationality, no overseas permanent residence, born in 1975, PhD infinance of Chinese Academy of Social Sciences, PhD in economics, graduated from Peking University,Fordham University and Chinese Academy of Social Sciences. He had served as the middle, senior managementstaff in Haier Group, managing director of Singapore CKSP Group. Currently, he is the researcher of theNon-governmental organization and Public Administration Research Center of Chinese Academy of SocialSciences, executive director of Health China Strategy Research Center; chief economist and director of Ivy capital;vice executive chairman of the China Old-age Health International Alliance; permanent financial adviser toChina- Israel Exchange Association of the High-tech Committee of Israel Parliament; independent director ofSingapore CKSP; expert and committee member of Hospital Management Research Institute of TsinghuaUniversity; expert and committee member of China Social Medical Research Association of MOHRSS; sinceOctober 2015, he has been the independent director of the company.and vice-chairman of China endowmentHealth International Union, Senior management of Haier Group, Director General Manager of Singapore CKSPGroup.2. SupervisorsMr. Dong Binggen, male, born in July 1949, bachelor, senior engineer, graduated from East China TextileEngineering College in 1977. He had served as the vice president of Zhejiang Silk Industry Institute, generalmanager of China Garment General Corporation, chairman of China National Garment Association, and so on.Currently, he is the party secretary, chairman of the board and president of Union Development Group Co., Ltd;chairman of the board of Union Holdings Co., Ltd; since June 2002, he has been the chairman of the board ofsupervisors of the company.

Mr. Huang Shengde, male, born in January 1972; Hongkong Chinese; obtained the high Diploma of CityUniversity of Hongkong in architecture, bachelor（ honorary degree） of University of South Australia inArchitecture, MBA (financial) of the business school of The University of Manchester; he had served in theHopewell Slip-form Engineering Co. Ltd, China Foundation Engineering Co. Ltd, Qian Tian Construction Co.,Ltd, Hongkong Xing Sheng Construction Co. Ltd, Wu Teng (Hongkong) Co. Ltd, Beijing Xingrong Real EstateDevelopment Co., Ltd, Yoma Strategic Holdings Co.,Ltd and Intecs Vantage Capitals Ltd; he had the managementand professional qualifications, including the member of 2006-Hongkong Project Management Association, themember of 2006 Chinese Engineering Cost Association, the member of 2002 Hongkong Surveyors Association,


80

the member of 2002 Royal Institution of Chartered Surveyors, the member of 2001 Australian Institute ofQuantity Surveyors Association, the member of 2001-2004 British Cost Engineers Council and the member of2001-2004 Australian Institute of architects. Currently, he is the vice general manager of Sino Great WallInternational Engineering Co., Ltd mainly in charge of overseas business cooperation and business development;since October, 2015, he has been the company’s supervisor.

Mr. Wu Xiaoming, male, Chinese nationality, no overseas permanent residence,born in November 1980, Bachelorin law, graduated from the law school of Guangdong Business College (now as Guangdong University of Finance& Economics) with major in law. He had served in Guangzhou Municipal Bureau of Quality and TechnicalSupervision Haizhu Branch ( now as Guangzhou Haizhu District Bureau of Quality and Technical Supervision);since December 2008, he has been the assistant to general manager and Legal Department Manager of Sino GreatWall International Engineering Co., Ltd; since June 2014, he has been the chairman of the board of supervisors ofSino Great Wall International Engineering Co., Ltd; since October 2015, he has been the company’s supervisor.

3. Senior management personnelPlease see detailed work experience of Mr. Chen Lue,Mr.Li Erlong and and Mr. Liang Rong in the column ofdirectors.Mrs. Yang Chunling, female, Chinese nationality, no overseas permanent residence, born in February 1971,Bachelor in economics, master in industrial engineering, accountant. She had served as employee in SinotransHenan Zhengzhou Logistic and Trading Company, Deputy Minister of the securities department of Aeolus TyreCo., Ltd, vice general manager and secretary of the board of directors of Henan Yuhua New Material Co., Ltd.Since September 2015, she has been the director of Sino Cubic Investment Co., Ltd; since March 2014, she hasbeen the secretary of the board of directors of Sino Great Wall International Engineering Co., Ltd; since October2015, she has been the secretary of the board of directors of the company.Mrs. Cui Hongli, female, Chinese nationality, no overseas permanent residence, born in January 1972, graduatedfrom Henan University of Finance and Economics, CPA. She had been served in China Luoyang Float GlassGroup Co.,Ltd, Beijing Jiayou Real Estate Development Group Co.,Ltd and Yuancheng Industrial Group Co.,Ltd.Since July 2011, she has been the investment and finance department manager, CFO of Sino Great WallInternational Engineering Co., Ltd; since October 2015, she has been the company’s CFO.

Office taking in shareholder companies


Offices taken in other organizations√Applicable □Not applicable

Name Name of other units Position Office term start fromOffice term

ended

Whether

receiving

remuneration

from other

units or not

Chen LueSino Great Wall International Engineering

Co., Ltd.

Board

chairmanOctober 17,2001 Yes

Chen LueBeijing Sino Great Wall Decoration Design

Co., Ltd.

Executive

directorNovember 28,2007 No

Chen Lue Sino Great Wall Investment (Beijing) Co., Executive April 22, 2014 No


81

Ltd. director,Gene

ral Manager

Chen Lue China Investment & Investment Co., Ltd.Board

chairmanSeptember 14,2015 No

Chen Lue Shenzhen Sino Dalue Investment Co., Ltd.Executive

directorFebruary 25,2015 No

Hu Yongfeng Union Development Group Co., Ltd.Vice

PresidentMay 18,2012 May 17,2015 No

Hu Yongfeng Union Holdings Co., Ltd.Vice Board

chairmanJune 21, 2013 June 20, 2016 No

Li ErlongSino Great Wall International Engineering

Co., Ltd.

General

ManagerMarch 1,2005 Yes


Co., Ltd.Director June 1,2014 No


Co., Ltd.

Board

chairmanJune 29,2016 No

Li ErlongBeijing Sino Great Wall Decoration Design

Co., Ltd.Manager November 28,2007 No

Li Erlong Sino Heji Environmental Material Co., Ltd.Executive

directorSeptember 2,2015 No

Li Erlong China Investment & Investment Co., Ltd. Director September 14,2015 No

Liang RongSino Great Wall International Engineering

Co., Ltd.

Executive

General

Manger

April 1,2003 June 29,2016 Yes

Liang RongSino Great Wall International Engineering

Co., Ltd.Director June 1,2014 No

Liang RongSino Great Wall International

Engineering(Macao) Co., Ltd.Director November 17,2014 No

Wang Lei Qinghai Heyi Mining Co., Ltd.Board

chairmanSeptember 2, 2008 No

Wang Lei Qinghai Heyi Trade Co., Ltd.Board

chairmanMay 8, 2009 No

Wang LeiShanghai Heyi Supply chain Management

Co., Ltd.

Board

chairmanApril 7, 2013 Yes

Bai Bin Jiuxin Assets Management Co., Ltd.General

MangerSeptember 9,2015

September

8,2018Yes

Bai Bin CHSR Director April 27,2016 April 28,2019 No

Bai BinSino Great Wall International Engineering

Co., Ltd.Director October 30,2015

October

29,2018No


82

Tang Jianxin Wuhan University

Professor

ofAccountin

g

Department ,

Economics

and

Management

School

December 1,2004 Yes

Tang Jianxin Wuhan Zhongbai Group Co., Ltd.Independent

DirectorNovember 1,2011 Yes

Tang Jianxin Pingdingshan Tianan Coal Co., Ltd.Independent

DirectorMay 17,2013 Yes

Tang JianxinYicang Dongyangguang Changjiang

Medicine Co., Ltd.

Independent

DirectorOctober 1,2015 Yes

Zhang Yufeng Beijing Great Wall Law Firm Director Yes

Zhang Yufeng Langfang BankIndependent

DirectorMay 1,2013 Yes

Zhang Yufeng Dezhan Health Co., Ltd.Independent

directorOctober 8,2016 Yes

Zhang Yufeng Henan Huihuang Technology Co., Ltd.Independent

directorFebruary 10,2017 Yes

Jiang

Chongguang

Centre of Health China Strategy Research of

Chinese Academy of Social sciences

Executive

directorMay 1,2015 Yes

Jiang

Chongguang

Graduate School of Chinese Academy of

Social SciencesMBATutor September 1,2013

September

1,2019Yes

Jiang

ChongguangIvy Capital

Chief

Economist，

Director

May 1,2015 Yes

Jiang

Chongguang

High tech Committee of the Israeli

parliament to exchange association

Lifelong

Financial

advisor

March 1,2014 Yes

Jiang

ChongguangSingapor CKSP

Independent

DirectorDecember 1,2015

January

1,2025Yes

Jiang

ChongguangChina Insurance Association

Deputy

SecretaryJune 15,2016 June 15,2021 Yes

Jiang

ChongguangDezhan Health Co., Ltd.

Independent

DirectorNovember 1,2016

November

1,2019Yes

Jiang

Chongguang

China Health Economics Center, Beijing

University

Special

researcherOctober 1,2016 No


83

Dong Binggen Union Development Group Co., Ltd.

Secretary of

Party

committee,

chairman of

board of

directors and

President

May 18,2012 Yes

Dong Binggen Union Holdings Co., Ltd.Board

chairmanJune 21, 2013 No

Huang DeshengSino Great Wall International Engineering

Co., Ltd.

Deputy

Generaql

Manager

Yes

Wu XiaomingSino Great Wall International Engineering

Co., Ltd.

Assistant

General

Manager,

Manager of

Law Dept.

December 1,2008 Yes

Wu XiaomingSino Great Wall International Engineering

Co., Ltd.

Chairman of

the

supervisory

committee

June 1,2014 Yes

Yang ChunlingSino Great Wall International Engineering

Co., Ltd.

Board

secretaryMarch 1,2014 Yes

Yang Chunling China Investment & Investment Co., Ltd. Diretor September 1,2015 No

Cui HongliSino Great Wall International Engineering

Co., Ltd.

Manager

ofInvestmen

t Dept, CFO

July 1,2011 Yes

NotesExcept the concurrently hold posts in the above-mentioned information, the company’s directors, supervisors,

senior management staff do not hold other posts or concurrently hold other posts in any other companies.

Punishments to the current and leaving board directors, supervisors and senior managers during the report periodby securities regulators in the recent three years□Applicable √Not applicable

IV. Remuneration to directors, supervisors and senior executives

Decision-making procedures, basis for determination and actual payment of the remuneration to directors ,supervisors and senior executives

The remuneration appraisal committee of the board of directors of the Company proposed remunerationstandards according to the responsibilities, work scope and importance of directors, supervisors and seniorexecutives, the earnings of the Company for the current year and the remuneration level of relevant post andsubmitted it to the board of directors for approval. After approval, the remuneration was paid on monthly basis.


84

The remuneration of independent directors is subject to approval by the shareholders' meeting.

Remuneration to directors, supervisors and senior executives in the reporting periodIn RMB’0000

Name Positions Sex Age Office status

Total

remuneration

received from the

shareholder

Remuneration

actually receivect

at the end of the

reporting period

Chen LueBoard Chairman,

General ManagerMale 46 In Office 36.6 Yes

Hu Yongfeng Director Male 54 In office 0 Yes

Li ErlongDirector, Deputy

General MangerMale 41 In Office 28.2 Yes

Liang RongDirector, Deputy

General MangerMale 47 In office 27 Yes

Wang Lei Director Male 53 In Office 0 Yes

Bai Bin Director Male 31 In Office 0 Yes

Tang JianxinIndependent

DirectorMale 51 In office 9.5 No

Zhang YufengIndependent

DirectorMale 53 In Office 9.5 No

Jiang

Chongguang

Independent

DirectorMale 41 In office 9.5 No

Dong Binggen

Chairman of the

supervisory

committee

Male 67 In Office 0 Yes

Huang Desheng Supervisor Male 45 In office 6.75 Yes

Wu Xiaoming Supervisor Male 36 In Office 11.7 Yes

Cui Hongli CFO Female 44 In office 22.56 Yes

Yang ChunlingSecretary to the

board of directorsFemale 45 In Office 14.1 Yes

Song ChenlingDeputy General

MangerFemale 44 In Office 22.78 Yes

Total -- -- -- -- 198.19 --

Incentive equity to directors, supervisors or/and senior executives in the reporting period□Applicable √Not applicable


85

V. Particulars about employees.

1.Number of staff, professional structure and educational background

Number of in-service staff of the parent company（person） 20

Number of in-service staff of the main subsidiaries（person） 2,000

Total number of the in-service staff（person） 2,200

Total number of staff receiving remuneration in the current

period（person）2,200

Professional

Classified according by Professions Number of persons（person）

Production 50

Sales 1,000

Technical 50

Financial 100

Administrative 1,000

Total 2,200

Education

Classified according by Professions Number of persons（person）

Total 2,200

2. Remuneration policies

The company, in accordance with the principle of marketization, provides competitive salary and welfare ofthe industry, differentiates the salary based on the positions, rewards those who perform well, and determine theemployee’s salary level in accordance with the benefit, positions and sales performance.

3.Training plan

The company sticks to the concept of ”people first” and values talent cultivation. To improve the employees’professional ability and occupational skills, standardize and improve its training management, and boostemployees’ enthusiasm for learning, applying, delivering and creating knowledge, the company organizesinduction training and daily training for all employees and conducts induction training for fresh undergraduatesrecruited from university campus. It also opens up networking academy, where it has complete curriculum systemfor all employee to study independently and hold training lectures specially for improving professional skills orknowledge on a regular basis. The company also carries out points system for employee training. Employees’points gained from attending training will serve as an important basis for the performance assessment, personneltransfer, promotion, salary adjustment, etc..


86

4.Outsourcing situation

□Applicable √ Not Applicable


87

IX. Administrative structure

I.Basic state of corporate governance

The company’s governance meets the requirements of regular documents on the governance of the listedcompanies issued by China Securities Regulatory Commission.During the reporting period, The company has strictly abided by the relevant laws, rules and regulations requestedon “Corporate Law”, “Securities Law”, “Listing Rules of Shenzhen Stock Exchange” and“Governance Rules of Listed Companies” and by China Securities Regulatory Commission, established andperfected the internal control management system, and constantly made the deep improvement of the corporategovernance activities to further standardize the company operations and improve the management level. Thecompany’s governance meets the basic requirements of regular documents on the governance of the listedcompanies issued by China Securities Regulatory Commission.(1).Shareholders and shareholders' general meeting: The Company convened and held shareholders' generalmeeting strictly according to the requirements of Opinions on Standardization of Shareholders' General Meetingof Listed Companies, formulated Rules of Procedure of Shareholders' General Meeting, ensured all shareholders,especially medium and small shareholders, enjoy equal position and can fully exercise their own rights.(2).Relationship between the controlling shareholder and the Company: The acts of the controlling shareholder ofthe Company were standardized. It did not exceed the authority of the shareholders' general meeting to directly orindirectly intervene with the decision-making and operating activities of the Company. The Company isindependent from its controlling shareholder in respect of personnel, assets, finance, organ and business. Theboard of directors, the supervisory committee and internal organ of the Company are able to operateindependently.(3) The Directors and The Board of Directors: the Board of Directors includes four special committees, such asAudit Committee, Nomination Committee, Strategy Committee and Remuneration and Appraisal Committee,which has provided a favorable support to the company for the decision-making related issues. Each specialcommittee has operated according to their work responsibilities and procedure rules, made research andexamination for the relative business and major issues of the company, and expressed the professional opinions inthe Board of Directors to offer support and advice for the scientific decision-making of the Board and ensure theBoard’s work more scientific and efficient. Also, the organization of the Board of Directors is in line with therequirement of laws and regulations, and the independent directors play an important role in the corporatedecision-making. So, the company attaches importance to the function of the independent directors. In thecompany’s management, the independent directors make careful review and express the independent views for thefinancial audit, the affiliated transactions and other issues.(4).Supervisors and the supervisory committee: The number and composition of the Supervisory Committee of theCompany complied with the requirements of laws and regulations. The Supervisory Committee of the Companyformulated the Rules of Procedure of the Supervisory Committee. The supervisors of the Company were able toperform their duties seriously, take the attitude of being responsible for all shareholders and supervise the legalityand regulation conformity of the Company's finance and the duty performance of the directors, managers andother senior executives of the Company.(5) The Company and The Affiliated Party: the affiliated transactions between the company and the affiliatedparty are strictly managed and the audit of the affiliated transactions is performed in accordance with the relevantprocedures. Also, the affiliated transactions are in compliance with the laws and regulations, and there not existthe issues that the major shareholders make use of the affiliated transactions to occupy the funds of the listedcompany.(6)Information disclosure and transparency: The Company designated the secretary to the board of directors to beresponsible for information disclosure, Regulations on Management of Information Disclosure,Regulations onManagement of External Information Users and reception of shareholder and consultation. In the report period,the Company was able to truly, accurately, completely and timely disclose relevant information according to theprovisions of laws, regulations and the Articles of Association of the Company. The Company will continue tooperate in a standardized way strictly according to the requirements of relevant laws and regulations including theCompany Law, further perfect company administration structure and establish and improve various regulations in


88

light of the gap with the requirements of Standards of Administration of Listed Companies, ensure themaximization of shareholders' interests and safeguard the lawful rights and interests of all shareholders.In the report period, The Company further increased information transparency and properly carried out publicitywork for protection of investors. It timely answered the questions of investors and communicated with mediumand small investors by making use of telephone, email, especially the platform for communication with investorsset up by Shenzhen Stock Exchange to let them know itself better.Does there exist any difference in compliance with the corporate governance , the PRC Company Law and therelevant provisions of CSRC,□ Yes √ NoThere exist no difference in compliance with the corporate governance , the PRC Company Law and the relevantprovisions of CSRC.

II. Independence and Completeness in business, personnel , assets, organization and finance

The company is completely separate with the controlling shareholder in terms of the business, personnel, assets,organizations, finance and other aspects, possessing independent and complete business and independentoperating capacity.1.Business： The Company has complete business and the ability of independent operation. It is completelyindependent from its controlling shareholder in respect of business. There is no unfair related transaction orhorizontal competition between the company and the controlling shareholders or its affiliated enterprises.2.Personnel： The company has a completely independent personnel management and salary system. Thecompany’s senior manager personnel all are work in the company and receiving remunerations, and they do nothold any other posts except the post of director or receive remunerations in the controlling shareholder and itsaffiliated enterprises. The company's financial staffs do not concurrently hold posts in the controlling shareholderand its affiliated enterprises.3.Assets： The company possesses independent place of business, independent land use rights, ownership ofbuildings and so forth assets, possesses the production system related to the production and operation, legallypossesses the equipments related to production and operation and has Independent purchase, sales system andsupporting facilities.4.Organization：The company established a sound internal operation management organization, independentlyexercising the operation and management rights, and there is no situation of confounding organization with thecontrolling shareholder and its affiliated enterprises.5.Finance:The company has a standardized financial accounting system, with an independent financial accountingdepartment, full-time accounting personnel and independent accounting system, being able to make financialdecisions independently. The company has set up the independent bank account and independently pays the tax.The situation of the free-occupying of the company’s assets and funds by the controlling shareholder and itsaffiliated enterprises does not exist.III. Horiontal Competitions

□Applicable√Not applicable

IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period

1.Annual General Meeting

Sessions Type Investorparticipation ratio Meeting Date Disclosure date Disclosure index

The first provisionalshareholders’General meeting in2016

Provisionalshareholders’General Meeting

44.03% March 30,2016 March 31,2016

The first provisionalshareholders’General meeting in2016 (No.2016-025)published onSecuritiesTimes,Hong KongCommercial Dailyand Juchao Website（http://www.cninfo


89

.com.cn）on March31,2016.

Annual GenralMeeting of 2015

Annual GeneralMeeting 42.68% May 6,2016 May 7,2016

Annual GeneralMeeting of 2015(No.2016-038)published onSecuritiesTimes,Hong KongCommercial Dailyand Juchao Website（http://www.cninfo.com.cn）on May7,2016.

The secondprovisionalshareholders’General meeting in2016


43.01% July 25,2017 July 26,2017

The secondprovisionalshareholders’General meeting in2016(No.2016-065)published onSecuritiesTimes,Hong KongCommercial Dailyand Juchao Website（http://www.cninfo.com.cn）on July26,,2016.

The Fourthprovisionalshareholders’General meeting in2016


41.08% December 26,2016 December 27,2016

The fourthprovisionalshareholders’General meeting in2016(No.2016-104)published onSecuritiesTimes,Hong KongCommercial Dailyand Juchao Website（http://www.cninfo.com.cn）onDecember 27,2016.

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore


V. Responsibility performance of independent directors in report period

1. The attending of independent directors to board meetings and shareholders’ general meeting

The attending of independent directors

IndependentDirectors

Number ofBoard meetingsnecessary to beattended in thereporting period

Number of spotattendances

Number ofmeetingsattended by

Communication

Number ofattendances byrepresentative

Number ofabsence

Failure topersonally attendboard meetingssuccessivelytwice (Yes/No)

Tang Jianxin 11 2 9 0 0 NoZhang Yufeng 11 1 10 0 0 NoJiang Chongguang 11 1 10 0 0 NoNumber of general meetings attendedby independent directors as non-voting

4


90

delegates

Notes to failure to personally attend Board Meetings Successively Twice

2.Objection of independent directors on some relevant issues

Objection of independent directors on some relevant issues□ Yes √NoNil

3. Other notes to duty performance of independent directors

Has an independent director’s advice to the Company been accepted√Yes □NoExplanation on acceptance of or failure to accept an independent director’s advice to the Company.

During the reporting period,The independent directors of the Company put forward a lot of professionalopinions on the laws and regulations and the Articles of Association of the Company, and paid attention to theoperation of the Company, performed their duties independently, formulated the system of the Company and theday-to-day business decision-making of the Company. Independent directors issued an opinion on the issue ofindependent and impartial opinions, in order to improve the company's supervision mechanism, safeguard thelegitimate rights and interests of the company and all shareholders play a due role.

VI. Duty Performance of Special Committees under the Board of Directors in the Reporting Period

The board of directors of the Company has special committees including audit committee, remuneration andappraisal committee, strategy committee and nomination committee. According to the scope of authority specifiedin the working rules for them, the committees conducted study and put forward opinions and suggestions forreference by the board of directors for decision making.

According to relevant regulations of CSRC, the audit committee of the board of directors of the Company didthe following work during the preparation of the annual report of the Company for 2016:1. On February 3, 2016, the audit committee of the board of directors reviewed the company’s financialaccounting statement 2015 and published the following opinions: the financial accounting statement 2015prepared by the company basically reflected its financial standing and operating results, and audit committeeagreed to engage in the yearly financial statement auditing work on this basis, requested the financial departmentto provide active cooperation in assisting with this audit, strengthen communication and contact, and timelyreflect the problems and audit work progress to audit committee.22.On March 10, 2016, the Audit Committee of the board of directors deliberated the Proposal on Alteration andEngaging of the 2015 Annual Audit Agency, considering the Dahua Certified Public Accountants (special generalpartnership) had provided audit service for the company in consecutive years, in order to ensure the independenceand objectivity of the audit work, after the Audit Committee of the board conscientiously examined, thenproposed the alteration and engaging BDO China Shu Lun Pan Certified Public Accountants LLP as thecompany’s 2015 annual audit agency, of which the audit fees for financial and internal control audit is RMB 1.5million. The Audit Committee agreed to submit the Proposal to the board of directors for deliberation.3. On April 10, 2016, the audit committee of the board of directors reviewed the audit report 2015 issued by BDOChina Shu Lun Pan Certified Public Accountants LLP . The audit committee agreed on the audit, agreed to submitthe financial audit report to the board of directors for deliberation; meanwhile, to ensure the consistency of auditwork, the audit committee suggested that the board of directors continue to appoint audit report 2015 issued byShu Lun Pan Certified Public Accountants LLP as the audit institution for the year 2016.4. On April 28, 2016, the Audit Committee of the board of directors deliberated the company’s First quarter 2016financial accounting statements, and issued the following deliberations: the First quarter 2016 financial accountingstatements compiled by the company basically reflected the situation of the company’s assets and the operationresults, and the Audit Committee of the board of directors agreed to submit the financial accounting statements tothe board of directors for deliberation.5. On August 25, 2016, the Audit Committee of the board of directors deliberated the company’s Semi –annual


91

Report 2016 financial accounting statements, and issued the following deliberations: the semi-annual report 2016financial accounting statements compiled by the company basically reflected the situation of the company’s assetsand the operation results, and the Audit Committee of the board of directors agreed to submit the financialaccounting statements to the board of directors for deliberation.6. On October 24, 2016, the Audit Committee of the board of directors deliberated the company’s third quarter2016 financial accounting statements, and issued the following deliberations: the Third quarter 2016 financialaccounting statements compiled by the company basically reflected the situation of the company’s assets and theoperation results, and the Audit Committee of the board of directors agreed to submit the financial accountingstatements to the board of directors for deliberation.

The information about the duty performance of the remuneration and appraisal committee of the board of directorsin year 2016:1. On April 10, 2016, according to the provisions stipulated by Rules of Procedure for the Special Committee ofthe Board, the remuneration and appraisal committee of the board had deliberated the remunerations of thecompany’s directors, supervisors and senior management personnel of year 2015 and reckoned that remunerationspaid to the company’s directors, supervisors and senior management personnel were fair, reasonable andconforming to the relevant company’s the remuneration policy and the appraisal standard, then agreed tosubmitted the item to the board of directors for deliberation.Job performance condition of strategic committee of the board of directors in the year of 2016:

1. On March 14, 2016, the Strategic Committee of the Board of Directors considered the proposal of the plan toestablish a wholly-owned subsidiary by investment of the company and the wholly-owned subsidiary SinoInternational and released the deliberations: the proposal was in line with the long-term development strategicplanning of the company and would lay a good foundation for the company’s future development. Thus, theStrategic Committee agreed to submit the proposal to the Board of Directors for consideration.

2.On July 7, 2016, the Strategic Committee of the Board of Directors deliberated the plan to raise funds by meansof non-public issuing of shares in order to complement the circulating funds and repay the bank loans, consideredthe proposal was in line with the development strategy of the company and agreed to submit to the Board ofDirectors the Proposal on the Scheme of non-public Issuing of A-Share to Specific Objects, Proposal on the Planof non-public Issuing of Shares by Sino Great Wall Co., Ltd and other relevant proposals for deliberation.

VII. Work of the supervisory Committee

Did the supervisory Committee find any risk existing in performing the supervision activities in the reportingperiod□Yes √NoThe supervisory Committee has no objection aginst any matters under supervision in the reporting period

VIII. Assessment and incentive Mechanism for Senior executives

The company established the evaluation system based on the targeted responsibility system, and adopted signingthe annual responsibility appraisal agreement for the evaluation of the company’s senior management personnelwhich specified the KPI and evaluation method with methods related to the evaluation results. During thereporting period, the company’s had conformed to the measures of the targeted responsibility system to assess andevaluate the senior management personnel performances, which presented in the annual performance.

IX. Internal control situations

1. Specific situations on major defects of internal control discovered during report period□ Yes √ No2. Self-evaluation report on internal controlDisclosure date of appraisal report oninternal control April 28,2017

Disclosure index of appraisal report on Juchao Website:（http://www.cninfo.com.cn）, Selfevaluation report of internal control


92

internal control in 2016 onApril 28,2017.Proportion of total unit assets covered byappraisal in the total assets of theconsolidated financial statements of thecompany

100.00%

Proportion of total unit incomes coveredby appraisal in the total business incomesof the consolidated financial statements ofthe company

100.00%

Standards of Defects EvaluationCategory Financial Report Non-financial Report

Standard

Material Defect:1.Fraud of directors, supervisors and seniormanagement;2.Material errors appear in the Company’sfinancial report published;3. The certified public auditor finds materialwrong reporting in the current financialstatement, while the Company has not foundsuch reporting during its operation;4.Theaudit committee and audit department of theCompany exercise invalid supervision uponinternal control;5.The result of internal control assessmenthasn’t been rectified, especially the materialor major defects;6.Important business is lack of systemcontrol or the system loses its validity.Major Defects:1.No recognized accountingstandards were followed when choosing andapplying the accounting policies;.2.No anti-fraud program and controlmeasures were established; 3.Nocorresponding control mechanism wasestablished or implemented for treating theabnormal or special accounting, and it is lackof compensating control;4.One or morefrauds appeared during the financial reportprocess, and which couldn’t reasonablyguarantee that the formulated financial reportwould reach the goals of being actual andaccurate.General Defect: Other defectsbesides material defect and major defect.

Material Defect:1.Violation of national laws orregulations, normative documents andsignificant decision making lacking ofscientificity and system may lead toinvalid system, no rectification formaterial or major defect or othersituations that materially affectthe Company; 2.Violation of regulationsled to punishment from governmentdepartment or regulatory authority.Violation of management system orinternal control procedure led to majorbusiness disputes. Ranges of materiallitigation led to great losses;3.Theworking initiatives of staffs wasdamaged at a great level, and theworking efficiency was substantiallydecreased, which exerted major adverseeffects on the culture and cohesion of theenterprise,and led to serious turnover ofcore teams;4.Negative news spreads inthe whole business scope( including theextension to industry chain ), or isconcerned by national medias or publicones, which will substantially damagethe enterprise’s reputation, and thenegative effects can’t be eliminated allthe time;5.The Company involvedpunishment from CSRC and involvedwarnings from stock exchange.

Standards of Quantitation

(1) Material Defect: amount with wrongreporting≧ 10% of total profit amount;amount with wrong reporting≧ 10% ofoperating income; amount with wrongreporting≧ 10% of total asset; amount withwrong reporting≧10% of net assets;(2)Major Defect: 5% of total profit amount≦amount with wrong reporting﹤10% of totalprofit amount; 5% of operating income≦amount with wrong reporting﹤10% ofoperating income ;5% of total asset≦amountwith wrong reporting﹤10% of totalasset;5% of net assets ≦amount with wrongreporting﹤10% of net assets;(3) GeneralDefect: amount with wrong reporting﹤5%of operating income. amount with wrong﹤5% of total asset; amount with wrongreporting﹤5% of net assets.

Material Defect: Due to the internalcontrol defect of non-financial report, itmay exert impacts of over RMB 10million(including RMB10 million ) onthe total profit amount.Major Defect:Due to the internal control defect ofnon-financial report, it may exert impactsof over RMB 5 million (including 5million but less than 10 million) on thetotal profit amount.General Defect:Due to the internalcontrol defect of non-financial report, itmay exert impacts of below RMB 5million.


93

Number of major defects in financialreporting（a） 0

Number of major defects in non financialreporting (a) 0

Number of important defects in financialreporting（a） 0

Number of important defects in nonfinancial reporting（a）

X. Internal Control audit report


Review opinions in the internal control audit reportWe believe that, Sino Great Wall Co., Ltd. maintained efficient internal control of financial reports in all significant aspectsaccording to “ Basic Standards of Corporate Internal Control” and relevant regulations on December 31, 2016.Disclosure date of audit reportof internal control (full-text) Disclosure

Index of audit report ofinternal control (full-text) April 28,2017

Internal audit report’s opinion Juchao Website: （http://www.cninfo.com.cn）;2016 Audit report of internal control

Type of audit report on internalcontrol Unqualified auditor’s report

Whether there is significantdefectin non-financial report No

Has the CPAs issued a qualified auditor’s report of internal control .□ Yes √NoDoes the internal control audit report issued by the CPAs agree with the self-assessment report of the Board ofDirectors√Yes □No


94

X. Corporate BondWhether the company has corporate bonds that have been publicly issued and listed on the stock exchange, andnot yet due or due butnot folly cashed on the approval date of annual report

No


95

XI. Financial Report

I. Audit report

AUDITORS' REPORT

PCPAR [2017] No. ZB11076

To all shareholders of Sino Great Wall Co., Ltd.: We have audited the attached financial statements of Sino Great Wall Co., Ltd. (hereinafter referred to as “the Company”), which comprise the consolidated balance sheet and the company's balance sheet as at December 31, 2016, the consolidated income statement and the company's income statement, the consolidated statement of cash flows and the company's statement of cash flows, the consolidated statement of changes in shareholders’ equity and the company's statement of changes in shareholders' equity and notes to the financial statements for the year then ended. I. Management's Responsibility for the Financial Statements

Preparation and fair presentation of financial statements is the responsibility of the company management. This responsibility includes: (1) preparing the financial statements in accordance with Accounting Standards for Business Enterprises to achieve fair presentation of the financial statements; (2) designing, implementing and maintaining internal control that is necessary to enable the financial statements that are free from material misstatement, whether due to fraud or error.

II. Auditor's Responsibilities

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Auditing Standards for Certified Public Accountants in China. Those standards require that we comply with professional and ethical requirements of Chinese certified public accountants, and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgments, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal control relevant to the preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the financial statements.

Auditors' Report Page 1

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

III. Opinion

In our opinion, the financial statements of the Company are prepared in accordance with Accounting Standards for Business Enterprises and present fairly, in all material respects, the consolidated financial position and the Company's financial position as at December 31, 2016 and the consolidated operating results and the Company's operating results and cash flows for the year then ended.

BDO CHINA Shu Lun Pan Certified Public Accountants LLP

Certified Public Accountant of China:

Certified Public Accountant of China:

Shanghai, China April 26, 2017 This auditors’ report and the accompanying notes to the financial statements are English translation of the Chinese

auditors’ report. In case of doubt as to the presentation of these documents, the Chinese version shall prevail.

Auditors' Report Page 2

Financial statements Page 1

资产 Assets 附注五 Note 5期末余额Balance as at

December 31, 2016年初余额 Balance as at

January 1, 2016流动资产： Current assets:

货币资金 Monetary funds （一） 5.1 1,340,815,821.83 695,384,561.31

结算备付金 Balances with clearing companies

拆出资金 Loans to banks and other financial institutions

以公允价值计量且其变动计入当期损益的金融资产 Financial assets measured at fair value throughcurrent profit or loss （二）5.2 1,102,961.04

衍生金融资产 Derivative financial assets

应收票据 Notes receivable （三） 5.3 1,074,390,642.58 220,448,747.94

应收账款 Accounts receivable （四） 5.4 3,725,170,208.31 2,352,808,087.33

预付款项 Advances to suppliers （五） 5.5 319,206,798.63 77,707,568.38

应收保费 Premium receivable

应收分保账款 Reinsurance accounts receivable

应收分保合同准备金 Reinsurance contract reserves receivable

应收利息 Interest receivable

应收股利 Dividends receivable

其他应收款 Other receivables （六） 5.6 651,012,132.91 239,952,886.11

买入返售金融资产 Financial assets purchased under resale agreements

存货 Inventories （七） 5.7 332,904,930.36 168,133,668.91

划分为持有待售的资产 Assets classified as held for sale

一年内到期的非流动资产 Non-current assets maturing within one year （八） 5.8 13,462,942.89 15,717,270.60

其他流动资产 Other current assets （九） 5.9 35,450,194.47 14,138,411.87

流动资产合计 TOTAL CURRENT ASSETS 7,492,413,671.98 3,785,394,163.49

非流动资产： Non-current assets:

发放贷款及垫款 Disbursement of advances and loans

可供出售金融资产 Available-for-sale financial assets

持有至到期投资 Held-to-maturity investments

长期应收款 Long-term receivables

长期股权投资 Long-term equity investments

投资性房地产 Investment property

固定资产 Fixed assets （十） 5.10 128,483,747.74 43,846,215.63

在建工程 Construction in process （十一） 5.11 10,016,928.24

工程物资 Project materials

固定资产清理 Liquidation of fixed assets

生产性生物资产 Productive biological assets

油气资产 Oil and gas assets

无形资产 Intangible assets （十二） 5.12 106,203,443.55 9,267,746.33

开发支出 Development expenses

商誉 Goodwill （十三） 5.13 58,874,144.79 6,724,316.91

长期待摊费用 Long-term deferred expenses （十四） 5.14 7,003,035.94 18,909,785.69

递延所得税资产 Deferred income tax assets （十五） 5.15 76,298,659.34 47,950,278.07

其他非流动资产 Other non-current assets （十六） 5.16 116,902,258.30 95,353,390.28

非流动资产合计 TOTAL NON-CURRENT ASSETS 493,765,289.66 232,068,661.15

资产总计 TOTAL ASSETS 7,986,178,961.63 4,017,462,824.63

神州长城股份有限公司 Sino Great Wall Co., Ltd.合并资产负债表 Consolidated Balance Sheet

2016 年 12 月 31 日 December 31, 2016（除特别注明外，金额单位均为人民币元） (Monetary units are expressed in RMB unless otherwise stated)

后附财务报表附注为财务报表的组成部分。 The accompanying notes to the financial statements are integral parts of the financial statements.

企业法定代表人: Legal Representative of Enterprise:主管会计工作负责人: Accounting Principal:会计机构负责人: Head of the Accounting Department:


负债和所有者权益 Liability and Owners' Equity 附注五 Note 5期末余额Balance as at


January 1, 2016

流动负债： Current liabilities:

短期借款 Short-term borrowings （十七） 5.17 1,966,058,357.59 225,408,496.07

向中央银行借款 Borrowings from central bank

吸收存款及同业存放 Absorption of deposits and interbank deposit

拆入资金 Loans from banks and other financial institutions

以公允价值计量且其变动计入当期损益的金融负债 Financial liabilities measured at fair value through current profit or loss

衍生金融负债 Derivative financial liabilities

应付票据 Notes payable （十八）5.18 706,883,375.54 143,410,167.17

应付账款 Accounts payable （十九）5.19 1,313,948,990.25 1,332,619,954.77

预收款项 Advances from customers （二十） 5.20 573,784,072.58 64,963,842.60

卖出回购金融资产款 Financial assets sold under repurchase agreements

应付手续费及佣金 Handling charges and commissions payable

应付职工薪酬 Employee compensation payable （二十一） 5.21 18,797,546.69 12,669,619.20

应交税费 Taxes and surcharges payable （二十二） 5.22 313,483,669.78 284,826,290.11

应付利息 Interest payable （二十三） 5.23 6,428,493.55 527,969.26

应付股利 Dividends payable

其他应付款 Other payables （二十四）5.24 222,414,975.01 635,200,976.60

应付分保账款 Reinsurance accounts payable

保险合同准备金 Reserves for insurance contracts

代理买卖证券款 Receivings from vicariously traded securities

代理承销证券款 Receivings from vicariously sold securities

划分为持有待售的负债 Liabilities classified as held for sale

一年内到期的非流动负债 Non-current liabilities maturing within one year （二十五）5.25 175,958,998.04 7,135,752.00

其他流动负债 Other current liabilities （二十六）5.26 30,382,980.72

流动负债合计 TOTAL CURRENT LIABILITIES 5,328,141,459.75 2,706,763,067.78

非流动负债： Non-current liabilities:

长期借款 Long-term borrowings （二十七） 5.27 786,858,878.82 30,140,649.14

应付债券 Bonds payable

其中：优先股 Including: Preferred stock

永续债 Perpetual debts

长期应付款 Long-term payables

长期应付职工薪酬 Long-term employee compensation payable

专项应付款 Special payables

预计负债 Estimated liabilities （二十八）5.28 13,225,861.70

递延收益 Deferred income

递延所得税负债 Deferred income tax liabilities （十五） 5.15 27,469,888.77 15,444.16

其他非流动负债 Other non-current liabilities

非流动负债合计 TOTAL NON-CURRENT LIABILITIES 827,554,629.29 30,156,093.30

负债合计 TOTAL LIABILITIES 6,155,696,089.04 2,736,919,161.08

所有者权益： Total owners' equity:

实收资本（或股本） Paid-in capital (or share capital) （二十九） 5.29 1,698,245,011.00 446,906,582.00

其他权益工具 Other equity instruments



资本公积 Capital reserve （三十） 5.30 -1,299,349,701.74 -50,367,862.22

减：库存股 Less: Treasury stock

其他综合收益 Other comprehensive income

专项储备 Special reserve （三十一）5.31 65,687,868.14 46,014,941.54

盈余公积 Surplus reserve （三十二） 5.32 84,394,441.23 84,394,441.23

一般风险准备 General risk reserves

未分配利润 Undistributed profits （三十三） 5.33 1,228,970,498.86 755,308,636.19

归属于母公司所有者权益合计 Total equity attributable to owners of the parent company 1,777,948,117.49 1,282,256,738.74

少数股东权益 Minority equity 52,534,755.10 -1,713,075.19

所有者权益合计 TOTAL OWNERS' EQUITY 1,830,482,872.59 1,280,543,663.55

负债和所有者权益总计 TOTAL LIABILITIES AND OWNERS' EQUITY 7,986,178,961.63 4,017,462,824.63

神州长城股份有限公司 Sino Great Wall Co., Ltd.合并资产负债表（续）Consolidated Balance Sheet (Continued)





资产 Assets 附注十五 Note 15期末余额Balance as at


January 1, 2016流动资产：Current assets:

货币资金 Monetary funds 168,691,344.34 239,145,251.31

以公允价值计量且其变动计入当期损益的金融资产 Financial assets measured atfair value through current profit or loss

衍生金融资产 Derivative financial assets

应收票据 Notes receivable

应收账款 Accounts receivable （一） 15.1 6,346.00 29,083.30预付款项 Advances to suppliers 1,000,000.00

应收利息 Interest receivable

应收股利 Dividends receivable

其他应收款 Other receivables （二）15.2 1,672,200,041.98存货 Inventories

划分为持有待售的资产 Assets classified as held for sale

一年内到期的非流动资产 Non-current assets maturing within one year

其他流动资产 Other current assets 1,404,744.25

流动资产合计 TOTAL CURRENT ASSETS 1,843,302,476.57 239,174,334.61

非流动资产： Non-current assets:

可供出售金融资产 Available-for-sale financial assets

持有至到期投资 Held-to-maturity investments

长期应收款 Long-term receivables

长期股权投资 Long-term equity investments （三） 15.3 3,176,451,536.66 3,079,451,536.66投资性房地产 Investment property

固定资产 Fixed assets 4,121.50

在建工程 Construction in process

工程物资 Project materials

固定资产清理 Liquidation of fixed assets

生产性生物资产 Productive biological assets

油气资产 Oil and gas assets

无形资产 Intangible assets

开发支出 Development expenses

商誉 Goodwill

长期待摊费用 Long-term deferred expenses 336,569.60递延所得税资产 Deferred income tax assets 382.68其他非流动资产 Other non-current assets 48,960,000.00

非流动资产合计 TOTAL NON-CURRENT ASSETS 3,225,752,227.76 3,079,451,919.34

资产总计 TOTAL ASSETS 5,069,054,704.33 3,318,626,253.95



神州长城股份有限公司 Sino Great Wall Co., Ltd.资产负债表 Balance Sheet



负债和所有者权益 Liability and Owners' Equity期末余额Balance as at


January 1, 2016流动负债： Current liabilities:短期借款 Short-term borrowings 980,000,000.00以公允价值计量且其变动计入当期损益的金融负债 Financial liabilities measured atfair value through current profit or loss

衍生金融负债 Derivative financial liabilities

应付票据 Notes payable 68,000,000.00

应付账款 Accounts payable

预收款项 Advances from customers

应付职工薪酬 Employee compensation payable 701,792.11

应交税费 Taxes and surcharges payable 97,085,106.00 98,150,372.30

应付利息 Interest payable 5,150,639.24

应付股利 Dividends payable

其他应付款 Other payables 13,252,762.06 803,339.56

划分为持有待售的负债 Liabilities classified as held for sale

一年内到期的非流动负债 Non-current liabilities maturing within one year

其他流动负债 Other current liabilities

流动负债合计 TOTAL CURRENT LIABILITIES 1,164,190,299.41 98,953,711.86

非流动负债： Non-current liabilities:

长期借款 Long-term borrowings 700,000,000.00

应付债券 Bonds payable



长期应付款 Long-term payables

长期应付职工薪酬 Long-term employee compensation payable

专项应付款 Special payables

预计负债 Estimated liabilities

递延收益 Deferred income

递延所得税负债 Deferred income tax liabilities

其他非流动负债 Other non-current liabilities

非流动负债合计 TOTAL NON-CURRENT LIABILITIES 700,000,000.00

负债合计 TOTAL LIABILITIES 1,864,190,299.41 98,953,711.86

所有者权益： Total owners' equity:

实收资本（或股本） Paid-in capital (or share capital) 1,698,245,011.00 446,906,582.00




资本公积 Capital reserve 1,237,956,472.37 2,489,294,901.37

减：库存股 Less: Treasury stock

其他综合收益 Other comprehensive income

专项储备 Special reserve

盈余公积 Surplus reserve 26,309,287.00 26,309,287.00

未分配利润 Undistributed profits 242,353,634.55 257,161,771.72

所有者权益合计 TOTAL OWNERS' EQUITY 3,204,864,404.92 3,219,672,542.09

负债和所有者权益总计 TOTAL LIABILITIES AND OWNERS' EQUITY 5,069,054,704.33 3,318,626,253.95


神州长城股份有限公司 Sino Great Wall Co., Ltd.资产负债表（续）Balance Sheet (Continued)




项目 Item 附注五 Note 5 本期发生额 Year 2016 上期发生额 Year 2015

一、营业总收入 Total operating income 4,664,999,117.17 4,010,358,999.58

其中：营业收入Including: Operating income （三十四）5.34 4,664,999,117.17 4,010,358,999.58

利息收入 Interest income

已赚保费 Earned premiums

手续费及佣金收入 Income from handling charges and commissions

二、营业总成本 Total operating cost 4,110,727,814.01 3,578,964,860.85

其中：营业成本 Including: Operating cost （三十四）5.34 3,459,377,744.66 3,165,027,185.66

利息支出 Interest expenses

手续费及佣金支出 Handling charges and commissions expenses

退保金 Surrender value

赔付支出净额 Net claims paid

提取保险合同准备金净额 Net amount withdrawn for insurance contract reserves

保单红利支出 Policy dividend payment

分保费用 Reinsurance costs

税金及附加 Taxes and surcharges （三十五）5.35 9,651,529.46 79,485,669.04

销售费用 Selling expenses （三十六）5.36 30,318,688.27 13,686,172.10

管理费用 General and administrative expenses （三十七） 5.37 313,930,733.56 154,562,327.86

财务费用 Financial expenses （三十八）5.38 127,437,227.95 54,866,402.02

资产减值损失 Losses from assets impairment （三十九） 5.39 170,011,890.11 111,337,104.17

加：公允价值变动收益（损失以“-”号填列） Plus: Gains from the changes in fair value ("-" for losses) （四十） 5.40 42,553.26

投资收益（损失以“-”号填列） Investment income ("-" for losses) （四十一） 5.41 2,226,350.97

其中：对联营企业和合营企业的投资收益 Including: Income from investment in associates and joint ventures

汇兑收益（损失以“-”号填列） Gains from foreign exchange ("-" for losses)

三、营业利润（亏损以“-”号填列）Operating profits ("-" for losses) 556,497,654.12 431,436,691.98

加：营业外收入 Plus: Non-operating income （四十二） 5.42 26,427,042.86 380,733.08

其中：非流动资产处置利得 Including: Gains from disposal of non-current assets 4,455.00

减：营业外支出 Less: Non-operating expenses （四十三） 5.43 21,586,940.28 1,025,395.57

其中：非流动资产处置损失 Including: Losses from disposal of non-current assets 564,833.40 85,567.15

四、利润总额（亏损总额以“-”号填列） Total profits ("-" for total losses) 561,337,756.70 430,792,029.49

减：所得税费用 Less: Income tax expenses （四十四） 5.44 89,244,861.75 84,688,888.81

五、净利润（净亏损以“-”号填列） Net profit ("-" for net losses) 472,092,894.95 346,103,140.68

其中：被合并方在合并前实现的净利润 Including: Net profit achieved by the combined party before the combination

归属于母公司所有者的净利润 Net profit attributable to owners of the parent company 473,661,862.67 346,648,651.48

少数股东损益 Minority interest income -1,568,967.72 -545,510.80

六、其他综合收益的税后净额 Other comprehensive income, net of tax 85.60

归属母公司所有者的其他综合收益的税后净额 Other comprehensive income, net of tax attributable to owners of the parent company 85.60

（一）以后不能重分类进损益的其他综合收益 Other comprehensive income that cannot be reclassified into profit or loss later

1. 重新计量设定受益计划净负债或净资产的变动 Changes arising from the re-measurement of net liabilities or net assets of defined benefitplan

2. 权益法下在被投资单位不能重分类进损益的其他综合收益中享有的份额 Share in other comprehensive income of the investee thatcannot be reclassified into profit or loss under the equity method

（二）以后将重分类进损益的其他综合收益 Other comprehensive income that will be reclassified into profit or loss later 85.60

1. 权益法下在被投资单位以后将重分类进损益的其他综合收益中享有的份额 Share in other comprehensive income of the investee that willbe reclassified into profit or loss under the equity method later

2. 可供出售金融资产公允价值变动损益 Profit or loss of change in faire value of available-for-sale financial assets

3. 持有至到期投资重分类为可供出售金融资产损益 Profit or loss arising from reclassification of held-to-maturity investments as financialassets available for sale

4. 现金流量套期损益的有效部分 Effective portion of profit or loss from cash flow hedging

5. 外币财务报表折算差额 Translation differences of foreign currency financial statements 85.60

6. 其他 Others

归属于少数股东的其他综合收益的税后净额 Other comprehensive income, net of tax attributable to minority shareholders

七、综合收益总额 Total comprehensive income 472,092,894.95 346,103,226.28

归属于母公司所有者的综合收益总额 Total comprehensive income attributable to owners of the parent company 473,661,862.67 346,648,737.08

归属于少数股东的综合收益总额 Total comprehensive income attributable to minority shareholders -1,568,967.72 -545,510.80

八、每股收益： Earnings per share:

（一）基本每股收益（元/股）Basic earnings per share (RMB/share) 0.28 0.40

（二）稀释每股收益（元/股）Diluted earnings per share (RMB/share) 0.28 0.40

后附财务报表附注为财务报表的组成部分。The accompanying notes to the financial statements are integral parts of the financial statements.


神州长城股份有限公司 Sino Great Wall Co., Ltd. 合并利润表 Consolidated Income Statement

2016年度 Year of 2016（除特别注明外，金额单位均为人民币元） (Monetary units are expressed in RMB unless otherwise stated)


项目 Item 附注十五 Note 15 本期发生额 Year 2016 上期发生额 Year 2015一、营业收入 Operating income （五） 15.5 238,048.64 2,318,061.00 减：营业成本 Less: Operating costs （五） 15.5 237,620.18

税金及附加 Taxes and surcharges 192,135.56 153,652.28

销售费用 Selling expenses

管理费用 General and administrative expenses 34,816,749.95 8,954,347.86

财务费用（收益以“-”号填列） Financial expenses (“-” for income) 5,966,974.50 3,370,704.26

资产减值损失 Losses from assets impairment 781,524.61 -13,038.09

加：公允价值变动净收益（损失以“-”号填列） Plus: Net gains from the changes infair value ("-" for losses)

-

投资收益（损失以“-”号填列） Investment income ("-" for losses) （四） 15.4 396,197.49 383,969,705.11 其中:对联营和合营企业的投资收益 Including: Income from investment in associatesand joint ventures

-

二、营业利润（亏损以“-”号填列） Operating profits ("-" for losses) -41,123,138.49 373,584,479.62

加：营业外收入 Plus: Non-operating income 26,315,384.00 73,450,480.94

其中：非流动资产处置利得 Including: Gains from disposal of non-current assets

减：营业外支出 Less: Non-operating expenses

其中：非流动资产处置损失 Including: Losses from disposal of non-current assets

三、利润总额（亏损总额以“-”号填列） Total profits ("-" for total losses) -14,807,754.49 447,034,960.56

减：所得税费用 Less: Income tax expenses 382.68 93,708,631.85

四、净利润（净亏损以“-”号填列） Net profit ("-" for net losses) -14,808,137.17 353,326,328.72五、其他综合收益的税后净额 Other comprehensive income, net of tax 4,398,234.00（一）以后不能重分类进损益的其他综合收益 Other comprehensive income thatcannot be reclassified into profit or loss later1. 重新计量设定受益计划净负债或净资产的变动 Changes arising from the re-measurement of net liabilities or net assets of defined benefit plan

2. 权益法下在被投资单位不能重分类进损益的其他综合收益中享有的份额 Share inother comprehensive income of the investee that cannot be reclassified into profit or lossunder the equity method

（二）以后将重分类进损益的其他综合收益 Other comprehensive income that will bereclassified into profit or loss later

4,398,234.00

1. 权益法下在被投资单位以后将重分类进损益的其他综合收益中享有的份额 Sharein other comprehensive income of the investee that will be reclassified into profit or lossunder the equity method later

2. 可供出售金融资产公允价值变动损益 Profit or loss of change in faire value ofavailable-for-sale financial assets

3. 持有至到期投资重分类为可供出售金融资产损益 Profit or loss arising fromreclassification of held-to-maturity investments as financial assets available for sale

4. 现金流量套期损益的有效部分 Effective portion of profit or loss from cash flowhedging5. 外币财务报表折算差额 Translation differences of foreign currency financialstatements

4,398,234.00

6. 其他 Others六、综合收益总额 Total comprehensive income -14,808,137.17 357,724,562.72七、每股收益： Earnings per share:（一）基本每股收益（元/股）Basic earnings per share (RMB/share) -0.01 0.17（二）稀释每股收益（元/股）Diluted earnings per share (RMB/share) -0.01 0.17



神州长城股份有限公司 Sino Great Wall Co., Ltd.

利润表 Income Statement

2016年度 Year of 2016

（除特别注明外，金额单位均为人民币元） (Monetary units are expressed in RMB unless otherwise stated)


项目 Item 附注五 Note 5 本期发生额 Year 2016 上期发生额 Year 2015

一、经营活动产生的现金流量 CASH FLOWS FROM OPERATING ACTIVITIES

销售商品、提供劳务收到的现金 Cash received from sales of goods and rendering of services 2,793,118,697.02 2,882,512,458.95

客户存款和同业存放款项净增加额 Net increase in deposits from customers and due from banks and other financialinstitutions向中央银行借款净增加额 Net increase in borrowings from the central bank

向其他金融机构拆入资金净增加额 Net increase in loans from other financial institutions

收到原保险合同保费取得的现金 Cash received from receiving insurance premium of original insurance contract

收到再保险业务现金净额 Net cash received from reinsurance business

保户储金及投资款净增加额 Net increase in deposits and investments from policyholders

处置以公允价值计量且其变动计入当期损益的金融资产净增加额 Net increase received from disposal of financial assetsmeasured at fair value through current profit and loss

收取利息、手续费及佣金的现金 Cash received from interests, handling charges and commissions

拆入资金净增加额 Net increase in loans from banks and other financial institutions

回购业务资金净增加额 Net capital increase in repurchase business

收到的税费返还 Refunds of taxes and surcharges 6,342,293.39 250,556.49

收到其他与经营活动有关的现金 Cash received from other operating activities （四十五）5.45 1,818,662,633.63 1,374,677,443.26

经营活动现金流入小计 Sub-total of cash inflows from operating activities 4,618,123,624.04 4,257,440,458.70

购买商品、接受劳务支付的现金 Cash paid for goods purchased and services received 2,879,469,436.78 2,566,176,221.01

客户贷款及垫款净增加额 Net increase in customers' loans and advances存放中央银行和同业款项净增加额 Net increase in deposits with central bank and with banks and other financialinstitutions支付原保险合同赔付款项的现金 Cash paid for original insurance contract claims

支付利息、手续费及佣金的现金 Cash paid for interests, handling charges and commissions

支付保单红利的现金 Cash paid for policy dividends

支付给职工以及为职工支付的现金 Cash payments to and on behalf of employees 345,233,924.96 194,602,987.57

支付的各项税费 Cash paid for taxes and surcharges 92,009,656.66 150,781,903.84

支付其他与经营活动有关的现金 Cash paid for other operating activities （四十五）5.45 2,989,286,419.58 1,637,930,603.36

经营活动现金流出小计 Sub-total of cash outflows from operating activities 6,305,999,437.98 4,549,491,715.78

经营活动产生的现金流量净额 NET CASH FLOWS FROM OPERATING ACTIVITIES -1,687,875,813.94 -292,051,257.08

二、投资活动产生的现金流量 CASH FLOWS FROM INVESTING ACTIVITIES

收回投资收到的现金 Cash received from disposal of investments 119,902,961.04 68.86

取得投资收益所收到的现金 Cash received from returns on investments 1,566,217.08 2,426.00

处置固定资产、无形资产和其他长期资产收回的现金净额 Net cash received from disposal of fixed assets, intangibleassets and other long-term assets

95,937.00

处置子公司及其他营业单位收到的现金净额 Net cash received from disposal of subsidiaries and other business units

收到其他与投资活动有关的现金 Cash received from other investing activities

投资活动现金流入小计 Sub-total of cash inflows from investment activities 121,565,115.12 2,494.86

购建固定资产、无形资产和其他长期资产支付的现金净额 Net cash paid for purchase and construction of fixed assets,intangible assets and other long-term assets

15,582,049.03 25,179,343.19

投资支付的现金 Cash paid for investments 188,307,635.00

质押贷款净增加额 Net increase in pledge loans

取得子公司及其他营业单位支付的现金净额 Net cash paid to acquire subsidiaries and other business units 42,467,736.61 3,533,792.47

支付其他与投资活动有关的现金 Cash paid for other investing activities

投资活动现金流出小计 Sub-total of cash outflows from investing activities 246,357,420.64 28,713,135.66

投资活动产生的现金流量净额 NET CASH FLOWS FROM INVESTING ACTIVITIES -124,792,305.52 -28,710,640.80

三、筹资活动产生的现金流量 CASH FLOWS FROM FINANCING ACTIVITIES

吸收投资收到的现金 Cash received from absorption of investment 242,223,784.52

其中：子公司吸收少数股东投资收到的现金 Including: Cash received by subsidiaries from investments by minorityshareholders取得借款收到的现金 Cash received from borrowings 3,352,564,898.49 783,614,556.72

发行债券收到的现金 Cash received from bonds issue

收到其他与筹资活动有关的现金 Cash received from other financing activities （四十五）5.45 175,355,000.00 779,900,000.00

筹资活动现金流入小计 Sub-total of cash inflows from financing activities 3,527,919,898.49 1,805,738,341.24

偿还债务支付的现金 Cash paid for debts repayments 676,386,220.35 737,683,498.86

分配股利、利润或偿付利息支付的现金 Cash paid for distribution of dividends and profits or payment of interests 116,576,063.38 33,711,743.66

其中：子公司支付给少数股东的股利、利润 Including: Dividends and profits paid to minority shareholders bysubsidiaries支付其他与筹资活动有关的现金 Cash paid for other financing activities （四十五）5.45 555,780,295.84 375,281,700.88

筹资活动现金流出小计 Sub-total of cash outflows from financing activities 1,348,742,579.57 1,146,676,943.40

筹资活动产生的现金流量净额 NET CASH FLOWS FROM FINANCING ACTIVITIES 2,179,177,318.92 659,061,397.84

四、汇率变动对现金及现金等价物的影响 EFFECT OF FLUCTUATION IN EXCHANGE RATE ON CASH ANDCASH EQUIVALENTS

-5,549,633.86 686,301.95

五、现金及现金等价物净增加额 NET INCREASE IN CASH AND CASH EQUIVALENTS 360,959,565.60 338,985,801.91

加：期初现金及现金等价物余额 Plus: Beginning balance of cash and cash equivalents 582,745,756.81 243,759,954.90

六、期末现金及现金等价物余额 ENDING BALANCE OF CASH AND CASH EQUIVALENTS 943,705,322.41 582,745,756.81



神州长城股份有限公司 Sino Great Wall Co., Ltd. 合并现金流量表 Consolidated Statement of Cash Flows



项目 Item 本期发生额 Year 2016 上期发生额 Year 2015

一、经营活动产生的现金流量： CASH FLOWS FROM OPERATING ACTIVITIES:

销售商品、提供劳务收到的现金 Cash received from sales of goods and rendering of services 266,133.00 2,246,511.00

收到的税费返还 Refunds of taxes and surcharges

收到其他与经营活动有关的现金 Cash received from other operating activities 822,670,967.58 99,238,423.81

经营活动现金流入小计 Sub-total of cash inflows from operating activities 822,937,100.58 101,484,934.81

购买商品、接受劳务支付的现金 Cash paid for goods purchased and services received

支付给职工以及为职工支付的现金 Cash payments to and on behalf of employees 7,388,478.01 1,026,970.10

支付的各项税费 Cash paid for taxes and surcharges 1,558,123.56 14,621,408.55

支付其他与经营活动有关的现金 Cash paid for other operating activities 2,332,567,169.66 95,712,355.22

经营活动现金流出小计 Sub-total of cash outflows from operating activities 2,341,513,771.23 111,360,733.87

经营活动产生的现金流量净额 NET CASH FLOWS FROM OPERATING ACTIVITIES -1,518,576,670.65 -9,875,799.06

二、投资活动产生的现金流量：CASH FLOWS FROM INVESTING ACTIVITIES:

收回投资收到的现金 Cash received from disposal of investments 107,000,000.00

取得投资收益收到的现金 Cash received from returns on investments 396,197.49

处置固定资产、无形资产和其他长期资产收回的现金净额 Net cash received from disposal of fixedassets, intangible assets and other long-term assets

处置子公司及其他营业单位收到的现金净额 Net cash received from disposal of subsidiaries and otherbusiness units

收到其他与投资活动有关的现金 Cash received from other investing activities 40,084.65

投资活动现金流入小计 Sub-total of cash inflows from investment activities 107,396,197.49 40,084.65

购建固定资产、无形资产和其他长期资产支付的现金 Cash paid for purchase and construction of fixedassets, intangible assets and other long-term assets

投资支付的现金 Cash paid for investments 155,960,000.00

取得子公司及其他营业单位支付的现金净额 Net cash paid to acquire subsidiaries and other businessunits

97,000,000.00

支付其他与投资活动有关的现金 Cash paid for other investing activities

投资活动现金流出小计 Sub-total of cash outflows from investing activities 252,960,000.00

投资活动产生的现金流量净额 NET CASH FLOWS FROM INVESTING ACTIVITIES -145,563,802.51 40,084.65

三、筹资活动产生的现金流量： CASH FLOWS FROM FINANCING ACTIVITIES:

吸收投资收到的现金 Cash received from absorption of investment 240,499,988.72

取得借款收到的现金 Cash received from borrowings

发行债券收到的现金 Cash received from bonds issue 1,810,000,000.00

收到其他与筹资活动有关的现金 Cash received from other financing activities 12,500,000.00

筹资活动现金流入小计 Sub-total of cash inflows from financing activities 1,822,500,000.00 240,499,988.72

偿还债务支付的现金 Cash paid for debts repayments 130,000,000.00

分配股利、利润或偿付利息支付的现金 Cash paid for distribution of dividends and profits or paymentof interests

74,013,433.81

支付其他与筹资活动有关的现金 Cash paid for other financing activities 24,800,000.00

筹资活动现金流出小计 Sub-total of cash outflows from financing activities 228,813,433.81

筹资活动产生的现金流量净额 NET CASH FLOWS FROM FINANCING ACTIVITIES 1,593,686,566.19 240,499,988.72

四、汇率变动对现金及现金等价物的影响 EFFECT OF FLUCTUATION IN EXCHANGE RATEON CASH AND CASH EQUIVALENTS

五、现金及现金等价物净增加额 NET INCREASE IN CASH AND CASH EQUIVALENTS -70,453,906.97 230,664,274.31

加：期初现金及现金等价物余额 Plus: Beginning balance of cash and cash equivalents 239,145,251.31 8,480,977.00

六、期末现金及现金等价物余额 ENDING BALANCE OF CASH AND CASH EQUIVALENTS 168,691,344.34 239,145,251.31


神州长城股份有限公司 Sino Great Wall Co., Ltd.现金流量表 Statement of Cash Flows

2016年度 Year of 2016

（除特别注明外，金额单位均为人民币元） (Monetary units are expressed in RMB unless otherwise stated)



优先股 Preferredstock

永续债 Perpetualdebts 其他 Others

一、上年年末余额 Balance at the end of the last year 446,906,582.00 -50,367,862.22 46,014,941.54 84,394,441.23 755,308,636.19 -1,713,075.19 1,280,543,663.55

加：会计政策变更 Plus: Adjustments for changes in accountingpolicies前期差错更正 Correction of accounting errors in prior periods同一控制下企业合并 Business combination under commoncontrol

其他 Others

二、本年年初余额 Balance at the beginning of the year 446,906,582.00 -50,367,862.22 46,014,941.54 84,394,441.23 755,308,636.19 -1,713,075.19 1,280,543,663.55

三、本期增减变动金额（减少以“-”号填列）

Increases/decreases in the current period (“-” for decreases) 1,251,338,429.00 -1,248,981,839.52 19,672,926.60 473,661,862.67 54,247,830.29 549,939,209.05

（一）综合收益总额 Total comprehensive income 473,661,862.67 -1,327,357.60 472,334,505.07

（二）所有者投入和减少资本 Capital contributed or reducedby owners 1,251,338,429.00 2,356,589.48 55,575,187.89 1,309,270,206.37

1．股东投入的普通股 Common shares contributed byshareholders 1,251,338,429.00 1,251,338,429.00

2．其他权益工具持有者投入资本 Capital contributed by theholders of other equity instruments2．股份支付计入所有者权益的金额 Amounts of share-basedpayments recognized in owners' equity

3．其他 Others 2,356,589.48 55,575,187.89 57,931,777.37

（三）利润分配 Profit distribution

1．提取盈余公积 Withdrawal of surplus reserves

2．提取一般风险准备 Withdrawal of general risk reserves3．对所有者（或股东）的分配 Profits distributed to owners(or shareholders)

4．其他 Others

（四）所有者权益内部结转 Internal carry-forward of owners'equity -1,251,338,429.00 -1,251,338,429.00

1．资本公积转增资本（或股本） Conversion of capitalreserves into paid-in capital (or share capital) -1,251,338,429.00 -1,251,338,429.00

2．盈余公积转增资本（或股本） Conversion of surplusreserves into paid-in capital (or share capital)

3．盈余公积弥补亏损 Surplus reserves offsetting losses

4．其他 Others

（五）专项储备 Special reserves 19,672,926.60 19,672,926.60

1．本期提取 Amount withdrawn in the current period 56,095,547.05 56,095,547.05

2．本期使用 Amount used in the current period 36,422,620.45 36,422,620.45

（六）其他 Others

四、本期期末余额 Balance at the end of the current period 1,698,245,011.00 -1,299,349,701.74 65,687,868.14 84,394,441.23 1,228,970,498.86 52,534,755.10 1,830,482,872.60

一般风险准备

General riskreserves

未分配利润 Undistributedprofits

专项储备 Specialreserves

少数股东权益

Minority equity实收资本(或股本)

Paid-in capital (or sharecapital)

其他权益工具 Other equity instruments资本公积 Capital

reserves减:库存股 Less:Treasury stock

其他综合收益 Othercomprehensive income

盈余公积

Surplus reserves


企业法定代表人: Legal Representative of Enterprise: 主管会计工作负责人: Accounting Principal: 会计机构负责人: Head of the Accounting Department:

神州长城股份有限公司 Sino Great Wall Co., Ltd.合并所有者权益变动表 Consolidated Statement of Changes in Owners' Equity


本期发生额 Year 2016

归属于母公司所有者权益 Equity attributable to owners of the parent company

项目 Item 所有者权益合计 Totalowners' equity


优先股

Preferred stock永续债 Perpetual

debts 其他 Others

一、上年年末余额 Balance at the end of the last year 70,136,099.00 176,467,549.00 -85.60 21,813,200.10 49,347,406.23 443,707,019.71 761,471,188.44

加：会计政策变更 Plus: Adjustments for changes in accounting policies

前期差错更正 Correction of accounting errors in prior periods

同一控制下企业合并 Business combination under common control

其他 Others

二、本年年初余额 Balance at the beginning of the year 70,136,099.00 176,467,549.00 -85.60 21,813,200.10 49,347,406.23 443,707,019.71 761,471,188.44三、本期增减变动金额（减少以“-”号填列） Increases/decreases in the currentperiod (“-” for decreases) 376,770,483.00 -226,835,411.22 85.60 24,201,741.44 35,047,035.00 311,601,616.48 -1,713,075.19 519,072,475.11

（一）综合收益总额 Total comprehensive income 85.60 346,648,651.48 -545,510.80 346,103,226.28

（二）所有者投入和减少资本 Capital contributed or reduced by owners 25,914,633.00 226,661,441.01 252,576,074.01

1．股东投入的普通股 Common shares contributed by shareholders 25,914,633.00 217,585,355.72 243,499,988.722．其他权益工具持有者投入资本 Capital contributed by the holders of otherequity instruments2．股份支付计入所有者权益的金额 Amounts of share-based payments recognizedin owners' equity3．其他 Others 9,076,085.29 9,076,085.29

（三）利润分配 Profit distribution 35,047,035.00 -35,047,035.00 -1,167,564.39 -1,167,564.39

1．提取盈余公积 Withdrawal of surplus reserves 35,047,035.00 -35,047,035.00

2．提取一般风险准备 Withdrawal of general risk reserves

3．对所有者（或股东）的分配 Profits distributed to owners (or shareholders)

4．其他 Others -1,167,564.39 -1,167,564.39

（四）所有者权益内部结转 Internal carry-forward of owners' equity1．资本公积转增资本（或股本） Conversion of capital reserves into paid-incapital (or share capital)2．盈余公积转增资本（或股本） Conversion of surplus reserves into paid-incapital (or share capital)3．盈余公积弥补亏损 Surplus reserves offsetting losses

4．其他 Others

（五）专项储备 Special reserves 24,201,741.44 24,201,741.44

1．本期提取 Amount withdrawn in the current period 34,558,557.84 34,558,557.84

2．本期使用 Amount used in the current period -10,356,816.40 -10,356,816.40

（六）其他 Others 350,855,850.00 -453,496,852.23 -102,641,002.23

四、本期期末余额 Balance at the end of the current period 446,906,582.00 -50,367,862.22 46,014,941.54 84,394,441.23 755,308,636.19 -1,713,075.19 1,280,543,663.55

所有者权益合计 Totalowners' equity

实收资本(或股本)Paid-in capital (or

share capital)

一般风险准备 General

risk reserves

未分配利润

Undistributed profits

其他权益工具 Other equity instruments资本公积 Capital

reserves

减:库存股

Less: Treasurystock

其他综合收益

Othercomprehensive

income

专项储备 Specialreserves

盈余公积 Surplusreserves



神州长城股份有限公司 Sino Great Wall Co., Ltd.合并所有者权益变动表（续） Consolidated Statement of Changes in Owners' Equity (Continued)


项目 Item

上期发生额 Year 2015

归属于母公司所有者权益 Equity attributable to owners of the parent company

少数股东权益

Minority equity



永续债 Perpetualdebts

其他

Others

一、上年年末余额 Balance at the end of the last year 446,906,582.00 2,489,294,901.37 26,309,287.00 257,161,771.72 3,219,672,542.09

加：会计政策变更 Plus: Adjustments for changes in accounting policies前期差错更正 Correction of accounting errors in prior periods

其他 Others

二、本年年初余额 Balance at the beginning of the year 446,906,582.00 2,489,294,901.37 26,309,287.00 257,161,771.72 3,219,672,542.09

三、本期增减变动金额（减少以“-”号填列） Increases/decreases in thecurrent period (“-” for decreases)

1,251,338,429.00 -1,251,338,429.00 -14,808,137.17 -14,808,137.17

（一）综合收益总额 Total comprehensive income -14,808,137.17 -14,808,137.17

（二）所有者投入和减少资本 Capital contributed or reduced byowners

1,251,338,429.00 1,251,338,429.00

1.股东投入的普通股 Common shares contributed by shareholders 1,251,338,429.00 1,251,338,429.002.其他权益工具持有者投入资本 Capital contributed by the holders ofother equity instruments3.股份支付计入所有者权益的金额 Amounts of share-based paymentsrecognized in owners' equity

4.其他 Others


1.提取盈余公积 Withdrawal of surplus reserves

2.对所有者（或股东）的分配 Profits distributed to owners (orshareholders)

3.其他 Others

（四）所有者权益内部结转 Internal carry-forward of owners' equity -1,251,338,429.00 -1,251,338,429.001.资本公积转增资本（或股本） Conversion of capital reserves intopaid-in capital (or share capital)

-1,251,338,429.00 -1,251,338,429.00

2.盈余公积转增资本（或股本） Conversion of surplus reserves intopaid-in capital (or share capital)

3.盈余公积弥补亏损 Surplus reserves offsetting losses

4.其他 Others

（五）专项储备 Special reserves

1.本期提取 Amount withdrawn in the current period

2.本期使用 Amount used in the current period


四、本期期末余额 Balance at the end of the current period 1,698,245,011.00 1,237,956,472.37 26,309,287.00 242,353,634.55 3,204,864,404.92

盈余公积 Surplusreserves

未分配利润

Undistributed profits所有者权益合计 Total

owners' equity实收资本（或股本）Paid-in capital (or share capital)

项目 Item 资本公积 Capitalreserves

减：库存股

Less: Treasurystock


专项储备

Special reserves



神州长城股份有限公司 Sino Great Wall Co., Ltd.所有者权益变动表 Statement of Changes in Owners' Equity


本期发生额 Year 2016




永续债 Perpetualdebts 其他 Others

一、上年年末余额 Balance at the end of the last year 169,142,356.00 31,606,598.00 -4,398,234.00 26,309,287.00 -96,164,557.00 126,495,450.00

加：会计政策变更 Plus: Adjustments for changes in accounting policies

前期差错更正 Correction of accounting errors in prior periods

其他 Others

二、本年年初余额 Balance at the beginning of the year 169,142,356.00 31,606,598.00 -4,398,234.00 26,309,287.00 -96,164,557.00 126,495,450.00

三、本期增减变动金额（减少以“-”号填列） Increases/decreases in the currentperiod (“-” for decreases)

277,764,226.00 2,457,688,303.37 4,398,234.00 353,326,328.72 3,093,177,092.09

（一）综合收益总额 Total comprehensive income 4,398,234.00 353,326,328.72 357,724,562.72

（二）所有者投入和减少资本 Capital contributed or reduced by owners 277,764,226.00 2,457,688,303.37 2,735,452,529.37

1.股东投入的普通股 Common shares contributed by shareholders 277,764,226.00 2,443,935,757.84 2,721,699,983.84

2.其他权益工具持有者投入资本 Capital contributed by the holders of other equityinstruments

3.股份支付计入所有者权益的金额 Amounts of share-based payments recognizedin owners' equity

4.其他 Others 13,752,545.53 13,752,545.53


1.提取盈余公积 Withdrawal of surplus reserves

2.对所有者（或股东）的分配 Profits distributed to owners (or shareholders)

3.其他 Others

（四）所有者权益内部结转 Internal carry-forward of owners' equity

1.资本公积转增资本（或股本） Conversion of capital reserves into paid-incapital (or share capital)

2.盈余公积转增资本（或股本） Conversion of surplus reserves into paid-incapital (or share capital)

3.盈余公积弥补亏损 Surplus reserves offsetting losses

4.其他 Others

（五）专项储备 Special reserves

1.本期提取 Amount withdrawn in the current period

2.本期使用 Amount used in the current period


四、本期期末余额 Balance at the end of the current period 446,906,582.00 2,489,294,901.37 26,309,287.00 257,161,771.72 3,219,672,542.09


减：库存股

Less: Treasurystock


专项储备

Special reserves盈余公积 Surplus

reserves未分配利润

Undistributed profits所有者权益合计 Total

owners' equity


神州长城股份有限公司 Sino Great Wall Co., Ltd.所有者权益变动表（续） Statement of Changes in Owners' Equity (Continued)


项目 Item

上期发生额 Year 2015

实收资本（或股本）Paid-in capital (or share

capital)

资本公积 Capitalreserves


SINO GREAT WALL CO., LTD.

AUDITORS' REPORT AND FINANCIAL STATEMENTS (FOR THE YEAR ENDED DECEMBER 31, 2016)

Contents

Page

1. Auditors' Report

1-2

2. Financial Statements

Consolidated Balance Sheet and the Company's Balance Sheet

1-4

Consolidated Income Statement and the Company's Income Statement

5-6

Consolidated Statement of Cash Flows and the Company's Statement of Cash Flows

7-8

Consolidated Statement of Changes in Owners' Equity and the Company's Statement of Changes in Owners' Equity

9-12

Notes to the Financial Statements

1-70

SINO GREAT WALL CO., LTD. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016

SINO GREAT WALL CO., LTD. NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2016 (Amounts are expressed in RMB unless otherwise stated)

1. Company profile

1.1 Company overview Sino Great Wall Co., Ltd. (hereinafter referred to as the "Company" or "Sino Great Wall") is formerly known as Shenzhen Victor Onward Textile Industrial Company Limited which is formerly known as Xinnan Printing and Dyeing Factory Co., Ltd. Established in 1980, Xinnan Printing and Dyeing Factory Co., Ltd. is the first wholly foreign-owned enterprise in Shenzhen. In April 1984, the Xinnan Printing and Dyeing Factory Co., Ltd. was changed into a foreign joint venture and was renamed Shenzhen Victor Onward Printing and Dyeing Co., Ltd. On November 19, 1991, approved by the Government of Shenzhen City, Shenzhen Victor Onward Printing and Dyeing Co., Ltd. was restructured into a joint stock limited company and was renamed Shenzhen Victor Onward Textile Industrial Company Limited. Domestic listed RMB ordinary shares ("A" shares; stock code: 000018) and overseas-listed foreign investment shares ("B" shares; stock code: 200018) issued by the Company were listed for trading on the Shenzhen Stock Exchange in 1992. On July 23, 2015, approved by the China Securities Regulatory Commission under the Official Reply to Approving Shenzhen Victor Onward Textile Industrial Company Limited to Make Major Assets Restructuring and Issue Shares to Chen Lve and Other Shareholders to Purchase Assets and Raise Supporting Funds (Z.J.X.K. [2015] No.1774), the Company issued 251,849,593 shares to Chen Lve and other 16 shareholders to purchase 100% of equities of Sino Great Wall International Engineering Co., Ltd. held by them and issued to them 25,914,633 non-public offering shares, which raised funds of RMB 254,999,988.72. As at September 24, 2015, equities of the listed company were changed to be registered in the name of the Company. Both parties fully completed the transfer of equities and the relevant formalities of industrial and commercial registration of changes, so the Company already owned 100% of equities in the listed company. Meanwhile, according to the Confirmation on Delivery of Exchange-Out Assets and as at the date of delivery (namely July 31, 2015), all assets and liabilities of the Company had been exchanged out. On September 24, 2015, Shenzhen Branch of the China Securities Depository and Clearing Corporation Limited had completed the relevant securities registration formalities for the above new shares. On July 29, 2015, the listed company received the new registered capital of RMB 251,849,593 paid by all the shareholders of Sino Great Wall. Ruihua Certified Public Accountants issued the Verification Report (R.H.Y.Z. [2015] No.48250011) on July 30, 2015. Registered capital after the change was RMB 420,991,949 and share capital RMB 420,991,949. On December 4, 2015, Shenzhen Victor Onward Textile Industrial Company Limited was renamed Sino Great Wall Co., Ltd. At the Company's general meeting of shareholders held on May 6, 2016, the 2015 Plan of Conversion of Capital Reserves into Share Capital was adopted. The detailed plan was: to increase capital reserves to all the shareholders with 28 shares for 10 shares based on 446,906,582 shares in total as at December 31, 2015 and to increase 1,251,338,429 shares in total. After the increase, total share capital of the Company was increased to 1,698,245,011 shares. As at December 31, 2016, total share capital of the Company was 1,698,245,011 shares, in which there were 1,434,441,780 circulating A shares and 263,803,231 circulating B shares. Chen Lve who holds 582,944,556 A shares, accounting for 34.33% of the total share capital, is the Company's controlling shareholder and actual controller.

Notes to the Financial Statements Page 1


Registered address of the Company: No.26 Kuipeng Road, Baishi Gang, Kuichong Street, Dapeng New District, Shenzhen. Legal representative: Chen Lve. The Company falls under textile printing and dyeing industry. The Company mainly engages in dyeing and printing production, processing and sales of all kinds of pure cotton, pure linen, polyester cotton, ramie cotton, high-grade blended fabrics and finished garments. The financial statements have been approved by the Board of Directors on April 26, 2017.

1.2 Scope of the consolidated financial statements

As at December 31, 2016, subsidiaries within the scope of the consolidated financial statements of the Company are as follows:

Name of subsidiaries Sino Great Wall International Engineering Co., Ltd. Beijing Sino Great Wall Decoration Design Co., Ltd. Suzhou Lvbang Wood Technology Co., Ltd. Herabenna Interior Design Guangzhou Co., Ltd. Sino Great Wall Group Co., Limited Shanghai Ling Rui International Trade Company Limited Shenzhen Hongtulve Industrial Co., Ltd. Inrich Me Engineering Co., Limited Sino Great Wall New Energy (Beijing) Co., Ltd. SINO GREAT WALL (PHILIPPINES) INTERNATIONAL CORPORITION SGW HP Engineering Construction SDN.BHD SINO GREAT WALL (USA). INC Shenzhen Yatian Decoration Design Engineering Co., Ltd. Sino Great Wall International Engineering (MACAU) Co., Limited SINO GREAT WALL INTERNETIONAL ENGINEERING (CNMI) CO., LLC Sino Great Wall (Beijing) Investment Fund Management Co., Ltd. Sino Great Wall Real estate (Hubei) Co., Ltd. Sino Great Wall Development (Hengqin) Co., Ltd. PT.SINO GREAT WALL INVESTMENT INDONESIA PT.SINO GREAT WALL CONSTRUCTION INDONESIA SINO GREAT WALL INTERNETIONAL ENGINEERING(MM)CO.,LTD Sino Great Wall Southwest Construction Engineering Co., Ltd. Sino Great Wall Jianyee Engineering Co., Ltd. Wuhan Commercial Workers Hospital Co., Ltd.

See “Note 6. Changes in scope of consolidation” and “Note 7. Rights and interests in other entities” for details of the scope of consolidated financial statements in the current year and the changes thereof.

2. Preparation basis for financial statements

2.1 Preparation basis The Company prepares the financial statements based on going concern, according to the transactions and events actually occurred and in accordance with the Accounting Standards for Business Enterprises - Basic Standards and various specific accounting standards, application guidance to and interpretations for the Accounting Standards for Business Enterprises and other relevant provisions (hereinafter collectively referred to as the "Accounting Standards for Business Enterprises") promulgated by the Ministry of Finance and disclosure provisions of the Rules for the Information Disclosure and Compilation of Companies Publicly Issuing Securities No. 15 - General Rules on Financial Reports promulgated by the China Securities Regulatory Commission.



2.2 Going concern The Company will have going-concern abilities within 12 months as of the end of the reporting period and have no significant events that will affect the going-concern abilities.

3. Significant accounting policies and accounting estimates

3.1 Statement on compliance with Accounting Standards for Business Enterprises The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the Company’s financial position, operating results, cash flows and other related information in the reporting period.

3.2 Accounting period

The accounting year is from January 1 to December 31 in calendar year.

3.3 Operating cycle The Company's operating cycle is 12 months.

3.4 Functional currency

RMB is the functional currency of the Company and its domestic subsidiaries due to that it is the currency in the main economic environment in which the Company and its domestic subsidiaries located. Currency of the Company in preparing its financial statements is RMB.

3.5 Accounting treatment methods of business combinations under common control and not

under common control Business combination under common control: The assets and liabilities acquired by the Company in business combinations are measured at the book value of assets and liabilities of the combinee (including the goodwill arising from the acquisition of the combinee by the ultimate controller) in the consolidated financial statements of the ultimate controller on the combination date. The stock premium in the capital reserves should be adjusted at the difference between the book value of the net assets acquired in combinations and that of consideration paid for the combination (or total par value of shares issued). If the stock premium in the capital reserves is insufficient to cover the differences, the retained earnings should be adjusted. Business combination not under common control: The Company shall, on the acquisition date, measure the assets surrendered and liabilities incurred or assumed by the Company for a business combination at their fair values. The Company shall recognize the difference of the combination costs in excess of the fair value of the identifiable net assets acquired from the acquiree as goodwill. The Company shall recognize the difference of the combination costs in short of the fair value of the identifiable net assets acquired from the acquiree in the current profit or loss after review. The auditing, legal services, consulting and other intermediary fees and other related administrative expenses for business combination will be included into current profit and loss upon occurrence; the transaction costs for the issuance of equity securities shall set off equities.

3.6 Preparation method of consolidated financial statements

3.6.1 Scope of consolidation The scope of consolidation of the consolidated financial statements of the Company is recognized based on the control and all subsidiaries (including the divisible part of the investee controlled by the Company) shall be included in the consolidated financial statements.



3.6.2 Procedures of consolidation The Company prepares the consolidated financial statements based on its own financial statements and those of its subsidiaries, and other relevant information. When preparing the consolidated financial statements, the Company treats the enterprise group as a whole accounting entity, to reflect the overall financial position, operating results and cash flows in accordance with relevant recognition, measurement and presentation requirements of Accounting Standards for Business Enterprises and the uniform accounting policies. The accounting policies and accounting period adopted by subsidiaries included in the consolidation scope of the consolidated financial statements shall be the same as those of the Company; if inconsistent, necessary adjustments shall be made according to the Company's accounting policies and accounting period in the preparation of the consolidated financial statements. For the subsidiaries acquired through business combinations not under common control, adjustments to their financial statements shall be made based on the fair values of net identifiable assets on the acquisition date. For subsidiaries acquired through business combination under common control, adjustments will be made to their financial statements based on the book value of their assets and liabilities (including the goodwill formed from the ultimate controller's acquisition of the subsidiaries) in the financial statements of the ultimate controller. The share of owner's equity, net profits and losses in the current year and comprehensive income in the current year of subsidiaries attributable to minority shareholders should be separately presented under the item "owner's equity" in the consolidated balance sheet, the item "net profit" and the item "total comprehensive income" in the consolidated income statement. The difference of the loss in the current year shared by minority shareholders of the subsidiaries in excess of the share of minority shareholders in the owner's equity at the beginning of the year of the subsidiaries should be used to offset the minority equity. (1) Increase in subsidiaries or business

During the reporting period, if the Company increases subsidiaries or business due to business combination under common control, it shall adjust the beginning amount of the consolidated balance sheet; include revenues, expenses and profits of the subsidiaries or business from the beginning of the current combination period to the end of the reporting period in the consolidated income statement; include cash flows of the subsidiaries or from the business from the beginning of the current combination period to the end of the reporting period in the consolidated cash flow statement; at the same time adjust the relevant items of the comparative statements to the extent that the reporting entity after combination has been always existed since the start of control by the ultimate controller. Where control can be exercised on the investee under the common control for additional investment or other reasons, it deems that all parties involved in combination make adjustment based on the current status when the ultimate controller starts its control. Equity investments held before the control over the combinee is obtained, the related gains and losses, other comprehensive income as well as other changes in net assets recognized from the later of the date when the original equity is obtained or the date when the combining party and the combined party are under the same control, to the combination date will respectively write down the retained earnings or current profit and loss in the comparative statements.



During the reporting period, if the Group acquired subsidiaries or business from the business combination not under common control, the beginning balance in the consolidated balance sheet will not be adjusted. The incomes, expenses and profits of the newly acquired subsidiaries or business from the acquisition date to the end of the reporting period shall be included in the consolidated income statement. The cash flows of the newly acquired subsidiaries or business from the acquisition date to the end of the reporting period shall be included in the consolidated statement of cash flows. Where the Company can implement control over an investee not under common control due to additional investment or other reasons, the equity held by the combinee before the purchase date is re-measured at the fair value on the purchase date of the equity, and the difference between the fair value and the book value shall be included in the current investment income. In the event that the equity of the acquiree held prior to the acquisition date involves other comprehensive income under the equity method and other changes in owners' equity than net profit and loss, other comprehensive income and profit distribution, other comprehensive income and other changes in the owner's equity associated therewith are transferred to investment income of the period to which the acquisition date belongs, except for other comprehensive income arising from changes in net liabilities or net assets due to the investee's re-measurement of defined benefits plan.

(2) Disposal of subsidiaries or business A. General method of disposal

During the reporting period, if the Company disposes subsidiaries or business, the incomes, expenses and profits from the subsidiaries or business from the beginning of the year to the disposal date shall be included in the consolidated income statement; cash flows of the subsidiaries and business from the beginning of the year to the disposal date shall be included in the consolidated statement of cash flows. When the Company loses the control over the investee due to disposal of partial equity investment or other reasons, the remaining equity investment after the disposal will be re-measured by the Company at its fair value on the date of loss of the control. The difference of total amount of the consideration from disposal of equities plus the fair value of the remaining equities less the shares calculated at the original shareholding ratio in net assets and goodwill of the original subsidiary which are continuously calculated as of the acquisition date or combination date is included in the investment income of the period at the loss of control. Other comprehensive incomes associated with the equity investments of the original subsidiary, or the changes in owners' equity other than net profit or loss, other comprehensive income and profit distribution, are transferred into investment income of the period when control is lost, except for other comprehensive income from the change in net liability or net asset due to the investor's re-measurement of designated benefit plan.

B Disposal of subsidiaries by stages Where the Company disposes the equity investments in subsidiary through multiple transactions and by stages until it loses the control, if the effect of the disposal on the terms and conditions as well as economic effect of all transactions of equity investments in subsidiaries meet one or more of the following circumstance, it usually indicates that the multiple transactions should be accounted for as a package deal:



i. the transactions are concluded at the same time or under the consideration of mutual effect;

ii. the transactions as a whole can reach a complete business result; iii. the occurrence of a transaction depends on that of at least one other

transactions; and/or iv. a single transaction is uneconomical but it is economical when

considered together with other transactions. Where various transactions of disposal of equity investments in subsidiaries until loss of the control belong to a package deal, accounting treatment shall be made by the Company on the transactions as a transaction to dispose subsidiaries and lose the control; however, the difference between each disposal cost and net asset share in the subsidiaries corresponding to each disposal of investments before loss of the control should be recognized as other comprehensive income in the consolidated financial statements and should be transferred into the current profit or loss at the loss of the control. Where various transactions of disposal of equity investments in subsidiaries until loss of the control do not belong to a package deal, before the loss of the control, accounting treatment shall be made according to the relevant policies for partial disposal of equity investments in the subsidiary without losing control; at the loss of the control, accounting treatment shall be made according to general treatment methods for disposal of subsidiaries.

(3) Purchase of minority equity of subsidiaries The difference between long-term equity investments acquired by the Company through purchase of minority interest and the subsidiary’s identifiable net assets attributable to the Company calculated continuously from the acquisition date (or the combination date) in accordance with the increased shareholding ratio shall be charged against stock premium within capital reserves in the consolidated balance sheet; when stock premium within capital reserves is insufficient to offset, the retained earnings shall be adjusted.

(4) Partial disposal of equity investments in subsidiaries without loss of control The difference between the proceeds from partial disposal of equity investments in the subsidiary and the share of identifiable net assets of the subsidiary attributable to the Company which are calculated continuously from the acquisition date (or the combination date) and which are corresponding to the disposal of long-term equity investments without losing control shall be charged against stock premium within capital reserves in the consolidated balance sheet; when stock premium within capital reserves is insufficient to offset, the retained earnings shall be adjusted.

3.7 Recognition criteria of cash and cash equivalents

For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash on hand and the unrestricted deposit of the Company. The term “cash equivalents” refers to short-term (maturing within three months from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.



3.8 Foreign currency transactions and translation of foreign currency statements 3.8.1 Foreign currency transactions

Foreign currency transactions are translated into functional currency at the approximate rate of spot exchange rate on the day when the transactions occur. The balance of foreign currency monetary items as at the balance sheet date are translated at the spot exchange rate on the balance sheet date and the exchange differences arising therefrom shall be included in the current profit or loss, except those exchange differences arising from the special borrowings of foreign currency related to the acquired and constructed assets qualified for capitalization that will be capitalized at the borrowing expenses.

3.8.2 Translation of foreign currency financial statements

Assets and liabilities in the balance sheet shall be translated at the spot exchange rates on the balance sheet date; for owners' equity items, except for the item of "retained earnings", other items are translated at the spot exchange rates prevailing on the date when the transactions occur. The income and expenses items in income statements are translated at the approximate rate of spot exchange rate prevailing on the date when transactions occur. Where the Company disposes of an overseas business, it shall transfer the exchange difference relating to the overseas business to the current profit and loss.

3.9 Financial instruments

Financial instruments include financial assets, financial liabilities and equity instruments. 3.9.1 Classification of financial instruments

Upon initial recognition, financial assets and financial liabilities are classified into: financial assets or financial liabilities measured at fair value through current profit or loss, including financial assets or financial liabilities held for trading (and financial assets or financial liabilities directly designated to be measured at fair value through current profit and loss); held-to-maturity investments; receivables; available-for-sale financial assets; and other financial liabilities, etc.

3.9.2 Recognition basis and measurement method of financial instruments

(1) Financial assets or financial liabilities measured at fair value through current profit and loss are initially recorded at fair values when acquired (deducting cash dividends that have been declared but not distributed and bond interest that has matured but not been drawn). Relevant transaction expenses are included in the current profit and loss. The interests or cash dividends to be received during the holding period are recognized as investment income. Change in fair values is included in the current profit and loss at the end of the period. Upon disposal, the difference between the fair value and initial book-entry value is recognized as investment income, while the gains or losses from changes in fair value will be adjusted.

(2) Held-to-maturity investments Held-to-maturity investments are initially recognized at the sum of the fair value (bond interest due but not yet received) and related transaction costs upon acquisition. The interest income will be calculated and determined according to the amortized cost and effective interest rate during the holding period and included in investment income. The effective interest rate is determined upon acquisition and will remain unchanged during the expected renewal period, or a shorter period if applicable.



Upon disposal, the difference between the purchase price obtained and the book value of the investment is recognized in investment income.

(3) Receivables For creditor’s rights receivable arising from external sales of goods or rendering of service by the Company and other creditor's rights of other enterprises (excluding liability instruments quoted in an active market) held by the Company, including accounts receivable and other receivables, the initial recognition amount shall be the contract price or agreement price receivable from purchasing party; for those with financing nature, they are initially recognized at their present values. Upon recovery or disposal, the difference between the purchase price obtained and the book value of the receivables is recognized in current profit and loss.

(4) Available-for-sale financial assets Available-for-sale financial assets are initially recorded at the sum of fair values (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn) and transaction costs upon acquisition. The interests or cash dividends to be obtained during the holding period are recognized as investment income. The interest or cash dividends is measured at fair value and changes in fair value is included in other comprehensive income. However, for an equity instrument investment that has no quoted price in an active market and whose fair value cannot be reliably measured, and for derivative financial asset linked to the said equity instrument and settled by delivery of the same equity instrument, they are measured at cost. Difference between the proceeds and the book value of the financial assets is recognized as investment profit or loss upon disposal; meanwhile, amount of disposal corresponding to the accumulated change in fair value which is originally and directly included in other comprehensive income shall be transferred out and recognized as investment income.

(5) Other financial liabilities They are initially recognized at the sum of the fair value and the associated transaction costs. The subsequent measurement is based on amortized costs.

3.9.3 Recognition and measurement of financial assets transfer

When a financial assets transfer occurs, the financial assets will be derecognized when substantially all the risks and rewards on the ownership of the financial assets have been transferred to the transferee; and they will not be derecognized if substantially all the risks and rewards on the ownership of the financial assets have been retained. The principle of substance over form is adopted to determine whether a financial asset meets the above de-recognition conditions for the financial asset. The Company divides the transfer of financial assets into overall transfer and partial transfer. Where the entire transfer of the financial asset meets the de-recognition conditions, the difference of the following two amounts will be included in current profit and loss: (1) the book value of the transferred financial asset; (2) the sum of the consideration received from the transfer and the accumulated

amount of the changes in fair value originally and directly included in owners’ equity (the situation where the financial asset transferred is an available-for-sale financial asset is involved).



If the partial transfer of the financial assets meets the de-recognition condition, the entire book value of the transferred financial asset shall be split into the derecognized and recognized part according to their respective fair value and the difference between the amounts of the following two items shall be included in the current profit or loss: (1) the book value of the derecognized part; (2) the sum of the consideration for the derecognized part and the portion of

de-recognition corresponding to the accumulated amount of the changes in fair value originally and directly included in owners’ equity (the situation where the financial asset transferred is an available-for-sale financial asset is involved).

If the transfer of financial assets does not meet the de-recognition condition, the financial assets shall continue to be recognized, and the consideration received will be recognized as a financial liability.

3.9.4 De-recognition conditions of financial liabilities

The whole or partial financial liabilities, which present obligations have been wholly or partially discharged, shall be de-recognized; if the Company signs an agreement with the creditor to replace the existing financial liabilities by way of assuming the new financial liabilities which contract terms are different with those of the existing financial liabilities, then the existing financial liabilities shall be derecognized and the new financial liabilities shall be recognized. Where substantive changes are made to the contract terms of existing financial liability in whole or in part, the existing financial liabilities or part thereof will be derecognized, and the financial liability the terms of which have been modified will be recognized as a new financial liability. When financial liabilities are derecognized in whole or in part, the difference between the book value of the financial liabilities derecognized and the consideration paid (including non-cash assets transferred out or new financial liabilities borne) will be included into current profit or loss. When the Company buys back part of financial liabilities, it will allocate the entire book value of the said financial liabilities on the repurchase date in accordance with the relative fair value of the recognized part and the terminated part. The difference between the book value of the derecognized part and the consideration paid (including non-cash assets surrendered or new financial liabilities assumed) shall be included in the current profit or loss.

3.9.5 Determination method for the fair value of financial assets and financial

liabilities The fair value of a financial instrument having an active market is determined on the basis of quoted price in the active market. The fair value of a financial instrument, for which there is no active market, is determined by using valuation techniques. For valuating, the Company chooses input values which characteristics are consistent with those of assets or liabilities considered by market participants in the course of transactions of relevant assets or liabilities by using the valuation technique that is applicable in the present situation and has sufficient available data and other information supporting, and applies relevant observable input values in priority. Unobservable input values are used only when relevant observable input values cannot be available or such values obtained are infeasible.



3.9.6 Test method and accounting treatment of depreciation of financial assets (excluding receivables) Except for the financial assets measured at fair values through current profit or loss, the Company will check the book value of financial assets on the balance sheet date. If there is objective evidence indicating that a financial asset is impaired, provision for impairment will be made. (1) Provision for impairment of available-for-sale financial assets:

If the fair value of available-for-sale financial assets has significantly declined at the end of the period, or it is expected that the trend of decrease in value is non-temporary after considering of various relevant factors, the impairment shall be recognized, and accumulated losses from decreases in fair value originally and directly included in owners' equity shall be all transferred out and recognized as impairment loss. For available-for-sale debt instruments whose impairment losses have been recognized, if their fair values rise in the subsequent accounting period and such rise is objectively related to the events occurring after the recognition of impairment loss, the previously recognized impairment loss shall be reversed and recorded into the current profit or loss. Impairment losses on available-for-sale equity instruments should not be reversed through profit and loss.

(2) Provision for impairment of held-to-maturity investments: Measurement of provision for impairment loss on held-to-maturity investments is treated with reference to the measurement method of impairment loss on receivables.

3.10 Provision for bad debts of accounts receivable 3.10.1 Receivables that are individually significant but with provision for bad debts

made on an individual basis: Judgment basis or amount standards for individually significant amount: The Company recognizes account receivables that are individually significant (more than or equal to RMB 10 million) and other receivables of a single current entities (more than or equal to RMB 2 million) as individually significant receivables. Provision method for receivables with individually significant amount and subject to individual provision for bad debts: On the balance sheet date, the Company separately conducts an impairment test on accounts receivable that are individually significant. Where they are impaired after such test, the impairment loss is recognized at the difference between the present value of its future cash flows lower than the book value and the provision for bad debts shall be made; accounts receivable that are not impaired after the separate test, together with accounts receivable that are individually insignificant, are divided into several portfolios according to similar credit risk features. The impairment loss is calculated and recognized at a certain percentage of these portfolios of accounts receivable in the balance on the balance sheet date and the provision for bad debts shall be made.

3.10.2 Provision for bad debts of accounts receivable made on credit risk characteristics

portfolio basis: (1) Basis of determination for credit risk characteristics portfolio:

The Company divides receivables that are individually insignificant and receivables that are individually significant but that fail to be impaired after a separate test into groups according to the similarity and correlation of credit risk



characteristics. The provision for bad debts is made based on a certain percentage of the balance of the portfolio of such receivables. The provision for bad debts for the current period is calculated based on the actual loss ratio of the receivables identical or similar thereto in the previous year, in combination with the proportion of the provision for bad debts in relation to each portfolio in the current year determined on the basis of practical situation.

(2) Method of bad-debt provision made in terms of the credit risk features portfolio

Methods of provision for bad debts made on credit risk characteristics portfolio basis

Aging portfolio Aging analysis method Portfolio of related parties within the scope of consolidation No provision for bad debts

For those subject to provision for bad debts under aging analysis method:

Aging Proportion of provision

for receivables (%)

Proportion of provision for other receivables

(%) Within 1 year 5 5 1-2 years 10 10 2-3 years 30 30 3-4 years 50 50 4-5 years 80 80 Over 5 years 100 100

3.10.3 Receivables that are individually insignificant but with provision for bad debts

made on an individual basis: Reasons for individual provision of bad debts On the balance sheet date, the Company recognizes impairment losses and makes provision for bad debts of other individually significant receivables with signs of impairment at the differences of the present values of their future cash flows in short of their book values. Method of provision for bad debts On the balance sheet date, the Company separately conducts an impairment test on accounts receivable that are individually insignificant but are provided for bad debts on individual basis. Where they are impaired after such test, the impairment losses are recognized at the difference between the present value of future cash flows lower than the book value and the provision for bad debts shall be accordingly made.

3.11 Inventories

3.11.1 Classification of inventories Inventories are classified into: raw materials, project construction, inventory goods, in products, low-value consumption goods, etc.

3.11.2 Valuation method of inventories dispatched

The inventories are measured at weighted average method when dispatched.

3.11.3 Recognition basis for net realizable values of inventories of different categories In normal operation process, for merchandise inventories held directly for sale, including finished goods, stock commodities and materials for sale, their net realizable values are determined at the estimated selling prices minus the estimated selling expenses and relevant taxes and surcharges; in normal operation process, for material



inventories that need further processing, their net realizable values are determined at the estimated selling prices of finished goods minus estimated costs to completion, estimated selling expenses and relevant taxes and surcharges; for inventories held to execute sales contract or service contract, their net realizable values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the Company, the net realizable value of the excess portion of inventories shall be based on general selling prices. The provisions for inventory depreciation reserve are made on an individual basis at the end of the period, for inventories with large quantities and relatively low unit prices, the provisions for inventory depreciation reserve are made on a category basis. For inventories related to the product portfolios manufactured and sold in the same area, and of which the final usage or purpose is identical or similar thereto, and which is difficult to separate from other items for measurement purposes, the provisions for inventory depreciation reserve are made on a portfolio basis. The net realizable values of inventory items are determined based on the market price on the balance sheet date, except for there is obvious evidence showing the market price on the balance sheet date is abnormal. Net realizable value of inventory items at the end of the year is recognized at the market price on the balance sheet date.

3.11.4 Inventory system

Perpetual inventory system is adopted.

3.11.5 Amortization methods for low-cost consumables and packaging materials (1) One-off amortization method is adopted for low-cost consumables; (2) One-off amortization method is adopted for packaging materials.

3.12 Assets classified as held for sale

The Company recognizes the part (or non-current assets) that meet all the following conditions as assets held for sale: (1) the part must be immediately available to be sold under the current conditions and

according to the usual terms on the sale of such part; (2) the Company has made resolutions on disposing of the part (or non-current assets) and has

been approved by the general meeting or relevant organs of power if the approval of shareholders is required;

(3) the Company has signed an irrevocable transfer agreement with the assignee; (4) the transfer will be completed within one year.

3.13 Long-term equity investments

3.13.1 Determination basis of joint control or significant influence over the investee The term ‘common control’ refers to the joint control, according to the relevant provisions, over an arrangement, of which the relevant activities should be agreed and decided by the participants that share the control. Where the Company exercises joint control over the investee together with other parties to the joint venture and enjoys the right on the investee's net assets, the investee is a joint venture of the Company.



Significant influence refers to the power to participate in making decisions on the financial and operating policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. Where the Company is able to have significant influences on an investee, the investee is its associate.

3.13.2 Determination of initial investment cost

(1) A long-term equity investment as a result of business combination Business combination under the common control: if the Company makes payment in cash, transfers non-cash assets or bears debts and issues equity securities as the consideration for the business combination, the book value of the owner's equity of the acquiree in the consolidated financial statements of the ultimate controller is recognized as the initial cost of the long-term equity investment on the combination date. In case the Company can exercise control over the investee under common control for additional investment or other reasons, the initial investment cost of long-term equity investments is recognized at the share of book value of net asset of the acquiree after the combination in the consolidated financial statements of the ultimate controller on the combination date. The stock premium should be adjusted at the difference between the initial investment cost of long-term equity investments on the combination date and the book value of long-term equity investments before the combination plus the book value of consideration paid for additional shares; if there is no sufficient stock premium for write-downs, the retained earnings are adjusted. Business combination not under the common control: The Company recognizes the combination cost determined on the combination date as the initial cost of long-term equity investments. Where the Company can control the investee not under common control from additional investments, the initial investment cost should be changed to be accounted for under the cost method and recognized at the sum of the book value of equity investments originally held and newly increased investment cost.

(2) Long-term equity investments obtained by other means For long-term equity investments acquired from making payments in cash, the initial cost is the actually paid purchase cost. For long-term equity investments acquired from issuance of equity securities, the initial investment cost is the fair value of the issued equity securities. If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out and traded in can be measured reliably, the initial cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded out and the relevant taxes and surcharges payable unless there is any conclusive evidence that the fair values of the assets traded in are more reliable; if the exchange of non-monetary assets does not meet the above criteria, the book value of the assets traded out and the relevant taxes and surcharges payable are recognized as the initial cost of long-term equity investment traded in. For long-term equity investment acquired from debt restructuring, the initial cost is determined based on the fair value.



3.13.3 Subsequent measurements and the recognition method of profits and losses (1) Long-term equity investments calculated under the cost method

Long-term equity investments of the Company in its subsidiaries are calculated under the cost method. Except for the actual price paid for acquisition of investment or the cash dividends or profits contained in the consideration which have been declared but not yet distributed, the Company recognizes the investment income in the current year at the cash dividends or profits declared by the investee.

(2) Long-term equity investments calculated under the equity method The Company's long-term equity investments in associates and joint ventures are calculated under the equity method. If the initial cost is more than the share of the fair value of the investee' identifiable net asset to which the Company shall be entitled when investing, the initial cost of the long-term equity investment will not be adjusted. If the initial cost of a long-term equity investment is less than the share of the fair value of the investee's identifiable net asset to which the Company shall be entitled when investing, the difference shall be included in the current profit or loss. The Company shall recognize the investment income and other comprehensive income at the shares of net profit and loss and other comprehensive income realized by the investee which the Company shall enjoy or bear and adjust the book value of long-term equity investments at the same time; the Company shall calculate the shares according to profits or cash dividends declared by the investee and correspondingly reduce the book value of long-term equity investments; the book value of long-term equity investments shall be adjusted according to the investee's other changes in owner's equity other than net profit and loss, other comprehensive income and profit distribution, which should be included in owner's equity. The share of the investee's net profit or loss should be recognized after adjustments are made to net profit of the investee based on the fair value of identifiable net assets of the investee upon acquisition of investments and according to accounting policies and accounting period of the Company. When holding the investment, the investee should prepare the consolidated financial statements, it shall account for the investment income based on the net profit, other comprehensive income and the changes in other owner's equity attributable to the investee. The Company shall write off the part of incomes from internal unrealized transactions between the Company and associates and joint ventures which are attributable to the Company according to the corresponding ratio and recognize the profit and loss on investments on such basis. Where the losses from internal transactions between the Company and the investee fall into the scope of assets impairment loss, the full amount of such losses should be recognized. For transactions on investments or sales of assets between the Company and associates and joint ventures, where such assets constitute business, they should be accounted for according to the relevant policies disclosed in this note "Accounting treatment of business combinations under common control and not under common control" and "Preparation of consolidated financial statements". When the Company recognizes its share of loss incurred to the investee, treatment shall be done in following sequence: firstly, the book value of the long-term equity investment shall be reduced; secondly, where the book value is insufficient to cover the share of losses, investment losses are recognized to the extent of book value of other long-term equity which forms the net investment in



the investee in substance and the book value of long term receivables shall be reduced; finally, after all the above treatments, if the Company is still responsible for any additional liability in accordance with the provisions stipulated in the investment contracts or agreements, estimated liabilities are recognized and included into current investment loss according to the obligations estimated to undertake.

(3) Disposal of long-term equity investments For disposal of long-term equity investments, the difference between the book value and the actual price shall be included into the current profit or loss. For long-term equity investments calculated under the equity method, when the Company disposes such investments, accounting treatment should be made to the part that is originally included in other comprehensive income according to the corresponding proportion by using the same basis for the investee to directly dispose the relevant assets or liabilities. Owner's equity recognized at the changes in the investee's other owner's equity other than net profit or loss, other comprehensive income and profit distribution shall be transferred to the current profit and loss according to the proportion, except for other comprehensive income from changes arising from re-measurement of net liabilities or net assets of defined benefit plan. In case the joint control or significant influence over the investee is lost for disposing part of equity investments or other reasons, the remaining equity will be changed to be accounted for according to the recognition and measurement principles of financial instruments. The difference between the fair value and the book value on the date of the loss of joint control or significant influence should be included in the current profit and loss. For other comprehensive income recognized from accounting of the original equity investments under the equity method, accounting treatment should be made by using the same basis for the investee to directly dispose the relevant assets or liabilities when the equity method is no longer adopted. Owner's equity recognized from the investee's changes in other owner's equity other than net profit or loss, other comprehensive income and profit distribution should all transferred to the current profit and loss when the equity method confirmed is no longer adopted. In case the control over the investee is lost due to disposal of part of equity investments or other reasons, in the preparation of individual financial statements, the remaining equity after the disposal that can exercise joint control or exert significant influence over the investee shall be accounted for in the equity method, and such remaining equity shall be adjusted as if it had been accounted for in the equity method since the time of acquisition; the remaining equity after disposal that cannot exercise joint control or exert significant influence over the investee shall be subject to account treatment according to the relevant provisions of the recognition and measurement criteria for financial instruments, and the difference between the fair value on the date when the control is lost and the book value shall be included into the current profit and loss. Where equity after the disposal is acquired from business combinations due to additional investments or other reasons, when the Company prepares individual financial statements, if the remaining equity after the disposal is accounted for under the cost method or equity method, other comprehensive income and other owners' equity recognized from equity investments that are held before the acquisition date and are accounted for under the equity method should be carried forward in proportion; if the remaining equity after the disposal is changed to be accounted for according to recognition and measurement standards of financial instruments, other comprehensive income and other owners' equity should be carried forward at full amount.



3.14 Investment properties The investment property refers to the real estate held for earning rentals or/and capital appreciation or both, including leased land use right, land use right held for transfer upon appreciation, and leased building (including self-built buildings or buildings developed for renting or buildings under construction or development for future renting). The Company measures its existing investment property at cost. For investment properties measured with the cost model - in terms of buildings for renting, the same depreciation policy as that for fixed assets of the Company is adopted and land use rights for renting are implemented with the same amortization policy as that for intangible assets.

3.15 Fixed assets 3.15.1 Recognition criteria of fixed assets

Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services, renting or business management with useful lives exceeding one accounting year. Fixed assets are recognized when they simultaneously meet the following conditions: (1) It is probable that the economic benefits relating to the fixed assets will flow into

the Company; and (2) The costs of the fixed asset can be measured reliably.

3.15.2 Depreciation method

Depreciation of the fixed assets is made on a category basis using the straight-line method and the depreciation rates are determined according to the categories, estimated useful lives and estimated net residual rates of fixed assets. Where various components of fixed assets are different in useful lives or bring economic benefits for the enterprise in different ways, then the Company should choose different depreciation rates or methods to separately provide for depreciation. For fixed assets acquired under financing leases, if there is reasonable assurance that the Company will obtain the ownership of the leased assets when the lease term expires, the leased assets should be depreciated over its useful life; if there is no reasonable assurance that the Company will obtain the ownership of the leased assets when the lease term expires, the leased assets should be depreciated over the shorter of the lease term or the useful life of the leased assets. The depreciation method, depreciation life, residual value rate and annual depreciation rate of fixed assets are as follows:

Category Depreciation method Depreciation

life (year)

Residual value

rate (%)

Annual depreciation

rate (%)

Buildings and constructions Straight-line method 20 5.00 4.75

Machinery equipment Straight-line method 10 5.00 9.50

Transportation equipment Straight-line method 7 5.00 13.57

Electronic equipment and other equipment Straight-line method 3-5 5.00 19.00-31.67

3.15.3 Determination basis and measurement method of fixed assets acquired under

financing leases The fixed assets acquired under financing lease are recognized if one of the following conditions is specified by the Company and the leaser in their lease agreement: (1) upon the expiration of the lease term, the ownership of the leased asset has been

transferred to the Company; (2) the Company has the option to purchase the asset and the purchase price is far

lower than the fair value of such asset at the time of the option being exercised;



(3) the lease term covers the most of the useful life of the leased asset; (4) there is no large difference between the present value of the minimum lease

payments on the lease commencement date and fair value of the assets. On the lease commencement date, the leased assets are stated at the lower of the fair value and the present value of the minimum lease payments. Minimum lease payments are stated at long-term payables and the difference is recognized as unrecognized financing costs.

3.16 Construction in progress

Projects under construction are recorded as fixed assets at necessary expenditures incurred before preparing the asset to reach the condition for its intended use. For construction in progress that has reached working conditions for its intended use but for which the completion of settlement has not been handled, it shall be transferred into fixed assets at the estimated value according to the project budget, construction price or actual cost, etc. from the date when it reaches the working conditions for its intended use. The fixed assets shall be depreciated in accordance with the Company’s policy on fixed asset depreciation. Adjustment shall be made to the originally and provisionally estimated value based on the actual cost after the completion of settlement is handled, but depreciation already provided will not be adjusted.

3.17 Borrowing costs

3.17.1 Recognition principles of capitalization of borrowing costs Borrowing costs include the interest of borrowings, the amortization of discount or premium, auxiliary expenses, exchange differences incurred by foreign currency borrowings, etc. The borrowing costs incurred to the Company and directly attributable to the acquisition and construction or production of assets eligible for capitalization should be capitalized and recorded into relevant asset costs; other borrowing costs should be recognized as costs according to the amount incurred and be included into the current profit and loss. Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets which may reach their intended use or sale status only after long-time acquisition and construction or production activities. Borrowing costs may be capitalized only when all the following conditions are met at the same time: (1) Asset disbursements, which include those incurred by cash payment, the transfer

of non-cash assets or the undertaking of interest-bearing debts for acquiring and constructing or producing assets eligible for capitalization, have already been incurred;

(2) Borrowing costs have already been incurred; (3) The acquisition and construction or production activities which are necessary to

prepare the assets for their intended use or sale have been in progress.

3.17.2 Capitalization period of borrowing costs Capitalization period refers to the period from the commencement of capitalization of borrowing costs to its cessation, excluding the period of capitalization suspension of borrowing costs.



Capitalization of borrowing costs should cease when the acquired and constructed or produced assets eligible for capitalization have reached the working condition for their intended use or sale. Where part of the purchase, construction or manufacturing projects of assets are completed and can be used separately, capitalization of the related borrowing costs should be ceased. When some projects among the acquired and constructed or produced assets eligible for capitalization are completed and can be used separately, the capitalization of borrowing costs of such projects should be ceased.

3.17.3 Period of capitalization suspension

If the acquisition and construction or production activities of assets eligible for capitalization are abnormally interrupted and such condition lasts for more than three months, the capitalization of borrowing costs should be suspended; if the interruption is necessary procedures for the acquired, constructed or produced assets eligible for capitalization to reach the working conditions for its intended use or sale, the borrowing costs continue to be capitalized. Borrowing costs incurred during the interruption are recognized as the current profit and loss and continue to be capitalized until the acquisition, construction or production of the asset restarts.

3.17.4 Measurement of capitalization rate and capitalized amounts of borrowing costs

As for special borrowings borrowed for acquiring and constructing or producing assets eligible for capitalization, borrowing costs of special borrowing actually incurred in the current period less the interest income of the borrowings unused and deposited in bank or return on temporary investment should be recognized as the capitalization amount of borrowing costs. As for general borrowings used for acquiring and constructing or producing assets eligible for capitalization, the interest of general borrowings to be capitalized should be calculated by multiplying the weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special borrowings by the capitalization rate of used general borrowings. The capitalization rate is calculated by weighted average interest rate of general borrowings.

3.18 Intangible assets

3.18.1 Measurement method of intangible assets (1) The Company initially measures intangible assets at cost on acquisition;

The costs of externally acquired intangible assets include their purchase prices, related taxes and surcharges and any other directly attributable expenditure incurred to prepare the asset for its intended use. If the payment for an intangible asset is delayed beyond the normal credit conditions, which is substantially of the financing nature, the cost of the intangible asset shall be determined on the basis of the present value of the purchase price. The intangible assets acquired and used by the debtor to repay debt in debt restructuring should be recorded at the fair value of the intangible assets. The difference between the book value of restructured debts and the fair value of intangible assets used to repay debt should be included in the current profit and loss. On the premise that non-monetary assets trade is of commercial nature and the fair value of the assets traded in or out can be measured reliably, the intangible assets traded in with non-monetary assets should be recognized at the fair value of the assets traded out, unless any unambiguous evidence indicates that the fair value of the assets traded in is more reliable; as to the non-monetary assets trade



not meeting the aforesaid premise, the book value of the assets traded out and related taxes and surcharges payable should be recognized as the cost of the intangible assets, with gains or losses not recognized.

(2) Subsequent measurement The useful lives of the intangible assets are analyzed and determined on their acquisition. For intangible assets with definite useful lives, the Company shall adopt the straight-line method for amortization within the period during which they can bring economic benefits to the Company; where the period during which they can bring economic benefits to the Company cannot be forecast, those intangible assets shall be deemed as assets with indefinite lives and no amortization will be made.

3.18.2 Estimate of useful life of intangible assets with limited useful life:

Item Estimated useful lives Basis Land use right 50 years Land use certificate Software 5 years By reference to the same industry The useful life and amortization method of intangible assets with limited useful lives should be reviewed at the end of each year. After review, the useful life of intangible assets and amortization method at the end of the year are not different from previous estimates.

3.18.3 Specific criteria for classification of research phase and development phase

Research phase: the phase for the creative and planned investigation and research to acquire and understand new scientific or technological knowledge. Development phase: the phase for the application of research achievements and other knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any new material, device or product, or substantially improved material, device and product. Expenditures incurred during the research phase of internal research and development projects shall be written off to current profit and loss.

3.18.4 Specific criteria for capitalization of expenditures at the development phase

Expenditures arising from development phase on internal research and development projects must be capitalized if the Company can satisfy all of the following criteria simultaneously: (1) it is technically feasible to finish intangible assets for use or sale; (2) it is intended to finish and use or sell the intangible asset; (3) the ways whereby the intangible asset is to generate economic benefits, including

those whereby it is able prove that there is a potential market for the products manufactured by applying this intangible asset or that there is a potential market for the intangible asset itself; if the intangible asset will be used internally, its usefulness shall be proved;

(4) it is able to finish the development of the intangible assets, and able to use or sell

the intangible assets, with the support of sufficient technologies, financial resources and other resources; and



(5) the expenditure attributable to the intangible assets during its development phase can be reliably measured.

3.19 Impairment of long-term assets

For the long-term equity investments, investment property, fixed assets, construction in progress, intangible assets, and other long-term assets measured at cost model, if there are signs of impairment, an impairment test will be conducted on the balance sheet date. If the recoverable amount of the asset is less than its book value after test, assets impairment provision will be made at the difference and included into impairment loss. The recoverable amount is determined at the higher of the net of the fair value less disposal costs and the present value of the expected future cash flows. The assets impairment provision is calculated and made on an individual basis. If it is difficult for the Company to estimate the recoverable amount of the individual asset, the recoverable amount of an asset group, to which the said asset belongs, will be determined. Asset group is the smallest asset group that can independently generate cash inflows. For goodwill, impairment test shall be conducted at least in the end of each year. The Company conducts an impairment test for the goodwill. The book value of goodwill arising from business combinations is amortized to relevant asset groups with a reasonable method from the date of acquisition; or amortized to relevant combination of asset groups if it is difficult to be amortized to relevant asset groups. When the book value of goodwill is amortized to the relevant assets group or combination of assets groups, it shall be evenly amortized according to the proportion of the fair value of each assets group or combination of assets groups in the total fair value of the relevant assets groups or combinations of assets groups. Where the fair value cannot be reliably measured, it should be amortized according to the proportion of the book value of each asset group or combination of assets groups in the total book value of assets groups or combinations of assets groups. When making an impairment test on the relevant assets groups or combination of assets groups containing goodwill, if any indication shows that the assets groups or combinations of assets groups may be impaired, the Company shall first conduct an impairment test on the assets groups or combinations of assets groups not containing goodwill, calculate the recoverable amount and compare it with the relevant book value to recognize the corresponding impairment loss. Then the Company shall conduct an impairment test on the assets groups or combinations of assets groups containing goodwill, and compare the book value of these assets groups or combinations of assets groups (including the book value of the goodwill apportioned thereto) with the recoverable amount. Where the recoverable amount of the relevant assets groups or combinations of assets groups is lower than the book value thereof, the Company shall recognize the impairment loss of the goodwill. The above losses from asset impairment shall not be reversed in subsequent accounting periods once recognized.

3.20 Long-term deferred expenses

Long-term deferred expenses refer to various expenses which have been already incurred but will be born in this period and in the future with an amortization period of over one year. 3.20.1 Amortization method

The amortization period is determined in accordance with the contract or expected beneficial period.

3.20.2 Amortization years

The amortization period is determined in accordance with the contract or expected beneficial period.



3.21 Employee compensation 3.21.1 Accounting treatment of short-term compensation

During the accounting period when employees serve the Company, the actual short-term compensation is recognized as liabilities and included in current profit or loss or costs associated with assets. During the accounting period when employees provide services for the Company, the corresponding amount of employee compensation is calculated and determined according to the provision basis and provision proportion as stipulated in the provisions on the social insurance premiums and housing funds paid for employees by the Company, as well as trade union funds and employee education funds. The non-monetary benefits of employees that can be measured reliably are measured at fair value.

3.21.2 Accounting treatment of post-employment benefits

Defined contribution plans The Company pays basic endowment insurance and unemployment insurance for employees according to the relevant provisions of the local government, calculate payables according to payment base and proportion specified by the local government and recognizes them as liabilities, and includes them into the current profit and loss or the relevant asset costs.

3.21.3 Accounting treatment of dismissal benefits

The Company recognizes the employee compensation arising from dismissal benefits as liabilities and include it in the current profit and loss when the Company cannot unilaterally withdraw dismissal benefits which are provided for termination of labor relation plan or layoff proposal, or when the Company recognizes costs or expenses (whichever is earlier) associated with restructuring of payment of dismissal benefits.

3.22 Estimated liabilities

3.22.1 Recognition criteria for estimated liabilities Where all the following conditions are met simultaneously for any obligation pertinent to any contingency including litigation, debt guarantee, onerous contract and reorganization, the Company will recognize such contingency as estimated liabilities: (1) the obligation is a present obligation of the Company; (2) the performance of such obligation is likely to result in outflow of economic

benefits from the Company; and (3) the amount of the obligation can be measured reliably.

3.22.2 Measurement of estimated liabilities Estimated liabilities of the Company are initially measured as the best estimate of expenses required for the performance of relevant present obligations. When the Company determines the best estimate, it should have a comprehensive consideration of risks with respect to contingencies, uncertainties and the time value of money. If the time value of money is significant, the best estimate shall be determined after discounting the relevant future outflow of cash. The best estimate shall be accounted as follows in different circumstances:



If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all the outcomes within this range are equal, the best estimates will be determined at the average amount of upper and lower limits within the range. If there is no continuous range (or interval) for the necessary expenses, or probabilities of occurrence of all the outcomes within this range are unequal although such a range exists, in case that the contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the contingency involves two or more items, the best estimate should be determined according to all the possible outcomes with their relevant probabilities. When all or some of the expenses necessary for the liquidation of estimated liabilities of the Company are expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. The amount recognized for the reimbursement should not exceed the book value of estimated liabilities.

3.23 Share-based payments

The Company's share-based payments are transactions in which the Company grants equity instruments or undertakes equity-instrument-based liabilities in return for services from employees [or other parties]. The share-based payments of the Company consist of equity-settled share-based payments and cash-settled share-based payments. The equity-settled share-based payment in return for services from employees shall be measured at the fair value of the equity instruments granted to the employees. Where the Company makes share-based payments in restricted stocks and the employee makes capital contributions to subscribe such shares, such shares should not be circulated or transferred before they reach unlocked conditions and before they are unlocked; if the unlocked conditions specified in the final equity incentive plan fail to be reached, then the Company should repurchase the shares at the price agreed in advance. When the Company received the payment of the employee for the subscription of restricted stocks, it should recognize share capital and capital reserves (share premiums) in accordance with the payment for subscription received. The Company should fully recognize a liability at the repurchase obligations and recognize treasury stock at the same time. On each balance sheet date within the vesting period, the Company will, based on the newly-acquired subsequent information such as the changes in the number of the vested employees and whether the specified performance is reached, make the best estimate on the number of the vesting equity instruments. On such basis, the services received in the current period should be included in the relevant cost or expenses according to fair value on the date of grant and capital reserves should be accordingly increased. No adjustments should be made to the recognized relevant costs or expenses and total owners' equity after the vesting date. However, when the right can be exercised immediately after the grant, it should be included in the relevant costs or expenses at the fair value on the date of grant. The capital reserves should be increased accordingly. For share-based payments finally failing to be exercised, costs or expenses should not be recognized, unless the conditions for vesting are market conditions or non-vesting conditions. At this time, whether market conditions or non-vesting conditions are met or not, it is deemed to have vesting rights if non-market conditions in all the vesting conditions are met. If the terms of the equity-settled share-based payments were modified, the services received should be recognized at least in accordance with the unmodified terms. Moreover, the modification of fair value of equity instruments granted from any increase, or beneficial changes to the employee on the modification date should be recognized as increases in services obtained. If the equity-settled share-based payments were cancelled, they should be handled as accelerated exercise of rights on the date of cancellation and the amount that is not yet recognized should be immediately recognized. Where employees or other parties could choose to meet non-vesting



conditions but failed to meet the conditions in the vesting period, they should be handed as cancelling the equity-settled share-based payments. However, if new equity instruments are granted, which are recognized as the replacement of the cancelled equity instrument on the grant data, the granted equity instrument for replacement shall be handled in the same way with the disposal of revision of provisions on the original equity instrument and conditions.

3.24 Revenue 3.24.1 General recognition principles for revenue from sales of goods:

(1) the Company has transferred the substantial risks and rewards of ownership of the goods to the buyer;

(2) the Company retains neither continuing managerial involvement to the degree

usually associated with ownership nor effective control over the goods sold; (3) the amount of revenue can be measured reliably; and (4) the related economic benefits are likely to flow into the Company; and (5) the relevant costs that have occurred or will occur can be measured reliably.

3.24.2 Specific principles

(1) Revenue from rendering of service Revenue from rendering of services of the Company mainly refers to revenue from engineering design. If the outcome of transactions can be estimated reliably, revenue shall be recognized at the important timing specified in the design contract. That is to say, revenue shall be recognized at the percentage of workload of completed design at the important timing in total design workload and expected recoverable contract amount. Where the outcome of transactions on rendering of services cannot be reliably estimated, the revenue from rendering of services shall be recognized at labor costs that have been incurred and that are expected to be compensated. The labor costs that have been incurred are recognized as the expenses in the current period. Labor costs that have been incurred but that are not expected to be compensated shall not be recognized as revenue. When contracts or agreements of the Company concluded with other enterprises include sales of goods and rendering of services, if the part of sales of goods and that of rendering of services can be distinguished and be separately measured, they shall be treated separately; if the part of sales of goods and that of rendering of services cannot be distinguished or can be distinguished but cannot be separately measured, the whole contract shall be treated as sales of goods.

(2) Revenue from construction contracts

If the outcome of a construction contract can be reliably estimated, the revenue and costs from the construction contract will be recognized by the completion percentage method on the balance sheet date. The progress of the contract completion is recognized based on the proportion of the actually incurred contract costs accumulated in the estimated total costs. Where the outcome of a construction contract cannot be estimated reliably, if contract costs are not expected to be recoverable, contract revenue is recognized to the extent of actual contract costs that are expected to be recoverable and the contract costs are recognized as contract expenses immediately when incurred. If contract costs are not expected to be recoverable, they are recognized as expenses immediately when incurred and contract revenue is not recognized. When uncertainties that make the outcome of a construction contract unable to be estimated reliably do not exist, revenue and costs associated with construction contracts should be recognized with the completion percentage method.



If the estimated total contract costs exceed the estimated total contract revenue, the expected loss is recognized as current expenses. Accumulated costs incurred and accumulative gross profits (losses) recognized as well as payments settled as to the construction contract should be presented at the net amount after the offset in the balance sheet. The part of accumulated costs incurred plus accumulative gross profits (losses) recognized exceeding payments settled as to the construction contract should be presented as inventories; the part of accumulated costs incurred plus accumulative gross profits (losses) recognized less than the payments settled as to the construction contract should be presented as advances from customers.

(3) Recognition of revenue from hospital service The revenue from hospital service mainly comes from out-patient department and in-patient department, and the revenue is recognized when the patients make the settlements. For revenue from out-patient department, as the patients that go to out-patient department generally require no hospitalization, and receive short term treatment, they settle with the hospital on the date of visit and pay for the treatment and medicine. Therefore, the revenue is recognized financially on the date the payment is received. For revenue from in-patient department, patients need to stay in for a period of treatment; they will pay certain advance when being hospitalized, which will not be recognized at that time. When the patients leave the hospital, they settle the medical expenses during the hospitalization, the hospital will issue an invoice to the patients, and then revenue is recognized financially.

3.25 Government subsidies

3.25.1 Type Government subsidies are monetary assets and non-monetary assets freely obtained by the Company from the government. They are divided into government subsidies related to assets and government subsidies related to income. Government subsidies related to assets refer to government subsidies which are acquired by the Company for construction or form long-term assets in other ways, including the financial allocation for purchasing fixed assets or intangible assets, the financial discount for special loan of fixed assets and others. Government subsidies related to income refer to those other than the government subsidies related to assets.

3.25.2 Timing of recognition

If government subsidies are monetary assets, it shall be measured in the light of the amount received or receivable. Where government subsidies are non-monetary assets, they are measured at fair value; where the fair value cannot be reliably measured, they are measured at nominal amount. Government subsidies measured at nominal amount are directly included in the current profit and loss.

3.25.3 Accounting treatment

Government subsidies related to assets are recognized as deferred income, and included in non-operating income by stages based on the useful life of the assets acquired and constructed; if government subsidies related to income are used to compensate the Company’s relevant expenses or losses in future periods, such government subsidies should be



recognized as deferred income on acquisition and be included in current non-operating income during the period of recognition of the relevant expenses; if government subsidies related to income are used to compensate the Company’s relevant expenses or losses incurred, such government subsidies are directly included into current non-operating income on acquisition.

3.26 Deferred income tax assets and deferred income tax liabilities

Deferred income tax assets are recognized at deductible temporary differences to the extent that it shall not exceed the taxable income probably obtained in future period to be against the deductible temporary difference. For deductible losses and tax credits that can be carried forward to subsequent periods, deferred tax assets arising therefrom are recognized to the extent that future taxable income will be probable to be available against deductible losses and tax credits. Taxable temporary differences are recognized as deferred income tax liabilities except in special circumstances. Such special circumstances in which deferred tax assets or deferred tax liabilities shall not be recognized include: the initial recognition of goodwill; other transactions or matters excluding business combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when incurred. If the Company has the legal right to settle in net amounts and intends to settle in net amount or to obtain assets and discharge liabilities simultaneously, the current tax assets and current tax liabilities of the Company shall be presented based on the net amount upon offset. When the Company has the legal right for netting of current income tax assets and current income tax liabilities and the income tax assets and income tax liabilities are related to the income tax levied on the same taxpayer by the same tax administrative department or are related to different taxpayers but, within each future period of reversal of important income tax assets and income tax liabilities, the taxpayers involved intend to settle current income tax assets and current income tax liabilities or acquire assets and liquidate liabilities at the same time, the Company's income tax assets and income tax liabilities shall be presented at the net amount after the offset.

3.27 Leases

3.27.1 Accounting treatment of operating leases (1) The Company's rental expenses paid for leased assets shall, within the whole

lease term excluding the rent-free period, be amortized with the straight-line method and included in current expenses. Initial direct costs related to lease transactions paid by the Company shall be included in the current expenses. When assets lessor bears costs related to the lease borne by the Company, the Company shall deduct the part of expenses from the total rents and amortize the rents after deduction over the lease term and include them in current expenses.

(2) The Company's rental expenses collected for leased assets shall, within the whole lease term excluding the rent-free period, be amortized with the straight-line method and recognized as the relevant rental income. Initial direct expenses relating to lease transactions incurred by the Company shall be recognized as the current expenses; if the amounts are significant, they shall be capitalized and included in the current income on the same basis as the recognition of lease income. When the Company bears the lease related expenses which should be undertook by the lessee, the Company shall deduct this part of expense from the total rental expenses, and amortize the net amount over the lease term.



3.27.2 Accounting treatment of financing lease (1) Assets leased in under financing leases: On the lease commencement date, the

book entry value of a fixed asset acquired under financing lease is measured at the asset’s fair value or the present value of the minimum lease payment, whichever is the lower. The minimum lease payment is recorded as the book entry value of the long-term payables, and the difference between them is deemed as the unrecognized financing expenses. The Company adopts the effective interest rate method for unrecognized financing charges, which shall be amortized over the lease terms and included in financial expenses. The Company records the initial direct expenses in the values of leased assets.

(2) Assets leased under finance leases: On the lease beginning date, the Company

recognizes the difference between the sum of financing lease receivable and the unguaranteed residual value, and the present value thereof as unrealized financing income, and recognizes the same as rental income over the periods when rent is received in the future. The Company's initial direct costs related to the rental transactions will be included in the initial measurement of the financing lease receivables and the amount of revenue recognized in the lease term will be reduced.

3.28 Discontinued operation

Discontinued operations refer to the component meeting any of the following conditions that has been disposed by the Company or classified as held for sale by the Company, and that can be separately identified upon operation and preparation for the financial statements: (1) the component represents a separate major business or a major business areas; (2) the component is a part of the plan on intended disposal of an independent major business

or a major business area; or (3) the part is a subsidiary acquired only for resale.

3.29 Changes in significant accounting policies and accounting estimates

3.29.1 Changes in significant accounting policies (1) Implementation of the Provisions on the Accounting Treatment for Value-added

Tax On December 3, 2016, the Ministry of Finance promulgated the Provisions on the Accounting Treatment for Value-added Tax (Cai Kuai [2016] No.22), which apply to relevant transactions of the Company occurred since May 1, 2016. Main impacts of the provisions implementation of the Company are as follows:

Contents of and reasons for changes in accounting policies

Name and amount of the affected items in the financial statements

(1) Adjust the item "business taxes and surcharges" in the income statement to the item "taxes and surcharges" therein. Taxes and surcharges (2) Reclassify the real estate tax, land-use tax-, vehicle and vessel use tax and stamp duty incurred by business operation activities of the enterprise since May 1, 2016 from "General and administrative expenses" to "Taxes and surcharges" and the taxes incurred before May 1, 2016 will not be adjusted. The comparative data shall not be adjusted.

Increased taxes and surcharges in this year amount to RMB 433,364.39, and decreased general and administrative expenses in 2016 amount to RMB 433,364.39.

(3) Reclassify the item "taxes and Increased ending balance of other



surcharges payable" to transfer the VAT amount where income (or profit) has been recognized but the VAT has not been paid and which shall be recognized as the output tax amount into the item "other current liabilities" (or "other non-current liabilities"). Compared data shall not be adjusted. The comparative data shall not be adjusted.

current liabilities amounted to RMB 30,382,980.72, and decreased ending balance of taxes and surcharges payable amounted to RMB 30,382,980.72.

3.29.2 Changes in significant accounting estimates

The Company had no changes in principal accounting estimates during the reporting period.

4. Taxation

4.1 Major tax types and tax rates Tax type Tax basis Tax rate

(%)

Value added tax (VAT)

The output tax is calculated based on taxable income in accordance with tax laws, and value added tax payable should be the balance of the output tax after deducting the deductible input tax for the current period

0, 3, 6, 11 and 17

Business tax Levied based on the taxable operating income 3 and 5 Urban maintenance and construction tax

Paid based on the actual business tax, VAT and consumption tax paid 1, 5 and 7

Education surtax Calculated and paid at turnover tax actually paid. 3 Local education surtax Calculated and paid at turnover tax actually paid. 2 Enterprise income tax Levied based on the amount of taxable income 15, 25



Note 1 According to the Circular on Launching the Pilot Collection of Value Added Tax in lieu of Business Tax in Transportation and Certain Areas of Modern Services Industries in Eight Provinces and Municipalities Including Beijing (Cai Shui [2012] No.71) promulgated by the Ministry of Finance and the State Administration of Taxation on July 31, 2012, design business of the Company’s subsidiary Beijing Sino Great Wall Decoration Design Co., Ltd. (hereinafter referred to as the "Sino Great Wall Design") was changed from taxable items under business tax to those under value added tax as of September 1, 2012, so the Company and Sino Great Wall Design became a small-scale VAT taxpayer and were subject to the rate of 3%. Rates of income tax in regard to the Company and its subsidiaries:

Name of subsidiary Income tax rate (%) Remarks

Sino Great Wall Co., Ltd. 25 Sino Great Wall Medical Investment Management Co., Ltd. 25 Sino Great Wall Infrastructure Investment Co., Ltd. 25 Wuhan Commercial Workers Hospital Co., Ltd. 25 Sino Great Wall International Engineering Co., Ltd. 15 Sino Great Wall Jianyee Engineering Co., Ltd. (formerly known as

Sichuan Haoyao Constructional Engineering Co., Ltd.) 25 Sino Great Wall (Beijing) Investment Fund Management Co., Ltd. 25 Sino Great Wall Real estate (Hubei) Co., Ltd. 25 Sino Great Wall New Energy (Beijing) Co., Ltd. 25 Qian'an Sino Solar Power Generation Co., Ltd. 25 Wu'an Juhe Photovoltaic Power Generation Co., Ltd. 25 Bozhou Guangcheng New Energy Co., Ltd. 25 Bozhou Zhaosheng Agricultural Technology Co., Ltd. 25 Bozhou Xieying Solar Power Generation Co., Ltd. 25 Shanghai Ling Rui International Trade Company Limited 25 Shenzhen Hongtulve Industrial Co., Ltd. 25 Sino Great Wall Development (Hengqin) Co., Ltd. 25 SINO GREAT WALL (USA). INC 30 Herabenna Interior Design Guangzhou Co., Ltd. 25 Inrich Me Engineering Co., Limited 17 Sino Great Wall Southwest Construction Engineering Co., Ltd.

(formerly known as Sichuan Dinghui Construction Co., Ltd.) 25 PT.SINO GREAT WALL INVESTMENT INDONESIA 25 PT.SINO GREAT WALL CONSTRUCTION INDONESIA 25

SINO GREAT WALL INTERNETIONAL ENGINEERING(CNMI)CO., LLC

Seven levels of tax rates from 0% to 5%, non-deductible progressive

Shenzhen Yatian Decoration Design Engineering Co., Ltd. 25 Sino Great Wall International Engineering (MACAU) Co., Limited 12 Sino Great Wall Group Co., Limited 17 SGW HP Engineering Construction SDN. BHD 24 SINO GREAT WALL (PHILIPPINES) INTERNATIONAL

CORPORITION 30 Beijing Sino Great Wall Decoration Design Co., Ltd. 25 Suzhou Lvbang Wood Technology Co., Ltd. 25 Sino Heji Environmental Protection Materials Co., Ltd. 25 SINO GREAT WALL INTERNETIONAL ENGINEERING(MM)

CO., LTD 25 Sino Great Wall International Engineering (Thailand) Co., Ltd. 20

4.2 Tax preference (1) Approved by the Beijing Municipal Office, SAT under the Circular on Approval of Tax

Types in 2013, the taxable income of Sino Great Wall Design was calculated at 10% of total income.



(2) According to the provisions of the Circular of the State Administration of Taxation on Issuing the Tentative Measures for the Collection and Administration of Income Tax on Enterprises That Have Operations in Different Regions and That Pay Taxes in a Consolidated Manner (G.S.F. [2008] No. 28) issued on March 10, 2008, for business institutions and establishments without the status of a legal person that are established in different regions within the territory of China, namely those engaging in production and operating activities in different regions, their head offices (parent companies) are enterprises that pay taxes in a consolidated manner. The parent company pays taxes in a consolidated manner. Head office and branches prepay enterprise income tax in installment, 50% of which is shared by all branches and 50% of which is prepaid by the head office. Branches share the prepayments in the proportion of 35%, 35% and 30% of operating income, employee compensation and total assets; final settlement of annual enterprise income tax shall be made by the parent company at the tax authority and will no longer be allocated to branches.

(3) The Company's subsidiaries Sino Great Wall Group Co., Limited (hereinafter referred to as

"Sino Hong Kong") and Inrich Me Engineering Co., Limited (hereinafter referred to as "Inrich Me Engineering") are enterprises established in the Hong Kong Special Administrative Region and are subject to enterprise profit tax at the rate of 16.5%; Sino Great Wall International Engineering (MACAU) Co., Limited (hereinafter referred to as "Sino Macau") is an enterprise established in the Macao Special Administrative Region and is subject to complementary income tax at the progressive rate.

(4) The Company's wholly-owned subsidiary Sino Great Wall International Engineering Co.,

Ltd. (hereinafter referred to as "Sino International") obtained the high-tech enterprise certificate (No.: GR201511003125) jointly approved and issued by Beijing Municipal Science and Technology Commission, Beijing Municipal Finance Bureau, Beijing Municipal Office, SAT and Beijing Local Taxation Bureau on November 24, 2015. The certificate was issued on November 24, 2015 and valid for 3 years, so Sino International would pay enterprise income tax at the rate of 15% in 2015, 2016 and 2017.

(5) The Company's wholly-owned subsidiary Wuhan Commercial Workers Hospital Co., Ltd.

was entitled to the exemption of value-added taxes since May 1, 2016 in accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on Implementing the Pilot Program of Replacing Business Tax with Value-Added Tax in an All-round Manner (Cai Shui [2016] No.36).

5. Notes to the items of consolidated financial statements 5.1 Cash and cash equivalents

Item Balance as at December 31, 2016

Balance as at January 1, 2016

Cash on hand 2,974,883.16 1,349,587.20 Bank deposits 940,730,439.25 343,390,159.56 Other monetary funds 397,110,499.42 350,644,814.55 Total 1,340,815,821.83 695,384,561.31 Including: Total amount deposited abroad 197,496,287.50 60,170,773.67

Cash or cash equivalents being restricted for use due to mortgage, pledge or freezing, or being placed overseas with restrictions on fund repatriation as follows:



Bank acceptance bills margin 140,689,860.21 46,497,936.83 Performance bond 255,913,019.19 64,202,294.79 Deposits for peasant laborers 507,620.02 1,532,920.07 Term deposits or call deposits for guarantee





Funds placed overseas with restrictions on fund repatriation 405,652.81 Total 397,110,499.42 112,638,804.50

5.2 Financial assets measured at fair value through current profit and loss

5.2.1 Financial assets measured at fair value through current profit and loss



Money market fund 1,102,961.04 Total 1,102,961.04

5.3 Notes receivable

5.3.1 Notes receivable by category



Bank acceptance bills 21,300,446.44 4,040,251.87 Commercial acceptance bills 1,053,090,196.14 216,408,496.07 Total 1,074,390,642.58 220,448,747.94

5.3.2 Pledged notes receivable of the Company as at December 31, 2016

Item Pledged amount as at December 31, 2016

Bank acceptance draft - Commercial acceptance draft 98,645,997.87 Total 98,645,997.87

5.3.3 Notes receivable endorsed or discounted by the Company as at December 31,

2016 but not expired on the balance sheet date

Item

Amount of derecognition as at December 31,

2016

Amount underecognized as at December

31, 2016 Bank acceptance draft 207,110,526.41 Commercial acceptance draft 345,762,089.05 Total 207,110,526.41 345,762,089.05

5.4 Accounts receivable

5.4.1 Disclosure of accounts receivable by category

Category

Balance as at December 31, 2016

Book balance Provision for bad debts

Book value Amount

Proportion

(%) Amount

Proportion of

provision (%)

Receivables that are individually significant

but with provision for bad debts made on an

individual basis

Receivables subject to provisions for bad

debts on credit risk characteristics basis 4,148,182,356.26 99.91 423,012,147.95 10.20 3,725,170,208.31

Receivables that are individually

insignificant but with provision for bad

debts made on an individual basis 3,844,309.34 0.09 3,844,309.34 100.00 -

Total 4,152,026,665.60 100.00 426,856,457.29 10.28 3,725,170,208.31



(Continued)

Category



Book value

Amount

Proportion

(%) Amount

Proportion of

provision (%)


significant but with provision for bad

debts made on an individual basis

Receivables subject to provisions for bad

debts on credit risk characteristics basis 2,638,742,183.89 100.00 285,934,096.56 10.84 2,352,808,087.33


insignificant but with provision for bad

debts made on an individual basis

Total 2,638,742,183.89 100.00 285,934,096.56 10.84 2,352,808,087.33

In the portfolio, accounts receivable with the provision for bad debts made under the aging analysis method:

Aging Balance as at December 31, 2016

Account receivable

Provision for bad debts

Proportion of provision (%)

Within1 year 2,981,476,004.74 149,073,800.25 5.00 1-2 years 665,268,747.44 66,526,874.75 10.00 2-3 years 281,948,783.56 84,584,635.07 30.00 3-4 years 177,703,424.82 88,851,712.41 50.00 4-5 years 39,051,351.16 31,241,080.93 80.00 Over 5 years 2,734,044.54 2,734,044.54 100.00 Total 4,148,182,356.26 423,012,147.95

5.4.2 Provision, reversal or recovery of bad debts in 2016

The amount of the provision for bad debts in 2016 was RMB 127,789,717.16; the amount of increase in bad debts on a consolidated basis in 2016 was RMB 13,132,643.57; and no bad debts were recovered or reversed in 2016.

5.4.3 Accounts receivable actually written off in 2016

No accounts receivable were actually written off during the reporting period. 5.4.4 Top five of accounts receivable by the debtor

Name of company


Account receivable Proportion in the

total accounts receivable (%)


China Harbour Engineering Company Ltd. 672,067,475.39 16.19 33,644,960.56 CHINA CENTRAL ASIA GROUP Co. Ltd 436,859,602.82 10.52 21,842,980.14 PowerChina Construction Group Ltd. 302,978,738.20 7.30 15,148,936.91 Oxley Diamond (Cambodia) Co., Ltd 282,328,914.30 6.80 14,116,445.72 Henan No.1 Thermal Power Construction Co., Ltd. 203,103,421.33 4.89 13,042,616.76 Total 1,897,338,152.04 45.70 97,795,940.09



5.4.5 Accounts receivable derecognized due to the transfer of financial assets

Name of company Project Amount

derecognized

Method of financial assets

transfer

Gains or losses

on

derecognition

Xiamen Jiayu Real Estate

Development Co., Ltd.

Xiamen Semi-hill

Grand View B03 14,160,461.27

Transfer of creditors’

right (without recourse) 1,621,895.35

Jinan Haier Green Town Property

Co., Ltd.

Apartments of Jinan

National Games

Village 10,296,979.40


right (without recourse) 1,179,384.11

Poly Real Estate Group Co., Ltd

Building No. 1,

Zhongda Square,

Guangzhou Poly Pearl

River New Town 5,566,496.88


right (without recourse) 637,569.30

Qingdao Green Town Jiaozhou Bay

Real Estate Development Co., Ltd.

Jiaozhou Bay Sheraton

Hotel 5,151,220.21



Dalian Aonan House Development

Co., Ltd.

Dalian Mingxiu Manor

Type B House 4,695,452.00



Dachang Jingyu Real Estate


Chaobai River

Daweicheng Phase 2

Stone Curtain Wall

Project 4,664,024.76



Dalian Zhengqian Property Co.,

Ltd.

Dalian Red Star

Coastal Community

Project 4,237,549.39



Inner Mongolia Yitai Property Co.,

Ltd.

Hohhot Daya

Comprehensive

Building 4,212,745.43



Poly Real Estate Group Co., Ltd

Panyu Poly

Champagne Mansion 4,191,403.58



Dalian Zhengqian Property Co.,

Ltd. Dalian Red Star Sea 2,474,061.00



Tangshan Hengrong Real Estate

Development Co., Ltd. Tang City 101 2,105,541.40



Poly (Zhuhai) Real Estate


Zhuhai Poly Golden

Bay Project, No. 9

model building and

model room in the hall 2,078,996.00



Chifeng Wanda Plaza Co., Ltd.

Inner Mongolia

Chifeng Wanda Hotel 1,437,783.42



Hangzhou Gemdale Zhongtian Real

Estate Development Co., Ltd.

Hangzhou Zhongtian

Project Plot No. 25

Block A High-rise

indoor decoration 1,199,168.80



Total

66,471,883.54

7,613,483.54

Note: On June 25, 2016, the Company and Dagang Financing Lease (Shanghai) Co., Ltd. signed an agreement on transfer of creditors’ right (No.: BLW-SZDG-2016002), according to which the Company transferred 14 items of accounts receivable of RMB66,471,883.54 to Dagang Financing Lease (Shanghai) Co., Ltd. at a transfer price of RMB 58,858,400.00 without recourse as agreed therein. The Company derecognized accounts receivable in 2016, and included the loss of RMB 7,613,483.54 on transfer in non-operating expenses.



5.5 Advances to suppliers 5.5.1 Advances to suppliers by aging

Aging Balance as at December 31, 2016 Balance as at January 1, 2016

Book balance Proportion

(%) Book balance

Proportion (%)

Within 1 year 311,193,306.31 97.49 70,146,608.20 90.27 1-2 years 5,789,414.72 1.81 5,258,018.08 6.77 2-3 years 1,269,897.25 0.40 1,090,606.22 1.40 Over 3 years 954,180.35 0.30 1,212,335.88 1.56 Total 319,206,798.63 100.00 77,707,568.38 100.00

5.5.2 Top five advances by suppliers

Supplier Balance as at December 31,

2016

Proportion in the total balance of advances to

suppliers as at December 31, 2016 (%)

Qingyuan Hefeng New Energy Technology Co., Ltd. 165,000,000.00 51.69 Nanjing Zhongjian Chemical Equipment Manufacturing Co., Ltd. 40,676,756.76 12.74 Shenyang Zhaohuan Modern Architectural Industrial Park Co., Ltd. 4,639,008.00 1.45 GULFLIGHTSELECTRICALENGINEERINGWLL 4,314,087.18 1.35 CSSC (Cambodia) Co., Ltd. 3,651,831.04 1.15 Total 218,281,682.98 68.38

5.6 Other receivables

5.6.1 Disclosure of other receivables by category:

Category



Book value Amount

Proportion

(%) Amount

Proportion of

provision (%)

Other receivables with individually

significant amount and subject to separate

provision for bad debts

Other receivables with provision for bad

debts accrued by credit risk features

portfolio 709,527,391.05 99.93 58,515,258.14 8.25 651,012,132.91

Other receivables with individually

insignificant amount but subject to

individual provision for bad debts 500,000.00 0.07 500,000.00 100.00

Total 710,027,391.05 100.00 59,015,258.14 8.31 651,012,132.91

(Continued)

Category



Book value

Amount

Proportion

(%) Amount

Proportion of

provision (%)

Other receivables with significant single

amount and individual provision for bad

debts



Category



Book value

Amount

Proportion

(%) Amount

Proportion of

provision (%)

Other receivables with provision for bad

debts accrued by portfolio with credit risk

features 261,942,379.50 99.82 21,989,493.39 8.39 239,952,886.11

Other receivables with insignificant single

amount and individual provision for bad

debts 478,000.00 0.18 478,000.00 100

Total 262,420,379.50 100 22,467,493.39 8.56 239,952,886.11

Other receivables subject to provision for bad debts under aging analysis method:


Other receivables Provision for bad

debts Proportion of provision (%)

Within 1 year 574,225,645.55 28,714,087.87 5.00 1-2 years 72,506,847.29 7,250,684.74 10.00 2-3 years 50,949,805.67 15,284,941.71 30.00 3-4 years 8,772,720.70 4,386,360.35 50.00 4-5 years 965,941.84 772,753.47 80.00 Over 5 years 2,106,430.00 2,106,430.00 100.00 Total 709,527,391.05 58,515,258.14

5.6.2 Provision, reversal or recovery of bad debts in 2016

The amount of the provision for bad debts in 2016 was RMB 35,012,661.40; the amount of increase in bad debts on a consolidated basis in 2016 was RMB 1,535,103.35; and no bad debts were recovered or reversed in 2016.

5.6.3 Other receivables actually written off in 2016

Item Written-off amount Actual write-off of other receivables 1,485,463.34

5.6.4 Classification of other receivables by the nature of payment

Nature of Payment Book balance as at December 31, 2016

Book balance as at January 1, 2016

Bidding margins, performance bonds and deposits 366,310,322.14 168,213,515.22 Petty cash and current accounts between individuals 59,867,918.12 40,331,852.58 Current accounts among entities 282,984,039.72 53,815,203.95 Others 865,111.07 59,807.75 Total 710,027,391.05 262,420,379.50

5.6.5 Top five of other receivables by the debtor

Name of company Nature

Balance as at

December 31,

2016

Aging

Proportion in total

balance of other

receivables as at

December 31,

2016 (%)

Provision for

bad debts

Balance as at

December 31,

2016

PowerChina Construction

Group Ltd.

Current accounts

among entities 259,423,663.63

Within 1

year 36.54 12,971,183.18

PT.WANXIANGNICKELIN

DONESIA

Bidding margins,

performance bonds

and deposits 68,000,000.00

Within 1

year 9.58 3,400,000.00



Name of company Nature

Balance as at

December 31,

2016

Aging

Proportion in total

balance of other

receivables as at

December 31,

2016 (%)

Provision for

bad debts

Balance as at

December 31,

2016

Chengdu Qingyuan Real

Estate Development Co.,

Ltd.

Bidding margins,

performance bonds


Within 1

year 4.23 1,500,000.00

Leading Group Office for

Reconstruction and

Extension Project of

Jingfeng Hotel of the

General Logistics

Department of PLA

Bidding margins,

performance bonds

and deposits 30,000,000.00 2-3 years 4.23 9,000,000.00

Shenzhen Jinshawan Hotel

Co., Ltd.

Bidding margins,

performance bonds


Within 1

year 3.88 1,382,769.57

Total / 415,079,054.92 58.46 28,253,952.75

5.7 Inventories

5.7.1 Classification of inventories

Item

Balance as at December 31, 2016 Balance as at January 1, 2016

Book balance Provision for

depreciation Book value Book balance

Provision for

depreciation Book value

Raw materials 12,078,945.75 - 12,078,945.75 13,086,673.87

13,086,673.87

Stock

commodities 43,492,877.62 1,404,765.68 42,088,111.94 7,538,609.26 1,352,585.08 6,186,024.18

Engineering

construction 282,911,079.94 5,051,867.60 277,859,212.34 148,457,514.11 148,457,514.11

Goods in transit - - - 403,456.75 403,456.75

Goods in

progress 668,934.23 - 668,934.23

Low-cost

consumables 209,726.10 - 209,726.10

Total 339,361,563.64 6,456,633.28 332,904,930.36 169,486,253.99 1,352,585.08 168,133,668.91



5.7.2 Inventory provision

Item Balance as at

January 1, 2016

Increase in 2016 Decrease in 2016 Balance as at December 31,

2016 Provision Others Reversal or write-off Others

Stock commodities 1,352,585.08 52,180.60 1,404,765.68 Engineering construction 5,051,867.60 5,051,867.60 Total 1,352,585.08 5,104,048.20 6,456,633.28

5.8 Non-current assets maturing within one year

Item Balance as at December 31, 2016 Balance as at January 1, 2016 Long-term borrowings maturing within one year 13,462,942.89 15,717,270.60 Total 13,462,942.89 15,717,270.60

5.9 Other current assets

Item Balance as at December 31, 2016 Balance as at January 1, 2016 Input tax 35,248,102.26 14,138,411.87 Income tax expenses prepaid 202,092.21 Total 35,450,194.47 14,138,411.87

5.10 Fixed assets

5.10.1 Fixed assets

Item Buildings and constructions

Machinery equipment

Transportation equipment

Electronic equipment and

other equipment Total

1. Original book value (1) Balance as at January 1, 2016 10,193,831.80 15,124,117.90 27,339,595.16 5,372,383.58 58,029,928.44

(2) Increase in 2016 57,775,649.24 73,898,441.45 8,823,721.31 10,286,188.75 150,784,000.75 - Purchase 17,027,997.40 19,620,984.99 6,436,507.07 1,848,909.82 44,934,399.28 - Transfer of construction in progress 5,898,702.19 4,664,068.70

10,562,770.89

- Increase due to business combinations 34,848,949.65 45,459,977.76 2,387,214.24 8,424,278.93 91,120,420.58 - Others

4,153,410.00

13,000.00 4,166,410.00

(3) Decrease in 2016

7,768,106.00 - 952,895.00 8,721,001.00 - Disposal or write-off

3,614,696.00

939,895.00 4,554,591.00

- Others

4,153,410.00

13,000.00 4,166,410.00



Item Buildings and constructions

Machinery equipment

Transportation equipment

Electronic equipment and

other equipment Total

(4) Balance as at December 31, 2016 67,969,481.04 81,254,453.35 36,163,316.47 14,705,677.33 200,092,928.19 2. Accumulated depreciation - - - -

(1) Balance as at January 1, 2016 74,769.21 624,167.49 11,569,621.16 1,915,154.95 14,183,712.81 (2) Increase in 2016 15,053,031.73 33,414,280.49 4,895,747.20 8,483,410.78 61,846,470.20 - Provision 655,224.14 3,366,867.97 3,215,361.21 1,631,494.27 8,868,947.59 - Others 14,397,807.59 30,047,412.52 1,680,385.99 6,851,916.51 52,977,522.61 (3) Decrease in 2016 - 3,525,400.06 - 895,602.49 4,421,002.55 - Disposal or write-off

3,097,944.85

891,142.76 3,989,087.61

- Others

427,455.21

4,459.73 431,914.94 (4) Balance as at December 31, 2016 15,127,800.94 30,513,047.92 16,465,368.36 9,502,963.24 71,609,180.46 3. Provision for impairment - - - -

(1) Balance as at January 1, 2016 - - - - - (2) Increase in 2016 - - - - - - Provision - - - - - - Others - - - - - (3) Decrease in 2016 - - - - - - Disposal or write-off - - - - - - Others - - - - - (4) Balance as at December 31, 2016 - - - - - 4. Book value - - - -

(1) Book value as at December 31, 2016 52,841,680.10 50,741,405.43 19,697,948.11 5,202,714.09 128,483,747.74 (2) Book value as at January 1, 2016 10,119,062.59 14,499,950.41 15,769,974.00 3,457,228.63 43,846,215.63

5.10.2 Temporarily idle fixed assets

There were no temporarily idle fixed assets in 2016.

5.10.3 Fixed assets with pending certificate of title Item Book value Reason for absence of certificate of title

Suzhou factory 5,751,234.64 The relevant formalities are going through



5.11 Construction in process 5.11.1 Construction in progress

Item Balance as at December 31, 2016 Balance as at January 1, 2016

Book balance Provision for impairment Book value Book balance Provision for

impairment Book value

Suzhou Lvbang Plant 4,978,670.79

4,978,670.79 Kuwait tower cranes 5,038,257.45

5,038,257.45

Total 10,016,928.24

10,016,928.24

5.11.2 Changes in important construction in progress in 2016

Project Budget Balance as at January

1, 2016

Increase in 2016

Transfer into fixed assets in

2016

Other decreases in 2016

Balance as at

December 31, 2016

Percentage of

completion

Accumulated capitalization

amount of interest

Including: Interest

capitalized in 2016

Interest capitalization rate in 2016

(%)

Sources of funds

Suzhou Lvbang Plant 6,478,670.79 4,978,670.79 920,031.40 5,898,702.19 100% Self-raised Kuwait tower cranes 5,298,257.45 5,038,257.45 202,074.12 4,664,068.70 576,262.87 100% Self-raised Total 11,776,928.24 10,016,928.24 1,122,105.52 10,562,770.89 576,262.87

5.12 Intangible assets

5.12.1 Intangible assets Item Land use right Software Total

1. Original book value (1) Balance as at January 1, 2016 7,714,044.00 2,395,059.29 10,109,103.29

(2) Increase in 2016 100,906,958.59 2,021,556.78 102,928,515.37 - Purchase

1,073,583.44 1,073,583.44

-Internal research and development - - - - Increase due to business combinations 100,906,958.59 947,973.34 101,854,931.93 (3) Decrease in 2016 - - - - Disposal - - - (4) Balance as at December 31, 2016 108,621,002.59 4,416,616.07 113,037,618.66 2. Accumulated amortization - - - (1) Balance as at January 1, 2016 181,202.41 660,154.55 841,356.96 (2) Increase in 2016 4,873,410.93 1,119,407.22 5,992,818.15 - Provision 354,160.54 755,571.31 1,109,731.85 - Increase due to business combinations 4,519,250.39 363,835.91 4,883,086.30 (3) Decrease in 2016 - Disposal (4) Balance as at December 31, 2016 5,054,613.34 1,779,561.77 6,834,175.11 3. Provision for impairment - - -



Item Land use right Software Total (1) Balance as at January 1, 2016 - - - (2) Increase in 2016 - Provision

(3) Decrease in 2016 - - - - Disposal - - - (4) Balance as at December 31, 2016 - - - 4. Book value - - - (1) Book value as at December 31, 2016 103,566,389.25 2,637,054.30 106,203,443.55 (2) Book value as at January 1, 2016 7,532,841.59 1,734,904.74 9,267,746.33

5.12.2 Land use right with pending certificate of title

There was no land use right with pending certificate of title in 2016.

5.13 Goodwill 5.13.1 Original book value of goodwill

Name of the investee or matters forming goodwill Balance as at

January 1, 2016

Increase in 2016 Decrease in

2016 Balance as at December 31, 2016 Formed from business

combinations Disposal

Shenzhen Yatian Decoration Design Engineering Co., Ltd. 6,724,316.91

6,724,316.91 Wuhan Commercial Workers Hospital Co., Ltd.

27,257,314.49

27,257,314.49

Sino Great Wall Southwest Construction Engineering Co., Ltd.

17,948,978.53

17,948,978.53 Sino Great Wall Jianyee Engineering Co., Ltd.

6,943,534.86

6,943,534.86

Total 6,724,316.91 52,149,827.88 - 58,874,144.79

Remarks: 1. Natural person Pan Huan and the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. signed an Equity Transfer Agreement on November 25, 2015. Pan Huan transferred 70% of his equities held in Shenzhen Yatian Decoration Design Engineering Co., Ltd. to Sino Great Wall International Engineering Co., Ltd.. After the transfer, the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. held 70% of equities in Shenzhen Yatian Decoration Design Engineering Co., Ltd.. The price for the transfer of 70% of equities in Shenzhen Yatian Decoration Design Engineering Co., Ltd. by the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. was RMB 4 million. The Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. takes November 25, 2015 as the acquisition date and total combination costs on the acquisition date are RMB 4 million. The difference between RMB-2,724,316.91, namely the fair value of identifiable net assets of 70% of the equities in Shenzhen Yatian Decoration Design Engineering Co., Ltd. acquired by the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. on the acquisition date, and the combination costs was RMB 6,724,316.91, which should be included in goodwill.



2. On May 1, 2016, Wuhan Shangzhi Hospital Co., Ltd. and its management shareholders signed a Contract on Equity Transfer and Asset Acquisition with the Company, specifying that Wuhan Shangzhi Hospital Co., Ltd. and its management shareholders transfer 100% of equities in Wuhan Shangzhi Hospital Co., Ltd. to the Company. After the equity transfer, the Company owned 100% of equities in Wuhan Commercial Workers Hospital Co., Ltd.. The consideration of the Company for 100% of equities transferred by Wuhan Commercial Workers Hospital Co., Ltd. was RMB 97 million. The Company took June 21, 2016 as the acquisition date. Total combination costs on the acquisition date were RMB 97 million. The difference between RMB 69,742,685.51, namely the fair value of identifiable net assets of 100% of the equities in Wuhan Shangzhi Hospital Co., Ltd. acquired by the Company on the acquisition date, and the combination costs was RMB 27,257,314.49, which should be included in goodwill. 3. Natural persons Ye Jiajun and Zhang Shizhong signed an Equity Transfer Agreement with the Company on July 27, 2016. Ye Jiajun and Zhang Shizhong transferred 100% of his equities held in Sichuan Dinghui Construction Co., Ltd. to Sino Great Wall International Engineering Co., Ltd.. After the transfer, the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. held 100% of equities in Sichuan Dinghui Construction Co., Ltd.. The price made by the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. for receiving 100% of equities in Sichuan Dinghui Construction Co., Ltd. was RMB 18 million. The Company took August 9, 2016 as the acquisition date. Total combination costs on the acquisition date were RMB 18 million. The difference between RMB 51,021.47, namely the fair value of identifiable net assets of 100% of the equities in Sichuan Dinghui Construction Co., Ltd. acquired by the Company, and the combination costs was RMB 17,948,978.53, which should be included in goodwill. After the acquisition, Sichuan Dinghui Construction Co., Ltd. was renamed Sino Great Wall Southwest Construction Engineering Co., Ltd.. 4. Sichuan Haoyao Constructional Engineering Co., Ltd. and its parent company Chengdu Ruihe Hongsheng Technology Co., Ltd. signed an Agreement on Increase in Capital and Share with the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. on November 9, 2016. They transferred 60% of their equities held in Sichuan Haoyao Constructional Engineering Co., Ltd. to Sino Great Wall International Engineering Co., Ltd.. After the transfer, the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. held 60% of equities in Sichuan Haoyao Constructional Engineering Co., Ltd.. The price made by the Company's wholly-owned subsidiary Sino Great Wall International Engineering Co., Ltd. for receiving 60% of equities in Sichuan Haoyao Constructional Engineering Co., Ltd. was RMB 90 million. The Company took November 11, 2016 as the acquisition date. Total combination costs on the acquisition date were RMB 90 million. The difference between RMB 83,056,465.14, namely the fair value of identifiable net assets of 60% of the equities in Sichuan Haoyao Constructional Engineering Co., Ltd. acquired by the Company on the acquisition date, and the combination costs was RMB 6,943,534.86, which should be included in goodwill.


SINO GREAT WALL CO., LTD. FOR THE YEAR ENDED DECEMBER 31, 2016 NOTES TO THE FINANCIAL STATEMENTS

5.14 Long-term deferred expenses

Item Balance as at

January 1, 2016

Increase in

2016

Amortization in

2016 Other decreases

Balance as at

December 31, 2016

Renovation costs 14,879,816.11 2,567,004.36 5,418,620.60 - 12,028,199.87

Overseas guarantee fees 19,747,240.18 1,856,356.88 13,165,818.10 - 8,437,778.96

Subtotal 34,627,056.29 4,423,361.24 18,584,438.70 - 20,465,978.83

Less: long-term borrowings maturing

within one year 15,717,270.60 13,462,942.89

Total 18,909,785.69 7,003,035.94

5.15 Deferred income tax assets and deferred income tax liabilities

5.15.1 Deferred income tax assets without offset

Item

Balance as at December 31, 2016 Balance as at January 1, 2016 Deductible temporary differences

Deferred tax assets

Deductible temporary differences

Deferred tax assets

Provision for asset impairment 484,110,666.81 74,623,400.23 308,401,589.95 46,440,178.39 Deductible losses 2,265,150.21 566,287.55 4,729,047.45 1,171,953.41 Inventory provision 6,456,633.28 1,108,971.56 1,352,585.08 338,146.27 Total 492,832,450.30 76,298,659.34 314,483,222.48 47,950,278.07

5.15.2 Deferred income tax liabilities without offset

Item

Balance as at December 31, 2016 Balance as at January 1, 2016 Taxable

temporary differences

Deferred income tax liabilities

Taxable temporary differences

Deferred income tax liabilities

Gains from changes in fair value of financial assets measured at fair value through profit and loss 102,961.04 15,444.16 Value increment of assets due to combinations not under common control by evaluation 109,879,555.06 27,469,888.77 Total 109,879,555.06 27,469,888.77 102,961.04 15,444.16

5.15.3 Details of unrecognized deferred income tax assets



Deductible temporary differences 1,761,048.62 Deductible losses 29,368,743.01 Total 31,129,791.63

5.16 Other non-current assets



PPP project investment 48,960,000.00 Advances for purchase of long-term assets 67,942,258.30 95,353,390.28 Total 116,902,258.30 95,353,390.28



1. Details of equity investments of PPP project companies

Item

Registered

capital

(RMB

'0,000)

Subscribed

contributions

(RMB

'0,000)

Shareho

lding

ratio

Balance as at

January 1,

2016

Increase

in 2016

(RMB

'0,000)

Decrease

in 2016

Balance as at

December 31,

2016 (RMB

'0,000)

Luyi Shuguang Medical

Industrial Investment and

Construction Co., Ltd. 9,600.00 4,896.00 51.00% 4,896.00 4,896.00

Total 9,600.00 4,896.00

4,896.00 4,896.00

5.17 Short-term borrowings 5.17.1 Short-term borrowings



Guaranteed borrowings 1,621,515,110.00 210,000,000.00 Commercial acceptance bills endorsed or discounted but not expired on the balance sheet date 344,543,247.59 15,408,496.07 Total 1,966,058,357.59 225,408,496.07

1. Notes to short-term borrowings: See Note 10.4 "Related-party transactions" for the related-party guarantee for short-term borrowings.

2. There were no outstanding short-term borrowings due as at December 31, 2016.

5.18 Notes payable

Type Balance as at December 31, 2016


Bank acceptance bill 397,450,000.00 143,410,167.17 Commercial acceptance bill 309,433,375.54

Total 706,883,375.54 143,410,167.17 Total notes payable due but unpaid as at December 31, 2016 were RMB 0.00. The amount of notes that will expire in next accounting period was RMB 706,883,375.54.

5.19 Accounts payable

5.19.1 Presentation of accounts payable:



Payments for projects 1,295,611,654.20 1,331,950,114.27 Payments for purchase of long-term assets 7,923,625.18 669,840.50 Payment for purchase of medicines 10,413,710.87 Total 1,313,948,990.25 1,332,619,954.77

5.19.2 Significant accounts payable with aging over one year:

Item Balance as at December 31,

2016

Reasons for failure of repayment or carry-forward

CUMMINSQATARLLC 11,660,032.30

RMB 914,723.58 for those within 1 year and RMB 10,745,308.72 within 1-2 years

Before the settlement period



Item Balance as at December 31,

2016


GULF REINFORCEMENT STEEL CO. W.L.L 10,424,868.23

RMB 658955.18 for those within 1 year and RMB 9,765,913.05 within 1-2 years


Rezayat Trading Co. Limited 10,782,975.37 RMB 10,782,975.37 within 1-2 years


CHHE GROUP CO.,LTD 24,563,802.05

RMB 11,975,790.38 for those within 1 year and RMB 12,588,011.67 within 1-2 years


Total 57,431,677.95 /

5.20 Advances from customers 5.20.1 Presentation of advances from customers



Payments for projects 572,743,695.28 64,963,842.60 Advances for medical services 1,040,377.30 Total 573,784,072.58 64,963,842.60

5.21 Employee compensation payable

5.21.1 Presentation of employee compensation payable

Item Balance as at

January 1, 2016

Increase in 2016

Decrease in 2016

Balance as at December 31,

2016 Short-term compensation 11,696,032.04 337,653,647.65 331,711,930.27 17,637,749.42 Post-employment benefits - defined contribution plans 973,587.16 13,708,204.80 13,521,994.69 1,159,797.27 Total 12,669,619.20 351,361,852.45 345,233,924.96 18,797,546.69

5.21.2 Presentation of short-term compensation

Item Balance as at

January 1, 2016

Increase in 2016

Decrease in 2016


2016 (1) Salaries, bonuses, allowances and subsidies 10,957,918.68 303,347,680.62 297,388,634.57 16,916,964.73 (2) Employee welfare - 14,636,878.07 14,636,878.07 - (3) Social insurance premiums 678,746.36 9,768,469.65 9,826,271.31 620,944.70 Including: medical insurance premiums 567,258.19 8,753,518.62 8,804,708.07 516,068.74 Work-related injury insurance premium 48,777.45 300,584.33 322,991.86 26,369.92 Maternity insurance premiums 62,710.72 714,366.70 698,571.38 78,506.04 (4) Housing provident funds 59,367.00 8,386,377.05 8,345,904.06 99,839.99 (5) Labor union funds and employee education funds - 1,514,242.26 1,514,242.26 - Total 11,696,032.04 337,653,647.65 331,711,930.27 17,637,749.42

5.21.3 Presentation of defined contribution plans



Item Balance as at

January 1, 2016

Increase in 2016

Decrease in 2016


2016 Basic endowment insurance premiums 928,655.00 13,138,845.28 12,936,675.43 1,130,824.85 Unemployment insurance premium 44,932.16 569,359.52 585,319.26 28,972.42 Total 973,587.16 13,708,204.80 13,521,994.69 1,159,797.27

5.22 Taxes and surcharges payable

Taxes and surcharges Balance as at December 31, 2016


Value-added tax 12,062,605.90 367,314.45 Business tax 83,297,969.10 99,853,626.46 Enterprise income tax 207,849,865.19 172,280,720.23 Individual income tax 1,515,889.41 545,880.47 Urban maintenance and construction tax 4,725,964.11 6,413,578.69 Education surtax 3,694,729.45 5,106,621.62 Stamp tax and other taxes 336,646.62 258,548.19 Total 313,483,669.78 284,826,290.11

5.23 Interest payable



Interest payable on short-term borrowings 4,710,255.00 330,945.21 Interest payable on long-term borrowings 1,718,238.55 197,024.05 Total 6,428,493.55 527,969.26

5.24 Other payables

5.24.1 Other payables by nature



Bidding margins, performance bonds and deposits 26,582,761.45 19,625,824.93 Current accounts between individuals and withholding payables 45,650,286.49 42,269,479.45 Lendings to shareholders - 523,963,781.16 Current accounts between entities 136,613,997.74 49,313,976.16 Others 1,067,929.33 27,914.90 Payments for subscribing shares issued privately 12,500,000.00 Total 222,414,975.01 635,200,976.60

5.24.2 Other significant payables with aging over one year



Shenzhen Qunguangshun Construction Labor Co., Ltd. 31,500,000.00 Unexpired yet Total 31,500,000.00



5.25 Non-current liabilities maturing within one year



Long-term borrowings maturing within one year 175,958,998.04 7,135,752.00 Total 175,958,998.04 7,135,752.00

5.26 Other current liabilities



Output tax to be carried forward 30,382,980.72 Total 30,382,980.72

5.27 Long-term borrowings 5.27.1 Classification of long-term borrowings



Pledged borrowings 500,000,000.00 19,480,800.00 Mortgage borrowings 3,175,860.22 10,659,849.14 Guaranteed borrowings 283,683,018.60 Total 786,858,878.82 30,140,649.14

5.28 Estimated liabilities

Item Balance as at

December 31, 2016 Balance as at

January 1, 2016 Reasons for the formation

Pending litigation 13,225,861.70

Provision for pending litigation of the Company

Total 13,225,861.70 /

5.29 Share capital

Item

Balance as at

January 1,

2016

Increase/Decrease in 2016 Balance as at

December 31,

2016

Issuance

of new

shares

Bonus

shares

Reserves

transferred to

share capital

Others Subtotal

Total amount of

shares 446,906,582.00 1,251,338,429.00 1,251,338,429.00 1,698,245,011.00

5.30 Capital reserve

Item Balance as at

January 1, 2016 Increase in 2016 Decrease in 2016


Capital premium (share premium) 394,052,904.72 1,251,338,429.00 -857,285,524.28 Other capital reserves -444,420,766.94 2,356,589.48 -442,064,177.46 Total -50,367,862.22 2,356,589.48 1,251,338,429.00 -1,299,349,701.74

Remark: Increase in other capital reserves of RMB 2,356,589.48 in 2016 was capital reserves increased due to accounting of interest of borrowings of the controlling shareholders and associated natural persons to the Company according to the equity transactions; The capital reserves conversed into share capital of RMB 1,251,338,429.00 in 2016 were the decrease of capital reserves in 2016.

5.31 Special reserve

Item Balance as at



Work safety costs 46,014,941.54 56,095,547.05 36,422,620.45 65,687,868.14 Total 46,014,941.54 56,095,547.05 36,422,620.45 65,687,868.14



5.32 Surplus reserve

Item Balance as at



Statutory surplus reserves 84,394,441.23 84,394,441.23 Total 84,394,441.23 84,394,441.23

5.33 Undistributed profits

Item Year 2016 Year 2015 Undistributed profits as at the end of last period before adjustment 755,308,636.19 443,707,019.71 Adjustment to total undistributed profits at the beginning of the year ("+" for increase and "-" for decrease) Undistributed profits at the beginning of the year after adjustment 755,308,636.19 443,707,019.71 Plus: net profit attributable to owners of the parent company in the year 473,661,862.67 346,648,651.48 Less: withdrawal of statutory surplus reserves 35,047,035.00 Others Undistributed profits at the end of the year 1,228,970,498.86 755,308,636.19

5.34 Operating income and operating cost

Item Amount in 2016 Amount in 2015

Income Cost Income Cost Primary business 4,662,402,374.17 3,459,377,744.66 4,010,300,741.19 3,165,027,185.66 Other business 2,596,743.00 - 58,258.39 Total 4,664,999,117.17 3,459,377,744.66 4,010,358,999.58 3,165,027,185.66

5.35 Business taxes and surcharges

Item Amount in 2016 Amount in 2015 Business tax 8,128,747.41 71,137,330.61 Urban maintenance and construction tax 597,022.91 4,552,568.01 Education surtax 478,975.13 3,795,770.42 Other taxes 446,784.01 Total 9,651,529.46 79,485,669.04

5.36 Selling expenses

Item Amount in 2016 Amount in 2015 Employee compensation 6,623,108.93 7,480,826.85 Travel expenses 934,104.49 1,055,919.35 Entertainment expenses 469,366.01 898,779.78 Advertising and promotion expenses 2,675.00 155,680.00 Engineering maintenance fees 17,911,593.82 1,431,742.98 Others 4,377,840.02 2,663,223.14 Total 30,318,688.27 13,686,172.10



5.37 General and administrative expenses Item Amount in 2016 Amount in 2015

Employee compensation 127,039,183.19 87,117,818.35 Office costs 9,544,489.51 6,241,300.07 Rental fees 19,084,430.19 12,393,307.35 Travel expenses 12,096,343.79 5,350,149.45 Entertainment expenses 9,828,496.48 6,462,222.69 Depreciation of fixed assets 6,848,917.76 2,339,244.07 Vehicle costs 2,871,639.42 2,586,923.27 Amortization of long-term deferred expenses 4,308,529.48 4,844,357.87 Consulting fees 79,559,745.78 10,069,218.74 Conference expenses 156,486.46 136,778.15 Others 42,592,471.50 17,021,007.85 Total 313,930,733.56 154,562,327.86

5.38 Financial expenses

Category Amount in 2016 Amount in 2015 Interest expenses 130,325,289.46 45,919,707.78 Less: Interest income 3,936,374.12 1,654,394.40 Gains or losses on exchange -75,709,807.87 -7,285,087.59 Discount interest 19,445,217.45 4,863,792.26 Handling charges and others 57,312,903.03 13,022,383.97 Total 127,437,227.95 54,866,402.02

5.39 Losses from asset impairment

Item Amount in 2016 Amount in 2015 Losses on bad debts 164,907,841.91 109,984,519.09 Losses on inventory depreciation 5,104,048.20 1,352,585.08 Total 170,011,890.11 111,337,104.17

5.40 Gains from changes in fair value

Source of the gains from changes in fair value Amount in 2016 Amount in 2015 Financial assets measured at fair value through current profit and loss 42,553.26 Total 42,553.26

5.41 Investment income

Item Amount in 2016 Amount in 2015 Income from long-term equity investments accounted for under equity method -

Investment income from disposal of long-term equity investments -

Investment income received from financial assets measured at fair value through current profit and loss during the holding period -

Investment income received from disposal of financial assets measured at fair value through current profit and loss 13,448.02 Investment income from held-to-maturity investments during the holding period -

Investment income of available-for-sale financial assets during the holding period -



Item Amount in 2016 Amount in 2015 Investment income from disposal of available-for-sale financial assets -

Gains and losses arising from re-measurement of the remaining equities at the fair value after the loss of the control - Others 2,212,902.95

Total 2,226,350.97

5.42 Non-operating income

Item Amount in 2016 Amount in 2015 Amount included in

non-recurring gains and losses in 2016

Total gains from disposal of non-current assets 4,455.00 Including: gains from disposal of fixed assets 4,455.00 Government grants 108,121.33 342,246.00 108,121.33 Others 26,318,921.53 34,032.08 26,318,921.53 Total 26,427,042.86 380,733.08 26,427,042.86

Government subsidies included in current profit and loss

Item Amount in 2016 Amount in 2015 Related to assets/income Rewards for headquarter-mode enterprises that have made investments in Tongzhou 72,365.00 342,246.00 Related to income Post subsidy 35,756.33 Related to income Total 108,121.33 342,246.00 /

5.43 Non-operating expenses

Item Amount in 2016 Amount in 2015 Amount included in

non-recurring gains and losses in 2016

Total losses from disposal of non-current assets 564,833.40 85,567.15 564,833.40 Including: losses on disposal of fixed assets 564,833.40 85,567.15 564,833.40 Foreign donations

Others 21,022,106.88 939,828.42 21,022,106.88 Total 21,586,940.28 1,025,395.57 21,586,940.28

5.44 Income tax expenses

5.44.1 Statement of income tax expenses Item Amount in 2016 Amount in 2015

Current income tax expenses 115,052,974.76 82,948,121.72 Deferred income tax expenses -25,808,113.01 1,740,767.09 Total 89,244,861.75 84,688,888.81

5.44.2 Adjustment process of accounting profits and income tax expenses

Item Amount in 2016 Total profit 561,337,756.70 Income tax expenses calculated at the statutory [or applicable] tax rate 140,334,439.18 Effect of different tax rate applicable to subsidiaries 1,009,583.31 Effect of adjustment on income tax in previous periods

Effect of tax-exempt income Effect of non-deductible costs, expenses and losses 42,837,964.72



Item Amount in 2016 Effect of deductible losses from using deferred income tax assets unrecognized in previous periods

Effect of deductible temporary differences or deductible losses from deferred income tax assets unrecognized in the current period 7,242,029.39 Income tax expenses 89,244,861.75

5.45 Items in the statement of cash flows

5.45.1 Cash received from other operating activities Item Amount in 2016 Amount in 2015

Interest income 3,936,374.12 1,654,394.40 Margin, deposit and other current accounts 1,814,618,138.18 1,372,680,802.86 Government grants 108,121.33 342,246.00 Total 1,818,662,633.63 1,374,677,443.26

5.45.2 Cash paid for other operating activities

Item Amount in 2016 Amount in 2015 Handling charges 15,515,853.49 17,871,746.12 Margin and deposit expenses 117,417,474.74 65,681,623.08 Selling expenses 23,695,579.34 5,708,228.19 General and administrative expenses 175,125,500.48 58,197,102.84 Current accounts 2,657,532,011.53 1,490,471,903.13 Total 2,989,286,419.58 1,637,930,603.36

5.45.3 Cash received from other investing activities

Item Amount in 2016 Amount in 2015 Individual financing funds received 162,855,000.00 779,900,000.00 Non-public deposits 12,500,000.00 Total 175,355,000.00 779,900,000.00

5.45.4 Cash paid for other financing activities

Item Amount in 2016 Amount in 2015 Note margin - 46,903,589.64 Individual financing funds 530,980,295.84 328,378,111.24 Trust deposits 2,000,000.00 Financing fees 22,800,000.00 Total 555,780,295.84 375,281,700.88

5.46 Supplementary information to the statement of cash flows

5.46.1 Supplementary information to the statement of cash flows Supplementary information Year 2016 Year 2015

1. Net profit adjusted to cash flows from operating activities

Net profit 472,092,894.95 346,103,140.68 Plus: provision for asset impairment 170,011,890.11 111,337,104.17 Depreciation of fixed assets and others 8,868,947.59 3,522,849.96 Amortization of intangible assets 1,109,731.85 627,434.01 Amortization of long-term deferred expenses 18,584,438.70 12,313,310.96 Losses on disposal of fixed assets, intangible assets and other long-term assets ("-" for gains) 564,833.40 81,112.15



Supplementary information Year 2016 Year 2015 Losses on write-off of fixed assets (“-” for gains)

Losses from changes in fair value ("-" for gains) -42,553.26 Financial expenses ("-" for gains) 136,256,259.56 38,634,620.19 Investment loss ("-" for gains) 2,226,350.97 - Decreases in deferred income tax assets ("-" for increases) 1,646,331.60 1,741,109.30 Increases in deferred income tax liabilities ("-" for decreases) -27,454,444.61 -342.21 Decreases in inventories ("-" for increases) -148,243,275.45 -134,526,054.06 Decreases in operating receivables (“-” for increases) -2,878,862,492.67 -867,621,315.78 Decreases in operating payables ("-" for decreases) 555,322,720.06 195,778,326.80 Others

Net cash flows from operating activities -1,687,875,813.94 -292,051,257.08 2. Significant investing and financing activities not involving cash inflows and outflows

Conversion of debt into capital Convertible corporate bonds due within one

year Fixed assets acquired under financial lease 3. Net change in cash and cash equivalents Ending balance of cash 943,705,322.41 582,745,756.81

Less: Beginning balance of cash 582,745,756.81 243,759,954.90 Plus: Ending balance of cash equivalents

Less: Beginning balance of cash equivalents

Net increase in cash and cash equivalents 360,959,565.60 338,985,801.91

5.46.2 Net cash paid for acquisition of subsidiaries in 2016

Amount Cash or cash equivalents paid in 2016 for business combinations incurred in 2016 110,000,000.00 Less: cash and cash equivalents held by subsidiaries on the acquisition date 67,532,263.39 Plus: Cash or cash equivalents paid in 2016 for business combinations in previous periods Net cash paid for acquisition of subsidiaries 42,467,736.61

5.46.3 Breakdowns of cash and cash equivalents



I. Cash 943,705,322.41 582,745,756.81 Including: cash on hand 2,974,883.16 1,349,587.20

Unrestricted bank deposit 940,730,439.25 343,390,159.56 Other unrestricted monetary funds 238,006,010.05

II. Cash equivalents III. Balance of cash and cash equivalents

as at December 31, 2016 943,705,322.41 582,745,756.81 Including: cash and cash restricted for





use by the parent company or subsidiaries within the group

5.47 Restricted assets

Item Book value as at December 31, 2016 -Reason for restriction

Cash and cash equivalents 397,110,499.42 Deposits Notes receivable 98,645,997.87 Pledge Balance of accounts receivables 1,509,610,147.37 Pledge Total 2,005,366,644.66

5.48 Monetary items in foreign currency

5.48.1 Monetary items in foreign currency

Item Balance in foreign

currency as at December 31, 2016

Exchange rate

RMB balance translated as at

December 31, 2016 Cash and cash equivalents

1,088,130,877.82

Including: USD 154,220,972.45 6.9370 1,069,830,885.89 GBP 1,000.00 8.5094 8,509.40 HKD 1,525,578.86 0.8945 1,364,645.55 QAR 82,452.21 1.9051 157,078.79 THB 50,000.00 0.1937 9,684.67 INR 292,646,802.97 0.0463 13,552,008.49 PHP 122,867.99 0.1402 17,224.11 MYR 284,472.84 1.5527 441,686.76 KWD 116,796.90 22.6588 2,646,480.79 BUK 1,590,000.00 0.0051 8,109.00 MOP 108,932.37 0.8681 94,564.37 Accounts receivable

2,062,888,319.06

Including: USD 109,812,714.10 6.9370 761,770,797.71 QAR 159,572,978.97 1.9051 304,000,701.70 INR 1,149,337,736.29 0.0463 53,224,004.52 PHP - 0.1402 - MYR 42,494,611.37 1.5527 65,979,258.34 MOP 1,362,817.67 0.8681 1,183,064.22 DZD 24,867,193.21 0.0626 1,557,808.06 KWD 38,623,917.74 22.6588 875,172,684.51 Advances to suppliers

96,686,246.86

Including: USD 2,587,704.72 6.9370 17,950,907.64 QAR 21,321,042.22 1.9051 40,618,479.63 INR 8,026,046.66 0.0463 371,673.47 KWD 1,665,804.92 22.6588 37,745,186.12 Other receivables

148,838,337.87

Including: USD 13,048,500.31 6.9370 90,517,446.65 HKD 15,150.00 0.8945 13,551.83 MOP - 0.8681 - INR 25,540,450.43 0.0463 1,182,737.68 MYR 462,804.74 1.5527 718,573.78 PHP 116,997.00 0.1402 16,401.10



Item Balance in foreign

currency as at December 31, 2016

Exchange rate

RMB balance translated as at

December 31, 2016 QAR 15,675,667.09 1.9051 29,863,538.46 THB 1,022,031.04 0.1937 197,960.61 KWD 1,149,993.31 22.6588 26,057,499.89 DZD 3,361,846.96 0.0626 210,603.27 BUK 11,841,381.00 0.0051 60,024.60 Accounts payable

615,773,811.43

Including: USD 42,867,884.62 6.9370 297,374,515.61 QAR 51,783,417.59 1.9051 98,652,011.05 INR 364,688,798.76 0.0463 16,888,158.86 PHP 44,130.43 0.1402 6,186.38 MYR 16,300,996.89 1.5527 25,309,742.82 KWD 7,536,594.55 22.6588 170,770,394.88 BUK 1,336,107,728.00 0.0051 6,772,801.83 Advances from customers

31,893,381.65

Including: USD 1,524,015.00 6.9370 10,572,092.06 EUR 1,998,722.68 7.3068 14,604,266.88 HKD - 0.8945 - DZD 107,223,416.22 0.0626 6,717,022.71 Other payables

80,390,994.02

Including: USD 10,134,042.51 6.9370 70,299,852.89 HKD - 0.8945 - QAR 500,339.30 1.9051 953,190.82 INR 42,167,275.30 0.0463 1,952,699.52 PHP 8,447.15 0.1402 1,184.15 DZD 126,262.63 0.0626 7,909.74 KWD 316,704.69 22.6588 7,176,156.90


SINO GREAT WALL CO., LTD. FOR THE YEAR ENDED DECEMBER 31, 2016 NOTES TO THE FINANCIAL STATEMENTS 6. Changes in the scope of consolidation

6.1 Business combinations not under common control 6.1.1 Business combinations not under common control in 2016

Acquiree Timing of acquisition

of equities

Costs for

acquisition of

equities

Proportion of

equities acquired

(%)

Method of

acquisition of

equities

Acquisition date

Recognition

basis of the

acquisition date

Revenue of the

acquiree from the

acquisition date to

December 31,

2016

Net profit of the

acquiree from the

acquisition date

to December 31,

2016

Wuhan Commercial Workers Hospital

Co., Ltd. June 21, 2016 97,000,000.00 100 Acquisition June 21, 2016

Acquisition of

control 82,027,233.44 3,120,181.28

Sino Great Wall Southwest

Construction Engineering Co., Ltd. August 9, 2016 18,000,000.00 100 Acquisition August 9, 2016

Acquisition of

control 14,967,733.16 426,158.33

Sino Great Wall Jianyee Engineering

Co., Ltd. November 11, 2016 90,000,000.00 60

Increase in capital

and share November 11, 2016

Acquisition of

control 102,593,058.61 541,256.23

6.1.2 Combination cost and goodwill

Wuhan Commercial

Workers Hospital Co., Ltd.

Sino Great Wall Southwest Construction Engineering Co., Ltd.

Sino Great Wall Jianyee Engineering

Co., Ltd.

Combination cost - Cash 97,000,000.00 18,000,000.00 90,000,000.00

- Fair value of non-cash assets - - - -Fair value of liabilities issued or assumed - - - -Fair value of equity securities issued - - - -Fair value of contingent consideration - - - - Fair value of equities held before the acquisition date on the acquisition date - - - - Others - - - Total combination costs 97,000,000.00 18,000,000.00 90,000,000.00 Less: share of fair value of identifiable net assets acquired 69,742,685.51 51,021.47 83,056,465.14 Amount of goodwill/combination cost less than the share of fair value of identifiable net assets acquired 27,257,314.49 17,948,978.53 6,943,534.86



6.1.3 Identifiable assets and liabilities of the acquiree on the acquisition date (Unit: RMB '0,000)

Wuhan Commercial Workers Hospital Co., Ltd.

Sino Great Wall Southwest Construction Engineering

Co., Ltd.

Sino Great Wall Jianyee Engineering Co., Ltd.

Fair value on the

acquisition date

Book value on the

acquisition date

Fair value on the

acquisition date

Book value on the

acquisition date

Fair value on the

acquisition date

Book value on the

acquisition date

Current assets 17,101.91 17,101.91 404.21 387.62 29,475.62 27,984.18 Non-current assets 14,056.60 2,552.97

4.15 307.19 679.46

Total assets: 31,158.51 19,654.88 404.21 391.77 29,782.81 28,663.64 Current liabilities 21,308.34 21,308.34 377.34 377.34 24,150.98 24,150.98 non-current liabilities - -

Total liabilities: 21,308.34 21,308.34 377.34 377.34 24,150.98 24,150.98 Net asset 9,850.17 -1,653.46 26.87 14.43 5,631.83 4,512.66 Less: minority equity - -

2,252.73 1,805.06

Net asset acquired 9,850.17 -1,653.46 26.87 14.43 3,379.10 2,707.60



6.2 Changes in the scope of consolidation for other reasons 1. The Company established a wholly-owned subsidiary in 2016 - SINO GREAT WALL

INTERNETIONAL ENGINEERING (CNMI) CO., LLC with registered capital of USD 1 million.

2. The Company established a wholly-owned subsidiary in 2016 - Sino Great Wall (Beijing)

Investment Management Co., Ltd. with registered capital of RMB 100 million. 3. The Company established a holding subsidiary in 2016 - Sino Great Wall Real Estate

(Hubei) Co., Ltd. with the shareholding ratio of 80% and the registered capital of RMB 100 million.

4. The Company established a holding subsidiary in 2016 - Sino Great Wall Development

(Hengqin) Co., Ltd. with the shareholding ratio of 85% and the registered capital of RMB 50 million.

5. The Company established a holding subsidiary in 2016 - PT.SINO GREAT WALL

INVESTMENT INDONESIA with the shareholding ratio of 99.9% and the registered capital of IDR 520 billion.

6. The Company established a holding subsidiary in 2016 - PT.SINO GREAT WALL

CONSTRUCTION INDONESIA with the shareholding ratio of 67% and the registered capital of IDR 150 billion.

7. The Company established a holding subsidiary in 2016 - SINO GREAT WALL

INTERNETIONAL ENGINEERING (MM) CO., LTD with the shareholding ratio of 80% and the registered capital of USD 10 million.

8. The Company established a wholly-owned subsidiary in 2016 - Sino Great Wall New

Energy (Beijing) Co., Ltd. with registered capital of RMB 30 million. 9. The Company canceled a holding subsidiary in 2016 - Sino Heji Environmental Protection

Materials Co., Ltd. 7. Equity in other entities

7.1 Equity in subsidiaries 7.1.1 Structure of the enterprise group

Name of subsidiaries Principal place

of business

Registered

place

Nature of

business

Shareholding ratio (%) Way of

acquisition Directly Indirectly

Sino Great Wall Medical

Investment Management Co.,

Ltd. Beijing Beijing

Medical

investment 100

Establishmen

t

Sino Great Wall Infrastructure

Investment Co., Ltd. Beijing Beijing

Investment

management,

import and

export 100

Establishmen

t

Wuhan Commercial Workers

Hospital Co., Ltd. Wuhan Wuhan Health care 100

Acquisition

Sino Great Wall International

Engineering Co., Ltd. Beijing Beijing Decoration 100

Acquisition

Sino Great Wall Jianyee

Engineering Co., Ltd. (formerly

known as Sichuan Haoyao

Constructional Engineering Co.,

Ltd.) Chengdu Chengdu Construction 60

Acquisition




of business

Registered

place

Nature of

business



Sino Great Wall (Beijing)

Investment Fund Management

Co., Ltd. Beijing Beijing

Investment

and property

management;

economy and

trade

consulting 100

Establishmen

t

Sino Great Wall Real Estate

(Hubei) Co., Ltd. Wuhan Wuhan

Real estate

development 80

Establishmen

t

Sino Great Wall New Energy

(Beijing) Co., Ltd. Beijing Beijing

New energy

technology 100

Establishmen

t

Qian'an Sino Solar Power

Generation Co., Ltd. Qian'an Qian'an

Solar

photovoltaic

power station 100

Establishmen

t

Wu'an Juhe Photovoltaic Power

Generation Co., Ltd. Wu'an Wu'an

Solar

photovoltaic

power

generation 100

Establishmen

t

Bozhou Guangcheng New

Energy Co., Ltd. Bozhou Bozhou

Solar power

generation 100

Establishmen

t

Bozhou Zhaosheng Agricultural

Technology Co., Ltd. Bozhou Bozhou Agriculture 100

Establishmen

t

Bozhou Xieying Solar Power

Generation Co., Ltd. Bozhou Bozhou

Solar power

generation 100

Establishmen

t

Shanghai Ling Rui International

Trade Company Limited Shanghai Shanghai Trade 100

Establishmen

t

Shenzhen Hongtulve Industrial

Co., Ltd. Shenzhen Shenzhen

Investment,

research and

development

and sales,

trade as well

as import and

export 100

Establishmen

t

Sino Great Wall Development

(Hengqin) Co., Ltd. Zhuhai Hengqin

Design and

construction 85

Establishmen

t

SINO GREAT WALL (USA).

INC

The United

States

The United

States

Commercial

activities

allowed by

law 100

Establishmen

t

Herabenna Interior Design

Guangzhou Co., Ltd. Guangzhou Guangzhou Design 100

Establishmen

t

Inrich Me Engineering Co.,

Limited Hong Kong Hong Kong

Mechanical

and electrical

engineering,

scientific

research,

trade and

investment

consulting 100

Establishmen

t

Sino Great Wall Southwest

Construction Engineering Co.,

Ltd. (formerly known as Sichuan

Dinghui Construction Co., Ltd.) Chengdu Chengdu Construction 100

Acquisition

PT.SINO GREAT WALL

INVESTMENT INDONESIA Indonesia Indonesia

Real estate or

lease 99.9

Establishmen

t

PT.SINO GREAT WALL

CONSTRUCTION INDONESIA Indonesia Indonesia Construction 67

Establishmen

t




of business

Registered

place

Nature of

business



SINO GREAT WALL

INTERNETIONAL

ENGINEERING(CNMI)CO.,LL

C Saipan Saipan

Design and

construction 100

Establishmen

t

Shenzhen Yatian Decoration

Design Engineering Co., Ltd. Shenzhen Shenzhen

Design and

construction 70

Acquisition


Engineering (MACAU) Co.,

Limited Macao Macao

Design and

construction 96 4

Establishmen

t

Sino Great Wall Group Co.,

Limited Hong Kong Hong Kong

Construction,

design, trade

and

investment

consulting 100

Establishmen

t

SGW HP

EngineeringConstructionSDN.B

HD Malaysia Malaysia

Design and

construction 100

Establishmen

t

SINO GREAT WALL

(PHILIPPINES)

INTERNATIONAL

CORPORITION Philippines Philippines

Building

construction

and import

and export

trade 100

Establishmen

t

Beijing Sino Great Wall

Decoration Design Co., Ltd. Beijing Beijing

Design and

consulting 100

Establishmen

t

Suzhou Lvbang Wood

Technology Co., Ltd. Suzhou Suzhou

Production

and sales 100

Establishmen

t

Sino Heji Environmental

Protection Materials Co., Ltd. Heji Heji

Production

and sales 80

Establishmen

t

SINO GREAT WALL

INTERNETIONAL

ENGINEERING(MM)CO.,LTD Myanmar Myanmar

Design and

construction 80

Establishmen

t


Engineering (Thailand) Co., Ltd. Thailand Thailand

48.998

Establishmen

t

8. Risks associated with financial instruments

The Company faces various financial risks in the process of operation: credit risks, market risks and liquidity risks. The Board of Directors of the Company shall be fully responsible for determining risk management objectives and policies and bearing the ultimate liabilities for that. However, the Board of Directors has authorized the management to design and implement the process that can ensure the effective implementation of the risk management objectives and policies. The Board of Directors reviews the effectiveness of the enforced procedures and the rationality of risk management objectives and policies through monthly reports submitted by the management. Internal auditors of the Company will also audit risk management policies and procedures and report the relevant findings to the audit committee. Overall objective of risk management of the Company is to formulate risk management policies to minimize risks without undue prejudice to the Company's competitiveness and resilience. 8.1 Credit risk

Credit risk refers to a risk of financial losses suffered by one party of financial instruments due to the failure of the other party to fulfill obligations. The Company mainly faces customer credit risks caused by sales on account. Prior to the conclusion of a new contract, the Company will evaluate the credit risk of the new customer, including external credit rating and bank reference letter under some circumstances if the relevant information is available. The Company sets a credit limit for each customer. The limit is the maximum amount unnecessary for additional approval.



The Company quarterly monitors credit ratings of existing customers and monthly reviews aging analysis of accounts receivable to ensure that the Company's overall credit risk is within the controllable range. When the Company monitors credit risks of customers, the customers shall be divided into groups according to their credit features. Customers rated as "high risk" will be placed in a restricted customer list. The Company may sell goods to such customers on credit in future periods subject to additional approval; otherwise the Company must require advance payments.

8.2 Market risk Market risk associated with financial instruments refers to the risk arising from changes in fair value or future cash flows of financial instruments due to market price fluctuation, including interest rate risk and foreign exchange risk. (1) Interest rate risk

Interest rate risk refers to the risk arising from changes in fair value or future cash flows of financial instruments due to fluctuation in market interest rate. The Company's interest rate risk mainly derives from bank borrowings. The Company establishes good relations with banks and reasonably designs credit lines, credit varieties and credit period to guarantee sufficient bank credit lines and to meet short-term financing needs. By shortening the time limit of a single loan, the Company may specifically agree terms of the prepayment to reasonably reduce the risk of interest rate. On December 31, 2016, in case other variables remain unchanged, if the loan interest rate calculated at a floating interest rate rises or falls 100 basis points, the Company's net profit will reduce or increase by RMB 21,200 (December 31, 2015: RMB 2,178,000).

(2) Exchange rate risk Exchange rate risk refers to the risk arising from changes in fair value or future cash flows of financial instruments due to fluctuation in foreign exchange rate. The Company shall match foreign currency income and foreign currency expenses as much as possible to minimize exchange rate risk. In addition, the Company may also sign forward foreign exchange contracts or currency swap contracts to avoid exchange rate risks. The exchange rate risk faced by the Company mainly derives from dollar-denominated financial assets and financial liabilities. Foreign currency financial assets and financial liabilities are converted into amount in RMB as follows:

Item

Balance as at December 31, 2016 (RMB) Balance as at January 1, 2016 (RMB)

USD Other foreign

currencies

Total USD

Other foreign

currencies

Total

Cash and cash equivalents 1,069,830,885.89 18,299,991.93 1,088,130,877.82 12,367,626.74 47,803,146.93 60,170,773.67

Accounts receivable 761,770,797.71 1,301,117,521.35 2,062,888,319.06 261,680,003.01 64,685,392.32 326,365,395.33

Advances to suppliers 17,950,907.64 78,735,339.22 96,686,246.86 3,219,710.57 21,727,760.68 24,947,471.25

Other receivables 90,517,446.65 58,320,891.22 148,838,337.87 19,653,509.31 61,363,486.93 81,016,996.24

Sub-total of assets 1,940,070,037.89 1,456,473,743.72 3,396,543,781.61 296,920,849.63 195,579,786.86 492,500,636.49

Accounts payable 297,374,515.61 318,399,295.82 615,773,811.43 121,182,379.88 321,046,692.24 442,229,072.12

Advances from customers 10,572,092.06 21,321,289.59 31,893,381.65 16,637,252.49 16,637,252.49

Other payables 70,299,852.89 10,091,141.13 80,390,994.02 2,005,010.46 3,042,262.65 5,047,273.11

Sub-total of liabilities 378,246,460.56 349,811,726.54 728,058,187.10 123,187,390.34 340,726,207.38 463,913,597.72

Net amount 1,561,823,577.33 1,106,662,017.18 2,668,485,594.51 173,733,459.29 -145,146,420.52 28,587,038.77

On December 31, 2016, in case all other variables remain unchanged, if RMB to USD appreciates or depreciates by 1%, the net profits of the Company would reduce or increase by RMB 15,618,200 (December 31, 2015: RMB 285,900).



8.3 Liquidity risk Liquidity risk refers to a risk arising from shortage of funds when the Company performs the obligations settled in cash or other financial assets. Policies of the Company are to ensure sufficient cash to pay matured debts. Liquidity risk is under centralized control of the financial department of the Company. The financial department monitors cash balance and readily realizable and marketable securities and makes rolling forecast on cash flows of the next 12 months to ensure that the Company has sufficient funds to repay debts in all cases of reasonable prediction. See disclosure of the relevant items of Note 5 for details of financial liabilities of the Company presented at undiscounted contractual cash flows on the maturity date.

9. Related parties and related-party transactions

9.1 Actual controller of the Company

Name Amount of shares held

Shareholding ratio in the Company

(%)

Voting ratio in the Company

(%) Remarks

Chen Lve 582,944,556 34.33 34.33

9.2 Subsidiaries of the Company See Note 7 Equity in other entities for subsidiaries of the Company.

9.3 Other related parties

Other related parties Relationship with the Company

He Sen Brother-in-law of the shareholder and actual controller of the Company

He Feiyan Wife of the shareholder and actual controller of the Company

Li Erlong etc. Directors, supervisors and senior officers of the Company Qinghai Heyi Commercial Co., Ltd.

Enterprise controlled by Wang Lei, the director of the Company

Qinghai Heyi Mining Co., Ltd. Enterprise controlled by Wang Lei, the director of the Company

Kunwu Jiuding Investment Holdings Co., Ltd. and its related parties

Shareholders with 5% or above of shares of the Company and under common control

Beijing Baolilai Technology Co., Ltd.

A wholly-owned subsidiary in which the Company's director acts as a director

9.4 Related party transactions

9.4.1 Purchase or sale of goods, and rendering or receipt of labor services Table of purchase of goods and receipt of labor services (Unit: RMB '0,000)

Related parties Related party transactions Amount in 2016

Amount in 2015

Qinghai Heyi Commercial Co., Ltd. Payment for materials 1,959.00 4,636.50 Qinghai Heyi Mining Co., Ltd. Consulting fees 1,187.00



Table of sales of goods and rendering of services (Unit: RMB '0,000)

Related parties Related party transactions Amount in 2016

Amount in 2015

Kunwu Jiuding Investment Holdings Co., Ltd. and its related parties

Funds for decoration projects 795.13 5,800.00

Beijing Baolilai Technology Co., Ltd.

Funds for decoration projects 38.20 821.60

9.4.2 Related-party guarantee

The Company as the warrantee:

Warrantor Amount of the

guarantee

Starting date of the

guarantee

Maturity date of the guarantee

Have the guarantee

been performed?

Chen Lve and Sino Great Wall Co., Ltd. 150,000,000.00

March 21, 2016

March 21, 2017 No

Chen Lve, Sino Great Wall Co., Ltd. and He Feiyan 150,000,000.00 July 19, 2016

July 19, 2017 No

Sino Great Wall Co., Ltd. 50,000,000.00 August 8, 2016

August 8, 2017 No

Chen Lve and Zhongcheng Jianyee Engineering Co., Ltd. 80,000,000.00 June 19, 2015

June 3, 2016 Yes


October 28, 2016

September 28, 2017 No

Chen Lve, He Feiyan and Sino Great Wall Co., Ltd. 50,000,000.00

November 19, 2015

November 19, 2016 Yes

Qinghai Heyi Mining Co., Ltd.

500,000,000.00

March 10, 2016

March 9, 2017 No

Chen Lve March 10, 2016

March 9, 2017 No


December 19, 2016

December 19, 2017 No

Chen Lve 12,000,000.00 January 13, 2016

January 13, 2018 No

Chen Lve 12,000,000.00 March 29, 2016

March 29, 2018 No

Chen Lve 12,000,000.00 March 27, 2016

March 27, 2018 No

United Venture Guarantee Group Co., Ltd. 28,000,000.00

January 8, 2016

January 7, 2017 No

Great Wall Jianyee Engineering Co., Ltd., Chen Lve and Qinghai Heyi Commercial Co., Ltd. 114,280,000.00

January 20, 2015

January 19, 2016 Yes

Chen Lve and He Feiyan 140,000,000.00 June 11, 2015 May 18, 2016 Yes

Chen Lve, Sino Great Wall Co., Ltd. and He Feiyan 140,000,000.00 July 12, 2016

July 12, 2017 No

Beijing Zhongguancun Sci-tech Financing Guaranty Co., Ltd. 230,000,000.00

February 22, 2016

March 22, 2018 No

Chen Lve and Qinghai Heyi Commercial Co., Ltd. 114,280,000.00

January 20, 2015

January 19, 2016 Yes

Chen Lve 80,000,000.00 June 19, 2015 June 3, 2016 Yes

Chen Lve 80,000,000.00 June 19, 2015 June 3, 2016 Yes




guarantee


guarantee


Have the guarantee

been performed?

Chen Lve and He Feiyan 140,000,000.00 June 11, 2015 May 18, 2016 Yes

Chen Lve 70,000,000.00 September 3, 2014

September 2, 2016 Yes

Chen Lve 11,000,000.00 February 11, 2015

February 11, 2018 No

Chen Lve 11,000,000.00 July 30, 2015 July 30, 2018 No

Sino Great Wall International Engineering Co., Ltd. and Chen Lve 100,000,000.00

January 13, 2016

January 12, 2017 No

Sino Great Wall International Engineering Co., Ltd., Chen Lve and He Feiyan 120,000,000.00

January 13, 2016

January 12, 2017 No


August 25, 2016

August 25, 2017 No


January 21, 2016

January 20, 2017 No

Chen Lve 50,000,000.00 January 29, 2016

July 28, 2016 Yes

Chen Lve 30,000,000.00 March 4, 2016 September 3, 2016 Yes

Chen Lve 50,000,000.00 July 29, 2016 January 28, 2017 No

Sino Great Wall International Engineering Co., Ltd. and Chen Lve 200,000,000.00 June 21, 2016

June 20, 2017 No

Sino Great Wall International Engineering Co., Ltd., Zhongcheng Jianyee Engineering Co., Ltd. and Chen Lve 100,000,000.00 April 29, 2016

April 28, 2017 No

Chen Lve 100,000,000.00 April 26, 2016 April 26, 2017 No

Chen Lve 5,000,000.00 June 22, 2016 November 22, 2016 Yes

Chen Lve 45,000,000.00 July 5, 2016 December 5, 2016 Yes


August 22, 2016

August 22, 2017 No

Chen Lve and He Feiyan 100,000,000.00 September 29, 2016

September 28, 2018 No

Chen Lve 400,000,000.00 June 28, 2016 June 28, 2018 No

Sino Great Wall International Engineering Co., Ltd., Chen Lve and He Feiyan 200,000,000.00 April 19, 2016

April 18, 2018 No

Chen Lve 10,000,000.00 December 15, 2016

June 14, 2017 No




guarantee


guarantee


Have the guarantee

been performed?

Sichuan Jinyu Financing Guaranty Co., Ltd., Ye Meifu and Yang Qiuhua 8,000,000.00

February 17, 2016

February 16, 2017 No

Sino Great Wall Co., Ltd. 400,000,000.00 June 28, 2016 June 27, 2017 No

Sino Great Wall Co., Ltd. 200,000,000.00 March 23, 2016

March 23, 2017 No

Sino Great Wall Co., Ltd. 180,000,000.00 January 3, 2017

January 2, 2018 No

Sino Great Wall Co., Ltd. 100,000,000.00 April 29, 2016 February 13, 2017 No


November 22, 2016

November 22, 2017 No


December 21, 2016


Sino Great Wall Co., Ltd. 250,000,000.00 December 20, 2016


Sino Great Wall Co., Ltd. 50,000,000.00 March 25, 2016

March 25, 2017 No

9.4.3 Borrowings from and to related parties

Related parties Lending/borrowing

amount Starting date

Maturity date

Remark

Lending

Chen Lve 93,855,000.00 January 1, 2016

June 30, 2016

Chen Lve 4,000,000.00 July 1, 2016 December 31, 2016

Remark: Provision for interest on the lendings to shareholders has been made. The amount included in the profit and loss in 2016 was RMB 2,356,589.48.

9.4.4 Remuneration of key management

Item Amount in 2016 Amount in 2015 Remuneration of key management 1,696,900.00 1,495,100.00

9.5 Receivables from and payables to related parties

9.5.1 Receivables

Project Related parties



bad debts Book balance

Provision for

bad debts

Accounts

receivable

Kunwu Jiuding Investment

Holdings Co., Ltd. and its

related parties 1,609,996.92 80,499.85 2,500,737.20 125,036.86

Beijing Baolilai Technology

Co., Ltd. 160,000.00 8,000.00 2,816,000.00 140,800.00

Advances to

suppliers



Project Related parties



bad debts Book balance

Provision for

bad debts

Qinghai Heyi Commercial Co.,

Ltd. 18,902,151.50

9.5.2 Payables

Project Related parties Book Balance as at December 31, 2016

Book Balance as at January 1, 2016

Accounts payable

Qinghai Heyi Commercial Co., Ltd. 1,750,581.64

Other payables

Qinghai Heyi Commercial Co., Ltd. 2,999,209.78

He Sen 4,405,644.43

10. Commitments and contingencies 10.1 Significant commitments

There were no major commitments required to be disclosed in 2016.

10.2 Contingencies There were no contingencies required to be disclosed in 2016.

11. Post balance sheet events

11.1 Notes to significant non-adjusting events On July 7, 2016, the Company held the tenth session of the seventh Board of Directors and approved the Proposal on Non-public Issuance of A Shares by Sino Great Wall Co., Ltd.. The Company intended to issue shares to Sino Great Wall (Beijing) Investment Co., Ltd., Beijing Anben Medical Investment Holding Co., Ltd. and Mr. Zheng Jihua to raise funds of RMB 2.5 billion. On October 14, 2016, the China Securities Regulatory Commission accepted the Company's application for non-public offering of shares. At the sixteenth meeting of the seventh Board of Directors convened by the Company on February 16, 2017, the Company deliberated and passed the Proposal on Adjusting the Scheme for the Non-public Issuance of Shares and adjusted the amount of funds to be raised to RMB 900 million.On March 22, 2017, the Company's application for non-public issuance of A shares was approved by the Issuance Examination Commission of China Securities Regulatory Commission, but official documents approved by the China Securities Regulatory Commission have not received yet.



11.2 Profit distribution Approved at the seventeenth session of the seventh Board of Directors, the Company distributed cash dividends of RMB 0.60 (including tax) for every 10 shares based on the existing 16,982,450,110,000 shares. No bonus shares were given and no capital reserves were conversed to increase share capital.

12. Other important matters

12.1 Outstanding L/G In order to ensure the smooth completion of the project, at the request of the owner, the Company applied to a commercial bank for issuing a performance guarantee. As at December 31, 2016, the amount of the outstanding L/G was RMB 1,262,632,100.

12.2 Segment information

12.2.1 Basis for recognition of reportable segment and accounting policies Accounting policies of reportable segment There were no related-party transactions among domestic architectural decoration, overseas architectural decoration and medical treatment, so no inters-segment price was transferred; Medical treatment was implemented by the Company and its independent subsidiary; overseas architectural decoration was accounted for according to the account sets set up in the regions where the projects in progress are located, mainly including account sets for Qatar, Kuwait, Cambodia, Sri Lanka, Malaysia, Burma, Maldives and Saipan, so there were no fees which were indirectly attributable to each segment and needed to be amortized; the business data of overseas architectural decoration was formed by the financial data of the above 8 account sets for major projects.



12.2.2 Financial information of reportable segments

Item Domestic architectural decoration Overseas architectural decoration Medical treatment Offset Total

Year 2016 Year 2015 Year 2016 Year 2015 Year 2016 Year 2015 Year 2016 Year 2015 Year 2016 Year 2015

I. Operating income 1,418,192,694.17 2,428,344,815.19 3,165,213,312.57 1,560,310,586.25 81,593,110.43

-21,703,598.14 4,664,999,117.17 4,010,358,999.58

Including: income from

external transactions 1,418,192,694.17 2,428,344,815.19 3,165,213,312.57 1,560,310,586.25 81,593,110.43

-21,703,598.14 4,664,999,117.17 4,010,358,999.58

Income from inter-segment

transactions

- -

II. Operating cost 1,184,945,928.21 1,988,442,188.52 2,216,759,318.30 1,154,881,399.00 57,672,498.15

-21,703,598.14 3,459,377,744.66 3,165,027,185.66

Including: costs of external

transactions 1,184,945,928.21 1,988,442,188.52 2,216,759,318.30 1,154,881,399.00

-21,703,598.14 3,401,705,246.51 3,165,027,185.66

Costs of inter-segment

transactions

- -

III. Losses from asset

impairment 74,286,638.56 80,433,729.48 95,207,208.36 30,903,374.69 518,043.19

170,011,890.11 111,337,104.17

IV. Depreciation and

amortization 3,004,474.27 6,985,552.79 30,488.71 21,288.88 19,316.10

-3,794,638.67

6,848,917.76 7,006,841.67

V. Total profit -304,963,110.16 69,862,580.73 864,476,659.76 360,904,330.95 3,583,802.03 - 1,759,594.94 -25,117.82 561,337,756.68 430,792,029.50

VI. Income tax expenses -10,207,854.94 76,207,293.00 99,038,519.27 8,766,407.91 1,703,401.20

1,289,203.78

89,244,861.75 84,973,700.90

VII. Net profit -294,755,255.22 -6,344,712.27 765,438,140.48 352,137,923.04 1,880,400.83 - 470,391.16 -25,117.82 472,092,894.93 345,818,328.60

VIII. Total assets 10,947,559,949.24 6,044,181,578.99 3,044,412,477.45 1,097,651,243.20 121,748,481.08

6,127,541,946.13 3,124,369,997.56 7,986,178,961.63 4,017,462,824.63

IX. Total liabilities 7,089,471,639.73 2,406,019,801.98 1,752,059,212.34 690,133,065.43 136,402,672.37

2,822,237,435.41 358,948,894.24 6,155,696,089.04 2,737,203,973.17


SINO GREAT WALL CO., LTD. NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2016 13. Notes to main items of the financial statements of the parent company

13.1 Accounts receivable 13.1.1 Disclosure of accounts receivable by category

Category



Book value Amount

Proportion

(%) Amount

Proportion

(%)

Receivables that are individually significant but

with provision for bad debts made on an individual

basis

Receivables subject to provision for bad debts on

credit risk characteristics basis 6,680.00 100.00 334.00 5.00 6,346.00

Receivables that are individually insignificant but


basis

Total 6,680.00 100 334 5 6,346.00

(Continued)

Category



Book value Amount

Proportion

(%) Amount

Proportion

(%)

Receivables that are individually significant but


basis

Receivables subject to provision for bad debts on

credit risk characteristics basis 30,614.00 100.00 1,530.70 5.00 29,083.30

Receivables that are individually insignificant but


basis

Total 30,614.00 100 1,530.70 5 29,083.30

In the portfolio, accounts receivable with the provision for bad debts made under the aging analysis method:


Accounts receivable


Proportion of provision

Within 1 year 6,680.00 334.00 5.00 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years Over 5 years Total 6,680.00 334.00

13.1.2 Provision, recovery or reversal of accounts receivable in 2016

The provision for bad debts made in 2016 was RMB 0.00; the provision for bad debts recovered or reversed in 2016 was RMB 1,196.70.

13.1.3 Top five receivables by debtor

Company name Balance as at December 31, 2016

Accounts receivable

Proportion in the total accounts receivables (%)


Sporadic individual rent in Kuichong, Shenzhen 6,680.00 100.00 334.00 Total 6,680.00 100.00 334.00



13.2 Other receivables

13.2.1 Disclosure of other receivables by category:

Category



Book value Amount

Proportion

(%) Amount Proportion (%)

Other receivables that are individually

significant but with provision for bad debts

made on an individual basis

Other receivables provided for bad debts on

portfolio of credit risks 1,672,982,763.29 100.00 782,721.31 0.05 1,672,200,041.98


insignificant but with provision for bad debts


Total 1,672,982,763.29 100 782,721.31 0.05 1,672,200,041.98

(Continued)

Category



Book value Amount

Proportion

(%) Amount Proportion (%)


significant but with provision for bad debts


Other receivables provided for bad debts on

portfolio of credit risks


insignificant but with provision for bad debts


Total

Remark: There were no other receivables as at January 1, 2016.

13.2.2 Provision for bad debts and reversal or recovery thereof in 2016 The provision for bad debts made in 2016 was RMB 782,721.31; the provision for bad debts recovered or reversed in 2016 was RMB 0.00.

13.2.3 Category of other receivables by nature

Nature Book Balance as at December 31, 2016

Book Balance as at January 1, 2016

Current accounts between entities 1,657,328,337.13 Petty cash 1,272,085.13 Margin and deposit 14,382,341.03 Others Total 1,672,982,763.29

13.2.4 Top five other receivables by debtor

Company name Nature

Balance as at

December 31,

2016

Aging

Proportion in

total other

receivables

(%)

Balance of

provision for bad

debts as at

December 31, 2016

Wuhan Commercial

Workers Hospital Co.,

Ltd.

Current accounts with

related parties 107,800,000.00 Within 1 year 6.44



Company name Nature

Balance as at

December 31,

2016

Aging

Proportion in

total other

receivables

(%)

Balance of

provision for bad

debts as at

December 31, 2016

Upper First-class

Hospital, Hongqiao,

Liangdu, Liupanshui

(Finance Bureau of

Fushun Economic

Development Zone) Deposits 10,000,000.00 Within 1 year 0.60 500,000.00

Hunan Trust Co., Ltd. Deposits 2,000,000.00 Within 1 year 0.12 100,000.00

Xu Ce

Borrowings of

employees 1,109,002.22 Within 1 year 0.07 55,450.11

The First People's

Hospital of Lingbao City

(COCITC) Deposits 1,000,000.00 Within 1 year 0.06 50,000.00

Total / 121,909,002.22 / 7.29 705,450.11

13.3 Long-term equity investments

Item


Book balance

Provision

for

impairment

Book value Book balance

Provision

for

impairment

Book value

Investment in subsidiaries 3,176,451,536.66 3,176,451,536.66 3,079,451,536.66 3,079,451,536.66

Total 3,176,451,536.66 3,176,451,536.66 3,079,451,536.66 3,079,451,536.66

13.3.1 Investment in subsidiaries

Investee

Balance as at

January 1,

2016

Increase

in 2016

Decrease

in 2016

Balance as at

December 31,

2016

Provision for

impairment in

2016

Balance of

provision for

impairment as at

December 31,

2016

Sino Great

Wall

International

Engineering

Co., Ltd. 3,079,451,536.66 3,079,451,536.66

Wuhan

Commercial

Workers

Hospital Co.,

Ltd. 97,000,000.00 97,000,000.00

Total 3,079,451,536.66 97,000,000.00

3,176,451,536.66

13.4 Investment income

Item Amount in 2016 Amount in 2015 Income from long-term equity investments accounted for under cost method

Income from long-term equity investments accounted for under equity method

Investment income from disposal of long-term equity investments

Investment income received from financial assets measured at fair value through current profit and loss during the holding period



Item Amount in 2016 Amount in 2015 Investment income received from disposal of financial assets measured at fair value through current profit and loss Investment income from held-to-maturity investments during the holding period

Investment income of available-for-sale financial assets during the holding period

Investment income from disposal of available-for-sale financial assets

Gains and losses arising from re-measurement of the remaining equities at the fair value after the loss of the control Others 396,197.49

Total 396,197.49

13.5 Operating income and operating cost

Item Amount in 2016 Amount in 2015

Income Cost Income Cost Primary business

Other business 238,048.64 2,318,061.00 237,620.18 Total 238,048.64 2,318,061.00 237,620.18

14. Supplementary information

14.1 Breakdown of current non-recurring profits and losses Item Amount Remark

Profits or losses from disposal of non-current assets -564,833.40 Tax returns, deduction and exemption approved

beyond the authority or without official approval documents Government grants included in current profits and losses (except for government grants closely related to the enterprise business, obtained by quota or quantity at unified state standards) 108,121.33

Expenses for using funds charged from non-financial enterprises and included in the current profit and loss

Gains from the difference between the investment costs of acquisition of subsidiaries, associates and joint ventures and share in the net fair value of the identifiable assets of the investee when investing 1,783,284.99

Profit or loss on exchange of non-monetary assets - Gains or losses from entrusting the investments or

management of asset Provision of asset impairment made due to force

majeure, such as natural disasters Gains or losses from debt restructuring Enterprise reorganizing expenses, such as employee

accommodation costs and integration expenses Gains or losses from transactions with obvious unfair

transaction price Current net gains and losses of the subsidiaries from

business combinations under common control from the beginning of the period to the combination date



Item Amount Remark Profit or loss on contingencies irrelevant to normal operation of the Company

Except for effective hedging business related to the normal business of the company, profits or losses from fair value changes in held-for-trading financial assets and held-for-trading financial liabilities, and investment income from disposal of held-for-trading financial assets, held-for-trading financial liabilities and available-for-sale financial assets 443,065.98

Reversal of the impairment provision for receivables subject to separate impairment test -

Profits or losses from entrusted loans - Profit or loss on changes in fair value of investment

properties subsequently measured under the fair value model -

Effects of one-off adjustments to the current profit and loss in accordance with the requirements of tax and accounting laws and regulations on the current profit and loss -

Custodian income from entrusted management - Other non-operating income and expenditure except

for the above items 5,296,814.65 Other items of gains and losses subject to the definition

of non-recurring gains and losses - Effect of income tax -3,668,000.60

Effect of minority interests -11,192.65 Total 3,387,260.30

14.2 Return on equity and earnings per share:

Profit for the reporting period Weighted average return

on equity (%)

Earnings per share (RMB) Basic earnings per

share Diluted earnings

per share Net profit attributable to ordinary shareholders of the Company 31.18 0.28 0.28 Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses 30.96 0.28 0.28

Sino Great Wall Co., Ltd.

(Official Seal) April 26, 2017
