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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

SHENZHEN TELLUS HOLDING CO., LTD

Annual Report 2015

April 2016

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Section I. Important Notice, Contents and Paraphrase

Board of Directors, Supervisory Committee, all directors, supervisors and senior

executives of Shenzhen Tellus Holding Co., Ltd. (hereinafter referred to as the

Company) hereby confirm that there are no any fictitious statements, misleading

statements, or important omissions carried in this report, and shall take all

responsibilities, individual and/or joint, for the reality, accuracy and completion

of the whole contents.

Lv Hang, Principal of the Company, Yang Jianping, person in charger of

accounting works and Ke Wensheng, person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of 2015 Annual

Report is authentic, accurate and complete.

All directors are attended the Board Meeting for report deliberation.

China Securities Journal, Hong Kong Commercial Daily and Juchao Website

(www.cninfo.com.cn) are the media for information disclosure appointed by the

Company, all information under the name of the Company disclosed on the

above said media shall prevail. Concerning the forward-looking statements with

future planning involved in the Report, they do not constitute a substantial

commitment for investors, and investors are advised to exercise caution of

investment risks.

The Company has no plan of cash dividends carried out, bonus issued and

capitalizing of common reserves either.

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Contents

Section I Important Notice, Contents and Paraphrase ................................................................. 2

Section II Company Profile and Main Finnaical Indexes ............................................................. 9

Section III Summary of Company Business .................................................................................. 9

Section IV Discussion and Analysis by the Management Team ................................................. 11

Section V Important Events .......................................................................................................... 27

Section VI Changes in shares and particular about shareholders............................................... 36

Section VII Preferred Stock¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.40

Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 45

Section IX Corporate Governance ................................................................................................. 70

Section X Financial Report ............................................................................................................. 81

Section XI Documents available for reference .............................................................................. 81

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Paraphrase

Items Refers to Contents

CSRC Refers to China Securities Regulatory Commission

SZ Exchange Refers to Shenzhen Stock Exchange

Shenzhen Branch of China Securities Depository & Clearing

Shenzhen Branch of SD&C Refers to

Corporation Limited

Company, the Company, our Company, Tellus

Refers to Shenzhen Tellus Holding Co., Ltd.

Group

Reporting period, this reporting period, this

Refers to Year of 2015

year

Auto Industry and Trade Co., Refers to Shenzhen Auto Industry and Trade Corporation

Zhongtian Company Refers to Shenzhen Zhongtian Industrial Co,. Ltd.

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Section II Company Profile and Main Finnaical Indexes

I. Company information

Short form of the stock Tellus-A, Tellus-B Stock code 000025, 200025

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾

Chinese)

Short form of the Company

ÉîÌØÁ¦

(in Chinese)

Foreign name of the Company

Shenzhen Tellus Holding Co.,Ltd

(if applicable)

Legal representative Lv Hang

Registrations add. 3/F, Tellus Building, Shui Bei Er Road, Luohu District, Shenzhen

Code for registrations add 518020

Offices add. 15/F, Zhonghe Building, Shennan Middle Road, Futian District, Shenzhen

Codes for office add. 518031

Company¡¯s Internet Web Site www.tellus.cn

E-mail ir@tellus.cn

II. Person/Way to contact

Secretary of the Board Rep. of security affairs

Name Qi Peng Sun Bolun

15/F, Zhonghe Building, Shennan Middle 15/F, Zhonghe Building, Shennan Middle

Contact add.

Road, Futian District, Shenzhen Road, Futian District, Shenzhen

Tel. £¨0755£©83989378 £¨0755£©83989339

Fax. £¨0755£©83989386 £¨0755£©83989386

E-mail ir@tellus.cn sunbl@tellus.cn

III. Information disclosure and preparation place

Newspaper appointed for information disclosure Securities Times (Shenzhen) and Hong Kong Commercial Daily(H.K.)

Website for annual report publish appointed by CSRC http://www.cninfo.com.cn

Preparation place for annual report Secretariat of the Board of Directors of Shenzhen Tellus Holding Co., Ltd.

IV. Registration changes of the Company

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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Organization code 19219221-0

Before 26 May 1993, business scope of the Company: engaged in metal working

machinery, general equipment, general component, abrasive tools, abrasive materials,

instrument, micro motor, home appliances, electronic component, electronic device,

electronic computer and accessories, auto parts, rubber products and construction

materials. Self-operated products manufacture by the Company and owned enterprises

such as self-used production raw materials, metal working machinery and general

equipment; import & export of general component. Business scope of the Company

changed dated 26 May 1993 as: engaged in metal working machinery, general

equipment, general component, abrasive tools, abrasive materials, instrument, micro

motor, home appliances, electronic component, electronic device, electronic computer

and accessories, auto parts, rubber products, construction materials, metal materials,

chemical materials and products, plastic products, hardware tools, warehousing &

transportation and general equipment; self-operated products manufacture by the

Company and owned enterprises such as self-used production raw materials and metal

working machinery; import & export of general component; import and export

business complies with the approval certificate (Shen Mao Guan Shen Zheng Zi

No.098). Business scope of the Company changed dated 22 January 1997 as: develop

enterprises (specific projects needs application); warehousing & transportation,

processing on giving materials for machinery component and mechanic assembly.

Domestic business and supply & marketing industry of materials (excluding

Changes of main business since listing (if

monopolized commodity and commodity under special government control).

applicable)

Self-operated products manufacture by the Company and owned enterprises such as

self-used production raw materials and metal working machinery; import & export of

general component; import and export business complies with the approval certificate

(Shen Mao Guan Shen Zheng Zi No.098). Business scope of the Company changed

dated 3 December 2009 as: develop enterprises (specific projects needs application);

develop and operate the real estate business on the land with usage rights obtained

legally; domestic business and supply & marketing industry of materials (excluding

monopolized commodity and commodity under special government control); rental and

management for self-owned property. Self-operated products manufacture by the

Company and owned enterprises such as self-used production raw materials and metal

working machinery; import & export of general component; import and export

business complies with the approval certificate (Shen Mao Guan Shen Zheng Zi

No.098). On 2 July 2014, business scope changed as: investment industrial projects

(specific project shall be declared upon separately); domestic commerce, supply and

marketing of material (monopolized commodities, commodity under special

government control and licensed commodity excluded ;) self-owned property lease and

management. Self-running the home-grown products of the Company and owned

enterprise, personal productive material, metal working machinery, import and export

business of the parts common; import and export are handle in line with the

Accreditation Certificate of Foreign Trade: Shen Mao Guan Zheng Zi No. 098

1. On 31 March 1997, the 159,588,000 state shares held by Shenzhen Investment

Previous changes for controlling

Management Co., Ltd., the only non-circulation shareholder, were transfer to SDG;

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shareholders (if applicable) total share capital of the Company was 220,281,600 shares while 159,588,000 state

shares held by SDG, a 72.45% in total share capital. 2. On 4 January 2006, the

13,717,440 shares, as the consideration of share merger reform, were transfer to

account of A-shareholders from SDG. After share merger reform, SDG holds 66.22%

of the total share capital of the Company. 3. On March 27, 2015, the company has

completed the non-public offering of A shares of 77,000,000, of which 6,000,000

shares are issued to the controlling shareholder - SDG, and SDG holds 51.09% of the

Company's total shares after the issuance.

V. Other relevant information

CPA engaged by the Company

Name of CPA Ruihua Certified Public Accountants (LLP)

3-9/F, West Tower, China Oversea Property Plaza,7# Building, 8# Yard, Yongdingmen West

Offices add. for CPA

Binhe Rd., Dongcheng District, Beijing

Signing Accountants Yuan Longping, Qin Changming

Sponsor engaged by the Company for performing continuous supervision duties in reporting period

¡ÌApplicable ¡õNot applicable

Name of the sponsor Offices add. for the sponsor Name of sponsor representative Continuous supervision period

HUAXI Securities Co,. Ltd Yu Chenguang, Huang Bin Until 2016-12-31

Financial consultant engaged by the Company for performing continuous supervision duties in reporting period

¡õ Applicable ¡Ì Not applicable

VI. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting

error correction or not

¡õ Yes ¡Ì No

2015 2014 Changes over last year 2013

Operating income (RMB) 303,726,790.57 464,987,527.80 -34.68% 486,729,308.18

Net profit attributable to

shareholders of the listed 42,768,789.52 10,345,217.67 313.42% 7,185,944.01

company(RMB)

Net profit attributable to

shareholders of the listed company

28,588,480.42 8,775,007.16 225.79% -15,228,791.55

after deducting non-recurring gains

and losses(RMB)

Net cash flow arising from

80,682,627.33 6,214,706.85 1,198.25% -2,629,634.80

operating activities(RMB)

Basic earnings per share 0.1538 0.0470 227.23% 0.0326

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(RMB/Share)

Diluted earnings per share

0.1538 0.0470 227.23% 0.0326

(RMB/Share)

Return on Equity 6.21% 5.53% 0.68% 4.02%

Changes over end of

End of 2015 End of 2014 End of 2013

last year

Total assets (RMB) 1,168,667,927.49 806,324,777.80 44.94% 702,180,174.03

Net assets attributable to

shareholder of listed company 868,169,052.32 191,880,262.80 352.45% 182,370,970.80

(RMB)

VII. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

¡õ Applicable ¡Ì Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International

Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

¡õ Applicable ¡Ì Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or

Chinese GAAP (Generally Accepted Accounting Principles) in the period.

VIII. Quarterly main financial index

In RMB

First quarter Second quarter Third quarter Fourth quarter

Operating income 81,285,344.52 77,206,437.32 73,318,969.97 71,916,038.76

Net profit attributable to

788,018.17 6,862,337.85 11,044,774.84 24,073,658.66

shareholders of the listed company

Net profit attributable to

shareholders of the listed company

768,943.67 6,747,596.04 2,578,864.40 18,493,076.31

after deducting non-recurring gains

and losses

Net cash flow arising from

29,617,359.36 4,245,523.34 4,042,657.15 42,777,087.48

operating activities

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial

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index disclosed in the company¡¯s quarterly report and semi-annual report

¡õYes ¡Ì No

IX. Items and amounts of extraordinary profit (gains)/loss

¡ÌApplicable ¡õ Not applicable

In RMB

Item 2015 2014 2013 Note

Gains/losses from the disposal of

non-current asset (including the write-off -34,345.09 148,486.49 32,501,637.93

that accrued for impairment of assets)

Governmental subsidy reckoned into current

gains/losses (not including the subsidy

enjoyed in quota or ration according to 371,850.00

national standards, which are closely

relevant to enterprise¡¯s business)

Gains and losses of investment or Proceeds of financial

5,740,301.35

management of assets products

Gains/losses from contingency without

-61,965.00 438,195.19 -2,130,200.00

routine business concerned

Held transaction financial asset, gains/losses

of changes of fair values from transaction

financial liabilities, and investment gains

from disposal of transaction financial asset,

1,226,127.75

transaction financial liabilities and financial

asset available for sales, exclude the

effective hedging business relevant with

normal operations of the Company

Restoring of receivable impairment

31,980.00 47,282.17

provision that tested individually

Other non-operating income and expenditure

118,638.89 248,824.36 -391,032.13

except for the aforementioned items

Terminating the

post-employment bene

other items (gain/loss) conformed to the fit plans for retirees

definition of the extraordinary profit 9,722,688.86 caused the reduction

(gain)/loss of the present value

of the benefit plan

obligation

Less: Impact on income tax 1,576,392.95 506,161.39 7,495,101.45

Impact on minority shareholders¡¯ equity 132,446.96 32,544.06 70,568.79

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(post-tax)

Total 14,180,309.10 1,570,210.51 22,414,735.56 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss, explain reasons

¡õ Applicable ¡Ì Not applicable

In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to

the Public --- Extraordinary Profit/loss

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Section III Summary of Company Business

I. Main businesses of the company in the reporting period

The company's main business is auto sales; automobile inspection, maintenance and accessories sales; property

leasing and services business. In 2014, the company developed the "Business Transformation Development

Program of Test Rite Group", defined the strategic development transformation direction to jewelry industry

comprehensive service provider, during the reporting period, the company has firmly promoted the company's

strategic transformation in accordance with the strategic plan, gone into in-depth study of the industry status after

multilateral research, formed the preliminary ideas for a new business model, and indicated directions for the

company¡¯s transformation. Below shall introduce the company¡¯s main business and market conditions:

1. Auto sales; automobile inspection, maintenance and accessories sales: influenced by the domestic economic

slowdown and weakness of end consumer market and other factors, in 2015, the domestic automobile production

and sales growth continued to decline, the market situation of auto sales is grim. By the end of 2014, Shenzhen

Municipal Government has started to regulate and control the increment of cars, which brings tremendous impact

on car sales business in Shenzhen City, affected by this, the company¡¯s auto sales revenue during the reporting

period was 134,916,200 yuan, a decrease of 56.47% compared to the same period of last year. In face of the

unfavorable situation, the company has promptly adjusted the business strategy, on the one hand, adjusted the sales

mode, pursued the efficiency and quality sales, and strengthened the sales profit management. On the other hand,

the company has strictly controlled the costs, simplified the staff positions, significantly reduced the financial costs;

at the same time, utilized the company¡¯s brand advantages in automobile maintenance to enlarge and refine the

vehicle maintenance and repair and enhance the profitability growth. During the reporting period, the company¡¯s

business income in vehicle inspection and maintenance and accessories sales and the gross margin have increased

on a year-on-year basis, while the auto sales business has reduced.

2. Property leasing and services: affected by the jewelry market condition at the end of 2014, since 2015, the rental

prices at the distributing centers for jewelry enterprises in Shuibei, Buxin areas of Shenzhen have shown a

downward trend, the lessees in these areas have kept requiring for reducing the rents or terminating the contracts

ahead of schedule. In face of this unfavorable situation, the company has adhered to market-oriented operation, and

realized the promotion of rental unit price and market value by developing the rental price system close to the

market level; actively responded to declining rents, surrender of tenancy, and rent reduction, etc., improved the

service quality, strengthened the propagation, and properly resolved the customer appeals; actively explored the

market, integrated the resources, taken various measures to improve the lease area and rental prices, and finally

achieved the annual rent revenue with a year-on-year growth of 29.8%.

3. Property management business: currently, the property management industry has entered a new period of

development. With the popularity of mobile intelligent terminals, the Internet, Internet of Things and other

intelligent community have become a new trend in property development. In order to meet the new situation, the

company has taken various measures to actively face the market changes. On the one hand, the company tried to

stimulate the employees¡¯ enthusiasm and sense of service through innovative management models, improved the

operational efficiency by establishing the service regulatory system and increasing the revenue and reducing the

expenditure, during the reporting period, the property management business has reduced 1.84 million yuan on a

year-on-year basis; on the other hand, the company shall take the property management project of Tellus Shuibei

Jewelry Building as an opportunity, learn from the outstanding enterprises, effectively improve the service

capabilities, lay a solid foundation for fully taking over Tellus Shuibei Jewelry Building, and transform to high-end

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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

property management services.

The company will strive to improve the business management and cost control levels, maintain the stability of

existing business, explore and promote the strategic landing program, and accelerate the pace of transformation in

accordance with the established strategic direction.

II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets No major change

Fixed assets No major change

Intangible assets No major change

Up to December 31,2015,the value of construction in progress is 27,905.67 Million Yuan,

Construction in progress increases 15,650.52 Million Yuan compared with the early period,which comes from the

continuous input of Shuibei building

2. Main overseas assets

¡õ Applicable ¡Ì Not applicable

III. Core Competitiveness Analysis

Shenzhen is the main gathering place of China's jewelry industry, Shuibei is the core gathering area of Shenzhen

jewelry industry, the company holds a large number of properties in Shuibei area, and has provided various stable

services for many leading enterprises in jewelry industry in Shenzhen and established good cooperative relations

with many jewelry enterprises over the years; the project of Tellus Jimeng Gold Jewelry Industrial Park located in

Shuibei core area has been listed as one of the 11 pilot projects in the transformation of old industrial zones of

Shenzhen City, the company shall become the largest owner of this industrial park through its wholly owned and

joint owned and associated enterprises. Currently all renovation projects in the industrial park have almost been

completed and will be put into use in 2016. The company can make use of leading enterprises in jewelry industry

that have strategic partnership with the company to gather the jewelry enterprises and attract talents to enter the

industrial park.

As a state-owned holding listed company, the company has good market credibility, and possesses diversified and

low-cost financing channels, by virtue of the identity of the third party jewelry operator,can attract distributors by

providing resources, financial services and capital operation to the jewelry manufacturers, and builds regional

channel platform. After the formation of regional channel platforms, the company can provide more services for the

jewelry manufacturers in industrial park. Meanwhile, with the help of channel resources and financial services, the

company can enhance the attractiveness to retailers and create a terminal platform for regional retails, and

eventually form an ecological circle for Tellus jewelry industry, therefore, the company can integrate each industry

chain in the ecological circle and generate preliminary market influence on the industry upstream and downstream

by gathering the manufacturers, distributors, terminal retailers resources with the identity of the third party jewelry

operator.

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Section IV Discussion and Analysis by the Management Team

1. Introduction

(1) Introduction of the company

In 2015, the global economy has shown the profound adjustment, the overall economic recovery in developed

countries has been unstable, the economic growth rate of emerging economies has slowed down, affected by

optimization of economic structure, conversion of growth momentum, and deepening of reform, the domestic

economic growth has also slowed down and entered the new normal of turning from high-speed growth into

medium and high-speed growth. In face of the complex external environment, under the leadership of the board of

directors, the company has unswervingly promoted the strategic transformation of the company, developed a

third-party platform to focus on the jewelry industry, continued to promote the integration, transformation and

upgrading of jewelry industry, built an ecological circle for Tellus jewelry industry, and enhanced the industry

value chain.

During the reporting period, the company has achieved operating income of 303,730,000 yuan, reduced by

161,260,000 yuan compared with 464,990,000 yuan in the same period of last year, a decrease of 34.7%, which is

mainly because the auto revenue of Huari Company has greatly declined affected by the car-purchase restriction

policy. Total profits are 47,290,000 yuan, an increase of 37,260,000 yuan compared with 10,030,000 yuan in the

same period of last year, the net profit belonging to parent company is 42,770,000 yuan, an increase of 32,420,000

yuan compared with 10,350,000 yuan in the same period of last year. The main reasons for the increase in total

profit are: ¢ÙDuring the reporting period, due to the termination of relevant employee retirement benefit plan and

the release of long-term employee pay payable and period expenses of 9.72 million yuan, the total profit has

increased by 9.72 million yuan, and the net profit belonging to shareholders of listed company has increased by

8.49 million yuan; ¢Ú rental income has increased by 17,460,000 yuan; ¢Û financial expenses have decreased by

10.2 million yuan (excluding Huari Company), mainly because the interest on bank loans has decreased, and the

income of financial products preserving for interest and principle have increased; ¢Ü operation income of Huari

Company has reduced by 3.39 million yuan on a year-on-year basis. Profit-cutting factors are mainly due to the

sharp decline in operating performance of shareholding enterprise - Zung Fu Company, the investment income has

reduced by 12 million yuan on a year-on-year basis. Net profit attributable to shareholders of listed companies

after deducting non-recurring gains and losses is 28,590,000 yuan, an increase of 19,810,000 yuan compared with

the same period of last year.

II. Main business analysis

1. Introduction

See the ¡°I-Introduction¡± in ¡°Discussion and Analysis by the Management Team¡±

2. Revenue and cost

(1) Constitute of operation revenue

In RMB

2015 2014

Increase/decrease

Ratio in operation Ratio in operation

Amount Amount y-o-y

revenue revenue

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Total of operation

303,726,790.57 100% 464,987,527.80 100% -34.68%

revenue

According to industries

Auto sales 134,916,197.98 44.42% 309,927,524.30 66.65% -56.47%

Auto inspection and

maintenance and 48,256,203.33 15.89% 45,604,870.24 9.81% 5.81%

accessories sales

Property rental and

107,533,087.06 35.40% 96,018,663.22 20.65% 11.99%

service

Other 13,021,302.20 4.29% 13,436,470.04 2.89% -3.09%

According to products

Auto sales 134,916,197.98 44.42% 309,927,524.30 66.65% -56.47%

Auto inspection and

maintenance and 48,256,203.33 15.89% 45,604,870.24 9.81% 5.81%

accessories sales

Property rental and

107,533,087.06 35.40% 96,018,663.22 20.65% 11.99%

service

Other 13,021,302.20 4.29% 13,436,470.04 2.89% -3.09%

According to region

Shenzhen 303,726,790.57 464,987,527.80

(2) About the industries, products, or regions accounting for over 10% of the company¡¯s operating income

or operating profit

¡ÌApplicable ¡õ Not applicable

In RMB

Increase/decrease Increase/decrease Increase/decrease

Operating

Operating cost Gross profit ratio of operating of operating cost of gross profit

revenue

revenue y-o-y y-o-y ratio y-o-y

According to industries

Auto sales 134,916,197.98 128,438,474.70 4.80% -56.47% -57.97% 3.39%

Auto inspection

and maintenance

48,256,203.33 38,505,305.64 20.21% 5.81% 5.01% 0.61%

and accessories

sales

Property rental

107,533,087.06 46,464,850.80 56.79% 11.99% 3.82% 3.40%

and service

According to products

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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Auto sales 134,916,197.98 128,438,474.70 4.80% -56.47% -57.97% 3.39%

Auto inspection

and maintenance

48,256,203.33 38,505,305.64 20.21% 5.81% 5.01% 0.61%

and accessories

sales

Property rental

107,533,087.06 46,464,850.80 56.79% 11.99% 3.82% 3.40%

and service

According to region

Auto sales 134,916,197.98 128,438,474.70 4.80% -56.47% -57.97% 3.39%

Auto inspection

and maintenance

48,256,203.33 38,505,305.64 20.21% 5.81% 5.01% 0.61%

and accessories

sales

Property rental

107,533,087.06 46,464,850.80 56.79% 11.99% 3.82% 3.40%

and service

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on

latest one year¡¯s scope of period-end

¡õ Applicable ¡Ì Not applicable

(3) Income from physical sales larger than income from labors

¡Ì Yes ¡õ No

Increase/decrease

Industries Item Unit 2015 2014

y-o-y

Sales volume vehicle 882 2,026 -56.47%

Auto sales (vehicle)

Storage vehicle 87 329 -73.56%

Reasons for y-o-y relevant data with over 30% changes

¡ÌApplicable ¡õ Not applicable

The current sales volume decrease is mainly due to the influence of car-purchase restriction policy in Shenzhen,

the vehicle sales number has reduced on a year-on-year basis; the decrease in inventory is mainly because the

suppliers have adjusted the annual targets and intensify efforts to clean up inventory at the beginning.

(4) Fulfillment of the company¡¯s signed significant sales contracts up to this reporting period

¡õ Applicable ¡Ì Not applicable

(5) Constitute of operation cost

Classification of industries and products

In RMB

2015 2014 Increase/decrease

Industries Item

Amount Ratio in operation Amount Ratio in operation y-o-y

15

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

cost cost

Auto sales Auto products 128,438,474.70 58.92% 305,567,651.81 78.47% -57.97%

Auto inspection

and maintenance

Raw materials 38,505,305.64 17.66% 36,668,260.73 9.42% 5.01%

and accessories

sales

Property rental

Other 46,464,850.80 21.31% 44,756,421.29 11.49% 3.82%

and service

Other Other 4,583,585.06 2.11% 2,431,285.86 0.62% 88.53%

In RMB

2015 2014

Increase/decrease

Products Item Ratio in operation Ratio in operation

Amount Amount y-o-y

cost cost

Auto sales Auto products 128,438,474.70 58.92% 305,567,651.81 78.47% -57.97%

Auto inspection

and maintenance

Raw materials 38,505,305.64 17.66% 36,668,260.73 9.42% 5.01%

and accessories

sales

Property rental

Other 46,464,850.80 21.31% 44,756,421.29 11.49% 3.82%

and service

Other Other 4,583,585.06 2.11% 2,431,285.86 0.62% 88.53%

Note

Operation cost for year of 2015 was RMB 217,992,216.20, a 44.02% decline y-o-y. Main business cost was RMB

213, 408,631.14, a 44.85% decline y-o-y.

(6) Whether the changes in the scope of consolidation in Reporting Period

¡õ Yes ¡Ì No

(7) Major changes or adjustment in business, product or service of the Company in Reporting Period

¡õ Applicable ¡Ì Not applicable

(8) Major sales and main suppliers

Major sales client of the Company

Total top five clients in sales (RMB) 15,105,153.41

Proportion in total annual sales volume for top five clients 4.97%

Information of top five clients of the Company

Serial Name Sales (RMB) Proportion in total annual sales

1 Shenzhen Renfu Tellus Automobile Service 5,300,000.00 1.74%

16

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Co., Ltd.

Shenzhen Yiquan Investment Consultants

2 3,528,000.00 1.16%

Co., Ltd.

3 Shenzhen Branch of Ping An Bank Co., Ltd. 2,215,037.00 0.73%

4 He Junyi 2,101,733.08 0.69%

5 Shenzhen Power Supply Bureau Co. Ltd. 1,960,383.33 0.65%

Total -- 15,105,153.41 4.97%

Other situation of main clients

¡õ Applicable ¡Ì Not applicable

Main suppliers of the Company

Total purchase amount from top five suppliers (RMB) 131,539,531.75

Proportion in total annual purchase amount for top five

96.69%

suppliers

Information of top five suppliers of the Company

Serial Name Sales (RMB) Proportion in total annual sales

1 FAW TOYOTA Motor Sales Co., Ltd. 111,445,306.09 81.92%

2 Shenzhen Huatong Auto Parts Co., Ltd. 15,970,557.66 11.74%

TOYOTA Motor (China) Investment Co.,

3 2,161,130.00 1.59%

Ltd.

Guangzhou Xinju Enterprise Development

4 992,999.00 0.73%

Co., Ltd.

Shenzhen New Wanxing Industrial Co.

5 969,539.00 0.71%

Ltd.

Total -- 131,539,531.75 96.69%

Other notes of main suppliers of the Company

¡õ Applicable ¡Ì Not applicable

3. Expenses

In RMB

Increase/decrease

2015 2014 Note of major changes

y-o-y

Mainly affected by the purchase limit

Sales expense 14,718,877.28 21,073,376.98 -30.15% of the car policy, reduced car sales lead

to reduced car sales cost

Mainly due to the release of long-term

Management expense 32,881,868.90 43,509,348.15 -24.43% employee pay payable and period

expenses

17

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Mainly due to the decrease in interest

Financial expense 4,343,688.83 17,771,137.44 -75.56%

expense and increase in interest income

4. R&D investment

¡õ Applicable ¡Ì Not applicable

5. Cash flow

In RMB

Item 2015 2014 Y-o-y changes

Subtotal of cash in-flow from

354,088,861.88 524,941,895.67 -32.55%

operation activity

Subtotal of cash out-flow from

273,406,234.55 518,727,188.82 -47.29%

operation activity

Net cash flow from operation

80,682,627.33 6,214,706.85 1,198.25%

activity

Subtotal of cash in-flow from

372,580,441.92 6,803,919.00 5,375.97%

investment activity

Subtotal of cash out-flow from

732,978,461.70 103,733,506.30 606.60%

investment activity

Net cash flow from investment

-360,398,019.78 -96,929,587.30 275.97%

activity

Subtotal of cash in-flow from

660,198,215.03 505,529,894.01 30.60%

financing activity

Subtotal of cash out-flow from

361,209,488.42 397,936,251.56 -9.23%

financing activity

Net cash flow from financing

298,988,726.61 107,593,642.45 177.89%

activity

Net increased amount of cash

19,139,041.28 16,879,221.55 13.39%

and cash equivalent

Main reasons for y-o-y major changes in aspect of relevant data

¡ÌApplicable ¡õ Not applicable

Item 2015 2014 Y-o-y changes Note

Mainly because automobile sales

Cash inflows from revenue declined which was

354,088,861.88 524,941,895.67 -32.55%

operating activities affected by the purchase of the car

policy

Cash flow from 273,406,234.55 518,727,188.82 -47.29% Mainly because the increase efforts

18

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

operating activities to sell the beginning of inventory

and the reduction in vehicle

purchases

Mainly because the subsidiary

Huari Toyota Company has sold

Net cash flow from the inventory vehicles of last year

80,682,627.33 6,214,706.85 1,198.25%

operation activity in current period resulting in an

increase in net operating cash

inflow

Mainly because the bank

Subtotal of cash guaranteed financial products are

in-flow from 372,580,441.92 6,803,919.00 5,375.97% due and withdrawn in current

investment activity period resulting in increase in cash

inflow

Mainly because the purchase of

bank guaranteed financial products

Subtotal of cash

and continuous investment in

out-flow from 732,978,461.70 103,733,506.30 606.60%

construction projects of Zhongtian

investment activity

Company in current period have

increased the cash outflow

Mainly because the purchase of

bank guaranteed financial products

in current period has increased the

Net cash flow from

-360,398,019.78 -96,929,587.30 expenditures and the continuously

investment activity

investment of the construction

projects increased the cash

expenditures

660,198,215.03 505,529,894.01 30.60% Mainly because the directional

Subtotal of cash

issuance of additional placement in

in-flow from

current period has increased the

financing activity

cash inflow

Mainly because the directional

issuance of additional placement in

Net cash flow from current period has increased and

298,988,726.61 107,593,642.45 177.89%

financing activity the bank financing net expenditures

have increased on a year-on-year

basis

Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company

¡ÌApplicable ¡õ Not applicable

In current period, the cash inflow increased by directional issuance of additional placement and the cash outflow

increased by credit repayment have increased the net cash flow of 298,988,726.61 yuan from the financial

19

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

activities; at the same time, net cash flow from the increase of financial products investment and the investing

activities for Shuibei Jewelry Building is - 360,398,019.78 yuan.

III. Analysis of the non-main business

¡õ Applicable ¡Ì Not applicable

IV. Assets and liability

1. Major changes of assets composition

In RMB

End of 2015 End of 2014

Ratio

Ratio in total Ratio in total Notes of major changes

Amount Amount changes

assets assets

159,184,710.9 Private placement to raise funds to

Monetary fund 13.62% 80,045,669.65 9.93% 3.69%

3 increase

Account

562,051.31 0.05% 1,373,257.89 0.17% -0.12%

receivable

Inventory 16,151,336.61 1.38% 48,209,026.18 5.98% -4.60% Automobile inventory reduction

Investment

82,100,133.48 7.03% 85,083,745.72 10.55% -3.52%

property

Long-term equity 220,180,721.2

18.84% 211,270,265.80 26.20% -7.36%

investment 9

136,583,565.0

Fix assets 11.69% 142,849,121.72 17.72% -6.03%

0

Construction in 279,056,650.3 Major transit companies in the

23.88% 122,551,469.97 15.20% 8.68%

process 5 construction project continued to invest

This issue is mainly due to the return of

bank borrowings and loans to the

Short-term loans 0.00% 74,719,672.00 9.27% -9.27%

parent company will be re classified to

other payment

Long-term loans 0.00% 178,597,550.55 22.15% -22.15%

2. Assets and liability measured by fair value

¡õ Applicable ¡Ì Not applicable

20

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

V. Investment

1. Overall situation

¡õ Applicable ¡Ì Not applicable

2. The major equity investment obtained in the reporting period

¡õ Applicable ¡Ì Not applicable

3. The major non-equity investment doing in the reporting period

¡õ Applicable ¡Ì Not applicable

4. Financial assets investment

(1) Securities investment

¡õ Applicable ¡Ì Not applicable

The company had no securities investment in the reporting period.

(2) Derivative investment

¡õ Applicable ¡Ì Not applicable

The Company has no derivatives investment in the Period

5. Application of raised proceeds

¡ÌApplicable ¡õNot applicable

(1) Overall application of raised proceeds

¡ÌApplicable ¡õNot applicable

In 10 thousand Yuan

Usage of

Cumulativ Ratio of the

Total

e raised cumulative retained

Total Total raised Total Raised

capitals raised raised

Total raised accumulati capital has accumulati capitals

has capitals capitals

Year Way raised capital ve raised purpose of ve raised idle for

purpose of has and what

capitals used capitals uses capitals more than

uses purpose of is expected

in Period used changed in unused two years

changed in uses to invested

Period

total changed with those

capitals

21

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

The

Company

used

temporaril

y idle

funds to

purchase

guaranteed

Non - financial

2015 Public 63,352.00 39,723.44 39,723.44 0 0 0.00% 63,352.00 products 0

Offering 230

million

yuan, raise

funds

account

balances

for

12,221,500

yuan

Total -- 63,352.00 39,723.44 39,723.44 0 0 0.00% 63,352.00 -- 0

Explanation on General usage of raised capital

According to the ¡°Proposal of the company¡¯s plan for non-public offering of shares¡± and other related proposals deliberated and

approved by the company¡¯s 19th extraordinary meeting of the seventh board of directors and the 4th extraordinary general meeting

of 2014, and the ¡°Approval for non-public offering of shares of Shenzhen Test Rite (Group) Co., Ltd.¡± (CSRC license No.

[2015]173) approved by China Securities Regulatory Commission, the Company has adopted non-public offering of shares to issue

RMB ordinary shares (A shares) of 77 million shares, and the issue price is 8.40 yuan /share. The total raised funds of this issuance

are 646,800,000 yuan, the net amount of raised funds is 633,520,000 yuan after deducting the issuance costs of 13,280,000 yuan.

On March 12, 2015, Ruihua Certified Public Accountants (special general partnership) has verified the capital of this issuance and

issued "Capital Verification Report" RHYZ No. [2015]48330003. During the reporting period, the company has totally put into

raised funds of 397,234,400 yuan, and accumulated to put into raised funds of 397,234,400 yuan, including 205,734,400 yuan used

for Tellus Shuibei Jewelry Building, and 191,500,000 yuan used to supplement working capital.

(2) Situation of committed project of raised proceeds

¡ÌApplicable ¡õNot applicable

In 10 thousand Yuan

Amount Investme

Projects Total Predicted Project

of nt

changed committe Total Amount serviceab Profit Reach the feasibility

Committed investment or not d accumula program

investme invested le realized predicted was

projects &investment (includin investme ted till the

nt after in this condition in this interest or changed

of raised fund g nt of investme period-en

adjustme period date of year not hugely or

changed raised nt till the d

project not

partially) capitals period-en (3)=(2)/(1

22

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

nt (1) d (2) )

Investment project commitment

Tellus Shuibei Jewelry

No 26,000 26,000 20,573.44 20,573.44 79.13% 2016.12.1 0 No No

Building

Liquid assets

supplementation of the No 37,352.00 37,352.00 19,150 19,150 51.27% 0 No No

Company

Subtotal of

-- 63,352.00 63,352.00 39,723.44 39,723.44 -- -- 0 -- --

commitment projects

Investment orientation for fund arising out of plan

Not applicable

Total -- 63,352.00 63,352.00 39,723.44 39,723.44 -- -- 0 -- --

1. Tellus Shuibei Jewelry Building has currently completed the main construction, of which the office

building is expected to be put into use in November 2016 and the podium building is expected to be put

into use in December 2016. 2. In the investment projects of raised funds for supplementing the company's

working capital: (1) Repayment of bank loans of 191,500,000 yuan has been completed in the reporting

period. (2) The newly increased renovation costs of Tellus Shuibei project will be put into use as planned

according to the project implementation progress£¬Actual investment may be less than the original plan. (3)

Jewelry e-commerce business: the jewelry e-commerce business market is highly competitive, payback

period is long, the company needs to invest huge marketing costs and resources in the business incubation

period and withstand a certain operating risks and losses, which may bring adverse effects on the

company¡¯s overall performance if investing the jewelry e-commerce platform according to the original

Situation about not plan under the current market situation, so the company has decided to suspend the plan to use raised funds

coming up to schemed to invest in this project. So we decided not to use the funds raised to invest in the project. (4) Jewelry retail

progress or expected market business: since 2015, affected by the decline of prosperity in jewelry industry and the raise of

revenue and the property costs, large jewelry retail markets across the country have shrunk the business and reduced the

reason(In specific income and profits, if the company continued to invest large funds into the jewelry retail market, the

project) business risks would be large, so the company has planned to reduce the investment scale in single retail

market, change to cooperate with the jewelry distributors and operators in some second and third tier cities,

establish the small jewelry retail stores with the help of their managerial experience and industry resources,

accumulate the industry experience, and train the management team so as to enlarge the investment scale

when the industry climate becomes better. (5) Jewelry training business: this project has not yet been put

into use. The company has started to investigate some schools in early 2015 and found that there are

already many jewelry training schools in Shenzhen Shuibei area and the market competition is rather

intense; at the same time, affected by the decline of prosperity in jewelry industry, the demand for training

business has substantially reduced. If the company invests in the construction of jewelry training schools,

the return on investment is relatively low and the payback period is long, so the company has decided to

suspend the investment plan for this project, and wait to argue until the business of jewelry service industry

23

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

goes smoothly and enough resources are accumulated. The raised funds in the original plan shall be used

for other projects. (6) Automobile leasing business supporting the jewelry market: the project has not yet

been put into use. One main reason is that Shenzhen Municipal Government announced the

implementation of car-purchase restriction policy on December 29, 2014, the car purchase takes two

methods, i.e. lottery and bidding, this policy made the company unable to carry out this business as

planned; another reason is that the prosperity of jewelry industry has declined, the demand for automobile

leasing has greatly reduced in jewelry industry of Shuibei, and the business prospects are influenced, so the

company has decided to cancel the investment in this project. The raised funds in the original plan shall be

used for other projects.

Explanation on great

changes of feasibility Not applicable

of project

Amount, usage and Not applicable

progress of using for

fund raising out of the

plan

Change of Not applicable

implementation place

of investment project

of raised capitals

Adjustment of Not applicable

implementation way

for investment project

of raised capitals

Applicable

On April 27, 2015, the company held the thirtieth interim meeting of the seventh board of directors which

Regulation of deliberated and approved the motion about replacing the self-raised funds beforehand invested in

implementation ways fundraising project with the raise funds, and agreed the company to replace the self-raised funds of

of investment project 114,162,000 Yuan invested in fundraising project with the raise funds, of which 15.6 million Yuan was

of raised capitals used to replace and supplement the beforehand invested self-raised funds of the company¡¯s circulating

funds and 98,562,000 Yuan was used to replace and supplement the beforehand invested self-raised funds

of Tellus Shuibei Jewelry Building project. The company¡¯s independent director and sponsor institution

have expresses their agreement on this matter.

Temporarily Not applicable

supplement for the

current capitals with

idle raised capitals

Temporarily Not applicable

supplement for the

current capitals with

idle raised capitals

Invested in pre-phases On April 28, 2015, the company held the twelfth meeting of the seventh board of directors which

24

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

and replacement for deliberated and approved the proposal on the use of some idle raised funds to buy guaranteed financial

raised fund projects products, authorized the company and its subsidiary ¨C Zhongtian Company to use the idle funds to

purchase guaranteed financial products, the total amount should not be more than 350 million yuan. As of

December 31, 2015, the balance of the company¡¯s financial products is 230 million yuan. The remaining

unused raised funds and financial income of 12,221,500 yuan have been saved in special account

according to the regulations of "Raised-funds Management System" for subsequent construction of

investment projects.

Issues or other

conditions found in use

Not applicable

of fund raised and

disclosure

(3)The changed project of raised proceeds

¡õ Applicable ¡Ì Not applicable

The Company has no project of raised proceeds changed in the Period

VI. Sales of major assets and equity

1. Sales of major assets

¡õ Applicable ¡Ì Not applicable

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

2. Sales of major equity

¡õ Applicable ¡Ì Not applicable

VII. Analysis of main holding company and stock-jointly companies

¡ÌApplicable ¡õ Not applicable

Particular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company Main Register Operating Operating

Type Total assets Net Assets Net profit

name business capital revenue profit

Shenzhen

Auto Sales of auto

RMB 58.96

Industry and Subsidiary and 294,288,382. 250,732,485. 18,563,825.4 19,925,371.4 17,846,264.7

million

Trade accessories 93 52 2 3 5

Corporation

Shenzhen SD Auto

US$ 5

Huari Subsidiary maintenance 73,502,086.1 30,526,668.1 32,837,537.5 -3,024,915.9 -2,773,873.6

million

Automobile and 6 4 5 6 2

25

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Enterprise production

Co. and sales of

Limited accessories

Shenzhen

Zhongtian Property RMB 267.25

Subsidiary 394,002,212. 284,052,220.

Industrial rental million 4,955,918.04 4,284,793.54 3,217,472.27

49 74

Co., Ltd

Shenzhen

Huari Toyota Sales of RMB 2

Subsidiary 38,009,203.4 -6,909,011.5 185,704,704.

Automobile automobile million 1,472,011.51 1,559,595.56

6 0 44

Sales Co. Ltd

Shenzhen

Manufacture

Xinyongtong

of inspection

Auto Vehicle RMB 19.61

Subsidiary equipment 14,902,191.7 934,101.38

Inspection million 2,526,780.16 4,085,453.00 1,251,276.89

for motor 9

Equipment

vehicle

Co., Ltd.

Shenzhen

Tellus Inspection

Xinyongtong and repair of RMB 32.90

Subsidiary 83,371,768.3 45,271,182.8 12,820,360.5

Automobile motor million 2,261,995.35 1,660,758.33

8 6 8

Development vehicle

Co. Ltd

Shenzhen SD Real estate

Tellus Real developmen RMB 31.15

Subsidiary 28,643,517.1 11,983,974.3 - 113,178.46 113,178.46

Estate Co., t and million

2 0

Ltd operation

Shenzhen SD

Tellus

Property RMB

Property Subsidiary 35,049,202.8 12,008,576.2 41,045,926.7

management 7.05million 2,323,460.26 1,927,740.64

Management 7 2 6

Co., Ltd

Shenzhen

Tellus Real Trading

RMB 2

Estate Subsidiary agency of 74,950.00 -32,021.16 -32,021.16

million 2,577,341.06 2,450,205.81

Exchange real estate

Co. Ltd

Shenzhen

Zung Fu Sales of auto

Stock jointly RMB 30

Tellus Auto and 544,475,609. 206,547,850. 457,918,003. -39,304,240. 50,882,918.2

company million

Service Co., maintenance 29 48 79 42 7

Ltd.

26

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Manufacture

Shenzhen

and

Dongfeng Stock jointly RMB 100

maintenance 310,254,516. 207,850,195. 876,992,496.

Automobile company million 2,618,933.00 5,242,659.00

of 00 00 00

Co., Ltd.

automobile

Particular about subsidiaries obtained or disposed in report period

¡õ Applicable ¡Ì Not applicable

Notes of holding and shareholding companies

VIII. Structured vehicle controlled by the Company

¡õ Applicable ¡Ì Not applicable

IX. Future Development Prospects

(I) The Company¡¯s future development strategy

1. The status and tendency of jewelry industry

Affected by the economic environment, the 10-year golden development period for jewelry came to an end and the

jewelry industry had stagnation and decline in recent two years, the industrial shrink brought great impact on every

link of jewelry industry chain. The industrial competition made higher requirements for the capital, operations,

channels, technology, marketing of jewelry enterprises, and many jewelry enterprises actively or passively started

the transition from disordered competition to the request of more rational development approach.

In the long term, benefiting from the consumption upgrade, the jewelry industry still has huge room for

development. Compared to the United States, Japan, Britain, France and other countries, China's per capita

consumption of jewelry is significantly low, the consumption of diamonds and multicolored jewelries continue to

increase, which provides long-term source of profits for the jewelry industry.

2. The company¡¯s strategic planning assumptions

Since the establishment of strategic development direction, the company has conducted in-depth research in the

jewelry market across the country, and constructed the design creativity and wechat entrepreneurial platform based

on the physical platform of Tellus Shuibei jewelry industrial park; established the regional channel platform and

regional retail terminal platform, created the whole industry chain trading service platform; taken financial services

as a link to achieve the interoperability across platforms, build large data centers for jewelry industry, and strive to

build the planning assumptions of Tellus jewelry industry ecosystem.

(1) Shuibei jewelry industrial park

Currently, Tellus Shuibei Jewelry Building project in Shuibei jewelry industrial park

is expected to put into use by the end of 2016, Golden Plaza constructed by joint venture ¨C Shenzhen Tellus

Jimeng Investment Co., Ltd. is expected to put into use in August 2016, Xinglong Gold Jewelry Building

(formerly known as "Shenzhen Shuibei Xinglong R & D Center Building ") constructed by joint-stock company -

Shenzhen Xinglong Machinery Mould Co., Ltd. is expected to put into use in July 2016.

After the completion of above-mentioned key projects, the company can take the jewelry manufacturers gathered

by physical platform as the basis, connect the channels and manufacturers by taking financial services as a link to

meet the business development requirements of both sides and get mutual benefit. Meanwhile, the company can

integrate various elements of industry chain based on the industrial park, construct the design creativity and wechat

entrepreneurial platform, increase the attractiveness to manufacturers and channel partners, and cultivate the new

profit growth points.

27

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

(2) Regional channel platform

Through the in-depth study to jewelry industry, the company thinks that channels are the core connecting link

between the preceding and the following of the entire jewelry industry chain. The regional channel platform has

wide development space and high profitability level, and can directly involve in the industrial chain management,

the company can take the construction of regional channel platform as the starting point and provide the whole

industry chain services to get more profits and make a certain impact on jewelry industry at the same time.

The company may create a regional channel platform, develop and expand the platform through the financial

services of supply chain, gradually form a national channel platform, obtain the main sources of profits through

financial and other additional services and get the future growth space by grafting e-commerce so as to make a

certain influence on the upstream and downstream of jewelry industry.

(3) Regional retail terminal platform

The company plans to extend the business to jewelry industrial chain terminals-- retail terminal platform.In virtue

of the resources of Shuibei manufacturers and channels in various regions, enhance the attractiveness to retailers

by providing financial services and e-commerce business, expand the scale of the terminal platform, and gradually

form a national jewelry retail terminal platform.

(4) Financial services of jewelry

According to the company's strategic framework and physical platform construction progress, the company plans to

establish a closed loop of finance industry included small loans, commercial factoring, guarantee business,

financial leasing, internet financing and other service items. As a link, the financial services platform will deeply

blend in physical platforms, regional channel platforms and regional retail terminal platforms business of Shuibei

jewelry industrial park, and become the important support for the company's future business.

(5) E-commerce business

After the steady development and expansion of regional trading platform, the company plans to cooperate with

e-commerce enterprises, merger and absorb the outstanding and mature e-commerce enterprises or establish the

industry funds incubation methods, make use of the advantages of e-commerce enterprises in e-commerce field

and business system, take advantage of the data and resources accumulated in physical platforms of Shuibei

industrial park, regional channel platforms and regional retail terminal platforms to complement the advantages of

virtual and physical platforms, build Tellus jewelry e-commerce platform, and complete the company¡¯s initial

layout in e-commerce platform.

By the landing and implementation of above plans, the company will take financial service as a link to attract the

regional channels to cooperate with manufacturers of Shuibei physical platform, at the same time, the company

will develop the retail terminal business in virtue of the resources of channels, obtain the big data and develop

e-commerce business by physical platforms of Shuibei jewelry, regional channel platforms and regional retail

terminals, all section support each other and develop harmoniously, eventually form a closed loop and create

Tellus jewelry industry ecosystem, and make a wide range of market influence on the entire jewelry market.

(II) The company¡¯s business plan in 2016

1. Complete the construction of key projects in the industrial park

Based on keeping the existing business steady , the company's focus of work in 2016 shall fully transfer to the

construction, investment and operations of Tellus Shuibei Jewelry Building (Phase I project), and timely advance

the development and construction of Tellus Gimeng Industrial Park No. 3 block (Phase II project).

2. Fully promote the transformation

In 2016, the company will fully promote the transformation and adopt multiple means to promote the landing and

implementation of business models. The company will focus on the strategic thinking of transforming to be a

28

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

comprehensive service provider in jewelry industry, take full advantage of market resources and company

resources, make in-depth analysis, excavate the meeting point between the regional channel platforms and retail

terminal platform and the company's superior resources, refine the implementation program and path; seek for the

target companies that meet the company's strategies and own development characteristics through a variety of

channels, and make the company bigger and stronger in e-commerce, jewelry financial services and retail terminal

fields through a variety of ways including cooperation, mergers and acquisitions, and industry funds incubation, etc.

3. Continue to deepen the internal reform, improve the enterprise competitiveness

The company will strengthen internal control, control costs, reduce costs, and ensure the smooth completion of

annual management tasks; adhere to market-oriented operation, standardized operation, further marketize rental

prices, and improve property operating income; accelerate the marketization process of property companies, the

company will take the property management project of Tellus Shuibei Jewelry Building as an opportunity to

enhance the property management level and transform to high-end property management; strengthen the

supervision to shareholding enterprises, support the enterprises to improve management; explore the exit

approaches of automotive business in accordance with the smooth, orderly, and soon principle.

(III) Funds needed for the company¡¯s future development

The company has completed the non-public offering of shares in March 2015, and the raised funds have been

credited into account. The company will regulate the expenditure of funds in strict accordance with the regulatory

measures of raised funds so as to maximize the utility of raised funds. At the same time, the company will furthest

use the temporarily idle funds, actively carry out the bank financing, and create the maximum benefits of funds.

The company will fully demonstrate the bank loans, capital market refinancing and other financing methods

according to its own operation and acquisition or investment demands, expand the financing channels, and raise the

funds; grasp the status of business environment and the variation trends of management environment of capital

structure, actively open up the new sources of capital, flexibly select the financing strategy selection, complete the

fund guarantee, and provide effective support for the company's future business development.

(IV) Risks may face

1. It is difficult for automobile to withdraw from the business

According to the company¡¯s strategic positioning of withdrawing from automobile main business in 2014, the

company shall face personnel placement and related industry adjustment when implementing the plan for

smoothly and orderly withdrawing from automobile sales business, the withdrawing shall be rather difficult and

the progress will be a little later than the expectation.

The company will resolutely promote the plan to orderly withdraw from the car sales business, strengthen the

communication, enhance the coordination of all parties, and deal with the conflicts among all parties.

2. The development plan and completion plan of project construction may be affected by following force

majeure factors:

(1) Changes in regulations and policies may affect the development of the project;

(2) Procedures of certifications and licenses for development projects may have an impact on the development

progress of the project;

(3) The removing progress of project involving removing may have an impact on the progress of the project;

(4) Significant changes in the weather may have an impact on the progress of the project;

(5) Other unpredictable events may have an impact on the progress of the project.

3. The transformation road is arduous

The company faces uncertainties in the layout of jewelry market. From the external environment, the jewelry

29

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

market has been rather sluggish in recent years, the overall industry shrinks, and the competition intensifies. From

the internal environment, after initially establishing the strategic planning assumptions, the company still faces

with the specific entry points, and the selection and exploration of implementation approaches.

Although the transformation road is difficult, the company will continue to promote the transformation of firm

belief.

X. Reception of research, communication and interview

1. In the report period, reception of research, communication and interview

¡ÌApplicable ¡õ Not applicable

Time Way Type Basic situation index of investigation

Panorama network has asked questions

about the reasons for revenue decrease

and profit increase in the mid-year

report, the company performance, the

progress of Tellus Shuibei Jewelry

2015-09-09 Telephone Communication Organization

Building, and the company's share price,

etc.; please see details on "Investor

relations activities log sheet" disclosed

on easy interactive platform of Shenzhen

Stock Exchange on September 9, 2015.

Shenzhen Special Zone Daily has asked

questions about the company's share

price, state-owned enterprise reform

policies, company performance, etc.;

2015-09-24 Telephone Communication organization

please see details on "Investor relations

activities log sheet" disclosed on easy

interactive platform of Shenzhen Stock

Exchange on September 24, 2015.

Reception (times) 2

Number of hospitality 2

Number of individual reception 0

Number of other reception 0

Disclosed, released or let out major undisclosed

No disclosed, released or let out major undisclosed information

information

30

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section V. Iimportant Events

I. Profit distribution plan of common stock and capitalizing of common reserves plan

Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during

the Reporting Period

¡ÌApplicable ¡õ Not applicable

Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years

(including the reporting period)

The accumulated retained profit of parent company ended as 2013, 2014 counted as -10,976.46 million Yuan,

-10,967.37 million Yuan respectively, has no profit distribution and cash bonus. Consolidated statements of the

company's 2015 annual net profit attributable to shareholders of the parent company is 4,276.88 million Yuan, the

consolidated statement of the non distribution of profits is 374.23 million Yuan, the accumulated retained profit of

parent company is -9,138.89 million Yuan. The Company has no profit distribution and cash bonus in 2015 due to

the negative value of the accumulated retained profit of parent company.

Cash dividend of common stock in latest three years (including the reporting period)

In RMB

Net profit Ratio in net profit

attributable to attributable to

common stock common stock

Year for bonus Amount for cash shareholders of shareholders of Amount for cash Proportion for cash

shares bonus (tax included) listed company in listed company bonus by other ways bonus by other ways

consolidation contained in

statement for bonus consolidation

year statement

2015 0.00 42,768,789.52 0.00% 0.00 0.00%

2014 0.00 10,345,217.67 0.00% 0.00 0.00%

2013 0.00 7,185,944.01 0.00% 0.00 0.00%

The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is

positive but no plan of cash dividend proposed of common stock

¡õ Applicable ¡Ì Not applicable

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

¡õ Applicable ¡Ì Not applicable

The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for

the year

31

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

III. Implementation of commitment

1. Commitments that the company, shareholders, actual controller, offeror, directors, supervisors, senior

management or other related parties have fulfilled during the reporting period and have not yet fulfilled by

the end of reporting period

¡ÌApplicable ¡õ Not applicable

Type of Commitmen Commitm Implementa

Commitments Promise Content of commitments

commitments t date ent term tion

(I) Commitments during the work of

Share Merger Reform of the Company:

1. Commitments on Lock-up period

(1) In accordance with the Measures for

the Administration of the Share Merger

Reform of Listed Companies, SDG

would abide by the various laws,

regulations and rules, and perform its

statutory commitment duty.

(2) Apart from the above-mentioned

statutory commitment, SDG also made

the following special commitment: with

36 months since the day the reform plan

starts to take effect, SDG would not list

at Shenzhen Stock Exchange and sell

the shares of Tellus it held (except for

the shares used to promote the

Commitments Commitments administration level of Tellus). Implementi

for share merger SDG for share 2005-12-25 Long-term

(3) The administration level would ng

reform merger reform

abide by the laws, regulations and rules,

and perform its statutory commitment

duty.

(4) SDG made the commitment: ¡°The

Promiser hereby promises that, if the

Promiser failed to fulfill its commitment

or not fully fulfill its commitment, it

would compensate other shareholders

for their losses suffered thereafter¡±.

(5) SDG declared: ¡°The Promiser would

dutifully fulfill its commitments and

shoulder corresponding legal

responsibilities. The Promiser would

transfer the shares held by it only if the

assignee agree and have the ability to

shoulder the commitment

responsibility.¡±

32

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

2. Special commitment concerning the

incentive mechanism

In order to effectively boost the core

management level and business

backbones for long, SDG would take

out its shares, not exceeding 10% in

total number after the Share Merger

Reform, and apply them to the boost of

the administration level. The shares

would be sold to the Company¡¯s

administrative level over 3 years, with

the selling price being the net asset

value per share audited during the

period nearest to the implementation.

Before the implementation of the

promoting plan by share selling each

year, the administration level must

prepay the Company a risk

responsibility fund, i.e. 20% of the

planned selling price; Should the work

of the performance examination set by

the Board failed to be finished, the paid

risk responsibility fund would not be

refunded and shall be owned by the

Company. Detailed rules concerning the

limitations on the administration level,

such as the subscription conditions and

risk responsibility fund, and boost plans

would be set by the Board and

submitted to relevant departments for

approval. The implementation of the

shares for promoting would be

conducted strictly according to relevant

laws and regulations, and the circulation

conditions of these shares would be in

conformity with relevant regulations set

by the Shenzhen Stock Exchange.

3. Relevant expenses of this Share

Merger Reform of Tellus would be paid

by SDG.

Commitments SDG, the controlling shareholder of the

for

Company, made a special commitment Implementi

SDG Share Merger 2014-06-26 2016-6-30

of incentive mechanism in Share ng

Reform

Merger Reform. After that SASAC and

33

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Ministry of Finance jointly issued a

¡°Trial Approach of Equity Incentive for

State-Owned Listed Companies¡±, and

CSRC issued the ¡°Incentive

Management on Shares of Listed

Companies (Trial)¡±, after comparison,

the above mentioned commitments

made by SDG are out of the relevant

regulations and requirement, relevant

commitments are not implemented as a

result. On 26 June 2014, the Company

actively communicating with SDG, and

promised that on the premise of

subjecting to applicable laws and

regulations and supervision

requirements, continues to support the

Company promote a long-term

incentive plan as soon as possible in

stead of the commitments made in share

merger reform, and complete the

long-term incentive plan before 30 June

2016. At that time, the long-term

incentive plan shall be implemented

after submit for deliberation in General

Meeting.

Commitments in

report of

acquisition or

equity change

Commitments in

assets

reorganization

Shenzhen Capital 1. The commitments of the relevant

Fortune bodies on the timely arrival of funds of

Investment share subscription: On August 22, 2014,

Management Co., about the subscription to Test Rite

Commitments

Ltd.; Shenzhen Group¡¯s private placement of shares,

make in initial 2015-3-27

Jiahe Investment Other Jewelry Industry Funds, SZ Capital, 2014-08-22 Completed

public offering

Management Capital Fortune, Jiahe Investment,

or re-financing

Enterprise; Wanbang Investment, and Test Rite

Shenzhen Wanban Group have respectively issued the

Investment ¡°commitment letter¡±, and made

Management Co., commitments to the timely arrival of

34

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Ltd.; Shenzhen funds of share subscription. The specific

Capital contents of Jewelry Industry Funds¡¯

Investment Co., commitment letter are that after this

Ltd.; Shenzhen non-public offering of shares being

Zhiyuan Fuhai approved by the China Securities

Jewlry Industry Regulatory Commission, the

Investment subscription funds of Test Rite Group¡¯s

Enterprise; non-public offering of shares have all

ShenZhen Tellus been in place when reporting the issuing

Holding Co.,Ltd scheme, and have been transferred to

the special account which was opened

by the sponsor institution (principal

underwriter) for this non-public offering

of shares at one time in accordance with

the requirements of the payment notice

issued by Test Rite Group and the

sponsor institution (principal

underwriter). The specific contents of

Test Rite Group¡¯s commitment letter are

that after this non-public offering of

shares being approved by the China

Securities Regulatory Commission, the

Company should supervise and urge

Capital Fortune (limited partnership) to

put all subscription funds in place when

reporting the issuing scheme, and

transfer the subscription funds to the

special account which was opened by

the sponsor institution (principal

underwriter) for this non-public offering

of shares at one time in accordance with

the requirements of the payment notice

issued by the Company and the sponsor

institution (principal underwriter).

2. The commitments to no undisclosed

related protocols of related bodies: On

August 22, 2014, Jewelry Industry

Funds, Jiahe Investment, and Wanbang

Investment has respectively made

commitments that no other undisclosed

protocols exist in Test Rite Group and

its controlling shareholder SDG, the

actual controller Shenzhen SASAC and

the related parties except for the

35

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

publicly disclosed protocols.

The commitments to the fulfillment of

information disclosure about the

company business development are as

follows: except for the information has

been disclosed publicly, the Company

has not had the disclosed information

ShenZhen Tellus about asset acquisition and business Implementi

Other 2014-10-17 Long-term

Holding Co.,Ltd development that has not been disclosed ng

within one year. In the future, the

company shall timely, accurately and

adequately disclose the relevant

information according to the progress of

new business and the related

requirements.

Equity incentive

commitment

In order to avoid the horizontal

competition, the company¡¯s controlling

shareholder, Shenzhen SDG Co., Ltd.,

has issued the ¡°commitment letter about

the avoidance of horizontal

competition¡± on May 26, 2014. The full

commitment letter is as follows: 1. The

Horizontal Implementi

SDG Company and other enterprises 2014-05-26 Long-term

Competition ng

controlled by the Company except Test

Rite Group haven¡¯t occupied in any

business that could substantially

Other compete with the main businesses of

commitments Test Rite Group, and have no horizontal

for medium and

small competition relationship with Test Rite

shareholders Group.

The accumulative rate of deviation

value of the share price of the

Company's stock Tellus A (stock code:

000025) has reached 20% in three

Not

consecutive trading days (March 19,

ShenZhen Tellus implement

2015, March 20, 2015, March 23, 2015-03-23 2015-6-23 Completed

Holding Co.,Ltd assets

2015). According to the relevant

restructuring

provisions of Shenzhen Stock

Exchange, it belongs to abnormal

fluctuations of shares. Verified by the

Company, in addition to the disclosed

36

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

non-public offering of shares (Please

refer to the latest details on ¡°Notice on

non-public offering of shares obtaining

the approval of China Securities

Regulatory Commission¡± No. 2015-005

published on "Securities Times", "Hong

Kong Commercial Daily", and Juchao

Website by the Company on February 3,

2015, the Company, the controlling

shareholders and actual controller

currently do not exist the major assets

restructuring, acquisition, issuance of

shares and other issues have significant

impacts on the Company, and make

commitments not to plan and prepare

the major assets restructuring,

acquisition, issuance of shares in the

next three months.

From 2014 to 2016, the company¡¯s

profits will first be used to cover the

losses of previous years; after making

up for losses of previous years, in the

premise that the company¡¯s profits and

cash flow can meet the company's

normal operations and long-term

development, reward shareholders, the

company will implement positive profit

distribution approaches to reward the

shareholders, details are as follows: 1.

The company¡¯s profit distribution can

ShenZhen Tellus Commitments adopt cash, stock or the combination of 2016-12-3 Implementi

2014-06-03

Holding Co.,Ltd for dividend cash and stock or other methods 1 ng

permitted by law. The foreign currency

conversion rates of domestically listed

foreign shares dividend are calculated

according to the standard price of HK

dollar against RMB announced by

People's Bank of China on the first

working day after the resolution date of

the shareholders' meeting. The company

prefers to adopt the cash dividends to

distribute profits. In order to maintain

the adaptability between capital

expansion and performance growth, in

37

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

the premise of ensuring the full cash

dividend distributions and the

rationality of equity scale and equity

structure, the company can adopt the

stock dividend methods to distribute

profits. 2. According to the "Company

Law" and other relevant laws and the

provisions of the company¡¯s "Articles of

Association", following conditions

should be satisfied when the company

implements cash dividends: (1) the

company's annual distributable profits

(i.e. the after-tax profits after making up

for losses and withdrawing

accumulation funds) are positive value,

the implementation of cash dividends

will not affect the company's

subsequent continuing operations; (2)

the audit institution issues the standard

audit report with clean opinion to the

company's annual financial report; (3)

the company has no significant

investment plans or significant cash

outlay (except for fund-raising

projects). Major investment plans or

significant cash outlay refer to: the

accumulated expenditures the company

plans to used for investments abroad,

acquisition of assets, or purchase of

equipments within the next 12 months

reach or exceed 30% of the net assets

audited in the latest period. 3. In the

premise of meeting the conditions of

cash dividends and ensuring the

company¡¯s normal operation and

long-term development, the company

makes cash dividends once a year in

principle, the company¡¯s board of

directors can propose the company to

make interim cash dividends in

accordance with the company's

profitability and capital demand

conditions. The proportion of cash

dividends in profits available for

38

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

distribution and in distribution of profits

should meet the following requirements:

(1) in principle, the company¡¯s profits

distributed in cash every year should not

be less than 10% of profit available for

distribution realized in the same year,

and the company¡¯s profits

accumulatively distributed in cash in the

last three years should not be less than

30% of the annual average profit

available for distribution realized in the

last three years. (2) if the company¡¯s

development stage belongs to mature

stage and there is no significant capital

expenditure arrangement, when

distributing profits, the minimum

proportion of cash dividends in this

profit distribution should be 80%; (3) if

the company¡¯s development stage

belongs to mature stage and there are

significant capital expenditure

arrangements, when distributing profits,

the minimum proportion of cash

dividends in this profit distribution

should be 40%; (4) if the company¡¯s

development stage belongs to growth

stage and there are significant capital

expenditure arrangements, when

distributing profits, the minimum

proportion of cash dividends in this

profit distribution should be 20%; when

the company's development stage is not

easy to be differed but there are

significant capital expenditure

arrangements, please handle according

to the preceding provisions. 4. On the

condition of meeting the cash dividend

distribution, if the company's operation

revenue and net profit grow fast, and the

board of directors considers that the

company¡¯s equity scale and equity

structure are reasonable, the company

can propose and implement the

dividend distribution plans except

39

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

proposing the cash dividend distribution

plans. When allocating stock dividend

every time, the stock dividend per 10

shares should be no less than 1 share.

Stock allocation can be implemented

individually or in combination of cash

dividends. When confirming the exact

amount of profit distribution by stock,

the company should fully consider if the

general capital after profit distribution

by stock matches with the company¡¯s

current operation scale and profit

growth rate and consider the impact on

future financing so as to make sure the

allocation plans meet the overall

interests of all shareholders.

Completed on

Y

time(Y/N)

2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in

forecasting period, explain reasons of reaching the original profit forecast

¡õ Applicable ¡Ì Not applicable

IV. Non-operational fund occupation from controlling shareholders and its related party

¡õ Applicable ¡Ì Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.

V. Explanation from Board of Directors, Supervisory Committee and Independent Directors

(if applicable) for ¡°Qualified Opinion¡± that issued by CPA

¡õ Applicable ¡Ì Not applicable

VI. Particulars about the changes in aspect of accounting policy, estimates and calculation

method compared with the financial report of last year

¡õ Applicable ¡Ì Not applicable

No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.

VII. Major accounting errors within reporting period that needs retrospective restatement

¡õ Applicable ¡Ì Not applicable

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

40

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

VIII. Compare with last year¡¯s financial report; explain changes in consolidation statement¡¯s

scope

¡õ Applicable ¡Ì Not applicable

No changes in consolidation statement¡¯s scope of the Company in the period.

IX. Appointment and non-reappointment (dismissal) of CPA

Accounting firm appointed

Name of domestic accounting firm Ruihua Certified Public Accountants (LLP)

Remuneration for domestic accounting firm (in 10

55

thousand Yuan)

Continuous life of auditing service for domestic

2

accounting firm

Name of domestic CPA Yuan Longping, Qin Changming

Re-appointed accounting firms in this period

¡õYes ¡ÌNo

Appointment of internal control auditing accounting firm, financial consultant or sponsor

¡ÌApplicable ¡õ Not applicable

In reporting period, Ruihua Certified Public Accountants (LLP) was engaged by the Company as audit institute

for internal control, remuneration amounting as RMB 240,000.

In 2014, The Company engaged Huaxi Securities Co., Ltd. as the sponsor due to private placement in the Period,

sponsor fee amounting as 2 million Yuan.

X. Particular about suspended and delisting after annual report disclosed

¡õ Applicable ¡Ì Not applicable

XI. Bankruptcy reorganization

¡õ Applicable ¡Ì Not applicable

No bankruptcy reorganization for the Company in reporting period

XII. Significant lawsuits and arbitrations of the Company

¡õApplicable ¡ÌNot applicable

No significant lawsuits and arbitrations occurred in the reporting period

XIII. Penalty and rectification

¡õ Applicable ¡Ì Not applicable

No penalty and rectification for the Company in reporting period.

41

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

XIV. Integrity of the company and its controlling shareholders and actual controllers

¡õ Applicable ¡Ì Not applicable

XV. Implementation of the company¡¯s stock incentive plan, employee stock ownership plan or

other employee incentives

¡õ Applicable ¡Ì Not applicable

During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives

that have not been implemented.

XVI. Major related transaction

1. Related transaction with routine operation concerned

¡ÌApplicable ¡õ Not applicable

Approv

Settlem

Pricing Transact ed

Content Proporti ent

Type Principl ion Transact Whethe

of on in method

of the e of amount ion r exceed

the Transact same of Similar Disclos

Related Relation related- the (RMB quota the Disclos

relate ion kind the market ure

party ship party related- Ten (RMB approve ure date

d-party price of related- price index

transacti party Thousa Ten d

transacti transacti party

on transacti nd Thousa quota

on ons transacti

on Yuan) nd

on

Yuan)£©

Director Related Accordi

Shenzhen

of the transacti ng to

Zung Fu Referen

compan on with the

Tellus house ce

y's routine 530 530 4.93% 530 no contract 530

Auto renting; market

board of concern or

Service pricing

director ed agreeme

Co., Ltd.

s nt

Total -- -- 530 -- 530 -- -- -- -- --

Details of large amount of sales

no

returns

As for the prediction on the total

amount of routine related-party

transactions to be occurred in the

no

reporting period by relevant types,

the actual performance in the

reporting period (if any)

42

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Reason for significant difference

between the transaction price and no

the market price

2. Related transactions by assets acquisition and sold

¡õ Applicable ¡Ì Not applicable

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

3. Main related transactions of mutual investment outside

¡õ Applicable ¡Ì Not applicable

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

4. Contact of related credit and debt

¡ÌApplicable ¡õNot applicable

Whether the Company had non-operating contact of related credit and debt

¡Ì Yes ¡õ No

Claim receivable from related party:

Whether Current

Balance at Current Current

has newly Balance at

period-begi recovery interest

Related Relationshi non-busines added period-end

Causes n (10 (10 Interest rate (10

party p s capital (10 (10 thousand

thousand thousand thousand

occupying thousand Yuan)

Yuan) Yuan) Yuan)

or not Yuan)

Influence on operation

results and financial

Not applicable

status from related credit

and debts

Debts payable to related party:

Balance at Current Current Current Balance at

period-begin newly added recovery interest period-end

Related party Relationship Causes Interest rate

(10 thousand (10 thousand (10 thousand (10 thousand (10 thousand

Yuan) Yuan) Yuan) Yuan) Yuan)

Shenzhen Parent

loans 7,300 1,000 361 6,300

SDG Co., Ltd. company

Current

Shenzhen Parent

account and 5,978 481 1,665 59 4,794

SDG Co., Ltd. company

loans interest

Shenzhen Parent Huari Co.,

1,892 5 61 1,887

SDG Co., Ltd. company Ltd.loans

Influence on operation

results and financial status The increase in interest expense caused the total profit decreased 4.81 million yuan.

from related credit and debts

43

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

5. Other related transactions

¡õ Applicable ¡Ì Not applicable

The company had no other significant related transactions in reporting period.

XVII. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

¡õ Applicable ¡Ì Not applicable

No trusteeship for the Company in reporting period

(2) Contract

¡õ Applicable ¡Ì Not applicable

No contract for the Company in reporting period

(3) Leasing

¡õ Applicable ¡Ì Not applicable

No leasing for the Company in reporting period

2. Major guarantees

¡ÌApplicable ¡õ Not applicable

(1) Guarantees

In 10 thousand Yuan

Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)

Guarante

Related

Actual date of e for

Announce Actual Implemen

Name of the Company Guarantee happening (Date Guarantee Guarantee

ment guarantee related

guaranteed limit of signing type term ted (Y/N)

disclosure limit

agreement) party

date

(Y/N)

To the expire

Shenzhen Zung Fu

date of joint

Tellus Auto Service 2014-09-30 3,500 2007-04-17 3,500 Pledged N Y

venture

Co., Ltd.

contract

Total actual occurred

Total approving external guarantee

0 external guarantee in report 3,500

in report period (A1)

period (A2)

Total actual balance of

Total approved external guarantee

3,500 external guarantee at the 3,500

at the end of report period ( A3)

end of report period (A4)

Guarantee of the Company and the subsidiaries

Guarante

Related

Actual date of e for

Announce Actual Implemen

Name of the Company Guarantee happening (Date Guarantee Guarantee

ment guarantee related

guaranteed limit of signing type term ted (Y/N)

disclosure limit

agreement) party

date

(Y/N)

44

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Shenzhen Zhongtian Joint liability 2014-6-24 To

2014-05-07 30,000 2014-06-24 30,000 N Y

Industrial Co., Ltd. guaranty 2024-6-23

Shenzhen Zhongtian General

2014-03-17 4,140 4,140 To 2016-6-25 N Y

Industrial Co., Ltd. guarantee

Shenzhen Auto

General

Industry and Trade 2014-08-20 1,000 2014-09-16 1,000 2015-9-16 Y Y

guarantee

Corporation

Total amount of actual

Total amount of approving

occurred guarantee for

guarantee for subsidiaries in report 0 35,140

subsidiaries in report period

period (B1)

(B2)

Total balance of actual

Total amount of approved

guarantee for subsidiaries at

guarantee for subsidiaries at the 35,140 34,140

the end of reporting period

end of reporting period (B3)

(B4)

Guarantee of the subsidiaries and the subsidiaries

Guarante

Related

Actual date of e for

Announce Actual Implemen

Name of the Company Guarantee happening (Date Guarantee Guarantee

ment guarantee related

guaranteed limit of signing type term ted (Y/N)

disclosure limit

agreement) party

date

(Y/N)

Two years

since the

expired date

Shenzhen Huari when debtor

Toyota Auto-Sales 2014-03-17 4,900 2014-06-26 4,900 Pledged of the main Y Y

Service Co., Ltd. contract

completed

debt

maturities

Shenzhen Huari

Toyota Auto-Sales 2014-03-17 1,800 2014-10-13 1,800 Pledged 2015-10-13 Y Y

Service Co., Ltd.

Total amount of actual

Total amount of approving

occurred guarantee for

guarantee for subsidiaries in report 0 6,700

subsidiaries in report period

period (C1)

(C2)

Total balance of actual

Total amount of approved

guarantee for subsidiaries at

guarantee for subsidiaries at the 6,700 0

the end of reporting period

end of reporting period (C3)

(C4)

Total amount of guarantee of the Company( total of three abovementioned guarantee)

Total amount of approving Total amount of actual

guarantee in report period 0 occurred guarantee in report 45,340

(A1+B1+C1) period (A2+B2+C2)

Total amount of approved Total balance of actual

guarantee at the end of report 45,340 guarantee at the end of 37,640

period (A3+B3+C3) report period (A4+B4+C4)

45

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

The proportion of the total amount of actually guarantee in the net

43.36%

assets of the Company (that is A4+ B4+C4)

Including:

Amount of guarantee for shareholders, actual controller and its

0

related parties(D)

The debts guarantee amount provided for the guaranteed parties

0

whose assets-liability ratio exceed 70% directly or indirectly(E)

Proportion of total amount of guarantee in net assets of the

0

Company exceed 50%(F)

Total amount of the aforesaid three guarantees(D+E+F) 0

Explanations on possibly bearing joint and several liquidating

N/A

responsibilities for undue guarantees (if applicable)

Explanations on external guarantee against regulated procedures

N/A

(if applicable)

Explanation on guarantee with composite way

(2)Guarantee outside against the regulation

¡õApplicable ¡ÌNot applicable

No guarantee outside against the regulation in Period.

3. Entrust others to cash asset management

(1) Trust financing

¡õApplicable ¡ÌNot applicable

In 10 thousand Yuan

Amount

of reserve Gains/l

Principal for osses

Whether Actual

Trust Criteria actually devaluati actuall

related Anticipat gains/loss

Name Type financing Start date End date for fixing collected on of y

trade or ed income es in

amount reward in the withdrawi collect

not period

Period ng (if ed in

applicable period

)

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-04- 2015-10- and

No 6,000 6,000 0 151.89 151.89 151.89

Industrial proceeds 30 15 interest

Bank Co., payment

Ltd. at

maturity

46

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Shenzhen Repayme

Branch of nt of

China principal

CITIC Floating 2015-04- 2015-07- and

No 3,000 3,000 0 32.91 32.91 32.91

Bank proceeds 30 30 interest

Corporati payment

on at

Limited maturity

Shenzhen

Branch of

Contract

China Structured 2015-04- 2015-07-

No 4,000 agreemen 4,000 0 40.5 40.5 40.50

Everbrigh deposit 30 30

t

t Bank

Co., LTd.

Shenzhen Repayme

Branch of nt of

China principal

CITIC Floating 2015-05- 2015-08- and

No 4,000 4,000 0 43.88 43.88 43.88

Bank proceeds 07 06 interest

Corporati payment

on at

Limited maturity

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-05- 2015-05- and

No 5,000 5,000 0 2.4 2.4 2.40

Industrial proceeds 07 12 interest

Bank Co., payment

Ltd. at

maturity

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-05- 2015-08- and

No 4,000 4,000 0 9.06 9.06 9.06

Industrial proceeds 08 26 interest

Bank Co., payment

Ltd. at

maturity

Shuibei

Jewellery Contract

Deposit 2015-05- 2015-07-

Branch of No 3,000 agreemen 3,000 0 6.21 6.21 6.21

products 08 29

China t

Construct

47

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

ion Bank

Co., Ltd.

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-05- 2015-10- and

No 5,000 5,000 0 126.58 126.58 126.58

Industrial proceeds 14 29 interest

Bank Co., payment

Ltd. at

maturity

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-05- 2015-10- and

No 3,000 3,000 0 75.95 75.95 75.95

Industrial proceeds 14 29 interest

Bank Co., payment

Ltd. at

maturity

Shenzhen Repayme

Gold nt of

Jewelry principal

Branch of Floating 2015-05- 2015-06- and

No 5,000 5,000 0 21.95 21.95 21.95

China proceeds 20 23 interest

Minsheng payment

Bank Co., at

Ltd. maturity

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-07- 2015-09- and

No 2,000 2,000 0 15.97 15.97 15.97

Industrial proceeds 03 28 interest

Bank Co., payment

Ltd. at

maturity

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-07- 2015-10- and

No 1,500 1,500 0 12.53 12.53 12.53

Industrial proceeds 24 23 interest

Bank Co., payment

Ltd. at

maturity

48

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Repayme

Shenzhen nt of

Tianan Current principal

Branch of Floating 2015-07- financial and

No 4,000 2,000 0 31.94 31.94 31.94

Industrial proceeds 31 managem interest

Bank Co., ent payment

Ltd. at

maturity

Shenzhen Repayme

Branch of nt of

China principal

CITIC Floating 2015-08- 2015-11-0 and

No 3,000 3,000 0 24.78 24.78 24.78

Bank proceeds 07 5 interest

Corporati payment

on at

Limited maturity

Repayme

nt of

Shenzhen

principal

Branch of

Floating 2015-08- 2015-11-1 and

Bank of No 1,000 1,000 0 10.29 10.29 10.29

proceeds 07 3 interest

Jiangsu

payment

Co., Ltd

at

maturity

Shenzhen

Huali

Structured Contract

Branch of 2015-08- 2015-11-1

No deposit 3,000 agreemen 3,000 0 26.25 26.25 26.25

Everbrigh 10 0

t

t Bank

Co., Ltd.

Repayme

Shenzhen nt of

Huali Guarantee principal

Branch of d principal 2015-10- 2016-01- and

No 3,000 0 0 26.3 21.82 0

Everbrigh and 16 16 interest

t Bank income payment

Co., Ltd. at

maturity

Shenzhen Repayme

Tianan nt of

Floating 2015-10- 2016-03-

Branch of No 3,000 principal 0 0 56.61 00

proceeds 15 31

Industrial and

Bank Co., interest

49

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Ltd. payment

at

maturity

Repayme

nt of

Shenzhen

principal

Branch of

Floating 2015-10- 2015-11-2 and

Industrial No 1,500 1,500 0 3.82 3.82 3.82

proceeds 26 5 interest

Bank Co.,

payment

Ltd.

at

maturity

Repayme

Shenzhen nt of

Tianan principal

Branch of Floating 2015-10- 2016-04- and

No 5,000 0 0 0 00

Industrial proceeds 29 14 interest

Bank Co., payment

Ltd. at

maturity

Repayme

Shenzhen

nt of

Branch

principal

Sales

Floating 2015-11-0 2015-12- and

Departme No 3,000 3,000 0 11.4 11.4 11.40

proceeds 4 16 interest

nt of

payment

Jiangsu

at

Bank

maturity

Shenzhen Repayme

Branch of nt of

China principal

CITIC Floating 2015-11-2 2016-02- and

No 3,000 0 0 24.21 00

Bank proceeds 3 16 interest

Corporati payment

on at

Limited maturity

Shenzhen

Huali Guarantee

Contract

Branch of d principal 2015-11-1 2016-02-

No 3,000 agreemen 0 0 24.03 13.07 0

Everbrigh and 3 13

t

t Bank income

Co., Ltd.

Shenzhen No Floating 1,000 2015-11-1 Current Repayme 0 0 0 00

50

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Branch proceeds 8 financial nt of

Sales managem principal

Departme ent and

nt of interest

Jiangsu payment

Bank at

maturity

Repayme

Shenzhen

nt of

Branch

Current principal

Sales

Floating 2015-12- financial and

Departme No 3,000 0 0 0 00

proceeds 18 managem interest

nt of

ent payment

Jiangsu

at

Bank

maturity

Total 82,000 -- -- -- 59,000 0 779.46 683.2 --

Capital resource Idle fund-raising

Principal uncollected for overdue

0

and accumulated earnings

Lawsuit involved (if applicable) N/A

Disclosure date for approval

from the Board for trust 2015-04-29

financing (if applicable)

Disclosure date for approval

from board of shareholders for

trust financing (if applicable)

Yes, the decision-making process that the company uses idle raised funds to purchase financial

products meets the "Articles of Association", "Raised Funds Management System" and other

relevant provisions. Using idle raised funds to purchase financial products is implemented in the

Trust financing plan in the future

premise of not affecting the main business. A certain amount of investment income can be

obtained by properly investing in the low-risk financial products so as to improve the company's

capital usage efficiency.

(2) Entrusted loans

¡õ Applicable ¡Ì Not applicable

The company had no entrusted loans in the reporting period.

4. Other material contracts

¡õ Applicable ¡Ì Not applicable

No other material contracts for the Company in reporting period

51

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

XVIII. Explanation on other significant events

¡õ Applicable ¡Ì Not applicable

The Company had no explanation on other significant events in the reporting period.

XIX. Significant event of subsidiary of the Company

¡õ Applicable ¡Ì Not applicable

XX. Social responsibility

¡õ Applicable ¡Ì Not applicable

XXI. Issuance of corporate bonds

Whether the company has corporate bonds that have been publicly issued and listed on the stock exchange, and not yet due or due but

not fully cashed on the approval date of annual report

No

52

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

In Share

Before change Increase/decrease in this time (+ , - ) After change

Capitaliza

Bonus tion of

Amount Ratio New issue Other Subtotal Amount Ratio

share public

reserve

14,587,05 77,000,00 77,000,00 91,587,05

I. Restricted shares 6.62% 30.81%

6 0 0 6

2. State-owned corporation 14,587,05 20,587,05

6.62% 6,000,000 6,000,000 6.93%

shares 6 6

71,000,00 71,000,00 71,000,00

3. Other domestic shares 23.88%

0 0 0

Including: domestic legal 71,000,00 71,000,00 71,000,00

23.88%

person¡¯s shares 0 0 0

205,694,5 205,694,5

II. Un-restricted shares 93.38% 69.19%

44 44

179,294,5 179,294,5

1. RMB ordinary shares 81.39% 60.31%

44 44

2. Domestically listed foreign 26,400,00 26,400,00

11.98% 8.88%

shares 0 0

220,281,6 77,000,00 77,000,00 297,281,6

III. Total shares 100.00% 100.00%

00 0 0 00

Reasons for share changed

¡Ì Applicable ¡õ Not applicable

During the reporting period, the restricted shares has increased by 77 million Shares because the company issued

the non-public offering of shares to two specified objectives to raise funds, respectively issued RMB ordinary

shares of 6 million shares to Shenzhen Special Development Group Co., Ltd., and issued RMB ordinary shares of

71 million shares to Shenzhen Capital Fortune Jewelry Industry Investment Enterprise (limited partnership).

Approval of share changed

¡Ì Applicable ¡õ Not applicable

On April 21, 2014, the company held the nineteenth interim meeting of the seventh board of directors which

deliberated and passed the motions relevant to this offering, such as ¡°Motion about the program of the company¡¯s

non-public offering of shares¡±; on June 3, 2014, the company held the fourth extraordinary general meeting in

2014 which deliberated and passed the motions relevant to this offering, such as ¡°Motion about the program of the

company¡¯s non-public offering of shares¡±. On November 21, 2014, the company¡¯s non-public offering of shares

53

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

has been checked and passed by the Issuance Examination Commission of China Securities Regulatory

Commission; on January 29, 2015, the company¡¯s non-public offering of shares has been approved and obtained

¡°Reply about the approval of non-public offering of shares of Shenzhen Test Rite (Group) Co. Ltd.¡± (SFC license

[2015] No. 173).

Ownership transfer of share changes

¡Ì Applicable ¡õ Not applicable

On March 18, 2015, the Company has submitted the relevant registration materials of the newly increased 77

million shares of share to China Securities Depository and Clearing Co., Ltd. Shenzhen Branch, the newly

increased share this time has been registered to the account on the trading day (March 26, 2015) just one day

before its offering day (March 27, 2015), and has been officially included in stock transfer books of listed

companies.

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common

shareholders of Company in latest year and period

¡õ Applicable ¡Ì Not applicable

Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators

¡õ Applicable ¡Ì Not applicable

2. Changes of restricted shares

¡Ì Applicable ¡õ Not applicable

In Share

Restricted

Shares

Opening shares Shares released Increased Ending shares Restricted

Shareholders Date for released

restricted in Period In restricted reasons

the

Period

SHENZHEN SDG

14,587,056 0 6,000,000 20,587,056 Additional issue 2018-3-36

CO., LTD.

Shenzhen Capital

Fortune Jewelry

Industry

0 0 71,000,000 71,000,000 Additional issue 2018-3-26

Investment

Enterprise (limited

partnership)

Total 14,587,056 0 77,000,000 91,587,056 -- --

54

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

II. Securities issuance and listing

1. Security offering (without preferred stock) in Reporting Period

¡Ì Applicable ¡õ Not applicable

Name of stock and Number of

Issue price (or Date of termination of

derivative Issue date Number of issue Date of listing permitted listed

interest rate) the transaction

securities transactions

Stock

Tellus A 2015-03-27 RMB 8.4 77,000,000 2018-03-26 77,000,000

Switching Company bonds, the separation transaction of switching company bonds, corporate bonds

Other derivative securities

Description of the issue of securities in the reporting period (excluding preferred shares)

In the reporting period, on January 29, 2015, the company¡¯s non-public offering of shares has been approved and

obtained ¡°Reply about the approval of non-public offering of shares of Shenzhen Test Rite (Group) Co. Ltd.¡± (SFC

license [2015] No. 173). On March 18, 2015, the Company has submitted the relevant registration materials of the

newly increased 77 million shares of share to China Securities Depository and Clearing Co., Ltd. Shenzhen Branch,

the newly increased share this time has been registered to the account on the trading day (March 26, 2015) just

one day before its offering day (March 27, 2015), and has been officially included in stock transfer books of listed

companies.

2. Changes of total shares and shareholders structure as well as explanation on changes of assets and

liability structure

¡Ì Applicable ¡õ Not applicable

The changes in the share capital structure of the issue are as follows:

Type Before the issue After the issue

Amount (share) Ratio Amount (share) Ratio

I.Restricted circulation 14,587,056 6.62% 91,587,056 30.81%

shares

RMB ordinary shares 14,587,056 6.62% 91,587,056 30.81%

II.Un-restricted circulation 205,694,544 93.38% 205,694,544 69.19%

shares

1. RMB ordinary shares 179,294,544 81.40% 179,294,544 60.31%

2. Domestically listed 26,400,000 11.98% 26,400,000 8.88%

foreign shares

Total 220,281,600 100.00% 297,281,600 100.00%

55

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

During the reporting period, the company¡¯s total raise funds amount of non-public offering of shares has reached

646,800,000 Yuan, and the net amount of raise funds was 633,520,000.00 Yuan after deducting the issuance costs

of 13,280,000.00 Yuan, the company¡¯s share has increased from 220,281,600 shares to 297,281,600 shares, an

increase of 77,000,000 shares and increased the company¡¯s share by 77,000,000.00 Yuan, and increased the

capital of the company - capital premium of 556,520,000.00 Yuan. On December 31, 2015, the company¡¯s

asset-liability ratio was 24.82%, down 50.09% compared with the asset-liability ratio at the end of 2014 which

was 74.91%. After the non-public offering of shares, the company¡¯s asset size has increased, financial risk has

reduced, and debt paying ability has greatly improved.

3. Existing internal staff shares

¡õ Applicable ¡Ì Not applicable

III. Particulars about shareholder and actual controller of the Company

1. Amount of shareholders of the Company and particulars about shares holding

In Share

Total preference

shareholders

Total preference

Total common with voting

Total common shareholders with

stock rights recovered

stock voting rights

shareholders at at end of last

shareholders in 76,801 66,810 recovered at end of 0 0

end of last month month before

reporting reporting period (if

before annual annual report

period-end applicable) (found

report disclosed disclosed (if

in note8)

applicable)

(found in note8)

Particulars about shares held above 5% by shareholders or top ten shareholders

Total Number of share pledged/frozen

Amount Amount

sharehold

Proportio Changes of of

Full name of Nature of n of ers at

in report restricted un-restrict

Shareholders shareholder shares the end of

State of share Amount

held period shares ed shares

report

held held

period

SHENZHEN SDG State-owned 151,870,5 20,587,05 131,283,5

51.09% 6,000,000

CO., LTD. corporation 60 6 04

Shenzhen Capital

Fortune Jewelry

Domestic non

Industry 71,000,00 71,000,00 71,000,00

state-owned 23.88%

Investment 00 0

corporate

Enterprise (limited

partnership)

GUOTAI JUNAN Foreign

0.39% 1,173,232 1,096,232 1,173,232

SECURITIES(HO corporation

56

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

NGKONG)

LIMITED

KGI ASIA Foreign

0.27% 817,211 817,211

LIMITED corporation

Foreign nature

Weng Zhengwen 0.19% 563,000 563,000

person

Guoyuan

Securities Foreign

0.16% 489,078 -402,504 489,078

Brokerage (Hong corporation

Kong) Co., Ltd.

Domestic nature

Chen Chujia 0.16% 471,090 471,090

person

Domestic nature

Zeng Huiming 0.13% 400,000 50,000 400,000

person

Domestic nature

Zhou Zhenbo 0.13% 380,000 380,000

person

Domestic nature

Qin Yuyan 0.10% 301,227 301,227

person

Strategy investors or general Shenzhen Capital Fortune Jewelry Industry Investment Enterprise (limited

corporation comes top 10 shareholders partnership)holds 71,000,000 RMB ordinary shares of the Company through private

due to rights issue (if applicable) (see placement, the shares subscribe cannot be trade or transfer within 36 months since the

note3) placement ended (27th March 2015)

Among the top ten shareholders, there exists no associated relationship between the

state-owned legal person¡¯s shareholders Shenzhen SDG Co., Ltd and other shareholders,

Explanation on associated relationship

and they do not belong to the consistent actionist regulated by the Management Measure of

among the top ten shareholders or

Information Disclosure on Change of Shareholding for Listed Companies. For the other

consistent action

shareholders of circulation share, the Company is unknown whether they belong to the

consistent actionist.

Particular about top ten shareholders with un-restrict shares held

Type of shares

Shareholders¡¯ name Amount of un-restrict shares held at Period-end

Type Amount

RMB ordinary

SHENZHEN SDG CO., LTD. 131,283,504 131,283,504

shares

GUOTAI JUNAN Domestically

SECURITIES(HONGKONG) 1,173,232 listed foreign 1,173,232

LIMITED shares

Domestically

KGI ASIA LIMITED 817,211 listed foreign 817,211

shares

57

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Domestically

Weng Zhengwen 563,000 listed foreign 563,000

shares

Domestically

Guoyuan Securities Brokerage (HK)

489,078 listed foreign 489,078

Co., Ltd.

shares

Domestically

Chen Chujia 471,090 listed foreign 471,090

shares

Domestically

Zeng Huiming 400,000 listed foreign 400,000

shares

Domestically

Zhou Zhenbo 380,000 listed foreign 380,000

shares

Domestically

Qin Yuyan 301,227 listed foreign 301,227

shares

Domestically

Lu Zhang 280,610 listed foreign 280,610

shares

Among the top ten shareholders, there exists no associated relationship between the

Expiation on associated relationship or

state-owned legal person¡¯s shareholders Shenzhen SDG Co., Ltd and other shareholders,

consistent actors within the top 10

and they do not belong to the consistent actionist regulated by the Management Measure of

un-restrict shareholders and between

Information Disclosure on Change of Shareholding for Listed Companies. For the other

top 10 un-restrict shareholders and top

shareholders of circulation share, the Company is unknown whether they belong to the

10 shareholders

consistent actionist.

Explanation on shareholders involving

margin business about top ten common

N/A

shareholders with un-restrict shares

held(if applicable) (see note4)

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back

agreement dealing in reporting period

¡õ Yes ¡Ì No

The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no

buy-back agreement dealing in reporting period.

2. Controlling shareholder of the Company

Nature of controlling shareholders: local state-owned holding

Type of controlling shareholders: legal person

58

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Legal person/person

Controlling shareholders Date of foundation Organization code Main operation business

in charge of the unit

Investment to set up industrial

(specific items to be declared

separately; Invest in tourism;

development and operation of

real estate; domestic business,

material supply and marketing

SHENZHEN SDG CO., LTD. Zhang Junlin 1982-06-20 192194195 industry (excluding monopolized

commodity and commodity

under special government

control); economic

information(excluding restricted

projects); import & export

business

Equity of other

foreign/domestic listed

Except for the equity of the Company hold by SDG, 39.18 percent equity of Shenzhen SDG

company that controlled by

Information Co., Ltd. (short form¡±SDGI¡±, code: 000070) were held by SDG; and holds 1.31 percent

and have joint-stock from

equity of Sichuan Jinlu Group Co., Ltd. (short form¡±Jinlu Group¡±, code: 000510)

controlling shareholder in

reporting period

Changes of controlling shareholders in reporting period

¡õ Applicable ¡Ì Not applicable

The Company had no changes of controlling shareholders in reporting period

3. Actual controller of the Company

Nature of actual controller: local state-owned assets management

Type of actual controller: legal person

Legal

Actual controlling shareholders person/person in Date of foundation Organization code Main operation business

charge of the unit

Shenzhen Municipal People¡¯s

Government State-owned

Gao Zimin 2003-07-20 K31728067 Not applicable

Assets Supervision and

Administration Commission

Equity of domestic/oversea

listed company control by Not applicable

actual controller in report period

Changes of actual controller in reporting period

¡õ Applicable ¡Ì Not applicable

No changes of actual controllers for the Company in reporting period.

Property right and controlling relationship between the actual controller and the Company is as follow:

59

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Shenzhen Municipal People¡¯s Government State-owned Assets Supervision and Administration Commission

100%

Shenzhen Investment Holdings Co., Ltd.

43.3%

19.49%

Shenzhen SDG Co., Ltd.

51.09%

Shenzhen Tellus Holding Co., Ltd.

Actual controller controlling the Company by entrust or other assets management

¡õ Applicable ¡Ì Not applicable

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

¡õ Applicable ¡Ì Not applicable

Legal rep./person in Main business or

Corporate shareholders Dated founded Register capital

charge of unit management activity

Shenzhen Yuanzhi Fuhai Jewelry

Industry Investment enterprise Cheng Houbo 2014-04-18 620,000,000 yuan Equity investment

(limited partnership)

5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,

restructuring side and other commitment subjects

¡õ Applicable ¡Ì Not applicable

60

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section VII. Preferred Stock

¡õ Applicable ¡Ì Not applicable

The Company had no preferred stock in the Period.

61

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section VIII. Particulars about Directors, Supervisors, Senior

Executives and Employees

I. Changes of shares held by directors, supervisors and senior executives

Amount Amount

Shares Shares

of shares of shares

Start held at Other held at

Working End date increased decreased

dated of

Title Sex Age of office period-be changes period-en

Name status office in this in this

term

term gin (share) d

period period

(Share) (Share)

(Share) (Share)

Currently 2015-05- 2018-05-

Lv Hang Chairman M 55

in office 20 19

Currently 2015-05- 2018-05-

Yu Lei Director F 48

in office 20 19

Zhang Currently 2015-05- 2018-05-

Director M 43

Quanxun in office 20 19

Chen Currently 2015-05- 2018-05-

Director M 44

Gengsen in office 20 19

Director , Currently 2015-05- 2018-05-

Ding Hui M 43

GM in office 20 19

Yang Director , Currently 2015-05- 2018-05-

F 44

Jianping CFO in office 20 19

Independ 2018-05-

Wei Currently 2015-05-

ent M 44 19

Shaohui in office 20

Director

Independ 2018-05-

Currently 2015-05-

Ji Huibin ent M 46 19

in office 20

Director

Independ 2018-05-

Li Currently 2015-05-

ent M 54 19

Xiangjun in office 20

Director

Chairman 2018-05-

of 19

Superviso Currently 2015-05-

Chen Hua F 52

ry in office 20

Committe

e

Li Miao Superviso Currently M 43 2015-05- 2018-05-

62

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

r in office 20 19

Fu Superviso Currently 2015-05- 2018-05-

M 43

Chunlong r in office 20 19

Li Superviso Currently 2015-05- 2018-05-

F 48

Xiaohong r in office 20 19

Ke 2018-05-

Superviso Currently 2015-05-

Wenshen F 48 19

r in office 20

g

Ren Deputy Currently 2015-05- 2018-05-

M 53

Yongjian GM in office 20 19

Deputy Currently 2015-05- 2018-05-

Feng Yu M 49

GM in office 20 19

Deputy Currently 2015-05- 2018-05-

Li Ming M 54

GM in office 20 19

Secretary 2018-05-

Currently 2015-12-

Qi Peng of the M 43 19

in office 28

board

Luo Director, Office 2012-06- 2015-06-

M 54

Bojun GM leaving 06 05

Director, Office 2012-06- 2015-06-

Fu Bin M 54

CFO leaving 06 05

Independ

Liu Office 2012-06- 2015-06-

ent F 62

Hongling leaving 06 05

Director

Chairman

of

Guan Superviso Office 2012-06- 2015-06-

M 62

Zhicai ry leaving 06 05

Committe

e

Wang Superviso Office 2012-06- 2015-06-

M 58

Guangye r leaving 06 05

Yao Deputy Office 2014-08- 2015-10-

M 53 0 500 500

Xiongbin GM leaving 08 23

Total -- -- -- -- -- -- 0 500 0 0 500

II. Changes of directors, supervisors and senior executives

Name Title Type Date Reasons

63

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Luo Bojun Director, GM Office leaving 2015-04-01 Due to the work change

Fu Bin Director, CFO Office leaving 2015-04-01 Due to the work change

Leave the post

Independent

Liu Hongling while office 2015-05-20 General election of the Board

Director

terms expired

Chairman of Leave the post

Guan Zhicai Supervisory while office 2015-05-20 General election of the Board

Committee terms expired

Leave the post

Wang Guangye Supervisor while office 2015-05-20 General election of the Board

terms expired

Yao Xiongbin Deputy GM dismissal 2014-08-08 Due to the work change

Li Miao Director appointment 2015-05-20 General election of the Board

III. Post-holding

Professional background, major working experience and present main responsibilities in Company of directors, supervisors and

senior executive

Name Main work experience and holding the post

Lv Hang Master degree, a senior political division. He successively served as chairman, GM and deputy secretary of the

general branch in Shenzhen SDG Xiaomeisha Tourism Center; Director and GM of Shenzhen Tellus Holding Co.,

Ltd.; GM of Shenzhen SDG Property Management Co., Ltd.; now he serves as chairman of the Company.

Yu Lei Master degree, certified real estate appraiser and Real estate economist. She ever took the post of secretary of

international corporation dept. of Vocational Education Training Center of Chaoyang District, Beijing, the deputy

director, director and deputy chief of Luohu Branch of Shenzhen Home Land Planning Bureau, the vice director and

director of State-owned Assets Supervision and Administration Commission of People¡¯s Government of Shenzhen;

now she is controlling shareholder of the company, and serves as deputy GM of SHENZHEN SDG CO., LTD. and

Director of the Company.

Zhang Quanxun Master. Served as auditor in audit department and project manager of Shenzhen Zhixin Accounting Firm; general

manager assistant of Xiamen Xingdao Feilu Investment Co., Ltd.; secretary of the board and general manager

assistant and worker director of Fujian Planning and Investing and Financing Co., Ltd.; deputy director of Xiamen

Productivity Promotion Center; director in plastic business department and strategic development department of

Shenzhen Tongchan Packaging Group; director in strategic research and merger department of Shenzhen Zhiyuan

Investment Co., Ltd.. Serves as the vice president of Shenzhen Capital Fortune Investment and Management Co.,

Ltd., and the director of the Company.

Chen Gengsen Bachelor degree, intermediate economist, accountant. Served as accountant in financial department of Guangdong

Shanjian International Industry (Group) Co., Ltd.; financial manager of Guangdong Shanjian International Industry

(Group) Co., Ltd.; chief financial officer and director in accounting center of Guangdong Shanjian International

Industry (Group) Co., Ltd.; chief financial officer of Guangdong Longshan Environmental and Hi-tech Industry

Group Co., Ltd.; managing director of Shenzhen Qibang Investment Holdings Co., Ltd.; and serves as president of

Shenzhen Shengbang Trading Co., Ltd., and the director of the Company.

64

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Ding Hui Master degree, a senior political division. He successively served as GM and deputy chairman of Huali Company;

chief of office of SDG and serves as Director and GM of the Company currently.

Yang Jianping Graduate and CPA. Served as the manager in finance and accounting department of Shenzhen SDG Information Co.,

Ltd., financial manager in Taike Branch, financial manager in Optical Cable Branch, deputy manager in finance and

accounting department, manager in finance and accounting department, etc., and serves as Director,chief financial

officer of the Company.

Wei Shaohui Master degree. He ever took post of law assistant and full-time attorney of Guangdong Shu Jun Law Firm. Now he

serves as senior partner of Guangdong Shu Jun Law Firm, and independent director of the Company; meanwhile

serves as independent director of Longhao Tiandi Co., Ltd. and Shenzhen Click Technology Co., Ltd. respectively.

Ji Huibin Master degree, senior engineer. He ever took the post of project manager, director of engineering dept. deputy GM

and GM of Shenzhen Jianyi Municipal Engineering Co., Ltd; director of engineering dept. and director of operation

dept. of Shenzhen Jianyi Industrial Co., Ltd. and deputy GM of Pang Yuan Real Estate Development Co., Ltd. Now

he works in Shenzhen International Logistic Development Co., Ltd. and serves as independent director of the

Company

Li Xiangjun Master¡¯s degree, economist, CPA, CTA. Served as the leader in Shenzhen Auditing Bureau, and serves as the senior

partner of Zhongqin Wanxin Certified Public Accountants (special general partnership), and the independent

directors of the Company.

Chen Hua Bachelor's degree, economist. Served as deputy director in credit investment department of Guangdong International

Trust and Investment Co., Ltd., Shenzhen Branch; deputy general manager of Guangdong International Trust and

Investment (Hong Kong) Co., Ltd.; director in customer service center of Shenzhen Changjiang Xingye

Development Co., Ltd.; director in human resources department of Shenzhen Shipping Corporation; office director

of Shenzhen SDG Co., Ltd.; director and general manger of Shenzhen SDG Information Co., Ltd.; and serves as the

chairman of the board of supervisors of the Company.

Li Miao Graduate, senior accountant. Served as chief in audit office of Shenzhen Nanyou (Holdings) Ltd., deputy manager in

finance department of Shenzhen Jujian Co., Ltd.; accounting manager in headquarters and director in financial center

of Shenzhen Press Group, and chief financial officer in Shenzhen Jin Feng Fan Property Development Co., Ltd;

Director of Shenzhen Tellus Holding Co., Ltd;Serves as the director and chief financial officer in the Company¡¯s

controlling shareholder - Shenzhen SDG Co., Ltd., the supervisor of the Company, and the supervisor of Shenzhen

Investment Holdings Limited.

Fu Chunlong Master degree. He ever took the Business Deputy General Manage of HR Department of Shenzhen SDG Co., Ltd.,

Deputy Team Leader in Work Team of Shenzhen Tefa Huatong Packaging Co., Ltd. and Deputy Minister of HR

Department of Shenzhen SDG Co., Ltd. Now, he is the Deputy Minister of HR Department of Shenzhen SDG Co.,

Ltd. and Supervisor of the Company.

Bachelor degree, an accountant. He ever acts as the teacher in School of Guangdong Foreign Trade, major

Ke Wensheng accountant of Shenzhen SDG Co., Ltd. and deputy GM and GM of the Accounting and Financial Dept. of the

Company. Now, he acts as the GM of Accounting and Financial Dept. and staff supervisor of the Company.

Li Xiao Hong Bachelor, economists, enterprise human resource manager. Served as a section member in foreign-related business

office of Hunan Computer Factory; manger in import and export department and marketing department of Shenzhen

Changdao Computer Graphics United Co., Ltd.; staff and director in secretariat of the board of directors, office, the

party and the masses personnel department of the Company; deputy manager of the Company¡¯s automobile business

division and integration division; deputy manager of the Company¡¯s human resources department; and serves as the

manger and employee supervisor of the Company¡¯s human resources (the party and the masses) department;

Ren Yongjian Bachelor degree, an accountant. He ever took the posts of Deputy Manager of Planning & Financial Dept. and

65

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Manager of Auditing Dept. in Shenzhen Special Economic Zone Development (Group) Company; Director and CFO

of the Company. He now acts as Deputy General Manager of the Company.

Feng Yu Bachelor degree. He ever took the Deputy General Manger of Shenzhen Xianke Real-estate Co., Ltd., Manager of

Investment Department of China Sports Group Industry Co., Ltd.; Director to the Office of General Manger of

Shenzhen SDG Co., Ltd; and Supervisor of the Company. Now, he acts as Deputy General Manager of the Company.

Li Ming Bachelor degree, engineer. Served as a teacher in Guangzhou Nonferrous Metals Industry School; director of

engineering and deputy general manager of Shenzhen South Tongfa Real Estate Development Co., Ltd.; director of

development department and property management department of Shenzhen South Tongfa Industry Co., Ltd.; deputy

general manager, director and chief engineer in enterprise development department of Shenzhen Jintong Property

Management Co., Ltd.,; manager in Swan project department and deputy general manger of Shenzhen SDG

Properties Co., Ltd., and serves as the deputy general manager of the Company.

Qi Peng Master's degree, economist. Served as the secretary to the president and director in information center of Shenzhen

Special Economic Zone Development (Group) Co., Ltd.; deputy director in secretariat of the board, and deputy

manger in enterprise development department, and manager in automobile business department and management

department of Shenzhen Test Rite (Group) Co., Ltd.; general manager of Shenzhen Test Rite Automobile Service

Chain Co., Ltd.; general manager of Shenzhen Test Rite New Yongtong Automobile Development Co., Ltd.; director

secretariat of the board of Shenzhen Test Rite (Group) Co., Ltd.; and serves as secretary of the board of the Company

Post-holding in shareholder¡¯s unit

¡ÌApplicable ¡õ Not applicable

Received

Position in

Start dated of End date of remuneration from

Name Name of shareholder¡¯s unit shareholder¡¯s

office term office term shareholder¡¯s unit

unit n

(Y/N)

Yu Lei SHENZHEN SDG CO., LTD. Deputy GM Y

Li Miao SHENZHEN SDG CO., LTD. CFO Y

Director of

Fu Chunlong SHENZHEN SDG CO., LTD. H&R Y

department

Zhang Shenzhen Capital Fortune Jewelry Industry

Y

Quanxun Investment Enterprise (limited partnership)

Shenzhen Capital Fortune Jewelry Industry

Chen Gengsen N

Investment Enterprise (limited partnership)

Post-holding in other unit

¡ÌApplicable ¡õ Not applicable

Received

Position in Start dated of End date of office remuneration

Name Name of other units

other unit n office term term from other unit

(Y/N)

Wei Shaohui Guangdong Shu Jun Law Firm Senior partner Y

Ji Huibin Shenzhen International Logistic Y

66

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Development Co., Ltd.

Zhong Qin Wanxin Certified Public

Li Xiangjun Senior partner Y

Accountants (LLP)

Punishment of securities regulatory authority in recent three years to the company¡¯s current and outgoing directors, supervisors and

senior management during the reporting period

¡õ Applicable ¡Ì Not applicable

IV. Remuneration for directors, supervisors and senior executives

Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives

The company executes in strict accordance with the "Salary Management System for Headquarters of Shenzhen

Test Rite (Group) Co., Ltd. (Trial)", "Staff Performance Management System for Headquarters of Shenzhen

Tellus (Group) Co., Ltd. (Trial)", "Implementing Rules of Remuneration and Appraisal Committee of the Board

of Shenzhen Test Rite (Group) Co., Ltd.", "Annual Performance Management Approaches for Leading Group

Members of Shenzhen Test Rite (Group) Co., Ltd." and other relevant system regulations, strictly implements the

performance appraisal, and pay the remuneration in accordance with the assessment results.

Remuneration for directors, supervisors and senior executives in reporting period

In 10 thousand Yuan

Total Whether

remuneration remuneration

Post-holding

Name Title Sex Age obtained from the obtained from

status

Company (before related party of

taxes) the Company

Chairman, Party Currently in

Lv Hang M 55 76 N

secretary office

Currently in

Ding Hui GM, Director M 43 27.89 Y

office

Currently in

Yang Jianping CFO, Director F 44 23.21 Y

office

Independent Currently in

Wei Shaohui M 44 5N

Director office

Independent Currently in

Ji Huibin M 46 5N

Director office

Independent Currently in

Li Xiangjun M 54 2.92 N

Director office

Chairman of

Currently in

Chen Hua Supervisory F 52 17.85 Y

office

Committee

Currently in

Ke Wensheng Supervisor F 48 33.82 N

office

67

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Currently in

Li Xiaohong Supervisor F 48 20.79 N

office

Currently in

Ren Yongjian Deputy GM M 53 63.97 N

office

Currently in

Feng Yu Deputy GM M 49 61.24 N

office

Currently in

Li Ming Deputy GM M 54 23.21 Y

office

Luo Bojun Director, GM M 54 Office leaving 46.29 N

Fu Bin Director, CFO M 54 Office leaving 45.28 N

Independent

Liu Hongling F 62 Office leaving 2.08 N

Director

Chairman of

Guan Zhicai supervisory M 62 Office leaving 41.39 N

committee

Wang Guangye Supervisor M 58 Office leaving 12.9 N

Yao Xiongbin Deputy GM M 53 Office leaving 47.08 N

Total -- -- -- -- 555.92 --

Delegated equity incentive for directors, supervisors and senior executives in reporting period

¡õ Applicable ¡Ì Not applicable

V. Particulars of workforce

1. Number of Employees, Professional composition, Education background

Employee in-post of the parent Company (people) 52

Employee in-post of main Subsidiaries (people) 465

The total number of current employees (people) 517

The total number of current employees to receive pay (people) 517

Retired employee¡¯ s expenses borne by the parent Company and

217

main Subsidiaries (people)

Professional composition

Category of professional composition Numbers of professional composition (people)

Production personnel 36

Sales personnel 34

Technician 105

Financial staff 43

Administration staff 116

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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Others 183

Total 517

Education background

Type of education background Numbers (people)

Master 13

Bachelor degree 93

Junior college 111

Technical secondary school 50

Other 250

Total 517

2. Remuneration Policy

The company executes in strict accordance with the "Salary Management System for Headquarters of Shenzhen

Tellus (Group) Co., Ltd. (Trial)", "Staff Performance Management System for Headquarters of Shenzhen Tellus

(Group) Co., Ltd. (Trial)" and other relevant system regulations strictly implement.

3. Training programs

The Company always attaches importance to the training and development work for employees; create innovation

into part of the long-term development strategy of the Company. Combine with current situation of the Company,

and take annual planning, position requirement and responsibility as well as enterprise¡¯s development needs into

consideration, the Company formulated a systematic training plans and talent cultivation projects; strengthen

training works in aspect of multi-tiered, multi-channel, multi-field and multi-form, including induction training for

new employees, business training for on-job employees, operation skill training for workers at the production line,

upgrade training for manager, project development and risk control training, continues to improve general quality

for employees in order to achieve a win-win situation for the Company and employees.

4. Labor outsourcing

¡õ Applicable¡Ì Not applicable

69

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section IX. Corporate Governance

I. Corporate governance of the Company

During the reporting period, the Company has been observing the Company Law, Securities Law and relevant

rules issued by the CSRC, for the purpose of improving its legal person governance structure, setting

up and improving the internal control system, and standardizing its operation level. According to the Articles of

Association, Procedure Rules of General Meeting, Procedure Rules of Board of Directors, Procedure Rules of

Supervisory Committee, Working Rules of Independent Directors, Working Rules of General Manager and a

series of rules and regulations, the Company maintained formal procedures, clearly duties and obligations of its

general meeting, board of directors, supervisory committee, each specialized committee of the board and senior

manager. Each of its directors, supervisors and senior managers can perform their duties earnestly. Its corporate

governance conformed to the requirements of certain regulation documents issued by the CSRC concerning

corporate governance of listed company until the end of reporting period

During the reporting period, in order to improve the company¡¯s internal control system, the company has revised

the "Articles of Association" in accordance with the requirements of internal controls and the company's share

capital and changes in registered capital, which has been deliberated and approved by the shareholders' meeting.

The company has developed the "Interim Management Measures for the Purchase of Financial Products", and

"Implementing Rules for Network Voting of Shareholders' Meeting", revised the "Implementing Rules of

Remuneration and Appraisal Committee of the Board", "Rules of Procedure of the Audit Committee of the Board",

"Working Rules of the Strategy Committee of the Board", and " Interim Provisions for Internal Audit ", which

have been considered and approved by the board of directors.

Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for

listed company from CSRC?

¡õYes ¡Ì No

There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance

for listed company from CSRC.

II. Independency of the Company relative to controlling shareholders¡¯ in aspect of businesses,

personnel, assets, organization and finance

The Company has been independent from the controlling shareholders in terms of business, personnel, asset,

institution and finance. The Company has independent and complete business and is able to operate

independently.

(I) Business: the Company belongs to independent legal person entity. Being completely independent from

controlling shareholders, it has independent and complete business system and is able to operate independently.

The Company has independent production, sales and service systems and its major business. There is no

inter-competition between the Company and its controlling shareholders and related parties.

(II) Personnel: the Company establishes complete labor, human resources and salary management systems. All the

senior management of the Company receives remuneration from the Company since they are employed by the

Company, and no one takes position in the enterprises owned by shareholders.

(III) Assets: the Company is completely independent from the controlling shareholder in terms of assets; each of

them is able to operate independently. The Company has complete and separate purchase system, production

system, sales system and relevant service system. Intangible assets including industry property, trademark and

non-proprietary technology are owned by the Company on separate basis.

(IV) Finance: the Company has independent financial accounting department which set independent accounting

70

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

calculation system and finance management system. No controlling shareholder intervenes in the capital

application of the Company. The Company opens separate bank accounts. No capital is saved in the financial

company or settlement center account controlled by substantial shareholder or other related parties. The Company

pays taxes by law independently.

(V) Institution: the board, the supervisory committee and other internal institutions of the Company operate

independently. All the institutions of the Company are set according to the standards requirements applicable to

listed company and actual business natures of the Company. It has independent office location.

III. Horizontal competition

¡õ Applicable ¡Ì Not applicable

IV. In the report period, the Company held annual shareholders¡¯ general meeting and

extraordinary shareholders¡¯ general meeting

1. Annual Shareholders¡¯ General Meeting in the report period

Ratio of investor

Session of meeting Type Date Date of disclosure Index of disclosure

participation

¡°Resolution Notice

of Annual General

Meeting of 2014¡±

(No.: 2015-042)

published on

Annual General Annual General

74.97% 2015-05-20 2015-05-21 Securities Times,

Meeting of 2014 Meeting

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

)

¡°Resolution Notice

of First

Extraordinary

General Meeting of

2015¡± (No.:

First Extraordinary

Extraordinary 2015-007) published

General Meeting of 66.23% 2015-02-13 2015-02-14

General Meeting on Securities Times,

2015

Hong Kong

Commercial Daily

and Juchao Website

(www.cninfo.com.cn

)

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

¡õ Applicable ¡Ì Not applicable

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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

V. Responsibility performance of independent directors

1. The attending of independent directors to Board meetings and general meeting

The attending of independent directors to Board Meeting

Times of Board

Absent the

meeting Times of Times of

Name of independent Times of Times of Meeting for the

supposed to attending by entrusted

director Presence Absence second time in a

attend in the communication presence

row (Y/N)

report period

Liu Hongling 5 1 4 0 0N

Li Xiangjun 4 2 2 0 0N

Ji Huibin 9 3 6 0 0N

Wei Shaohui 9 3 6 0 0N

Times for attending general meeting

2

from independent directors

Explanation of absent the Board Meeting for the second time in a row

2. Objection for relevant events from independent directors

Independent directors come up with objection about Company¡¯s relevant matters

¡õYes ¡ÌNo

Independent directors has no objections for relevant events in reporting period

3. Other explanation about responsibility performance of independent directors

The opinions from independent directors have been adopted

¡Ì Yes ¡õ No

Explanation on advice that accepted/not accepted from independent directors

In accordance with relevant laws and regulation of ¡°Company Law¡±, ¡°Securities Laws¡±, ¡°Listing Rules for Stocks¡±

and ¡°System of Independent Directors¡±, independent directors focus on the normative of Company¡¯s operation,

performed responsibility independently and carry out their duties diligently; issued independent and fair-ness

independent opinions on the audit institution, appointed in reporting period for non-public issue matters, financial

report and internal control of the Company, related transactions, capital contact with related parties and external

guarantee, profit distribution, amendment of article of association, director and senior executives changes as well

as other events needs independent opinions issued, which perfected supervision mechanism for the Company and

play a corresponding role in protecting legal interest of the Company and whole shareholders.

VI. Duty performance of the special committees under the board during the reporting period

The Company set three special committees under the board of directors, namely the strategic committee, the audit

committee as well as the remuneration and examination committee.

1. Duty performance of the strategic committee

The strategic committee of the board is specially set according to general meeting resolution and the Articles of

Association, responsible for study on the long term development strategy and material investment decisions and

raising its recommendations. The committee comprised of 5 directors, and the committee is chaired by chairman

of the board. During the reporting period, the committee performed its duties according to the Working Rules of

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ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

the Strategic Committee, with each of its members doing their best to perform the respective duties. The

Committee takes part in the discussion on the operation development planning and related investment projects.

Individual opinions and recommendations are encouraged. It emphasizes on legal person governance and

standardized operation. By raising measures to prevent operation risks, the committee plays an important role in

increasing the core competitiveness, strengthening scientific decisions and enhancing efficiency of material

investment decision as well as the quality of decisions.

2. The audit committee

During the reporting period, the committee performed its duties according to the Articles of Association and

Working Procedures of the Audit Committee. The committee pays close attention to the operation, finance and

implementation of standard internal control. It strengthens communications with the relevant responsible

departments within the Company, and reviews the effective appraisal on the internal control and corporate risk

management by means of telecommunication, investigation and reporting. It reviews that whether the operation,

finance and accounting policy of the Company follows relevant laws and rules, and provides management and

audit opinions.

During the annual audit, the audit committee took active attitude in relevant works. Prior to the official

involvement of Ruihua Certified Public Accountants (LLP) (hereinafter referred to as Ruihua) in the

annual audit, on 18 January 2016, the audit committee held meeting and determined the working arrangement for

2015 annual audit after negotiation with Ruihua, reviewed the financial statements prepared by the Company,

and believed that the preparation of such statements was in compliance with provisions of enterprise accounting

principles, reflecting the financial position as of the end of 2015 and operating results of 2015 on a truthful basis.

Thus, the committee agreed to submit the financial statements and related information to Ruihua for audit.

After the official audit by Ruihua, members of the audit committee made calls to enquire the audit progress, and

urged the accounting firm to complete audit as scheduled according to the working arrangement, so as to ensure

prompt disclosure of its annual report. Meanwhile, the committee conducted communications with the

accountants in respect of the issues found in audit works.

After the issuance of initial audit opinions by the accountants, the audit committee held meeting on 29 March

2016 to re-review the financial statements, and formed written opinions and resolutions in respect of the annual

financial statements, audit work summary report and reengagement of CPA, the reengagement of CPA was

submitted to the board for consideration.

3. Duty performance of the remuneration and examination committee

During the reporting period, the remuneration and examination committee reviewed the remuneration of directors,

supervisors and senior management of the Company. The entire members of the committee believed that the

remuneration payment in the reporting period complied with the Company¡¯s performance examination system.

The remuneration of directors, supervisors and senior management were determined according to the relevant

systems of the Company.

VII. Works from Supervisory Committee

The Company has risks in reporting period that found in supervisory activity from supervisory committee

¡õ Yes ¡Ì No

Supervisory committee has no objection about supervision events in reporting period

VIII. Examination and incentives of senior management

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Board of the Company evaluated senior executives based on relevant regulations at end of this reporting period.

IX. Internal Control

1. Details of major defects in IC appraisal report that found in reporting period

¡õYes ¡Ì No

2. Appraisal Report of Internal Control

Disclosure date of full internal control

2016-04-15

evaluation report

Disclosure index of full internal control http://www.cninfo.com.cn Juchao website http://www.cninfo.com.cn, the website for

evaluation report information disclosure appointed by Shenzhen Stock Exchange

Included in the scope of the evaluation unit

assets accounted for the proportion of the

100.00%

total assets of the company's consolidated

financial statements

Included in the scope of evaluation unit

operating income accounted for the

98.99%

proportion of the company's consolidated

financial statements operating income

Defects Evaluation Standards

Category Financial Reports Non-financial Reports

1. Major deficiencies: a. Fraud of 1. Major deficiencies: a. Great decisions

management leading to material violate the company¡¯s established

misstatements of financial results or false procedure, resulting in significant losses

financial reports, which mislead users of to the company; b. Serious violation of

financial statements and result in laws and regulations results in

decision-making mistakes and litigation; b. significant losses to the company; c.

Ineffective control environment; c. Major Important businesses are lack of system

internal control deficiencies found and control or system control fails; d.

reported to the management but haven¡¯t Serious brain drain of core management

Qualitative criteria been corrected after a reasonable time; d. or core technical staff; e. Significant

The decision-making of the company¡¯s deficiencies in the internal evaluation

major matters has not fulfilled the results have not been corrected.

corresponding decision-making process,

resulting in significant losses of the 2. Significant deficiencies: a. The

company; e. Important businesses company violates the enterprise internal

involving the company¡¯s production and regulations and causes significant

management are lack of effective control; f. losses; b. Serious brain drain of

Other correct judgments to the statement business personnel in the company¡¯s

users. key positions; c. The company¡¯s

74

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

significant business systems have

2. Significant deficiencies: a. The selection deficiencies; d. The significant

and application of accounting policies do deficiencies in the internal control of

not follow the generally accepted the company have not been corrected.

accounting principles; b. Anti-fraud

programs and control measures have been 3. General deficiencies: Deficiencies

not established; c. Corresponding control except for major and significant

mechanism for accounts handling of deficiencies.

unconventional or special transactions has

not been established or implemented and

has no there is no appropriate

compensatory controls; d. The controls to

the period-end financial reporting process

have one or more defects and cannot

reasonably ensure that the financial

statements prepared are true and accurate.

3. General deficiencies: Deficiencies except

for major and significant deficiencies.

1. Major deficiencies: loss amount >

1.5% of owner's equity attributable to

1. Major deficiencies: misstatement

parent company, and absolute amount >

amount > 10% of total profit, and absolute

5 million yuan;

amount > 2 million yuan;

2. Significant deficiencies: 0.5% of

2. Significant deficiencies: 5% of total

owner's equity attributable to parent

profit < misstatement amount ¡Ü10% of total

company < loss amount ¡Ü 1.5% of

profit, and absolute amount > 1 million

Quantitative standard owner's equity attributable to parent

yuan; or 1 million yuan < absolute amount

company, or 1 million yuan < absolute

¡Ü 2 million yuan, and misstatement

amount ¡Ü 5 million yuan;

amount > 5% of total profit.

3. General deficiencies: misstatement

3. General deficiencies: loss amount ¡Ü

amount ¡Ü 5% of total profit, or absolute

0.5% of owner's equity attributable to

amount ¡Ü 1 million yuan

parent company, or absolute amount ¡Ü 1

million yuan

Amount of significant defects in financial

0

reports

Amount of significant defects in

0

non-financial reports

Amount of important defects in financial

0

reports

Amount of important defects in

0

non-financial reports

75

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X. Auditing report of internal control

¡ÌApplicable ¡õ Not applicable

Deliberations in Internal Control Audit Report

We consider that, according to relevant regulations and ¡°Basic Rules of Internal Control for Enterprise¡±, Shenzhen Tellus Holding

Co., Ltd. maintained an efficiency internal control of financial report dated 31 December 2015, in all material aspects.

Disclosure details of audit report of

Disclosure

internal control

Disclosure date of audit report of

2016-04-15

internal control (full-text)

Index of audit report of internal Juchao website http://www.cninfo.com.cn, the website for information disclosure appointed by

control (full-text) Shenzhen Stock Exchange

Opinion type of auditing report of

standard without reserved reports

IC

whether the non-financial report

No

had major defects

Carried out modified opinion for internal control audit report from CPA

¡õYes ¡Ì No

The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board

¡Ì Yes ¡õ No

76

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Section X. Financial Report

I. Audit report

Type of audit opinion Standard unqualified

Date for audited report signed 2016-04-14

Name of audit institution Ruihua Certified Public Accountants (LLP)

Reference number Ruihua Shen Zi [2016] No.48330005

CPA Yuan Longping, Qin Changming

Text of Report

To the shareholders of Shenzhen Tellus Holding Company Limited:

We have audited the accompanying financial statements of Shenzhen Tellus Holding Company Limited

(¡°the Company¡±), which comprise the consolidated and company balance sheet as at 31 December 2015,

and the consolidated and company income statement, the consolidated and company cash flow statement,

the consolidated and company statements of changes in equity for the year then ended, and notes to these

financial statements

Management¡¯s Responsibility for the Financial Statements

The Company¡¯s management is responsible for the preparation of financial statements that give a true and

fair view. This responsibility includes: (1) Preparing financial statements in accordance with the

Accounting Standards for Business Enterprises. (2) Designing, implementing and maintaining internal

control relevant to the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor¡¯s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with China¡¯s Auditing Standards for the Certified Public Accountants.

Those standards require that we comply with ethical requirements and plan and perform the audit to

obtain reasonable assurance whether the financial statements are free from material misstatement.

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 judgment, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity¡¯s

preparation 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 Company¡¯s

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as evaluating the overall

77

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presentation of the financial statements.

Audit Opinions

In our opinion, the companys financial statements comply with the Accounting Standards for

Business Enterprises and present fairly, in all material respects, the financial position of the

Company as at 31 December 2015, and the results of operations and cash flows of the

Company for the year then ended.

II. Financial statements

Units in Notes of Financial Statements is RMB

1. Consolidated Balance Sheet

Prepared by ShenZhen Tellus Holding Co.,Ltd

2015-12-31

In RMB

Item Closing balance Opening balance

Current assets:

Monetary funds 159,184,710.93 80,045,669.65

Settlement provisions

Capital lent

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes receivable

Accounts receivable 562,051.31 1,373,257.89

Accounts paid in advance 6,454,769.40 6,981,402.87

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance

receivable

Interest receivable 348,833.33

Dividend receivable

Other receivables 11,128,001.89 7,904,999.44

Purchase restituted finance asset

Inventories 16,151,336.61 48,209,026.18

Divided into assets held for sale

Non-current asset due within one

year

Other current assets 165,565,445.21 8,968,278.77

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Total current assets 359,395,148.68 153,482,634.80

Non-current assets:

Loans and payments on behalf

Finance asset available for sales 10,478,985.77 10,478,985.77

Held-to-maturity investment 100,000.00

Long-term account receivable

Long-term equity investment 220,180,721.29 211,270,265.80

Investment property 82,100,133.48 85,083,745.72

Fixed assets 136,583,565.00 142,849,121.72

Construction in progress 279,056,650.35 122,551,469.97

Engineering material

Disposal of fixed asset

Productive biological asset

Oil and gas asset

Intangible assets 52,985,273.37 53,924,233.96

Expense on Research and

Development

Goodwill

Long-term expenses to be

1,499,006.24 905,871.01

apportioned

Deferred income tax asset 24,488,443.31 25,678,449.05

Other non-current asset 1,900,000.00

Total non-current asset 809,272,778.81 652,842,143.00

Total assets 1,168,667,927.49 806,324,777.80

Current liabilities:

Short-term loans 74,719,672.00

Loan from central bank

Absorbing deposit and interbank

deposit

Capital borrowed

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes payable

Accounts payable 27,417,068.61 22,340,922.90

Accounts received in advance 11,460,807.66 9,979,166.89

Selling financial asset of

repurchase

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Commission charge and

commission payable

Wage payable 19,639,738.81 17,164,185.03

Taxes payable 10,043,901.26 9,055,093.27

Interest payable

Dividend payable

Other accounts payable 193,797,786.68 114,533,081.65

Reinsurance payables

Insurance contract reserve

Security trading of agency

Security sales of agency

Divided into liability held for sale

Non-current liabilities due within 1

120,700,000.00

year

Other current liabilities

Total current liabilities 262,359,303.02 368,492,121.74

Non-current liabilities:

Long-term loans 178,597,550.55

Bonds payable

Including: preferred stock

Perpetual capital

securities

Long-term account payable 13,972,779.67 13,657,490.94

Long-term wages payable 9,953,557.75

Special accounts payable

Projected liabilities

Deferred income

Deferred income tax liabilities 478,085.12 723,459.18

Other non-current liabilities 13,269,356.04 32,570,237.55

Total non-current liabilities 27,720,220.83 235,502,295.97

Total liabilities 290,079,523.85 603,994,417.71

Owner¡¯s equity:

Share capital 297,281,600.00 220,281,600.00

Other equity instrument

Including: preferred stock

Perpetual capital

securities

Capital public reserve 564,192,605.51 7,672,605.51

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Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus public reserve 2,952,586.32 2,952,586.32

Provision of general risk

Retained profit 3,742,260.49 -39,026,529.03

Total owner¡¯s equity attributable to

868,169,052.32 191,880,262.80

parent company

Minority interests 10,419,351.32 10,450,097.29

Total owner¡¯s equity 878,588,403.64 202,330,360.09

Total liabilities and owner¡¯s equity 1,168,667,927.49 806,324,777.80

Legal Representative: Lv Hang Person in charge of Accounting Works:Yang Jianping

Person in charge of Accounting Institution: Ke Wensheng

2. Balance Sheet of Parent Company

In RMB

Item Closing balance Opening balance

Current assets:

Monetary funds 80,301,551.68 26,441,746.73

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes receivable

Accounts receivable

Account paid in advance 101,280.00 106,810.00

Interest receivable 348,833.33

Dividends receivable

Other receivables 93,744,827.52 110,350,188.00

Inventories

Divided into assets held for sale

Non-current assets maturing within

one year

Other current assets 145,000,000.00 1,350,000.00

Total current assets 319,496,492.53 138,248,744.73

Non-current assets:

Available-for-sale financial assets 10,176,617.20 10,176,617.20

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Held-to-maturity investments

Long-term receivables

Long-term equity investments 682,223,207.17 425,961,150.29

Investment property 52,808,715.01 54,186,250.01

Fixed assets 17,096,105.47 17,961,888.31

Construction in progress 362,279.69 251,308.70

Project materials

Disposal of fixed assets

Productive biological assets

Oil and natural gas assets

Intangible assets 478,422.33 274,939.25

Research and development costs

Goodwill

Long-term deferred expenses 31,644.20 346,559.91

Deferred income tax assets 13,947,196.24 13,986,138.44

Other non-current assets

Total non-current assets 777,124,187.31 523,144,852.11

Total assets 1,096,620,679.84 661,393,596.84

Current liabilities:

Short-term borrowings 19,544,160.00

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes payable

Accounts payable

Accounts received in advance

Wage payable 5,247,871.02 6,918,478.90

Taxes payable 592,579.23 430,065.27

Interest payable

Dividend payable

Other accounts payable 320,935,774.45 260,117,846.49

Divided into liability held for sale

Non-current liabilities due within 1

120,700,000.00

year

Other current liabilities

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Total current liabilities 326,776,224.70 407,710,550.66

Non-current liabilities:

Long-term loans 132,300,000.00

Bonds payable

Including: preferred stock

Perpetual capital

securities

Long-term account payable

Long-term wages payable 3,343,417.98

Special accounts payable

Projected liabilities

Deferred income

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities 135,643,417.98

Total liabilities 326,776,224.70 543,353,968.64

Owners¡¯ equity:

Share capita 297,281,600.00 220,281,600.00

Other equity instrument

Including: preferred stock

Perpetual capital

securities

Capital public reserve 560,999,182.23 4,479,182.23

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus reserve 2,952,586.32 2,952,586.32

Retained profit -91,388,913.41 -109,673,740.35

Total owner¡¯s equity 769,844,455.14 118,039,628.20

Total liabilities and owner¡¯s equity 1,096,620,679.84 661,393,596.84

3. Consolidated Profit Statement

In RMB

Item Current Period Last Period

I. Total operating income 303,726,790.57 464,987,527.80

Including: Operating income 303,726,790.57 464,987,527.80

Interest income

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Insurance gained

Commission charge and commission

income

II. Total operating cost 277,820,186.88 481,799,447.89

Including: Operating cost 217,992,216.20 389,423,619.69

Interest expense

Commission charge and commission

expense

Cash surrender value

Net amount of expense of

compensation

Net amount of withdrawal of

insurance contract reserve

Bonus expense of guarantee slip

Reinsurance expense

Operating tax and extras 6,189,409.10 5,046,179.83

Sales expenses 14,718,877.28 21,073,376.98

Administration expenses 32,881,868.90 43,509,348.15

Financial expenses 4,343,688.83 17,771,137.44

Losses of devaluation of asset 1,694,126.57 4,975,785.80

Add: Changing income of fair

value(Loss is listed with ¡°-¡±)

Investment income (Loss is listed

20,992,313.67 26,001,792.57

with ¡°-¡±)

Including: Investment income on

15,252,012.32 24,775,664.82

affiliated company and joint venture

Exchange income (Loss is listed

with ¡°-¡±)

III. Operating profit (Loss is listed with

46,898,917.36 9,189,872.48

¡°-¡±)

Add: Non-operating income 533,675.86 965,026.73

Including: Disposal gains of

39,278.33 197,088.80

non-current asset

Less: Non-operating expense 139,497.06 129,520.69

Including: Disposal loss of

73,623.42 48,602.31

non-current asset

IV. Total Profit (Loss is listed with ¡°-¡±) 47,293,096.16 10,025,378.52

Less: Income tax expense 4,555,052.61 1,459,170.36

V. Net profit (Net loss is listed with ¡°-¡±) 42,738,043.55 8,566,208.16

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Net profit attributable to owner¡¯s of

42,768,789.52 10,345,217.67

parent company

Minority shareholders¡¯ gains and

-30,745.97 -1,779,009.51

losses

VI. Net after-tax of other comprehensive

-835,925.67

income

Net after-tax of other comprehensive

income attributable to owners of parent -835,925.67

company

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1. Changes as a result of

re-measurement of net defined benefit

plan liability or asset

2. Share of the other

comprehensive income of the investee

accounted for using equity method which

will not be reclassified subsequently to

profit and loss

(II) Other comprehensive income

items which will be reclassified -835,925.67

subsequently to profit or loss

1. Share of the other

comprehensive income of the investee

accounted for using equity method which

will be reclassified subsequently to profit

or loss

2. Gains or losses arising

from changes in fair value of -835,925.67

available-for-sale financial assets

3. Gains or losses arising

from reclassification of held-to-maturity

investment as available-for-sale financial

assets

4. The effect hedging portion

of gains or losses arising from cash flow

hedging instruments

5. Translation differences

arising on translation of foreign currency

financial statements

6. Other

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Net after-tax of other comprehensive

income attributable to minority

shareholders

VII. Total comprehensive income 42,738,043.55 7,730,282.49

Total comprehensive income

42,768,789.52 9,509,292.00

attributable to owners of parent Company

Total comprehensive income

-30,745.97 -1,779,009.51

attributable to minority shareholders

VIII. Earnings per share:

(i) Basic earnings per share 0.1538 0.0470

(ii) Diluted earnings per share 0.1538 0.0470

Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before

combination, and realized 0 Yuan at last period for combined party

Legal Representative: Lv Hang Person in charge of Accounting Works:Yang Jianping

Person in charge of Accounting Institution: Ke Wensheng

4. Profit Statement of Parent Company

In RMB

Item Current Period Last Period

I. Operating income 36,101,114.68 20,660,013.84

Less: Operating cost 3,735,105.43 3,638,420.84

Operating tax and extras 2,021,662.41 1,156,960.78

Sales expenses

Administration expenses 15,470,605.96 21,140,261.38

Financial expenses 3,397,372.33 10,587,352.42

Losses of devaluation of asset 97,726.87 31,087.94

Add: Changing income of fair

value(Loss is listed with ¡°-¡±)

Investment income (Loss is

6,945,125.36 15,486,345.99

listed with ¡°-¡±)

Including: Investment income

2,562,056.88 14,260,218.24

on affiliated company and joint venture

II. Operating profit (Loss is listed

18,323,767.04 -407,723.53

with ¡°-¡±)

Add: Non-operating income 2.10 537,511.68

Including: Disposal gains of

28,512.68

non-current asset

Less: Non-operating expense

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Including: Disposal loss of

non-current asset

III. Total Profit (Loss is listed with

18,323,769.14 129,788.15

¡°-¡±)

Less: Income tax expense 38,942.20 38,942.20

IV. Net profit (Net loss is listed with

18,284,826.94 90,845.95

¡°-¡±)

V. Net after-tax of other comprehensive

-835,925.67

income

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1. Changes as a result of

re-measurement of net defined benefit

plan liability or asset

2. Share of the other

comprehensive income of the investee

accounted for using equity method

which will not be reclassified

subsequently to profit and loss

(II) Other comprehensive income

items which will be reclassified -835,925.67

subsequently to profit or loss

1. Share of the other

comprehensive income of the investee

accounted for using equity method

which will be reclassified subsequently

to profit or loss

2. Gains or losses arising

from changes in fair value of -835,925.67

available-for-sale financial assets

3. Gains or losses arising

from reclassification of held-to-maturity

investment as available-for-sale

financial assets

4. The effect hedging

portion of gains or losses arising from

cash flow hedging instruments

5. Translation differences

arising on translation of foreign

currency financial statements

6. Other

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VI. Total comprehensive income 18,284,826.94 -745,079.72

VII. Earnings per share:

(i) Basic earnings per share

(ii) Diluted earnings per share

5. Consolidated Cash Flow Statement

In RMB

Item Current Period Last Period

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor 336,791,620.45 519,037,138.41

services

Net increase of customer deposit

and interbank deposit

Net increase of loan from central

bank

Net increase of capital borrowed

from other financial institution

Cash received from original

insurance contract fee

Net cash received from reinsurance

business

Net increase of insured savings and

investment

Net increase of amount from

disposal financial assets that measured

by fair value and with variation

reckoned into current gains/losses

Cash received from interest,

commission charge and commission

Net increase of capital borrowed

Net increase of returned business

capital

Write-back of tax received

Other cash received concerning

17,297,241.43 5,904,757.26

operating activities

Subtotal of cash inflow arising from

354,088,861.88 524,941,895.67

operating activities

Cash paid for purchasing

commodities and receiving labor 160,383,590.90 408,051,698.31

service

88

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Net increase of customer loans and

advances

Net increase of deposits in central

bank and interbank

Cash paid for original insurance

contract compensation

Cash paid for interest, commission

charge and commission

Cash paid for bonus of guarantee

slip

Cash paid to/for staff and workers 58,345,635.86 54,631,918.73

Taxes paid 19,126,200.02 22,018,514.18

Other cash paid concerning

35,550,807.77 34,025,057.60

operating activities

Subtotal of cash outflow arising from

273,406,234.55 518,727,188.82

operating activities

Net cash flows arising from operating

80,682,627.33 6,214,706.85

activities

II. Cash flows arising from investing

activities:

Cash received from recovering

360,000,000.00 1,507,458.60

investment

Cash received from investment

12,040,301.35 4,984,270.40

income

Net cash received from disposal of

fixed, intangible and other long-term 540,140.57 312,190.00

assets

Net cash received from disposal of

subsidiaries and other units

Other cash received concerning

investing activities

Subtotal of cash inflow from investing

372,580,441.92 6,803,919.00

activities

Cash paid for purchasing fixed,

147,978,461.70 103,733,506.30

intangible and other long-term assets

Cash paid for investment 585,000,000.00

Net increase of mortgaged loans

Net cash received from

subsidiaries and other units obtained

Other cash paid concerning

investing activities

89

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Subtotal of cash outflow from investing

732,978,461.70 103,733,506.30

activities

Net cash flows arising from investing

-360,398,019.78 -96,929,587.30

activities

III. Cash flows arising from financing

activities

Cash received from absorbing

635,500,000.00

investment

Including: Cash received from

absorbing minority shareholders¡¯

investment by subsidiaries

Cash received from loans 24,698,215.03 498,797,550.55

Cash received from issuing bonds

Other cash received concerning

6,732,343.46

financing activities

Subtotal of cash inflow from financing

660,198,215.03 505,529,894.01

activities

Cash paid for settling debts 327,595,765.58 378,717,530.93

Cash paid for dividend and profit

11,785,448.58 17,868,720.63

distributing or interest paying

Including: Dividend and profit of

minority shareholder paid by

subsidiaries

Other cash paid concerning

21,828,274.26 1,350,000.00

financing activities

Subtotal of cash outflow from financing

361,209,488.42 397,936,251.56

activities

Net cash flows arising from financing

298,988,726.61 107,593,642.45

activities

IV. Influence on cash and cash

equivalents due to fluctuation in -134,292.88 459.55

exchange rate

V. Net increase of cash and cash

19,139,041.28 16,879,221.55

equivalents

Add: Balance of cash and cash

80,045,669.65 63,166,448.10

equivalents at the period -begin

VI. Balance of cash and cash

99,184,710.93 80,045,669.65

equivalents at the period -end

6. Cash Flow Statement of Parent Company

In RMB

Item Current Period Last Period

90

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor 36,101,114.68 20,660,013.84

services

Write-back of tax received

Other cash received concerning

61,726,112.67 674,229.77

operating activities

Subtotal of cash inflow arising from

97,827,227.35 21,334,243.61

operating activities

Cash paid for purchasing

commodities and receiving labor

service

Cash paid to/for staff and workers 14,782,602.91 10,156,423.38

Taxes paid 4,662,538.78 2,541,986.11

Other cash paid concerning

44,161,372.89 108,178,198.87

operating activities

Subtotal of cash outflow arising from

63,606,514.58 120,876,608.36

operating activities

Net cash flows arising from operating

34,220,712.77 -99,542,364.75

activities

II. Cash flows arising from investing

activities:

Cash received from recovering

260,000,000.00 1,507,458.60

investment

Cash received from investment

10,683,068.48 4,984,270.40

income

Net cash received from disposal of

fixed, intangible and other long-term 39,890.00

assets

Net cash received from disposal of

subsidiaries and other units

Other cash received concerning

investing activities

Subtotal of cash inflow from investing

270,683,068.48 6,531,619.00

activities

Cash paid for purchasing fixed,

739,303.84 2,253,859.28

intangible and other long-term assets

Cash paid for investment 725,000,000.00

Net cash received from

subsidiaries and other units

91

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

755,739,303.84 2,253,859.28

activities

Net cash flows arising from investing

-455,056,235.36 4,277,759.72

activities

III. Cash flows arising from financing

activities

Cash received from absorbing

635,500,000.00

investment

Cash received from loans 342,500,000.00

Cash received from issuing bonds

Other cash received concerning

financing activities

Subtotal of cash inflow from financing

635,500,000.00 342,500,000.00

activities

Cash paid for settling debts 212,600,000.00 239,000,000.00

Cash paid for dividend and profit

7,630,720.91 10,652,719.46

distributing or interest paying

Other cash paid concerning

437,000.00 1,350,000.00

financing activities

Subtotal of cash outflow from financing

220,667,720.91 251,002,719.46

activities

Net cash flows arising from financing

414,832,279.09 91,497,280.54

activities

IV. Influence on cash and cash

equivalents due to fluctuation in -136,951.55 -71.82

exchange rate

V. Net increase of cash and cash

-6,140,195.05 -3,767,396.31

equivalents

Add: Balance of cash and cash

26,441,746.73 30,209,143.04

equivalents at the period -begin

VI. Balance of cash and cash

20,301,551.68 26,441,746.73

equivalents at the period -end

7. Statement of Changes in Owners¡¯ Equity (Consolidated)

This Period

In RMB

This Period

Owners¡¯ equity attributable to parent company Minorit Total

Item

Other Capital Less: Other Reason Surplus Provisio Retaine y owners¡¯

Share interests equity

equity instrument reserve Invento compre able reserve n of d profit

92

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

capital Perpet ry hensive reserve general

ual shares income risk

Prefer

capita

red Other

l

stock

securi

ties

220,28

I. Balance at the 7,672,6 2,952,5 -39,026, 10,450, 202,330

1,600.

end of the last year 05.51 86.32 529.03 097.29 ,360.09

00

Add:

Changes of

accounting policy

Error

correction of the

last period

Enterprise

combine under

the same control

Other

II. Balance at the 220,28

7,672,6 2,952,5 -39,026, 10,450, 202,330

beginning of this 1,600.

05.51 86.32 529.03 097.29 ,360.09

year 00

III. Increase/ 77,000

Decrease in this 556,520 42,768, -30,745. 676,258

,000.0

year (Decrease is ,000.00 789.52 97 ,043.55

0

listed with ¡°-¡±)

(i) Total

42,768, -30,745. 42,738,

comprehensive

789.52 97 043.55

income

(ii) Owners¡¯ 77,000

556,520 633,520

devoted and ,000.0

,000.00 ,000.00

decreased capital 0

1.Common shares 77,000

556,520 633,520

invested by ,000.0

,000.00 ,000.00

shareholders 0

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

93

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

2. Withdrawal of

general risk

provisions

3. Distribution for

owners (or

shareholders)

4. Other

(IV) Carrying

forward internal

owners¡¯ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the 297,28

564,192 2,952,5 3,742,2 10,419, 878,588

end of the report 1,600.

,605.51 86.32 60.49 351.32 ,403.64

period 00

Last Period

In RMB

Last Period

Owners¡¯ equity attributable to the parent Company

Other

equity instrument

Minorit

Item Less: Other Provisio Total

Perpet Reason y

Share Capital Invento compre Surplus n of Retaine interest owners¡¯

ual able

capital Prefer capita reserve ry hensive reserve general d profit s

equity

red Other reserve

l shares income risk

stock

securi

ties

220,28

I. Balance at the 7,672,6 835,925 2,952,5 -49,371, 12,229, 194,600

1,600.

end of the last year 05.51 .67 86.32 746.70 106.80 ,077.60

00

94

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Add:

Changes of

accounting policy

Error

correction of the

last period

Enterprise

combine under the

same control

Other

II. Balance at the 220,28

7,672,6 835,925 2,952,5 -49,371, 12,229, 194,600

beginning of this 1,600.

05.51 .67 86.32 746.70 106.80 ,077.60

year 00

III. Increase/

Decrease in this -835,92 10,345, -1,779, 7,730,2

year (Decrease is 5.67 217.67 009.51 82.49

listed with ¡°-¡±)

(i) Total

-835,92 10,345, -1,779, 7,730,2

comprehensive

5.67 217.67 009.51 82.49

income

(ii) Owners¡¯

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4 Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Withdrawal of

general risk

provisions

3. Distribution for

owners (or

shareholders)

4. Other

(IV) Carrying

forward internal

owners¡¯ equity

95

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the 220,28

7,672,6 2,952,5 -39,026, 10,450, 202,330

end of the report 1,600.

05.51 86.32 529.03 097.29 ,360.09

period 00

8. Statement of Changes in Owners¡¯ Equity (Parent Company)

This Period

In RMB

This Period

Other

equity instrument

Other Total

Item Perpetu Less:

Share Capital comprehe Reasonab Surplus Retaine

al Inventory owners¡¯

capital Preferre reserve nsive le reserve reserve d profit

capital Other shares equity

d stock income

securiti

es

-109,67

I. Balance at the 220,281, 4,479,182 2,952,586 118,039,6

3,740.3

end of the last year 600.00 .23 .32 28.20

5

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

II. Balance at the -109,67

220,281, 4,479,182 2,952,586 118,039,6

beginning of this 3,740.3

600.00 .23 .32 28.20

year 5

96

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

III. Increase/

Decrease in this 77,000,0 556,520,0 18,284, 651,804,8

year (Decrease is 00.00 00.00 826.94 26.94

listed with ¡°-¡±)

(i) Total

18,284, 18,284,82

comprehensive

826.94 6.94

income

(ii) Owners¡¯

77,000,0 556,520,0 633,520,0

devoted and

00.00 00.00 00.00

decreased capital

1.Common shares

77,000,0 556,520,0 633,520,0

invested by

00.00 00.00 00.00

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

shareholders)

3. Other

(IV) Carrying

forward internal

owners¡¯ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

97

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

report period

(VI)Others

IV. Balance at the

297,281, 560,999,1 2,952,586 -91,388, 769,844,4

end of the report

600.00 82.23 .32 913.41 55.14

period

Last period

In RMB

Last period

Other

equity instrument

Other Total

Item Perpetu Less:

Share Capital comprehe Reasonab Surplus Retaine

al Inventory owners¡¯

capital Preferre reserve nsive le reserve reserve d profit

capital Other shares equity

d stock income

securiti

es

-109,76

I. Balance at the 220,281, 4,479,182 835,925.6 2,952,586 118,784,7

4,586.3

end of the last year 600.00 .23 7 .32 07.92

0

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

II. Balance at the -109,76

220,281, 4,479,182 835,925.6 2,952,586 118,784,7

beginning of this 4,586.3

600.00 .23 7 .32 07.92

year 0

III. Increase/

Decrease in this -835,925. 90,845. -745,079.

year (Decrease is 67 95 72

listed with ¡°-¡±)

(i) Total

-835,925. 90,845. -745,079.

comprehensive

67 95 72

income

(ii) Owners¡¯

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

98

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

payment

4. Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

shareholders)

3. Other

(IV) Carrying

forward internal

owners¡¯ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the -109,67

220,281, 4,479,182 2,952,586 118,039,6

end of the report 3,740.3

600.00 .23 .32 28.20

period 5

99

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

SHENZHEN TELLUS HOLDING CO., LTD.

Notes to Financial Statements

£¨For the Year Ended 31 December, 2015 Expressed in RMB Yuan£©

¢ñ¡¢ Corporation profile

1.Foundation of Tellus

The Chinese name of Tellus: ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾

The English name of Tellus: ShenZhen Tellus Holding Co.,Ltd

Registered company addrss: Tellus Building level 3, Shuibei second Road, Luohu,

Shenzhen City, Guangdong Province.

Office address: the 15th Floor of Nuclear Building ,Shennan Road, Futian District,

Shenzhen

Stock market: Shenzhen Stock Exchange

Name and code: Tellus A£¨000025£©,Tellus B£¨200025£©

Legal representative£ºHang LV

The number of business license: 440301103017750

2. Theindustry characteristic and business scope with the main products or

services

The industry characteristic£ºThe industry of providing energy materials, machinery

and electronics equipment

The business scope:automotive integrated services, including the test of equipment

maintenance, property leasing and management etc.

The main products or services: sales of vehicles and accessories, the maintenance

and inspection of vehicles and the services of property leasing etc.

3. The history of Tellus

Shenzhen Tellus Holding Company Limited (¡°the Company¡±) was developed from

the Shenzhen Tellus Machinery Co.,Ltd., which established on 11 October, 1986. On

2nd January, 1992, with the approval of Shenzhen Municipal Peoples Government

¡°shen fu ban fu (1992), No. 1850¡±, Shenzhen Tellus Machinery Co.,Ltd. reorganized

to a public limited company and renamed to Shenzhen Tellus Machinery Holding

Company Limited. On 15 March 1993, with the approval of Bank of China Shenzhen

branch ¡°Shen Ren Yin Fu Zi (1993) No.92¡±, the Company issued the initial public

registered shares and turned into Limited Liability Company with the name of ¡°Tellus

100

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

mechanical and electrical co. LTD, Shenzhen¡±. At this moment, the whole share

capital is 166.88 million shares, including the original 120.9million shares with 45.98

million new shares. The new shares is divided into two parts, one is RMB 25.98

million ordinary shares (A shares) ,the other is special shares (B) RMB 20 million

shares

In June 1993, Shenzhen securities management office was about to agree that

¡°Tellus mechanical and electrical co. LTD, Shenzhen¡°wasqualified to list in

Shenzhen stock exchange market(shen zheng ban fu[1993]34) and (shen zheng shi

zi [1993]22).On 30 June 1994, the Company changed name to Shenzhen Tellus

Holding Company Limited with the approval of Shenzhen administrative bureau for

industry and commerce .

On March 15, 1993, with the approval of the branch of peoples bank of China in

shenzhen special economic zone, the group could issue A ordinary shares 25.98

million with B ordinary shares20 million (shen ren yin fu zi (1993)092).On June 30,

1994, with the approval of the shenzhen city administration for industry and

commerce, Tellus mechanical and electrical co. LTD, Shenzhen was renamed

ShenZhen Tellus Holding Co.,Ltd

The capital structure of the Company at listing date£º

Category Amount (share) Ratio£¨%£©

1. Non-tradable shares

Include: State shares 120,900,000 72.45

Sub-total of non-tradable shares 120,900,000 72.45

2. Tradable shares

-A 25,980,000 15.57

-B 20,000,000 11.98

Sub-total tradable shares 45,980,000 27.55

Total 166,880,000 100.00

Change of capital structure after established:

£¨1£©Issue bonus shares in 1993

According to the decision made by general meeting of shareholders in 1993, the

company distributed a 2 for 10 bonus shares with cash dividend of RMB 0.5. The

whole capital changed into 2,002.56 million shares.

101

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

On 22 April 1994£¬the Shenzhen Stock Management Office agreed about plan of

distributing bonus . After plan, the companys capital structure changed as follows:

Category Amount£¨share£© Ratio£¨%£©

State - owned shares 145,080,000 72.45

Public shares 31,176,000 15.57

RMB special stock£¨B shares£© 24,000,000 11.98

Total 200,256,000 100.00

£¨2£©Issue bonus shares and increase capital in 1994

On 28 May 1995, the Group shareholder meeting agreed about plan of distributing

bonus and increasing capital. On the basis of 2,002.56 million shares in the end of

1994, the Group distributed 0.5 of 10 shares, and give RMB 0.5 from every

increasing 0.5 share capital. After the Groups share capital increased to 2,202.816

million shares.

After plan, the companys capital structure changed as follows:

Category Amount£¨share£© Ratio£¨%£©

State - owned shares 159,588,000 72.45

Public shares 34,293,600 15.57

RMB special stock£¨B shares£© 26,400,000 11.98

Total 220,281,600 100.00

£¨3£©Majority shareholder change in 1997

On 31st March 1997, with the approval of Shenzhen Municipal Peoples Government

¡°shen fu han (1997), No. 19¡± and China Securities Regulatory Commission ¡°zheng

jian han shang (1997), No. 5¡±, Shenzhen Investment Administrative Company

transferred its 159,588,000 shares to Shenzhen Te Fa (Group) Company Limited

(hereinafter referred to as ¡°the Te Fa Group¡±). The shares transferred represent

72.45% of the total issued shares of the Company.

£¨4£©The reform of listing non-tradable shares in 2006

In December 2005, shenzhen, the State-owned Assets Supervision and

Administration Commission agreed about the plan of reforming non-tradable shares.

On 4th January 2006, Te Fa Group gave 13,717,440 shares to the holders of

tradable shares of the company in the A share market. After the split-share reform

102

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

was completed, it held 66.22% of the shares capital of the Company.

After the split-share reform, the companys capital structure changed as follows:

Category Amount£¨share£© Ratio£¨%£©

State - owned shares 145,870,560 66.22

Public shares 48,011,040 21.79

RMB special stock£¨B shares£© 26,400,000 11.98

Total 220,281,600 100.00

(5) Private placement of RMB ordinary shares in 2015

According to the 19th special meeting of the 7th Board Meeting on April 21st,2014,

and the 4th stockholders meeting on June 3rd, 2014, the Company private issued

RMB ordinary shares (A shares) 77,000,000.00 shares to Shenzhen Tefa Group Co.

and Shenzhen Yuanzhifuhai Jewerly Investment Co. The total raising money is less

than RMB 646,800,000.00 and it is all by cash.

Category Amount Ratio£¨%£©

State-owned legal person shares 151,870,560 51.09

Domestic public shares 119,011,040 40.03

RMB special shares (b share) 26,400,000 8.88

Total 297,281,600 100.00

Till the end of 2015, the Company had issued 29,728.16 million shares, details in

Note 7.31.

4. The scope of consolidation

There are 14 subsidiariesincluded in the 2015 consolidation scope, details in

notes8¡±the equity in other entities¡±. Compared with last year(2014), there is no

difference in the consolidation scope.

5. The approval and the date of financial statements

The financial statements of the Company are authorized to be issued to the public

on April 14th,2016 by the Board of Directors.

¢ò¡¢ Basis of Preparation

1. Basis of preparation

The financial statements of the Company have been prepared on the basis of going

103

ÉîÛÚÊÐÌØÁ¦(¼¯ÍÅ)¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

concern in conformity with Chinese Accounting Standards for Business Enterprises

and Accounting Systems for Business Enterprises issued by the Ministry of Finance

of Peoples Republic of China in February 2006, and Accounting Standards (order

No.33 of the Ministry of Finance announcedand order No.76 of the Ministry of

Finance revised ) and Compilation Rules for Information Disclosure by Companies

Offering Securities to the Public No.15¡ªGeneral Provisions on Financial Reports

(2014 Revision) issued by the China Securities Regulatory Commission (CSRC).

According to the relevant accounting regulations in Chinese Accounting Standards

for Business Enterprises, the Group has adopted the accrual basis of accounting.

Except for certain financial instruments which are measured by at fair value, the

Group adopts the historical cost as the principle of measurement in the financial

statements. Where assets are impaired, provisions for asset impairment are made in

accordance with relevant requirements.

¢ó¡¢ Statement of Compliance with Enterprise Accounting Standards

The financial statements of the Group comply are recognized and measured in

accordance with the regulations in the Chinese Accounting Standards for Business

Enterprises and they give a true and fair view of the financial position, business

results and cash flow of the Group as of 31 December 2014. In addition, in all

material respects ,the financial statements of the Company and the Group

complywith the revised disclosing requirements for financial statements and the

notes Compilation Rules for Information Disclosure by Companies Offering

Securities to the Public No.15¡ªGeneral Provisions on Financial Reports (2014

Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.

¢ô¡¢ Important Accounting Principles and Accounting Estimates

According to the Chinese Accounting standards,the Group ensures the relevant

accounting policies and estimation by means of characteristics of subsidiaries. In

terms of theexplanation of judgment and estimation of important accounting policies

made by Board of Directors, details will be found in notes 4.31¡±the important

judgment and estimation¡±.

1¡¢ Accounting period

The accounting period of the Group is classified as annual period and interim period.

Interim period refers to the reporting period shorter than a complete annual period.

The accounting period of the Group is the calendar year from January 1 to

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December 31.

2¡¢Operating Cycle

The normal operating cycle is referring to buying assets used into generating new

products to sell products and recollect monetary assets.

3¡¢ Monetary Unit

Renminbi (RMB) is the currency of the primary economic environment in which the

Group and its domestic subsidiaries operate. Therefore, the Group and its domestic

subsidiaries choose RMB as their functional currency. The Group adopts RMB to

prepare its functional statements.

4¡¢Basis of accounting

A business combination is a transaction or event that brings together two or more

separate entities into one reporting entity. Business combinations are classified into

business combinations involving enterprises under common control and business

combinations not involving enterprises under common control.

£¨1£©Business combination involving entities under common control

A business combination involving enterprises under common control is a business

combination in which all of the combining enterprises are ultimately controlled by the

same party or parties both before and after the combination, and that control is not

transitory. For a business combination involving enterprises under common control,

the party that, on the combination date, obtains control of another enterprise

participating in the combination is the absorbing party, while that other enterprise

participating in the combination is a party being absorbed. Combination date is the

date on which the absorbing party effectively obtains control of the party being

absorbed.

The assets and liabilities obtained are measured at the carrying amount as recorded

by the enterprise being combined at the combination date. The differences between

the carrying amount of the net assets obtained and the carrying amount of

consideration paid for the combination (or the total face value of shares issued) is

adjusted to the capital premium (or share premium) in the capital reserve. If the

balance of the capital premium (or share premium) is insufficient, any excess is

adjusted to retained earnings.

The cost of a combination incurred by the absorbing party includes any costs directly

attributable to the combination shall be recognized as an expense through profit or

loss for the current period when incurred.

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£¨2£©Business combination involving entities not under common control

A business combination involving enterprises not under common control is a

business combination in which all of the combining enterprises are not ultimately

controlled by the same party or parties both before and after the business

combination. For a business combination not involving enterprises under common

control, the party that, on the acquisition date, obtains control of another enterprise

participating in the combination is the acquirer, while that other enterprise

participating in the combination is the acquiree. Acquisition date is the date on which

the acquirer effectively obtains control of the acquiree.

For a business combination not involving enterprise under common control, the

combination cost including the sum of fair value, at the acquisition date, of the

assets given, liabilities incurred or assumed, and equity securities issued by the

acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,

legal services, valuation and consultancy services etc. and other associated

administrative expenses attributable to the business combination are recognized in

profit or loss when they are incurred. The transaction cost arose from issuing of

equity securities or liability securities shall be initially recognized as equity securities

or liability securities.

The contingent consideration related to the combination shall be booked as

combination cost at the fair value at the acquisition date. If, within the 12 months

after acquisition, additional information can prove the existence of related

information at acquisition date and the contingent consideration need to be adjusted,

goodwill can be offset. For a business combination achieved in stages that involves

multiple exchange transactions, the equity interest in the acquiree previously held

before the acquisition date re-assessed at the fair value at the acquisition date, with

any differences between its fair value and its carrying amount is recorded as

investment income. The other comprehensive income of the acquiree before the

acquisition date relating to the previously held interest in the acquiree is transferred

to investment income. Combination cost is the aggregate of the carrying amount of

the equity interest held in the acquiree prior to the acquisition date and the fair value

of the cost of the additional investment at the acquisition date.

Combination cost of the acquirers interest and identifiable net assets of the acquirer

acquired through the business combination shall be measured by the fair value at

the acquisition date. Where the cost of combination exceeds the acquirers interest

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in the fair value of the acquirees identifiable net assets, the difference shall be

recognized as goodwill. Where the cost of combination is less than the acquirers

interest in the fair value of the acquirees identifiable net assets, the difference shall

be accounted for according to the following requirements: (i) the acquirer shall

reassess the measurement of the fair values of the acquirees identifiable assets,

liabilities and contingent liabilities and measurement of the cost of combination; (ii) if

after that reassessment, the cost of combination is still less than the acquirers

interest in the fair values of the acquirees identifiable net assets, the acquirer shall

recognize the remaining difference immediately in profit or loss for the current

period.

Where the temporary difference obtained by the acquirer was not recognized due to

inconformity with the conditions applied for recognition of deferred income tax, if,

within the 12 months after acquisition, additional information can prove the existence

of related information at acquisition date and the expected economic benefits on the

acquisition date arose from deductible temporary difference by the acquiree can be

achieved, relevant income tax assets can be recognized, and goodwill offset. If the

goodwill is not sufficient, the differences shall be recognized as profit of the current

period.

Apart from above, the differences shall be taken into profit or loss of the current

period if the recognition of deferred income tax assets is related to the combination.

5¡¢Preparation of consolidated financial statements

£¨1£©The scope of consolidated financial statements

The scope of consolidation in the consolidated financial statements is determined on

the basis of control. Control is the power to govern the financial and operating

policies of an enterprise so as to obtain benefits from its operating activities. The

scope of consolidation includes the Group and all of the subsidiaries. Subsidiary is

an enterprise or entity under the control of the Group.

£¨2£©Preparation of the consolidated financial statements

The subsidiary of the Group is included in the consolidated financial statements from

the date when the control over the net assets and business decisions of the

subsidiary is effectively obtained, and excluded from the date when the control

ceases. For a subsidiary disposed of by the Group, the operating results and cash

flows before the date of disposal (the date when control is lost) are included in the

consolidated income statement and consolidated statement of cash flows, as

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appropriate. For a subsidiary disposed during the period, no adjustment is made to

the opening balance of the consolidated financial statements.

For a subsidiary acquired through a business combination not under common

control, the operating results and cash flows from the acquisition (the date when the

control is obtained) are included in the consolidated income statement and

consolidated statement of cash flows, as appropriated; no adjustment is made to the

opening balance and comparative figures in the consolidated financial statements.

Where a subsidiary was acquired during the reporting period, through a business

combination involving enterprises under common control, the financial statements of

the subsidiaries are included in the consolidated financial statements. The results of

operations and cash flow are included in the consolidated balance sheet and the

consolidated income statement, respectively, based on their carrying amounts, from

the date that common control was established, and the opening balances and the

comparative figures of the consolidated financial statements are restated.

When the accounting period or accounting policies of a subsidiary are different from

those of the Group, the Group makes necessary adjustments to the financial

statements of the subsidiary based on the Groups own accounting period or

accounting policies. Where a subsidiary was acquired during the reporting period

through a business combination not under common control, the financial statements

was re-conciliated on the basis of the fair value of identifiable net assets at the date

of acquisition. Intra-group balances and transactions, and any unrealized profit or

loss arising from intra-group transactions, are eliminated in preparing the

consolidated financial statements.

Minority interest and the portion in the net profit or loss not attributable to the Group

are presented separately in the consolidated balance sheet within shareholders

equity and net profit. Net profit or loss attributable to minority shareholders in the

subsidiaries is presented separately as minority interest in the consolidated income

statement below the net profit line item. When the amount of loss for the current

period attributable to the minority shareholders of a subsidiary exceeds the minority

shareholders portion of the opening balance of owners equity of the subsidiary, the

excess is allocated against the minority interests.

When the Group loses control of a subsidiary due to the disposal of a portion of an

equity investment or other reasons, the remaining equity investment is re-measured

at its fair value at the date when control is lost. The difference between 1) the total

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amount of consideration received from the transaction that resulted in the loss of

control and the fair value of the remaining equity investment and 2) the carrying

amounts of the interest in the former subsidiarys net assets immediately before the

loss of the control is recognized as investment income for the current period when

control is lost. The amount recognized in other comprehensive income in relation to

the former subsidiarys equity investment is reclassified as investment income for

the current period when control is lost. The retained interest is subsequently

measured according to the rules stipulated in the ¡°Chinese Accounting Standards for

Business Enterprises No.2¡ªLong-term equity investment¡± or ¡°Chinese Accounting

Standards for Business Enterprises No.22¡ªDetermination and measurement of

financial instruments¡± . Details in Note 4. 7 ¡°Financial instruments¡± or Note

4.10 ¡±Long-term equity investments ¡±.

6¡¢The methods of making consolidatedfinancial statements

(1) The standards of ensure scope of financial statements

Control is the foundation of ensuring the scope financial statements. Control is

referring to the power of controlling investee via the relevant investing activities with

changeable returns and of influencing to change values of them. The consolidation

scope refers to the group and subsidiaries. Subsidiary is entity of the controlled

party.

(2)The methods of making consolidatedfinancial statements

From the day of acquiring the equity and actual control of management decisions, it

should be in the scope vice versa. As for the subsidiary of disposition, the assets

and monetary flow should be included into the consolidated financial statements, not

adjusting the opening balance. Under the non-same control surrounding, the

operating results and cash flows have been included in the consolidated financial

statements properly and accurately with no adjustment of the opening

balance.Under the same control surrounding, the operating results and cash flows

have been included in the consolidated financial statements properly and accurately

with adjustment of the opening balance.

When making financial statements, if the period of the group and the subsidiary is

different, we should necessarily adjust the subsidiary period in accordance with the

groups. As for the non-same control subsidiaries, the values at acquisition date

will be applied when adjusting.

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The values all major transactions in the group and unrealized profits should be

offsetin the preparation of consolidated financial statements.

It should be listed individually when the entity of subsidiaries have non-controlling

shares. Furthermore, if there are share belonging to the non-controlling

shareholders, we should classify it as ¡°Non-controlling interests¡±. If there is a loss in

the investment of non-controlling shareholders, we still list the loss in the category of

¡°Non-controlling interests¡±.

When losing the control power of subsidiesbecause of deposing partial share capital,

for the remaining values, it will be recalculated. The sum of consideration at

acquisition date minus the original equity held by the group with the relevant route,

the difference should be listed into current investment outcome. The comprehensive

income relevant to subsidiaries should be used the same accounting methods to

measure. Besides, for the remaining share capital, it should be measured by the

accounting standards of NO.2 and NO.22, details will be found in notes 4.9 or notes

4.13.

It is necessary to distinguish how to lose the control power: for a package of

transactions or not. The following would suggest whether affected by a package of

transactions£º¢Ùfair and equal£»¢Úthe result of the entire trasanction could be

accomplished by the transaction£»¢Ûthe transaction happens depends on the other£»

¢Üit will be considered as a whole when measuring the economic results, details will

be found in notes 4¡¢13¡¢£¨2£©¢Ü.

7£®Joint Venture

Joint venture refers to an arrangement controlled be two or more than two parties.

The group will divide joint venture into joint management and joint ventures in

accordance with the standards.Joint venture is the arrangement of

acquiringbenefits .

The equity method will be used into the calculation ,details will be found in 4.13£¨2£©

¢Ú.

As a party of joint venture, we should ensure the assets and liabilities individually;

besides, revenues and costs of production and sales.

If selling or buying assets, the group should only ensure gain or loss which belonged

to the other partiesparticipated in joint venture, accounting standards¡ª8.

8. Cash and Cash equivalent

Cash and cash equivalents of the Group include cash on hand, ready usable

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deposits and investments having short holding term (normally will be due within

three months from the day of purchase), with strong liquidity and easy to be

exchanged into certain amount of cash that can be measured reliably and have low

risks of change.

9. Foreign exchange

£¨1£©Translation in foreign exchange transactions

The foreign currency transactions are recorded, on initial recognition in the

functional currency, by applying the spot exchange rate on the date of the

transaction £¨an exchange rate that approximates the actual spot exchange rate on

the date of transaction£©. The exchange of foreign currency and transactions related

to the foreign exchange are translated at the spot exchange rate.

£¨2£©Translation of monetary foreign currency and non-monetary foreign currency

At the balance sheet date, foreign currency monetary items are translated using the

spot exchange rate at the balance sheet date. All the exchange differences thus

resulted are taken to profit or loss, except for ¢Ùthose relating to foreign currency

borrowings specifically for construction and acquisition of qualifying assets, which

are capitalized in accordance with the principle of capitalization of borrowing costs.

¢ÚThe exchange difference from changes of other account balance of foreign

currency monetary items available-for-trade is recorded into profit or loss except for

amortized cost.

Non-monetary foreign currency items measured at historical cost shall still be

translated at the spot exchange rate prevailing on the transaction date, and the

amount denominated in the functional currency is not changed. Non-monetary

foreign currency items measured at fair value are translated at the spot exchange

rate prevailing at the date when the fair values are determined. The exchange

difference thus resulted are recognized in profit or loss for the current period or as

capital reserve.

10¡¢Financial instruments

£¨1£©Determination of financial assets and liabilities fair value

Fair value is the amount for which an asset could be exchanged, or a liability settled,

between knowledgeable, willing parties in an arms length transaction. For a

financial instrument which has an active market, the Group uses quoted price in the

active market to establish its fair value. The quoted price in the active market refers

to the price that can be regularly obtained from exchange market, agencies, industry

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associations, pricing authorities; it represents the fair market trading price in the

actual transaction.

For a financial instrument which does not have an active market, the Group

establishes fair value by using a valuation technique. Valuation techniques include

using recent arms length market transactions between knowledgeable, willing

parties, reference to the current fair value of another instrument that is substantially

the same, discounted cash flow analysis and option pricing models.

£¨2£©Classification, recognition and measurement of financial assets

All regular way purchases or sales of financial assets are recognized and

derecognized on a trade date basis. On initial recognition, the Groups financial

assets are classified into one of the four categories, including financial assets at fair

value though profit or loss, held-to maturity investments, loans and receivables and

available-for-trade financial assets. A financial asset is recognized initially at fair

value. In the case of financial assets at fair value through profit or loss, relevant

transaction costs are immediately charged to the profit and loss of the current period;

transaction costs relating to financial assets of other categories are included in the

amount initially recognized.

¢Ù Financial assets at fair value through profit or loss:

Including financial assets held-for-trade and financial assets designated at fair value

through profit or loss.

Financial asset held-for-trade is the financial asset that meets one of the following

conditions:

A. the financial asset is acquired for the purpose of selling it in a short term;

B. the financial asset is a part of a portfolio of identifiable financial instruments that

are collectively managed, and there is objective evidence indicating that the

enterprise recently manages this portfolio for the purpose of short-term profits;

C. the financial asset is a derivative, except for a derivative that is designated and

effective hedging instrument, or a financial guarantee contract, or a derivative that is

linked to and must be settled by delivery of an unquoted equity instrument (without a

quoted price from an active market) whose fair value cannot be reliably measured.

For such kind of financial assets, fair values are adopted for subsequent

measurement.

Financial asset is designated on initial recognition as at fair value through profit or

loss only when it meets one of the following conditions:

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A. the designation eliminates or significantly reduces the inconsistency in the

measurement or recognition of relevant gains or losses that would otherwise arise

from measuring the financial instruments on different bases.

B. a group of financial instruments is managed and its performance is evaluated on

a fair value basis, and is reported to the enterprises key management personnels.

Formal documentation regarding risk management or investment strategy has

prepared.

Financial assets at fair value through profit or loss are subsequently measured at the

fair value. Any gains or losses arising from changes in the fair value and any

dividends or interest income earned on the financial assets are recognized in the

profit or loss.

¢Ú Investment held-to maturity

Held-to-maturity investments are non-derivative financial assets with fixed or

determinable payments and fixed maturity that an entity has the positive intention

and ability to hold to maturity. Such kind of financial assets are subsequently

measured at amortized cost using the effective interest method. Gains or losses

arising from derecognition, impairment or amortization are recognized in profit or

loss for the current period.

Effective interest rate is the rate that exactly discounted estimated future cash flows

through the expected life of the financial asset or financial liability or, where

appropriate, a shorter period to the net carrying amount of the financial asset or

financial liability.

When calculating the effective interest rate, the Group shall estimate future cash

flow considering all contractual terms of the financial asset or financial liability

without considering future credit losses, and also consider all fees paid or received

between the parties to the contract giving rise to the financial asset and financial

liability that are an integral part of the effective interest rate, transaction costs, and

premiums or discounts, etc.

¢Û Loans and receivables

Loans and receivables are non-derivative financial assets with fixed determinable

payment that are not quoted in an active market. Financial assets classified as loans

and receivables by the Group include note receivables, account receivables, interest

receivable dividends receivable and other receivables.

Loans and receivables are subsequently measured at amortized cost using the

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effective interest method. Gain or loss arising from derecognition, impairment or

amortization is recognized in profit or loss.

¢Ü Financial assets available-for-trade

Financial assets available-for-trade include non-derivative financial assets that are

designated on initial recognition as available for trade, and financial assets that are

not classified as financial assets at fair value through profit or loss, loans and

receivables or investment held-to-maturity.

Financial assets available-for-trade are subsequently measured at fair value, and

gains or losses arising from changes in the fair value are recognized as other

comprehensive income and included in the capital reserve, except that impairment

losses and exchange differences related to amortized cost of monetary financial

assets denominated in foreign currencies are recognized in profit or loss, until the

financial assets are derecognized, at which time the gains or losses are released

and recognized in profit or loss.

Interests obtained and dividends declared by the investee during the period in which

the financial assets available-for-trade are held, are recognized in investment gains.

£¨3£©Impairment of financial assets

The Group assesses at the balance sheet date the carrying amount of every

financial asset except for the financial assets that measured by the fair value. If there

is objective evidence indicating a financial asset may be impaired, a provision is

provided for the impairment.

The Group makes an impairment test for a financial asset that is individually

significant. For a financial asset that is not individually significant, it is included in a

group of financial assets with similar credit risk characteristics and collectively

assessed for impairment [or individually assessed for impairment]. If no objective

evidence of impairment incurs for an individually assessed financial asset (whether

the financial asset is individually significant or not individually significant), it is

included in a group of financial assets with similar credit risk characteristics and

collectively assessed for impairment. Assets for which an impairment loss is

individually recognized is not included in a group of financial assets with similar

credit risk characteristics and collectively assessed for impairment.

¢Ù Impairment on held-to maturity investment, loans and receivables

The financial assets measured by cost or amortized cost write down their carrying

value by the estimated present value of future cash flow. The difference is recorded

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as impairment loss. If there is objective evidence to indicate the recovery of value of

financial assets after impairment, and it is related with subsequent event after

recognition of loss, the impairment loss recorded originally can be reversed. The

carrying value of financial assets after impairment loss reversed shall not exceed the

amortized cost of the financial assets without provisions of impairment loss on the

reserving date.

¢Ú Impairment loss on available-for-trade financial assets

When decision is made with all related factors on whether the fall of fair value

investment of an equity instrument available-for-trade is significant or non-transient,

it indicates impairment of such equity instrument investment, in which, ¡°significant¡±

means over 20% of fall in fair value and ¡°non-transient¡± means over 12 months of

subsequent fall.

When an available-for-trade financial asset is impaired, the cumulative loss arising

from declining in fair value that had been recognized in capital reserve shall be

removed and recognized in profit or loss. The amount of the cumulative loss that is

removed shall be difference between the acquisition cost with deduction of

recoverable amount less amortized cost, current fair value and any impairment loss

on that financial asset previously recognized in profit or loss.

If, after an impairment loss has been recognized, there is objective evidence that the

value of the financial asset is recovered, and it is objectively related to an event

occurring after the impairment loss was recognized, the initial impairment loss can

be reversed and the reserved impairment loss on available-for-trade equity

instrument is recorded in the profit or loss, the reserved impairment loss on

available-for-trade debt instrument is recorded in the current profit or loss.

The equity instrument where there is no quoted price in an active market, and whose

fair value cannot be reliably measured, or impairment loss on a derivative asset that

is linked to and must be settled by delivery of such an unquoted equity instrument

shall not be reversed.

£¨4£©Recognition and measurement of financial assets transfer

The Group derecognizes a financial asset when one of the following conditions is

met:

1) the rights to receive cash flows from the asset have expired;

2) the enterprise has transferred its rights to receive cash flows from the asset to a

third party under a ¡°pass-through¡± arrangement; or

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3) the enterprise has transferred its rights to receive cash flows from the asset and

either (a) has transferred substantially all the risks and rewards of the asset, or (b)

has neither transferred nor retained substantially all the risks and rewards of the

asset, but has transferred control of the asset.

If the enterprise has neither retained all the risks and rewards from the financial

asset nor control over the asset, the asset is recognized according to the extent it

exists as financial asset, and correspondent liability is recognized. The extent of

existence refers the level of risk by the financial asset changes the enterprise is

facing.

For a transfer of a financial asset in its entirety that satisfies the derecognition

criteria, (a). the carrying amount of the financial asset transferred; and (b) the sum of

the consideration received from the transfer and any cumulative gain or loss that

had been recognized in other comprehensive income, is recognized in profit or loss.

If a part of the transferred financial asset qualifies for derecognition, the carrying

amount of the transferred financial asset is allocated between the part that continues

to be recognized and the part that is derecognized, based on the relative fair value

of those parts. The difference between (a) the carrying amount allocated to the part

derecognized; and (b) the sum of the consideration received for the part

derecognized and any cumulative gain or loss allocated to the part derecognized

which has been previously recognized in other comprehensive income, is

recognized in profit or loss.

£¨5£©Classification and measurement of financial liabilities

The Groups financial liabilities are, on initial recognition, classified into financial

liabilities at fair value through profit or loss and other financial liabilities. For financial

liabilities at fair value through profit or loss, relevant transaction costs are

immediately recognized in profit or loss for the current period, and transaction costs

relating to other financial liabilities are included in the initial recognition amounts.

¢ÙFinancial liabilities measured by the fair value and the changes recorded in profit

or loss

The classification by which financial liabilities held-for-trade and financial liabilities

designed at the initial recognition to be measured by the fair value follows the same

criteria as the classification by which financial assets held-for-trade and financial

assets designed at the initial recognition to be measured by the fair value and their

changes are recorded in the current profit or loss.

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For the financial liabilities measured by the fair value and changes recorded in the

profit or loss, fair values are adopted for subsequent measurement. All the gains or

losses on the change of fair value and the expenses on dividends or interests

related to these financial liabilities are recognized in profit or loss for the current

period.

¢ÚOther financial liabilities

Derivative financial liabilities that linked with equity instruments, which do not have a

quoted price in an active market and their fair value cannot be measured reliably, is

subsequently measured by cost Other financial liabilities are subsequently

measured at amortized cost using the effective interest method. Gains or losses

arising from derecognition or amortization are recognized in profit or loss for the

current period.

£¨6£©Derecognition

The Group derecognizes a financial liability (or part of it) when the underlying

present obligation (or part of it) is discharged or cancelled or has expired. An

agreement between the Group (an existing borrower) and existing lender to replace

original financial liability with a new financial liability with substantially different terms

is accounted for as an extinguishment of the original financial liability and the

recognition of a new liability.

When the Group derecognizes a financial liability or a part of it, it recognizes the

difference between the carrying amount of the financial liability (or part of the

financial liability) derecognized the consideration paid (including any non-cash

assets transferred or new financial liabilities assumed) in profit or loss.

£¨7£©Derivatives and embedded derivatives

Derivatives in the relevant contract are initially recorded at fair value, and

subsequent valuesmeasure at fair value.

£¨8£©Offsetting financial assets and financial liabilities

When the group has a legal right that is currently enforceable to set off the

recognized financial assets and financial liabilities, and intends either to settle on a

net basis, or to realize the financial asset and settle the financial liability

simultaneously, a financial asset and a financial liability shall be offset and the net

amount is presented in the balance sheet. Except for the above circumstances,

financial assets and financial liabilities shall be presented separately in the balance

sheet and shall not be offset.

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£¨9£© Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets

of the Group after deducting all of its liabilities. The consideration received from

issuing equity instruments, net of transaction costs, are added to owners equity.

All types of distribution (excluding stock dividends) made by the Group to holders of

equity instruments are deducted from owners equity. The Group does not recognize

any changes in the fair value of equity instruments.

11¡¢Account receivables

The account receivable by the Group includes account receivables, and other

receivables.

£¨1£©Criteria for recognition of bad debts:

The Company carries out an inspection on the balance sheet date. Where there is

any objective evidence proving that the receivables have been impaired, an

impairment provision shall be made:

¢ÙA serious financial difficulty occurs to the issuer or debtor;

¢ÚThe debtor breaches any of the contractual stipulations, for example, fails to pay

or delays the payment of interests or the principal, etc.;

¢Û The debtor will probably become bankrupt or carry out other financial

reorganizations;

¢Ü Other objective evidences showing the impairment of the receivables.

£¨2£©Method for bad debts provision

¢Ù Provisions of bad debts in account receivables that is individually significant.

The Group treats account receivables over RMB 1,000,000 and other

receivables over RMB 500,000 as individually significant items.

For an account receivable that is individually significant, the asset is individually

assessed for impairment, and the amount of impairment is recognized in profit or

loss if there is objective evidence of impairment is included in a group of financial

assets with similar credit risk characteristics and collectively assessed for

impairment. An account receivable for which an impairment loss is individually

recognized is not included in a group of account receivables with similar credit risk

characteristics and collectively assessed for impairment.

¢Ú Provisions of bad debts in account receivables that individually insignificant items

with similar credit risk characteristics that have significant risk:

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A£®Evidence of credit risk characteristics

Whether the financial asset is individually significant or not individually

significant, it is included in a group of financial assets with similar credit risk

characteristics and collectively assessed for impairment. Such credit risk reflects the

repayment of all due amount under the contract, and is related to the estimation of

future cash flow expected to be derived from the assets.

Evidence of portfolios£º

Items Evidence of portfolios

Aging portfolios Use the aging of account receivables as credit risk characteristics

B£®Provision by credit risk characteristics

During the group impairment test, the amount of bad debts provisions is determined

by the assessed result from the experience of historical loss and current economic

status and the existing loss in the estimated account receivables according to the

set of account receivables and credit risk characteristic.

Provisions for difference portfolios£º

Item Method of provision

Aging portfolios Provision by Aging

a. Provision by Aging analysis

Aging Accounts receivable£¨%£© Other receivables£¨%£©

Within 1 year(inclusive) No provision No provision

1-2 years (inclusive) 5 5

2-3 years (inclusive) 20 20

Over 3 years 50 50

¢Û Provisions of bad debts that is individually insignificant.

The Group treats account receivables under RMB 1,000,000 and other receivables

under RMB 500,000 as individually insignificant items.

For the account receivables not individually significant, the Group assesses the

account receivables individually for impairment when are of following characteristics:

if there is objective evidence indicating the impairment, the impairment loss is

recognized at the difference between the present value of future cash flow less the

carrying amount, and provision is made accordingly. For example, account

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receivables with related parties; account receivables under litigations or arbitrations,

or account receivables with obvious indication that debtor cannot fulfill the obligation

of repayment.

£¨3£©The reversal of bad debts provision

If there is objective evidence of recovery in value of account receivables, and the

recovery can be related to an event occurring after the impairment was

recognized, the previously recognized impairment loss is reversed and

recognized in profit or loss. However, the reversal shall not result in a carrying

amount that exceeds what the amortized cost would have been had the

impairment loss not been recognized at the date the impairment is reversed.

12¡¢Inventories

£¨1£©Classification of inventory

The Groups inventory mainly include raw materials, goods in stock,

work-in-progress and low value consumables, etc.

£¨2£©Valuation method of inventories upon delivery

Inventories are initially carried at the actual cost and delivered at the value by weighted average method.

The low value consumables and packaging should be amortized in equal installment.

£¨3£©Basis for determining net realizable value of inventories and provision methods

for decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business

less the estimated costs of completion, the estimated costs necessary to make the

sale and relevant taxes. Net realizable value is determined on the basis of clear

evidence obtained, and takes into consideration the purpose of holding inventories

and effect of post balance sheet events.

At the balance sheet date, inventories are measured at the lower of the cost and net

realizable value. If the net realizable value is below the cost of inventories, a

provision for decline in value of inventories is made. The provision for inventories

decline in value is normally determined by the difference of the cost of individual

item less its realizable value.

After the provision for decline in value of inventories is made, if the circumstances

that previously caused inventories to be written down below cost no longer exist so

that the net realizable value of inventories is higher than their cost, the original

provision for decline in value is reversed and the reversal is included in profit or loss

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for the period.

£¨4£©Inventory system is maintained for stock system.

13. Held-to-maturity investmentd

Held-to-maturity investments are initially measured at fair value (deducting bond

interest that has matured but not yet been retrieved) plus relevant transaction costs

when acquired. Interest income is recognized as investment income based on the

amortized cost and effective interest rate. If differences between the effective

interest rate and coupon rate is negligible, the coupon rate is applicable. The actual

interest rate is determined upon acquisition and remains unchanged during the

expected remaining period, or a shorter period if applicable. Differences between

the proceeds and book values of the investments are recognized as investment

income on disposal.

If an asset could be sold under the normal conditions with precise decisions from

directors of board in an irrevocable agreement in one year, then it would be regarded

as held-to maturity asset. The method of calculation is no deprecation or

amortization from the beginning-holding-day, instead of choosing the lower one

between book value and fair value minus disposal expenses. If the disposable asset

is an asset group under the accounting standards 8 and the goodwill will be divided

into this asset group, then it should be included the goodwill.

It should be disclosed individually when it is classified as held-to-maturity asset. If it

is classified as the liability connecting to the asset group, it should also list

separately.

14¡¢Long-term equity investments

The term of long-term equity investments refers to the investment which has control,

joint venture and significant influence over the investees. If the group does not have

control, joint venture and significant influence over the investees, then it should be

classified as available-for-sale financial asset or the asset measured at fair value

and recorded into the profits and losses of the current financial assets, details will be

found in notes4.9¡±Financail Instruments¡±.

The term ¡°joint control¡± refers to the contractually agreed sharing of control over an

economic activity, which exists only when the investing parties involved in the

economic activity reach a consensus on sharing control over critical financial and

operating policies concerning that activity. An entity which is subject to joint control

by the investor and other parties is their joint venture.

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£¨1£©Determination of investment cost

For a business combination involving enterprises under common control, the initial

investment cost of the long-term equity investment shall be carrying value of the

absorbing partys share of the owners equity of the party being absorbed at the date

of combination. For a business combination not involving enterprise under common

control, the combination cost including the sum of fair value, at the acquisition date,

of the assets given, liabilities incurred or assumed, and equity securities issued by

the acquirer. The intermediary expenses incurred by the acquirer in respect of

auditing, legal services, valuation and consultancy services etc. and other

associated administrative expenses attributable to the business combination are

recognized in profit or loss when they are incurred. Transaction fee of equity

securities or debt securities issued by purchasers business combination should be

calculated in initializing confirming amount of equity securities or debt securities.

The equity investments other than the long-term equity through combination shall be

initially measured by cost. The cost shall be recognized to the difference in the way

of acquisition of long-term equity investment. Theses ways include the cash

purchase price the Group actually paid, the fair value of equity security issued by the

Group, value specified in the investment contract or agreement, the fair value or

carrying value of the asset out in the transaction of non-monetary asset exchanges,

and the fair value of the long-term equity investment. Other direct cost, tax and

necessary expenses related to the acquisition of long-term equity investment are

recognized in investment cost.

£¨2£©Subsequent measurement

Cost method shall be adopted in a long-term equity investment where the investing

enterprise does not have common control or significant influence over the investee,

the investment is not quoted in an active market and its fair value cannot be

measured reliably. Where an investing enterprise can exercise common control or

significant influence over the investee, a long-term investment shall be accounted

for using the equity method. When an investing enterprise can no longer exercise

joint control or common control nor significant influence over the investee, and its

fair value cannot be measured reliably, a long-term investment shall be counted as

financial asset ready-for trade.

A long-term equity investment where cost method is adopted in the Companys

financial statements can exercise controls over the investee.

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¢Ù Cost method of accounting for long-term equity investments

Under the cost method, a long-term equity investment is measured at initial

investment cost. Except for cash dividends or profits declared but not yet paid that

are included in the price or consideration actually paid upon acquisition of the

long-term equity investment, investment income is recognized in the period in

accordance with the attributable share of cash dividends or profit distributions

declared by the investee.

¢Ú Equity method of accounting for long-term equity investments

Where the initial investment cost of a long-term equity investment exceeds the

investing enterprises interest in the fair values of the investees identifiable net

assets at the time of acquisition, no adjustment shall be made to the initial

investment cost. Where the initial investment cost of a long-term equity investment is

less than the investing enterprises interest in the fair values of investees identifiable

net assets at the time of acquisition, the difference shall be charged to profit or loss

for the current period, and the cost of the long-term equity investment shall adjusted

accordingly.

Under the equity method, the Group recognizes its share of the net profit or loss of

the investee for the period as investment income or loss for the period. The Group

recognizes it share of the investees net profit or loss based on the fair value of the

investees individual separately indentible assets etc. at the acquisition date after

making appropriate adjustments to confirm with the Groups accounting policies and

accounting period. Unrealized profits or losses resulting from the Groups

transactions with its associates and joint ventures are recognized as investment

income or loss to the extent that those attributable to the Groups equity interest are

eliminated. However, unrealized losses resulting from the Groups transactions with

its investees on the transferred assets, in accordance with "Accounting Standards

for Enterprises No. 8 - Impairment of Assets", are not eliminated. Changes in owners

equity of the investee other than net profit or loss are correspondingly adjusted to

the carrying amount of the long-term equity investment, and recognized as other

compressive income which is included in the capital reserve.

When the investee is recognized net losses, reduce the carrying value of long-term

equity investments and long-term equity of net investment (in substance) in investee

to zero. In addition, the Group has the obligations on additional losses, then the

expected obligation as estimated liabilities and included in the current investment

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losses. Where the net profit from investee units, restoration confirm the amount of

revenue sharing after offset the amount of unrecognized loss sharing.

For long-term equity investments in associates and joint ventures which had been

held by the Group before its first time adoption of Accounting Standards for Business

Enterprises in 01-01-2007, where the initial investment cost of a long-term equity

investment exceeds the Groups interest in the investees net assets at the time of

acquisition, the excess is amortized and is recognized in profit or loss on a straight

line basis over the original remaining life.

¢Û Acquisition of minority interest

The difference between newly increased equity investment due to acquisition of

minority interests and portion of net asset cumulatively calculated from the

acquisition date is adjusted as capital reserve. If the capital reserve is not sufficient

to absorb the difference, the excess are adjusted against returned earnings.

¢Ü Disposal of long-term equity investment

Where the parent company disposes long-term investment in a subsidiary without a

change in control, the difference in the net asset between the amount of disposed

long-term investment and the amount of the consideration paid or received is

adjusted to the owners equity. If the disposal of long-term investment in a subsidiary

involves loss of control over the subsidiary, the related accounting policies in Note

4.5 applies.

(3) The accounting methods described at consolidated financial statements

On disposal of a long-term equity investment, the difference between the proceeds

actually received and receivable and the carrying amount is recognized in profit or

loss for the period.

For along-term equity investment accounted for using the equity method, the

amount included in the owners equity attributable to the percentage interest

disposed is transferred to profit or loss for the period.

For any retained interest, it shall be subsequently measured according to the related

accounting policies in regard of long-term equity investments or financial assets as

described above if its carrying amount is recognized as long-term equity

investments or other related financial assets. Retroactive adjustment is made on the

basis of relevant policies if the retained interests are settled from cost method to

equity method.

Recognition of investee under common control or significant influence

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Control is the power to govern the financial and operating policies of an enterprise

so as to obtain benefits from its operating activities. Common control is the

contractually agreed sharing of control over an economic activity, and exists only

when the strategic financial and operating decisions relating to the activity require

the unanimous consent of the parties sharing control. Significant influence is the

power to participate in the financial and operating policy decisions of the investee

but is not control or joint control over those policies. When determining whether an

investing enterprise is able to exercise control or significant influence over an

investee, the effect of potential voting rights of the investee held the investing

enterprise or other parties that are currently exercisable or convertible shall be

considered.

The group would lose the power of control over subsidiaries gradually via multiple

transactions. If it is a package of transactions, then every transaction would be

treated as lose control power. The difference of disposable value and carrying

amount would be regarded as other comprehensive profits until the power is

certainly ensured that the group lost the power of control.

15¡¢Investment properties

Investment property is property held to earn rental or for capital appreciation or both.

It includes a land use right that is leased out, a land use right held for transfer upon

capital appreciation, and a building that is leased out.

The investment properties shall be initially measured in light of their cost when

getting it and make a follow-up measurement to the investment real estate through

the cost pattern on the date of the balance sheet. The test method of depreciation or

impairment of the buildings is the same as fixed assets, the test method of

depreciation or impairment of the land use rights is the same as intangible assets.

The details of assess method and impairment provision for investment properties

are in Note4.20 ¡°Impairment of non-current non-financial assets¡±.

Where an investment property is disposed or no longer in use permanently and no

economic benefits shall be obtained from the disposal, derecognized the investment

property. The income from sale, transfer or disposal of the investment property is

recorded in the profit or loss after deduction of its carrying amount and related tax.

16¡¢Fixed assets

£¨1£©The conditions of recognition

Fixed assets refers to the tangible assets that are held for the sake of producing

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commodities, rendering labor service, renting or business management and their

useful life is in excess of one fiscal year.

£¨2£©The method for depreciation

Fixed assets are stated at cost and consider the impact of expected costs of

abandoning the initial measurement. From the following month of state of intended

use, the straight-line method is used for different categories of fixed assets to take

depreciation. The recognition of the classification, useful life and estimated residual

rate are as follows:

Category Expected useful life Estimated residual value£¨%£© Depreciation£¨%£©

Building & construction 35 3 2.77

Machines & equipments 12 3 8.08

Vehicles 7 3 13.86

Electronic appliances 7 3 13.86

Office and other equipment 7 3 13.86

Private housing renovation costs 10 0 10.00

Expected net residual value of fixed assets is the balance of the Group currently

obtained from the disposal of the asset less the estimated costs of disposal amount,

assuming the asset is out of useful life and state the expected service life in the end.

£¨3£© Measurement and recognition of fixed assets

Impairment and provisions of fixed assets are disclosed on Note 4.17 ¡°Impairment of

non-current non-financial assets¡±.

£¨4£©Others

A fixed asset is recognized only when the economic benefits associated with the

asset will probably flow to the Company and the cost of the asset can be measured

reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition

criteria shall be included in the cost of the fixed asset, and the carrying amount of the

component of the fixed asset that is replaced shall be derecognized. Otherwise,

such expenditure shall be recognized in profit or loss in the period in which they are

incurred.

The revenue from selling or transferring, or disposing a fixed asset is booked into

profit and loss after deduction of carrying value and related tax.

The Group conducts a review of useful life, expected net realizable value and

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depreciation methods of the fixed asset at least on an annual base. Any change is

regarded as change in accounting estimates.

17¡¢Construction in progress

Construction in progress is measured at its actual cost. The actual costs include

various construction expenditures during the construction period and other relevant

costs. Construction in progress is transferred to a fixed asset when it is ready for

intended use.

Testing method for provision impairment of construction in progress and accrued

method for provision impairment please refer to Note 4.17 Impairment of

non-current financial assets.

18¡¢Borrowing costs

The borrowing costs shall include interests on borrowings, amortization of discounts

or premiums on borrowings, ancillary expenses, and exchange balance on foreign

currency borrowings. Where the borrowing costs incurred to an enterprise can be

directly attributable to the acquisition and construction or production of assets

eligible for capitalization, it shall be capitalized and recorded into the costs of

relevant assets. Other borrowing costs shall be recognized as expenses on the

basis of the actual amount incurred, and shall be recorded into the current profits

and losses.

Where funds are borrowed for a specific-purpose, the amount of interest to be

capitalized is the actual interest expense incurred on that borrowing for the period

less any bank interest earned from depositing the borrowed funds before being used

on the asset or any investment income on the temporary investment of those funds.

Where funds are borrowed for a general-purpose, the amount of interest to be

capitalized on such borrowings is determined by applying a weighted average

interest rate to the weighted average of the excess amounts of accumulated

expenditure on the asset over and above the amounts of specific-purpose

borrowings. During the capitalization period, exchange differences related to a

specific-purpose borrowing denominating in foreign currency are all capitalized.

Exchange differences in connection with general-purpose borrowings are

recognized in profit or loss in the period in which they are incurred.

Assets qualified for capitalization are the fixed assets, investment properties or

inventories which need a long time of construction or production activities before

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ready for intended used or sale. Capitalization of borrowing costs is suspended

during periods in which the acquisition, construction or production of a qualifying

asset is interrupted by activities other than those necessary to prepare the asset for

its intended use or sale, when the interruption is for a continuous period of more

than 3 months. Borrowing costs incurred during these periods recognized as an

expense for the current period until the acquisition, construction or production is

resumed.

19¡¢Intangible assets

£¨1£©Recognition and calculation of intangible asset

The term ¡°intangible asset¡± refers to the identifiable non-monetary assets without

physical shape, possessed or controlled by enterprises.

The intangible assets are initially measured by its cost. Expenses related to

intangible assets, if the economic benefits related to intangible assets are likely to

flow into the enterprise and the cost of intangible assets can be measured reliably,

shall be recorded as cost of intangible assets. The expenses other than this shall be

booked in the profit or loss when they occur.

Land use rights that are purchased by the Group are accounted for as intangible

assets. Buildings, such as plants that are developed and constructed by the Group,

and relevant land use rights and buildings, are accounted for as intangible assets

and fixed assets, respectively. Payments for the land and buildings purchased are

allocated between the land use rights and the buildings; if they cannot be reasonably

allocated all of the land use rights and buildings are accounted for as fixed assets.

When an intangible asset with a definite useful life is available for use, its original

cost is amortized over its estimated useful life using the straight-line method. An

intangible asset with an indefinite useful life is not amortized.

For an intangible asset with a definite useful life, the Group reviews the useful

life and amortization method at the end of the period, and makes adjustment when

necessary. An additional review is also carried out for useful life of the intangible

assets with indefinite useful life. If there is evidence showing the foreseeable limit

period of economic benefits generated to the enterprise by the intangible assets,

then estimate its useful life and amortize according to the policy of intangible assets

with definite useful life.

£¨2£©Research and Development expenditures

The expenditures of the internal research could be divided into two phrases: a

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research phrase and a development phrase.

The expenditures happened during research phrase should be regarded as the

current profit and loss.In the research phase of an internal project, an entity cannot

demonstrate that an intangible asset exists that will generate probable future

economic benefits. Therefore, this expenditure is recognised as an expense when it

is incurred.

An intangible asset arising from development (or from the development phase of an

internal project) shall be recognised if, and only if, an entity can demonstrate all of

the following:

(a) the technical feasibility of completing the intangible asset so that it will be

available for use or sale;

(b) its intention to complete the intangible asset and use or sell it;

(c) how the intangible asset will generate probable future economic benefits. Among

other things, the entity can demonstrate the existence of a market for the output of

the intangible asset or the intangible asset itself or, if it is to be used internally, the

usefulness of the intangible asset;

(d) the availability of adequate technical, financial and other resources to complete

the development and to use or sell the intangible asset;

(e) its ability to measure reliably the expenditure attributable to the intangible asset

during its development.

£¨ 3 £© Methods of impairment assessment and determining the provision for

impairment losses of intangible assets

Testing method for provision impairment of intangible assets and accrued method

for provision impairment please refer to Note 4.20 Impairment of non-current

financial assets.

20¡¢Long-term prepaid expenses

Long-term prepaid expenses represent expenses incurred that should be borne and

amortized over the current and subsequent period together of more than one year.

Long-term prepaid expenses are amortized by using straight line method.

21¡¢Long-term assets impairment

On each balance sheet date, the Group will make judgments to determine whether

there are signs for impairment to the fixed assets ,construction in progress, definite

intangible assets, investment properties& equity investment in subsidiaries& joint

ventures& jointly run business measured using the cost method etc. non-current and

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non-financial assets. If there are signs for impairment, the impairment should be

tested by estimating the recoverable amount. Goodwill, indefinite intangible assets

and intangible assets having not reached the usable condition, should be yearly

tested for impairment no matter whether there are signs for impairment.

The result of impairment test demonstrates that the recoverable amount is less than

its carrying amount, the difference will be recorded as provision for impairment and

debited as impairment loss. The recoverable amount equals to the greater of 1)fair

value less disposal expenses and 2) present value of the predicted future cash

flows.

The fair value of the assets is determined by the sale contract price of fair trade;

When there are no sale contracts but exist active market ,the fair value will be

determined with the quotation from the buyer; When there exist neither sale

contracts nor active market, the assets fair value will be determined by the best

information available.

The disposal expenses include the legal expenses, related taxes, delivery fees and

other direct fees incurred for making the assets reach the salable condition. The

present value of the predicted future cash flows is calculated according to the

predicted future cash flows generated from the continuous use of the assets and

final disposal discounted with the applicable discounted rate. The provision for

impairment test should be recognized based on the individual asset. If it is hard to

estimate the recoverable amount to individual asset, the recoverable amount of the

assets group of which the individual assets are included should be determined.

Assets group is the smallest unit that can independently generate the cash inflow.

For the goodwill separately displayed on the financial statement, when making the

impairment test, the carry value of the goodwill should be allocated to assets group

or the group of assets group predicted to be benefit from the synergistic effect from

the enterprises combination. When the rest result shows that the recoverable of the

assets group or the group of assets group having been allocated with the relevant

goodwill is less than the carrying amount, the related impairment loss should be

recognized. The impairment losses will firstly reduce the book value of the goodwill

allocated and then reduce the book value of each asset of the assets group or the

group of assets group according to the percentage of each asset to the assets group

or the group of assets group beside the goodwill.

The impairment loss of the above assets would not be reversed back once they are

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recognized.

22.Employee benefits

Employee benefits payable shall be recognized as liabilities in the accounting

periods during which the employees provide services to the Group. They are all

forms of consideration given by an entity in exchange for service rendered by

employees or for the termination of employment: short-term employee,

post-employment benefits and other long-term employee benefits.

Short-term employee benefits include items such as the following, if expected to be

settled wholly before twelve months after the end of the annual reporting period in

which the employees render the related services:

(a) wages, salaries and social security contributions;

(b) paid annual leave and paid sick leave;

(c) profit-sharing and bonuses; and

(d) non-monetary benefits (such as medical care, housing, cars and free or

subsidised goods or services) for current employees.

Post-employment benefits include items such as the following:

(a) retirement benefits (eg pensions and lump sum payments on retirement); and

(b) other post-employment benefits, such as post-employment life insurance and

post-employment medical care.

In the event that the Group terminates the employment relationship with employees

unilaterally before the end of the employment contracts, or offers to compensate the

employees in order to encourage them to accept voluntary redundancy, if the

Company has formally formulated plans for termination of the employment

relationship or offer for voluntary redundancy, and the plans will be implemented

shortly afterwards, compensations for redundancy shall be recognized as estimated

liabilities and charged to profit or loss for the current period.

The plan for early retirement of employees shall be treated in the same way as the

above compensations for redundancy. The salaries and social insurance premiums

paid by the Company to employees subject to early retirement during the period

from termination of service provision to normal retirement shall be recognized as

estimated liabilities and charged to profit or loss for the current period

(compensations for redundancy).

23.Accrued liabilities

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Accrued liabilities (or Provisions) are recognized when following obligations related

to a contingency are satisfied simultaneously. They are (a) such obligation is the

present obligation of the Group, (b)it is probable that an outflow of economic benefits

will be required to settle the obligation, and (c) the amount of the obligation can be

measured reliably.

The amount recognized as a provision is the best estimate of the consideration

required to settle the present obligation at the balance sheet date, taking into

account factors pertaining to a contingency such as risks, uncertainties and time

value of money.

Where all or some of the expenditure required to settle a provision is expected to be

reimbursed by a third party, the reimbursement is recognized as a separate asset

only when it is virtually certain that reimbursement will be received, and the amount

of reimbursement recognized does not exceed the carrying amount of the provision.

(1) Onerous contracts

An onerous contract is a contract in which the unavoidable costs of meeting the

obligations under the contract exceed the economic benefits expected to be

received under it. The exceeding part over the assets in the contract shall be

recognized as a provision when an executor contract becomes an onerous contract

and the obligation arising under the onerous contract satisfies the requirements of

provisions.

(2) Restructuring Obligation

The amount of a restructuring provision shall be recognized by the total direct

expenditures arising from the restructuring when the enterprise has a detailed,

formal plan for the restructuring, and a public announcement of the plan has

been made for restructuring and above requirements for the provision mentioned

above are satisfied.

[For the restructuring obligation carried for the portion of business for sale, the

obligation related to the restructuring can only be recognized when the Group has

committed for the sales of portion of the business (signing the selling agreement

with termination)]

24. Revenue

£¨1£©Revenue from sales of goods

The Group has transferred to the buyer the significant risks and rewards of

ownership of the goods; the Group retains neither continuing managerial

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involvement to the degree usually associated with ownership nor effective control

over the goods sold; the associated costs incurred or to be incurred can be

measured reliably.

The group sales vehicles as the main transaction, so sales revenue should be

ascertained after ensuring accept cash or the right to collect cash or cash

equivalents.

£¨2£©Revenue from services

When the outcome of a transaction involving the rendering of services can be

estimated reliably at the balance sheet date, revenue associated with the

transaction is recognized using the percentage of completion method, or otherwise,

the revenue is recognized to the extent of costs incurred that are expected to be

recoverable. The stage of completion of a transaction for rendering services is

determined based on [survey of work performed / services performed to the date of

as a percentage of total services to be performed / the proportion that costs incurred

to date bear to the estimated total costs of the transaction]

The outcome of a transaction involving rendering of services can be estimated

reliably when all of the following conditions are satisfied:

1) the amount of revenue can be measured reliably;

2) it is probable that the associated economic benefits will flow to the Group;

3) the stage of completion of the transaction can be measured reliably;

4) the costs incurred and to be incurred for the transaction can be measured

reliably.

If the outcome of a transaction involving rendering of services cannot be estimated

reliably, the revenue is recognized by the cost incurred and estimated compensation,

and the actual cost is booked into profit and loss. No revenue is recognized if the

cost incurred cannot be recovered.

For contract or agreement entered between the Group and other enterprises with

sales of goods and rendering services, if part of goods selling and the part of

rendering service can be separated and measured individually, they are settled

separately. If the part of goods selling and the part of rendering service cannot be

separated or they can be separated but cannot be measured individually, the parts

in the contract shall be treated as goods of selling.

£¨3£©Revenue from royalty revenue

According to the contract or agreement, the revenue is recognized on an accrual

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basis.

£¨4£©Revenue from interests

The amount of interest revenue should be measured and confirmed in accordance

with the length of time for which the enterprise's cash is used by others and the

actual interest rate.

25. Government Grants

Government grants are transfer of monetary assets and non-monetary assets from

the government to the Group at no consideration, excluding the capital invested by

the government as equity owner. Government grant can be classified as grant

related to the assets and grants related to the income.

If a government grant is in the form of a transfer of a monetary asset, it is measured

at the amount received or receivable. If a government grant is in the form of a

non-monetary asset, it is measured at fair value. If the fair value cannot be reliably

determined, it is measured at a nominal amount. A government grant measured at a

nominal amount is recognized immediately in profit or loss for the period.

A government grant related to an asset is recognized as deferred income, and

evenly amortized to profit or loss over the useful life of the related asset. For a

government grant related to income, if the grant is a compensation for related

expenses or losses to be incurred in subsequent period, the grant is recognized as

deferred income, and recognized in profit or loss over the periods in which the

related costs are recognized. If the grant is a compensation for related expenses or

losses already incurred, the grant is recognized immediately in profit or loss for the

period.

For repayment of a government grant already recognized, if there is a related

deferred income, the repayment is offset against the carrying amount of the deferred

income, and any excess is recognized in profit or loss for the period. If there is no

related deferred income, the repayment is recognized immediately in profit or loss

for the period.

26. Deferred income tax assets and deferred income tax liabilities

At the balance sheet date, deferred tax assets and liabilities are measured at the tax

rates that are expected to apply to the period when the asset is realized or the

liability is settled, according to the requirements of tax laws. The measurement of

deferred tax assets and deferred tax liabilities reflects the tax consequences that

would follow from the manner in which the Group expects at the balance sheet date,

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to recover the assets or settle the liabilities.

For temporary differences between the carrying amount of certain assets or liabilities

and their tax base, or between the nil carrying amount of those items that are not

recognized as assets or liabilities and their tax base that can be determined

according to tax laws, deferred tax assets and liabilities are recognized using the

balance sheet liability method.

For temporary differences associated with the initial recognition of goodwill and the

initial recognition of an asset or liability arising from a transaction (not a business

combination) that affects neither the accounting profit nor taxable profits (or

deductible losses) at the time of transaction, no deferred tax asset or liability is

recognized.

For taxable temporary differences associated with investments in subsidiaries and

associates, and interests in joint ventures, no deferred income tax liability related is

recognized except where the Group is able to control the timing of reversal of the

temporary difference and it is probable that the temporary difference will not reverse

in the foreseeable future.

All deferred income tax liabilities arising from taxable temporary differences except

the ones mentioned above are recognized.

For temporary deductible differences associated with the initial recognition of an

asset or liability arising from a transaction (not a business combination) that affects

neither the accounting profit nor taxable profits (or deductible losses) at the time of

transaction, no deferred tax asset is recognized.

For taxable temporary deductible differences associated with investments in

subsidiaries and associates, and interests in joint ventures, no deferred income tax

asset related is recognized if it is impossible to reversal the temporary difference in

the foreseeable future, or it is not probable to obtain taxable income which can be

used for the deduction of the temporary difference in the future.

Except mentioned above, the Group recognizes other deferred income tax assets

that can deduct temporary differences to the extent that it is probable that taxable

profits will be available against which the deductible temporary differences can be

utilized.

For the deductible losses and tax credit that can be carried forward, deferred tax

assets for deductible temporary differences are recognized to the extent that it is

probable that taxable profits will be available against which the deductible temporary

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differences can be utilized.

At the balance sheet date, deferred tax assets and liabilities are measured at the tax

rates according to tax lawsthat are expected to apply in the period in which the asset

is realized or the liability is settled.

At the balance sheet date, the Group reviews the carrying amount of deferred tax

assets. If it is no longer probable that sufficient taxable profit will be available in

future periods to allow the benefits of the deferred tax assets to be used, the Group

reduces the carrying amount of deferred tax assets. The amount of such reduction is

reversed when it becomes probable that sufficient taxable profit will be available.

27. Leases

(1) Operating Lease

¢ÙThe Group as Lessee under Operating Lease

Lease payments under an operating lease are recognized by a lessee on a

straight-line basis over the lease term, and either included in the cost of the related

asset or charged to profit or loss for the current period. The contingent rents shall be

recorded in the profit or loss of the period in which they actually arise.

¢ÚThe Group as Leaser under Operating Lease

Lease income from operating leases shall be recognized by the leaser in profit or

loss on a straight-line basis over the lease term. Initial direct cost of significance in

amount shall be capitalized when incurred. If another basis is more systematic and

rational, that basis may be used. Contingent rents are credited to profit or loss in the

period in which they actually arise.

(2)Financing Lease

¢ÙThe Group as Lessee under Operating Lease

For an asset that is held under a finance lease, at the lease commencement, the

leased asset is recorded at the lower of its fair value at the lease commencement

and the present value of the minimum lease payments, and the minimum lease

payment is recorded as the carrying amount of the long-term payables; the

difference between the recorded amount of the leased asset and the recorded

amount of the payable is accounted for as unrecognized finance charge, Initial direct

costs incurred by the lessee during the process of negotiating and securing the

lease agreement shall be added to the amount recognized for the leased asset.

The net amount of minimum lease payment deducted by the unrecognized finance

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shall be separated into long-term liabilities and long-term liability within one year for

presentation.

Unrecognized finance charge shall be computed by the effective interest method

during the lease term. Contingent rent shall be booked into profit or loss when

actually incurred.

¢ÚThe Group as Leaser under Operating Lease

For an asset that is leased out under a finance lease, the aggregate of the minimum

lease receipts at the inception of the lease and the initial direct costs is recorded as

a finance lease receivable, and unguaranteed residual value is recorded at the same

time; the difference between the aggregate of the minimum lease receipt, initial

direct costs, and unguaranteed residual value, and the aggregate of their present

values, is recognized as unearned finance income, which is amortized using the

effective interest rate method over each period during the lease term.

Finance lease receivable less unearned finance income shall be separated into

long-term liabilities and long-term liability within one year for presentation.

Unearned finance income shall be computed by the effective interest method during

the lease term. Contingent rent shall be credited into profit or loss in which actually

incurred.

28. Material accounting judgments and accounting estimations

Because of the inherent uncertainties of the operating activities, the Group needs to

make judgments, estimations and assumptions to the financial statement items

whose carrying amount cannot be accurately measured. Those judgments,

estimations and assumptions are made based on the managements historical

experience and taking other relevant factors into account. Those judgments,

estimations and assumptions would influence the reported amount of revenue,

expense, asset and liability and disclosure of the contingency liability on the balance

sheet date. However, the actual result caused by the uncertainty of these

estimations may be different with the present estimation made by the management,

which may cause significant adjustments to the carrying amount of the influenced

assets and liabilities in the future.

The Group are making periodical review on the judgments, estimations and

assumptions mentioned above based on the premise of going concern. For the

changes of estimations that only influence the current period, the influenced amount

will be recognized in the current period. For the changes of estimations that not only

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influence the current period ,but also affect the future periods, the influenced amount

will be recognized in the current period and future period.

As of the balance sheet date, the material areas that need to be judged ,estimated

and assumed are listed below:

£¨1£© The classification of lease

The lease are classified into operating lease and finance lease, according to the

¡°Accounting Standards for Business Enterprise No.21-Lease¡± .When making the

classification, the management need to make analysis and judgment about whether

all risk and reward related with the ownership of assets leased out have been

substantially transferred to the lessee or not ,or whether all risk and reward related

with the ownership of the assets leased have substantially assumed by the Group.

£¨2£© The provision for allowance for bad debt

The Group applies the allowance method to estimate the bad debt, according to the

policy of accounts receivable. The impairment of accounts receivable is based on

the evaluation of accounts receivables possibility of collection. The difference

between the actual result and the original estimation would influence the accounts

receivables carrying value and cause the balance of allowance for bad debt to

increase or reverse back during the period when the estimation is changed.

£¨3£© Provision for inventory

According to inventory accounting policy, the ending inventory is measured by the

lower of cost and net realizable value. When the cost is greater than the net

realizable value and the obsolete and unsalable inventory, the inventory falling price

reserve shall be withdrawn. Reduce the inventory to the net realizable value is

based on the evaluation the salable of the inventory and its net realizable value.

Estimates of net realizable value are based on the most reliable evidence available

at the time the estimates are made and take into consideration the purpose for which

the inventory is held and the influences of events occurring after the balance sheet

date. The difference between the actual result and original estimation will influence

the carrying amount of the inventory and cause the provision for inventory to

increase or reverse back during the period when the estimation is changed.

£¨4£© The fair value of financial instrument

For the financial instrument lacking active trading market, the Group will use several

valuation methods to make sure the fair value. The methods include the model to

analyze the discounted cash flow etc. The Group will evaluate the following aspects,

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such as the future cash flow, credit risk, market volatility and the relativity etc. and

then choose the applicable discounted rate, when making the evaluation. There are

uncertainties for the relevant assumptions whose changes will influence the fair

value of financial instrument.

£¨5£© Provision for non-financial and non-current assets

The Group will make judgment on the non-current assets beside the financial assets

about whether there are signs for impairment on the balance sheet date. For the

intangible assets whose life is uncertain, when there are signs for impairment, it

should be tested for impairment, beside the yearly impairment test. Other

non-current assets beside the financial statement, when there are signs indicating

that the carrying value are unrecoverable, it should be tested for impairment.

When the carrying value of the asset or asset group is greater than the recoverable

amount (i.e., the net value of fair value less the cost of disposal and present value of

the predicted future cash flow whichever is higher), it indicates impairment.

The net value of fair value less the cost of disposal, is referred to the agreed sale

price of similar assets under fair trade or the observable market price, less the

incremental cost directly related with the disposal of the assets.

The Group need to make significant judgment to the output of assets (or assets

group), sale price, relevant operating cost and the discounted rate when estimating

the present value of future cash flows. The Group will make use of any relevant

material available when estimating the recoverable amount , including the

prediction of the output, sale price and relevant operating cost according to

reasonable and supportable assumptions.

The Group will test the goodwill for impairment at least once a year, which requires

to estimate the present value of the future cash flows of the assets and assets group

allocated with the goodwill . When estimating the present value to the future cash

flow, the Group need to estimate the cash flows generating from the assets and

assets group, and choose the applicable discount rate to determine the present

value.

£¨6£© Depreciation and amortization

The Group use the straight-line method to depreciate and amortize the investment

real estate, fixed assets and intangible assets within the useful life after taking into

the consideration of the residual value. By the way, the amount of depreciation and

amortization during the report period are determined. The useful life is determined

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based on past experience and the predicted technical changes of similar assets. If

there are significant changes of previous estimations, the depreciation and

amortization would be adjusted in the future periods.

£¨7£© Deferred tax asset

To the degree that there are sufficient taxable profit to make up the deductible

losses, the Group will recognize the deferred tax assets for the un-used deductible

losses. It requires the management to apply massive judgments to estimate the time

and amount the taxable profits will generate in the future period combining with the

strategic of tax planning to determine the amount of deferred tax asset.

£¨8£© Income tax

There are some uncertainties for some trades ultimate tax treatment and calculation.

Some items need the determination from the tax authorities about whether they are

deductible before tax or not. If the ultimate tax determination are different with the

originally estimated amount, the difference will influence the current period income

tax and the deferred income tax when the tax determination are finally made.

29. Changes in major accounting policies and accounting estimates

(1) Changes of accounting policies

There were no changes of accounting policies.

(2)Changes of accounting estimates

There were no changes of main accounting estimations during this period.

¢õ¡¢ Principal Taxes Applied

Taxes and their rates

Category Taxable basis Tax rate

Value added tax (¨DVAT¡¬) Goods sales income, taxi operating income 17% & 3%

Proceeds from sales of properties, leasing income,

Business tax 5%

property management income

Business tax Construction, installation income 3%

Construction tax Turnover tax 7%

Educationsurcharge(Local

Turnover tax 5%

Educationsurcharge)

Income tax Income tax payable 25% & 16.5%

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*The applied rate in the group is 25% except Shenzhen Xinyongtong Dongxiao

Automobile Inspection Equipment Co., Ltd.

¢ö¡¢ Notes to the Consolidated Financial Statements

Unless specified, the items of the Opening in the followings (including the notes to

the Company financial statements) refers to the date of January 1, 2015, the Closing

refers to the December 31, 2015.

1¡¢ Monetary assets

Items Closing balance Opening balance

Cash on hand 75,003.23 84,813.57

Cash in bank 159,109,707.70 79,960,856.08

Other monetary funds

Total 159,184,710.93 80,045,669.65

Up to December 31st, 2015, the Company buy 3 months structural deposits in China

Everbright Bank worth RMB 60,000,000.00 which the ownership is limited.

2¡¢Accounts receivables

(1) Accounts receivable by categories

Closing balance

Items Book balance Bad debt provision Carrying

Amount (%) Amount (%) amount

Accounts receivable of which provision for bad debts

22,512,414.52 45.61 22,512,414.52 100.00

is of individually significant

The aging analysis of the receivables that are

562,051.31 1.14 562,051.31

grouped and impaired

Accounts receivable of which provision for bad debts

26,282,070.64 53.25 26,282,070.64 100.00

is of individually insignificant

Total 49,356,536.47 100.00 48,794,485.16 98.86 562,051.31

£¨continued£©

Opening balance

Items

Book balance Bad debt provision Carrying

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Amount (%) Amount (%) amount

Accounts receivable of which provision for bad debts

22,512,414.52 45.65 22,512,414.52 100.00

is of individually significant

The aging analysis of the receivables that are

2,137,058.59 4.33 763,800.70 35.74 1,373,257.89

grouped and impaired

Accounts receivable of which provision for bad debts

24,674,068.64 50.02 24,674,068.64 100.00

is of individually insignificant

Total 49,323,541.75 100.00 47,950,283.86 97.22 1,373,257.89

¢Ù Accounts receivables which has a significant closing balance to prepare

bad-debt

Closing balance

Accounts receivables Bad debt

Carrying amount Ratio % Reason

provision

Shenzhen Jinlu Trading Co.,Ltd. 9,846,607.00 9,846,607.00 100.00 Uncertainly withdraw

Guangdong Zhanjiang Sanxing Automobile

4,060,329.44 4,060,329.44 100.00 The aging is too long to collect

Co.,Ltd

Changlong WANG 2,380,760.40 2,380,760.40 100.00 The aging is too long to collect

Huizhou Jiandacheng Co.,Ltd. 2,021,657.70 2,021,657.70 100.00 It is hardly to collect

Jiangling Automobile Factory 1,191,059.98 1,191,059.98 100.00 The aging is too long to collect

Yangjiang Automobile Trading Co.,Ltd. 1,150,000.00 1,150,000.00 100.00 The aging is too long to collect

Guangdong Province Commodity Group 1,862,000.00 1,862,000.00 100.00 The aging is too long to collect

Total amount 22,512,414.52 22,512,414.52 100.00

¢Ú Bad debt provision by aging

Closing balance

Aging

Carrying amount Bad debt provision Ratio£¨%£©

Within 1 year 562,051.31

Total 562,051.31

(2) Bad-debt collected in 2015

The bad-debt in 2015 is RMB 844,201.30 without collecting.

(3) Top 5 entities with the largest balances of accounts receivable

Name of entities Relationship with the Amount Age Proportion of the amount to

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Group the total AR (%)

Shenzhen Jinlu Trading Co.,Ltd. Un-related party 9,846,607.00 Over 3year 19.95

Guangdong Zhanjiang Sanxing Antomobile

Un-related party 4,060,329.44 Over 3year 8.23

Co.,Ltd

Changlong WANG Un-related party 2,380,760.40 Over 3year 4.82

Huizhou Jianda Bridge Engineering Co.,Ltd Un-related party 2,021,657.70 Over 3year 4.10

Guangdong Province Commodity Group Un-related party 1,862,000.00 Over 3year 3.77

Total 20,171,354.54 40.87

(4) Accountreceivables from which the financial instruments had been transferred

There is no situation happened in 2015 under this condition.

(5) The value of transferred accounts receivables changed into asset or liabilities

There is no situation happened in 2015 under this condition.

3¡¢Prepayments

(1) Aging analysis

Closing balance Opening balance

Aging

Amount (%) Amount (%)

Within 1 year 5,751,990.04 89.11 6,384,573.51 91.45

1-2 years 126,950.00 1.97 586,865.42 8.41

2-3 years 565,865.42 8.77

Over 3 years 9,963.94 0.15 9,963.94 0.14

Total 6,454,769.40 100.00 6,981,402.87 100.00

(2) Top 5 entities with the largest balances of prepayments

The value of Top 5 entities in the closing balance is RMB 6,399,561.45 with the ratio

of 99.14 %.

4¡¢Premiums account receivable

(1) Premiums account receivable by categories

Category Closing balance Opening balance

Structural deposits 348,833.33

Total 348,833.33

5¡¢Other receivables

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(1) Other receivables by categories

Closing balance

Category Carrying amount Bad debt provision Carrying

amount

Amount (%) Amount (%)

Other receivables of which provision for bad debts is

39,180,176.91 60.75 39,180,176.91 100.00

of individually significant

The aging analysis of the other receivables that are

14,673,158.28 22.75 3,545,156.39 24.16 11,128,001.89

grouped and impaired

Other receivables of which provision for bad debts is

10,643,328.95 16.50 10,643,328.95 100.00

of individually insignificant

Total 64,496,664.14 100.00 53,368,662.25 82.75 11,128,001.89

(Continued)

Opening balance

Category Carrying amount Bad debt provision Carrying

amount

Amount (%) Amount (%)

Other receivables of which provision for bad debts is

39,166,619.18 64.00 39,166,619.18 100.00

of individually significant

The aging analysis of the other receivables that are

11,354,470.45 18.55 3,449,471.01 30.38 7,904,999.44

grouped and impaired

Other receivables of which provision for bad debts is

10,675,308.95 17.45 10,675,308.95 100.00

of individually insignificant

Total 61,196,398.58 100.00 53,291,399.14 87.08 7,904,999.44

¢Ù The significant individuals in the end of year

Closing balance

Name of companies Carrying Bad debt

Ratio % Reason

amount provision

It is unexpected to collect since the

Zhongqi Huanan Automobile Sales Co.,Ltd. 9,832,956.37 9,832,956.37 100.00

company has gone

It is unexpected to collect since the

Shenzhen Nanfang Industry and Trade Co.,Ltd. 7,359,060.75 7,359,060.75 100.00

company has gone

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Closing balance

Name of companies Carrying Bad debt

Ratio % Reason

amount provision

Win the case, this company do not

Shenzhen Zhonghao (Group) Co.,Ltd. 5,000,000.00 5,000,000.00 100.00

have asset to pay.

Jinbeili Household Company 2,706,983.51 2,706,983.51 100.00 It is too long to collect

It is unexpected to collect since the

Shenzhen Xinxingtai Trading Co.,Ltd. 2,418,512.90 2,418,512.90 100.00

company has gone

Shenzhen Petrochemical Group 1,902,686.77 1,902,686.77 100.00 It is unexpected to collect

It is unexpected to collect since the

Shenzhen Tefa Huatong Casing Co.,Ltd. 1,212,373.79 1,212,373.79 100.00

company has gone

It is unexpected to collect since the

Shenzhen Jinhe Mould Co.,Ltd. 1,023,560.00 1,023,560.00 100.00

company has gone

It is unexpected to collect since the

Heyuan Dongfeng Technique Service Station 930,000.00 930,000.00 100.00

company has gone

Shenzhen Nuoer Electromechanical Co.,Ltd. 906,024.60 906,024.60 100.00 It is too long to collect

Shenzhen South Great Wall Investment Co.,Ltd. 819,460.91 819,460.91 100.00 It is uncertain to collect

It is unexpected to collect since the

Shenzhen Xiandao Chemical Materials Co.,Ltd. 660,790.09 660,790.09 100.00

company has gone

Shenzhen Baodong Real Estate Co.,Ltd. 609,773.00 609,773.00 100.00 It is too long to collect

Others 3,797,994.22 3,797,994.22 100.00 It is too long to collect

Total 39,180,176.91 39,180,176.91 100.00

¢Ú Other receivables by aging balance

Closing balance

Aging

Carrying amount Bad debt provision Ratio(%)

Within 1 year 7,073,581.75

1-2 years 82,841.64 4,142.08 5.00

2-3 years 724,510.45 144,902.09 20.00

Over 3 years 6,792,224.44 3,396,112.22 50.00

Total 14,673,158.28 3,545,156.39

(2) Situation of bad-debt in 2015

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The value of bad-debt in 2015 is RMB 109,243.11. The bad-debt has been

written-off RMB 31,980.00 in this year.

Including£ºThe important written-off of bad-debt in 2015

Names Amount Collecting way

Shenzhen Government Purchasing Center 20,000.00 By transfer

Shenzhen Haiguanyuan Industry Co.,Ltd. 480.00 By transfer

Shenzhen Futian Huada Stationery Trading Co. 1,500.00 By transfer

Others 10,000.00 By transfer

Total 31,980.00

(3) The classification of other receivables

Category Carrying amount of closing balance Opening balance

Related-party 4,881,267.41 4,803,420.77

Others 59,615,396.73 56,392,977.81

Total 64,496,664.14 61,196,398.58

(4) At 31 December 2015, the top five debtor of other receivable balance:

Relationship with the Bad-debt closing

Name of companies Closing balance Age Ratio(%)

company balance

Zhongqi Huanan Automobile Sales

Non-related party 9,832,956.37 Over 3 years 15.25 9,832,956.37

Co.,Ltd.

Shenzhen Nanfang Industry and Trade

Non-related party 7,359,060.75 Over 3 years 11.41 7,359,060.75

Co.,Ltd.

Shenzhen Zhonghao (Group) Co.,Ltd. Non-related party 5,000,000.00 Over 3 years 7.75 5,000,000.00

Shenzhen Kaifeng Automobile Co., Ltd. Non-related party 4,413,728.50 Over 3 years 6.84 2,206,864.25

Jinbeili Household Company Non-related party 2,706,983.51 Over 3 years 4.20 2,706,983.51

Total 29,312,729.13 45.45 27,105,864.88

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6¡¢Inventory

(1) Categories of inventory

Closing balance

Items

Carrying amount Provision for inventories Net carrying amount

Raw materials 15,162,375.25 14,771,812.17 390,563.08

Low value consumbles 2,103.50 2,103.50

Finished products 29,943,254.48 14,184,584.45 15,758,670.03

Total 45,107,733.23 28,956,396.62 16,151,336.61

£¨continued£©

Opening balance

Items

Carrying amount Provision for inventories Net carrying amount

Raw materials 14,887,672.70 14,771,812.17 115,860.53

Low value consumbles 4,053.49 4,053.49

Finished products 62,007,456.28 13,918,344.12 48,089,112.16

Total 76,899,182.47 28,690,156.29 48,209,026.18

(2) Inventory revaluation reserve

Increased in 2015 Decreased in 2015

Items Opening balance Closing balance

Withdraw Others Written-off Others

Raw materials 14,771,812.17 14,771,812.17

Low value consumbles

Finished products 13,918,344.12 759,921.00 493,680.67 14,184,584.45

Total 28,690,156.29 759,921.00 493,680.67 28,956,396.62

(3) Reason of the change of bad-debt

Item Withdraw reason Written-off reason Resell reason

Finished products Realizable value is lower than the cost Products been sold

7¡¢Other current assets

Items Closing balance Opening balance

Deductible input tax 565,445.21 7,618,278.77

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Non-public issue expenses 1,350,000.00

Available-for-sale financial assets (within 1 year) 165,000,000.00

Total 165,565,445.21 8,968,278.77

8¡¢Available-for-sale financial assets

(1) Situation of available-for-sale financial assets

Closing balance Opening balance

Items

Book value Impairment loss Net book value Book value Impairment loss Net book value

Available-for-sale equity

18,605,225.77 8,126,240.00 10,478,985.77 18,605,225.77 8,126,240.00 10,478,985.77

investments

Include £º Measured by

faie value

Measured by cost value 18,605,225.77 8,126,240.00 10,478,985.77 18,605,225.77 8,126,240.00 10,478,985.77

Total 18,605,225.77 8,126,240.00 10,478,985.77 18,605,225.77 8,126,240.00 10,478,985.77

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(2) Closing balance of available-for-sale financial assets

Carrying amount Bad debt provision

Names Ratio£¨%£©

Opening balance Increased Decreased Closing balance Opening balance Increased Decreased Closing balance

China Pufa Machinery Industrial

10,176,617.20 10,176,617.20 4.94

Co.,Ltd.

Shenzhen Jingwei Industrial Co.,Ltd. 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 12.50

Shenzhen (Moscow) Co,.Ltd. 825,000.00 825,000.00 825,000.00 825,000.00 7.00

Wuhan Weite Hotel 640,000.00 640,000.00 640,000.00 640,000.00

Shenzhen Petrochemical Industry 100,000

700,000.00 700,000.00 700,000.00 700,000.00

(Group) Co., Ltd. shares

Shenzhen Shuntian Vehicle

600,000.00 600,000.00 600,000.00 600,000.00 11.10

Technology Co.,Ltd.

Shenzhen Jinhe Mould Co.,Ltd 453,440.00 453,440.00 453,440.00 453,440.00 15.00

Shenzhen Zhongqi Training Center 600,000.00 600,000.00 600,000.00 600,000.00 6.25

Minilong 162,000.00 162,000.00 162,000.00 162,000.00 6.25

Shenzhen Bisik Transportation

302,368.57 302,368.57 7.50

Industrial Co., Ltd

Rishen International Co.,Ltd 145,800.00 145,800.00 145,800.00 145,800.00 7.50

Total 18,605,225.77 18,605,225.77 8,126,240.00 8,126,240.00

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(3) Changes of impairment provision on available-for-sale financial assets

Available-for-sale Available-for-sale

Items Total

equity instrument liabilities instrument

Opening balance 8,126,240.00 8,126,240.00

Withdraw in 2015

including£ºfrom comprehensive profits

Decreased in 2015

including£ºfair value of return back

Closing balance 8,126,240.00 8,126,240.00

9¡¢Held-to-maturity investment

(1) Situation

Closing balance Opening balance

Item Bad debt Net book

Book value Bad debt provision Net book value Book value

provision value

National coupons 20,000.00 20,000.00 120,000.00 20,000.00 100,000.00

Total 20,000.00 20,000.00 120,000.00 20,000.00 100,000.00

10¡¢Long-term receivables

(1) Situation

Closing balance Opening balance Discount

Items Rate

Bad debt Net book Bad debt Net book

Book value Book value

Range

provision value provision value

Other£º

Long-term equity 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68

including: Shenzhen

Tellus Automobile Services 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68

Chain Co.,Ltd. *

total 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68

Note£º*This company is one of the joint companies, the non-operating account

receivable is actually the net investment to Shenzhen Tellus Automobile Services

Chain Co.,Ltd. At 2015 Dec. 31st, the liabilities exceeds its assets and the owners

150

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equity is negtative. The book value of long-term receivables to Shenzhen Tellus

Automobile Service is zero. Considering the actual situation of this company which

had stopped operation, we have already got 100% preparation for the bad-debt.

11¡¢Long-term equity investments

Change in 2015

Increasi-n Decreas-i

Adjustment of

Investee Opening balance g ng Investment income Other

comprehensiv-e

investme investme under equity-method changes

profits

nt nt

¢ñ¡¢Cooperative enterprise

Shenzhen Tellus Jimeng Investment Co.,Ltd. 59,717,642.94 82,052.79

Shenzhen Tellus Xing Investment Co.,Ltd. 9,313,071.40 645,073.44

Total 69,030,714.34 727,126.23

¢ò¡¢Joint venture

Shenzhen Xing Long Mechanical Models

15,878,254.74

Co.,Ltd. *Note

Shenzhen Tellus Automobile Services Chain

Co.,Ltd.

Shenzhen Ren fu Tellus Automobiles Services

77,212,637.60 1,834,930.65

Co.,Ltd.

Shenzhen Automobile Industrial Import and

8,273,939.33 19,866.40

Export Co.,Ltd

Shenzhen Dongfeng Automobile Co., Ltd. 40,183,926.36 12,775,199.38

Shenzhen Xinyongtong Tenology Co.,Ltd 522,733.17 -35,855.01

Shenzhen Xinyongtong Pump and

127,836.59

Environmental Protection Co.,Ltd

Shenzhen Xinyongtong Consulting Service

41,556.83

Co.,Ltd.

Shenzhen Xinyongtong Automobile Service

126,503.43 -69,255.33

Co.,Ltd.

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Change in 2015

Increasi-n Decreas-i

Adjustment of

Investee Opening balance g ng Investment income Other

comprehensiv-e

investme investme under equity-method changes

profits

nt nt

Shenzhen Xinyongtong Dongxiao Automobile

Parts Sales Co.,Ltd.

Shenzhen Xinyongtong Xinda Inspection

Eqiupment Co.,Ltd

Hunan Changyang Industrial Co.,Ltd.*Note¢Ù 1,810,540.70

Shenzhen Jiecheng Electronic Co.,Ltd.*Note

3,225,000.00

¢Ù

Shenzhen Xiandao Chemical Materials

4,751,621.62

Co.,Ltd.*Note¢Ù

China Automobile Shenzhen Trading Co.,Ltd.

400,000.00

*Note¢Ù

Shenzhen General Standard Co.,Ltd.*Note¢Ù 500,000.00

Shenzhen Torch Spark Plug Industrial

17,849.20

Co.,Ltd.*Note¢Ù

Zhongqi South China Automobile Sales

2,250,000.00

Co.,Ltd. *Note¢Ù

Shenzhen Bailiyuan Power Co.,Ltd.*Note¢Ù 1,320,000.00

Shenzhen Yiming Automobile Trading Co.,Ltd.

200,001.10

*Note¢Ù

Total 156,842,400.67 14,524,886.09

¢ó¡¢Others

Shenzhen Hanli Hi-technology Ceramics

1,956,000.00

Co.,Ltd.*Note *¢Ú

Nanfang Automobile Repairing Center *Note *

6,700,000.00

¢Ú

152

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Change in 2015

Increasi-n Decreas-i

Adjustment of

Investee Opening balance g ng Investment income Other

comprehensiv-e

investme investme under equity-method changes

profits

nt nt

Total 8,656,000.00

Total 234,529,115.01 15,252,012.32

£¨continued£©

Change in 2015 Closing balance

Investee Declaration of cash Bad debt Closing balance for bad debt

Others

dividends or profits provision provision

¢ñ¡¢Cooperative enterprise

Shenzhen Tellus Jimeng Investment Co.,Ltd. 59,799,695.73

Shenzhen Tellus Xing Investment Co.,Ltd. 9,958,144.84

Total 69,757,840.57

¢ò¡¢Joint venture

Shenzhen Xing Long Mechanical Models

15,878,254.74

Co.,Ltd. *Note

Shenzhen Tellus Automobile Services Chain

Co.,Ltd.

Shenzhen Ren fu Tellus Automobiles Services

6,300,000.00 72,747,568.25

Co.,Ltd.

Shenzhen Automobile Industrial Import and

8,293,805.73

Export Co.,Ltd

Shenzhen Dongfeng Automobile Co., Ltd. 52,959,125.74

Shenzhen Xinyongtong Tenology Co.,Ltd 486,878.16

Shenzhen Xinyongtong Pump and

127,836.59 127,836.59

Environmental Protection Co.,Ltd

Shenzhen Xinyongtong Consulting Service 41,556.83 41,556.83

153

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Change in 2015 Closing balance

Investee Declaration of cash Bad debt Closing balance for bad debt

Others

dividends or profits provision provision

Co.,Ltd.

Shenzhen Xinyongtong Automobile Service

57,248.10

Co.,Ltd.

Shenzhen Xinyongtong Dongxiao Automobile

Parts Sales Co.,Ltd.

Shenzhen Xinyongtong Xinda Inspection

Eqiupment Co.,Ltd

Hunan Changyang Industrial Co.,Ltd.*Note¢Ù 1,810,540.70 1,810,540.70

Shenzhen Jiecheng Electronic Co.,Ltd.*Note

3,225,000.00 3,225,000.00

¢Ù

Shenzhen Xiandao Chemical Materials

4,751,621.62 4,751,621.62

Co.,Ltd.*Note¢Ù

China Automobile Shenzhen Trading Co.,Ltd.

400,000.00 400,000.00

*Note¢Ù

Shenzhen General Standard Co.,Ltd.*Note¢Ù 500,000.00 500,000.00

Shenzhen Torch Spark Plug Industrial

17,849.20 17,849.20

Co.,Ltd.*Note¢Ù

Zhongqi South China Automobile Sales

2,250,000.00 2,250,000.00

Co.,Ltd. *Note¢Ù

Shenzhen Bailiyuan Power Co.,Ltd.*Note¢Ù 1,320,000.00 1,320,000.00

Shenzhen Yiming Automobile Trading Co.,Ltd.

200,001.10 200,001.10

*Note¢Ù

Total 6,300,000.00 165,067,286.76 14,644,406.04

¢ó¡¢Others

Shenzhen Hanli Hi-technology Ceramics

1,956,000.00 1,956,000.00

Co.,Ltd.*Note *¢Ú

Nanfang Automobile Repairing Center *Note * 6,700,000.00 6,700,000.00

154

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Change in 2015 Closing balance

Investee Declaration of cash Bad debt Closing balance for bad debt

Others

dividends or profits provision provision

¢Ú

Total 8,656,000.00 8,656,000.00

Total 6,300,000.00 243,481,127.33 23,300,406.04

Note £º * ¢Ù Companies have been withdrawn, so we have already got 100%

preparation for the bad-debt.

*¢Ú Other details will be founded in Note VIII-1.

12¡¢Real estate Investment

(1) Measured by the cost of investment in real estate

Items House, Building Total

I. Original book value

1¡¢Opening balance 159,169,717.60 159,169,717.60

2¡¢Increased at this period 1,700,938.91 1,700,938.91

£¨1£©Land premium 1,700,938.91 1,700,938.91

3¡¢Decreased at this period

£¨1£©Disposal

4¡¢Closing balance 160,870,656.51 160,870,656.51

II¡¢Total accumulated depreciation and accumulated amortization

1¡¢Opening balance 74,085,971.88 74,085,971.88

2¡¢Increased at this period 4,684,551.15 4,684,551.15

£¨1£©Provisionor amortization 4,684,551.15 4,684,551.15

3¡¢Decreased at this period

£¨1£©Disposal

4¡¢Closing balance 78,770,523.03 78,770,523.03

III. Impairment allowance

IV.Book value

1¡¢Closing book value 82,100,133.48 82,100,133.48

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Items House, Building Total

2¡¢Book value at year beginning 85,083,745.72 85,083,745.72

(2) The details of real estate investment of ownership or use-right restrictionrefer to

NoteVI-4.

(3)There are no real estate investment buildings without property certicificate up to

December 31st,2015.

156

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13¡¢Fixed assets

(1) List of fixed assets

Transportation Office equipment and Self-owned housing

Items House and buildings Machinery equipment Electronic equipment Total

equipment others decoration

I.Original book value

1¡¢Opening balance 271,582,729.60 20,203,188.64 6,232,481.81 11,566,041.28 4,179,271.23 3,056,469.95 316,820,182.51

2¡¢Increased at this period 1,056,100.00 678,758.51 1,041,903.17 88,862.08 2,865,623.76

£¨1£©Purchase 1,056,100.00 678,758.51 1,041,903.17 88,862.08 2,865,623.76

3¡¢Decreased at this period 2,662,023.66 878,660.53 236,734.71 16,591.80 3,794,010.70

£¨1£©Disposal or scrap 2,662,023.66 878,660.53 236,734.71 16,591.80 3,794,010.70

4¡¢Closing balance 271,582,729.60 18,597,264.98 6,032,579.79 12,371,209.74 4,251,541.51 3,056,469.95 315,891,795.57

II. Accumulateddepreciation

1¡¢Opening balance 132,881,916.51 15,965,798.06 4,147,352.29 8,917,145.97 3,716,774.85 2,765,531.04 168,394,518.72

2¡¢Increased at this period 7,157,932.95 308,993.00 470,754.42 523,135.79 81,912.29 9,556.18 8,552,284.63

£¨1£©Provision 7,157,932.95 308,993.00 470,754.42 523,135.79 81,912.29 9,556.18 8,552,284.63

3¡¢Decreased at this period 2,567,216.26 343,872.55 206,440.48 3,884.40 3,121,413.69

£¨1£©Disposal or scrap 2,567,216.26 343,872.55 206,440.48 3,884.40 3,121,413.69

4¡¢Closing balance 140,039,849.46 13,707,574.80 4,274,234.16 9,233,841.28 3,794,802.74 2,775,087.22 173,825,389.66

157

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Transportation Office equipment and Self-owned housing

Items House and buildings Machinery equipment Electronic equipment Total

equipment others decoration

III. Impairment allowance

1¡¢Opening balance 3,555,385.70 1,646,060.95 6,165.00 17,984.71 69,562.98 281,382.73 5,576,542.07

2¡¢Increased at this period

£¨1£©Provision

3¡¢Decreased at this period 93,701.16 93,701.16

£¨1£©Disposal or scrap 93,701.16 93,701.16

4¡¢Closing balance 3,555,385.70 1,552,359.79 6,165.00 17,984.71 69,562.98 281,382.73 5,482,840.91

IV.Book value

1¡¢Closing book value 127,987,494.44 3,337,330.39 1,752,180.63 3,119,383.75 387,175.79 136,583,565.00

2¡¢Opening book value 135,145,427.39 2,591,329.63 2,078,964.52 2,630,910.60 392,933.40 9,556.18 142,849,121.72

158

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Note£ºCurrent depreciation is RMB 8,552,284.63.There is no fixed assets transferred from

construction in progress in current period.

(2) Temporary idle fixed assets

The Company had no temporary idle fixed assets at the end of this period.

(3) Fixed assets with un-completed property certificates

Items Book Value Reasons for un-completed certificates

Shuibei Zhongtian building 1,341,371.70 Reason left over by history

Hostel at North Remin Road 5,902.41 Reason left over by history

Songquan apartment£¨Mix£© 53,144.66 Reason left over by history

Tellus building underground park 11,558,599.16 Unable to handle real estate license

Tellus building conversion layer 2,098,184.84 Unable to handle real estate license

Warehouse of trading department 107,784.13 Reason left over by history

Warehouse 1,059,512.29 Reason left over by history

The 1st, 2nd, 3rd factory building, 3 to 5 layers 4,802,298.16 Reason left over by history

Yongtong building 45,353,768.47 Reason left over by history

The 16th apartment house, Taohua Yuan 1,987,452.24 Reason left over by history

Automobile building 20,232,217.09 Reason left over by history

Floor 1 of business housing, Baoan 1,226,027.97 Reason left over by history

Zhonghe building 5,797,159.53 Reason left over by history

Total 95,623,422.65

(4) The fixed assets with restricted ownership

Details of the fixed assets with restricted ownership refer to Note VI-46.

14¡¢Project under construction

(1) Project under construction

Closing balance Opening balance

Items Provision for Provision for

Book balance Book value Book balance Book value

devaluation devaluation

Shuibei Jewelry Building 279,056,650.35 279,056,650.35 122,551,469.97 122,551,469.97

Total 279,056,650.35 279,056,650.35 122,551,469.97 122,551,469.97

159

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(2) Changes of significant construction in progress

Increase atthis Transferred to fixed Other

Name Budget Opening balance Closing balance

period assets decrease

Shuibei Jewelry Building 41364 million 122,551,469.97 156,505,180.38 279,056,650.35

Total 122,551,469.97 156,505,180.38 279,056,650.35

£¨continued£©

Rate of

Capitalization of Including£ºCurrent amount of

Name Proportion(%) Progress capitalization of Source of funds

interest capitalization of interest

interest£¨%£©

Shuibei Jewelry

67.46% 14,125,416.86 3,120,270.97 1.58 Self-financing

Building

Total 67.46% 14,125,416.86 3,120,270.97

(3) Provision for devaluation for current year.

There is no provision for devaluation for construction in progress at the end of December

31st, 2015.

15¡¢Intangible assets

(1) List of intangible assets

Items Land use right Trademarks Software Total

1. Original book value

1¡¢Opening balance 54,284,923.80 95,800.00 659,685.00 55,040,408.80

2¡¢Increased at this period 277,500.00 277,500.00

£¨1£©Purchase 277,500.00 277,500.00

3¡¢Decreased at thisperiod

£¨1£©Disposal

4¡¢Closing balance 54,284,923.80 95,800.00 937,185.00 55,317,908.80

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Items Land use right Trademarks Software Total

II. Accumulated amortization

1¡¢Opening balance 743,629.09 49,764.95 322,780.80 1,116,174.84

2¡¢Increased at this period 1,115,443.67 9,579.96 91,436.96 1,216,460.59

(1)Provision 1,115,443.67 9,579.96 91,436.96 1,216,460.59

3¡¢Decreased at this period

£¨1£©Disposal

4¡¢Closing balance 1,859,072.76 59,344.91 414,217.76 2,332,635.43

III.Impairment allowance

IV.Book value

1. Closing book value 52,425,851.04 36,455.09 522,967.24 52,985,273.37

2. Opening book value 53,541,294.71 46,035.05 336,904.20 53,924,233.96

Note£ºThe current year amortization is RMB 1,216,460.59.

(2) The intangible assets with restricted ownership

Details of the intangible assets with restricted ownership refer to Note VI-47.

(3) The Company had no Intangible assets with uncertain service life at the end of this

period.

16¡¢Long term amortize expenses

Other

Items Opening balance Increase in this period Amortizedexpenses Closing balance

decrease

Renovation fee 594,606.54 1,191,767.64 287,367.94 1,499,006.24

Insurance expense of bank deposit and

311,264.47 311,264.47

loan commitment fee

Total 905,871.01 1,191,767.64 598,632.41 1,499,006.24

17¡¢Deferred income tax assets/deferred income tax liabilities

(1) Details of the recognized deferred income tax assets

Closing balance Opening balance

Items Deductible temporary Deductible temporary Deferred income tax

Deferred income tax assets

difference difference assets

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Allowances for assets

78,579,491.60 19,644,872.90 78,585,491.56 19,646,372.90

impairment

Equity investment variance 14,844,139.32 3,711,034.83 14,844,139.31 3,711,034.83

Employee benefits

4,598,254.14 1,149,563.54

£¨Defined-Benefit Plan£©

Unrealized Profit on

Transactions with associate 4,530,142.32 1,132,535.58 4,685,911.12 1,171,477.78

Companies

Total 97,953,773.24 24,488,443.31 102,713,796.13 25,678,449.05

(2) Details of the recognized deferred income tax liabilities

Closing balance Opening balance

Items Taxable temporary Taxable temporary Deferred income tax

Deferred income tax liabilities

differences differences liabilities

Depreciation of fixed assets 1,912,340.48 478,085.12 2,893,836.72 723,459.18

Total 1,912,340.48 478,085.12 2,893,836.72 723,459.18

(3) Details of the un-recognized deferred income tax assets

Items Closing balance Opening balance

Deductible temporary difference 102,739,875.16 90,526,640.12

Deductible loss 41,176,065.43 60,405,723.91

Total 143,915,940.59 150,932,364.03

(4) Deductible losses of the un-recognized deferred income tax asset will expire in the

following years

Year Closing balance Opening balance Remark

2015 8,294,521.87

2016 2,656,114.39 6,106,031.92

2017 1,543,641.99 8,117,981.88

2018 15,520,231.84 15,579,607.94

2019 19,656,438.96 22,307,580.30

2020 1,799,638.25

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Total 41,176,065.43 60,405,723.91

18¡¢Other non-current assets

Items Closing balance Opening balance

Prepayments for equipments 1,800,000.00

Others 100,000.00

Total 1,900,000.00

19¡¢Provision for asset impairment

Decreased

Items Opening balance Increased Closing balance

Reversal Resell

I.Bad debt provision 103,420,886.68 953,444.41 31,980.00 104,342,351.09

II. Provision for impairment of held-to-maturity

20,000.00 20,000.00

investments

III.Provision for decline in value of inventories 28,690,156.29 759,921.00 28,815.67 464,865.00 28,956,396.62

IV.Provision for impairment of long-term

23,258,849.21 41,556.83 23,300,406.04

investments

V.Provision for impairment of fixed assets 5,576,542.07 93,701.16 5,482,840.91

VI.Provision for impairment of available-for-sale

8,126,240.00 8,126,240.00

financial assets

Total 169,092,674.25 1,754,922.24 154,496.83 464,865.00 170,228,234.66

20¡¢Short-term loan

(1) Categories of short-term loans

Items Closing balance Opening balance

Pledge Loan

Mortgage Loan 44,000,000.00

Loan on Guarantee 10,000,000.00

Credit Loan 20,719,672.00

Total 74,719,672.00

(2) There is no overdue short-term loans at the end of this period.

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21¡¢Accounts payable

(1) Accounts payable

Items Closing balance Opening balance

Accounts payable 27,417,068.61 22,340,922.90

Total 27,417,068.61 22,340,922.90

(2) Significant accounts payable which aged over one year

Items Closing balance The reason for not repaid or carried forward

Shenzhen Tefa Real Estate Co.,Ltd. 6,054,855.46 Not repaid by related company

Total 6,054,855.46

22¡¢Advance accounts

(1) Advance accounts

Aging Closing balance Opening balance

Within 1 year 10,729,385.35 9,242,967.59

1 to 2 years 34,657.64

2 to 3 years 29,881.35

Over 3 years 701,540.96 701,541.66

Total 11,460,807.66 9,979,166.89

Note£ºThe balance of advance accountover 3 years mainly caused by the amount of the

subsidiary (Shenzhen Xinyongtong Automobile Inspection Equipment Co.,Ltd.). This

amount do not transferred to revenue as the client did not check upon delivery.

23¡¢ Employee benefits payable

(1) Details of employee benefits payable

Items Opening balance Increase in this period Decrease in this period Closing balance

I. Short-term remuneration 16,624,460.11 62,182,534.59 60,575,469.79 18,231,524.91

II. Post-employment benefit-defined

539,724.92 8,022,081.88 7,153,592.90 1,408,213.90

benefit plans

III. Severance welfares 1,363,371.34 1,363,371.34

IV. Other benefits due within 1 year

Total 17,164,185.03 71,567,987.81 69,092,434.03 19,639,738.81

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(2) Details of short-term remuneration

Items Opening balance Increase in this period Decrease in this period Closing balance

I. Salary, bonus, allowance and subsidies 14,178,624.98 52,999,196.61 51,327,281.70 15,850,539.89

II. Employee welfare 2,174,080.39 2,174,080.39

III.Social insurance premium 10,384.19 2,448,104.39 2,448,176.32 10,312.26

Including:Medical insurance premium 9,312.71 2,161,057.30 2,161,129.23 9,240.78

Industries insurance premium 476.16 80,438.63 80,438.63 476.16

Maternity insurance premium 595.32 206,608.46 206,608.46 595.32

IV. Housing fund 2,154,037.42 2,950,523.25 2,967,568.51 2,136,992.16

V. Union expenses and employee

281,413.52 1,408,871.95 1,456,604.87 233,680.60

education expenditure

VI. Short-term paid absence

VII. Short-term profit share plan

VIII.Others 201,758.00 201,758.00

Total 16,624,460.11 62,182,534.59 60,575,469.79 18,231,524.91

(3) The details of defined contribution plans

Items Opening balance Increased in this period Decreased in this period Closing balance

I.Basic endowment insurance premium 136,412.87 6,250,802.35 6,132,776.85 254,438.37

II. Unemployment insurance premium 1,055.26 242,206.51 241,936.92 1,324.85

III. Company annuity payment 402,256.79 1,529,073.02 778,879.13 1,152,450.68

Total 539,724.92 8,022,081.88 7,153,592.90 1,408,213.90

24¡¢Taxes and fees payable

Items Closing balance Opening balance

VAT 176,318.69 243,780.42

Corporate income tax 974,988.75 835,558.77

Enterprise income tax 1,969,038.78 1,259,693.58

Individual income tax 174,434.79 79,246.30

Urban construction and maintenance tax 159,154.08 106,786.05

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Items Closing balance Opening balance

Property tax 864,954.64 858,788.79

Land VAT 5,362,682.64 5,362,442.05

Land tax 177,330.86 172,536.12

Education surcharge 155,960.23 118,873.26

Others 29,037.80 17,387.93

Total 10,043,901.26 9,055,093.27

25¡¢Other payables

(1) Other payables by categories

Items Closing balance Opening balance

Related parties transactions and loan¡¢interest 135,662,323.98 65,230,936.82

Deposit¡¢security bond 16,313,694.07 16,165,861.14

Others 41,821,768.63 33,136,283.69

Total 193,797,786.68 114,533,081.65

(2) Significant other payables which aged over one year

Items Closing balance The reason for not repaid or carried forward

Shenzhen Tefa Group Co.,Ltd. 66,810,211.32 There are no expire date setted by the holding company

Total 66,810,211.32

26¡¢Non-current liabilities due within one year

Items Closing balance Opening balance

Long-term borrowings due within one year£¨NoteVI-27£© 120,700,000.00

Total 120,700,000.00

27¡¢Long-term borrowings

Items Closing balance Opening balance

Mortgaged loan 226,297,550.55

Credit loan 73,000,000.00

Less£ºNon-current liabilities due within one year£¨NoteVI-26£© 120,700,000.00

Total 178,597,550.55

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28¡¢Long-term Payables

Items Closing balance Opening balance

Employee housing deposit 3,908,848.40 3,908,848.40

Technical innovation 11,311.96 11,311.96

Dongfeng Automobile Co., Ltd. 10,052,619.31 9,737,330.58

Total 13,972,779.67 13,657,490.94

29¡¢Long-term employee benefits payable

(1) Details of long-term employee benefits payable

Items Closing balance Opening balance

I. Post-employment benefit-defined benefit plans 9,953,557.75

II.Severance welfares

III. Others

Total 9,953,557.75

(2) Changes of defined benefit plans

¢ÙPresent value of defined benefit obligation

Items Current period Previous period

I.Opening balance 9,953,557.75 10,297,200.34

II. Cost of defined benefit plans calculated in gains and losses of current period -9,346,642.22 561,197.43

1¡¢Service cost of current period

2¡¢Service cost of the past

3¡¢Gains£¨Losses present as¨D£­¡¬£© -9,722,688.86

4¡¢Net interest 376,046.64 561,197.43

III. Cost of defined benefit plans calculated in other comprehensive income

1¡¢Actuarial gain£¨Losses present as¨D£­¡¬£©

IV.Other changes 606,915.53 904,840.02

1¡¢Consideration payment on settlements

2¡¢Paid welfares 606,915.53 904,840.02

V. Closing balance 9,953,557.75

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Note£ºService cost of the past which is RMB -9,722,688.86caused by the Company

canceled the retairee benefits plan at Oct. 2015 and leads to the decrease of present value

of defined benefit obligation.

30¡¢Other non-current liabilities

Items Closing balance Opening balance

Deferred income * 13,269,356.04 32,570,237.55

Total 13,269,356.04 32,570,237.55

Note *£ºDeferred income of the Company is rent received in advance of Shuibei Jewelry

Building, the Company recognized amortized cost use effective interest method.

31¡¢Share capital

Changes for the period£¨+ -£©

Items Opening balance Bonus Capitalization of Closing balance

New issue Other Subtotal

issue public reserve

Restricted tradable shares

1.State-owned shares

2. State-owned legal

14,587,056.00 6,000,000.00 6,000,000.00 20,587,056.00

person shares

3.Other omestic-owned

shares

Including: Domestic

71,000,000.00 71,000,000.00 71,000,000.00

legalperson wnership

Domestic nature person

4. Foreign-owned shares

Including: Foreign

legalperson ownership

Foreign nature person

Total restricted tradable

14,587,056.00 77,000,000.00 77,000,000.00 91,587,056.00

shares

¢ò¡¢Tradable shares

1. Ordinary shares 179,294,544.00 179,294,544.00

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Changes for the period£¨+ -£©

Items Opening balance Bonus Capitalization of Closing balance

New issue Other Subtotal

issue public reserve

denominated in RMB

2. Foreign-owned shares

26,400,000.00 26,400,000.00

listed domestically

3. Foreign-owned shares

listed overseas

4.Others

Total tradable shares 205,694,544.00 205,694,544.00

¢ó¡¢Total shares 220,281,600.00 77,000,000.00 77,000,000.00 297,281,600.00

Note: Ruihua Certified Public Accountants had verified the share capital and issued NO.

¡¾2015¡¿48330003 Capital Verification Report. The Company changed in registration at 16th,

July, 2015 approved by Shenzhen Industrial and Commercial Administration Bureau.

32¡¢Capital reserve

Items Opening balance Increased in this period Decreased in this period Closing balance

Capital premium 3,024,773.35 556,520,000.00 559,544,773.35

Other reserves 4,647,832.16 4,647,832.16

Total 7,672,605.51 556,520,000.00 564,192,605.51

Note: According to the 19th Special Meeting of the 7th Board Meeting at 21st,April,2014 and

the 4th Extraordinary Shareholders Meeting at 3rd,June,2014, the Company private offered

less than RMB 77,000,000 ordinary shares ( A-share), which is one yuan per share to

Shenzhen Tefa Group Co.,Ltd and Shenzhen Yuanzhifuhai Jewelry Investment Co.,Ltd.

The Company raised RMB 646,800,000.00, and the practical placement is RMB

633,520,000.00 after detucting issue expenses RMB 13,280,000.00. The equity capital

increased RMB 77,000,000.00, and the capital stock premium RMB 556,520,000.00 has

been included in capital reserve.

33¡¢Surplus reserve

Items Opening balance Increased in this period Decreased in this period Closing balance

Statutory surplus reserve 2,952,586.32 2,952,586.32

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Items Opening balance Increased in this period Decreased in this period Closing balance

Total 2,952,586.32 2,952,586.32

34¡¢Undistributed profit

Items Current period Previous period

Before adjustment: Undistributed profits at the end of prior year -39,026,529.03 -49,371,746.70

Adjustment: Total undistributed profits at beginning of year (Increase +, decrease -)

After adjustment: Undistributed profits at beginning of year -39,026,529.03 -49,371,746.70

Add: Net profit attributable to shareholders of the parent 42,768,789.52 10,345,217.67

Less: Appropriation to statutory surplus reserve

Appropriation to discretionary surplus reserve

Appropriation to common risk provision

Common stock dividend payable

Common stock dividends converted to shares

Retained profits at the period end 3,742,260.49 -39,026,529.03

35¡¢Operating Revenues and Operating Costs

Current period Previous period

Items

Revenue Cost Revenue Cost

Principal operating activities 290,705,488.37 213,408,631.14 451,551,057.76 386,992,333.83

Other operating activities 13,021,302.20 4,583,585.06 13,436,470.04 2,431,285.86

Total 303,726,790.57 217,992,216.20 464,987,527.80 389,423,619.69

36¡¢Business taxes and surcharges

Items Amount of current period Amount of previous period

Business tax 5,041,179.59 4,112,942.80

City construction and maintenance tax 680,017.76 561,276.79

Education surcharges 468,211.75 371,960.24

Total 6,189,409.10 5,046,179.83

Note: Details of business taxes and surcharges please refer to Note V.Taxes.

37¡¢Selling expenses

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Items Current period Previous period

Employment benefits 9,848,996.50 12,209,650.35

Advertisement 594,035.30 1,092,285.31

Depreciation 875,473.68 1,695,974.26

Office expenses 994,402.01 952,404.94

Water and electricity fee 471,404.57 463,362.44

Goods freight 318,567.35 662,833.08

Others 1,615,997.87 3,996,866.60

Total 14,718,877.28 21,073,376.98

38¡¢Administration expenses

Items Current period Previous period

Staff cost 16,504,340.76 26,023,173.35

Taxes and fees 3,380,791.12 3,025,817.42

Office expenses 2,209,367.65 2,295,086.63

Travel expenses 1,071,000.26 1,297,527.15

Entertainment expenses 886,305.20 1,271,585.36

Depreciation and amortization 1,820,282.48 1,628,132.01

Consultation and service fee 2,331,090.87 2,096,975.71

Goods freight 1,478,961.56 1,678,914.59

Others 3,199,729.00 4,192,135.93

Total 32,881,868.90 43,509,348.15

39¡¢Financial expenses

Items Current period Previous period

Interest expenses 10,003,421.69 26,883,526.28

Less: Interest income 3,487,230.40 871,464.83

Less: Interest capitalized 3,120,270.97 9,025,159.20

Exchange difference 134,292.88 6,612.01

Others 813,475.63 777,623.18

Total 4,343,688.83 17,771,137.44

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40¡¢Loss of assets impairment

Items Current period Previous period

Loss of bad debts 921,464.41 4,975,785.80

Loss of inventory valuation 731,105.33

Loss of long term equity investment valuation 41,556.83

Total 1,694,126.57 4,975,785.80

41¡¢Investment income

Items Current period Previous period

Income generated from long-term equity investments measured by equity method 15,252,012.32 24,775,664.82

Investment income from holding trading financial assets 84,270.40

Investment income from holding financial products 5,740,301.35

Investment income from disposal trading financial assets 1,141,857.35

Total 20,992,313.67 26,001,792.57

42¡¢Non-operating income

Recorded in the amount of thenon-recurring

Items Current period Previous period

gains and losses

Gains on non-current asset disposals 39,278.33 197,088.80 39,278.33

Including£ºGains on fixed asset disposals 39,278.33 197,088.80 39,278.33

Govermant grants 371,850.00 371,850.00

Others 122,547.53 767,937.93 122,547.53

Total 533,675.86 965,026.73 533,675.86

Including: Government grants accounted into current profit and loss

Items Current period Previous period Revelent to assets/gains and losses

Fund to electric lift update 271,850.00 Gains and losses

Luohu Economic Promotion Corporation Integrity

50,000.00 Gains and losses

Financial Assistance

Luohu Economic Promotion Corporation Financial

50,000.00 Gains and losses

Support

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Items Current period Previous period Revelent to assets/gains and losses

Total 371,850.00

43¡¢Non-Operation expenses

Recorded in the amount of the non-recurring

Items Current period Previous period

gains and losses

Loss on non- recurring asset disposal 73,623.42 48,602.31 73,623.42

Including: Loss on fixed asset disposal 73,623.42 48,602.31 73,623.42

Others 65,873.64 80,918.38 65,873.64

Total 139,497.06 129,520.69 139,497.06

44¡¢Income tax expenses

(1) Income tax expenses

Items Amount of current period Amount of previous period

Current income tax expense 3,611,105.39 1,963,886.73

Deferred income tax expense 944,631.68 -175,710.96

Adjustment of previous income tax -684.46 -329,005.41

Total 4,555,052.61 1,459,170.36

(2) The process of calculating the income tax based on accounting profits

Items Amount of current period

Consolidated profit this year 47,293,096.16

Income tax calculated at legal or applicable tax rate 11,823,274.03

Impact of various tax rates applicable to subsidiaries -13,751.08

Adjustment of impact on the income tax in the previous period -684.46

Impact of non-taxable income

Impact of non-deductible cost, expense and loss -4,425,851.40

Impact of deductible losses deferred income tax assets unconfirmed in the previous use period -362,867.34

Impact of the deductible temporary differences or deductible loss of unconfirmed deferred tax assets of

-2,465,067.15

this year.

Changes of the deferred tax assets/liability caused by the adjustment of tax rate

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Income taxes 4,555,052.61

45¡¢Notes to items in the cash flow statements

(1) Other cash receipts relating to operating activities

Items Current period Previous period

Cash received from business operation 13,705,340.52 2,399,896.01

Cash pledge and security deposits 453,503.84 2,633,396.42

Interest income 3,138,397.07 871,464.83

Total 17,297,241.43 5,904,757.26

(2) Other cash payments relating to operating activities

Items Current period Previous period

Cash paid to general and administrative expenses 24,541,157.90 29,169,987.58

Cash paid to operating expenses and others 11,009,649.87 4,855,070.02

Total 35,550,807.77 34,025,057.60

(3) Other cash receipts relating to financing activities

Items Current period Previous period

Deposit for bank acceptance 6,732,343.46

Total 6,732,343.46

(4) Other cash payment relating to financing activities

Items Current period Previous period

Cash paid to financing expenses 21,828,274.26 1,350,000.00

Total 21,828,274.26 1,350,000.00

46¡¢Supplementary information to the cash flow statement

(1) Supplementary information to the cash flow statement

Items Current period Previous period

1¡¢Adjusting net profit to cash flow from operating activities

Net profit 42,738,043.55 8,566,208.16

Add: Impairment loss provision of assets 1,694,126.57 4,910,940.22

Depreciation of fixed assets, oil and gas assets and consumable biological 13,164,743.45 15,030,431.56

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Items Current period Previous period

assets

Amortization of intangible assets 101,016.92 80,800.79

Amortization of Long-term deferred expenses 612,899.02 436,876.02

Loss on disposal of fixed assets, intangible assets and other long-term deferred

34,345.09 -148,486.49

assets (gain as in "-")

Loss on scrap of fixed assets (gain as in "-")

Loss on fair value changes (gain as in "-")

Financial cost (gain as in "-") 7,017,443.60 17,865,127.34

Loss on investment (gain as in "-") -20,992,313.67 -26,001,792.57

Decreased in deferred income tax assets (increase as in "-") 1,190,005.74 70,275.84

Increased of deferred income tax liabilities (increase as in "-") -245,374.06 -524,628.68

Decreased of inventories (increase as in "-") 31,791,449.24 14,682,185.10

Decreased of operating receivables (increase as in "-") 2,231,233.00 3,165,569.37

Increased of operating Payable (decrease as in "-") 1,345,008.88 -31,918,799.81

Others

Net cash flows from operating activities 80,682,627.33 6,214,706.85

2¡¢Significant investment and financing activities that without cash flows£º

Debt-to-capital conversion

Convertible loan due within 1 year

Fixed assets acquired under financial lease

3¡¢Movement of cash and cash equivalents£º

Ending balance of cash 99,184,710.93 80,045,669.65

Less: Beginning balance of cash equivalents 80,045,669.65 63,166,448.10

Add£ºEnding balance of cash equivalents

Less: Beginning balance of cash equivalents

Net increase of cash and cash equivalents 19,139,041.28 16,879,221.55

(2) Composition of cash and cash equivalents

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Items Closing balance Opening balance

I. Cash 99,184,710.93 80,045,669.65

Including: Cash on hand 75,003.23 84,813.57

Bank deposits 99,109,707.70 79,960,856.08

Other monetary funds

II. Cash equivalents

Including: Investments in debt securities due within three months

III. Balance of cash and cash equivalents at the period end 99,184,710.93 80,045,669.65

Including£ºRestricted cash and cash equivalents of Parent company or subsidiaries in the Group

Note: Cash and cash equivalents belong to the company or its subsidiaries were not

included in this sheet.

47¡¢Ownership or use-right restricted assets

Items Book value at the end of thisperiod Reason of restriction

Monetory asstes 60,000,000.00 Note VI-1

investment real estate 49,190,553.82

Fixed assets 6,946,552.76

Intangible assets 52,425,851.04

Long-term equity investment 72,747,568.25 Note IX-5(2)

Total 241,310,525.87

Note£º1. In August 28th,2014, the Company gain RMB 211 millionof credit amount from

China CITIC Bank Jingtian Branch by signing a comprehensive credit contract Shen Yin

Jingtian Zong Zi No.007 (2014). Meanwhile, the Company signed two maximum mortgage

contracts Shen Yin Jingtian Di Zi No.008 (2014), and Shen Yin Jingtian Di Zi No.007 (2014).

The mortgaged assets are assets with book value RMB 50,293,453.68 of Shenzhen Tefa

Tellus Real Estate Co.,Ltd., and assets with book value RMB 117,706,546.32 of the

Company.

In August 28th, 2014, the Company borrowed RMB 157.5 million from China CITIC Bank,

Shen Yin Jingtian Dai Zi No.0012 (2014), with term limitation from August 28 th, 2014 to

August 28th, 2017. Repayment rule is monthly interest repayment, 8% of principle should

be repaid every half year and pay off the rest before end of the contract date. At the end of

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this period, the loan has been repaid but the assets are still mortgaged because of the loan

limit.

2. In June 24th, 2014, the subsidiary Shenzhen Zhongtian Industrial Co.,Ltd. borrowed RMB

300 million from the Construction Bank Shuibei Jewelry Branch by signing a mortgage

contract, Di Jie 2014 Gu 250 Tianbei, with term limitation from June 24 th, 2014 to June 23rd,

2024. The mortgaged assets island of Tellus Shuibei Jewelry Building project, which

certificated as Shenfang Di Zi No.2000609764. The Company offering joint liability for

Shenzhen Zhongtian Industrial Co.,Ltd. with contract Bao Jie 2014 Gu 250 Tianbei. At the

end of this period, the loan has been repaid but the assets are still mortgaged because of

the loan limit.

3. In August 28th, 2014, the non-wholly owned subsidiary Shenzhen Huari Toyota

Automobile sales and services Co.,Ltd. signed credit contracts with China Guangfa Bank,

Shenzhen Branch, the amount is RMB 49,000,000.00 and the time limits is 3 months. The

other subsidiary Shenzhen Tefa Huari Automobile Co.,Ltd. made assurance about the

contracts and offered Huari Building basement, 1st and 2nd floor, 3rd to 7th floor as guaranty.

Up to December 31st, 2015, the loan has been returned, but the assets are still under

pledged because of the debts limit are still valid.

48¡¢Foreign currency monetary items

(1) Foreign currency monetary items

Items Closing foreign currency balance Exchange rate Closing convert to RMB balance

Monetary funds

Including£ºCash-USD 856.00 6.49 5,558.52

Cash-UKD 534.00 0.84 447.37

VII¡¢Change of scope of consolidation

1¡¢Business combination not under the same control

No change of business combination not under the same control in the reporting period.

2¡¢Business combination under the same control

No change of business combination under the same control in the reporting period.

3¡¢Counter purchase

There is no counter purchase in the reporting period.

4¡¢Disposal of subsidiaries

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There is no disposal of subsidiaries in the reporting period.

¢ø¡¢Equity in other entities

1¡¢Equity in subsidiary

(1) The structure of the enterprise group

Proportion of

Main operating Registration Nature of

Names shareholding£¨%£© Way of gaining

place place business

Directly Indirectly

Shenzhen Tellus Xinyongtong Automobile

Shenzhen Shenzhen Service 100.00 Establish/Investment

Development Co.,Ltd.

Shenzhen Tefa Tellus Property Management

Shenzhen Shenzhen Service 100.00 Establish/Investment

Co., Ltd.

Shenzhen Tefa Tellus Real Estate Co.,Ltd. Shenzhen Shenzhen Manufacture 100.00 Establish/Investment

Shenzhen Tellus Real Estate Exchange Co.,

Shenzhen Shenzhen Service 100.00 Establish/Investment

Ltd

Shenzhen Xinyongtong Automobile

Shenzhen Shenzhen Service 51.00 Establish/Investment

Inspection Equipment Co.,Ltd.

Shenzhen Dongchang Yongtong Automobile

Shenzhen Shenzhen Service 95.00 Establish/Investment

Inspection Co.,Ltd.

Shenzhen Xinyongtong Dongxiao Automobile

Shenzhen Shenzhen Service 95.00 Establish/Investment

Inspection Equipment Co.,Ltd.

Shenzhen Baoan Shiquan Industrial Co.,Ltd. Shenzhen Shenzhen Business 100.00 Establish/Investment

Shenzhen Automobile Industry and Trading

Shenzhen Shenzhen Business 100.00 Establish/Investment

Co., Ltd.

Shenzhen Tefa Huari Automobile Enterprise

Shenzhen Shenzhen Service 60.00 Establish/Investment

Co.,Ltd.

Shenzhen Zhongtian Industrial Co.,Ltd. Shenzhen Shenzhen Service 100.00 Establish/Investment

Shenzhen Huari Toyota Automobile sales and

Shenzhen Shenzhen Business 60.00 Establish/Investment

services Co.,Ltd.

Shenzhen Huari Anxin Automobile Inspection

Shenzhen Shenzhen Service 60.00 Establish/Investment

Equipment Co.,Ltd.

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Proportion of

Main operating Registration Nature of

Names shareholding£¨%£© Way of gaining

place place business

Directly Indirectly

Shenzhen Automobile Industry supply and

Shenzhen Shenzhen Service 100.00 Establish/Investment

marketing Co.,Ltd.

Shenzhen Hanli Hi-technology Ceramics Ceramic

Shenzhen Shenzhen 80.00 Establish/Investment

Co.,Ltd.* technology

Shenzhen Nanfang Automobile Repairing Automobile

Shenzhen Shenzhen 100.00 Establish/Investment

center * repairment

Note£º*The operating period of Shenzhen Hanli Hi-technology Ceramics Co., Ltd. was from

September 9th, 1993 to September 21st, 1998, and the operating period of Shenzhen

Nanfang Automobile Repairing centerwas from July 12 th,1994 to July 11th. For stop

operating and did not participate annual inspections, the industry and commerce

registration of these two companies were revoked by the administrative department of

industry and commerce. Therefore, these two companies do not included in the scope of

consolidation, and the book value of net investment is zero.

(2) Important non wholly owned subsidiary

Shareholding ratio of Gains and losses

Dividend and profit paid Closing balance of

Names of the subsidiary minority shareholders attributable to the minority

to minority shareholders minority equity

£¨%£© shareholders

Shenzhen Huari Toyota Automobile sales and

40% 623,838.22 -2,763,604.60

services Co.,Ltd.

Shenzhen Tefa Huari Automobile Enterprise

40% -1,109,549.44 12,210,667.26

Co.,Ltd.

(3) The main financial information of important non wholly owned subsidiary

Closing balance

Names of the subsidiary Non-current

Current assets Fixed assets Total assets Current liabilities Total liabilities

liabilities

Shenzhen Huari Toyota

Automobile sales and 36,700,757.39 1,308,446.07 38,009,203.46 44,918,214.96 44,918,214.96

services Co.,Ltd.

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Names of the subsidiary Closing balance

Shenzhen Tefa Huari

Automobile Enterprise 39,761,100.57 33,740,985.59 73,502,086.16 42,497,332.90 478,085.12 42,975,418.02

Co.,Ltd.

(Continued)

Opening balance

Names of the subsidiary Non-current

Current assets Fixed assets Total assets Current liabilities Total liabilities

liabilities

Shenzhen Huari Toyota

Automobile sales and 66,234,803.90 1,488,146.91 67,722,950.81 76,191,557.87 76,191,557.87

services Co.,Ltd.

Shenzhen Tefa Huari

Automobile Enterprise 39,310,343.44 35,655,774.22 74,966,117.66 40,830,228.13 835,347.77 41,665,575.90

Co.,Ltd.

Current period Previous period

Names of the Comprehe Comprehe

Operation Operating cash Operating cash

subsidiary Net profit nsive Operation revenue Net profit nsive

revenue flow flow

income income

Shenzhen Huari

Toyota

Automobile 185,704,704.44 1,559,595.56 41,524,021.39 351,004,734.69 4,115,420.93 -5,873,682.22

sales and

services Co.,Ltd.

Shenzhen Tefa

Huari

32,837,537.55 -2,773,873.62 298,968.38 36,919,863.80 -8,819,319.53 2,262,094.40

Automobile

Enterprise

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Names of the Current period Previous period

subsidiary

Co.,Ltd.

(4) The limitation of using Groups assets and repaying Groups debts.

There is no significant limitation of using Groups assets and repaying Groups debts.

2¡¢The transaction of holding equity changed in a subsidiary without a change in

control

There is no transaction of holding equity changed in a subsidiary without a change in

control.

3¡¢The equity in joint venture or associated company

(1) The significant joint venture or associated enterprise

Main operating Holding proportion Accounting treatment of

Registration

Names place Nature of business £¨%£© investment in joint

place

Directly Indirectly venture/associated enterprise

Associated company:

Shenzhen Ren Fu-Tellus

Mercedes-Benz sales¡¢

Automotive Service Shenzhen Shenzhen 35.00 Equity method

repairment

Co.,Ltd.

Shenzhen Dongfeng Automobile production¡¢

Shenzhen Shenzhen 25.00 Equity method

Automobile Co., Ltd. repairment

Joint venture:

Shenzhen Tellus Jimeng Industrial investment¡¢property

Shenzhen Shenzhen 50.00 Equity method

investment Co.,Ltd. management¡¢leasing

(2) Key financial information of significant associated company

Closing balance/Current period Opening balance/Previous period

Items Shenzhen Ren Fu-Tellus Shenzhen Dongfeng Shenzhen Ren Fu-Tellus Shenzhen Dongfeng

Automotive Service Co.,Ltd. Automobile Co., Ltd. Automotive Service Co.,Ltd. Automobile Co., Ltd.

Current assets 284,555,030.00 349,579,989.46 312,304,427.00 455,215,900.97

Fixed assets 25,699,486.00 194,895,619.83 35,303,675.00 197,175,553.60

Total assets 310,254,516.00 544,475,609.29 347,608,102.00 652,391,454.57

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Closing balance/Current period Opening balance/Previous period

Items Shenzhen Ren Fu-Tellus Shenzhen Dongfeng Shenzhen Ren Fu-Tellus Shenzhen Dongfeng

Automotive Service Co.,Ltd. Automobile Co., Ltd. Automotive Service Co.,Ltd. Automobile Co., Ltd.

Current liabilities 102,404,321.00 262,389,706.82 127,000,566.00 439,039,200.65

Non-current liabilities 75,538,051.99 57,687,321.71

Total liabilities 102,404,321.00 337,927,758.81 127,000,566.00 496,726,522.36

Equity of minority shareholders -5,288,652.50 -5,070,773.24

Shareholders' equity of the

207,850,195.00 211,836,502.98 220,607,536.00 160,735,705.45

company

Net assets calculated by

72,747,568.25 52,959,125.74 77,212,637.60 40,183,926.36

shareholding proportion

Adjustment

¡ªGoodwill

¡ªUnrealized profit of internal

transaction

¡ªOthers

The book value of investment in

72,747,568.25 52,959,125.74 77,212,637.60 40,183,926.36

associated company

The fair value of the equity

investment in associated

company which have open

quotation in market

Operating revenue 876,992,496.00 457,918,003.79 1,422,380,499.00 511,498,366.88

Net profit 5,242,659.00 50,882,918.27 39,506,811.00 44,937,693.08

Net profit gain from the

termination of operation

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Closing balance/Current period Opening balance/Previous period

Items Shenzhen Ren Fu-Tellus Shenzhen Dongfeng Shenzhen Ren Fu-Tellus Shenzhen Dongfeng

Automotive Service Co.,Ltd. Automobile Co., Ltd. Automotive Service Co.,Ltd. Automobile Co., Ltd.

Other comprehensive income

Total comprehensive income 5,242,659.00 50,882,918.27 39,506,811.00 44,937,693.08

Dividends received from

6,300,000.00 4,900,000.00

associated company this period

(3) Key financial information of significant joint ventures

Shenzhen Tellus Jimeng investment Co.,Ltd.

Items

Closing balance/Current period Opening balance/Previous period

Current assets 17,734,574.30 28,159,623.29

Including£ºCash & Cash Equivalents 13,645,857.23 19,987,349.61

Fixed assets 297,377,588.89 199,171,630.91

Total assets 315,112,163.19 227,331,254.20

Current liabilities 10,642,771.76 17,815,968.34

Non-current liabilities 184,870,000.00 90,080,000.00

Total liabilities 195,512,771.76 107,895,968.34

Equity of minority shareholders

Shareholders' equity of the Company 119,599,391.43 119,435,285.86

Net assets calculated by shareholding proportion 59,799,695.73 59,717,642.94

Adjustment

¡ªGoodwill

¡ªUnrealized profit of internal transaction

¡ªOthers

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Shenzhen Tellus Jimeng investment Co.,Ltd.

Items

Closing balance/Current period Opening balance/Previous period

Book value of investment in joint ventures 59,799,695.73 59,717,642.94

Fair value of the equity investment in joint ventures which have open quotation

in market

Operating revenue 78,823.60

Financial expense -271,705.38 -18,341.13

Income tax

Net profit 164,105.57 90,754.03

Net profit gain from the termination of operation

Other comprehensive income

Total comprehensive income 164,105.57 90,754.03

Dividends received from joint ventures this period

(4) Other financial information of joint ventures and associated enterprises

Items Closing balance/Current period Opening balance/Previous period

Joint ventures£º

Total book value of investment 9,958,144.84 9,313,071.40

Total amount of the pro rata calculation

of the following items

¡ªNet profit 489,304.64 231,688.57

¡ªOther Comprehensive income

¡ªTotal comprehensive income 489,304.64 231,688.57

Associated enterprises£º

Total book value of investment 24,716,186.73 24,842,987.50

Total amount of the pro rata calculation

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Items Closing balance/Current period Opening balance/Previous period

of the following items

¡ªNet profit -85,243.94 -447,408.46

¡ªOther Comprehensive income

¡ªTotal comprehensive income -85,243.94 -447,408.46

(5) Excess deficit in joint ventures or associated enterprises

Accumulated unrealized

Accumulated unrealized losses Unrealized losses at the end

Names losses at the end of current

at the end of previous period of current period

period

Shenzhen Tellus Automobile Services Chains

95,013.99 2,523.00 97,536.99

Co.,Ltd.

Shenzhen Xinyongtong Dongxiao Automobile

46,912.77 386,096.34 433,009.11

Service Co., Ltd.

Shenzhen Yongtong Xinda Inspection Equipment

213,433.08 219,245.29 432,678.37

Co.,Ltd.

4¡¢Significant common operation

There is no significant common operation in this reporting period.

¢ù¡¢Related parties and related-party transactions

1¡¢Parent company information

Registered Registered Parent company¡¯s Parent company¡¯s vote

Names Nature

address capital shareholding ratio£¨%£© ratio£¨%£©

Real estate development and

Shenzhen Tefa

Shenzhen management, domestic 258,282 million 51.09 51.09

Group Co.,Ltd.

commerce

Note£ºThe finial control of the Company is Shenzhen State-owned Assets Supervision and

Administration Commission

2¡¢Subsidiaries of the Company

Details refer to the Note VIII-1.

3¡¢Information on the joint ventures and associated enterprises of the Company

Details refer to the Note VI-10.

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4¡¢Other Related parties information

Names Relationship to the Company

Shenzhen Tefa Swan Enterprise Co.,Ltd. Subject to the same party controls

Shenzhen Mechanical Equipment Import and Export Co.,Ltd. Subject to the same party controls

Shenzhen Tefa Real Estate Co.,Ltd. Subject to the same party controls

Hongkong Yujia Investment Co., Ltd. Subject to the same party controls

Shenzhen Tellus Real Estate(Yue Yang) Co.,Ltd. Subject to the same party controls

Shenzhen Tefa Development Center Construction Management Co.,Ltd. Subject to the same party controls

Shenzhen Tellus Yang Chun Real Estate Co.,Ltd. Subject to the same party controls

Shenzhen Tellus Real Estate(Long Gang) Co.,Ltd. Subject to the same party controls

5¡¢Related transactions.

(1) Lease

Tellus is the leaser

Lease income recognized in Lease income recognized in

lessee Type of lease

current period previous period

Shenzhen Ren Fu-Tellus Automotive Service Co.,Ltd. Houses leasing 5,300,000.00 5,150,000.00

Shenzhen Xinyongtong Automobile Service Co.,Ltd. Houses leasing 401,812.00 412,272.00

Shenzhen Xinyongtong Dongxiao Automobile Service Co., Ltd. Houses leasing 288,800.00 279,000.00

(2) Guarantee between related parties

The Company as guarantor

According to the hypothecation contract signed by the company and the Ren Fu

Automotive Management Co.,Ltd.£¨bellows short for Ren Fu Shenzhen£©,from the settle date

of associated company,Shenzhen Ren Fu-Tellus Automotive Service Co.,Ltd.£¨below

short for Ren Fu Tellus£©, to the end date of the joint venture contract between Ren Fu

Shenzhen and the Company, the Company take 35% responsibility for the loan which total

amount less than RMB 100 million, and use 35% equity of the Company in Ren Fu Tellus

as counter guarantee pledge to Ren Fu Shenzhen. The applicable scope of this regulation

includes: (1) Ren Fu Shenzhen offering entrusted loans to Ren Fu Tellus, ;( 2) Ren Fu

Tellus receive bank or business loans under the guarantee of Ren Fu Shenzhen

All other conditions except above the Company as guarantorare offering guarantee to

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subsidiaries.

(3) Offering services by employ associated parties

Shenzhen Zhongtian Industrial Co., Ltd. chose monitor and managementinstitute of Tellus

Shuibei Project through an open bidding process. In 14th May, 2013, Shenzhen Tefa

Development Center Construction Management Co., Ltd. was qualified by obtained the

letter of acceptance from Shenzhen Construction Engineering Trading Center

(No.20130514002C).

Shenzhen Zhongtian Industrial Co., Ltd. and Shenzhen Tefa Development Center

Construction Management Co., Ltd. signed the monitor and management contract of Tellus

Shuibei Jewelry Building Project in May of 2013. In accordance with the contract, entrusted

fee is RMB 5,041.9 thousand. At the end of this reporting period, RMB 3,277.2 thousand of

and entrusted fee had been paid.

(4) Borrowing and lending between related parties

Related parties Amount Beginning date Ending date Remark

Borrowing£º

Shenzhen Tefa Group Co.,Ltd. 63,000,000.00 2015/12/25 2016/12/24

(5) Fees for funds occupation of related parties

Amount of current

Related parties Content Amount of previous period

period

Borrowing£º

Shenzhen Tefa Group Co.,Ltd. Fees for funds occupation 4,197,459.17 5,264,520.00

Lending£º

Shenzhen Xing Long Mechanical Models Co.,Ltd. Fees for funds occupation 76,041.64 76,041.64

(6) Rewards for the key management personnel

Amount of current period Amount of previous period

Items

(RMB¡¯0000) (RMB¡¯0000)

Rewards for the key management personnel 620.00 612.00

6¡¢Receivables and payables of related parties

(1) Receivables

Names Closing balance Opening balance

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Bad debt Bad debt

Book balance Book balance

provision provision

Accounts receivables£º

Shenzhen Xinyongtong Automobile Service Co.,Ltd. 927,602.00 927,602.00 927,602.00 440,610.70

Shenzhen Xinyongtong Dongxiao Automobile Parts Sales Co.,Ltd. 680,400.00 680,400.00 680,400.00 323,190.00

Total 1,608,002.00 1,608,002.00 1,608,002.00 763,800.70

Other receivables£º

Shenzhen Tellus Automobile Services Chains Development Co.,Ltd. 1,359,297.00 1,359,297.00 1,359,297.00 1,359,297.00

Shenzhen Xinyongtong Tecnology Co.,Ltd. 116,480.22 58,240.11 116,480.22 47,296.04

Shenzhen Yongtong Xinda Inspection Equipment Co.,Ltd 519,587.47 519,587.47 517,782.47 517,782.47

Shenzhen Pilot New Chemical Materials Co.,Ltd. 660,790.09 660,790.09 660,790.09 660,790.09

Shenzhen Xing Long Mechanical Models Co.,Ltd. 2,110,336.30 960,116.10 2,034,294.66 922,032.78

Shenzhen Tellus Xinyongtong Automobile Service Co.,Ltd. 114,776.33 114,776.33 114,776.33 114,776.33

Shenzhen Tellus Jimeng investment Co.,Ltd.

Total 4,881,267.41 3,672,807.10 4,803,420.77 3,621,974.71

Long-term receivables:

Shenzhen Tellus Automobile Services Chain Co.,Ltd. 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68

Total 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68

(2) Payables

Names Closing balance Opening balance

Short-term loans£º

Shenzhen Tefa GroupCo.,Ltd. 18,919,672.00

Total 18,919,672.00

Accounts payables£º

Shenzhen Tefa Real Estate Co., Ltd. 6,054,855.46 6,054,855.46

Shenzhen Mechanical Equipment Import and Export Co.,Ltd. 45,300.00 45,300.00

Total 6,100,155.46 6,100,155.46

Other payables£º

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Names Closing balance Opening balance

Shenzhen Tefa Real Estate Co., Ltd. 335,701.34 335,701.34

Hongkong Yujia Investment Co., Ltd. 2,019,296.65 1,887,561.15

Shenzhen Tefa Swan Enterprise Co.,Ltd. 20,703.25 20,703.25

Shenzhen Mechanical Equipment Import and Export Co.,Ltd. 1,455,892.44 1,195,503.24

Shenzhen Tefa Group Co.,Ltd. 129,810,211.32 59,782,492.72

Shenzhen Tellus Real Estate(Long Gang) Co.,Ltd. 1,095,742.50 1,095,742.50

Shenzhen Tellus Yang Chun Real Estate Co.,Ltd. 476,217.49 476,217.49

Shenzhen Xing Long Mechanical Models Co.,Ltd. 78,515.56 78,515.56

Shenzhen Tellus Xinyongtong Technoledge Co., Ltd. 320,000.00 320,000.00

Shenzhen Tellus Xing Investment Co.,Ltd. 25,703.43 14,159.57

Shenzhen Yongtong Xinda Inspection Equipment Co.,Ltd. 24,340.00 24,340.00

Total 135,662,323.98 65,230,936.82

Long-term loans£º

Shenzhen Tefa Group Co.,Ltd. 73,000,000.00

Total 73,000,000.00

¢ú¡¢Commitment issues

1¡¢Significant Commitment issues

£¨1£©Capital commitment

Items Closing balance Opening balance

Signed but not confirmed in financial report

¡ªcommitment of purchase long-term assets 158,289,230.16 235,913,223.51

Total 158,289,230.16 235,913,223.51

2¡¢Contingency

£¨1£©Lawsuits

¢ÙIn October of 2005, a lawsuit was brought before Shenzhen Luo Hu District Peoples

Court by the Company, which was the recognizor of Jintian Industrial (Group) Co., Ltd.

(¡°Jintian¡±) to require Jintian to redress RMB 4,081,830 (principal: RMB 3,000,000, interest:

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RMB 1,051,380, legal fare: RMB 25,160 and executive fare: RMB 5,290, which were all

dealt as a loss in last report term.) It was the amount money that was distrained forcibly.

The Fu Tian District Peoples Court had adjudged that the Company won the lawsuit and

the forcible execution had been applied by the Company. The company has not yet

received the money at the date of the approval of the financial report.

In April 2006 Shenzhen Development Bank brought an accusation against Jintians

overdueing loan two million U.S. dollars and the company who guaranteed for this case.

The company took on the principal and all interest. After that, the company appealed to

Shenzhen Luohu District People's Court, asking Jintian to repay 2,960,490 U.S. dollars and

interest. In 2008, it reached Shen Luo No.937 Civil Reconciliation Agreement (2008) after

the mediating action taken by the Shenzhen Luohu District People's Court. The agreement

is as follows: If Jintian repay 2,960,490 U.S. dollars before October 31, 2008, the company

will exempt all the interest. If Jintian can not settle the amount on time, it will pay the penalty

in accordance with the People's Bank of China RMB benchmark lending rate over the same

period. The company has not yet received the money from Jintian at the date of the

approval of the financial report.

¢ÚShenzhen Tellus Real Estate Development Co., Ltd. (¡°Real Estate Co.,¡±), a wholly-owned

subsidiary of the company, entered into a Joint Property Construction Contract with

Shenzhen Jinlu Industrial and Trade Company (¡°Jinlu Company¡±) at November 29, 1994 to

build a real estate in Shenzhen. Real Estate Co. paid RMB 9,822,500.00 to Jinlu Company

as of December 31, 1996. However, Jinlu Company breached the contract and cooperated

with Guangzhou Military Area Shenzhen Property Administrative Department (¡°GMAA¡±) to

develop the real estate and paid the RMB 9,822,500 received from Real Estate Co. to

GMAA. Therefore, Real Estate Co. lodged a claim against Jinlu Company. The Futian

District Peoples Court admitted GMAA as the third party of this case according to the law of

the PRC. It was ruled by the Futian District Peoples Court that the contract was of no effect;

GMAA shall repay Jinlu Company the principal of RMB 9,822,500, interests and judicial

proceeding expense, which shall be transferred to Real Estate Co. within three days of the

reception by Jinlu Company. GMAA applied for further trial that was allowed, and the

original judgment was suspended during the retrial.

Real Estate Co., and Jinlu Company sued GMAA in March, 2005 as co-plaintiffs, appeal the

judgement of enforcing the defendents deliver Yelihui Food Street (11,845 ©O which worth

RMB 11,851,357) to plaintiffs. Meanwhile, the defendents should pay RMB 5,034,664.94

which is the rent income since 1998. At the same time, Real Estate Co., signed agreement

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with Jinlu Company stated that the Real Estate Co., will allocated 6,000 ©O of Yelihui Food

Street, and the residual part belong to Jinlu Company. If the Food Street is less than 6,000

©O, then all of it belong to Real Estate Co.. The profits gained from this case will equally

allocated between Real Estate Co., and Jinlu Company. Shenzhen Intermediate People

Court tried this case on August 2010, however, the case is too complicated to make

pronouncement of judgement in court.

As Real Estate Co. received Min Wu Chu Zi NO.82 civil order which stated that the Yelihui

Food Street is illegal building and the Court cannot judge on it, the Court reject Real Estate

Co.s request. The company has recognized bad debt provision in full of investment fund of

Tellus Real Estate.

¢ÛIn 2014, the subsidiary, Shenzhen Automobile Industry and Trading Co., Ltd.,(bellow

short for Automobile Industry and Trading) received the court summonsfrom Shenzhen

Futian District Peoples Court. China Huarong Asset Management Corporation Shenzhen

Branch (bellow short for CHAMC)suedAutomobile Industry and Trading to take joint liability

due to the claims and disputes of Shenzhen Guangming Watch Co., Ltd. and

itscreditor.According to Shenzhen Futian Peoples Court (1997) Shen Fu ¡°Jing¡± Zi NO.801

civil judgment,verdict the Guangming Watch Co., Ltd. repays 7 million and interest to

China Citic Bank Co., Ltd,. The Guangming Watch Co., Ltd. did not repay the loan after the

verdiction. Then the China Citic Bank Co., Ltd,. apply enforcement, token back RMB

561,398.30£¬there are no more other assets to execut, Shenzhen Futian Peoples Court

verdict Termination of execution by Shen Fu Fa ¡°zhi¡±Zi NO.102 in December10, 1998.The

original debtorthe China Citic Bank Co., Ltd, transfered the debt to CHAMC in July, 2013.

¢Ü Guangming Watch Co., Ltd. was canceled the business licence by Shenzhen

Adminstration of Industry and Commerce in Feb. 28, 2002. China Huarong Asset

Management Corporation Shenzhen Branch sued Guangming Watch Co., Ltd. and

Shenzhen Automobile Industry and Trading Co., Ltd. in May 2014, the plaintiff want the

court verdict CHAMC takeover the whole right of Shen Fu ¡°Jing¡± Zi NO.801 civil

judgment(1997). Meanwhile, Shenzhen Automobile Industry and Trading Co., Ltd. did not

establish a liquidate team to liquidate the associate in legal deadline, ¡°should bear the joint

liability¡±.

¢û¡¢Subsequent Event

1¡¢Profit distribution

Pursuant to the resolution of Board at the Board of Directors meeting on April 14th, 2016,

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the Company will neither distribute profits nor capitalize capital surplus for the current

period. The allocation of profit resolution still need the board of shareholders to

approval.

¢ü¡¢Other significant events

1¡¢Early error correction

The Company does not have any early error correction in this reporting period.

2¡¢Debt restructuring

The Company does not have any information of debt restructuring to disclose in this reporting

period.

3¡¢Non-monetary asset replacement

The Company does not have any information of non-monetary asset replacement to

disclose in this reporting period.

4¡¢Segment reporting

Financial information of segment reporting.

Year 2015

Vehicle inspection

Items Automobile sales Leasing and services Inter-segment elimination Total

&Components sales

Principal operating income 134,916,197.98 62,273,538.90 112,310,487.06 -18,794,735.57 290,705,488.37

Principal operating cost 128,438,474.70 52,522,641.21 51,242,250.80 -18,794,735.57 213,408,631.14

Total assets 32,654,835.75 87,019,810.67 1,949,455,296.48 -900,462,015.41 1,168,667,927.49

Total liabilities 46,316,147.71 49,740,842.07 570,585,415.73 -376,562,881.66 290,079,523.85

Year 2014

Vehicle inspection Inter-segment

Items Automobile sales Leasing and services Total

&components sales elimination

Principal operating income 309,927,524.30 54,313,979.13 96,318,663.22 -9,009,108.89 451,551,057.76

Principal operating cost 305,567,651.81 45,377,369.62 45,056,421.29 -9,009,108.89 386,992,333.83

Total assets 63,823,256.36 83,377,851.39 1,301,854,828.02 -642,731,157.97 806,324,777.80

Total liabilities 76,454,644.54 45,914,528.51 860,457,268.88 -378,832,024.22 603,994,417.71

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XIII¡¢Notes of main items in financial reports of the company

1¡¢Accounts receivable

£¨1£©Disclosure by category

Closing balance

Category Book balance Bad debt provision Book

Amount Proportion£¨%£© Amount Proportion£¨%£© value

Accounts receivable of individual significance and subject to

individualimpairment assessment

Accounts receivable subject to impairment assessment by credit risk

characteristics of portfolio

Accounts receivable of individual insignificance but subject to

484,803.08 100.00 484,803.08 100.00

individual impairment assessment

Total 484,803.08 100.00 484,803.08 100.00

£¨Continued£©

Opening balance

Category Book balance Bad debt provision Book

Amount Proportion£¨%£© Amount Proportion£¨%£© value

Accounts receivable of individual significance and subject to

individualimpairment assessment

Accounts receivable subject to impairment assessment by credit risk

characteristics of portfolio

Accounts receivable of individual insignificance but subject to

484,803.08 100.00 484,803.08 100.00

individual impairment assessment

Total 484,803.08 100.00 484,803.08 100.00

2¡¢Other receivables

(1) Disclosure by category

Closing balance

Category Book balance Provision for bad debts

Book balance

Amount Proportion£¨%£© Amount Proportion£¨%£©

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Closing balance

Category Book balance Provision for bad debts

Book balance

Amount Proportion£¨%£© Amount Proportion£¨%£©

Other receivable ofindividual significance and

12,246,315.95 11.25 12,246,315.95 100.00

subject to individualimpairment assessment

Other receivable subject to impairment

assessment by credit risk characteristics of 94,805,891.38 87.07 1,061,063.86 1.12 93,744,827.52

portfolio

Other receivable of individual insignificance

but subject to individual impairment 1,833,967.78 1.68 1,833,967.78 100.00

assessment

Total 108,886,175.11 100.00 15,141,347.59 13.91 93,744,827.52

£¨Continued£©

Opening balance

Book balance Provision for bad debts

Category

Proportion Proportion Book balance

Amount Amount

£¨%£© £¨%£©

Other receivable ofindividual significance and

12,232,758.22 9.76 12,232,758.22 100.00

subject to individualimpairment assessment

Other receivable subject to impairment

assessment by credit risk characteristics of 111,327,082.72 88.78 976,894.72 0.88 110,350,188.00

portfolio

Other receivable of individual insignificance

but subject to individual impairment 1,833,967.78 1.46 1,833,967.78 100.00

assessment

Total 125,393,808.72 100.00 15,043,620.72 12.00 110,350,188.00

¢Ù Other Receivable accounts with large amount individually and bad debt provisions were

provided

Other receivable£¨Unit£© Closing balance

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Bad debt Proportion

Other receivable Reason

provision £¨%£©

Shenzhen ZhongHao (Group) Co.,Ltd. 5,000,000.00 5,000,000.00 100.00 Won the lawsuit,no assets recoverable

Jinbeili electrical appliances Co.,Ltd. 2,706,983.51 2,706,983.51 100.00 Aging long, not expected to withdraw

Shenzhen Petrochemical Industry (Group)

1,902,686.77 1,902,686.77 100.00 Aging long, not expected to withdraw

Co., Ltd.

Huatong casing Co.,Ltd. 1,212,373.79 1,212,373.79 100.00 Aging long, not expected to withdraw

Shenzhen Pilot New Chemical Materials

660,790.09 660,790.09 100.00 Aging long, not expected to withdraw

Co.,Ltd.

Others_VAT£¨Trade department£© 763,481.79 763,481.79 100.00 Aging long, not expected to withdraw

Total 12,246,315.95 12,246,315.95

¢ÚIn the groups, other accounts receivable adopting aging analysis method to withdraw bad

debt provision:

Closing balance

Aging

Other receivable Bad debt provision Proportion£¨%£©

Within 1 year 92,313,357.91

1 to 2 years 76,041.64 3,802.08 5.00

2to 3years 503,280.45 100,656.09 20.00

Over 3 years 1,913,211.38 956,605.69 50.00

Total 94,805,891.38 1,061,063.86

(2) The amount of bad debt provision during the current year is RMB 97,726.87.

(3) Other receivables classified by nature

Nature Closing balance Opening balance

Internal current account 92,031,334.71 107,087,610.34

Unit account 2,771,126.39 2,695,084.75

Others 14,083,714.01 15,611,113.63

Total 108,886,175.11 125,393,808.72

(4) The top five of other receivables classified by debtor at period end

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Closing balance of bad

Debtors Nature Closing balance Aging Proportion£¨%£©

debt provision

Shenzhen ZhongHao (Group) Co.,Ltd. Unit account 5,000,000.00 Over 3 years 4.59 5,000,000.00

Jinbeili Electrical Appliances Co.,Ltd. Unit account 2,706,983.51 Over 3 years 2.49 2,706,983.51

Shenzhen Petrochemical Industry (Group) Co.,

Unit account 1,902,686.77 Over 3 years 1.75 1,902,686.77

Ltd.

Huatong Casing Co.,Ltd. Unit account 1,212,373.79 Over 3 years 1.11 1,212,373.79

Others_VAT£¨Trade department£© Unit account 763,481.79 Over 3 years 0.70 763,481.79

Total 11,585,525.86 10.64 11,585,525.86

(5) Accounts receivables related to government subsidyn

There are no accounts receivables related to government subsidyn this reporting period..

(6) Terminated recognize of other receivables due to financial assets transfer.

There is no terminated recognize of other receivables due to financial assets transfer.

(7) Assets or liabilities caused by transferring other receivables

There are no assets or liabilities caused by transferring other receivables.

3¡¢Long-term equity investments

(1) Disclosure by category

Closing balance Opening balance

Items

Book balance Bad debt provision Book value Book balance Bad debt provision Book value

Investment to

the 525,795,543.61 1,956,000.00 523,839,543.61 265,795,543.61 1,956,000.00 263,839,543.61

subsidiaries

Investment to

joint

ventures/as-so 168,170,825.88 9,787,162.32 158,383,663.56 171,908,769.00 9,787,162.32 162,121,606.68

ciated

enterprises

Total 693,966,369.49 11,743,162.32 682,223,207.17 437,704,312.61 11,743,162.32 425,961,150.29

£¨2£©Investment to the subsidiaries

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Impairment Closing balance

Names Opening balance Increased Decreased Closing balance provision in of impairment

current year provision

Shenzhen Tefa Tellus Real

31,152,888.87 31,152,888.87

Estate Exchange Co.,Ltd.

Shenzhen Tellus Real Estate

2,000,000.00 2,000,000.00

Exchange Co.,Ltd.

Shenzhen Tefa Tellus

Property Management Co., 5,021,970.88 5,021,970.88

Ltd.

Shenzhen Tellus

Xinyongtong Automobile 57,672,885.22 57,672,885.22

Development Co.,Ltd.

Shenzhen Zhongtian

10,708,622.90 260,000,000.00 270,708,622.90

Industrial Co.,Ltd

Shenzhen Automobile

Industry and Trading 126,251,071.57 126,251,071.57

Co.,Ltd.

Shenzhen Tefa Huari

Automobile Enterprise 19,224,692.65 19,224,692.65

Co.,Ltd.

Shenzhen Huari Toyota

1,807,411.52 1,807,411.52

Automobile Co.,Ltd.

Shenzhen Xinyongtong

Automobile Inspection 10,000,000.00 10,000,000.00

Equipment Co.,Ltd.

Shenzhen Hanli

Hi-technology Ceramics 1,956,000.00 1,956,000.00 1,956,000.00

Co.,Ltd.*

Total 265,795,543.61 260,000,000.00 525,795,543.61 1,956,000.00

Note£º*The detail information of Shenzhen Hanli Hi-technology Ceramics Co.,Ltd.refers to

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Note VIII-1.Subsidiaries.

(3) Investment to joint ventures and associated enterprises

Increased /Decreased in reporting period

Adjustment of

Gain/Loss of

Names Opening balance Increas Decrease other Other equity

investment under

ed d comprehensive changes

equity method

income

I. Joint ventures

Shenzhen Tellus Jimeng Investment Co.,Ltd. 59,717,642.94 82,052.79

Shenzhen Tellus Xing Investment Co.,Ltd. 9,313,071.40 645,073.44

Subtotal 69,030,714.34 727,126.23

II. Associated enterprises

Shenzhen Xing Long Mechanical Model Co.,Ltd. 15,878,254.74

Shenzhen Tellus Automobile Service Development

Co.,Ltd.

Shenzhen Ren Fu-Tellus Automotive Service

77,212,637.60 1,834,930.65

Co.,Ltd.

Hunan Changyang Industrial Co.,Ltd.* 1,810,540.70

Shenzhen Jiecheng Electronic Co.,Ltd.* 3,225,000.00

Shenzhen Pilot New Chemical Materials Co.,Ltd.* 4,751,621.62

Subtotal 102,878,054.66 1,834,930.65

Total 171,908,769.00 2,562,056.88

£¨continued£©

Increased /Decreased in reporting period

Closing balance of

Names Declaration of cash Withdrawn impairment Closing balance

Other impairment provision

dividends or profits provision

I. Joint ventures

Shenzhen Tellus Jimeng Investment

59,799,695.73

Co.,Ltd.

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Increased /Decreased in reporting period

Closing balance of

Names Declaration of cash Withdrawn impairment Closing balance

Other impairment provision

dividends or profits provision

Shenzhen Tellus Xing Investment Co.,Ltd. 9,958,144.84

Subtotal - 69,757,840.57

II. Associated enterprises

Shenzhen Xing Long Mechanical Model

15,878,254.74

Co.,Ltd.

Shenzhen Tellus Automobile Service

Development Co.,Ltd.

Shenzhen Ren Fu-Tellus Automotive

6,300,000.00 72,747,568.25

Service Co.,Ltd.

Hunan Changyang Industrial Co.,Ltd.* 1,810,540.70 1,810,540.70

Shenzhen Jiecheng Electronic Co.,Ltd.* 3,225,000.00 3,225,000.00

Shenzhen Pilot New Chemical Materials

4,751,621.62 4,751,621.62

Co.,Ltd.*

Subtotal 6,300,000.00 98,412,985.31 9,787,162.32

Total 6,300,000.00 168,170,825.88 9,787,162.32

Note:*Full provision for impairment has been made for these companies due tothe

revocation of Business License.

4¡¢Operating income and operating costs

Current year Previous year

Items

Income Cost Income Cost

Principal operating activities 36,101,114.68 3,735,105.43 20,660,013.84 3,638,420.84

Total 36,101,114.68 3,735,105.43 20,660,013.84 3,638,420.84

5¡¢Investment Income

Items Current year Previous year

Income from long-term equity investment measured by adopting theequity method 2,562,056.88 14,260,218.24

Investment income received from holding of held-to-maturity investment 4,383,068.48

Investment income received from holding of available-for ¨Csale financialassets 84,270.40

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Items Current year Previous year

Investment income arising from disposal of available-for ¨Csale financial assets 1,141,857.35

Total 6,945,125.36 15,486,345.99

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XIV¡¢Supplementary information

1¡¢Non-recurring profit and lossfor the current year

Items Amount Description

Gains or losses from disposal of non-current assets after expending impairment provisions -34,345.09

Exceeded-authority approved, non-official approved or accidental tax repayment and relief

Government grants recognized through profits or loss for the current reporting period, excluding

grants which are closely related to the Company¡¯s operating activities and of which the quota or 371,850.00

approval is eligible for automatic renewal in accordance with relevant regulations

Financial resource usage fees charged on non-financial institution recognized through profit or

loss for the current reporting period

Gains arising from bargain purchase in business combination and investments in associates and

joint ventures

Non-monetary assets exchange

Consigned investment and asset management 5,740,301.35 Note VI.41

Impairment provision resulting from force majeure, e.g. natural disasters

Debt restructuring

Entity restructuring expenses, e.g., expenditure for layoff of employees, integration expenses, etc.

Profit or loss attributable to the evidently unfair portion of transaction price, being transacted price

in excess of fair transaction price, of a transaction

Net profits or losses achieved by an acquired under-common-control entity during the period from the start

of the period to the acquisition date

Gains or losses arising from contingent events unconnected with the Company¡¯s daily operating

-61,965.00

activities

Fair value changes of tradable financial assets and tradable financial liabilities held and gains or

losses arising from disposals of tradable financial assets, tradable financial liabilities and

available-for-sale financial assets, excluding hedging contracts relevant to the Company¡¯s daily

operating activities

Reversal of provision for account receivables that are tested for impairment losses individually 31,980.00

Profit or loss on entrusted loans

Profit or loss on changes in the fair value of investment properties that are subsequently

201

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Items Amount Description

measured using the fair value model

Effects on profit or loss of one-off adjustment to profit or loss for the period according to the period

requirements of tax laws and accounting laws and regulations

Custodian fees earned from entrusted operation

Other non-operating income or expenses other than the above 118,638.89

Other profit or loss that meets the definition of non-recurring profit or loss 9,722,688.86

Subtotal 15,889,149.01

Tax effects 1,576,392.95

Effects attributable to minority interests (after tax) 132,446.96

Total 14,180,309.10

Note£º¡±+¡± means income or gain and ¡°-¡± means loss or expense.

The Company defines items as non-recurring profit or loss items according to ¡°Information

Disclosure and Presentation Rules for Companies Making Public Offering of Securities

No.1---Non-recurring Profit or Loss¡±(CSRC No.[2008]43).

2¡¢Rate of return on net assets and earnings per share

Rate of the weighted average Earnings per share

Profit category

net profit£¨%£© Basic earnings per share Diluted earnings per share

Net profit attributable to ordinary

6.2127 0.1538 0.1538

shareholders

Recurring profit or loss attributable to

4.1529 0.1298 0.1298

ordinary shareholders

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Section XI. Documents available for Reference