Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Security code: 000058, 200058 Security name: SHEN SEG, SHEN SEG B Announcement No.:2016-092 Shenzhen SEG Co., Ltd. 2016 Q3 Report October 2016 1 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Definition Refers Definition Description to refers This Company, the Company Shenzhen SEG Co., Ltd. to refers Shenzhen SEG Group Co., Ltd. Shenzhen SEG Group Co., Ltd. to refers Huakong SEG Shenzhen Huakong SEG Co., Ltd. to refers SEG Baohua Shenzhen SEG Baohua Enterprise Development Co., Ltd. to refers Xi'an SEG Xi’an SEG Electronics Market Co., Ltd. to refers Suzhou SEG Suzhou SEG Electronics Market Management Co., Ltd. to refers Xi'an Hairong SEG Xi’an Hairong SEG Electronics Market Co., Ltd. to refers Nanjing SEG Shenzhen SEG Electronics Market Management Co., Ltd. to refers Nantong SEG Nantong SEG Times Square Management Co., Ltd. to refers Changsha SEG Changsha SEG Development Co., Ltd. to refers SEG Industry Shenzhen SEG Industrial Investment Co., Ltd. to refers SEG E-Commerce Shenzhen SEG E-Commerce Co., Ltd. to refers SEG Credit Shenzhen SEG Credit Co., Ltd. to refers Wuxi SEG Wuxi SEG Electronics Market Co., Ltd to refers Nanning SEG Nanning SEG Digital Plaza Management Co., Ltd. to refers SegMaker is a wholly-owned subsidiary of SEG, a subsidiary with 100% SegMaker to share capital held by SEG Group refers State-owned Assets Supervision and Administration Commission of Shenzhen SASAC to Shenzhen Municipality refers Shenzhen Securities Regulatory Bureau of China Securities Regulatory Shenzhen Securities Regulatory Bureau to Commission Unless otherwise specified, the amount referred refers Amount in RMB to in the report to 2 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Chapter 1 Important Notice The Board of Directors, the Board of Supervisors, the directors, the supervisors, and the senior executives guarantee that the quarterly report is authentic, accurate, and complete and has no false records, misleading statements or major omissions, and that they undertake joint and several legal liabilities. All the directors have attended the meeting of the Board of Directors and reviewed the quarterly report. Chairman of the Board Wang Li, the Chief Financial Officer Liu Zhijun and the responsible person of the accounting institution (accountant in charge) Ying Huadong hereby declare that the Financial Statements enclosed in this quarterly report are true, accurate and complete. 3 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Chapter 2 Main Financial Data and Shareholder Change I. Major accounting data and financial indexes Are retrospective adjustments made to previous financial statements due to accounting policy changes or accounting errors? □ Yes √ No Period-end amount Year-end amount YoY increase/decrease Total assets (Yuan) 2,509,809,592.55 2,614,660,524.37 -4.01% Net assets attributable to shareholders of the listed company 1,493,688,009.33 1,475,126,229.16 1.26% (Yuan) Amount from the beginning of the year YoY increase/decrease The report period YoY increase/decrease to the end of the report up to the report period period Operating revenue (Yuan) 139,478,273.85 -28.39% 502,151,510.70 -11.80% Net profit attributable to shareholders of the listed company 15,422,191.47 111.83% 42,278,461.89 0.22% (Yuan) Net profit attributable to shareholders of the listed company 15,912,414.05 134.62% 44,608,873.52 7.54% after deduction of non-recurring gains and losses (Yuan) Net cash flow arising from - - -83,427,796.65 - operating activities (Yuan) Basic EPS (Yuan/Share) 0.0197 107.37% 0.054 Diluted EPS (Yuan/Share) 0.0197 107.37% 0.054 Weighted average ROE 1.04% 0.11% 2.85% -2.53% Unit: Yuan Amount from the beginning Item of the year to the end of the Remarks report period Gains and losses on disposal of non-current assets (including the -10,988.73 Loss from disposal of fixed assets write-off of assets depreciation reserves) Mainly the special reward (RMB Government subsidy included in the current profit and loss 50,000) for the development of (closely related to enterprise business, excluding quoted or 119,322.06 the service industry from Suzhou quantitative government subsidy according to national uniform Wujiang Finance Bureau and the 4 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. standard) support fund (RMB 53,400) for SEG e-commerce trading platform of Shenzhen Economy and Trade Information Committee. Additional accrual of Nanning SEG litigation compensation Other non-operating income and expenses except the -3,073,169.32 expense is RMB 3,700,000. above-mentioned items Others are income from merchant compensation. Less: Amount of affected income tax -833,740.10 Amount of influence of minority shareholders’ equity (after 199,315.74 tax) Total -2,330,411.63 - An explanation shall be made with regard to the Company's considerations for defining non-recurring profit and loss according to the Explanatory Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public — Non-recurring Profit and Loss and the reason of classifying the non-recurring profit and loss listed in this announcement as recurring. □ Applicable √ Not applicable In the report period, it does not happen that the company defines the non-recurring profit and loss items defined or listed by Interpretive Bulletin No. 1 on Information Disclosure by Companies Publicly Issuing Securities — Non-recurring Gains and Losses as recurring profit and loss items. II. Total number of shareholders and shares held by top 10 shareholders at the end of the report period 1. Total number of ordinary shareholders and preferred shareholders restored with voting rights and shares held by top 10 shareholders Unit: Share Total number of ordinary Total number of preferred shareholders at the end of the report 81,310 shareholders restored with the 0 period voting rights (if any) Shares held by top 10 shareholders Quantity of Information on pledged or frozen Name of Nature of Proportion of Shares held restricted shares shares shareholder shareholder shareholding held Share status Quantity Shenzhen SEG State-owned legal 30.24% 237,359,666 0 Group Co., Ltd. person Domestic natural Liu Guocheng 0.85% 6,739,002 0 person 5 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Domestic natural Zhang Jiao 0.52% 4,046,989 0 person Domestic natural Liu Guohong 0.42% 3,300,258 0 person Overseas natural Gong Qianhua 0.37% 2,940,000 0 person Domestic natural Zeng Ying 0.29% 2,300,000 0 person China Securities Domestic Finance non-state-owned 0.29% 2,271,900 0 Corporation legal person Limited Foreign legal NORGES BANK 0.24% 1,890,226 0 person Domestic natural Wei Jieren 0.18% 1,412,066 0 person Domestic natural Hu Chunwan 0.17% 1,385,200 0 person Information on top 10 shareholders of non-restricted shares Type of share Name of shareholder Quantity of unrestricted ordinary shares held Type of share Quantity RMB ordinary Shenzhen SEG Group Co., Ltd. 237,359,666 237,359,666 shares Domestically Liu Guocheng 6,739,002 listed foreign 6,739,002 shares RMB ordinary Zhang Jiao 4,046,989 4,046,989 shares Domestically Liu Guohong 3,300,258 listed foreign 3,300,258 shares Domestically Gong Qianhua 2,940,000 listed foreign 2,940,000 shares Domestically Zeng Ying 2,300,000 listed foreign 2,300,000 shares China Securities Finance RMB ordinary 2,271,900 2,271,900 Corporation Limited shares 6 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Domestically NORGES BANK 1,890,226 listed foreign 1,890,226 shares Domestically Wei Jieren 1,412,066 listed foreign 1,412,066 shares Domestically Hu Chunwan 1,385,200 listed foreign 1,385,200 shares Shenzhen SEG Group Co., Ltd (hereinafter referred to as "SEG Group") has no associated Explanations on the association relationship with other shareholders and is not a person acting in concert with other relationship or concerted action shareholders as specified in the Management Methods for Disclosure of Information on among the above-mentioned Changes of Shareholding Status of Shareholders of Listed Companies. It is unclear whether shareholders other shareholders are persons acting in concert. Information on top 10 ordinary shareholders participating in Zhang Jiao holds 2,847,801 shares in the credit securities account. securities margin trading (if any) Whether the top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares conducted agreed repurchase transactions in the report period? □ Yes √ No The top ten ordinary shareholders of the Company or top ten ordinary shareholders of non-restricted shares did not conduct agreed repurchase transactions in the report period. 2. Total number of preferred shareholders and shares held by top 10 preferred shareholders □ Applicable √ Not applicable 7 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Chapter 3 Important Matters I. Main accounting statements of the report period and changes in financial indicators of reasons √ Applicable □ Not applicable (I) Balance Sheet Statement Item Closing balance Opening balance Difference Increase or decrease over the previous year (%) Notes receivable 100,792.00 100,792.00 Accounts receivable 68,751,597.89 98,212,422.87 -29,460,824.98 -30.00% Advances 85,887,752.86 129,044,887.26 -43,157,134.40 -33.44% Other accounts receivable 60,964,997.67 27,352,784.33 33,612,213.34 122.88% Inventory 610,981,171.82 450,809,934.72 160,171,237.10 35.53% Other current assets 190,695,564.93 339,430,419.74 -148,734,854.81 -43.82% Construction in progress 186,583.94 140,810.00 45,773.94 32.51% Other non-current assets - 5,103,811.14 -5,103,811.14 -100.00% Accounts payable 22,763,090.01 89,908,781.98 -67,145,691.97 -74.68% Payroll payable 7,749,915.62 21,849,134.16 -14,099,218.54 -64.53% Interest payable 698,717.58 516,758.34 181,959.24 35.21% Dividends payable 17,302,998.39 2,218,224.58 15,084,773.81 680.04% Estimated liabilities - 7,000,000.00 -7,000,000.00 -100.00% 1. Notes receivable: increase by RMB 100,000 over the beginning of the period, mainly due to increase in the rent settled by notes of the holding subsidiary Wujiang SEG Market Management Co., Ltd. in the report period. 2. Accounts receivable: decrease by RMB 29.46 million or 30% YoY, mainly due to the termination of supply chain business by SEG E-Commerce because the Company is to transfer equity in the report period. 3. Advance payment: decreases by RMB 43.16 million or 33.44% YoY, mainly due to the termination of supply chain business by SEG E-Commerce because the Company is to transfer equity and trade business of the holding subsidiary SEG Industry shrinks in the report period. 4. Other receivables: increase by RMB 33.61 million YoY, or 122.88% YoY, mainly due to (1) mainly due to the decoration deposit RMB 8.87 million for new outlet at the east gate paid by Mellow Orange Hotel run by the holding subsidiary SEG Baohua; (2) preliminary security deposit RMB 8.87 million in total for a new project paid by the headquarters; (3) increase in the current account RMB 10.30 million between the holding subsidiary Wuxi SEG and Wuxing Xinyuan Construction and Development Co., Ltd. 8 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. 5. Inventory: increases by RMB 160.17 million or 35.53% YoY, mainly due to project construction expense of the Company's wholly-owned subsidiary Nantong SEG in the report period. 6. Other current assets: decrease by RMB 148.73 million or 43.82% YoY, due to decrease in bank financing amount in the report period. 7. Construction in progress: increases by RMB 50,000 or 32.51%, mainly due to new air-conditioner installation project of the holding subsidiary Changsha SEG. 8. Other non-current assets: decrease by RMB 5.1 million or 100% YoY, mainly because the prepaid electronics market transformation project fund in the previous year is carried forward to long-term deferred assets as the project is completed in the report period. 9. Accounts payable: decrease by RMB 67.15 million or 74.68% YoY, mainly due to the termination of supply chain business by SEG E-Commerce because the Company is to transfer equity. 10. Payroll payable: decreases by RMB 14.10 million or 64.53% YoY, mainly because salaries and bonuses accrued in the previous year are paid in the report period. 11. Interest payable: increases by RMB 180,000 or 35.21% YoY, due to interest payable agreed in the financing contract Transfer and Repurchase of Specific Assets Earnings entered into between the holding subsidiary SEG Credit and Great Wall Securities. 12. Dividend payable: increases by RMB 15.08 million or 680.04%, mainly due to increase in the dividend unpaid by the holding subsidiary SEG Credit to minority shareholders. 13. Estimated liabilities: decrease by RMB 7 million or 100% YoY, mainly due to payment of Nanning SEG litigation compensation expense RMB 13 million. The estimated liabilities accrued in the previous year are deducted. (II) Profit Statement Item Amount Amount of the Difference Increase or incurred in the previous period decrease over the current period previous year (%) Interest expenses 465,888.89 4,206,636.86 -3,740,747.97 -88.92% Operating tax and surcharges 12,034,935.82 20,059,179.56 -8,024,243.74 -40.00% Financial cost 3,186,217.90 4,630,265.70 -1,444,047.80 -31.19% Loss from asset impairment -4,481,512.08 10,015,700.20 -14,497,212.28 -144.74% Investment income 2,401,978.48 9,485,725.11 -7,083,746.63 -74.68% Income from investment in joint -6,482,084.00 -4,366,107.86 -2,115,976.14 -48.46% ventures or associates Non-operating expenses 3,886,657.87 827,995.29 3,058,662.58 369.41% Other comprehensive income -82,762.10 316,765.26 -399,527.36 -126.13% 1. Interest expense: decreases by RMB 3.74 million or 88.92% YoY, mainly because the holding subsidiary SEG Credit repaid all bank loans in Q1. The interest expense decreases as loans decrease. 2. Business tax and surtax: decreases by RMB 8.02 million or 40% YoY, mainly due to the program of replacing business tax with value-added tax launched from May 1, 2016. Enterprises that paid the business tax before pay the value-added tax now, the value-added tax is the tax excluded in price and not included in this item. 3. Financial expense: decreases by RMB 1.44 million or 31.19% YoY. In the report period, as short-term 9 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. borrowings of the Company and holding subsidiaries excluding SEG Credit decrease by RMB 48.16 million, the interest expense payable to the bank decreases accordingly. 4. Asset impairment loss: decreases by RMB 14.50 million or 144.74% YoY. In the report period, the holding subsidiary SEG Credit performs the impairment test according to the five-grade loan classification, and reverses the partially accrued loan loss provision. 5. Investment income: decreases by RMB 7.08 million or 74.68%, mainly due to (1) In the report period, the total capital of the Company decreases, the total bank financing amount decreases, and the financing income decreases. (2) The accumulated loss of Huakong SEG (the Company holds 20% shares) amounts to RMB 31.21 million, which is RMB 9.63 million more than that of the previous year (RMB 21.58 million). Accordingly, the investment income of the Company decreases by RMB 1.58 million. 6.Income from investment in associates and joint ventures: decreases by RMB 2.11 million or -48.46% YoY, mainly because the accumulated loss of Huakong SEG (the Company holds 20% shares) amounts to RMB 31.21 million, which is RMB 9.63 million more than that of the previous year (RMB 21.58 million). Accordingly, the investment income of the Company decreases by RMB 1.58 million. 7. Non-operating expense: increases by RMB 3.06 million or 369.41%, mainly because Nanning SEG lawsuit claim was dismissed by Nanning Xingning District People's Court in the (2015) X. M. Y. C. Zi. No. 1590 Civil Judgment. According to the (2015) X. M. Y. C. Zi. No. 1393 Civil Judgment, the Company paid the litigation compensation expense and overdue fine (RMB 13 million in total). Considering that the Company has accrued the estimated liabilities RMB 7 million for this item and Nanning SEG estimated the rent payable RMB 2.3 million, the remaining compensation RMB 3.7 million is included in this item. 8. Other comprehensive income: decreases by RMB 400,000 YoY, mainly because the value of Friendship Group stocks held by the holding subsidiary SEG Baohua declines. (III) Cash Flow Statement Item Amount incurred in Amount of the previous Difference Increase or the current period period decrease over the previous year (%) Cash received from sales of goods and 620,820,444.62 1,090,057,199.43 -469,236,754.81 -43.05% rendering of services Tax refunds 82,932,677.81 136,078,841.72 -53,146,163.91 -39.06% Other cash received from operating 164,808,152.37 473,715,102.01 -308,906,949.64 -65.21% activities Cash paid for goods and service 709,962,609.24 1,172,208,970.95 -462,246,361.71 -39.43% Net increase in loans to customers -44,885,258.00 20,896,649.47 -65,781,907.47 -314.80% and advances (1) Other cash received from 196,562,398.65 472,106,815.05 -275,544,416.40 -58.36% operating activities Cash received from withdrawal of 601,902,098.00 1,689,700,000.00 -1,087,797,902.00 -64.38% investment Cash received from investment income 10,034,062.48 14,402,007.18 -4,367,944.70 -30.33% Net cash received from disposal of fixed 62,000.00 34,082.50 27,917.50 81.91% assets, intangible assets and other 10 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. long-term assets Cash paid for purchase and construction 7,074,145.94 14,550,969.56 -7,476,823.62 -51.38% of fixed assets, intangible assets and other long-term assets Cash paid for investment 493,604,260.00 1,738,300,000.00 -1,244,695,740.00 -71.60% Other cash paid for financing 1,674,692.51 58,656,972.92 -56,982,280.41 -97.14% activities 1. Cash received from sales of goods and rendering of services: decreases by RMB 469.24 million or 43.05% YoY, mainly due to the termination of supply chain business by SEG E-Commerce because the Company is to transfer equity and trade business the holding subsidiary SEG Industry shrinks in the report period. 2. Tax refunds: decrease by RMB 53.15 million or 39.06% YoY, mainly due to the termination of supply chain business by SEG E-Commerce because the Company is to transfer equity in the report period. 3. Other cash received from operating activities: decreases by RMB 308.91 million or 65.21% (RMB 469.24 million or 43.05%) YoY. Because SEG E-Commerce that the Company is to transfer its equity terminated foreign trade business in the report period, the advance and deposit received decrease. 4. Cash paid for goods and services: decreases by RMB 462.24 million or 39.43% YoY, mainly due to the termination of supply chain business by SEG E-Commerce because the Company is to transfer equity and trade business of the holding subsidiary SEG Industry shrinks in the report period. 5. Net increase in loans and advances to customers: decreases by RMB 65.78 million or 314.8% YoY, mainly because loans granted by the holding subsidiary SEG Credit decrease and the net increase in loans is negative in the report period while loans rose in the same period of the previous year. 6. Other cash paid for operating activities: decreases by RMB 275.54 million or 58.36% YoY. Because SEG E-Commerce that the Company is to transfer its equity terminated foreign trade business in the report period, the advance and deposit received decrease. 7. Cash received from withdrawal of investment: decreases by 1.08780 billion or 64.38% YoY, mainly because the Company invests more in the main business and the investment scale of bank financial products decreases. 8. Cash received from withdrawal of investment: decreases by 4.37 million or 30.33% YoY, mainly because the Company invests more in the main business and the investment scale of bank financial products decreases over the same period of the previous year. 9. Net cash received from disposal of fixed assets, intangible assets and other long-term assets: increases by RMB 30,000 or 81.91% YoY, mainly because the cash received from disposal of obsolete assets increases by RMB 30,000 YoY. 10. Cash paid for purchase and construction of fixed assets, intangible assets and other long-term assets: decreases by RMB 7.48 million or 51.38% YoY, mainly due to decrease in the market decoration and transformation expense of the holding subsidiary. 11. Cash paid for investment: decreases by 1.2447 billion or 71.6% YoY, mainly because the Company invests more in the main business and the investment scale and frequency of bank financial products decrease. 12. Other cash paid for financing activities: decreases by 56.98 million or 97.14% YoY, mainly because the holding subsidiary SEG E-Commerce repaid the interbank financing of related parties in the same period of the previous year while the Company has not incurred such expense in the report period. 11 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. II. Progress of significant events and their impacts and analysis of solutions √ Applicable □ Not applicable (I) Major asset restructuring The Company launched a major asset restructuring program in November 2015, and its stocks (SHEN SEG 000058, SHEN SEG B 200058) were suspended from the early trading on November 4, 2015. During the stock suspension, the Company and related parties actively pushed forward major assets restructuring, and regularly disclosed progress notices. The Company's stocks resumed trading from the morning on February 25, 2016. As of the date of disclosure of the report, the Company has disclosed the major asset restructuring report (see Report on Issuance of Shares and Payment of Cash for Asset Acquisition and Raising of Supporting Funds & Connected Transactions [Draft] disclosed on www.cninfo.com.cn on August 4), and received the Notice of China Securities Regulatory Commission on Primary Feedback Opinion for Review of Administrative Licensing Items (see the Announcement of Receipt of the Notice of China Securities Regulatory Commission on Primary Feedback Opinion for Review of Administrative Licensing Items Concerning the Major Asset Restructuring disclosed by the Company on www.cninfo.com.cn on October 10.) At this stage, the Company and related intermediaries are striving to improve work efficiency and ensure the smooth progress of the project. The Company will promptly perform the information disclosure obligation according to the progress. According to the disclosed major asset restructuring report, the Company plans to acquire 100% equities of SegMaker held by SEG Group, 55% equities of SEG Kangle, 100% equities of SEG Property Development, and 79.02% equities of SEG Property Investment by issuance of shares (86.90%) and payment of cash (13.10%). In order to promote the integrated performance, the Company plans to raise supporting fund of no more than 100% of the transaction price of assets to be purchased (or RMB 2 billion) through private placement to no more than 10 specific investors. After restructuring, based on advantages in the specialized electronics market and commercial real estate business and Huaqiang North industrial cluster, the Company will give full play to the resource allocation function. The Company will build the SEG maker center, SEG international maker product display and promotion center, SEG maker apartment, and maker funds, get deeply involved in the maker ecology industrial chain, facilitating the maker group in basic hardware technologies, R&D and production support, and funding. The Company will also interact with upstream and downstream manufacturers, promote capitalization and industrialization of innovations, and marketization of new technologies and products, and invigorate innovative vitality of the market to support and build a new maker business ecosphere integrating "experimental development + incubator + marketing + supporting services", and promote business development. In addition, the Company will, based on the existing specialized electronics market, combine service advantages of the specialized electronics market and customer resources, make more efforts to expand the maker services, cultural education, smart technology, sports and entertainment, virtual experience, electronic games and financial services, optimize and integrate the business chain system, take consumer experience as the carrier, utilize online and offline channels and resources, and carry out industrial upgrading. To promote integrated operating of multiple businesses, make use of collaborative effects, and guarantee the business transformation and upgrading of listed companies, the Company's future operating and development strategy will be embodied in "three transformations": a) from a single electronic product transaction platform and commercial real estate platform to a complex business type platform integrating maker ecology, culture and education, intelligent technology, sports and entertainment, virtual experience, gaming games, and financial services, from single commercial platform operation to be involved in production and operation of relevant contents; b) enterprises of the Company running the specialized electronics market will transform from a single 12 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. leasing role to a platform operator and service provider integrating online and offline resources; c) relying on the resource platform of specialized electronics market business and commercial real estate business, the Company will strive to build an international maker platform with SEG characteristics, develop the whole industry chain layout, and continuously expand innovative fields, such as electronic information products, intelligent electronic applications, and supply chain financial services. (II) Progress in lawsuit by Nanning SEG: In March 2013, Nanning SEG leased the first and second floors in the podium of Nanning Property Plaza located at No. 158, Renmin East Road, Xingning District, Nanning from Nanning Haiqi Real Estate Development Co., Ltd. The property is used as an electronics market. The agreed leasing period is from March 18, 2013 to March 17, 2025. However, because the problem of concentrated water seepage and penetration was still not solved after several times of communication, Nanning SEG brought a lawsuit against Nanning Haiqi at the People's Court of Xingning District. At the same time, Nanning Haiqi brought a lawsuit against Nanning SEG at the ground that Nanning SEG did not pay the rent at the same court. The court merged the two cases into one case and heard the case. The claims of Nanning SEG have been rejected in the Civil Judgment (X. M. Y. C. Z (2015) No. 1590) issued by the People's Court of Xingning District. According to the Civil Judgment (X. M. Y. C. Z (2015) No. 1393), the Leasing Contract for the Electronics Market Project of Nanning SEG signed and concluded by and among Nanning Haiqi, Nanning SEG, and Shenzhen SEG Co., Ltd. on June 16, 2013 was rescinded, Nanning SEG should pay the rent and the liquidated damages for the overdue payment to Nanning Haiqi, as well as the Nanning Haiqi's lawyer fees, and the case acceptance fees. Considering actual situation, the Company decides now not to institute an appeal. According to the Enforcement Notice (Gui 0102 Zhi 1057-1 (2016)) issued by the People's Court of Xingning District, Nanning, Guangxi Zhuang Autonomous Region on September 6, 2016, the Company should pay a liquidated damage for the overdue rent from August 31, 2016 to September 6, 2016, RMB 12,998,409 in total. The Company has paid the amount on September 13, 2016 according to the Enforcement Notice. The Company has accrued RMB 7 million as a predicted debt for this issue in 2015. Nanning SEG has accrued a payable rent of RMB 2.3 million, and the Company has accrued RMB 2.7 million for this issued as a predicted debt in the semi-annual report in 2016. Therefore, the Company has accrued a total of RMB 12 million in previous report periods for predicted debts and payable rent. The influenced amount of the remaining compensation amount on the net profit in the third quarter of the Company is about RMB 1 million. Considering the influenced amount of the lawsuits on the net profit of the Company in 2016 is about RMB 3.7 million, the event will not have major influence on the Company's operating and production. (For details, refer to the semi-annual report disclosed to the media on August 24, 2016.) (III) The Company received the summon and civil complaint from the People's Court of Xingning District, Nanning on September 26, 2016, which required the Company to appear at the court and respond to lawsuits (Gui 0102 Min Chu [2016] No. 3653, dispute over house leasing contract; and Gui 0102 Min Chu [2016] No. 3654, disputes over property service contract) against the Company on November 2, 2016. The relevant information has been disclosed through media on September 29, 2016. (IV) On the Ninth Session of the Sixth Board Meeting of the Company on March 28, 2016, the Predicted Items for Daily Operating Associated Transactions in 2016 were approved. According to the resolution, the holding shareholder Shenzhen SEG Group Co., Ltd. should pay RMB 0.2 million for the annual entrustment fee of Shenzhen SEG Communication Market to the Company. Up to the disclosure date of this report, the Company has received the above fee. 13 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Inquiry Index for the Websites Disclosing Overview of Important Events Disclosure Date the Temporary Reports Restructuring Report on Issuance of Shares and Payment of Cash for Asset August 4, 2016 Acquisition and Raising of Supporting Funds & Connected Transactions (Draft) disclosed on www.cninfo.com.cn Announcement on Shenzhen SASAC's August 26, 2016 Approval of the Major Asset Restructuring Plan disclosed on www.cninfo.com.cn Announcement on Shenzhen SASAC's Recordation of the Asset Appraisal Report August 27, 2016 involved in Major Asset Restructuring Plan 1. Matters concerning major asset disclosed on www.cninfo.com.cn restructuring Announcement on Receipt of the Notice of China Securities Regulatory Commission on Acceptance of Administrative Licensing September 14, 2016 Application during Major Asset Restructuring disclosed on www.cninfo.com.cn Announcement of Receipt of the Notice of China Securities Regulatory Commission on Primary Feedback Opinion for Review October 10, 2016 of Administrative Licensing Items Concerning the Major Asset Restructuring disclosed on www.cninfo.com.cn Announcement of Acquisition of Business 2. Matters concerning acquisition of License of Shenzhen Hongtu SEG business license of Shenzhen Hongtu SEG September 1, 2016 Investment Management Co., Ltd. Investment Management Co., Ltd. disclosed on www.cninfo.com.cn Announcement of Progress of Strategic 3. Matters concerning progress of the Cooperation between the Company and cooperation between the Company and September 22, 2016 Taobao (China) Software Co., Ltd. Taobao (China) Software Co., Ltd. disclosed on www.cninfo.com.cn 4. Matters concerning the Company's Announcement of the Company's Receipt of receipt of court summons and civil September 29, 2016 Court Summons and Civil Complaint complaint disclosed on www.cninfo.com.cn 14 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. III. Commitments fulfilled in the report period and being fulfilled as of the end of the report period by the Company, shareholders, actual controllers, buyers, directors, supervisors, senior executives, or other related parties √ Applicable □ Not applicable Commitment Commitment Commitments Subject Type Content Performance date term Commitment for share reform Not applicable "1. The Company undertakes that as of October 31, 2015, controlling shareholders of Shenzhen SEG or other related persons who occupy funds of Shenzhen Commitment SEG or the on horizontal subject Commitments in the Acquisition Shenzhen competition, company due August 3, Report and the Report of Changes on SEG Group related to Long-term Being fulfilled 2016 Equity Co., Ltd. transaction, non-operating and capital events will occupation repay them before the shareholders' meeting that is intended to review the restructuring plan; 2. After restructuring, the financial independence of the listed companies shall be guaranteed 15 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. and no illegal occupation of funds of listed companies will occur any more; 3. The Company will abide by and urge listed companies to abide by relevant laws and administrative regulations such as the Code on Corporate Governance of Listed Companies, the Notice on Regulating the Funds Transfers between Listed Companies and Related Parties and the External Guarantee of Listed Companies, and the Listing Rules of Shenzhen Stock Exchange, regulations, regulatory documents, and Shenzhen Stock 16 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Exchange business rules, and improve awareness of compliance; 4. The Company will exercise the rights of shareholders according to law, and will not abuse the rights of shareholders to damage the interests of listed companies and other shareholders; 5. The Company will optimize the governance structure of listed companies, improve the internal control system, regulate the operation of the three organs, give full play to functions and supervisory role of independent directors and the Board of Supervisors, and restrict 17 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. decision-maki ng and operation by controlling shareholders and actual controllers of the Company; (6) The Company will fulfill the obligation of information disclosure strictly in accordance with relevant provisions, actively cooperate with listed companies on information disclosure, timely inform major events incurred or to be incurred, and ensure the authenticity, accuracy, integrity, timeliness and fairness of information disclosure. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to 18 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Shenzhen SEG, the subject company, other companies, enterprises, or other economic organizations controlled by the Company." "1. When the Company acts as the controlling shareholder of Shenzhen SEG, the Company, other companies, enterprises, or other Commitment economic on horizontal organizations Shenzhen competition, controlled by August 3, SEG Group related the Company, Long-term Being fulfilled 2016 Co., Ltd. transaction, will minimize and capital and regulate occupation associated transactions with Shenzhen SEG or the subject company, other companies, enterprises, or other economic organizations controlled by 19 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the Company. 2. When the restructuring is completed, the Company, other companies, enterprises, or other economic organizations controlled by the Company will handle associated transactions with Shenzhen SEG or the subject company that are unavoidable or incurred for reasonable cause at fair and reasonable market price, perform the decision-maki ng procedure for associated transactions according to relevant laws, regulations, and normative documents, fulfill the obligation of information disclosure and handle the approval 20 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. procedures according to the law, do not use the dominant position of the controlling shareholder to damage the legal rights and interests of Shenzhen SEG and other shareholders. 3. The Company, other companies, enterprises, or other economic organizations controlled by the Company will not use the rights of shareholders of the listed company or the actual control ability to manipulate or instruct the listed company or its directors, supervisors and senior executives to have the listed company unfairly provide or accept funds, 21 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. goods, services or other assets, or engage in any acts detrimental to the interests of listed companies. In case of breach of the following commitments, the Company will bear all losses thus incurred to Shenzhen SEG, the subject company, other companies, enterprises, or other economic organizations controlled by the Company." "1. In the restructuring, relevant assets, such as Commitment some on horizontal commercial Shenzhen competition, electronics August 03, SEG Group related Long-term Being fulfilled markets of 2016 Co., Ltd. transaction, SEG Group and capital that constitute occupation horizontal competition, have not been injected into 22 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the listed company. SEG Group will trust such assets to Shenzhen SEG or its subsidiaries after the major asset restructuring. Within 5 years after the major asset restructuring, SEG Group will take all necessary measures to solve flaws of such assets, and incorporate the preceding specialized electronics markets that constitute horizontal competition into Shenzhen SEG or transfer them to the third party in a feasible way such as sales based on operating needs of Shenzhen SEG and the completeness of the 23 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. ownership of such assets. If SEG Group fails to complete the foregoing matters as scheduled, before injecting relevant assets to Shenzhen SEG, SEG Group shall lease them to Shenzhen SEG for direct operation and enjoy the income from such property. The annual rent of Shenzhen SEG is the depreciated value of such property. Profit and loss incurred by leasing of such property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a leasing agreement. 2. Except assets owned and business 24 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. operated before the validity date of commitment, when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to guarantee sustainable development of Shenzhen SEG, the Company will exercise supervision and restriction on operating activities of its own and affiliated enterprises under its control, will not establish new or acquire any assets or business same as or similar to its main business within the operation area of Shenzhen SEG, and will not be engaged in any activities that may damage the 25 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. interests of Shenzhen SEG and other companies and enterprises controlled by Shenzhen SEG, or other economic organizations. If in the future there is any business opportunity same as or similar to other main business within Shenzhen SEG operation area, such opportunity will preferentially be recommended to Shenzhen SEG and other companies and enterprises controlled by Shenzhen SEG, or other economic organizations. However, any of the following cases is an exception: (1) Due to 26 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. national laws, regulations and policies and other reasons, any commercial properties and real estate development projects appropriated or allocated through oriented protocols by the government to SEG Group and any enterprises invested by it; or (2) when the general conditions of tender, transfer or assignment of specific commercial properties and real estate development projects have specific requirements on the bidder or assignee, Shenzhen SEG is not qualified y but SEG Group is qualified .Co mmercial property and 27 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. real estate development projects that are same as the main business of Shenzhen SEG or result in horizontal competition subject to the above exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer such projects to Shenzhen SEG. In case of breach of the foregoing commitments, the Company will bear all losses thus 28 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. incurred to Shenzhen SEG, the subject company, other companies, enterprises, or other economic organizations controlled by the Company." "1. The Company will guarantee the independence of personnel of Shenzhen SEG and subject company: (1) After completion of the restructuring, the labor, Shenzhen Other personnel and August 3, SEG Group Long-term Being fulfilled commitments compensation 2016 Co., Ltd. management of Shenzhen SEG are independent from the Company and related parties, such as other companies, enterprises, or other economic organizations controlled by 29 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the Company. (2) After completion of the restructuring, senior executives of Shenzhen SEG and the subject company hold full-time position at Shenzhen SEG and the subject company and receive compensation, and will not assume any duties other than director and supervisor in the Company and related parties, such as other companies, enterprises, or other economic organizations controlled by the Company. (3) After completion of the restructuring, the Company will not interfere with the shareholders' 30 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. meeting and the Board of Directors' exercise of power in appointment/d ismissal of personnel. 2. The Company will guarantee the independence of organs of Shenzhen SEG and the subject company: (1) After completion of the restructuring, Shenzhen SEG and the subject company will develop a sound corporate governance structure and an independent and complete organizational structure. (2) After completion of the restructuring, the shareholders' meeting, the Board of Directors, and 31 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the Board of Supervisors of Shenzhen SEG and the subject company will exercise duties and powers according to laws, regulations and articles of association of Shenzhen SEG and the subject company. 3. The Company will guarantee the independence and completeness of Shenzhen SEG and the subject company: (1) After completion of the restructuring, Shenzhen SEG and the subject company will have independent and complete assets related to production and management. (2) After completion of 32 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the restructuring, the site for business operation of Shenzhen SEG and the subject company are independent of the Company and related parties, such as other companies, enterprises, or other economic organizations controlled by the Company. (3) After completion of the restructuring, except normal operational contacts, Shenzhen SEG and the subject company are not involved in the following case: funds or assets are occupied by the Company and related parties, such as other companies, enterprises, or 33 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. other economic organizations controlled by the Company. 4. The Company will guarantee the business independence of Shenzhen SEG and the subject company: (1) After completion of the restructuring, Shenzhen SEG and the subject company own relevant qualification for independent business operation, and have the independent and sustainable market-oriente d operation capability. (2) Except assets owned and business operated before the validity date of commitment, when acting as 34 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. a controlling shareholder of Shenzhen SEG, in order to guarantee sustainable development of Shenzhen SEG, the Company will exercise supervision and restriction on operating activities of its own and the affiliated enterprises under its control, will not establish new or acquire any assets or businesses same as or similar to its main business within the operation area of Shenzhen SEG, and will also not be engaged in any activities which may damage the interests of Shenzhen SEG and other companies, enterprises, or other economic organizations 35 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. controlled by Shenzhen SEG. If in the future there is any business opportunity same as or similar to other main business within Shenzhen SEG operation area, such opportunity will be preferentially recommended to Shenzhen SEG and other companies, enterprises, or other economic organizations controlled by Shenzhen SEG. ① Due to national laws, regulations and policies and other reasons, any commercial properties and real estate development projects appropriated or allocated through oriented protocols by 36 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the government to SEG Group and any enterprises invested by it; or ② When the general conditions of tender, transfer or assignment of specific commercial properties and real estate development projects have specific requirements on the bidder or assignee, Shenzhen SEG is not qualified but SEG Group is qualified. Commercial property and real estate development projects that are same as the main business of Shenzhen SEG or result in horizontal competition subject to the above exclusions may be invested and 37 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. built by SEG Group at first. If Shenzhen SEG thinks that such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer such projects to Shenzhen SEG. (3) After completion of the restructuring, the Company and related parties, such as other companies, enterprises, or other economic organizations controlled by the Company will reduce related transactions with Shenzhen SEG and the subject company and 38 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. other companies, enterprises, or other economic organizations controlled by them; for any related transactions that are indeed necessary and unavoidable, the Company will handle them at fair price based on the market principle, and fulfill relevant approval procedures and the information disclosure obligation according to provisions of relevant laws, regulations and normative documents. 5. The Company will guarantee the financial independence of Shenzhen SEG and the subject company: (1) After completion of the restructuring, 39 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Shenzhen SEG and the subject company will establish an independent financial department, independent financial accounting system, and standard and independent financial accounting rules. (2) After completion of the restructuring, Shenzhen SEG and the subject company will separately open an account in banks, and do not share accounts with the Company and related parties, such as other companies, enterprises, or other economic organizations controlled by the Company. (3) After completion of the 40 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. restructuring, financial personnel of Shenzhen SEG and the subject company will not hold a part-time job in the Company or related parties, such as other companies, enterprises, or other economic organizations controlled by the Company. (4) After completion of the restructuring, Shenzhen SEG and the subject company will independently make financial decisions, and the Company will not interfere with fund usage of Shenzhen SEG and the subject company. (5) After completion of the restructuring, Shenzhen 41 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. SEG and the subject company will pay taxes independently according to laws. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG, and the subject company." "(I) Contract subjects and date of signing Shenzhen SEG and SEG Group signed Performance Commitment and Compensation Agreement on August 3, Shenzhen Commitments made at the time of 2016. (II) August 3, SEG Group Long-term Being fulfilled restructuring of major assets Performance 2016 Co., Ltd. commitment period 3 accounting periods following the completion of the transaction (including the year of completion and the following 42 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. consecutive two accounting periods). If the transaction is completed before December 31, 2016 (included), the performance commitment period includes 2016, 2017, and 2018.If the transaction is completed between December 31, 2016 and December 31, 2017 (included), the performance commitment period includes 2017, 2018, and 2019.After the completion of the transaction, Shenzhen SEG shall hire an accounting firm with the qualification of securities that is recognized by SEG Group within 4 months after 43 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the end of each accounting period during the performance commitment period to respectively issue a special audit report and/or an impairment test report (hereinafter referred to as the "special audit report") with respect to the promised net profit/promise d cash flow income/promi sed development profit (hereinafter collectively referred to as "promised performance") related to assets within the transaction compensation scope agreed in the agreement, and recognize the promised performance or impairment of assets 44 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. within the transaction compensation scope in each year during the performance commitment period. (III) Performance commitment and performance compensation Underlying assets injected into Shenzhen SEG in this transaction are subject to multiple appraisal methods: 100% equities of SegMaker, 55% equities of SEG Kangle, and 79.02% equities of SEG Property Investment are priced on the basis of appraisal conclusion with the asset-based method, in which property assets are subject to the income 45 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. method and market method and real estate development in the long-term equity investment is subject to the hypothetical development method; 100% equities of SEG Property Development and 100% equities of SEG Property Management (a wholly-owned subsidiary of SEG Property Investment) are subject to the income method. (IV) Triggering condition for performance compensation After the completion of the transaction, if assets within the transaction compensation scope as specified in the special audit report are impaired 46 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. or fail to achieve the promised performance, SEG Group shall make compensation to Shenzhen SEG as agreed in the agreement. (V) Performance compensation method After the completion of the transaction, if assets within the transaction compensation scope are impaired or fail to achieve the promised performance, SEG Group shall compensate Shenzhen SEG in cash or shares. (VI) Effectiveness and termination of the agreement The agreement is made upon signature and seal by the legal representative 47 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. or authorized agent of each party. As an integral part of the Asset Purchase Agreement, the agreement shall come into effect from the date of effectiveness of the Asset Purchase Agreement. When the Asset Purchase Agreement is rescinded, terminated, or deemed as invalid, the agreement is also rescinded, terminated, or invalid. (VII) Liability for breach of the agreement Except for in case of force majeure, violation of any terms of the agreement by either party constitutes breach of the agreement. The default party shall compensate 48 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. for all losses arising from breach of the agreement to the non-breaching party. "1. In the restructuring, relevant assets, such as some commercial electronics markets of SEG Group that constitute horizontal competition, have not been injected into the listed Commitment company. on horizontal SEG Group Shenzhen competition, will trust such August 3, SEG Group related assets to Long-term Being fulfilled 2016 Co., Ltd. transaction, Shenzhen and capital SEG or its occupation subsidiaries after the major asset restructuring. Within 5 years after the major asset restructuring, SEG Group will take all necessary measures to solve flaws of such assets, and incorporate 49 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the preceding specialized electronics markets that constitute horizontal competition into Shenzhen SEG or transfer them to the third party in a feasible way such as sales based on operating needs of Shenzhen SEG and the completeness of the ownership of such assets. If SEG Group fails to complete the foregoing matters as scheduled, before injecting relevant assets to Shenzhen SEG, SEG Group shall lease them to Shenzhen SEG for direct operation and enjoy the income from such property. The annual rent of 50 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Shenzhen SEG is the depreciated value of such property. Profit and loss incurred by leasing of such property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a leasing agreement. 2. Except assets owned and business operated before the validity date of commitment, when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to guarantee sustainable development of Shenzhen SEG, the Company will exercise supervision and restriction on operating activities of its 51 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. own and affiliated enterprises under its control, will not establish new or acquire any assets or business same as or similar to its main business within the operation area of Shenzhen SEG, and will not be engaged in any activities that may damage the interests of Shenzhen SEG and other companies and enterprises controlled by Shenzhen SEG, or other economic organizations. If in the future there is any business opportunity same as or similar to other main business within Shenzhen SEG operation area, such 52 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. opportunity will preferentially be recommended to Shenzhen SEG and other companies and enterprises controlled by Shenzhen SEG, or other economic organizations. However, any of the following cases is an exception: (1) Due to national laws, regulations and policies and other reasons, any commercial properties and real estate development projects appropriated or allocated through oriented protocols by the government to SEG Group and any enterprises invested by it; or (2) when the general 53 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. conditions of tender, transfer or assignment of specific commercial properties and real estate development projects have specific requirements on the bidder or assignee, Shenzhen SEG is not qualified y but SEG Group is qualified .Co mmercial property and real estate development projects that are same as the main business of Shenzhen SEG or result in horizontal competition subject to the above exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that such assets are eligible to be injected into 54 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Shenzhen SEG, upon receipt of the written acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer such projects to Shenzhen SEG. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG, the subject company, other companies, enterprises, or other economic organizations controlled by the Company." "1. When the Commitment Company acts on horizontal as the Shenzhen competition, controlling August 3, SEG Group related shareholder of Long-term Being fulfilled 2016 Co., Ltd. transaction, Shenzhen and capital SEG, the occupation Company, other 55 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. companies, enterprises, or other economic organizations controlled by the Company, will minimize and regulate associated transactions with Shenzhen SEG or the subject company, other companies, enterprises, or other economic organizations controlled by the Company. 2. When the restructuring is completed, the Company, other companies, enterprises, or other economic organizations controlled by the Company will handle associated transactions with Shenzhen SEG or the subject company that are unavoidable 56 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. or incurred for reasonable cause at fair and reasonable market price, perform the decision-maki ng procedure for associated transactions according to relevant laws, regulations, and normative documents, fulfill the obligation of information disclosure and handle the approval procedures according to the law, do not use the dominant position of the controlling shareholder to damage the legal rights and interests of Shenzhen SEG and other shareholders. 3. The Company, other companies, enterprises, or other economic organizations 57 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. controlled by the Company will not use the rights of shareholders of the listed company or the actual control ability to manipulate or instruct the listed company or its directors, supervisors and senior executives to have the listed company unfairly provide or accept funds, goods, services or other assets, or engage in any acts detrimental to the interests of listed companies. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG, the subject company, other 58 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. companies, enterprises, or other economic organizations controlled by the Company." "1. The Company undertakes that as of October 31, 2015, controlling shareholders of Shenzhen SEG or other related persons who occupy funds of Shenzhen SEG or the Commitment subject on horizontal company due Shenzhen competition, to August 3, SEG Group related Long-term Being fulfilled non-operating 2016 Co., Ltd. transaction, events will and capital repay them occupation before the shareholders' meeting that is intended to review the restructuring plan; 2. After restructuring, the financial independence of the listed companies shall be guaranteed and no illegal 59 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. occupation of funds of listed companies will occur any more; 3. The Company will abide by and urge listed companies to abide by relevant laws and administrative regulations such as the Code on Corporate Governance of Listed Companies, the Notice on Regulating the Funds Transfers between Listed Companies and Related Parties and the External Guarantee of Listed Companies, and the Listing Rules of Shenzhen Stock Exchange, regulations, regulatory documents, and Shenzhen Stock Exchange 60 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. business rules, and improve awareness of compliance; 4. The Company will exercise the rights of shareholders according to law, and will not abuse the rights of shareholders to damage the interests of listed companies and other shareholders; 5. The Company will optimize the governance structure of listed companies, improve the internal control system, regulate the operation of the three organs, give full play to functions and supervisory role of independent directors and the Board of Supervisors, and restrict decision-maki 61 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. ng and operation by controlling shareholders and actual controllers of the Company; (6) The Company will fulfill the obligation of information disclosure strictly in accordance with relevant provisions, actively cooperate with listed companies on information disclosure, timely inform major events incurred or to be incurred, and ensure the authenticity, accuracy, integrity, timeliness and fairness of information disclosure. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen 62 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. SEG, the subject company, other companies, enterprises, or other economic organizations controlled by the Company." "For enterprises subordinate to the subject company not under property operation due to problems left over by history (including but not limited to enterprises that are revoked of the Shenzhen Before Other business August 3, SEG Group completion of Being fulfilled commitments license or 2016 Co., Ltd. restructuring discontinue operation), the Company will help and propel the subject company to handle relevant cancellation procedures. After the completion of the restructuring, 63 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. if the subject company or the listed company is held responsible, penalized, or suffer any losses due to non-proper operation or failure in handling the cancellation procedures by such companies, SEG Group shall bear the legal responsibility and compensate the subject company or the listed company in full." "After updating and restructuring of SEG Industry Building, SEG Economy Shenzhen Before Other Building, and August 3, SEG Group completion of Being fulfilled commitments SEG Kangle 2016 Co., Ltd. restructuring Industry Building, the area of added part that belongs to SegMaker, SEG Kangle 64 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. and SEG Property is 2,855.20 square meters. SEG Group undertakes that the use of the temporary buildings belonged to SegMaker, SEG Kangle and SEG Property will be renewed after expiration of the two-year use duration. In case when, due to failure in renewal of use of temporary buildings, the listed company has any loss or the income during the period from expiration of the performance commitment period to expiration of the evaluated income expected period is lower than the expected compensation, 65 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. or the listed company has any loss because the temporary buildings are required to be dismantled by governmental organs during the period from expiration of the performance commitment period to expiration of the evaluated income expected period, SEG Group will compensate the listed company timely and in full amount according to the following compensation methods: 1. SEG Group has made commitments for the performance of the subject company within three years after completion of major asset restructuring. 66 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Influence of the updating and restructuring project has been taken into account in the commitments. 2. The amount of compensation for the income that is lower than the expected income during the period from expiration of the performance commitment period to expiration of the evaluated income expected period = (the predicted accumulated income to the end of the report period - actual accumulated income to the end of the report period) - the compensated amount. 3. The loss caused when 67 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the temporary buildings are required to be dismantled by governmental organs during the period from expiration of the performance commitment period to expiration of the evaluated income expected period = the dismantling cost and compensation amount related - (the accumulated total income to the time the buildings are dismantled- predicted accumulated income during the predication period). Note: the predicted income refers to the net value remained after the predicted total income from the newly added temporary 68 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. buildings in the evaluation reports of the subject companies minuses the allocated investment cost during the operating period and the amount influenced by permanent rent termination predicted in the evaluation report. Shenzhen SEG should employ an auditing agency with security practice qualification recognized by SEG Group to provide a formal auditing report on the compensation methods for the property investment within the compensation scope of the report period within four months at the end of each 69 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. accounting year during the compensation period. SEG Group should compensate in cash any property investment and compensation items within the compensation scope of the report period. Shenzhen SEG should calculate the payable compensation amount within 15 working days upon final specific review opinions provided by the auditing agency, and send a written notice to SEG Group. Within 30 working days upon receipt of the written notice from Shenzhen SEG, SEG Group should pay the compensation 70 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. in cash in full amount." "1. 100% shares of SEG Property have been entrusted to a share entrusting agency as required. Its equity form is authentic and valid, and the equity structure and ownership are clear. The Company has no objection to the share ownership, share quantity, Shenzhen Before Other and share August 3, SEG Group completion of Being fulfilled commitments holding 2016 Co., Ltd. restructuring percentage of SEG Property. The Company has no disputes over share ownership with SEG Property and other shareholders.2 . In case any dispute over ownership of the 3.85% shares of SEG Property of which ownership has not been 71 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. determine as of July 26, 2016 occurs in the future, the Company commits to SEG Property that the Company will provide any necessary assistant to SEG Property to solve the dispute, protect SEG Property from any loss caused thereby, and undertake corresponding responsibilitie s." "Commitments and Declaration on the Fact That the Number of Shareholders of Shenzhen Shenzhen SEG Property Before SEG Property Other Investment August 3, completion of Being fulfilled Investment commitments Co., Ltd. Is 2016 restructuring Co., Ltd. More than 200. All the Shares of the company have been collectively entrusted to a share entrusting 72 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. agency as required. The company's share form is authentic and valid, and the equity structure and ownership are clear. The company has no conflicts, disputes or potential disputes over major share ownership with the company shareholders." "1. In case when, after the restructuring, the land/property use should be changed based on the actual operating demands of Shenzhen Before Other the subject August 3, SEG Group completion of Being fulfilled commitments company or 2016 Co., Ltd. restructuring because the subject company is required by the relevant house property management organ or the land regulatory 73 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. department to change the land/property use, SEG Group will assist the subject company in finishing the relevant formalities. 2. In case when the subject company suffers from administrative penalty by relevant land and/or house property management department because the actual use of the land/property is different from those recorded in the certificate, SEG Group will compensate the subject company for any expenditures and economic loss caused thereby." "1. Since the Shenzhen Before Other issuance date August 3, SEG Group completion of Being fulfilled commitments of this 2016 Co., Ltd. restructuring commitment 74 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. letter, SEG Group will assist SegMaker in restoring for business purpose the part currently functioning as a parking garage on the first floor of the podium of SEG Jingyuan Building within five years. 2. If the restoration work cannot be finished within the above mentioned period of time, SEG Group agrees to process the subject assets as follows: (1) paying in cash the evaluated value of the parking garage and the bank interest of the evaluated value in the same period from the restructuring closing date to the expiration of this 75 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. commitment time; or (2) purchasing in cash the first floor of the podium of SEG Jingyuan Building at a price no less than the evaluated value of the building during this restructuring. 1. The subject company is a limited liability company or stock-limited company established and validly existing according to law with legitimate Shenzhen business Other August 3, SEG Group qualification; Long-term Being fulfilled commitments 2016 Co., Ltd. the subject company has obtained all approvals, permission, authorization and permits required for its setting up and operation of business, all such approvals, permission, 76 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. authorization and permits are valid and there exists no reasons or situations which may cause the above approvals, permission, authorization and permits invalid. 2. The subject company has not any major lawbreaking or irregularity behaviors in production operation, nor any situations where termination is required according to the requirements of relevant laws, regulations, normative documents and Articles of Association. As of the date of issuance of this commitment letter, the subject company has no pending or 77 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. predictable significant lawsuit, arbitration or administrative penalty with amount of subject of more than one million or which will generate adverse impact on its operation. 3. The subject company will independently and fully fulfill the labor contracts it signed with employees. 4. If the subject company is subject to any recovery of fees or penalty from the relevant competent organization in industrial and commerce, tax, employee salaries, social insurance, housing fund, business qualification or competent authorities due to any facts 78 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. existing before this restructuring, the Company will fully indemnify the subject company for all fees owned by subject company and assume all losses occurred by subject company and Shenzhen SEG as a result of this. 5. The subject company legally possesses the ownership and/or right of usage of office space, office equipment, trademark and other assets as necessary to guarantee normal production operation, has independent and complete assets and business structure, has legal ownership to its main assets with 79 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. independent, complete and clear indication of ownership. 6. The subject company has not any lawsuit, arbitration, judicial mandatory enforcement and other situations which interferes with the transfer of company ownership, and has not incurred any external guarantee that is against laws and articles of association of the Company. After completion of this restructuring, if any loss is caused to Shenzhen SEG and the subject company due to the Company's breach of the above commitment, the Company 80 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. agrees to assume the above mentioned liability of indemnity/co mpensation to Shenzhen SEG, the subject company. "1. The Company is a company limited by shares established and effectively existing according to law, and has no circumstances of bankruptcy, dissolution, liquidation or Shenzhen Other August 3, termination Long-term Being fulfilled SEG Co., Ltd. commitments 2016 according to current laws, regulations, normative documents or the Articles of Association. The Company has issued shares openly and been listed according to law. As a listed company, the 81 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Company owns the subject qualification of issuing non-publicly issued shares and purchasing assets according to laws, regulations and normative documents of China. 2. The Company has in recent three years complied with the relevant industrial and commercial administration laws and regulations, running enterprises abiding by the law, and has no record of receiving administrative punishments with serious cases due to breach of industrial and commercial administration laws and regulations; the Company does not exist 82 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. any situations requiring termination according to relevant laws, regulations, normative documents and Articles of Association. The Company has not any legal impediments in going-concern . 3. The Company's holding of general meeting, board of directors meeting, board of supervisors meeting, contents of resolutions and their signing in recent three years are legal, effective and consistent with the provisions of relevant laws, regulations, normative documents and articles of association; the Company's 83 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. stockholders' meeting's authorization to board of directors in recent three years are legal, effective and consistent with the provisions of relevant laws, regulations, normative documents and Articles of Association; the Company's major decisions since being listed are legal, compliant with regulations, true and effective. 4. The Company does not exist any situations of receiving administrative penalty or criminal punishment from China Securities Regulatory Commission due to breach of securities laws, administrative 84 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. laws & regulations or rules, or any situations of receiving administrative penalty or criminal punishment with serious cases due to breach of industrial and commercial, tax, land, environmental protection, customs laws, administrative laws or regulations. 5. The Company has not any pending or foreseeable significant lawsuit, arbitration or administrative penalty cases. The Company's directors, supervisors and senior executives have not any pending or foreseeable significant lawsuit, arbitration or administrative penalty cases. 85 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. 6. There does not exist any situation of the Company's interests being serious damaged by controlling shareholder or actual controller which has not been eliminated. 7. The Company and its affiliated companies do not exist any situation of illegal external guarantee which has not been eliminated yet. 8. The Company's current directors, senior executives have not any situation of receiving administrative penalty from CSRC in recent thirty-six months, or receiving public censure from stock 86 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. exchange during recent twelve months. 9. The Company and its current directors and senior executives have not any situations of being investigated by judicial authorities due to alleged crimes or being investigated by CSRC due to alleged irregularities. 10. Before this restructuring, the connected transactions carried out by the Company fulfilled fair policy-making procedure as necessary and are legal and effective. 11. The Company has not any situation of seriously damaging investor's legitimate rights and interests and public 87 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. interests. 12. Restructuring of the Company conforms to substantial conditions for the restructuring of listed companies specified in laws, regulations and normative documents, including but not limited to: (1) the restructuring conforms to national industrial policies and laws and administrative regulations related to environment protection, land management, and anti-monopoly ; (2) the restructuring will not make the Company inconsistent with the share-based listing conditions; (3) the pricing of 88 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. assets in major asset restructuring is fair, and will not damage rights and interests of the Company and its shareholders; (4) the restructuring can strengthen the Company's operating sustainability, and will not result in any circumstances in which the Company's major assets are cash or has no specific operating businesses after restructuring; (5) the restructuring helps the Company maintain independence of its actual controllers and related persons in terms of business, asset, finance, staff, and organization, 89 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. and conform to relevant regulations by CSRC on independence of listed companies; (6) the restructuring helps the Company maintain a perfect and effective legal person governance structure; (7) the restructuring follows the principle of enhancing the asset quality, financial status, and sustainable profitability of the Company; and (8) the restructuring helps to reduce associated transaction and avoid peer competition for the Company. 13. The Company commits that, after completion of restructuring, the Company 90 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. will continue to maintain its independence of its actual controllers and related persons in terms of business, asset, finance, staff, and organization, and conform to relevant regulations by CSRC on independence of listed companies. 14. This restructuring will not cause significant adjustment to the structure of board of directors, board of supervisors, senior executives of the Company, and also will not involve any adjustment in major business decision-maki ng rule & procedure, information disclosure mechanism 91 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. and so on. After completion of this restructuring, the Company will strictly run and continuously improve legal person governance structure according to the requirements of Company Law, Securities Law, Corporate Governance Standards for Listed Companies and other laws, regulations and articles of association. 15. The Framework Agreement for Issuance of Shares and Payment of Cash for Assets Acquisition, Agreement for Issuance of Shares and Payment of Cash for 92 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Assets Acquisition, and Agreement for Performance Commitment and Compensation , and its relevant formal transaction agreement signed by the Company with Shenzhen SEG Co., Ltd. as regarding this restructuring are reached by different parties to this transaction of restructuring on a equally basis following fair and reasonable principle; these agreements are attached with precedent conditions and are binding on above parties only after these precedent conditions are fully satisfied; the agreement 93 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. is legal and effective and does not contain any contents inconsistent with the relevant laws, regulations and normative documents. 16. The Company undertakes and guarantees that the calling and convening procedure and voting procedure of the board of directors meeting and shareholders' meeting are consistent with the regulations of the relevant laws, regulations, normative documents and Articles of Association, and the contents of resolutions are legal and effective. 17. The final price of this restructuring 94 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. will be determined through consultations based on pricing principle commonly determined by all parties in accordance with the appraisal result issued by appraisal agency with qualification of carrying out securities business and evaluated value of the subject asset determined in the evaluation report filed at State-owned Assets Supervision and Administratio n Commission of the People's Government of Shenzhen Municipality, which is the expression of true meaning of various parties. 18. The information disclosure 95 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. made by the Company for this restructuring complies with the regulations of relevant laws, regulations, rules and normative documents, and there exists no contract, agreement or arrangement which shall be disclosed but not disclosed. 19. The Company's current directors, supervisors, senior executives and shareholders with more than 5% shareholding and other insiders carried out self-inspection on the sales and purchases of Shenzhen SEG stocks within six months (May 04, 2015) prior to the date of trading 96 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. half of this restructuring and issued self-inspection report, except Liu Zhijun, Zheng Dan, Zhu Longqing, Tian Jiliang, Ying Huadong and Xu Ning as disclosed in self-inspection reports who have purchased and sold the Company's stocks, the no other directors, supervisors, senior executives and shareholders have purchased or sold any stocks of Shenzhen SEG, and there exists no situation that the relevant personnel making use of inside information of this restructuring in purchasing and selling stocks of the 97 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Company during self-inspection period. 20. After completion of this restructuring, the Company will continue to perform necessary connected transaction deliberation procedure according to law, regulations, normative documents and articles of association, the legitimate rights and interests of Shenzhen SEG and the whole shareholders. 21. After completion of this restructuring, the holding shareholder of the Company is still Shenzhen SEG Group Co., Ltd., and the actual controller is still 98 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. State-owned Assets Supervision and Administratio n Commission of the People's Government of Shenzhen Municipality. This restructuring will not lead to change of controlling shareholder and actual controller of the Company." "1. The Company will guarantee the independence of personnel of Shenzhen SEG and subject company: (1) after completion of Shenzhen Other the August 3, SEG Group Long-term Being fulfilled commitments restructuring, 2016 Co., Ltd. the labor, personnel and compensation management of Shenzhen SEG are independent from the Company and related parties, such as other 99 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. companies, enterprises, or other economic organizations controlled by the Company. (2) Guarantee that after completion of this restructuring the senior executives of Shenzhen SEG and the subject company hold full-time position at Shenzhen SEG and the subject company and receive compensation, and will not assume any duties other than director and supervisor in the Company and other companies, enterprises or other economic organizations and other connected parties under control of the Company. (3) 100 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Guarantee not to, after completion of this restructuring, interfere with the shareholders' meeting and board of directors meeting's exercise of power in appointment/d ismissal of personnel. 2. Guarantee the independence of institutions of Shenzhen SEG and subject company (1) guarantee that after completion of this restructuring Shenzhen SEG and subject company will have sound corporate governance structure and independent, complete organization. (2) Guarantee that after completion of this 101 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. restructuring the shareholders' meeting, board of directors meeting and board of supervisors meeting of Shenzhen SEG and subject company will exercise duties and powers according to laws, regulations and Articles of Association of Shenzhen SEG and subject company. 3. The Company will guarantee the independence and completeness of Shenzhen SEG and the subject company: (1) After completion of the restructuring, Shenzhen SEG and the subject company will have 102 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. independent and complete assets related to production and management. (2) Guarantee that after completion of this restructuring the site for business operation of Shenzhen SEG and subject company are independent of the Company and other companies, enterprises or other economic organizations and other connected parties under control of the Company. (3) Except normal operational intercourse, guarantee that after completion of this restructuring Shenzhen SEG and subject company do 103 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. not exist any situation that funds or assets are possessed by the Company and other companies, enterprises or other economic organizations and other connected parties under control of the Company. 4. Guarantee the businesses of Shenzhen SEG and subject company are independent (1) guarantee that after completion of this restructuring Shenzhen SEG and subject company have relevant qualification for independently carrying out operational activities, and possess independent, sustainable market-oriente 104 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. d operational capability. (2) Except the assets owned and business operated before validity date of commitment, during the period as controlling shareholder of Shenzhen SEG, in order to guarantee sustainable development of Shenzhen SEG, the Company will exercise supervisory and restriction on operating activities of its own and the affiliated enterprises under its control, and will not establish new or acquire any assets or businesses same or similar with its main businesses within the operation area of Shenzhen SEG, and will 105 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. also not be engaged in any activities which may damage the interests of Shenzhen SEG and other companies, enterprises or other economic organizations under control of Shenzhen SEG; if in future there exists any business opportunity same or similar with other main businesses within Shenzhen SEG operation area, such opportunity will preferentially recommended to Shenzhen SEG and other companies, enterprises or other economic organizations under control of Shenzhen SEG. However, any of the 106 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. following cases is an exception: However, any of the following cases is an exception: (1) Due to national laws, regulations and policies and other reasons, any commercial properties and real estate development projects appropriated or allocated through oriented protocols by the government to SEG Group and any enterprises invested by it; or (2) When the general conditions of tender, transfer or assignment of specific commercial properties and real estate development projects have specific requirements 107 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. on the bidder or assignee, Shenzhen SEG is not qualified but SEG Group is qualified. Commercial property and real estate development projects that are same as the main business of Shenzhen SEG or result in horizontal competition subject to the above exclusions may be invested and built by SEG Group at first. If Shenzhen SEG thinks that such assets are eligible to be injected into Shenzhen SEG, upon receipt of the written acquisition notice from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer 108 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. such projects to Shenzhen SEG. (3) Guarantee that after completion of this restructuring, the Company and other companies, enterprises, other economic organizations or other connected parties under control of the Company will reduce connected transactions with Shenzhen SEG and subject company and other companies, enterprises, other economic organizations or other connected parties under their control; for any connected transactions which are indeed necessary and unavoidable, 109 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. guarantee to carry out fair operation following market principle at fair price and fulfill relevant approval procedure and information disclosure obligations according to the provisions of relevant laws, regulations and normative documents. 5. The Company will guarantee the financial independence of Shenzhen SEG and the subject company: (1) After completion of the restructuring, Shenzhen SEG and the subject company will establish an independent financial department, independent financial accounting system, and 110 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. standard and independent financial accounting rules. (2) After completion of the restructuring, Shenzhen SEG and the subject company will separately open an account in banks, and do not share accounts with the Company and related parties, such as other companies, enterprises, or other economic organizations controlled by the Company. (3) After completion of the restructuring, financial personnel of Shenzhen SEG and the subject company will not hold a part-time job in the Company or related parties, 111 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. such as other companies, enterprises, or other economic organizations controlled by the Company. (4) After completion of the restructuring, Shenzhen SEG and the subject company will independently make financial decisions, and the Company will not interfere with fund usage of Shenzhen SEG and the subject company. (5) After completion of the restructuring, Shenzhen SEG and the subject company will pay taxes independently according to laws. In case of breach of the foregoing commitments, the Company will bear all 112 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. losses thus incurred to Shenzhen SEG, and the subject company." 1. The Company has not any of the following situations as specified in Clause 6, Administrative Measures On Acquisition Of Listed Companies: (1) Damage legitimate rights and interests of the company acquired and Shenzhen Other its August 3, SEG Group Long-term Being fulfilled commitments shareholders 2016 Co., Ltd. utilizing acquisition of listed company; (2) With large amount of outstanding debts and this in-debt status has lasted for a certain period of time; (3) Has actual or alleged serious illegal activities in recent three years; (4) Has 113 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. serious behaviors of breaching promises in securities market in recent three years; (5) Other situations in which no acquisition of listed companies are allowed according to laws and administrative regulations and in the opinions of CSRC. 2. The Company and its main managers have not suffered from any administrative punishment (administrativ e punishment obviously unrelated to security market excluded), criminal punishment, major civil lawsuit or arbitration related to economic 114 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. disputes within the last five years. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG, and the subject company." "1. The Company is an enterprise incorporated in China that owns the full capacity for civil conduct and has the legal body qualification for participating Shenzhen in the Other August 3, SEG Group restructuring, Long-term Being fulfilled commitments 2016 Co., Ltd. signing agreements with Shenzhen SEG, and performing rights and obligations under the agreement. 2. Except that the property located at 4F, Block 2, SEG Industry 115 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Building of SEG Property Investment funded by the Company is to handle the transfer formality (with no legal impediment), the Company has fulfilled the obligation of contributing capital to the subject company, and has no acts against its obligations and responsibilitie s as a shareholder, such as false contribution, deferred investment, or withdrawal of capital. There are no circumstances that may affect the legal existence of the subject company. 3. There is no dispute or potential dispute over ownership of equities of the 116 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. subject company. There are no circumstances that may affect the legal existence of the subject company. 4. The equities held by the Company in the subject company are actually legally owned. There is no actual dispute or potential dispute over ownership of equities, no trust, shareholding under entrustment or similar arrangement, no commitment or arrangement of forbidden transfer or limited transfer, no pledge, freezing, seals up, property preservation or other limitation of rights, and no lawsuit, 117 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. arbitration or other forms of dispute which would affect the restructuring. Meanwhile, the Company guarantees that the equities it held in the subject company will maintain the status until the equities are registered under Shenzhen SEG after change of registration. 5. The equities held by the Company in the subject company are assets with clear ownership. The Company undertakes that there are no legal obstacles to stock transfer after the restructuring of Shenzhen SEG is approved by CSRC, and no credit and debt disputes. The 118 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Company promises to complete formalities for ownership transfer of these equities within the agreed period. 6. Before the equities are registered under Shenzhen SEG after change of registration, the Company undertakes that the subject company will maintain normal, orderly, and legitimate operation, and will not take actions irrelevant to normal production and management, such as disposal of assets, external guarantee, or additional major debts, or illegally transfer or conceal assets 119 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. and business. If the foregoing actions are indeed necessary, provided that national laws, regulations, and normative documents are not violated, these actions can be taken only after written approval of Shenzhen SEG. 7. The Company undertakes that there are not any ongoing or potential litigation, arbitration, or dispute that may affect the Company's equity transfer, and all agreements or contracts do not contain restrictive clauses that may affect the Company's equity transfer. The Articles of Association, internal 120 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. management system documents, and contracts or agreements do not contain restrictive clauses that may affect the Company's equity transfer. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG." "The Company has not disclosed any insider information about the restructuring or utilized such insider information Shenzhen Other for insider August 3, SEG Group Long-term Being fulfilled commitments trading. In 2016 Co., Ltd. case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG." 121 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. "1. Shares of Shenzhen SEG subscribed by the Company in the restructuring will be locked up for 36 months from the date of listing. Shares of Shenzhen SEG acquired in the restructuring shall not be traded or transferred or managed by others under Shenzhen Other entrustment or August 3, SEG Group Long-term Being fulfilled commitments repurchased 2016 Co., Ltd. by Shenzhen SEG within 36 months from the date of completion of the offering. After the completion of this offering, additional shares held due to bonus shares and converted equity capital shall be also subject to the foregoing agreement. When the foregoing 122 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. lockup period expires, share transfer and transaction will be subject to the valid laws, regulations, and provisions, rules, and requirements of China Securities Regulatory Commission and Shenzhen Stock Exchange. 2. If the closing price of Shenzhen SEG stocks is lower than the initial offer price for consecutively 20 trading days within 6 months after the completion of the restructuring or the closing price of Shenzhen SEG stocks is lower than the initial offer price at the end of 6 months after the 123 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. completion of the restructuring, the lockup period of Shenzhen SEG stocks will be automatically extended for 6 months. 3. If the information provided or disclosed in the restructuring is suspected of false representation s, misleading statements, or material omissions and the judicial authority or China Securities Regulatory Commission investigates and places the case on file, shares of Shenzhen SEG held by the Company will not be transferred. 4. Before the restructuring, all stocks of Shenzhen SEG held by 124 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the Company shall not be transferred within 12 months after the completion of the restructuring. 5. If relevant laws, regulations, and normative documents have special requirements on the lockup period of shares, these laws, regulations, and normative documents shall prevail. 6. If the foregoing lockup period is not consistent with the latest regulation requirement of the security regulatory authority, the Company agrees to adjust it according to the latest regulation opinion of the regulation suggestion of 125 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the security regulatory authority and implement the relevant provision of China Securities Regulatory Commission and Shenzhen Stock Exchange after the lockup period expires. "1. In the recent 5 years, the Company has not been subject to any administrative penalty (except those not related to the securities market) or criminal penalty. 2. In Shenzhen Before Other the recent 5 August 3, SEG Group completion of Being fulfilled commitments years, except 2016 Co., Ltd. restructuring for those cases that have been concluded, such as the case of Hainan SEG International Trust and Investment Company, Zhongshi case, GTJA case and 126 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Dasheng case, the Company is not involved in other major civil proceedings or arbitration (the subject in dispute of 10 million Yuan) related to economic disputes. 3. The Company has never been suspected of insider trading related to major asset restructuring and placed on file for investigation or placed on file with the case not settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill commitments, or been subject to administrative supervision measures by the CSRC or disciplinary action by the Stock Exchange due 127 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. to insider trading related to major assets restructuring, or been held criminally liable by the judicial authorities according to law. In case of breach of the foregoing commitments, the Company will bear all losses thus incurred to Shenzhen SEG." "1. I have not been subject to any Bo Hongxi, administrative Cao Xiang, penalty by the Fan Zhiqing, CSRC in Li Luoli, Liu recent 36 Fusong, Liu months, or Zhijun, Ru public censure Guiqin, Song by the Stock Pingping, Exchange in Before Tang Other the recent 12 August 3, completion of Being fulfilled Chongyin, commitment months. 2. I 2016 restructuring Wang Li, Xu have not been Ning, Yu investigated Qian, Zhang by judicial Guangliu, authorities due Zhang Haifan, to alleged Zheng Dan, crimes or by Zhong CSRC due to Longqing alleged irregularities. In case of breach of the 128 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. following commitments, I will bear all losses thus incurred to Shenzhen SEG." "1. In the recent 5 years, the Company has not been subject to any administrative penalty or criminal penalty or involved in other major civil proceedings or arbitration related to Directors, economic supervisors, disputes. 2. and senior The Company Before Other August 3, executives of has never been completion of Being fulfilled commitments 2016 Shenzhen suspected of restructuring SEG Group insider trading Co., Ltd. related to major asset restructuring and placed on file for investigation or placed on file with the case not settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill 129 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. commitments, or been subject to administrative supervision measures by the CSRC or disciplinary action by the Stock Exchange due to insider trading related to major assets restructuring, or been held criminally liable by the judicial authorities according to law. In case of breach of the following commitments, I will bear all losses thus incurred to Shenzhen SEG." SegMaker, "1. In the SEG Kangle, recent 3 years, SEG Property the Company Development, has not been SEG Property subject to any Investment, major Before SEG New Other administrative August 3, completion of Being fulfilled City commitments punishment or 2016 restructuring Construction, criminal SEG Property punishment or Management, involved in Huizhou other major Qunxing, civil Xi'an SEG, proceedings or 130 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Beijing arbitration related to economic disputes. 2. The Company has never been suspected of insider trading related to major asset restructuring and placed on file for investigation or placed on file with the case not settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill commitments, or been subject to administrative supervision measures by the CSRC or disciplinary action by the Stock Exchange due to insider trading related to major assets restructuring, or been held criminally liable by the judicial authorities 131 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. according to law. In case of breach of the following commitments, I will bear all losses thus incurred to Shenzhen SEG." "1. SEG Group has legal ownership of lands, properties, and equities transferred to SegMaker without compensation before the restructuring, and there is no dispute over the ownership Shenzhen Other of transferred August 3, SEG Group Long-term Being fulfilled commitments assets. Except 2016 Co., Ltd. for some mortgaged properties that require the consent of the mortgagee, there is no legal obstacle to the registration of ownership change. 2. The Company undertakes to complete the formalities of 132 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. ownership registration change of assets transferred to SegMaker before the Board of Directors reviews the restructuring draft. The Company will compensate SegMaker in full if SegMaker is held responsible or punished, or suffer any other loss due to the Company's violation of the foregoing commitment or defects of the transferred assets." "As of the date of issuance of the commitment letter, SEG Kangle owns Shenzhen Before Other 9 properties August 3, SEG Group completion of Being fulfilled commitments with the total 2016 Co., Ltd. restructuring construction area of 12,941.28 square meters. The actual proprietor of 133 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the property located at 1F, Block 1, SEG Industry Building with an area of 902 square meters is SEG Group. Due to the provision that industrial buildings in Shenzhen shall be transferred as a whole, the transfer registration formality for the property has not been handled. The actual proprietor of Room 508, Block 4, SEG Residential Quarter is SEG Kangle, but the property is registered under SEG Group and the transfer formality for the property has not been handled. The Company undertakes that all parties have no disputes over 134 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the ownership of the foregoing property whose registered proprietor is SEG Kangle but whose actual proprietor is SEG Group and the property whose registered proprietor is SEG Group but whose actual proprietor is SEG Kangle. SEG Group will assist SEG Kangle in completing the division and transfer registration formalities for the foregoing properties. After the restructuring, if Shenzhen SEG suffers any losses due to ownership of such properties, SEG Group will compensate Shenzhen 135 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. SEG in full. 2. The construction in process-assem bly workshop that SEG Group uses to contribute capital to SEG Property Investment is 4F, Block 2, SEG Industry Building (real estate proprietorship certificate No.: S. F. D. Zi. No. 3000759297) with the total area of 1,936.71 square meters. The property was delivered to SEG Property Investment upon capital contribution, but the transfer formality could not be handled without the certificate on capital contribution. Due to negligence of the handler, 136 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. the property was registered under SEG Group together with other properties of SEG Industry Building belonging to SEG Group. Due to the restriction of transfer of industrial buildings as a whole, the transfer formality has not been handled. SEG Property Investment has been occupying, using, and acquiring operating revenue from the property since capital contribution. The Company will assist SEG Property Investment in completing the transfer registration formality of the foregoing property. After the restructuring, 137 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. if Shenzhen SEG suffers any losses due to ownership of such properties, SEG Group will compensate Shenzhen SEG in full. 3. The Company will help and propel the subject company and its subsidiaries to complete ownership registration of land and property assets and regulate the land purpose. 4. If due to land use rights and property assets existing before the completion of the restructuring, the subject company and its subsidiaries (1) fail to timely handle the land use rights and the proprietorship certificate (excluding results not 138 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. caused by the subject company and its subsidiaries, such as force majeure, laws, policies, government management, and change in planned land purpose); or (2) cannot handle the relevant land use rights and real estate proprietorship certificate (excluding results not caused by the subject company and its subsidiaries, such as force majeure, laws, policies, government management, and change in planned land purpose); or (3) are subject to other circumstances of nonstandard land use rights and properties (excluding results not 139 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. caused by the subject company and its subsidiaries, such as force majeure, laws, policies, government management, and change in planned land purpose), and suffer actual losses including but not limited to compensation, fines, expenses, and interests damage, the Company will compensate the subject company and its subsidiaries in full. Before issuance date of the restructuring report of Shenzhen SEG, SEG Shenzhen Before Other Group will August 3, SEG Group completion of Being fulfilled commitments finish 2016 Co., Ltd. restructuring formalities related to transfer of ownership of the property (4F, Block 2, SEG Industry 140 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Building). If SEG Group fails to finish the formalities at expiration, SEG Group agrees to compensate SEG Property Investment RMB 1.5 million in currency, and allows SEG Property Investment to continue to use the property for free until SEG Group transfers the ownership of the property to SEG Property Investment. SEG Group agrees to compensate SEG Property Investment for any operating loss or other economic loss of SEG Property Investment caused by SEG Group's failure in transferring the ownership of the property. 141 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. According to the Article Five of the Equity Transfer Agreement signed by the Company with SEG Group when the Company was listed, SEG Group agreed that the Company and its subsidiaries and associated companies to use the eight Commitment trademarks on horizontal registered by Shenzhen competition, Commitment made at the time of SEG Group at SEG Group related July 1, 1996 Long-term Being fulfilled initial public offerings or refinancing the National Co., Ltd. transaction, Trademark and capital Bureau; SEG occupation Group agreed that the Company used the aforesaid trademarks or similar signs as the Company’s logo and used the trademarks and signs during its operation; the Company need not pay any fee to SEG Group for using the 142 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. aforesaid trademarks or signs. As for the problem pointed out by Shenzhen Office of China Securities Regulatory Commission during on-site inspection in the Company that the Company and SEG Group are competitive in Commitment the electronic on horizontal business, the Shenzhen competition, Company has September 14, SEG Group related received a Long-term Being fulfilled 2007 Co., Ltd. transaction, written and capital Commitment occupation Letter from SEG Group on September 14, 2007. The content of the Commitment Letter is as follows: "The competition in electronic business between SEG Group and Shenzhen SEG Co., Ltd. occurs due to historical reasons and 143 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. objective market development background. SEG Group hereby commits that we will not separately operate businesses similar to those of Shenzhen SEG in the same city." The 6th interim The term of meeting of the validity is 5th Board of from February Directors held 1, 2011 to on January 26, January 31, 2011 reviewed 2016, five and approved years in total. the Proposal And the of Solving the entrusted Horizontal operating Commitment Competition management on horizontal between the contract Shenzhen competition, Company and January 26, expires within SEG Group related Being fulfilled Its Controlling 2011 the report Co., Ltd. transaction, Shareholder. period. As of and capital After friendly the end of the occupation consultation, report period, SEG Group the Contract agreed to has been entrust the renewed, and Company to the term of operate and validity is manage with from February full authority 1, 2016 to SEG January 31, Communicatio 2017. ns Market 144 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. under direct management of SEG Group. Therefore, the two parties have signed the entrustment operation and management contract, and SEG Group will pay the Company RMB 200,000 Yuan as entrust management expenses. Commitment on equity incentives Not applicable Based on our confidence in economic prospect of China and future development of the Company, in order to Other commitments made to the Shenzhen jointly Other medium and small shareholders of the SEG Group maintain a July 9, 2015 12 months Fulfilled commitments Company Co., Ltd. stable capital market and promote a sustainable, stable and healthy development of the Company, Shenzhen SEG Group 145 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. Co., Ltd., the holding shareholder of the Company, hereby commits that, it will not reduce the amount of shares of the Company it holds within the coming twelve months since the issuance date of this Announcemen t, i.e., July 9. Whether commitments were fulfilled Yes on time In case the commitments are not fulfilled at expiration, the Company should provide explanation on N/A unfulfilled items, and the next work plans. VI. Estimation of operating results of 2016 Warning of negative estimated accumulated net profit from the beginning of the year to the end of the next report period or large fluctuation over the same period of the previous year and causes □ Applicable √ Not applicable V. Securities investment √ Applicable □ Not applicable Shares Sharehold Gains and Short Initial Shares Sharehold Closing held at ing ratio losses in Stock Stock form of investmen held at ing ratio book Accounti Source of the at the the report type code the t cost period at the end value ng item shares beginning beginning period security (Yuan) end of period (Yuan) of period of period (Yuan) Youhao 634,137.3 Financial Initial Share 600778 90,405.00 60,683 0.04% 60,683 0.04% Group 5 assets share 146 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. available for sale Long-ter Huakong 279,307,0 201,345,0 201,345,0 175,501,2 -6,241,99 m equity Initial Share 000068 20.00% 20.00% SEG 46.38 33 33 31.93 9.33 investmen share t Financial SEG 8,275,321 13,515,39 assets Initial Share 832770 Navigatio 7,500,000 11.38% 7,500,000 11.38% .43 2.83 available share ns for sale 287,672,7 208,905,7 208,905,7 189,650,7 -6,241,99 Total - - - - 72.81 16 16 62.11 9.33 VI. Derivative investment □ Applicable √ Not applicable No derivative investment is involved in the report period. VII. Registration form for investigations, communication and interviews in the report period √ Applicable □ Not applicable Time Means Type Investigation Index Inquire about the progress status of major assets restructuring. The Company July 6, 2016 Phone call Individual has given a reply according to the actual progress status that has been disclosed. Inquire about the progress status of major assets restructuring. The Company July 14, 2016 Phone call Individual has given a reply according to the actual progress status that has been disclosed. Inquire about the progress status of major assets restructuring. The Company July 27, 2016 Phone call Individual has given a reply according to the actual progress status that has been disclosed. Inquire about the assets injection related information in this major asset restructuring. The Company has given a August 9, 2016 Phone call Individual reply according to the major asset restructuring report that has been disclosed. August 18, 2016 Phone call Individual Inquire about the number of shareholders 147 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. as of August 15.The Company has given a reply according to the register of shareholders released by the Securities Depository and Clearing Corporation. Inquire about the progress status of major assets restructuring. The Company August 23, 2016 Phone call Individual has given a reply according to the actual progress status that has been disclosed. Inquire about the number of shareholders as of August 30.The Company has given August 31, 2016 Phone call Individual a reply according to the register of shareholders released by the Securities Depository and Clearing Corporation. Inquire about voting results of the shareholders' meeting of the Company. September 1, 2016 Phone call Individual The Company has given a reply according to the disclosed notice of the shareholders' meeting. Inquire about the progress status of major assets restructuring. The Company September 7, 2016 Phone call Individual has given a reply according to the actual progress status that has been disclosed. Inquire about the progress status of approval of major asset restructuring by China Securities Regulatory September 19, 2016 Phone call Individual Commission. The Company has given a reply according to the actual progress status that has been disclosed. Inquire about main business, transformation, and private placement of the Company. The Company has given a September 21, 2016 On-site investigation Organization reply according to the actual condition and disclosed such information on irm.cninfo.com.cn . Inquire about main business, transformation, and major asset restructuring progress of the Company. September 28, 2016 On-site investigation Organization The Company has given a reply according to the actual condition and disclosed such information on irm.cninfo.com.cn . 148 Full text of 2016 Q3 Report of Shenzhen SEG Co., Ltd. VIII. Illegal external guarantee □ Applicable √ Not applicable No illegal external guarantee is involved in the report period. IX. Non-operating capital occupation on the listed company by the controlling shareholders and related parties □ Applicable √ Not applicable No non-operating capital occupation on the listed company by the controlling shareholders and related parties is involved in the report period. 149 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Chapter 4 Financial Statements I. Financial Statements 1. Consolidated Balance Sheet Prepared by: Shenzhen SEG Co., Ltd. September 30, 2016 Unit: Yuan Item Closing balance Opening balance Current assets: Monetary funds 198,351,497.31 276,863,429.10 Deposit reservation for balance Loans to other banks 40,000,000.00 40,000,000.00 Financial assets measured by fair value with changes included in current gains and losses Derivative financial assets Notes receivable 100,792.00 Accounts receivable 68,751,597.89 98,212,422.87 Advances 85,887,752.86 129,044,887.26 Premiums receivable Reinsurance accounts receivable Reinsurance deposit receivable Interest receivable Dividends receivable Other accounts receivable 60,964,997.67 27,352,784.33 Redemptory monetary capital for resale Inventory 610,981,171.82 450,809,934.72 Held-for-sale assets Non-current assets due within one year Other current assets 190,695,564.93 339,430,419.74 Total current assets 1,255,733,374.48 1,361,713,878.02 150 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Non-current assets: Loans and advances issued 492,740,126.16 475,520,822.08 Financial assets available for sale 34,429,530.18 34,539,973.24 Held-to-maturity investment Long-term receivables Long-term equity investment 186,640,560.07 185,122,573.88 Investment properties 429,840,258.51 443,851,726.40 Fixed assets 37,155,404.45 37,524,425.25 Construction in progress 186,583.94 140,810.00 Engineering materials Disposal of fixed assets 4,577.55 Productive biological assets Oil & gas assets Intangible assets 893,740.28 1,143,762.11 Development expenses Goodwill 10,328,927.82 10,328,927.82 Long-term expenses to be amortized 51,422,694.54 49,235,999.86 Deferred income tax assets 10,433,814.57 10,433,814.57 Other non-current assets 5,103,811.14 Total non-current assets 1,254,076,218.07 1,252,946,646.35 Total assets 2,509,809,592.55 2,614,660,524.37 Current liabilities: Short-term borrowing 366,803,646.30 367,759,630.48 Loans from central bank 0.00 Deposits from customers and 0.00 interbank Loans from other banks 0.00 Financial liabilities measured by fair value with changes included in current 0.00 gains and losses Derivative financial liabilities 0.00 Notes payable 0.00 Accounts payable 22,763,090.01 89,908,781.98 Advances from customers 134,757,155.28 190,430,121.05 Financial assets sold for repurchase 0.00 151 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Service charges and commissions 0.00 payable Payroll payable 7,749,915.62 21,849,134.16 Taxes payable 27,028,822.77 34,645,030.07 Interest payable 698,717.58 516,758.34 Dividends payable 17,302,998.39 2,218,224.58 Other payables 213,350,044.16 194,329,885.69 Reinsurance accounts payable 0.00 Insurance deposit 0.00 Customer brokerage deposits 0.00 Securities underwriting brokerage 0.00 deposits Held-for-sale liabilities 0.00 Non-current liabilities due within one 0.00 year Other current liabilities 0.00 Total current liabilities 790,454,390.11 901,657,566.35 Non-current liabilities: Long-term borrowing Bonds payable Preferred stock Perpetual capital securities Long-term payables Payroll payable Special payables Estimated liabilities 7,000,000.00 Deferred income 9,580,672.59 9,634,114.77 Deferred income tax liabilities 15,164,797.29 16,024,102.35 Other non-current liabilities Total non-current liabilities 24,745,469.88 32,658,217.12 Total liabilities 815,199,859.99 934,315,783.47 Owners' equity: Share capital 784,799,010.00 784,799,010.00 Other equity instruments 0.00 Preferred stock 0.00 152 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Perpetual capital securities 0.00 Capital reserve 506,553,643.41 506,545,831.11 Less: Treasury shares 0.00 Other comprehensive income 271,582.93 326,662.48 Special reserve 0.00 Surplus reserve 109,922,336.87 109,922,336.87 General risk provision Undistributed profits 92,141,436.12 73,532,388.70 Total owners' equity attributable to the 1,493,688,009.33 1,475,126,229.16 parent company Minority shareholders' equity 200,921,723.23 205,218,511.74 Total owners' equity 1,694,609,732.56 1,680,344,740.90 Total liabilities and owners' equity 2,509,809,592.55 2,614,660,524.37 Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 2. Balance Sheet of the Parent Company Unit: Yuan Item Closing balance Opening balance Current assets: Monetary funds 119,898,506.02 186,369,470.58 Financial assets measured by fair value with changes included in current gains and losses Derivative financial assets Notes receivable Accounts receivable 580,380.00 Advances 699,860.00 418,544.10 Interest receivable Dividends receivable 11,340,000.00 Other accounts receivable 704,807,909.31 570,671,617.38 Inventory 939,772.39 112,715.50 Held-for-sale assets Non-current assets due within one year Other current assets 280,000,000.00 393,166,401.54 153 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Total current assets 1,118,266,427.72 1,150,738,749.10 Non-current assets: Financial assets available for sale 33,515,392.83 33,515,392.83 Held-to-maturity investment Long-term receivables Long-term equity investment 466,624,086.31 455,106,100.12 Investment properties 276,510,527.01 284,399,860.14 Fixed assets 19,410,805.19 19,458,584.25 Construction in progress 140,810.00 Engineering materials Disposal of fixed assets 4,577.55 Productive biological assets Oil & gas assets Intangible assets 474,650.50 622,054.24 Development expenses Goodwill Long-term expenses to be amortized 7,246,537.97 7,000,181.66 Deferred income tax assets 8,242,045.89 8,242,045.89 Other non-current assets Total non-current assets 812,028,623.25 808,485,029.13 Total assets 1,930,295,050.97 1,959,223,778.23 Current liabilities: Short-term borrowing 290,000,000.00 315,000,000.00 Financial liabilities measured by fair value with changes included in current gains 0.00 and losses Derivative financial liabilities 0.00 Notes payable 0.00 0.00 Accounts payable 79,596.00 36,075.52 Advances from customers 14,375,575.43 42,704,620.99 Payroll payable 2,335,933.25 13,652,201.42 Taxes payable 13,087,036.64 10,033,418.41 Interest payable 0.00 477,402.78 Dividends payable 119,803.29 119,803.29 Other payables 86,068,040.99 95,119,560.37 154 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Held-for-sale liabilities 0.00 Non-current liabilities due within one 0.00 0.00 year Other current liabilities 0.00 0.00 Total current liabilities 406,065,985.60 477,143,082.78 Non-current liabilities: Long-term borrowing Bonds payable Preferred stock Perpetual capital securities Long-term payables Payroll payable Special payables Estimated liabilities 0.00 7,000,000.00 Deferred income 9,500,000.00 9,500,000.00 Deferred income tax liabilities 0.00 0.00 Other non-current liabilities Total non-current liabilities 9,500,000.00 16,500,000.00 Total liabilities 415,565,985.60 493,643,082.78 Owners' equity: Share capital 784,799,010.00 784,799,010.00 Other equity instruments 0.00 0.00 Preferred stock 0.00 0.00 Perpetual capital securities 0.00 0.00 Capital reserve 507,781,650.13 507,773,837.83 Less: Treasury shares 0.00 0.00 Other comprehensive income 70.19 0.00 Special reserve 0.00 0.00 Surplus reserve 109,922,336.87 109,922,336.87 Undistributed profits 112,225,998.18 63,085,510.75 Total owners' equity 1,514,729,065.37 1,465,580,695.45 Total liabilities and owners' equity 1,930,295,050.97 1,959,223,778.23 Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 155 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. 3. Consolidated Profit Statement in the Report Period Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period I. Total operating revenue 149,787,589.78 212,602,324.33 Including: Operating revenue 139,478,273.85 194,784,480.30 Interest income 8,204,499.97 17,246,745.96 Earned premiums 0.00 Service charges and 2,104,815.96 571,098.07 commissions income II. Total operating cost 124,131,586.17 194,717,803.24 Including: Operating cost 110,866,002.03 170,669,427.73 Interest expenses 0.00 1,047,588.22 Commissions 0.00 Surrender value 0.00 Net compensation pay-outs 0.00 Net insurance deposit 0.00 accrued Insurance dividends 0.00 Reinsurance expenses 0.00 Operating tax and 1,905,261.68 6,311,149.42 surcharges Sale expenses 390,091.93 399,567.41 Management expenses 9,058,239.31 9,201,128.68 Financial cost 2,430,877.78 3,787,208.47 Loss from asset impairment -518,886.56 3,301,733.31 Income from change of fair value 0.00 (enter "-" for loss) Income from investment 1,135,525.46 4,033,761.47 (enter "-" for loss) Including: Income from investment in joint ventures or -1,655,333.15 526,748.08 associates Income from exchange (enter 0.00 "-" for loss) 156 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. III. Operating profit (enter "-" for loss) 26,791,529.07 21,918,282.56 Add: Non-operating revenue 598,833.52 296,764.20 Including: Gains on disposal 0.00 688.90 of non-current assets Less: Non-operating expenses 1,127,772.53 12,206.35 Including: Loss from disposal 1,672.51 19,709.12 of non-current assets IV. Total profit (enter "-" for total loss) 26,262,590.06 22,202,840.41 Less: Income tax 5,281,530.11 7,803,559.99 V. Net profit (enter "-" for net loss) 20,981,059.95 14,399,280.42 Net profit attributable to owners of 15,422,191.47 7,280,509.44 the parent company Profit and loss of minority 5,558,868.48 7,118,770.98 shareholders VI. Net of tax of other comprehensive 34,156.28 incomes Total owners' net of tax of other comprehensive incomes attributable to 22,748.63 the parent company 1. Other comprehensive incomes not to be reclassified into gains and 0.00 losses (1) Changes of net liabilities or net assets of the 0.00 re-measured defined benefit plans (2) Shares of the investee of other comprehensive incomes not to 0.00 be reclassified into gains and losses under the equity method 2. Other comprehensive incomes 22,748.63 to be reclassified into gains and losses (1) Shares of the investee of other comprehensive incomes to be 22.09 reclassified into gains and losses under the equity method (2) Gains and losses from changes of fair value of the 22,726.54 available-for-sale financial assets (3) Held-to-maturity 0.00 157 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. investments categorized as gains and losses from the available-for-sale financial assets (4) Effective gains or loss 0.00 from cash flows (5) Foreign currency 0.00 translation differences (6) Others 0.00 Net of tax of other comprehensive incomes attributable to minority 11,407.65 shareholders VII. Total comprehensive income 21,015,216.23 14,399,280.42 Total comprehensive income attributable to shareholders of the 15,444,940.10 7,280,509.44 parent company Total comprehensive income 5,570,276.13 7,118,770.98 attributable to minority shareholders VIII. Earnings per share 1. Basic earnings per share 0.0197 0.0095 2. Diluted earnings per share 0.0197 0.0095 Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 4. Profit Statement of the Parent Company in the Report Period Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period I. Operating revenue 23,942,257.49 28,747,818.26 Less: Operating cost 13,565,699.04 28,258,319.33 Operating tax and surcharges 170,433.25 1,641,683.79 Sale expenses 0.00 0.00 Management expenses 4,959,586.20 3,981,108.87 Financial cost -7,860,250.82 -5,840,334.72 Loss from asset impairment 0.00 0.00 Income from change of fair value 0.00 0.00 (enter "-" for loss) Income from investment 7,303,310.41 18,134,531.78 (enter "-" for loss) Including: Income from -1,655,333.15 526,748.08 158 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. investment in joint ventures or associates II. Operating profit (enter "-" for loss) 20,410,100.23 18,841,572.77 Add: Non-operating revenue 129,776.01 0.31 Including: Gains on disposal 0.00 0.00 of non-current assets Less: Non-operating expenses 1,076,373.55 0.00 Including: Loss from disposal 0.00 0.00 of non-current assets III. Total profit (enter "-" for total loss) 19,463,502.69 18,841,573.08 Less: Income tax 321,259.05 2,356,490.23 V. Net profit (enter "-" for net loss) 19,142,243.64 16,485,082.85 V. Net of tax of other comprehensive 22.09 0.00 incomes 1. Other comprehensive incomes not to be reclassified into gains and 0.00 0.00 losses (1) Changes of net liabilities or net assets of the 0.00 0.00 re-measured defined benefit plans (2) Shares of the investee of other comprehensive incomes not to 0.00 0.00 be reclassified into gains and losses under the equity method 2. Other comprehensive incomes 22.09 0.00 to be reclassified into gains and losses (1) Shares of the investee of other comprehensive incomes to be 22.09 0.00 reclassified into gains and losses under the equity method (2) Gains and losses from changes of fair value of the 0.00 0.00 available-for-sale financial assets (3) Held-to-maturity investments categorized as gains and 0.00 0.00 losses from the available-for-sale financial assets (4) Effective gains or loss 0.00 0.00 from cash flows 159 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. (5) Foreign currency 0.00 0.00 translation differences (6) Others 0.00 0.00 VI. Total comprehensive income 19,142,265.73 16,485,082.85 VII. Earnings per share 1. Basic earnings per share 0.00 2. Diluted earnings per share 0.00 Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 5. Consolidated Profit Statement from the Beginning of the Year to the End of the Report Period Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period I. Total operating revenue 562,038,422.54 637,821,378.42 Including: Operating revenue 502,151,510.70 569,339,615.91 Interest income 55,577,595.88 64,800,130.44 Earned premiums 0.00 Service charges and 4,309,315.96 3,681,632.07 commissions income II. Total operating cost 469,051,475.46 553,431,805.96 Including: Operating cost 431,862,880.02 487,973,359.17 Interest expenses 465,888.89 4,206,636.86 Commissions 0.00 Surrender value 0.00 Net compensation pay-outs 0.00 Net insurance deposit 0.00 accrued Insurance dividends 0.00 Reinsurance expenses 0.00 Operating tax and 12,034,935.82 20,059,179.56 surcharges Sale expenses 1,208,423.09 1,340,972.53 Management expenses 24,774,641.82 25,205,691.94 Financial cost 3,186,217.90 4,630,265.70 Loss from asset impairment -4,481,512.08 10,015,700.20 160 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Income from change of fair value 0.00 (enter "-" for loss) Income from investment 2,401,978.48 9,485,725.11 (enter "-" for loss) Including: Income from investment in joint ventures or -6,482,084.00 -4,366,107.86 associates Income from exchange (enter 0.00 "-" for loss) III. Operating profit (enter "-" for loss) 95,388,925.56 93,875,297.57 Add: Non-operating revenue 1,017,221.88 1,342,743.31 Including: Gains on disposal 0.00 19,382.00 of non-current assets Less: Non-operating expenses 3,886,657.87 827,995.29 Including: Loss from disposal 10,988.73 216,133.33 of non-current assets IV. Total profit (enter "-" for total loss) 92,519,489.57 94,390,045.59 Less: Income tax 27,320,246.83 27,924,930.91 V. Net profit (enter "-" for net loss) 65,199,242.74 66,465,114.68 Net profit attributable to owners of 42,278,461.89 42,186,643.05 the parent company Profit and loss of minority 22,920,780.85 24,278,471.63 shareholders VI. Net of tax of other comprehensive -82,762.10 316,765.26 incomes Total owners' net of tax of other comprehensive incomes attributable to -55,079.55 210,902.31 the parent company 1. Other comprehensive incomes not to be reclassified into gains and 0.00 losses (1) Changes of net liabilities or net assets of the 0.00 re-measured defined benefit plans (2) Shares of the investee of other comprehensive incomes not to 0.00 be reclassified into gains and losses under the equity method 161 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. 2. Other comprehensive incomes -55,079.55 210,902.31 to be reclassified into gains and losses (1) Shares of the investee of other comprehensive incomes to be 70.19 reclassified into gains and losses under the equity method (2) Gains and losses from changes of fair value of the -55,149.74 210,902.31 available-for-sale financial assets (3) Held-to-maturity investments categorized as gains and 0.00 losses from the available-for-sale financial assets (4) Effective gains or loss 0.00 from cash flows (5) Foreign currency 0.00 translation differences (6) Others 0.00 Net of tax of other comprehensive incomes attributable to minority -27,682.55 105,862.95 shareholders VII. Total comprehensive income 65,116,480.64 66,781,879.94 Total comprehensive income attributable to shareholders of the 42,223,382.34 42,397,545.36 parent company Total comprehensive income 22,893,098.30 24,384,334.58 attributable to minority shareholders VIII. Earnings per share 1. Basic earnings per share 0.054 0.054 2. Diluted earnings per share 0.054 0.054 Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 6. Profit Statement of the Parent Company from the Beginning of the Year to the End of the Report Period Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period I. Operating revenue 75,568,939.36 95,325,082.68 Less: Operating cost 50,456,187.48 72,953,564.13 162 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Operating tax and surcharges 2,174,799.60 5,366,087.54 Sale expenses 0.00 0.00 Management expenses 11,476,417.99 10,157,313.97 Financial cost -20,925,402.20 -13,539,109.03 Loss from asset impairment 0.00 -400,000.00 Income from change of fair value 0.00 (enter "-" for loss) Income from investment 53,065,641.17 55,753,612.90 (enter "-" for loss) Including: Income from investment in joint ventures or -6,482,084.00 -4,366,107.86 associates II. Operating profit (enter "-" for loss) 85,452,577.66 76,540,838.97 Add: Non-operating revenue 137,076.01 214,230.50 Including: Gains on disposal 0.00 of non-current assets Less: Non-operating expenses 3,784,288.80 21,350.50 Including: Loss from disposal 7,915.25 4,100.50 of non-current assets III. Total profit (enter "-" for total loss) 81,805,364.87 76,733,718.97 Less: Income tax 8,995,462.97 12,468,465.43 V. Net profit (enter "-" for net loss) 72,809,901.90 64,265,253.54 V. Net of tax of other comprehensive 70.19 incomes 1. Other comprehensive incomes not to be reclassified into gains and 0.00 losses (1) Changes of net liabilities or net assets of the 0.00 re-measured defined benefit plans (2) Shares of the investee of other comprehensive incomes not to be reclassified into gains and losses under the equity method 2. Other comprehensive incomes 70.19 to be reclassified into gains and losses (1) Shares of the investee 70.19 of other comprehensive incomes to be 163 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. reclassified into gains and losses under the equity method (2) Gains and losses from changes of fair value of the available-for-sale financial assets (3) Held-to-maturity investments categorized as gains and 0.00 losses from the available-for-sale financial assets (4) Effective gains or loss 0.00 from cash flows (5) Foreign currency 0.00 translation differences (6) Others 0.00 VI. Total comprehensive income 72,809,972.09 64,265,253.54 VII. Earnings per share 1. Basic earnings per share 0.00 2. Diluted earnings per share 0.00 Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 7. Consolidated Cash Flow Statement from the Beginning of the Year to the End of the Report Period Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period I. Cash flow from operating activities: Cash received from sales of goods 620,820,444.62 1,090,057,199.43 and rendering of services Net increase in deposits from 0.00 customers and interbank Loans from central bank 0.00 Net increase in loans from other 0.00 banks Cash received from premium of 0.00 the original insurance contract Net cash received from reinsurance 0.00 business Net increase in the deposit of the 0.00 insured and investments 164 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Net increase in financial assets measured by fair value with changes 0.00 included in current gains and losses Cash received from interest and 59,906,357.06 69,806,828.06 commissions Net increase in loans from other 0.00 banks Net increase in redemption capital 0.00 Tax refunds 82,932,677.81 136,078,841.72 Other cash received from operating 164,808,152.37 473,715,102.01 activities Subtotal of cash inflow from operating 928,467,631.86 1,769,657,971.22 activities Cash paid for goods and service 709,962,609.24 1,172,208,970.95 Net increase in loans to customers -44,885,258.00 20,896,649.47 and advances Net increase in deposits with 0.00 central bank and interbank Cash paid for indemnity payment 0.00 of the original insurance contract Cash paid for interest and 34,483.91 46,623.87 commissions Cash paid as insurance dividends 0.00 Cash paid to and on behalf of 81,309,320.61 75,174,832.18 employees Taxes paid 68,911,874.10 75,501,049.15 (1) Other cash received from 196,562,398.65 472,106,815.05 operating activities Subtotal of cash outflow in operating 1,011,895,428.51 1,815,934,940.67 activities Net cash flow from operating activities -83,427,796.65 -46,276,969.45 III. Cash flow from financing activities: Cash received from withdrawal of 601,902,098.00 1,689,700,000.00 investment Cash received from investment 10,034,062.48 14,402,007.18 income Net cash received from disposal of 62,000.00 34,082.50 fixed assets, intangible assets and other 165 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. long-term assets Net cash received from disposal of 0.00 subsidiaries and other business units Other cash received from financing 0.00 activities Subtotal of cash inflow from financing 611,998,160.48 1,704,136,089.68 activities Cash paid for purchase and construction of fixed assets, intangible 7,074,145.94 14,550,969.56 assets and other long-term assets Cash paid for investment 493,604,260.00 1,738,300,000.00 Net increase in mortgage loans 0.00 Net cash paid for acquisition of 0.00 subsidiaries and other business units Other cash paid for investment 0.00 0.00 activities Subtotal of cash outflow in financing 500,678,405.94 1,752,850,969.56 activities Net cash flow arising from financing 111,319,754.54 -48,714,879.88 activities III. Cash flow from financing activities: Cash received by absorbing 0.00 investment Including: Cash received by subsidiaries from investment of 0.00 minority shareholders Borrowings received 334,420,000.00 424,000,000.00 Cash received from bond issue 0.00 Other cash received from financing 7,812.30 activities Subtotal of cash inflow from financing 334,427,812.30 424,000,000.00 activities Cash paid for debt repayment 392,575,984.18 466,882,492.87 Cash paid for dividend and profit 45,241,043.09 38,658,807.17 distribution or interest payment Including: Dividends and profit paid by subsidiaries to minority 11,943,582.73 12,653,693.04 shareholders 166 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Other cash paid for financing 1,674,692.51 58,656,972.92 activities Subtotal of cash outflow in financing 439,491,719.78 564,198,272.96 activities Net cash flow arising from financing -105,063,907.48 -140,198,272.96 activities IV. Influence of exchange rate 17.80 1.27 fluctuation on cash and cash equivalents V. Net increase of cash and cash -77,171,931.79 -235,190,121.02 equivalents Add: Opening balance of cash and 275,523,429.10 382,056,680.70 cash equivalents VI. Closing balance of cash and cash 198,351,497.31 146,866,559.68 equivalents Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong 8. Cash Flow Statement of the Parent Company from the Beginning of the Year to the End of the Report Period Unit: Yuan Item Amount incurred in the current period Amount incurred in the previous period I. Cash flow from operating activities: Cash received from sales of goods 68,449,051.92 80,095,769.61 and rendering of services Tax refunds 0.00 Other cash received from operating 74,990,711.78 448,002,674.23 activities Subtotal of cash inflow from operating 143,439,763.70 528,098,443.84 activities Cash paid for goods and service 54,972,750.33 44,476,025.49 Cash paid to and on behalf of 33,396,939.07 26,658,556.47 employees Taxes paid 16,836,827.07 31,069,803.90 Other cash received from operating 185,978,879.39 556,222,721.17 activities Subtotal of cash outflow in operating 291,185,395.86 658,427,107.03 activities 167 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. Net cash flow from operating activities -147,745,632.16 -130,328,663.19 II. Cash flow from financing activities: Cash received from withdrawal of 699,000,000.00 1,582,100,000.00 investment Cash received from investment 49,603,558.49 61,504,585.65 income Net cash received from disposal of fixed assets, intangible assets and other 0.00 long-term assets Net cash received from disposal of 0.00 subsidiaries and other business units Other cash received from financing 0.00 activities Subtotal of cash inflow from financing 748,603,558.49 1,643,604,585.65 activities Cash paid for purchase and construction of fixed assets, intangible 1,802,351.46 1,082,359.00 assets and other long-term assets Cash paid for investment 605,000,000.00 1,609,600,000.00 Net cash paid for acquisition of 0.00 subsidiaries and other business units Other cash paid for investment 0.00 activities Subtotal of cash outflow in financing 606,802,351.46 1,610,682,359.00 activities Net cash flow arising from investment 141,801,207.03 32,922,226.65 activities III. Cash flow from financing activities: Cash received by absorbing 0.00 investment Borrowings received 290,000,000.00 315,000,000.00 Cash received from bond issue 0.00 Other cash received from financing 7,812.30 activities Subtotal of cash inflow from financing 290,007,812.30 315,000,000.00 activities Cash paid for debt repayment 315,000,000.00 350,000,000.00 Cash paid for dividend and profit 35,437,529.24 23,636,805.55 168 Full text of Q3 2016 Report of Shenzhen SEG Co., Ltd. distribution or interest payment Other cash paid for financing 0.00 activities Subtotal of cash outflow in financing 350,437,529.24 373,636,805.55 activities Net cash flow arising from financing -60,429,716.94 -58,636,805.55 activities IV. Influence of exchange rate 0.00 1.27 fluctuation on cash and cash equivalents V. Net increase of cash and cash -66,374,142.07 -156,043,240.82 equivalents Add: Opening balance of cash and 186,369,470.58 204,395,253.65 cash equivalents VI. Closing balance of cash and cash 119,995,328.51 48,352,012.83 equivalents Legal representative: Wang Li, Person in charge of accounting: Liu Zhijun, Responsible person of the accounting institution: Ying Huadong II. Auditor's Report Is the Quarter 3 Report audited? □ Yes √ No The Q3 Report of the Company has not been audited. 169