THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares in Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser(s) or transferee(s) or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s). Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular. 上海復星醫藥 ( 集團 ) 股份有限公司 Shanghai Fosun Pharmaceutical (Group) Co., Ltd. * (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 02196) ANNUAL REPORT 2015 BOARD REPORT 2015 SUPERVISORY COMMITTEE REPORT 2015 FINAL ACCOUNTS REPORT 2015 PROFIT DISTRIBUTION PROPOSAL 2015 RE-APPOINTMENT OF AUDITORS RPT REPORT APPRAISAL RESULTS APPRAISAL PROGRAM ENTRUSTED LOAN/BORROWING QUOTA EXTERNAL GUARANTEES TOTAL BANK CREDIT APPLICATIONS AUTHORIZATION TO DISPOSE OF LISTED SECURITIES THE INEDS ALLOWANCE AMENDMENTS TO BOARD RULES THE PROPOSED ISSUANCE OF THE RENEWABLE CORPORATE BONDS AUTHORIZATION IN RELATION TO RENEWABLE CORPORATE BONDS GRANT OF GENERAL MANDATE TO ISSUE A SHARES AND/OR H SHARES EXTENSION OF THE EFFECTIVE PERIOD FOR THE GENERAL MEETING RESOLUTION OF THE PROPOSED NON-PUBLIC ISSUANCE EXTENSION OF THE EFFECTIVE PERIOD FOR THE AUTHORIZATION OF THE PROPOSED NON-PUBLIC ISSUANCE RE-ELECTION OF THE BOARD RE-ELECTION OF SUPERVISORY COMMITTEE AND NOTICE OF AGM A letter from the Board is set out on pages 5 to 40 of this circular. Notice convening the AGM of Shanghai Fosun Pharmaceutical (Group) Co., Ltd.* to be held at Pine City Hotel, No. 8 Dong an Road, Shanghai, the PRC on Tuesday, 7 June 2016 at 1:30 p.m. is set out on pages N-1 to N-6 of this circular. The reply slip and form of proxy for use at the AGM are enclosed herewith and also published on the websites of the Hong Kong Stock Exchange ( and of the Company ( Whether or not you are able to attend the AGM, you are reminded to complete, sign and return the reply slip and the form of proxy enclosed, in accordance with the instructions printed thereon. For holders of H Shares, the reply slip shall be lodged at the Company s Hong Kong share registrar for H Shares, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong no later than twenty (20) days before the holding of the AGM (i.e. Wednesday, 18 May 2016) by hand, by post or by fax. The form of proxy shall be lodged at the Company s Hong Kong share registrar for H Shares, Tricor Investor Services Limited, at Level 22, Hopewell Centre, 183 Queen s Road East, Hong Kong no later than 24 hours before the holding of the AGM. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM should you so wish. 19 April 2016 * for identification purposes only

2 CONTENTS Page Definitions Letter from the Board Appendix I Board Report I-1 Appendix II Supervisory Committee Report II-1 Appendix III Final Accounts Report III-1 Appendix IV RPT Report IV-1 Appendix V Appraisal Results V-1 Appendix VI Entrusted Loan/Borrowing Quota VI-1 Appendix VII External Guarantees Appendix VIII Total Bank Credit Applications VII-1 VIII-1 Appendix IX Authorization to Dispose of Listed Securities IX-1 Appendix X Authorization in relation to Renewable Corporate Bonds X-1 Appendix XI Grant of General Mandate to Issue A Shares and/or H Shares XI-1 Appendix XII Re-election of the Board Appendix XIII Re-election of the Supervisory Committee XII-1 XIII-1 Notice of Annual General Meeting N-1 - i -

3 DEFINITIONS Unless the context otherwise requires, the following expressions in this circular shall have the following meanings: A Share(s) domestic share(s) with a nominal value of RMB1.00 each in the share capital of the Company, which is (are) listed on the Shanghai Stock Exchange and traded in RMB AGM Anhui Railway Construction Articles of Association or Articles associate(s) Board Board Rules Business Day the annual general meeting of the Company to be held at Pine City Hotel, No. 8 Dong an Road, Shanghai, the PRC on Tuesday, 7 June 2016 at 1:30 p.m. or any adjournment thereof Anhui Railway Construction Investment Fund Co., Ltd* ( 安徽省鐵路建設投資基金有限公司 ) The articles of association of the Company as effective at the time has the meaning ascribed to it under the Hong Kong Listing Rules the board of Directors the Rules of Procedures of the Board Meetings any day (excluding Saturday and Sunday) on which banks in Hong Kong are generally open for business CFM China Fund Management Co., Ltd.* ( 中信建投基金管理有限公司 ) China Life China Merchants Wealth China Universal Company Law Company or Fosun Pharma China Life Insurance Company Limited ( 中國人壽保險股份有限公司 ) China Merchants Wealth Asset Management Co., Ltd.* ( 招商財富資產管理有限公司 ) China Universal Asset Management Company Limited* ( 匯添富基金管理股份有限公司 ) the Company Law of the PRC ( 中華人民共和國公司法 ), as amended, supplemented or otherwise modified from time to time Shanghai Fosun Pharmaceutical (Group) Co., Ltd.*, a joint stock limited company incorporated in the PRC with limited liability, the H Shares and A Shares of which are listed and traded on the main board of the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively - 1 -

4 DEFINITIONS controlling shareholder(s) CSRC Director(s) has the meaning ascribed to it under the Hong Kong Listing Rules China Securities Regulatory Commission the director(s) of the Company Elion Resources Elion Resources Holding Co. Ltd.* ( 億利資源控股有限公司 ) Fosun Finance Fosun High Tech Fosun Industrial Fosun International Fosun International Holdings General Mandate to Issue A Shares and/or H Shares Group Fosun Group Finance Corporation Limited ( 上海復星高科技集團財務有限公司 ) Shanghai Fosun High Technology (Group) Company Limited* ( 上海復星高科技 ( 集團 ) 有限公司 ), a limited liability company established in the PRC, and a direct wholly-owned subsidiary of Fosun International and the controlling shareholder of the Company Fosun Industrial Co., Limited ( 復星實業 ( 香 ) 有限公司 ), a company incorporated in Hong Kong with limited liability, and a wholly-owned subsidiary of the Company Fosun International Limited ( 復星國際有限公司 ), a company incorporated in Hong Kong with limited liability, the shares of which are listed on the main board of the Hong Kong Stock Exchange, and the controlling shareholder of the Company Fosun International Holdings Limited ( 復星國際控股有限公司 ), a limited liability company established in the British Virgin Islands, and the controlling shareholder of the Company the general mandate to allot, issue or otherwise deal with A Shares and/or H Shares of the Company proposed to be granted at the AGM the Company and its subsidiaries H Share(s) overseas listed foreign share(s) with nominal value of RMB1.00 each in the share capital of the Company, which is(are) listed on the Hong Kong Stock Exchange and traded in Hong Kong dollars H Shareholder(s) holder(s) of H Shares HK$ or HKD Hong Kong Hong Kong dollars, the lawful currency of Hong Kong the Hong Kong Special Administrative Region of the PRC - 2 -

5 DEFINITIONS Hong Kong Listing Rules or Stock Exchange Listing Rules Hong Kong Stock Exchange HKFRS Latest Practicable Date Notice of AGM PRC or China Proposed Non-Public Issuance Renewable Corporate Bonds The Rules Governing the Listing of Securities on the Hong Kong Stock Exchange, as amended from time to time The Stock Exchange of Hong Kong Limited Hong Kong Financial Reporting Standards 11 April 2016, being the latest practicable date prior to the printing of this circular of ascertaining certain information herein the notice of the AGM dated 19 April 2016 set out on pages N-1 to N-6 of this circular the People s Republic of China (for the purpose of this circular, excluding Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan) the proposed non-public issuance of new A Shares to the Subscribers renewable corporate bonds of not more than RMB6,000,000,000 in principal amount proposed to be issued by the Company to qualified investors in the PRC Reporting Period the 12-month period ended 31 December 2015 RMB Securities Law SFO Shanghai Stock Exchange or SSE Share(s) Shareholder(s) SSE Listing Rules Subscribers Renminbi, the lawful currency of the PRC the Securities Laws of the PRC ( 中華人民共和國證券法 ), as amended, supplemented or otherwise modified from time to time Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) the Shanghai Stock Exchange share(s) of the Company, including A Shares and H Shares holder(s) of Share(s) Rules Governing the Listing of Stocks on Shanghai Stock Exchange, as amended from time to time collectively, China Life, Taikang AMC, Anhui Railway Construction - 3 -

6 DEFINITIONS substantial shareholder(s) Supervisor(s) Supervisory Committee Taikang AMC Zhongrong Dingxin has the meaning ascribed to it under the Hong Kong Listing Rules the supervisor(s) of the Company the committee of supervisors of the Company Taikang Asset Management Co., Ltd.* ( 泰康資產管理有限責任公司 ) Beijing Zhongrong Dingxin Investment Management Co., Ltd.* ( 北京中融鼎新投資管理有限公司 ) % per cent - 4 -

7 LETTER FROM THE BOARD 上海復星醫藥 ( 集團 ) 股份有限公司 Shanghai Fosun Pharmaceutical (Group) Co., Ltd. * (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 02196) Executive Directors: Mr. Chen Qiyu (Chairman) Mr. Yao Fang (Vice Chairman, President, CEO) Non-executive Directors: Mr. Guo Guangchang Mr. Wang Qunbin Mr. Wang Pinliang Ms. Kang Lan Mr. John Changzheng Ma Independent Non-executive Directors: Dr. Zhang Weijiong Mr. Cao Huimin Mr. Jiang Xian Dr. Wong Tin Yau Kelvin Registered office: 9th Floor, No. 510 Caoyang Road Putuo District Shanghai, , China Headquarter: Building A No Yishan Road Shanghai, , China Principal place of business in Hong Kong: Level 54 Hopewell Centre 183 Queen s Road East Hong Kong 19 April 2016 To the Shareholders Dear Sir or Madam, ANNUAL REPORT 2015 BOARD REPORT 2015 SUPERVISORY COMMITTEE REPORT 2015 FINAL ACCOUNTS REPORT 2015 PROFIT DISTRIBUTION PROPOSAL 2015 RE-APPOINTMENT OF AUDITORS RPT REPORT APPRAISAL RESULTS APPRAISAL PROGRAM ENTRUSTED LOAN/BORROWING QUOTA EXTERNAL GUARANTEES TOTAL BANK CREDIT APPLICATIONS AUTHORIZATION TO DISPOSE OF LISTED SECURITIES THE INEDS ALLOWANCE AMENDMENTS TO BOARD RULES THE PROPOSED ISSUANCE OF THE RENEWABLE CORPORATE BONDS AUTHORIZATION IN RELATION TO RENEWABLE CORPORATE BONDS GRANT OF GENERAL MANDATE TO ISSUE A SHARES AND/OR H SHARES EXTENSION OF THE EFFECTIVE PERIOD FOR THE GENERAL MEETING RESOLUTION OF THE PROPOSED NON-PUBLIC ISSUANCE EXTENSION OF THE EFFECTIVE PERIOD FOR THE AUTHORIZATION OF THE PROPOSED NON-PUBLIC ISSUANCE RE-ELECTION OF THE BOARD RE-ELECTION OF SUPERVISORY COMMITTEE AND NOTICE OF AGM * for identification purposes only - 5 -

8 LETTER FROM THE BOARD I. INTRODUCTION The purpose of this circular is to give you notice of the AGM and to provide you with information regarding certain ordinary resolutions and special resolutions to be proposed at the AGM relating to (including) the following matters to enable you to make informed decisions on whether to vote for or against the proposed resolutions at the AGM: At the AGM, resolutions will be proposed to approve, among others: (1) the annual report of the Group for the year 2015 (the Annual Report 2015 ); (2) the work report of the Board of the Company for the year 2015 (the Board Report 2015 ); (3) the work report of the Supervisory Committee of the Company for the year 2015 (the Supervisory Committee Report 2015 ); (4) the final accounts report of the Group for the year 2015 (the Final Accounts Report 2015 ); (5) the annual profit distribution proposal of the Company for the year 2015 (the Profit Distribution Proposal 2015 ); (6) the re-appointment of Ernst & Young Hua Ming (a special general partnership) as PRC financial report and internal control report auditors of the Company for the year 2016 and reappointment of Ernst & Young as international financial report auditors of the Company for the year 2016 and the passing of remuneration packages for the PRC and international auditors for the year 2015 (the Re-appointment of Auditors ); (7) the estimated ongoing related party transactions for 2016 of the Group (the RPT Report ); (8) the appraisal results and remunerations of executive Directors for 2015 (the Appraisal Results ); (9) the appraisal program of executive Directors for 2016 (the Appraisal Program ); (10) the renewal of and new entrusted loan/borrowing quota of the Group for 2016 (the Entrusted Loan/Borrowing Quota ); (11) the renewal of and new external guarantee quota of the Group for 2016 (the External Guarantees ); (12) the total bank credit applications of the Group for 2016 (the Total Bank Credit Applications ); (13) the authorization to the management to dispose of listed securities (the Authorization to Dispose of Listed Securities ); - 6 -

9 LETTER FROM THE BOARD (14) the adjustments of allowance of independent non-executive Directors (the INEDs Allowance ); (15) the amendments to the Rules of Procedures for the Board Meetings of the Company (the Amendments to Board Rules ); (16) the proposed issuance of Renewable Corporate Bonds (the Proposed Issuance of the Renewable Corporate Bonds ); (17) the resolution to authorize the Board (or its delegate) to conduct, at their absolute discretion, the reporting procedures of the Renewable Corporate Bonds and relevant matters in relation to the issuance thereof (the Authorization in relation to Renewable Corporate Bonds ); (18) the proposed grant of the general mandate to issue A Shares and/or H Shares of the Company (the Grant of General Mandate to Issue A Shares and/or H Shares ); (19) extension of the effective period for the general meeting resolution of the Proposed Non-Public Issuance; (20) extension of the effective period for the authorization of the Proposed Non-Public Issuance; (21) the elections of executive Directors and non-executive Directors of the seventh session of the Board; and (22) the elections of independent non-executive Directors of the seventh session of the Board (collectively, Re-election of the Board for resolutions (21) and (22)) (23) the elections of Supervisors of the seventh session of the Supervisory Committee ( Re-election of the Supervisory Committee ). A. DETAILS OF THE RESOLUTIONS (1) Annual Report 2015 An ordinary resolution will be proposed at the AGM to pass the Annual Report The annual report 2015 (for H Shares) is set out in the website of Hong Kong Stock Exchange ( (2) Board Report 2015 An ordinary resolution will be proposed at the AGM to pass the work report of the Board of the Company for the year Full text of the Board Report 2015 to be passed is set out in Appendix I to this circular

10 LETTER FROM THE BOARD (3) Supervisory Committee Report 2015 An ordinary resolution will be proposed at the AGM to pass the work report of the Supervisory Committee for the year Full text of the Supervisory Committee Report 2015 to be passed is set out in Appendix II to this circular. (4) Final Accounts Report 2015 An ordinary resolution will be proposed at the AGM to pass the final accounts report of the Group for the year Full text of the Final Accounts Report 2015 to be passed is set out in Appendix III to this circular. (5) Profit Distribution Proposal 2015 An ordinary resolution will be proposed at the AGM to pass the profit distribution proposal of the Company for the year The Profit Distribution Proposal 2015 to be passed is set out as follows: Pursuant to the Articles of Association and other relevant rules, the Board has proposed the payment of a final dividend of RMB0.32 per Share (pre-tax) from undistributed profit of the Company to all Shareholders. If calculated based on the Company s total issued share capital of 2,314,075,364 Shares as at the Latest Practicable Date, a total of RMB740,504, (pre-tax) will be distributed. Dividends will be distributed to A Shareholders and H Shareholders in RMB and HK$, respectively. The actual amount of dividend for H shares shall be calculated in HK$ based on the average benchmark exchange rate between RMB and HK$ published by the People s Bank of China for the five (5) business days before the date of the AGM. It is also proposed to the AGM that the Board or its authorized persons be authorized to exercise discretion for the implementation of the aforesaid profit distribution proposal. The Company will give further notice on the record date and book closure dates for the purpose of determining the entitlement of Shareholders to the aforesaid final dividend for H Shares. (6) Re-appointment of Auditors An ordinary resolution will be proposed at the AGM to pass the re-appointment of Ernst & Young Hua Ming (a special general partnership) as PRC financial report and internal control report auditors of the Company for the year 2016 and re-appointment of Ernst & Young as international financial report auditors of the Company for the year 2016 and the passing of remuneration packages for the year The remuneration packages for PRC and international auditors for the year 2015 to be passed are set out as follows: - 8 -

11 LETTER FROM THE BOARD The remuneration paid to Ernst & Young Hua Ming (a special general partnership) for providing domestic financial report and internal control auditing services for the Company for the year 2015 amounted to RMB2.4 million and RMB0.75 million, respectively, and the remuneration paid to Ernst & Young for providing international financial report auditing services for the Company for the year 2015 amounted to RMB1.1 million. It is also proposed to the AGM that the Board or its authorized persons be authorized to exercise discretion for the implementation of the aforesaid remuneration packages for auditors. (7) RPT Report An ordinary resolution will be proposed at the AGM to pass the Group s estimated ongoing related party transactions for Full text of the RPT Report to be passed is set out in Appendix IV to this circular. (8) Appraisal Results An ordinary resolution will be proposed at the AGM to pass the appraisal results and remunerations of executive Directors of the Company for Full text of the Appraisal Results to be passed is set out in Appendix V to this circular. (9) Appraisal Program An ordinary resolution will be proposed at the AGM to pass the appraisal program of executive Directors of the Company for The Appraisal Program to be passed is set out as follows: In 2016, the appraisal to the executive Directors is mainly based on the 5-year strategic plan and the work focus in 2016, which the details of the appraisal are determined based on indexes such as, financial index, operational and management index, strategic and developmental index and reward and punishment index. In 2016, the remuneration of executive Directors (except executive Directors who are also senior management) will remain the annual salary system which consists of fixed salary and annual performance assessment bonus. The remuneration should be determined primarily based on the economic benefits received by the Company and by reference to other factors including the responsibilities and actual performance of the Directors and the remuneration standards of the industry. (10) Entrusted Loan/Borrowing Quota An ordinary resolution will be proposed at the AGM to pass the renewal of and new entrusted loan quota of the Group for Full text of the Entrusted Loan Quota to be passed is set out in Appendix VI to this circular

12 LETTER FROM THE BOARD (11) External Guarantees An ordinary resolution will be proposed at the AGM to pass the renewal of and new external guarantee quota of the Group for Full text of the External Guarantees to be passed is set out in Appendix VII to this circular. (12) Total Bank Credit Applications An ordinary resolution will be proposed at the AGM to pass the total bank credit applications of the Group for Full text of the Total Bank Credit Applications to be passed is set out in Appendix VIII to this circular. (13) Authorization to Dispose of Listed Securities An ordinary resolution will be proposed at the AGM to pass and authorize the management to dispose of listed securities. Full text of the Authorization to Dispose of Listed Securities to be passed is set out in Appendix IX to this circular. (14) The INEDs Allowance An ordinary resolution will be proposed at the AGM to pass the adjustments of allowance of independent non-executive Directors. The INEDs Allowance to be passed is set out as follows: Pursuant to the relevant provisions of the Guidelines Opinion on the Establishment of Systems of Independent Directors of Listed Companies ( 關於在上市公司建立獨立董事制度的指導意見 ) issued by the CSRC and the Independent Director System of the Company, allowance of independent non-executive Directors is proposed to be adjusted from the current RMB200,000 (pre-tax) per year to RMB300,000 (pre-tax) per year from the year 2016 onward, taking into consideration of the roles of independent non-executive Directors in the operation of the Board and their actual fulfilment of duties and with reference to the allowance standards of independent non-executive directors of listed companies at the same scale. (15) Amendments to Board Rules At the AGM, an ordinary resolution will be proposed to amend the Board Rules. Details of the proposed resolution are set out below: For the improvement of company governance, subject to the Articles of Associations, suitable amendments is proposed to the Rule 3 of the Board Rules. Proposed to be amended as follows: Articles 3 The Board of directors shall exercise the following functions and powers: Currently reads as follow: (1) to convene and report at the shareholders general meetings;

13 LETTER FROM THE BOARD (2) to implement the resolutions passed at the shareholders general meetings; (3) to decide the Company s business and investment plans; (4) to prepare the Company s annual budget and final account plan; (5) to prepare the Company s profit distribution plan and loss recovery plan; (6) to prepare the proposals for the increase or reduction of the Company s registered capital, issue of debentures or other securities as well as listing; (7) to draw up plans for significant acquisition by the Company, purchase of the Company s shares or the merger, division and dissolution of the Company and change of corporate form; (8) to make decisions on any disposal of assets of the Company and its controlled subsidiaries (other than those subject to the consideration of the shareholders general meeting), any disposal of assets between the Company and its controlled subsidiaries or among its controlled subsidiaries, and any merger or division of its controlled subsidiaries, unless otherwise stipulated in the laws, administrative regulations, departmental rules, regulations of the securities authorities of the place where the Company is listed or the Articles of Association; (9) to determine the Company s internal management structure; (10) to appoint or dismiss the Company s president, the secretary to the Board and the company secretary, to appoint or dismiss the Company s Vice president and other senior management including financial controller as nominated by the president, and determine their remunerations, awards and punishment; (11) to prepare the Company s basic management system; (12) to prepare amendments to the Articles of Association; (13) to manage the disclosure of information of the Company; (14) to propose at the shareholders general meeting for engaging or removal of the auditor for the Company; (15) to consider and approve the disposal of assets (including but not limited to purchase or sale of assets and business, entrusting or being entrusted to manage assets and business, endowing or being endowed with assets, leasing or renting out assets, making investment to establish legal entities or acquisition of legal entities or subscribing for shares issued by legal entities, trust management of funds or entrustment loans, licensing or being licensed to use assets, disposing of creditors rights and debts, capital increase and deduction as well as provision of guarantees of the controlling subsidiaries

14 LETTER FROM THE BOARD and subsidiaries in which it holds minority equity interests), provision of financial assistance and connected transactions, other than those matters which are subject to consideration and approval at the shareholders general meeting of the Company under the laws, administrative regulations, departmental rules, regulatory documents, the SSE Listing Rules, the Stock Exchange Listing Rules and the Articles of Association: 1. provision of guarantees other than those matters which are subject to consideration and approval at the shareholders general meeting under the laws, administrative regulations, departmental rules, regulatory documents, the SSE Listing Rules, the Stock Exchange Listing Rules and the Articles of Association; 2. the disposal of assets where the aggregate assets value (the higher of the book value and assessed value) or the transaction amount (including liabilities and expenses) involved in a single transaction exceeding RMB300,000,000 (excluding the current number), and the purchase and sale of the material assets within 1 year representing less than 30% of the Company s latest audited total asset value (except for disposals of assets between the Company and its controlled subsidiaries, or among its controlled subsidiaries); 3. the financial assistance where the amount involved in a single transaction exceeding RMB300,000,000 (excluding the current number) and representing less than 50% of the Company s latest audited net asset value; 4. the connected transaction with the connected person with the transaction amount accounting for more than 1% (including 1%) of the absolute value of Company s latest audited net asset (excluding corporate guarantees); 5. the discloseable transaction which is subject to the publication of announcement or the approval at the shareholders general meeting under Chapter 14 of the Stock Exchange Listing Rules; 6. save as the matters mentioned in paragraph 1 above which fall beyond the authority of review and approval of the Board shall be determined by the president, provided otherwise that such authority is stipulated under the applicable regulations of the place where the Company is listed which shall comply with the required regulations applicable to the place where the Company is listed; (16) to hear the work report of the president of the Company and examine the work of the president; (17) to exercise such other functions and powers as authorized by the laws, administrative regulations, departmental rules, Articles of Association or the shareholders general meetings

15 LETTER FROM THE BOARD (18) matters which exceed the authority delegated by the shareholders general meetings shall be submitted to the shareholders general meeting for consideration. It is proposed to be amended to: (1) to convene and report at the shareholders general meetings; (2) to implement the resolutions passed at the shareholders general meetings; (3) to decide the Company s business and investment plans; (4) to prepare the Company s annual budget and final account plan; (5) to prepare the Company s profit distribution plan and loss recovery plan; (6) to prepare the proposals for the increase or reduction of the Company s registered capital, issue of debentures or other securities as well as listing; (7) to draw up plans for significant acquisition by the Company, purchase of the Company s shares or the merger, division and dissolution of the Company and change of corporate form; (8) to make decisions on any disposal of assets of the Company and its controlled subsidiaries (other than those subject to the consideration of the shareholders general meeting), any disposal of assets between the Company and its controlled subsidiaries or among its controlled subsidiaries, and any merger or division of its controlled subsidiaries, unless otherwise stipulated in the laws, administrative regulations, departmental rules, regulations of the securities authorities of the place where the Company is listed or the Articles of Association; (9) to determine the Company s internal management structure; (10) to appoint or dismiss the Company s president, the secretary to the Board and the company secretary, to appoint or dismiss the Company s Vice president and other senior management including financial controller as nominated by the president, and determine their remunerations, awards and punishment; (11) to prepare the Company s basic management system; (12) to prepare amendments to the Articles of Association; (13) to manage the disclosure of information of the Company; (14) to propose at the shareholders general meeting for engaging or removal of the auditor for the Company;

16 LETTER FROM THE BOARD (15) to consider and approve the disposal of assets (including but not limited to purchase or sale of assets and business, entrusting or being entrusted to manage assets and business, endowing or being endowed with assets, leasing or renting out assets, making investment to establish legal entities or acquisition of legal entities or subscribing for shares issued by legal entities, trust management of funds or entrustment loans, licensing or being licensed to use assets, disposing of creditors rights and debts, capital increase and deduction as well as provision of guarantees of the controlling subsidiaries and subsidiaries in which it holds minority equity interests), provision of financial assistance and connected transactions, other than those matters which are subject to consideration and approval at the shareholders general meeting of the Company under the laws, administrative regulations, departmental rules, regulatory documents, the SSE Listing Rules, the Stock Exchange Listing Rules and the Articles of Association: 1. provision of guarantees other than those matters which are subject to consideration and approval at the shareholders general meeting under the laws, administrative regulations, departmental rules, regulatory documents, the SSE Listing Rules, the Stock Exchange Listing Rules and the Articles of Association; 2. the disposal of assets where the aggregate assets value (the higher of the book value and assessed value) or the transaction amount (including liabilities and expenses) involved in a single transaction exceeding RMB500,000,000 (excluding the current number), and the purchase and sale of the material assets within 1 year representing less than 30% of the Company s latest audited total asset value (except for disposals of assets between the Company and its controlled subsidiaries, or among its controlled subsidiaries); 3. the financial assistance where the amount involved in a single transaction exceeding RMB500,000,000 (excluding the current number) and representing less than 50% of the Company s latest audited net asset value; 4. the connected transaction with the connected person with the transaction amount accounting for more than 1% (including 1%) of the absolute value of Company s latest audited net asset (excluding corporate guarantees); 5. the discloseable transaction which is subject to the publication of announcement or the approval at the shareholders general meeting under Chapter 14 of the Stock Exchange Listing Rules; 6. save as the matters mentioned in paragraph 1 above which fall beyond the authority of review and approval of the Board shall be determined by the president, provided otherwise that such authority is stipulated under the applicable regulations of the place where the Company is listed which shall comply with the required regulations applicable to the place where the Company is listed;

17 LETTER FROM THE BOARD (16) to hear the work report of the president of the Company and examine the work of the president; (17) to exercise such other functions and powers as authorized by the laws, administrative regulations, departmental rules, Articles of Association or the shareholders general meetings. (18) matters which exceed the authority delegated by the shareholders general meetings shall be submitted to the shareholders general meeting for consideration. (16) Proposed Issuance of the Renewable Corporate Bonds (Note) The Board has approved (among other things) and proposed to submit the Proposed Issuance of the Renewable Corporate Bonds to shareholders for consideration and approval. Details are set out as follows: (i) Overview of the issuance (A) Size and method of the issuance The size of the Renewable Corporate Bonds will not be more than RMB6.0 billion (inclusive). The issuance can be made in one or more tranches. The specific size and method of the issuance shall be determined by the Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, within the aforesaid range at its absolute discretion in accordance with the requirements under the relevant laws and regulations, advices and recommendations of the regulatory authorities, the funding requirements of the Company and the prevailing market conditions at the time of the Issuance with a view to safeguard the best interests of the Company. (B) Bond rate or its determination mechanism The coupon rate of the Renewable Corporate Bonds and its calculation and the coupon payment method shall be determined by the Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, and the lead underwriter in accordance with the relevant requirements and the market conditions. (C) Maturity period, method of principal repayment and interest payment, and other specific arrangements There is an option available to the Company to renew the Renewable Corporate Bonds. The bonds will continue to exist if the renewal option is exercised by the Company according to the issuance terms. The bonds will be due and repaid if the Note: The disclosure of financial information of the Proposed Issuance of the Renewable Corporate Bonds is based on the China Accounting Standards for Business Enterprises

18 LETTER FROM THE BOARD renewal option is not exercised according to the issue terms. The specific term and the size of each type of bonds with different maturity periods shall be determined by the Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, in accordance with the relevant requirements and the prevailing market conditions at the time of the Proposed Issuance of the Renewable Corporate Bonds. (D) Use of proceeds The proceeds raised from the Renewable Corporate Bonds (excluding the expenses relating to the issuance) are intended to be used for replenishment of the working capital of the Company and repayment of the principal amount of and interest on interest-bearing debts. The specific purposes shall be determined by the Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, within the aforesaid range taking into consideration the financial position and the funding requirements of the Company. (E) Investors and the placing arrangement for Shareholders The target of the Renewable Corporate Bonds will be the qualified investors pursuant to the requirements under the Administrative Measures for the Issue and Trading of Corporate Bonds. The specific persons to whom the Company will issue the Renewable Corporate Bonds shall be determined by the Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, in accordance with the requirements of the relevant laws and regulations, the market conditions and specific matters relating to the Issuance of the Renewable Corporate Bonds. The Renewable Corporate Bonds will not be offered, by way of preferential placing, to the Shareholders. (F) The Guarantee The Renewable Corporate Bonds does not have any guarantee arrangement. (G) Credit standing of the Company and safeguards for debt repayment The following protective measures will be adopted by the Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, in the event that the Company anticipates that it will be, or becomes, unable to repay the principal amount of and interests accrued on the Renewable Corporate Bonds as and when they fall due in accordance with the relevant laws and regulations and the Articles of Association: (1) no distribution of any dividend to the Shareholders;

19 LETTER FROM THE BOARD (2) suspension of major projects requiring capital expenditures, such as significant external investments and mergers and acquisitions; (3) reduction or suspension of the salary and bonus payable to the Directors and senior management; (4) no re-designation of the key personnel in charge of the Renewable Corporate Bonds. (H) Underwriting The unsubscribed portion of the Renewable Corporate Bonds shall be underwritten by the underwriter syndicate formed by the lead underwriter. (I) Listing arrangement The Board (or its authorized representatives), which is to be authorized by the Shareholders at the general meeting, shall decide on matters in relation to the listing of the Renewable Corporate Bonds upon issuance taking into consideration the circumstances of the Company, the method of issue and the market conditions. (J) Validity of the resolution The resolution relating to the Renewable Corporate Bonds shall be valid for 12 months from the date of passing of the relevant resolution by the Shareholders at the general meeting. In the event that the Board and/or its authorized representatives has determined to carry out the issuance of the Renewable Corporate Bonds within the validity period and the Company has also obtained the approval, permit, filing or registration of the issuance (if applicable) from regulatory authorities during the validity period of such authorization, the Company may complete such issuance or part of the issuance of the Renewable Corporate Bonds during the validity period so far as such approval, permit, filing or registration remains valid. (ii) Summarised financial information In October 2014, the Company made adjustment to accounting policies based on the changes of the China Accounting Standards for Business Enterprises. The corresponding retrospective adjustments have been made on the following financial information of 2013 in accordance with the aforementioned changes of accounting policies

20 LETTER FROM THE BOARD (a) Combined financial statements of the Group and financial statements of the parent (i.e. the Company) for the last three years Combined Balance Sheet Items 31 December 2015 Unit: RMB (in ten thousand) 31 December 31 December Current Assets: Cash and cash equivalents 402, , , Financial assets at fair value through profit or loss 3, , , Notes receivables 41, , , Amounts receivables 173, , , Prepayments 16, , , Interest receivables Other receivables 20, , , Dividends receivables , , Inventory 164, , , Assets classified as held for sale 99, Other current assets 9, , Total current assets 832, , , Non-current assets: Financial assets available for sale 331, , , Long-term equity investment 1,391, ,190, , Fixed assets 476, , , Construction in progress 100, , , Construction materials Intangible assets 302, , , Development expenses 22, , , Goodwill 330, , , Long-term deferred expenses 1, , , Deferred income tax asset 10, , , Other non-current assets 21, , , Total non-current assets 2,987, ,667, ,248, Total assets 3,820, ,533, ,947,

21 LETTER FROM THE BOARD Items 31 December 2015 Unit: RMB (in ten thousand) 31 December 31 December Current liabilities: Short-term loans 547, , , Notes payables 7, , , Account payables 97, , , Receipts in advance 26, , , Payroll payables 37, , , Tax payables 50, , , Interest payables 16, , , Dividend payables Other payables 115, , , Liabilities classified as held for sale 58, Non-current liabilities due within one year 186, , , Other current liabilities 9, , , Total current liabilities 1,093, , , Non-current Liabilities: Long-term borrowings 167, , , Bonds payables 189, , , Long-term payables 94, , , Specific payables Deferred income tax liabilities 184, , , Deferred income 16, , , Other non-current liabilities 6, , , Total non-current liabilities 659, , , Total liabilities 1,753, ,623, ,181, Interests of equity holders (or shareholders): Share capital 231, , , Capital reserves 605, , , Less: treasury stock 4, , Other comprehensive income 91, , , Surplus reserves 199, , , Retained earnings 693, , , Total equity attributable to equity holders of the parent 1,818, ,667, ,533, Minority interests 248, , , Equity attributable to equity holders 2,066, ,910, ,766, Total liabilities and interests of equity holders 3,820, ,533, ,947,

22 LETTER FROM THE BOARD Consolidated Income Statement Unit: RMB (in ten thousand) Items Total operating revenue 1,260, ,202, , Less: Cost of operation 630, , , Operating taxes and surcharges 10, , , Cost of sales 281, , , Administrative expenses 190, , , Financial expenses 45, , , Asset impairment loss 7, , , Add: Gain on changes in fair value , , Investment income 234, , , Including: investment income in joint ventures and associates 110, , , Operating profit 329, , , Add: Non-operating income 10, , , Less: Non-operating expenses 3, , , Total profit 337, , , Less: Income tax 50, , , Net profit 287, , , Less: Minority interests 41, , , Net profit attributable to shareholders of the parent 246, , , Add: Other comprehensive income -19, , , Total comprehensive income 267, , , Total comprehensive income attributable to minority shareholders 41, , , Total comprehensive income attributable to shareholders of the parent 225, , ,

23 LETTER FROM THE BOARD Consolidated Statement of Cash Flows Unit: RMB (in ten thousand) Items I. Cash flows from operating activities: Cash received from sale of goods or rendering of services 1,444, ,308, ,058, Refunds of taxes received 3, , , Cash received relating to other operating activities 24, , , Sub-total of cash inflows from operating activities 1,472, ,336, ,091, Cash paid for goods purchased and services received 646, , , Cash paid to and on behalf of employees 200, , , Cash paid for all types of taxes 143, , , Cash paid relating to other operating activities 319, , , Sub-total of cash outflows from operating activities 1,310, ,216, , Net cash flows from operating activities 162, , , II. Net cash flows from investing activities: Cash received from sale of investments 176, , , Cash received from return on investments 35, , , Net cash received from disposal of fixed assets, intangible assets and other long-term assets 2, , Net cash received from disposal of subsidiaries or other operating companies 35, , Cash received relating to other investing activities 9, , , Sub-total of cash inflows from investing activities 259, , , Cash paid for acquisition of fixed assets, intangible assets and other long-term assets 123, , , Cash paid for investments 295, , , Net cash paid for the acquisition of subsidiaries or other operating companies 24, , , Cash paid relating to other investing activities 3, , , Sub-total of cash outflows from investing activities 446, , , Net cash flows from investing activities -186, , ,

24 LETTER FROM THE BOARD Unit: RMB (in ten thousand) Items III. Cash flows from financing activities: Cash received from capital contributions 11, , , Including: Cash received from capital contributions of minority shareholders of subsidiaries 8, , , Cash received from borrowings 924, , , Cash received relating to other financing activities 7, , , Sub-total of cash inflows from financing activities 943, , , Cash repayments of debts 723, , , Cash paid for distribution of dividends or profits and for interest expenses 124, , , Including: Cash paid for distribution of dividends or profits to minority shareholders of subsidiaries 13, , , Cash paid relating to other financing activities 40, , , Sub-total of cash outflows from financing activities 888, , , Net cash flows from financing activities 55, , , IV. Effect of changes in exchange rate on cash 3, , V. Net increase in cash and cash equivalents 33, , , Balance of cash and cash equivalents at the beginning of the period 301, , , Balance of cash and cash equivalents at the end of the period 334, , ,

25 LETTER FROM THE BOARD Balance Sheet of the Parent Items 31 December 2015 Unit: RMB (in ten thousand) 31 December December 2013 Current Assets: Cash and cash equivalents 74, , , Interest receivables , , Other receivables 320, , , Dividends receivables , , Inventory Assets classified as held for sale 27, Other non-current assets due within one year 79, Other current assets 35, , , Total current assets 512, , , Non-current assets: Financial assets available for sale 64, , , Long-term equity investment 1,545, ,367, , Fixed assets 1, , , Intangible assets Other non-current assets 327, , , Total non-current assets 1,940, ,773, , Total assets 2,452, ,184, ,255,

26 LETTER FROM THE BOARD Items 31 December 2015 Unit: RMB (in ten thousand) 31 December December 2013 Current liabilities: Short-term loans 267, , Payroll payables 10, , , Tax payables 1, , , Interest payables 15, , , Dividend payables Other payables 51, , , Non-current liabilities due within one year 164, , , Other current liabilities 99, Total current liabilities 510, , , Non-current Liabilities: Long-term borrowings 18, , , Bonds payables 189, , , Deferred income Deferred income tax liabilities 115, , Other non-current liabilities Total non-current liabilities 323, , , Total liabilities 834, , , Interests of equity holders (or shareholders): Share capital 231, , , Capital reserves 826, , , Less: treasury stock 4, , Other comprehensive income 9, , , Surplus reserves 119, , , Retained earnings 436, , , Equity attributable to equity holders 1,618, ,459, , Total liabilities and interests of equity holders 2,452, ,184, ,255,