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个股公告正文

深赛格B:2016年年度报告(英文版)

日期:2017-04-18附件下载

Shenzhen SEG Co., Ltd.

  2016 Annual Report

        2017-028




      April 2017




           1
                                             Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.




           Chapter 1 Important Notice, Contents and Definitions

The Board of Directors, the Board of Supervisors, the directors, the supervisors and the
senior executives guarantee that the annual report is authentic, accurate, and complete, and
that it has no false records misleading statements or major omissions, and they commit to the
individual and joint legal liabilities.

Chairman of the Board of Directors 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 annual report are true,
accurate and complete.

All the directors have attended this board meeting reviewing the annual report.

The future plans, development strategies, and forward-looking statements involved in the
annual report do not constitute any tangible commitment to investors. Investors should pay
attention to investment risks.

The Company plans not to distribute cash dividends or bonus shares nor transfer reserves
into share capital.




                                              2
                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.




                                                    CONTENTS



Chapter 1 Important Notice, Contents and Definitions ...........................................2
Chapter 2 Company Profile and Main Financial Indexes ........................................6
Chapter 3 Overview of Company’s Business ........................................................... 11
Chapter 4 Management Discussion and Analysis ...................................................17
Chapter 5 Important Matters ...................................................................................49
Chapter 6 Changes in Share Capital and Information on Shareholders ............ 109
Chapter 7 Preferred Shares..................................................................................... 115
Chapter 8 Information on Directors, Supervisors, Senior Executives and Employees                                      116
Chapter 9 Corporate Governance ..........................................................................128
Chapter 10 Corporate Bonds ..................................................................................143
Chapter 11 Financial Report ...................................................................................144




                                                                 3
                                                    Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.




                                          Definitions


                  Definition            Refers to                                Description

This Company, the Company, the listed
                                        Refers to       Shenzhen SEG Co., Ltd.
company, Shen SEG

Shenzhen SEG Group Co., Ltd.            Refers to       Shenzhen SEG Group Co., Ltd.

Huakong SEG                             Refers to       Shenzhen Huakong SEG Co., Ltd.

SEG Baohua                              Refers to       Shenzhen SEG Baohua Enterprise Development Co., Ltd.

Xi'an SEG                               Refers to       Xi'an SEG Electronics Market Co., Ltd.

Suzhou SEG                              Refers to       Suzhou SEG Electronics Market Management Co., Ltd.

Xi'an Hairong SEG                       Refers to       Xi'an Hairong SEG Electronics Market Co., Ltd.

Nanjing SEG                             Refers to       Shenzhen SEG Electronics Market Management Co., Ltd.

                                                        Shanghai SEG Electronics Market Operation Management Co.,
Shanghai SEG                            Refers to
                                                        Ltd.

Nantong SEG                             Refers to       Nantong SEG Times Plaza Management Co., Ltd.

Changsha SEG                            Refers to       Changsha SEG Development Co., Ltd.

Mellow Orange Hotel                     Refers to       Shenzhen Mellow Orange Business Hotel Management Co., Ltd

Longgang SEG                            Refers to       Shenzhen SEG Electronics Market Management Co., Ltd.

SEG Industry                            Refers to       Shenzhen SEG Industrial Investment Co., Ltd.

SEG E-Commerce                          Refers to       Shenzhen SEG E-commerce Co., Ltd.

SEG Credit                              Refers to       Shenzhen SEG Credit Co., Ltd.

SEG Navigations                         Refers to       Shenzhen SEG GPS Scientific Navigations Co., Ltd.

Shunde SEG                              Refers to       Shunde SEG Electronics Market Management Co., Ltd.

Wuxi SEG                                Refers to       Wuxi SEG Electronics Market Co., Ltd

Nanning SEG                             Refers to       Nanning SEG Digital Plaza Management Co., Ltd.

Suzhou SEG Digital                      Refers to       Suzhou SEG Digital Plaza Management Co., Ltd.

                                                        Xi'an Fengdong New Town SEG Times Plaza Properties Co.,
Xi'an Fengdong SEG                      Refers to
                                                        Ltd.



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                                                              Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.



                    Definition                    Refers to                                 Description

Nantong SEG Operation                             Refers to       Nantong SEG Commercial Operation Management Co., Ltd.

SEG Intelligent                                   Refers to       Suzhou SEG Intelligent Technology Co., Ltd.

SEG Investment                                    Refers to       Shenzhen SEG Investment Management Co., Ltd.

SEG CPARK                                         Refers to       SEG International CPARK Show Promotion Center

                                                                  Shenzhen SEG Longyan New Energy Application and
Longyan Application                               Refers to
                                                                  Development Co., Ltd.
SEG Longyan Technology                            Refers to       Shenzhen SEG Longyan Energy Technology Co., Ltd.

SEG Real Estate Investment                        Refers to       Shenzhen SEG Real Estate Investment Co., Ltd.

SEG Kangle                                        Refers to       Shenzhen SEG Kangle Enterprise Development Co., Ltd.

SEG Property Development                          Refers to       Shenzhen SEG Property Development Co., Ltd.
                                                                  China International Consumer Electronics Exhibition/Exchange
CEEC                                              Refers to
                                                                  Center Co., Ltd.

Wangyu Technology                                 Refers to       Shanghai Wangyu Information Technology Co., Ltd.

SegMaker                                          Refers to       Shenzhen SegMaker Co., Ltd.

Tencent                                           Refers to       Shenzhen Tencent Computer System Co., Ltd.

Fujian Babycat                                    Refers to       Fujian Babycat Animation Technology Co., Ltd.
Tmall Company                                     Refers to       Zhejiang Tmall Technology Co., Ltd.

Futian Investment                                 Refers to       Shenzhen Futian Investment Co., Ltd.

Ourgame International                             Refers to       Ourgame International Holdings Limited

Allied eSports                                    Refers to       Tianjin Allied eSports Internet Technology Co., Ltd.
Shum Yip Land                                     Refers to       Shum Yip Land Company Limited

                                                                  State-owned Assets Supervision and Administration Commission
Shenzhen SASAC                                    Refers to
                                                                  of Shenzhen Municipality

CSRC                                              Refers to       China Securities Regulatory Commission

                                                                  Shenzhen Securities Regulatory Bureau of China Securities
Shenzhen Securities Regulatory Bureau             Refers to
                                                                  Regulatory Commission

Articles of Association                           Refers to       Articles of Association of Shenzhen SEG Co., Ltd.

Unless otherwise specified, the amount referred
                                                  Refers to       Amount in RMB
to in the report




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                                                                  Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.




             Chapter 2 Company Profile and Main Financial Indexes

I. Basic Information

Stock abbreviation               SHEN SEG, SHEN SEG B                    Stock code                    000058, 200058

Changed stock abbreviation (if
                                 None
any)

Listed on                        Shenzhen Stock Exchange

Company name in Chinese          深圳赛格股份有限公司

Company abbreviation in
                                 深赛格
Chinese

Company name in English (if
                                 SHENZHEN SEG CO., LTD.
any)

Company name abbreviations
                                 None
in English (if any)

Legal representative             Wang Li

Registered address               31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen

Post code                        518028

Office address                   31/F, Tower A, Stars Plaza, Huaqiang Road (N), Futian District, Shenzhen

Post code                        518028

Website                          http://www.segcl.com.cn

E-mail                           segcl@segcl.com.cn

II. Contact Information

                                                 Secretary of the Board of Directors           Securities affairs representative

Name                                         Zheng Dan                                   Zhang Xin

                                             31/F, Tower A, Stars Plaza, Huaqiang Road 31/F, Tower A, Stars Plaza, Huaqiang Road
Contact address
                                             (N), Futian District, Shenzhen              (N), Futian District, Shenzhen

Phone                                        0755-83747939                               0755-83747939

Fax                                          0755-83975237                               0755-83975237

E-mail                                       segcl@segcl.com.cn                          segcl@segcl.com.cn

III. Information Disclosure and Filing Site

Media selected by the Company for information           China Securities Journal, Securities Times, Securities Daily and Hong Kong
disclosure                                              Commercial Daily

Website assigned by CSRC for publishing the annual
                                                        http://www.cninfo.com.cn (Cninfo Website)
report

The place where the annual report is prepared and       Secretary's Office of Board of Directors, 31/F, Tower A, Stars Plaza,


                                                                  6
                                                                  Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


kept                                                    Huaqiang Road (N), Futian District, Shenzhen

IV. Changes of Registration Information

Organization code                            27925377-6

                                             Changes to business scope on July 6, 2005: Domestic commerce, goods supply and
                                             sale (excluding commodities under special operation, control and sale), industrial
                                             investment (licenses for specific projects shall be subject to application on a
                                             case-by-case basis), economic information consultancy, property lease, real estate
                                             agency, and operation of SEG professional electronics markets (the license for the
                                             professional market shall be further applied for).
                                             Alteration of registration information on September 28, 2016: The business scope of
                                             the Company is changed to investment in industrial projects (specific items to be
                                             declared separately); operation and management of electronics markets; online trade;
                                             Internet technology development; advertising business; housing leasing; sales of
                                             computers, software, auxiliary equipment, and electronic products; cultural and artistic
                                             exchange activity planning (excluding performances); exhibition activities; investment
                                             in and management of children's industrial chain projects; children's playground
Changes of main business since the
                                             equipment leasing (excluding financial leasing activities); playground management and
Company's listing (if any)
                                             services (limited to branch management); catering services (limited to branch
                                             management); business management consulting; education consulting; wholesale and
                                             retail of pre-packaged food, unpacked food, and dairy products (including infant
                                             formula milk powder) (limited to branch management); sales of stationery, craft gifts,
                                             toys, children's clothing, electronic products, handicrafts, and daily necessities;
                                             photography services; technical development of new energy; EPC of photovoltaic
                                             power generation and building integrated photovoltaic (BIPV) engineering; technical
                                             development and services of CdTe film solar cell modules; investment in photovoltaic
                                             power plants, contracting of BIPV curtain wall engineering; domestic trade (excluding
                                             franchised goods, proprietary goods, and goods under special control). (Any item
                                             subject to approval pursuant to laws can be operated only after approval.) Information
                                             services (limited to Internet information services); sales of food; manufacturing and
                                             sales of CdTe solar cell modules.

Changes of dominant stockholders (if any) No change.

V. Other Relevant Information of the Company

The accounting firm employed by the Company:
Name of the accounting firm           Da Hua Certified Public Accountants (Special General Partnership)

Address of the accounting firm        Room 1101, 11/F, Tower 7, No. 16 Block, Xisihuan Road (M), Haidian District, Beijing

Name of the certified public
                                      Zhang Xing and Zhang Zhaocheng
accountant signing the audit report

The sponsor firm employed by the Company for fulfilling the duties of continuous supervision in the report
period:
□ Applicable √ Not applicable
The financial advisor employed by the Company for fulfilling the duties of continuous supervision in the report
period:

                                                                  7
                                                            Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


□ Applicable √ Not applicable

VI. Main Accounting Data and Financial Indexes

Are retrospective adjustments made by the Company to previous financial statements due to accounting policy
changes or accounting errors?
□ Yes √ No
                                                                                           Year-on-year
                                                2016                     2015                                      2014
                                                                                         increase/decrease

Operating income (Yuan)                         672,384,276.47        741,533,676.93                  -9.33%   681,343,920.99

Net profit attributable to shareholders of
                                                107,560,213.41         74,242,090.49                 44.88%     48,380,294.05
the listed company (Yuan)

Net profit attributable to shareholders of
the listed company after deduction of            29,705,359.63         84,931,560.68                 -65.02%    45,920,252.23
non-recurring gains and losses (Yuan)

Net cash flow arising from operating
                                               -120,030,057.68         -12,453,523.82                          -427,933,620.94
activities (Yuan)

Basic EPS (Yuan/Share)                                     0.1371               0.0946               44.93%            0.0616

Diluted EPS (Yuan/Share)                                   0.1371               0.0946               44.93%            0.0616

Weighted average ROE                                       7.11%                5.19%                 1.92%               3.80%

                                                                                           Year-on-year
                                             End of 2016             End of 2015                                End of 2014
                                                                                         increase/decrease

Total assets (Yuan)                           2,548,276,265.32      2,614,660,524.37                  -2.54% 2,659,717,718.28

Net assets attributable to shareholders of
                                              1,548,200,647.55      1,475,126,229.16                  4.95% 1,298,970,719.85
the listed company (Yuan)

VII. Differences in Accounting Data under Chinese and Overseas Accounting Standards

1. Differences in net profits and net assets reported in the financial statements disclosed under
international accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
In the report period, the company's net profits and net assets have no differences in the financial report disclosed
based on both the international and the Chinese accounting standards.
2. Differences in net profits and net assets reported in the financial statements disclosed under
international accounting standards and Chinese accounting standards
□ Applicable √ Not applicable
In the report period, the company's net profits and net assets have no differences in the financial report disclosed
based on both the international and the Chinese accounting standards.

VIII. Major Quarterly Financial Indexes

                                                                                                                    Unit: Yuan

                                             Quarter 1              Quarter 2            Quarter 3              Quarter 4


                                                            8
                                                                   Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


Operating income                                      191,126,945.65         171,546,291.20        139,478,273.85         170,232,765.77

Net profit attributable to shareholders of the
                                                       17,696,110.04            9,160,160.38         15,422,191.47         65,281,751.52
listed company

Net profit attributable to shareholders of the
listed company after deduction of                      17,623,939.70          11,072,519.77          15,912,414.05        -14,903,513.89
non-recurring gains and losses

Net cash flow from operating activities                -30,744,760.42        -68,569,267.98          15,886,231.75        -36,602,261.03

Are there any significant differences between the financial indexes or their totals in the preceding table and those
described in the disclosed quarterly reports or semi-annual reports?
□ Yes √ No

IX. Items and amount of non-recurring gains and losses:

√ Applicable □ Not applicable
                                                                                                                               Unit: Yuan

                                                 Amount of       Amount of       Amount of
                    Item                                                                                        Remarks
                                                    2016           2015             2014

                                                                                                Gains on reduction of holding-shares of
Gains and losses on disposal of
                                                                                                Huakong SEG, sales of the equity of
non-current assets (including the write-off 89,459,793.78        -257,269.63         6,475.34
                                                                                                SEG E-commerce, and disposal of fixed
of assets depreciation reserves)
                                                                                                assets

                                                                                                Subsidies for Nantong SEG animation
                                                                                                industrial base, 2015 special funds for
                                                                                                development of the service industry of
                                                                                                Wujiang District from Finance Bureau of
                                                                                                Wujiang District, Suzhou, special funds
                                                                                                for industrial development from
Government subsidies recorded into
                                                                                                Administrative Committee of the
current gains and losses (except those
                                                                                                Economic Development Zone, 2015
closely related with corporate business          9,828,264.76     980,956.24 1,554,585.78
                                                                                                Reward for stable and healthy economic
and enjoyed according to national
                                                                                                development, headquarter operation
standards or certain quota)
                                                                                                reward of special funds for industrial
                                                                                                development of Enterprise Development
                                                                                                Service Center, Futian District,
                                                                                                Shenzhen, and support project fund for
                                                                                                construction of Nantong SEG
                                                                                                Electronics Market

Fund appropriation charges for
non-financial entities recognized in             3,097,500.00    3,414,955.63      700,000.00
current profit or loss

Corporate restructuring costs, such as                                                          Employee compensation arising from
                                                 -1,439,958.00
staffing expenses and integration costs                                                         restructuring of SEG E-commerce

Transferred-back impairment provision
for accounts receivable, for which                                469,871.93
separate impairment tests are carried out


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                                           Amount of      Amount of      Amount of
                   Item                                                                               Remarks
                                             2016           2015           2014

Trustee fee from entrusted operation        188,679.24     200,000.00     200,000.00

Other non-operating income and expenses                                                Losses from litigation compensation of
                                          -3,068,241.76 -13,043,897.59    498,440.96
except the above-mentioned items                                                       Nanning SEG

Less: Amount of affected income tax       19,072,980.69   2,022,052.01    216,991.94

     Amount of influence of minority
                                           1,138,203.55    432,034.76     282,468.32
shareholders' equity (after tax)

Total                                     77,854,853.78 -10,689,470.19 2,460,041.82                       --

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.




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                     Chapter 3 Overview of Company’s Business

I. Main Business in the Report period

Should the Company abide by the disclosure requirements of special industries?
No.
(I) Main business and operation model
Main business of the Company includes development and operation of electronics market and supporting
projects, property lease service, trade and channel service, e-commerce, value-added microcredit service, and
economical hotel service and so on.
Business model: With three business operation platforms including the electronics market, commercial real
estate and SEG CPARK as the core, the Company comprehensively integrates business resources, promotes the
transformation and upgrading of the original main business, expands the business from operation of a single
business platform to the production and operation of relevant content, creates a business model combining
multiple business types, including maker ecology, culture and education, intelligent technology, sports and
entertainment, virtual experience, e-sports, and financial services and so on, and develops from a single leasing
role into diversified strategic emerging industries and high-end manufacturing and services.
(II) Current situation and tendency of industrial development and industrial position of the Company
1.    Current situation of development of the electronics market is as follows:
① The industrial value chain of the electronics market is extended and the market functions are diversified.

With the improvement of modernized communication technology and information transmission approaches, the
cost for connecting transaction information between consumers and manufacturers decreases gradually, and the
functions of the electronics market in commodity gathering, distribution and transactions are being weakened. At
present, the electronics market has abandoned the earliest "vendor booth" model of operation, and is extending
vertically toward the two ends of the value chain of the electronic information industry, from only serving the
distributors to providing services in enterprise image and product image display and promotion to manufacturers,
providing sales service to distributors and providing platform comprehensive services to consumers before,
during and after sales.
                      Extension of the Industrial Value Chain of the Electronics Market




                      Manufacturer:
                      enterprise image               Distributor:                 Consumers:
                     and product image               product sales               services before,
                        display and                     service                  during and after
                     promotion service                                                sales




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At the same time, in the electronics market, facilities including water, electricity, warehousing, transportation,
packaging, security, fire control, health, settlement, information, and life services have been improved. The
functions of the electronics market have changed from traditionally unitary commodity gathering, distribution
and transaction to commodity gathering and distribution, information release, price discovery and
comprehensive services.
② Tendency of industrial integration is intensified.

Faced with the industrial reform, in order to strengthen the competitiveness, the electronics market has formed
modern integrated logistics and services that are mainly represented by overseas transportation and bonded
warehousing, foreign trade, agency sales and property leasing. Whereas the traditional electronics market has
such weaknesses as high property cost, high transportation pressure and insufficient logistics supporting
infrastructures, the new generation electronics market focuses on innovation in the traditional operation model,
provides various services to both buyers and sellers, creates advanced distribution center for electronic
components and IT terminal products, strengthens logistics service, develops service trade for electronic
manufacture industry, and builds a distribution operation center of electronic products integrating property
leasing and service, logistics and distribution, information and financial services.
③ Intelligent terminal products, especially 3C products including mobile phones and tablet devices become
main operating products.

Technical improvements brought by mobile Internet technology and touch technology have facilitated the
migration of intelligent devices from desk devices to mobile devices, represented mainly by smart phones and
tablet computers. With the construction of mobile Internet infrastructure and development and improvement of
the Internet ecological system including software and hardware, the consumption market of smart phones and
tablet computers has been fast developing. Intelligent terminal devices have gradually become the main
operating products in the electronics market, and will further facilitate the development of the latter.
④   Tendency of products expanding to emerging application fields is intensified.

In recent years, with the fast development of industries including wearable devices, intelligent household and
automotive electronics, types of products distributed in the electronics market gradually expand to the emerging
application field, meanwhile the booming development of the emerging market of electronic information
industry will strongly drive the increase of demands for electronic components.
⑤   Reform occurs in commercial property management of electronics market.

Operation of commercial properties refers to the industry that acquires long-term rental income and supporting
service income by leasing properties or providing management services. The property industry in China is
developing, improving and getting mature. As improvement of management and service concepts is advocated
now, competition of quality concept and brand concept, changes of market environment, application of high and
new technologies and updating of consumption ideas request the property operation enterprises to make relevant
reform from service concepts to service methods, from operation concepts to market positioning. Therefore, the
commercial operation of the electronics market will gradually develop from the previously traditional electronic
product transaction platform and leasing platform to diversified businesses including comprehensive maker
business, culture and education, intelligent technology, sports and entertainment, virtual experience, e-sports and
financial services.
⑥   Influences from e-commerce on operation and management of physical markets

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In recent years, the transaction volumes and the number of markets and booths in electronics markets with the
sales volume exceeding RMB 100 million have decreased mainly due to the influence from e-commerce on
physical markets. As the promotion of mobile terminal consumption, household consumption and all kinds of
life services are overheating in the online market. Therefore, it is imperative for electronics markets to transform
to both online and offline platforms operation model.
2.   Analysis on industrial development tendency of nationwide electronics markets

Electronics markets play an important role in the circulation of IT products. The booming electronic information
industry has brought a huge space for growth. With the fast development of e-commerce, network devices and
logistics industry in China in recent years, physical electronics markets have been affected to a certain extent,
traditional electronics markets are facing both the opportunity and the challenge of transformation and upgrading.
During the "13th Five-year Plan" period, the electronics markets in China will develop in the following
tendencies:
①   Electronics markets will focus on both physical markets and e-commerce

At present, e-commerce economy under Internet has entered into a new normal state. The slow-down of growth
has triggered the reform of channel relationship. However, because the physical electronics markets feature
production operation, supply logistics service and realistic consumption experience that are different from
e-commerce, the latter has gradually carried out cooperation with electronics markets, as an inevitable tendency
of the development of the industry.
②   Integrated and interactive development of electronics markets and commercial real estate

In recent years, the profit model of electronics markets is changing. On one hand, electronics markets are
combined with commercial real estate. Through total packaging, operation and promotion of commercial real
estate, the formation of IT business circle is accelerated, and the real estate projects where the electronics
markets are located increase in value. On the other hand, the appreciation of real estate where the electronics
markets are located will further improve the brand value of the electronics markets. Therefore, more and more
merchants praise highly of the operation model of interactive development by utilizing electronics markets to
increase the value of the surrounding properties, further driving the development of the electronics markets.
The integrated and interactive development of electronics markets and commercial real estate can ensure the
long-term stable operation of the markets, and electronics markets can directly benefit from the income from real
estate appreciation brought by market operation, which facilitates the expansion of enterprises and the growth of
brands.
③ Electronics markets are facing upgrading and renovation and manufacturers of famous electronic brand are
seeking for joint development with electronics markets.

The popularization of consumable electronic products has made the electronics markets the buyer's market. The
consumers have higher requirements on the shopping environment, quality warranty and after-sale guarantee.
The operators of the electronics markets must continuously improve internal management, service, and shopping
environment, normalize the merchants' operation behaviors, and improve after-sale service guarantee system to
attract more consumers.
At the same time, the intensified competition among manufacturers of famous electronic brands will further
strengthen the integration. The control of the manufacturers over the downstream fields will be strengthened, and
they will continuously adjust agencies and the distributors, which will affect the adjustment of the electronics

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markets. At present, the electronics markets focus more and more on of manufacturer resources. By various
approaches including expanding market scale, improving shopping environment and improving service standard,
the markets focus on improving the popularity and brand influences of the market brands in the mind of the
consumers, so as to get more resources of manufacturer resources.
④ Electronics markets will remain the dominant sales channel of IT products in China.

Domestic channels of retail market of electronic products mainly include electronics markets, chain stores of
electrical household appliances, retailers with own properties, e-commerce and department stores and
supermarkets. Most retailers of electronic products carry out operation and sales in the electronics market, which
maintains large market shares by relying on such advantages as the most complete categories of products, fast
updating, large operation area and comfortable shopping environment. The retailers have chosen electronics
markets with brand popularity as their main platform for operation in order to improve the sales and coverage
width to consumers and improve the sales efficiency.
On the other hand, the electronics market is also the main product display platform for many manufacturers of
electronic products. By setting up flagship stores or experience stores in the electronics markets, manufacturers
can help consumers timely and easily know about their latest products, and display the enterprise image.
According to the investigation data from Electronics Market Committee of China Electronics Chamber of
Commerce, the electronics market will remain the main sales channel for domestic electronic products in the
future. The percentage of sales volume of electronic products including desktops, laptops, mobile phones, tablet
computers and intelligent hardware sold through electronics markets in the total domestic retail volume will
remain over 50%.
3.   Industrial position of the Company

In terms of operation of electronics markets, as the founder of the electronics market operation model of China,
the Company is leading in the industry. The Company has established nearly 30 electronics markets in China by
means of direct operation, joint operation and entrusted operation, has formed a chain system of electronics
markets covering Pearl River Delta, Yangtze River Delta and radiating the whole country, and has gained high
brand influence both at home and abroad.

II. Significant Changes in Main Assets

1. Significant Changes in Main Assets


             Main assets                                        Description of Significant Changes


                                    In the report period, the equity decreases by 0.80% year on year, mainly because
                                    (1) In the report period, the Company reduced 10,066,700 holding-shares of Huakong
                                    SEG and the long-term equity investment of RMB 9,086,600.
                                    (2) In the report period, the Company contributed RMB 9,000,000 to Shenzhen
                                    International Consumer Electronics Exchange/Exhibition Center Co., Ltd. (CEEC),
Equity
                                    accounting for 30% of its equity.
                                    (3) In the report period, Huakong SEG and Shanghai SEG make profits but CEEC makes
                                    a loss based on accounting via the equity method. After the Company deducts cash
                                    dividents of Shanghai SEG,, the Company reduced the long-term equity investment of
                                    RMB 387,100 in total

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Fixed assets                         There is no significant change in the report period.

Intangible assets                    There is no significant change in the report period.

                                     In the report period, the LCD screen installation project in the lobby of 1/F of SEG Plaza
Construction in progress
                                     was completed and transferred out, resulting in decrease of this item.
                                     In the report period, the monetary fund decreases by 33.87% year on year, mainly
Monetary fund                        because the Company's funds were mainly used to invest in Nantong SEG Times Plaza,
                                     resulting in decrease of this item.
                                     In the report period, accounts receivable decrease by 48.20% year on year, mainly
                                     because the Company sold the equity of its subsidiary SEG E-Commerce and the balance
Accounts receivable
                                     sheet statement of SEG E-Commerce was no longer consolidated, resulting in decrease
                                     of this item.
                                     In the report period, the prepayment decreases by 63.28% year on year, mainly because
                                     the Company sold the equity of its subsidiary SEG E-Commerce and the balance sheet
Prepayment
                                     statement of SEG E-Commerce was no longer consolidated, resulting in decrease of this
                                     item.
                                     In the report period, other receivables increase by 131.00% year on year, mainly because
                                     (1) The subsidiary SEG Baohua paid the decoration deposit RMB 8,980,000 for the new
                                     Dongmen Branch of Mellow Orange Hotel.
                                     (2) The headquarters paid the earlier-stage deposit RMB 1,030,000 in total for new
Other receivables
                                     projects.
                                     (3) The incomings and outgoings of the subsidiary Wuxi SEG with Wuxing Xinyuan
                                     Construction Development Co., Ltd. increased by RMB 10,300,000 in total.
                                     (4) The purchasing deposit of SEG Intelligent increased by RMB 2,000,000.
                                     In the report period, the inventory increases by 33.56% year on year, mainly because
Inventory                            project construction expenditure was incurred by Nantong SEG Times Plaza, resulting in
                                     increase of this item.
                                     In the report period, the long-term deferred expense increases by 91.57% year on year,
Long-term deferred expense           mainly because the decoration expense of Nantong SEG Times Plaza RMB 42,970,000
                                     was incurred.
                                     In the report period, other non-current assets increase by 170.48% year on year, mainly
Other non-current assets             because the earlier-stage expenditure of the new branch of Mellow Orange Hotel RMB
                                     7,460,000 was incurred.


2. Main Overseas Assets

□ Applicable √ Not applicable

III. Analysis of Core Competence

Shenzhen SEG Electronics Market operated by the Company is the founder of the electronics market operation
model in China, as a leader in the industry. It has won honorable titles successively including "Five-star Market
of Electronic Products in China", "Most Influential Market in Shenzhen Special Economic Zone in 30 Years",
"National Integrity Demonstrative Market 2014-2015" awarded by the State Administration for Industry &
Commerce, and ten branded markets in Shenzhen for "Influencing China".
Through 28 years of hard work in the electronics market, the Company has acquired abundant market merchant
resources and mature market operation and management experience. As of today, the Company has set up more
than 20 electronics markets in China by means of direct operation, joint operation and entrusted operation, has
formed a chain system of electronics markets covering the Zhujiang River Delta, the Yangtze River Delta and
radiating the whole country, and has become the largest comprehensive electronics market in China and even in
Asia covering electronic components, digital IT and communication products, and has gained high brand
influence both at home and abroad.


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For the past several years, the Company has been carrying out exploration, innovation and practice in terms of
business transformation and upgrading of electronics markets for traditional main business. Faced with new
consumption, new channel and new retail, apart from updating hardware and upgrading services, SEG
Electronics Market has continuously introduced scene-mode, experience-mode, interaction-mode and
socializing-mode types of operation. In the fields where SEG has investment and resources integration capacity,
in order to improve core competitiveness and initiatives, SEG has attempted to create diversified types of
business with SEG characteristics by means of investment and joint venture, such as juvenile maker education,
e-sports, intelligent home and children's experience, etc. After the said featured types of business are gradually
formed, an offline shopping place featuring SEG Electronics (digital and communication) as the core, coexisting
of SEG's featured types of business, and other featuring cooperative types of business will come into being and
provide one-stop and comprehensive consumption experience to consumers.
In the report period, the Company has actively carried out major assets restructuring, reduce horizontal
competition at the maximum and enhance the profitability and core competitiveness of listed company. At the
same time, relying on the platform of the listed company, the Company has fully integrated the business of
electronics markets, and eventually fulfilled strategic integration, transformation and upgrading of current
business of the listed company. In the report period, the Company's scheme of major assets restructuring was
conditionally approved by China Securities Regulatory Commission Acquisition and Restructuring Committee.
After the completion of major assets restructuring, the Company will continuously integrate the existing business
and resources, develop in-depth cooperation with Longyan Energy Technology, Wangyu Technology, Alibaba,
Fujian Babycat, and Tencent in such new business fields as new energy, e-sports, e-commerce, animation, and
makers, actively promote the transformation and upgrading of the original business, develop new business, and
achieve coordinated development of multiple business types. The Company will develop diversified strategic
emerging industries and high-end manufacturing and services.




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                  Chapter 4 Management Discussion and Analysis

I. Overview

In the report period, the global economy, affected by such events as slow-down of economic growth in USA and
Brexit, is in downturn of growth. Affected by complicated and severe international and domestic environment,
the economic growth and transformation of China is still under the downturn pressure.
Facing the complicated external economic environment and fierce market competition, the Company has
actively promoted major assets restructuring in 2016. In this way, the Company has acquired such core operating
assets held by the controlling shareholders as the quality electronics market, property management, and
commercial real estate, which will enhance and stabilize the operating results of the Company. The income from
investment in the real estate development project in the major assets restructuring will also enhance the
profitability of the Company. The Company has also strengthened efforts on resource integration, transformation
and upgrading through the major assets restructuring, vigorously developed innovative business, and looked for
new profit growth point to constantly enhance the core competitiveness of the Company.
In the report period, the Company achieved the operating income of RMB 760,910,000, decreasing by 10% year
on year. The main reasons of decrease are: (1) the operating income from electronics market and property lease
plates declined; (2) due to the program of replacing business tax with value-added tax, the total income of the
Company decreased by around RMB 19,000,000; and (3) the operating income of microcredit business
decreased.
In the report period, the Company achieved total profit as much as RMB 187,540,000, increasing by 31.08%
year on year. The main reason for the increase is: the investment income of the Company from sales of the equity
of Huakong SEG and SEG E-commerce.

II. Analysis of Main Business

1. Overview

The main business of the Company comprises development and operation of electronics markets and supporting
projects, property lease service, trade and channel operation, microcredit value-added service, and economical
hotel business.
(1) Operation of electronics markets (including relevant business such as maker platform and Internet +)
With the fast development of Internet and mobile Internet, fast popularization of terminal operation, the
formation of oligopoly of e-commerce platforms as well as the vertical subdivision of e-commerce market, the
electronics market has been impacted to a certain extent.
Facing heated market competition and the impact of new commerce modes, by focusing on users' value and
integrating all kinds of resources, expanding the industrial chain, enriching value-added services, improving the
service quality, and establishing multi-channel profit model, the Company has greatly promoted the
transformation and upgrading of the existing electronics market business, actively explored new business
development modes and continuously improved the operation capacity and the innovation capacity of the main
electronics markets.


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In the report period, the Company carried out strategic business cooperation with Taobao, established online and
offline business platform, has made a solid first step on the path of creating O2O electronics market innovation
and value-added services with SEG features. By carrying out strategic business cooperation with Allied eSports,
Wangyu Technology and Fujian Babycat, the Company has gradually set foot in production and operation of
relevant contents from unitary commercial platform operation, and created comprehensive platform service
operator. The Company has signed a strategic cooperation agreement with Tencent to use respective platform
and resources advantages for strategic cooperation, jointly create a comprehensive service platform for makers
that combines incubation and investment, key cooperative physical display and distribution platform for
hardware and hardware lab platform of pragmatic innovation service, and establishes a maker incubation service
benchmark combining software and hardware in China. The Company has signed a strategic cooperation
agreement with Tmall. The parties will carry out strategic cooperation in terms of target recommendation of
maker products or mature products, maker support event of "global gathering and innovation", Internet
intelligent acceleration channel, online and offline marketing events, media promotion and resources
complementation. SEG CPARK affiliated to SEG has attracted many international and domestic famous brands
and creative products from makers to enter. It has gathered more than 500 models of branded products, and held
more than 130 road shows, academic exchange and products release. It has been highly recognized by leaders at
all levels and achieved extensive influence and good social demonstrative effects. SEG CPARK obtained the
special fund of RMB 2,000,000 for makers in Shenzhen in August 2016, and has recently been awarded the title
as a "Base for Science Education" by Shenzhen Science and Technology Association.
In the report period, the Company's electronics market business achieved operating income of RMB 281,600,000,
decreasing by 19.59% year on year; and achieved total profit of RMB 46,470,000, decreasing by 33.67% year on
year. The operating income and total profit decreased because: on the one hand, the psychical store industry is
impacted by economic slowdown and fast development of mobile Internet and e-commerce in China; on the
other hand, the Company has vigorously promoted diversification, transformation, and upgrading of market
operations, retains the original well-managed business types, brings in different strategic industries, and
coordinates different business type combinations to enhance the core competitiveness of the Company. The
investment in such strategy has an impact on decline in the annual revenue of the Company.
(2) Property lease service business
The Company's property lease service includes the property lease business of the head office, the subsidiary SEG
Baohua held by the Company and Nantong SEG operating company. In the report period, the performance of the
property lease business of the head office and subsidiary SEG Baohua held by the Company has been relatively
stable.
The Company has maintained the all-year-round lease rate above 98% by effective operation measures such as
improving management and service quality of properties, controlling costs and expenses and adjusting strategies
to attract investment. In the report period, the Company's property lease service achieved the operating income
of RMB 61,680,000, decreasing by 5% year on year; and achieved the total profit of RMB 19,790,000,
decreasing by 17% year on year. The main reasons for decrease of operating income and total profit are: firstly,
affected by the overall economic environment, in order to maintain the stability of property operation and give
merchants confidence in operation, the Company lowered down the rents of some properties; secondly, Nantong
SEG Times Plaza Commercial Project was opened at the end of October 2016. The investment and relevant costs
in the earlier stage were incorporated into the property lease business, resulting in decrease of total profit.
(3) Trade and channel business


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In the report period, the overall operation of SEG Industry declined sharply, mainly due to increasing economic
downturn pressure in China, and business stagnation of upstream and downstream partners, which resulted in
delayed capital return and slow capital circulation of cooperating customers of SEG Industry, and directly
affected the operating income of the Company. At the moment the Company has filed lawsuits against the
cooperating customers that delayed the payment for goods and taken relevant legal measures to protect the
interests of the Company. SEG Intelligent Company was invested and established by the Company in January
2016. It engages in smart home business, develops intelligent and engineering projects, and provides multiple
intelligent solutions for home, engineering, and plants. SEG Intelligent also acts as agent for retail of famous
brands of communications.
In the report period, the Company's trade and channel business achieved the operating income of RMB
284,330,000, increasing by 7.58% year on year. The main reason for increase of operating income is the income
from channel business of SEG Intelligent Company added in the report period.
(4) Microcredit business
In the report period, SEG Credit, the subsidiary held by the Company was stable in operation. The Company's
cargo pledge business is getting more and more mature. In order to adapt to the market changes and the demands
of the customers, the Company has continuously explored new models of loan. Under the precondition of risk
control, the Company has attempted to carry out dynamic cargo pledge operation model and has achieved initial
success.
In the report period, the Company's microcredit business achieved the operating income of RMB 88,530,000,
decreasing by 15% year on year; and achieved the total profit of RMB 42,270,000, decreasing by 10% year on
year. The main reasons for decrease of operating income and total profit are as follows. On one hand, the
competition of microcredit industry has been intensified in 2016 according to the industrial statistical data. The
overall operation performance has declined. Moreover, a large number of guarantee companies and commercial
banks have got involved in the microcredit industry, which affected the income of the microcredit companies.
On the other hand, affected by the decrease of entire interest rates of China, the overall income level of the
Company has decreased slightly.
(5) Economical hotel business
In the report period, SEG Baohua opened a new economical hotel in Luohu District, Shenzhen (Mellow Orange
Dongmen Branch), and its previous economical hotel business included Changsha Branch, Xingsha Branch and
Bao'an Branch. In the report period, the Company's economical hotel business achieved the operating income of
RMB 24,920,000, decreasing by 6% year on year; and achieved the total profit of RMB 2,050,000, decreasing by
1.5% year on year. The main reasons for the decrease of operating income and total profit are: firstly, they are
affected by the external economic environment, and the competition of the economical hotel industry has been
intensified; secondly, affected by the program of replacing business tax with value-added tax as well as the new
opening of Dongmen Hotel, the operating income has decreased slightly.
(6) E-commerce business
In the report period, the Company's e-commerce business achieved the operating income of RMB 19,860,000,
decreasing by 44.19% year on year. The main reason for decrease of operating income is that in the report period
the Company implemented the transfer of SEG E-commerce, and SEG E-commerce scaled back all its
operations.




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2. Income and Cost

(1) Formation of operating income
                                                                                                                               Unit: Yuan

                                         2016                                           2015                             Year-on-year
                                                Percentage of                                   Percentage of          increase/decrease
                             Amount                                       Amount
                                              operating income                              operating income                 (%)

Total operating
                            760,915,085.86                 100%          846,675,884.33                    100%                    -10.13%
income

                                                                                                                   Classified by industry

Electronics market
operation and               343,280,375.05               45.11%          415,127,517.70                  49.03%                    -17.31%
property leasing

Trade                       284,331,867.85               37.37%          264,303,143.71                  31.22%                       7.58%

Hotel                        24,915,964.23                3.27%           26,523,482.58                    3.13%                    -6.06%

E-commerce                   19,856,069.34                2.61%           35,579,532.94                    4.20%                   -44.19%

Finance                      88,530,809.39               11.63%          105,142,207.40                  12.42%                    -15.80%

                                                                                                                    Classified by product



                                                                                                                     Classified by region

Shenzhen                    463,882,693.06               60.96%          625,255,412.68                  82.17%                    -25.81%

Xi'an                        61,087,396.36                8.03%           59,688,953.13                    7.84%                      2.34%

Su Zhou                     177,711,494.88               23.35%           79,040,494.44                  10.39%                  124.84%

Changsha                     24,597,175.67                3.23%           39,091,884.16                    5.14%                   -37.08%

Nanjing                      24,795,038.43                3.26%           32,421,829.58                    4.26%                   -23.52%

Foshan                         3,020,405.16               0.40%              2,474,556.31                  0.33%                   22.06%

Wuxi                           5,820,882.30               0.76%              7,079,142.74                  0.93%                   -17.77%

(2) Information on industries, products or regions accounting for over 10% of operating income or
operating profit
√ Applicable □ Not applicable
Should the Company abide by the disclosure requirements of special industries?
No.
                                                                                                                               Unit: Yuan

                                                                                 Year-on-year                             Year-on-year
                                                                                                     Year-on-year
                                                                               increase/decrease                        increase/decrease
                     Operating income   Operating cost   Gross profit rate                         increase/decrease
                                                                                 of operating                             of gross profit
                                                                                                   of operating cost
                                                                                   income                                      rate

Classified by industry

Electronics            343,280,375.05   243,760,551.06                28.99%            -17.31%             -19.15%                   1.62%
market operation


                                                                 20
                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


and property
leasing

Trade                   284,331,867.85   284,740,411.64               -0.14%          7.58%              9.19%              -1.48%

Hotel                    24,915,964.23    21,705,084.88               12.89%          -6.06%             -2.47%             -3.20%

(3). E-commerce          19,856,069.34    19,858,461.31               -0.01%         -44.19%            -20.53%            -29.77%

Finance                  88,530,809.39    12,430,171.06               85.96%         -15.80%            45.67%              -5.92%

Classified by product

Classified by region

Shenzhen                463,882,693.06   322,380,893.92               30.50%         -25.81%            -23.88%             -1.76%

Xi'an                    61,087,396.36    44,494,862.35               27.16%          2.34%              2.34%                0.00%

Su Zhou                 177,711,494.88   163,336,457.22               8.09%         124.84%            116.24%                3.66%

Changsha                 24,597,175.67    15,356,162.14               37.57%         -37.08%            -44.53%               8.39%

Nanjing                  24,795,038.43    29,081,888.23            -17.29%           -23.52%            -14.14%            -12.81%

Wuxi                      3,020,405.16     2,873,099.31               4.88%          22.06%             24.16%              -1.61%

If the statistical caliber of main business data is adjusted in the report period, the Company shall use the main
business data of the previous year collected at the end of the report period after adjustment of statistical caliber.
□ Applicable √ Not applicable
(3) Is the Company's material sales revenue more than its service revenue?
□ Yes √ No
(4) Performance of executed major sales contracts as of the report period
□ Applicable √ Not applicable
(5) Formation of operating cost
Industry classification
                                                                                                                        Unit: Yuan

                                                     2016                                 2015                      Year-on-year
     Industry
                           Item                             Percentage of                        Percentage of    increase/decrease
  classification                           Amount                               Amount
                                                          operating cost                        operating cost          (%)

Electronics        Electronics
market operation market operation
                                                                      41.85%   301,511,104.70            48.78%            -19.15%
and property       and property          243,760,551.06
leasing            leasing

Trade              Trade                 284,740,411.64               49.22%   260,773,559.46            42.19%               9.19%

Hotel              Hotel                  21,705,084.88                3.75%    22,255,148.18             3.60%               -2.47%

E-commerce         E-commerce             19,858,461.31                3.43%    24,989,821.48             4.04%            -20.53%

Finance            Finance                12,430,171.06                2.15%     8,533,082.37             1.38%             45.67%



     Industry              Item                      2016                                 2015                      Year-on-year



                                                                 21
                                                               Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


  classification                                          Percentage of                        Percentage of    increase/decrease
                                         Amount                               Amount
                                                         operating cost                       operating cost          (%)

Electronics
market operation Lease and
                                         89,787,034.41              36.83%    99,519,264.28            33.01%               -9.78%
and property       property costs
leasing

Electronics
                   Total
market operation
                   remuneration for      57,842,140.82              24.12%    73,123,516.29            24.25%            -20.90%
and property
                   employees
leasing

Electronics
market operation Depreciation and
                                         26,896,131.93              11.22%    29,266,499.62             9.71%               -8.10%
and property       amortization
leasing

Electronics
                   Market and
market operation
                   property service      59,910,715.55              24.99%    75,217,006.81            24.95%            -20.35%
and property
                   costs
leasing

Electronics
market operation Retail goods sales
                                          9,324,528.35              3.89%     24,384,817.70             8.09%            -61.76%
and property       cost
leasing



                                                   2016                                 2015                      Year-on-year
     Industry
                            Item                          Percentage of                        Percentage of    increase/decrease
  classification                         Amount                               Amount
                                                         operating cost                       operating cost          (%)

                   Total
Hotel              remuneration for       5,110,635.15              23.55%     5,458,034.64            24.52%               -6.36%
                   employees

                   Depreciation and
Hotel                                     3,243,021.27              14.94%     3,577,343.55            16.07%               -9.35%
                   amortization

Hotel              Administrative fee      202,279.31               0.93%       597,774.92              2.69%            -66.16%

Hotel              Lease cost             8,258,888.25              38.05%     8,199,833.24            36.84%               0.72%

Hotel              Others                 4,890,260.90              22.53%     4,422,161.83            19.87%             10.59%



                                                   2016                                 2015                      Year-on-year
Product category            Item                          Percentage of                        Percentage of    increase/decrease
                                         Amount                               Amount                                  (%)
                                                         operating cost                       operating cost

Trade              Goods sales cost     262,813,004.51              92.30%   260,773,559.46          100.00%                0.78%

Trade              Lease cost             4,060,000.00              1.43%

Trade              Manpower cost           984,567.12               0.35%



                                                               22
                                                              Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


Trade              Others               16,882,840.01              5.93%



                                                  2016                                    2015                      Year-on-year
    Industry
                            Item                         Percentage of                           Percentage of    increase/decrease
  classification                        Amount                                   Amount
                                                        operating cost                          operating cost          (%)

Finance            Lease cost             835,447.71               6.72%          664,432.82              7.79%             25.74%

                   Financial service
Finance                                 11,594,723.35              93.28%        7,868,649.55            92.21%             47.35%
                   cost



                                                  2016                                    2015                      Year-on-year
    Industry
                            Item                         Percentage of                           Percentage of    increase/decrease
  classification                        Amount                                   Amount
                                                        operating cost                          operating cost          (%)

                   Total
E-commerce         remuneration for       791,042.52               3.98%         1,248,958.81             5.00%            -36.66%
                   employees

E-commerce         Sales cost           14,803,990.32              74.55%    16,457,203.37               65.86%            -10.05%

                   Promotion
E-commerce                               2,201,214.57              11.08%        2,562,768.35            10.26%            -14.11%
                   expenses

                   Customs
E-commerce         declaration and       1,411,072.73               7.11%        2,058,226.13             8.24%            -31.44%
                   logistics expenses

E-commerce         Others                 651,141.17               3.28%         2,662,664.82            10.65%            -75.55%

(6) Is the consolidation scope changed in the report period?
√ Yes □ No
Compared with the previous period, three more entities are included in and one entity is excluded from the
consolidated financial statements in the current period, including:
1. Subsidiaries, special purpose entities, and business entities that gain control by way of commissioning
    management or renting included in the consolidation scope in the current period
                          Name                                                       Reason for change
Suzhou SEG Intelligent Technology Co., Ltd.       Newly established
Shenzhen SEG Longyan New Energy Application
                                            Newly established
and Development Co., Ltd.
Shenzhen SEG Longyan Energy Technology Co.,
                                            Newly established
Ltd.

2. Subsidiaries, special purpose entities, and business entities that lose control by way of commissioning
    management or leasing excluded from the consolidation scope in the current period
                          Name                                                       Reason for change
Shenzhen SEG E-commerce Co., Ltd.                 Transfer-out of all equities




                                                              23
                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


(7) Information about significant changes or adjustments of business, product or service in the report
period
□ Applicable √ Not applicable
(8) Information on main customers and main suppliers
Information about the Company's major customers
Sales amount of top 5 customers (Yuan)                                                                           178,353,088.59

Percentage of the total sales amount of top 5 customers to
                                                                                                                        26.53%
the annual sales

Percentage of the sales amount of related parties among
                                                                                                                          0.00%
top 5 customers to the annual sales

Information about top 5 customers

    No.                  Customer Name                        Sales amount (Yuan)        Percentage of the annual sales amount

1          Shenzhen Runneng Digital Co., Ltd.                            86,573,198.09                                  12.88%

           Shenzhen Nanfang Yunhe Technology Co.,
2                                                                        52,034,318.22                                    7.74%
           Ltd.

3          Shenzhen Comnet Technology Co., Ltd.                          18,413,719.60                                    2.74%
           Xinjiang Zhongdi Communication
4                                                                        13,445,496.60                                    2.00%
           Equipment Co., Ltd.

5          Shenzhen Wonder Industry Co., Ltd.                             7,886,356.08                                    1.17%

Total                           --                                      178,353,088.59                                  26.53%

Other information on main customers
□ Applicable √ Not applicable
Information about major suppliers
Total purchase amount of top 5 suppliers (Yuan)                                                                  158,288,064.96

Percentage of the total purchase amount of top 5 suppliers
                                                                                                                        27.17%
to the annual purchase

Percentage of the purchase amount of related parties
                                                                                                                          0.00%
among top 5 customers to the annual purchase amount

Information about top 5 suppliers
    No.                   Name of supplier                   Purchase amount (Yuan)       Percentage of the annual purchase

1            www.189zg.cn                                                45,473,737.61                                    7.81%

2            Shenzhen Shuojian Industry Co., Ltd                         44,717,876.92                                    7.68%
             Telling Telecommunication Holding Co.,
3                                                                        32,862,893.16                                    5.64%
             Ltd.
             Shenzhen Youyou Financial Service Co.,
4                                                                        18,862,559.83                                    3.24%
             Ltd.

             Beijing Hengsha Science and Technology
5                                                                        16,370,997.44                                    2.81%
             Co., Ltd.

Total                            --                                     158,288,064.96                                  27.17%

Other information on main suppliers

                                                                24
                                                               Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


□ Applicable √ Not applicable
3. Expense
                                                                                                                          Unit: Yuan

                                                                  Year-on-year
                                 2016             2015         increase/decrease           Description of significant changes
                                                                      (%)

                                                                                     In the report period, the opening of Nantong
                                                                                 SEG Times Plaza incurred the expense of
Sale expenses                  13,846,141.59    4,585,434.23             201.96% RMB 10,510,000, and the newly-added
                                                                                     investment in the subsidiary SEG Intelligent
                                                                                     added to the sales expense of the Company.

                                                                                     In the report period, major assets restructuring
                                                                                     incurred the expense of RMB 16,800,000 and
Management expenses            60,042,027.31   44,222,779.09                35.77%
                                                                                     the compensation of RMB 1,440,000 was paid
                                                                                     due to SEG E-commerce restructuring.

                                                                                     In the report period, due to the completion and
                                                                                   opening of Nantong SEG Times Plaza, the
Financial cost                  4,627,175.84    3,564,776.76                29.80% interest expense capitalized decreased and the
                                                                                     interest expense included in profit or loss
                                                                                     increased.

4. Investment in research and development
□ Applicable √ Not applicable
5. Cash Flow
                                                                                                                          Unit: Yuan

                                                                                                     Year-on-year increase/decrease
              Item                             2016                              2015
                                                                                                                   (%)

Subtotal of cash inflow from
                                               1,313,569,362.59                  2,188,033,814.36                            -39.97%
operating activities

Subtotal of cash outflow in
                                               1,433,599,420.27                  2,200,487,338.18                            -34.85%
operating activities

Net cash flow from operating
                                                -120,030,057.68                    -12,453,523.82
activities

Subtotal of cash inflow from
                                                 805,548,757.27                  2,264,549,143.15                            -64.43%
investing activities

Subtotal of cash outflow in
                                                 729,919,986.64                  2,172,173,875.73                            -66.40%
investing activities

Net cash flow from investing
                                                  75,628,770.63                      92,375,267.42                           -18.13%
activities

Subtotal of cash inflow from
                                                 461,367,812.30                    442,000,000.00                               4.38%
financing activities

Subtotal of cash outflow in
                                                 512,995,153.98                    628,455,033.90                            -18.37%
financing activities



                                                               25
                                                          Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                                                          Year-on-year increase/decrease
              Item                         2016                       2015
                                                                                                       (%)

Net cash flow arising from
                                             -51,627,341.68             -186,455,033.90
financing activities

Net increase in cash and cash
                                             -96,028,613.26             -106,533,251.60
equivalents

Description of main factors of significant year-on-year change
√ Applicable □ Not applicable
1. Subtotal of cash inflow from operating activities decreases by 39.97% year on year in the report period,
mainly due to decline in the supply chain business of SEG E-commerce, trading business contraction of SEG
Industry, and decrease in the cash flow.
2. Subtotal of cash outflow from operating activities decreases by 34.85% year on year in the report period,
mainly for the following reasons:
(1) Decline in the supply chain business of the subsidiary SEG E-commerce results in decrease in the cash paid
in the report period.
(2) The purchasing expense for trading business of the subsidiary SEG Industry decreases year on year in the
report period.
3. Net cash flow from operating activities decreases year on year in the report period, mainly due to year-on-year
growth of the real estate development expense of Nantong SEG.
4. Subtotal of cash inflow from investing activities decreases by 64.43% year on year in the report period, mainly
due to reduction of investment in bank financing.
5. Subtotal of cash outflow from investing activities decreases by 66.40% year on year in the report period,
mainly because reduction of investment in bank financing resulted in decrease in investment return.
6. Net cash flow from investing activities decreases by 18.13% year on year in the report period, mainly because
larger investment return resulted in larger net cash inflow from investing activities in the same period of the
previous year while the reduction of investment in bank financing resulted in decrease in investment return in the
report period.
7. Subtotal of cash inflow from financing activities increases by 4.38% year on year in the report period, mainly
due to increase in bank loans obtained by the Company.
8. Subtotal of cash outflow from financing activities decreases by 18.37% year on year in the report period,
mainly due to the Company's repayment of the due bank loans and decrease in the principal and interest of
short-term financing bond.
9. Net cash flow from financing activities increases year on year in the report period, mainly because the
financing scale of the Company decreased and cash outflow was larger in the same period of the previous year
while the financing scale of the Company was basically flat in the report period.
10. Net increase in cash and cash equivalents increase year on year in the report period, for the reasons described
in Items 7, 8, and 9.
Reasons for the big difference between the net cash flow arising from operating activities and the annual net
profit in the report period


                                                         26
                                                                Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


□ Applicable √ Not applicable

III. Analysis of Non-major Business

√ Applicable □ Not applicable
                                                                                                                             Unit: Yuan

                                     Percentage of
                       Amount                                             Reason                            Sustainable or not
                                      total profit

                                                      1. Gains on reduction of holding-shares of
                                                   Huakong SEG and sales of the equity of
                                                                                                     1. Unsustainable
Investment income    99,145,904.44          52.87% SEG E-commerce;
                                                                                                     2. Sustainable
                                                      2. financial income and income from
                                                      investment in joint ventures

                                                      Impairment provision for loans and
Asset impairment     -3,476,898.53           -1.85%                                                  Partially sustainable
                                                      advances granted by subsidiary SEG Credit

Non-operating                                         Government subsidies and liquidated
                     10,897,524.02            5.81%                                                  Partially sustainable
income                                                damages

Non-operating                                         Litigation compensation of Nanning SEG in
                      4,366,432.31            2.33%                                                  Unsustainable
expenses                                              the report period

IV. Assets and Liabilities

1. Significant Changes in Asset Formation
                                                                                                                             Unit: Yuan

                            End of 2016                              End of 2015
                                                                                              Increase/decre      Description of
                                     Percentage of                           Percentage of
                      Amount                               Amount                                  ase         significant changes
                                      total assets                            total assets

Monetary funds      183,094,815.84            7.19%      276,863,429.10              10.59%          -3.40%

Accounts
                     50,870,545.72            2.00%       98,212,422.87               3.76%          -1.76%
receivable

Inventory           602,098,738.92          23.63%       450,809,934.72              17.24%           6.39%

Investment
                    425,169,768.62          16.68%       443,851,726.40              16.98%          -0.30%
properties

Long-term equity
                    183,649,044.67            7.21%      185,122,573.88               7.08%           0.13%
investment

Fixed assets         39,181,793.82            1.54%       37,524,425.25               1.44%           0.10%

Construction in
                                              0.00%          140,810.00               0.01%          -0.01%
progress

Short-term
                    355,000,000.00          13.93%       367,759,630.48              14.07%          -0.14%
borrowing

2. Assets and liabilities measured based on fair value
√ Applicable □ Not applicable


                                                                27
                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                                                                                     Unit: Yuan
                                                     Cumulative
                                   Change in fair   change in fair    Impairment      Amount of     Amount of
                    Opening                                                                                          Closing
        Item                        value of the        value        accrued in the purchase in the sales in the
                    balance                                                                                          balance
                                   current period   recognized in    current period current period current period
                                                      the equity
Financial assets
3.
Available-for-sa
                      744,580.41                        -61,289.83                                                   683,290.58
le financial
assets
Subtotal of
                      744,580.41                        -61,289.83                                                   683,290.58
financial assets
Total                 744,580.41                        -61,289.83                                                   683,290.58
Financial
                            0.00                                                                                           0.00
liabilities
Are major asset measurement attributes of the Company materially changed in the report period?
□ Yes √ No

3. Restricted asset rights as of the end of the report period

□ Applicable √ Not applicable

V. Investment

1. General
√ Applicable □ Not applicable
                                              Investment over the same period of the
   Investment in the report period (Yuan)                                                        Increase/decrease (%)
                                                       previous year (Yuan)
                            167,406,096.68                              171,899,357.22                                   -2.61%




                                                                28
                                                                                                                                     Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


2. Significant equity investment in the report period
√ Applicable □ Not applicable
                                                                                                                                                                                                  Unit: Yuan

                                                                                                                                                  Investment
                                                                                                                       Progress as
                                                                                                                                                   profit or
                 Main      Investment    Investment      Shareholding Source of                 Investment Product       of the       Projected                   Lawsuit    Disclosure       Disclosure
Investee name                                                                         Partner                                                     loss of the
                business      mode         amount         percentage     capital                  horizon      type     balance        income                     involved date (if any)    index (if any)
                                                                                                                                                   current
                                                                                                                       sheet date
                                                                                                                                                    period

                                                                                                                                                                                           http://www.cnin
                                                                                                                                                                                           fo.com.cn
                                                                                                                                                                                           Announcement
                                                                                                                                                                                           of Shenzhen
Suzhou SEG
                                                                                                                                                                                           SEG Co., Ltd.
Intelligent                Newly-                                      Self-owned               Not                                               -3,445,047.               January 13,
                Trade                    10,000,000.00       100.00%                None                     Digital   Opening                                    No                       on the
Technology                 established                                 capital                  applicable                                                   53             2016
                                                                                                                                                                                           Establishment of
Co., Ltd.
                                                                                                                                                                                           Shenzhen SEG
                                                                                                                                                                                           Intelligent
                                                                                                                                                                                           Technology Co.
                                                                                                                                                                                           Ltd.
                                                                                Advanced
                                                                                Solar Power                                                                                                http://www.cnin
                                                                                (Hangzhou )                                                                                                fo.com.cn
                                                                                Inc.,                                                                                                      Announcement
Shenzhen SEG                                                                    Shenzhen                                                                                                   of Shenzhen
Longyan New                                                                     Raytai                                                                                                     SEG Co., Ltd.
Energy
                    Newly-                                           Self-owned Technology      Not          Photovol In                                                    May 10,        on Foreign
Application  Energy                       2,500,000.00        50.00%            Photovoltaic                                               0.00                   No                       Investment and
                    established                                      capital                    applicable   taic     preparation                                           2016
and                                                                             Engineering                                                                                                Establishment of
Development                                                                     Co., Ltd.,                                                                                                 SEG Longyan
Co., Ltd.                                                                       Shenzhen                                                                                                   New Energy
                                                                                Energy                                                                                                     Application and
                                                                                Nanjing                                                                                                    Development
                                                                                Energy                                                                                                     Co., Ltd.
                                                                                Holdings

                                                                                                29
                                                                                                                                           Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                                                       Limited
                                                                                                                                                                                                 http://www.cnin
                                                                                                                                                                                                 fo.com.cn
                                                                                                                                                                                                 Announcement
                                                                                                                                                                                                 of Shenzhen
Shenzhen                                                                                                                                                                                         SEG Co., Ltd.
International                                                                                                                                                                                    on Equity
                                                                                   Shenzhen
Consumer                                                                                                                                                                                         Investment and
               Exhibiti Newly-                                          Self-owned Futian           Not          Exhibitio In                          -8,181,957.                May 12,
Electronics                               9,000,000.00        30.00%                                                                            0.00               No                            Establishment of
               on       established                                     capital    Investment       applicable   n         preparation                         94                 2016
Exhibition/Exc                                                                                                                                                                                   Shenzhen
                                                                                   Co., Ltd.
hange Center                                                                                                                                                                                     International
Co., Ltd.                                                                                                                                                                                        Consumer
                                                                                                                                                                                                 Electronics
                                                                                                                                                                                                 Exhibition/Exch
                                                                                                                                                                                                 ange Center
                                                                                                                                                                                                 Co., Ltd.
                                                                                                                                                                                                 http://www.cnin
                                                                                                                                                                                                 fo.com.cn
                                                                                Advanced
                                                                                Solar Power                                                                                                      Announcement
                                                                                (Hangzhou )                                                                                                      of Shenzhen
Shenzhen SEG                                                                    Inc., Southern                                                                                                   SEG Co., Ltd.
Longyan                                                                         Raytai Group,                                                                                                    on the
                    Newly-                                           Self-owned                Not                           In                                                   November       Establishment of
Energy       Energy                     82,500,000.00         50.00%            Shenzhen                         Energy                         0.00                 No
                    established                                      capital                   applicable                    preparation                                          12, 2016       SEG Longyan
Technology                                                                      Energy
Co., Ltd.                                                                       Nanjing                                                                                                          Energy
                                                                                Energy                                                                                                           Technology Co.,
                                                                                Holdings                                                                                                         Ltd. and Launch
                                                                                Limited                                                                                                          of CdTe Film
                                                                                                                                                                                                 Photovoltaic
                                                                                                                                                                                                 Industrial Base

                                        104,000,000.0                                                                                                  -11,627,005
Total             --         --                               --                --           --          --         --           --             0.00                      --          --                --
                                                     0                                                                                                         .47

3. Significant non-equity investment in progress in the report period
√ Applicable □ Not applicable
                                                                                                                                                                                                      Unit: Yuan

                Investment        Fixed asset   Industries         Amount of         Accumulated   Source of                      Projected      Accumulated     Reasons for        Disclosure      Disclosure
Project name                                                                                                      Progress
                   mode           investment?   involved in        investment          amount       capital                           income     income as of        failure to    date (if any) index (if any)

                                                                                                    30
                                                                                                                                                            Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                          investment       during the     invested as of                                                            the end of the    achieve the
                                                                          report period   the end of the                                                            report period plan schedule
                                                                                          report period                                                                              objective and
                                                                                                                                                                                       expected
                                                                                                                                                                                        income

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Nantong SEG                                                                                                                                                                          Not
               Self-constructed No                    Real estate      148,406,096.68 597,264,847.59 capital and                                               0.00 -8,396,389.16
Times Plaza                                                                                                                                                                          applicable
                                                                                                             bank loans

Total                   --                 --                 --       148,406,096.68 597,264,847.59                 --                 --                     0.00 -8,396,389.16            --             --             --

4. Financial assets investment
(1) Security investment
√ Applicable □ Not applicable
                                                                                                                                                                                                                        Unit: Yuan

                                                                                               Gains and
                                                                                                 losses                            Amount of
                                                                                                             Accumulative                       Amount of
                             Short form                       Accounting                       from fair                           purchase                       Gains and
                Stock                           Initial                       Opening book                   change of fair                     sales in the                     Closing book                          Source of
 Stock type                    of the                        measurement                         value                               in the                      losses in the                    Accounting item
                code                      investment cost                         value                      value counted                        current                            value                              capital
                              security                             mode                        changes in                           current                     report period
                                                                                                               into equity                        period
                                                                                               the current                          period
                                                                                                 period

Domestic and
                         Youhao                              Measurement                                                                                                                          Available-for-sale Self-owned
overseas       600778                           90,405.00                         744,580.41                    -61,289.83               0.00           0.00             0.00        683,290.58
                         Group                               of fair value                                                                                                                        financial assets   capital
shares

Domestic and                                             Measurement
                         Huakong                                                                                                                                                                                     Self-owned
overseas       000068                     204,864,058.29 of cost     181,743,161.07                                       178.21                -9,086,648.37 1,895,383.08 174,552,073.99 Other assets
                         SEG                                                                                                                                                                                         capital
shares                                                       method




                                                                                                                31
                                                                                                                                               Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                                                       Gains and
                                                                                         losses                       Amount of
                                                                                                     Accumulative                  Amount of
                        Short form                      Accounting                      from fair                     purchase                      Gains and
               Stock                      Initial                     Opening book                   change of fair                sales in the                     Closing book                         Source of
 Stock type                 of the                      measurement                      value                          in the                     losses in the                   Accounting item
                code                  investment cost                     value                      value counted                   current                           value                              capital
                           security                        mode                        changes in                      current                     report period
                                                                                                      into equity                    period
                                                                                       the current                     period
                                                                                         period

Domestic and                                         Measurement
                        SEG                                                                                                                                                        Available-for-sale Self-owned
overseas       832770                   8,275,321.43 of cost     13,515,392.83                                              0.00           0.00            0.00 13,515,392.83
                        Navigations                                                                                                                                                financial assets    capital
shares                                                  method

Total                                 213,229,784.72        --        196,003,134.31                    -61,111.62                 -9,086,648.37 1,895,383.08 188,750,757.40               --                --

(2) Investment of derived products
□ Applicable √ Not applicable
No investment in derivatives is involved in the report period.
5. Use of the collected capital
□ Applicable √ Not applicable
In the report period, there was no usage of raised capital.

VI. Sales of Major Assets and Equity

1. Sales of Major Assets
√ Applicable □ Not applicable
                                                  Net profit                   Proportion
                                                                                                                   Association Transfer           Transfer of   Implemented
                                                 contributed      Impact of     of the net Pricing
                                      Transaction by the                                                             with the    of all               all       as scheduled
                                                                    the sale      profit   principle
                              Date of     price                                                                                                                    or not? If Disclosure
Counterparty Sold assets                         asset to the        on the    contributed for the Connected counterparty property                 creditor's
                                                                                                                                                                                                Disclosure index
                               sale      (RMB                                                        transaction? (applicable rights of           rights and     not, indicate   date
                                                     listed       Company         by the    sale of
                                        10,000)                                                                   to connected assets                debts       reasons and
                                                  company          (Note 3)      assets to  assets
                                                                                                                 transactions) involved?          involved?        measures
                                                   from the                     the listed
                                                                                                                                                                 taken by the
                                                  beginning                     company

                                                                                                        32
                                                                                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                      of the              to total net                                                             Company
                                                    period to                profit
                                                   the date of
                                                   sale (RMB
                                                     10,000)
             51% of the                                                                                                                                               Announcement on the
             equity of                                                                                                                                                Progress of Equity
Wang         Shenzhen   December                                                                                                                             December Transfer of Shenzhen SEG
                                          534.97      -430.75 348.64           3.17% Fair value No               N/A      Yes       Yes          Transferred
Yunling      SEG        8, 2016                                                                                                                              15, 2016 E-commerce Co., Ltd.
             E-commerce                                                                                                                                               disclosed on
             Co., Ltd.                                                                                                                                                http://www.cninfo.com.cn
                                                                                                                                                                      Announcement on the
                                                                                                                                                                      Implementation of
             10,066,700
Secondary                                                                                                                                                             Reduction of
             shares of  December                                                                                                                             December
market                                     8,815         8.72 8,620.23       78.27% Fair value No                N/A      Yes       Yes          Transferred          Holding-shares of
             Huakong    31, 2016                                                                                                                             31, 2016
investors                                                                                                                                                             Shenzhen SEG Co., Ltd.
             SEG
                                                                                                                                                                      disclosed on
                                                                                                                                                                      http://www.cninfo.com.cn

2. Sales of Major Equity
√ Applicable □ Not applicable
                                                    Net profit
                                                  contributed                Proportion
                                                  by the asset               of the net                                                         Implemented
                                                  to the listed                profit                               Association                 as scheduled
                                                                 Impact of
                                                    company                 contributed     Pricing                   with the                     or not? If
                                      Transaction               the sale on                                                      Transfer of
                                                    from the                   by the    principle for Connected counterparty                    not, indicate Disclosure
Counterparty Sold assets Date of sale price (RMB                    the                                                          all equities                                   Disclosure index
                                                   beginning                assets to the the sale of transaction? (applicable                   reasons and      date
                                        10,000)                  Company                                                         involved?
                                                      of the                    listed       assets                to connected                    measures
                                                                  (Note 3)
                                                    period to               company to                             transactions)                 taken by the
                                                   the date of                total net                                                            Company
                                                   sale (RMB                   profit
                                                     10,000)
             51% of the                                                                                                                                                     Announcement on the
             equity of                                                                                                                                                      Progress of Equity
Wang         Shenzhen   December                                                                                                                             December       Transfer of Shenzhen SEG
                                            534.97       -430.75 348.64                  3.17% Fair value   No         None      Yes            Yes
Yunling      SEG        8, 2016                                                                                                                              15, 2016       E-commerce Co., Ltd.
             E-commerce                                                                                                                                                     disclosed on
             Co., Ltd.                                                                                                                                                      http://www.cninfo.com.cn
Secondary    10,066,700 December           8,815.09          8.72 8,620.23          78.27% Fair value       No         None      Yes            Yes          December       Announcement on the

                                                                                                    33
                                                                                                                               Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


market         shares of   31, 2016                                                                                                                    31, 2016     Implementation of
investors      Huakong                                                                                                                                              Reduction of
               SEG                                                                                                                                                  Holding-shares of
                                                                                                                                                                    Shenzhen SEG Co., Ltd.
                                                                                                                                                                    disclosed on
                                                                                                                                                                    http://www.cninfo.com.cn

VII. Analysis of Controlling and Holding Companies

√ Applicable □ Not applicable
Information on main subsidiaries and holding companies with more than 10% influences on the Company's net profits
                                                                                                                                                                                  Unit: Yuan

  Company name        Company type             Main business            Registered capital   Total assets     Net assets        Operating income     Operating profit        Net profit

SEG Credit            Subsidiary      Micro-credit                      150,000,000.00       527,128,411.41   190,217,607.42         78,351,087.18      42,273,929.06          31,709,669.74

                                      Property operation and
SEG Baohua            Subsidiary                                        30,808,800.00        160,403,186.06   112,528,058.07         80,289,375.74      35,800,313.60          26,881,089.95
                                      management and hotel business

                                      Channel retail terminal of
SEG Industry          Subsidiary      electronic products and property 25,500,000.00         103,489,093.25    44,646,580.89        183,761,151.85        6,312,881.57          5,984,662.68
                                      operation and management

                                      Operation and management of
Longgang SEG          Subsidiary                                        3,000,000.00          18,632,641.84     7,365,800.29          8,885,058.01        2,302,057.14          1,766,813.36
                                      professional electronics market

                                      Operation and management of
Shunde SEG            Subsidiary                                        6,000,000.00           4,768,727.23     3,251,329.59          3,020,405.16           66,777.56             92,107.04
                                      professional electronics market

                                      Operation and management of
Changsha SEG          Subsidiary                                        35,000,000.00         90,333,829.24    69,762,432.18         24,597,175.67        8,597,440.66          6,004,911.59
                                      professional electronics market

                                      Operation and management of
Xi'an SEG             Subsidiary                                        3,000,000.00          42,746,870.72    18,277,318.13         39,901,579.15      12,566,775.67          10,729,264.73
                                      professional electronics market

                                      Operation and management of
Xi'an Hairong SEG Subsidiary                                            3,000,000.00          27,047,412.83     5,470,844.74         21,185,817.21        2,384,182.47          2,187,519.46
                                      professional electronics market



                                                                                                 34
                                                                                                                             Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


  Company name     Company type             Main business           Registered capital    Total assets      Net assets        Operating income     Operating profit     Net profit

                                  Operation and management of
Nanjing SEG        Subsidiary                                       20,000,000.00          23,115,769.70      4,436,932.79         24,795,038.43       -4,778,383.95      -4,552,613.66
                                  professional electronics market

                                  Operation and management of
Wujiang SEG        Subsidiary                                       3,000,000.00           23,504,627.13      5,084,589.72         15,420,790.93        2,136,733.06       1,777,325.36
                                  professional electronics market

                                  Operation and management of
Wuxi SEG           Subsidiary                                       3,000,000.00           15,945,797.55      4,471,380.86          5,820,882.30         741,528.88          526,070.18
                                  professional electronics market

                                  Operation and management of
Suzhou SEG         Subsidiary                                       3,000,000.00           36,718,623.73     11,421,072.36         41,978,978.54        8,126,629.35       5,980,331.82
                                  professional electronics market

                                  Operation and management of
Suzhou SEG Digital Subsidiary                                       8,000,000.00           22,832,637.84     -2,049,294.53         27,149,253.66         491,000.53          493,897.43
                                  professional electronics market

SEG Intelligent    Subsidiary     Trade                             10,000,000.00          12,190,666.91      6,554,952.47         93,162,471.75       -3,461,244.46      -3,445,047.53

                                  Development and operation of
Nantong SEG        Subsidiary                                       30,000,000.00         720,210,231.69     21,603,610.84                            -10,227,118.54      -2,208,110.04
                                  real estate

Nantong SEG
Commercial         Subsidiary     Property Operation                -                       8,843,404.99     -4,501,816.70            878,147.31       -4,501,343.74      -4,501,343.73
Operation

SEG E-Commerce     Subsidiary     E-commerce                        -                                                              19,856,069.34       -4,433,595.83      -4,307,477.61

                                  Manufacturing and operation of
                   Shareholding
Huakong SEG                       color picture tube (CPT), CPT     1,006,671,464.00     1,313,724,068.11   800,907,363.73        297,563,205.88      21,931,533.98        8,723,288.17
                   company
                                  materials, and glass apparatus

                   Shareholding   Operation and management of
Shanghai SEG                                                        5,000,000.00           17,903,203.15      9,827,332.82          7,333,583.64         657,870.52          491,843.57
                   company        professional electronics market

                   Shareholding
CEEC                              Electronics exhibition            30,000,000.00          23,006,940.08     21,818,042.06          4,675,561.08       -8,181,856.34      -8,181,957.94
                   company




                                                                                              35
                                                            Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


Information on the acquisition and disposal of subsidiaries in the report period
√ Applicable □ Not applicable
                                   Mode of acquisition and disposal of
         Company name                                                    Impact on the overall production and performance
                                     subsidiaries in the report period
                                                                         It achieved the operating income of RMB 93.16
Suzhou SEG Intelligent
                                           Newly-established             million and the loss of RMB 3.45 million in the
Technology Co., Ltd.
                                                                         report period.
Shenzhen SEG Longyan New
                                                                         It is in preparation and has not opened for business
Energy Application and                     Newly-established             yet.
Development Co., Ltd.
Shenzhen SEG Longyan Energy                                              It is in preparation and has not opened for business
Technology Co., Ltd.                       Newly-established             yet.
                                                                         It achieved the operating income of RMB 19.86
Shenzhen SEG E-Commerce Co.,
                                         Transfer of all equities        million and the loss of RMB 4.31 million in the
Ltd.
                                                                         report period.

Information on controlling and holding companies
1. In the report period, the operating income of SEG Industry decreases by 32.96% over the previous year. For
more reasons, see the third point of 1. Overview in Section 4 - II. Analysis of Main Business.
2. In the report period, the operating income of Longgang SEG decreases by 15.81% over the previous year.
Because the vacancy rate of the market increased, the operating income decreased and total profit was down.
3. In the report period, the operating income of Shunde SEG increases by 22.06% over the previous year, mainly
because the occupancy rate of the company significantly rose, the overall renewal rate reached 90%, and leasing
of small offices was stable.
4. In the report period, the operating income of Nanjing SEG decreases by 23.52% over the previous year. The
occupancy rate of Nanjing SEG from January to May was lower than that in the same period of the previous year.
The market occupancy rate rose in the second quarter, but preferences during the decoration period for new
merchants resulted in decrease in the operating income of the company.
5. In the report period, the total profit of Wujiang SEG increases by 39.97% over the previous year, mainly
because the rental income and advertising income increased by 5.93% and the gross profit increased.
6. In the report period, the operating income of Wuxi SEG decreases by 17.77% over the previous year and the
total profit decreases by 39.97%, mainly because the overall market occupancy rate decreased year on year. The
decrease in the rental income led to decrease in the total profit. Besides, other receivables of the Company
increased and the amount of funds decreased, and the financial income decreased by RMB 270,000 year on year.
7. In the report period, the operating income of Suzhou SEG increases by 69.09% over the previous year, mainly
because the property lessor Zongheng International Electronic Expo City (Suzhou) Co., Ltd. sold the property
and the parties reached a temporary agreement. In Q4 2016, the paid rent decreased by RMB 1,206,000 year on
year. The cost decreased and the profit increased. Besides, the litigation compensation to Suzhou Rail Transit
was incurred in same period of the previous year while no such compensation was incurred in the current period.
8. In the report period, the operating income of Suzhou SEG Digital decreases by 21.85% over the previous year,
mainly because the company adjusted business types and terminated direct selling of digital products. As new
business types generated higher returns. Suzhou SEG Digital turns from deficits to profit in the report period.
9. As a newly-established enterprise in the report period, Intelligent Technology engages in smart home business,
develops intelligent and engineering projects, and provides multiple intelligent solutions for home, engineering,

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and plants. The company achieves the annual operation income of RMB 93,160,000. As the low gross profit rate
is low and the organization expense is recognized in the current profit or loss, the Company has a loss of RMB
3,450,000 in the report period.
10. In the report period, the operating income of Nantong SEG was RMB 4,500,000, mainly because Nantong
SEG Times Plaza starts business and the organization expense is recognized in the current profit or loss.
11. The Company sold all its equity of SEG E-commerce in the report period. The operating income attributable
to the listed company decreases by 44.19% in the report period. For details, see the Announcement of Shenzhen
SEG Co., Ltd. on the Progress of Equity Transfer of SEG E-commerce (No. 2016-112) published by the
designated information disclosure media of the Company on December 15, 2016.

VIII. Information on Structural Entity Controlled by the Company

□ Applicable √ Not applicable

IX. Outlook of future development of the Company

(I) Future development planning of the Company
1. Implementation of major assets restructuring
The Company's application for issuing shares and paying cashes to acquire assets and raise supporting funds &
connected transaction has been approved by the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) on
January 17, 2017.
On January 19, 2017, business registration formalities for shareholder alteration related to transfer of 100% of
the equity of SegMaker, 55% of the equity of SEG Kangle, 100% of the equity of SEG Property Development,
and 79.02% of the equity of SEG Real Estate held by SEG Group to the Company was completed. After the
completion of alteration, the Company holds 100% of the equity of SegMaker, 55% of the equity of SEG Kangle,
100% of the equity of SEG Property Development, and 79.02% of the equity of SEG Real Estate.
On January 21, 2017, Da Hua Certified Public Accountants (special general partnership) hired by the Company
verified newly-added capital stock of RMB 450,857,239 arising from share issuance of the Company, and issued
a verification report (D. H. Y. Zi. [2017] No. 000044).
450,857,239 A shares were issued by the Company through private placement (including 450,857,239 restricted
shares) and listed from March 6, 2017.
After the said private placement, the core assets of SEG Group were injected into the listed company, reducing
horizontal competition to the greatest extent. The listed company after restructuring will be based on electronics
markets, commercial (industrial park) real estate, maker business, and CdTe film solar business, promote
interactive development with multiple business models, comprehensively integrate business resources, build
SEG new industrial eco-circle, create a diversified and strategic emerging industry development platform, and
develop into a leader in high-end manufacturing and services.
In terms of transformation of the existing specific main business, the Company will be based on electronics
markets, combine service advantages and customer resources of electronics markets, step up efforts to develop
the maker business, culture and education, intelligent technology, sports and entertainment, virtual experience,



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e-sports, financial services, strategic emerging industries, high-end manufacturing and services, optimize and
integrate the business chain systems, and implement industrial transformation and upgrading.
2. In 2017, the Company will rely on the capital market and the platform as a listed company, center around the
Company's 13th five-year plan, be based on its actual development and existing resources, make full use of
capital market, integrate internal and external resources, carry out capital operation mainly through the "external
industrial mergers and acquisitions", "investment funds" and other models, and deliver a platform for diversified
strategic emerging industries.
2017 investment plan of the Company focuses on commercial (industrial park) real estate and business
transformation and upgrading. The total amount of the investment plan is expected to be RMB 1,813,760,000,
consisting of RMB 1,302,410,000 for commercial real estate projects (including fund raising and investment
projects, Nantong SEG Times Plaza, etc.), RMB 462,100,000 for new investment projects (including CdTe
project, Hongtu SEG Intelligent Industrial Fund, and e-sport Internet café etc.), and the non-operating capital
expenditure of RMB 49,250,000.
(II) Completion Result of Main financial budget and investment plan of 2016:
1. The Company released the Announcement of Resolution of 9th meeting of the 6th Session of the Board of
Directors on March 30, 2016, wherein main financial budget targets of 2016 was disclosed. The completion
result is shown in the table below:
                                                                                                                     Unit: RMB 10,000

      No.                                Item                       Budget target of 2016          Actual amount of 2016 (audited)

       1         Total assets                                                          293,504                                254,828

       2         Total liabilities                                                     121,830                                 78,977

       3         Operating income                                                       85,638                                 76,092

       4         Owners' equity                                                        171,674                                175,851

       5         Including: Owners' equity attributable to the                         151,858                                154,820
                 parent company

       6         Asset-liability ratio                                                  41.51%                                 30.99%

       7         Management expenses                                                    6,416                                    6,004

2. 2016 annual project investment plan of the Company focuses on business transformation and upgrading,
which is expected to be RMB 326,700,000 in total.
                                                                                                                     Unit: RMB 10,000

 No.                   Project name                  Annual       Cumulative                      Project progress
                                                     budget       completed
                                                    investment investment

  1        Nantong SEG Times Plaza                       14,100          15,573 Nantong projects Animation Industrial Park and
                                                                               animation business hqve opened and put into operation.

  2        New investment project                        18,570      3560.36

           (1) SEG intelligent technology project                    1,000.00 The new company has been registered and RMB
                                                                               10,000,000 is invested in the registered capital. The
                                                                               company is in formal business.


                                                                    38
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       (2) Shenzhen International Consumer                     900.00 The new company has been registered and RMB
       Electronics        Exchange/Exhibition                        9,000,000   is   invested   in   the   registered   capital,
       Center Co., Ltd.                                              accounting for 30% of the equity.

       (3) SEG "Internet café project                         240.44 The company signed the strategic cooperation agreement
                                                                     with Allied eSports and Wangyu Technology. The first
                                                                     project is located at 4F of Nantong SEG Times Plaza and
                                                                     open for business on October 28, 2016. Suzhou store and
                                                                     Shenzhen Allied eSports flagship store are in progress.

       (4) Children project reserve                            319.92 The company set up Children's Industry Division in
                                                                     August 2016, which is responsible for development,
                                                                     expansion and operation of SEG children's theme
                                                                     experience venue. The first project was launched in
                                                                     Nantong SEG Times Plaza and open for business on
                                                                     October 28, 2016.

       (5) New hotel investment project                   1,100.00 In May 2016, the Company signed the lease contract
                                                                     concerning the original Dongmen hotel property located
                                                                     at 2195 Hubei Road and invested in the establishment of
                                                                     Dongmen Branch of Mellow Orange Hotel. The
                                                                     decoration of the hotel has been completed. The
                                                                     company is applying for the license for special industries
                                                                     and preparing for the opening.

       Total                                      32670   19133.36

Note: There is deviation between 2016 project investment plan and the actual completion result because: Hongtu
SEG Intelligent Industrial Fund is under examination and approval and has not been funded yet; for industrial
reasons and prudence, the Company has not invested in new electronics market projects.
(III) Summary of progress of development strategies and operation plans disclosed earlier in the report
period
According to the development strategies disclosed by the Company in the annual report of 2015, the Company
would try to change from the traditional profit model focusing on rental income to the profit model of
multi-channel platform. The Company dug into the user values, expanded value-added service connotations and
increased users' experience. By integrating all kinds of tangible and intangible resources on the inventory market,
the Company created the maker service platform, financial service platform and electronics market operation
platform, facilitated SEG Electronics Market to transfer from the traditional profit model focusing on rental
income to the profit model of multi-channel platform. At the same time, the Company has set foot in emerging
strategic industries such as CdTe film solar energy.
In the report period, the main work done by the Company is as follows:
1.   In order to reduce horizontal competition at the maximum, enhance the profitability and core
competitiveness of listed company, and fully integrate the business of electronics markets by relying on the
platform of the listed company, eventually fulfill integration, transformation and upgrading of current business
of the listed company, facilitate the Company to develop toward diversified business, extend the industrial chain,
expand the profit margins of the listed company, and enhance the influence of the listed brand, the Company
carried out major assets restructuring in 2016.



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For restructuring, the Company intended to purchase 100% of the equity of SegMaker, 55% of the equity of SEG
Kangle, 100% of the equity of SEG Property Development and 79.02% of the equity of SEG Real Estate held by
SEG Group by means of issuing shares and paying cash to acquire assets, in which the percentage of payment by
the equity is 86.90% and that of cash payment 13.10%. At the same time, in order to improve the efficiency of
restructuring, the Company intended to raise the supporting fund for the restructuring from no more than 10
specific investors by means of non-public offering, with the total raised fund no more than 38.78% of the
transaction price of the assets to be acquired. According to the appraised value, the total amount of assets did not
exceed RMB 2 billion.
On November 15, 2016, China Securities Regulatory Commission Acquisition and Restructuring Committee
conditionally approved Shenzhen SEG issuing shares and paying cash to acquire assets and raising supporting
fund as well as related party transaction issues on the 85th Acquisition and Restructuring Committee Working
Meeting of 2016.
On January 17, 2017, the Company received the Approval on Shenzhen SEG Co., Ltd.'s Issuing Shares to
Shenzhen SEG Group Co., Ltd. to Acquire Assets and Raise Supporting Funds (Z. J. X. K. [2017] No. 21) issued
by China Securities Regulatory Commission, which approved the Company to issue 450,857,239 shares to SEG
Group to acquire relevant assets and raise supporting funds for the said share issuance and asset acquisition by
non-public offering of no more than 201,207,243 new shares. The said approval document issued by China
Securities Regulatory Commission will be valid within 12 months after the issuance.
The transfer formalities of the subject assets were completed on January 19, 2017, and the 450,857,239 new
shares in A-share by non-public offering were listed for trading on March 6, 2017.
2.   Transformation and upgrading of electronics markets and implementation of new businesses are actively
carried out by the Company.
(1) E-sports and Internet cafébusiness
In terms of e-sports, the Company signed the Regional Agency Contract of Wangyu Internet Caféwith Shanghai
Wangyu Information Technology Co., Ltd. on March 14, 2016 to develop strategic cooperation with Wangyu, by
using respective advantages of platform and resources, to deploy "e-sport" physical stores on the basis of
subordinate property assets. The Company would reproduce layout in subordinate properties or core business
circles of core cities based on operation situation, maturity and market demand of the e-sport projects. Therefore,
the Company established the E-sport Division in August 2016, in charge of development, expansion and
operation of business related to e-sports. At present, the first physical store "Wangyu Internet
Café-EventE-sports" arranged in Nantong SEG was put into trial operation in October 2016, and relevant
operation data met the expectations. Apart from daily operation, two e-sport competitions have been held and
attracted 32 teams and nearly 400 people, achieving good brand benefits. The e-sport venue has a construction
area of 1600 m2 and investment of RMB 5,000,000. Now the second e-sport venue has settled in Suzhou and is
nearly finished. It is expected to open for business in April 2017. The Company signed the Strategic Cooperation
Agreement with Tianjin Allied eSports on December 16, 2016. The parties jointly invested RMB 24,800,000 to
establish Shenzhen SEG Lianzhong Internet Technology Co., Ltd. to carry out the operation projects of
large-scale comprehensive e-sport venues. The Company acquired the business license on February 10, 2017.
The Company invested RMB 13,640,000, accounting for 55% of the shares. The e-sport project will integrate
upstream and downstream resources of the e-sport industry, create super top-rank comprehensive entertainment
venues of e-sport events in China, and create an e-sport club that integrates "games, leisure bars, online and
offline communication platform for professional electronic gamers and players". The project was started for

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construction at the end of February 2017 and is expected to finish in June 2017 and can undertake large-scale
e-sports events.
(2) Children's experience business
In order to build a new commercial operation platform of SEG Electronics Market and actively promote the
transformation and upgrading of the main business of the Company-the physical electronics markets, based on
its actual situation and the needs of business transformation, the Company planned to create a scene-mode
children's technology and culture experience platform that focuses on education and culture, and covers also
children's animation, experience, education, service and entertainment.
Therefore, the Company established the Children's Industry Division in August 2016, dedicated to development,
expansion and operation of SEG children's theme experience venue. The first project was launched in Nantong
SEG Times Plaza and open for business on October 28, 2016. The children's type of business is the largest
backbone store in Nantong project, which is packaged with Babycat animation image as the theme of the park
with a usable area of 2,235 m2. Driven by stable customers, sufficient customer flow has been brought to other
types of business and promoted increase in the sales volume per square meter rented of the shopping mall. Since
the operation of the children's amusement park project, it has attracted 3,800 WeChat followers, more than 1,500
members, and nearly 100% customer retention rate.
(3) E-commerce business cooperation with Taobao
In order to actively promote the transformation and upgrading of the main business of the Company, i.e. the
physical electronics markets, accelerate the combination of physical electronics markets and Internet, explore
new types of cooperation methods and create an "Internet +" model truly with SEG features and internal core
value, the Company signed the Strategic Cooperation Agreement of Taobao "Enterprises Purchasing" Project
with Taobao (China) Software Co., Ltd. on January 27, 2016 (see the announcement of Shenzhen SEG Co., Ltd.
on signing the strategic cooperation agreement with Taobao (China) Software Co., Ltd. on January 28, 2016 for
details), aiming at promoting SEG's unique online and offline mixed service mode by organically integrating the
advantages of physical merchants of SEG Electronics Market and Taobao's online resources. In order to
implement and facilitate the work, the Company set up the E-commerce Division in August 2016, which is
dedicated to the implementation and settlement of the strategic cooperation projects with Taobao, assumes other
business functions related to e-commerce and explores new profit mode. SEG set up "SEG Taobao Zone" in
Taobao and was launched on September 29, 2016, obtained the distribution access on the front page, and tried to
make the domain of the zone a secondary domain of Taobao. The total gross merchandise volume (GMV) in half
a year after launch is nearly RMB 800 million. At present, more than 2,600 merchants have formally entered.
The launch of "SEG@Taobao DIY-one-stop electronic components purchasing channel" indicates that the
strategic cooperation between the Company and Taobao's industrial market has been fully implemented and
material breakthrough has been achieved. A solid step has been made on the way of creating innovative and
value-added services of O2O electronics market with SEG features.
(4) Makers business
In order to implement the Company's development strategies, fully promote "mass entrepreneurship and
innovation", and establish a complete "SEG maker" industrial ecological system, the Company signed a
Three-party Cooperation Agreement with SegMaker and Tencent on April 5, 2016. The three parties will use
respective platform and resources advantages to carry out strategic cooperation, jointly create comprehensive
venture service platform that combines incubation and investment, physical hardware display and distribution


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platform under key cooperation and hardware lab platform of pragmatic innovation services, and establish a
venture incubation service benchmark integrating software and hardware in China.
At the same time, the Company signed the Strategic Cooperation Agreement with Tmall on April 8, 2016. The
two parties will carry out strategic cooperation in terms of target recommended cooperation in makers products
or mature products, cooperation in the maker support event of "global gathering and innovation" Internet
intelligent acceleration channel, online and offline marketing events, media promotion and resources
complementation. From April 9 to April 12, 2016, SEG products were promoted in Juhuasuan for 3 days
successively. Through joint selection by Alibaba and SEG, 20 "black technology" products that participated in
the event were sold on the platform. During the 3 days, nearly 30,000 pieces were traded, and 1,000 pieces in
promotional products of 12 types were traded, and the total sales volume exceeded RMB 10 million.
In the report period, SEG CPARK signed cooperation agreements with more than 30 brands. Meanwhile SEG
CPARK product training and children's science popularization education will be carried out synchronously. At
present, the maker education project of SEG CPARK is designed to develop a maker education complex which is
oriented towards "maker education activities" as the theme and integrates scientific innovation, education,
competition, experience, achievement transformation, and team culture construction. With the activity center as
the carrier, the project brings in enterprises or teams featuring advanced technologies and product innovation,
provides schools, organizations and families with the space for off-campus practice, maker classes, and
parent-child experience. The project is in cooperation with Makeblock, Mago Imagineer, Zhongyi Sports, and
Zhihui Tongxing.
Hongtu SEG Intelligent Industrial Investment Fund: Hongtu SEG Intelligent Industrial Investment Fund jointly
initiated and established by the Company and Shenzhen Capital Group Co., Ltd. and Shenzhen Guiding Fund has
a scale of RMB 300 million. Its main target of investment includes: Hongtu SEG Fund mainly for new intelligent
electronic information industry, wearable intelligent devices, intelligent equipment, 3D printing, robot, VR/AR
industry and Internet of things, Internet/mobile Internet+, cloud computation and projects with potentials for
growth in relevant emerging industries of Shenzhen. In the report period, the industrial and commercial
registration of the fund management company has been completed (i.e. "Shenzhen Hongtu SEG Investment
Management Co., Ltd."). As of today, the industrial and commercial registration of the fund limited partnership
(i.e. "Shenzhen Hongtu SEG Intelligent Industrial Investment Fund (Limited Partnership)") has been completed
and relevant registration and record formalities are in progress.
(5) SEG Intelligence
The Company established Suzhou SEG Intelligent Technology Co., Ltd. in January 2016, which is dedicated to
the business of intelligent home and focuses on creating one-stop purchasing and after-sale service platform of
intelligent home. SEG "Dream Home" intelligent home experience center, as the carrier of the platform, has
been fully integrated with the automatic control system, computer network system and network communication
technology, and can provide various networked intelligent home solutions and individual intelligent hardware for
families, projects and factories.
(6) Consumer Electronic Exhibition/Exchange Center (CEEC) Project
CEEC is jointly built by the Ministry of Industry and Information and Shenzhen City under a frame agreement. It
is designed to create a world-level consumer electronic exhibition/exchange center that integrates release of
high-end consumers' electronic products, display, user experience, investment and discussion, cooperation and
trade, based in Shenzhen, serving the whole country, and facing the world. On May 10, 2016, Shenzhen Futian
Investment Development Co., Ltd., Shum Yip Land Company Limited and Shenzhen SEG Co., Ltd. jointly
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invested and established Shenzhen International Consumer Electronic Exhibition/Exchange Center Co., Ltd. The
project is linked with the industrial resources of North Huaqiang of Shenzhen with the construction area of
around 40,000 m2, with Shum Yip Shangcheng LOFT as the center. Currently it is in the period of attracting
investment.
(7) New energy business
The new energy market has high potentials, is environment-friendly and ecological, and is an industry
encouraged and supported by the government. Among all enterprises that are engaged in the CdTe solar energy
photovoltaic industry, Advanced Solar Power (Hangzhou) Co., Ltd., as an enterprise that possesses the CdTe film
cell component technology with completely independent intellectual property, is a technically leading enterprise
in the industry both at home and abroad. In May 2016, the Company invested and established "Shenzhen SEG
Longyan New Energy Application and Development Co., Ltd" jointly with Advanced Solar Power (Hangzhou)
Co., Ltd., Shenzhen Raytai Technology Photovoltaic Engineering Co., Ltd. and Shenzhen Energy Nanjing
Energy Holding Limited, to engage in the promotion of the integration of CdTe film PV power generation station,
building integrated photovoltaics (BIPV), integrated project contracting, and the sales of CdTe film solar cell
components. In the future, the SEG Longyan CdTe Film PV Industrial Park Project invested by the Company
will engage in the construction of CdTe film PV components production line and develop solar film cell industry.
The planned total investment of the project is RMB 570,989,900 and two production lines of CdTe film PV
components with the total production output of 80 MW will be built. The main products include standard PV
components and light transmitting components. The project is estimated to be finished and put into operation
within one year. The aforesaid two projects will become upstream and downstream businesses that facilitate each
other in operation. "SEG Longyan Film Solar PV Project" has finished relevant decision-making procedure and
the joint venture company SEG Longyan has been established. The project is planned to be located at Shenzhen
Shantou Cooperation Zone. Recently, SEG Longyan won the bid for the right to use the state-owned construction
land (lot No. E2016-0025) located at Ebu Town, Shenzhen-Shantou Special Cooperation Area at RMB
28,010,000, which will ensure the successful implementation of SEG Longyan's CdTe film photovoltaic project.
SEG Longyan will continue to promote environmental assessment and design of the park.
3.   Orderly promoting commercial real estate business
Nantong SEG Times Plaza is opening and put into operation. Nantong SEG Times Plaza will combine the two
themes including technology and animation, and create two operation cores focusing on commerce and industrial
park. At the same time, Nantong SEG will increase income and reduce expenditures, trying to get supporting
funds.
On June 18, 2016, Nantong SEG Times Plaza Animation Industrial Park was opened. Now 16 animation
enterprises have signed contracts with a total area of 9,360 m2, accounting for 65.7% of the total area. Through
the operation of Animation Industrial Park, scale, production value and industrial influence of the enterprises that
enter Nantong Animation industrial Base will be improved continuously. On October 28, 2016, the commercial
part of Nantong SEG Times Plaza was opened. Through post-stage operation, customer flow, sales amount and
commercial influence will be improved continuously, so as to further enhance the brand value of SEG and the
market value of the skirt building properties.
(IV) Main problems for the business development of the Company
1.   Some electronics market business, due to the issues including the cooperators, is in difficulty. The industry
is highly affected by the economic environment, and both rental income and market lease rate have decreased,
highlighting the difficulty in operation.
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2.   The project of Nantong SEG Times Plaza has certain operational risks. Nantong SEG Times Plaza project
faces certain operation risks. Due to increase in the supply of Nantong real estate in the short term and serious
homogeneous competition, based on analysis of the present and future macro-environment of Nantong
commercial real estate, although Nantong SEG Project has entered the operation stage from the development and
construction state, it still faces huge challenges.
(V) Key tasks of the Company in 2017
Key tasks of the Company in 2017 include:
1.   The Company will raise and utilize supporting funds for major assets restructuring.
2.   After the completion of major assets restructuring, directed by the strategic development orientation, the
     Company will accelerate effective integration of business, personnel, organization, capital, and information
     resources, and develop the business model and management model compatible with the strategic
     development platform after major assets restructuring.
3.   The Company will accelerate the implementation of new projects, focus on CdTe film solar photovoltaic
     projects, and develop strategic emerging industries; determine the construction land for "SEG Longyan
     Film Photovoltaic Industrial Park", promote the design and construction of the park, and strive for
     government support; accelerate the establishment and operation of Shenzhen Hongtu SEG Intelligent
     Industrial Investment Fund, and give play to the active role of the fund.
4.   The Company will rely on the current electronics market, closely combine the service advantages and
     customers resources of the electronics market, expand the maker business, culture and education, intelligent
     technology, sports, entertainment, virtual experience and e-sports, continuously deliver innovative
     value-added services of the O2O electronics market with SEG characteristics, accelerate integration of the
     physical electronics market and the Internet, develop new cooperation modes, create the Internet+ model
     with SEG characteristics and intrinsic core value, and continuously strengthen its core competitiveness and
     profitability.
5.   The Company will promote the real estate development and operation of the industrial park, coordinate
     resources, and accelerate the real estate construction, investment promotion, sales, and operation of the
     industrial park.
6.   The Company will further improve the basic management quality, strengthen standard operation, and duly
     perform the information disclosure obligation as a listed company; strengthen communication with
     investors and potential investors, enhance the investors' understanding and identification with the Company,
     carry out investor relationship management from multiple channels and at multiple levels, duly guarantee
     the legal rights and interests of investors, particularly small and medium-sized investors, further strengthen
     overall risk management and the construction and implementation of the internal control system, strengthen
     the responsibility of risk subjects, improve the decision-making awareness, further improve the risk control
     system, and carry out risk assessment throughout the lifecycle of major investment projects.
7.   The Company will strengthen system innovation and the construction of the talent team, carry out the pilot
     program on investing enterprises, and establish and improve the incentive system suitable for the Company
     together with major assets restructuring. The Company will promote innovation in human resources
     management, talent cultivation, and talent pool, particularly talent incentives.
(VI) Risk warning


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                                                      Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


The future development planning and investment plan mentioned above do not reflect the profit estimation of
2017 by the Company. The results depend on multiple factors such as changes in market condition, efforts of the
operation team, and approval of relevant authority departments and uncertainties exist. Investors shall pay
special attention to it.

X. Statement of receipt of surveys, communication and visits

1. Registration form for investigations, communication and Interviews in the report period

√ Applicable □ Not applicable
        Time                 Means            Type                       Basic information on investigation
                                                           Inquire about the progress of major assets restructuring. The
January 4, 2016       Phone call       Individual          Company has given a reply according to the actual progress
                                                           disclosed.
                                                           Inquire about the progress of major assets restructuring. The
January 7, 2016       Phone call       Individual          Company has given a reply according to the actual progress
                                                           disclosed.
                                                           Inquire about the progress of major assets restructuring. The
January 8, 2016       Phone call       Individual          Company has given a reply according to the actual progress
                                                           disclosed.
                                                           Inquire about the progress of major assets restructuring. The
February 1, 2016      Phone call       Individual          Company has given a reply according to the actual progress
                                                           disclosed.
                                                           Inquire about the progress of major assets restructuring. The
February 2, 2016      Phone call       Individual          Company has given a reply according to the actual progress
                                                           disclosed.
                                                           Inquire about the reply to the Letter of Inquiry about the
                                                           Restructuring of Shenzhen SEG Co., Ltd. issued by Shenzhen
                                                           Stock Exchange. The Company has replied that it has arranged
February 19, 2016     Phone call       Individual          agencies for studying, verifying and replying to relevant issues
                                                           and investors may pay attention to the upcoming
                                                           announcement of the Company.
                                                           Inquire about the reply to the Letter of Inquiry about the
                                                           Restructuring of Shenzhen SEG Co., Ltd. issued by Shenzhen
                                                           Stock Exchange. The Company has replied that it has arranged
February 20, 2016     Phone call       Individual          agencies for studying, verifying and replying to relevant issues
                                                           and investors may pay attention to the upcoming
                                                           announcement of the Company.
                                                           Inquire when the Company will resume trading. The Company
February 22, 2016     Phone call       Individual          has given a reply according to the actual progress disclosed.
                                                           Inquire about when the Company will resume trading. The
February 23, 2016     Phone call       Individual          Company has given a reply according to the actual progress
                                                           disclosed.
                                                           Inquire about asset injection in major assets restructuring. The
February 25, 2016     Phone call       Individual          Company has given a reply according to the major assets
                                                           restructuring plan disclosed.
                                                           Inquire why stocks of the Company have not risen after
                                                           resumption and whether there is any important announcement
February 26, 2016     Phone call       Individual          to be disclosed. The Company has replied that there is no
                                                           information which shall be disclosed but not disclosed.
                                                           Inquire why stocks of the Company have not risen after
                                                           resumption and whether there is any important announcement
February 27, 2016     Phone call       Individual          to be disclosed. The Company has replied that there is no
                                                           information which shall be disclosed but not disclosed.
                                                           Inquire about the number of shareholders as of February 29.
March 1, 2016         Phone call       Individual          The Company has given a reply according to the register of
                                                           shareholders released by the Securities Depository and

                                                      45
                                                  Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


        Time               Means           Type                     Basic information on investigation
                                                       Clearing Corporation.
                                                       Inquire about the number of shareholders as of March 15. The
                                                       Company has given a reply according to the register of
March 15, 2016      Phone call     Individual          shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire when the Company will disclose the annual report.
March 22, 2016      Phone call     Individual          The Company has replied that the annual report will be
                                                       disclosed on March 30, 2016.
                                                       Inquire about the financial data of Q1. The Company asked
March 31, 2016      Phone call     Individual          investors to pay attention to 2016 Q1 report of the Company to
                                                       be disclosed.
                                                       Inquire about asset injection in major assets restructuring. The
April 20, 2016      Phone call     Individual          Company has given a reply according to the major assets
                                                       restructuring plan disclosed.
                                                       Inquire about the number of shareholders as of April 29. The
                                                       Company has given a reply according to the register of
April 30, 2016      Phone call     Individual          shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire about the progress of major assets restructuring. The
May 19, 2016        Phone call     Individual          Company has given a reply according to the actual progress
                                                       disclosed.
                                                       Inquire about the number of shareholders as of June 15. The
                                                       Company has given a reply according to the register of
June 15, 2016       Phone call     Individual          shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire about the financial data of Q1. The Company asked
June 30, 2016       Phone call     Institution         investors to pay attention to 2016 semi-annual report of the
                                                       Company to be disclosed.
                                                       Inquire about the progress of major assets restructuring. The
July 6, 2016        Phone call     Individual          Company has given a reply according to the actual progress
                                                       disclosed.
                                                       Inquire about the progress of major assets restructuring. The
July 14, 2016       Phone call     Individual          Company has given a reply according to the actual progress
                                                       disclosed.
                                                       Inquire about the progress of major assets restructuring. The
July 27, 2016       Phone call     Individual          Company has given a reply according to the actual progress
                                                       disclosed.
                                                       Inquire about asset injection in major assets restructuring. The
August 9, 2016      Phone call     Individual          Company has given a reply according to the major assets
                                                       restructuring plan disclosed.
                                                       Inquire about the number of shareholders as of August 15. The
                                                       Company has given a reply according to the register of
August 18, 2016     Phone call     Individual          shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire about the progress of major assets restructuring. The
August 23, 2016     Phone call     Individual          Company has given a reply according to the actual progress
                                                       disclosed.
                                                       Inquire about the number of shareholders as of August 30. The
                                                       Company has given a reply according to the register of
August 31, 2016     Phone call     Individual          shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire about voting results of the general meeting of the
September 1, 2016   Phone call     Individual          Company. The Company has given a reply according to the
                                                       disclosed notice of the general meeting.
                                                       Inquire about the progress of major assets restructuring. The
September 7, 2016   Phone call     Individual          Company has given a reply according to the actual progress
                                                       disclosed.


                                                  46
                                                  Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


        Time                Means          Type                      Basic information on investigation
                                                       Inquire about the approval progress of the CSRC on major
September 19, 2016   Phone call     Individual         assets restructuring. The Company has given a reply according
                                                       to the actual progress disclosed.
                                                       Inquire about the main business, transformation, and private
September 21, 2016   Phone call     Individual         placement of the Company. For details, see the disclosure on
                                                       irm.cninfo.com.cn.
                                                       Inquire about the main business, transformation, and private
September 28, 2016   Phone call     Individual         placement of the Company. For details, see the disclosure on
                                                       irm.cninfo.com.cn.
                                                       Inquire about the financial data of Q3. The Company asked
October 8, 2016      Phone call     Individual         investors to pay attention to 2016 Q3 report of the Company to
                                                       be disclosed.
                                                       Inquire about the approval progress of the CSRC on major
October 16, 2016     Phone call     Individual         assets restructuring. The Company has given a reply according
                                                       to the actual progress disclosed.
                                                       Inquire about the Company's sales of the equity of Huakong
October 27, 2016     Phone call     Individual         SEG. The Company has given a reply according to the
                                                       announcement disclosed.
                                                       Inquire about the Company's sales of the equity of Huakong
October 28, 2016     Phone call     Individual         SEG. The Company has given a reply according to the
                                                       announcement disclosed.
                                                       Inquire about the number of shareholders as of October 31.
                                                       The Company has given a reply according to the register of
November 3, 2016     Phone call     Individual         shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire about issues related to the CdTe film photovoltaic
November 15, 2016    Phone call     Individual         industrial base project. The Company has given a reply
                                                       according to the announcement disclosed.
                                                       Inquire about the review reply of the M&A and Restructuring
                                                       Review Committee of the CSRC on major assets restructuring.
November 18, 2016    Phone call     Individual         The Company has given a reply according to the actual
                                                       progress disclosed.
                                                       Inquire about issues related to the CdTe film photovoltaic
November 25, 2016    Phone call     Individual         industrial base project. The Company has given a reply
                                                       according to the actual progress disclosed.
                                                       Inquire about the progress of the Company's transfer of the
November 30, 2016    Phone call     Individual         equity of SEG E-commerce. The Company has given a reply
                                                       according to the announcement disclosed.
                                                       Inquire about the number of shareholders as of November 30.
                                                       The Company has given a reply according to the register of
December 2, 2016     Phone call     Individual         shareholders released by the Securities Depository and
                                                       Clearing Corporation.
                                                       Inquire about the progress of the Company's sales of shares of
                                                       Huakong SEG. The Company asked investors to pay attention
December 9, 2016     Phone call     Individual         to the progress report disclosed in the designated information
                                                       disclosure media.
                                                       Inquire about the operating result of Q4. The Company asked
December 16, 2016    Phone call     Individual         investors to pay attention to 2016 annual report of the
                                                       Company to be disclosed.
                                                       Inquire about the progress of the Company's sales of shares of
                                                       Huakong SEG. The Company asked investors to pay attention
December 20, 2016    Phone call     Individual         to the progress report disclosed in the designated information
                                                       disclosure media.
                                                       Inquire whether Company has obtained the approval of the
December 22, 2016    Phone call     Individual         CSRC on major assets restructuring. The Company asked
                                                       investors to pay attention to real-time announcements.
                                                       Inquire whether Company has obtained the approval of the
December 29, 2016    Phone call     Individual         CSRC on major assets restructuring. The Company asked

                                                  47
                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


        Time                      Means   Type                       Basic information on investigation
                                                      investors to pay attention to real-time announcements.

Frequency of reception                                                                                         48

Number of institutions received                                                                                 9

Number of individuals received                                                                                 46

Number of other objects received                                                                                0

Is there any important information
                                                                                                               No
disclosed?




                                                 48
                                                                    Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.




                                      Chapter 5 Important Matters

I. Plan of common share profit distribution and plan of transfer of capital reserves into share
capital

Information on the establishment, implementation or adjustment of the ordinary share profit distribution policy,
especially the cash dividend policy:
√ Applicable □ Not applicable
(I) Information on the establishment, implementation or adjustment of the profit distribution policy:
According to the Articles of Association and Shareholder Return Plan for the Next Three Years (2015-2017), the
Annual Profit Distribution Plan of 2015 was formulated by the Company in 2016 and passed by the Board of
Directors and general meeting. The statutory surplus reserve was RMB 7,009,501.20, accrued at 10% of the
profit available for distribution. Based on 784,799,010 share capital of the Company as of December 31, 2015,
the cash dividends were distributed to all shareholders at 0.30 yuan (tax included) for every 10 shares. The total
amount of profit distribution of the Company was RMB 23,543,970.30, in which cash dividends accounted for
100%. The Company did not transfer reserves into share capital. The annual profit distribution plan of 2015 was
completed on June 16, 2016.
                                             Special explanation of cash dividend policy

Does it comply with the Article of Association of the Company
                                                                     Yes
or the resolutions of the meeting of shareholders?

Are the dividend standard and ratio explicit and clear?              Yes

Are the decision-making procedure and mechanism perfect?             Yes

Do independent directors fulfill their obligations and play their
                                                                     Yes
role?

Is there any channel for medium and small shareholders to fully
express themselves? Are their legitimate rights and interests fully Yes
protected?

Are the conditions and procedure for adjustment or change of
                                                                     Yes
cash dividend policy compliant and transparent?

Information on ordinary share profit distribution (proposal) and the plan of transfer of capital reserves into share
capital (proposal) in the recent three years (including the report period)
Pursuant to the Accounting Standard for Business Enterprise 2014, the investment in subsidiaries by the
Company was calculated based on the basis of cost method, the profit of parent company remained bigger
differences with consolidated profit. In accordance with relevant provisions of the Company Law, the profit
distribution was implemented with the parent company as the main body. Therefore, the profit distribution of the
Company in 2014, 2015 and 2016 was implemented depending on the distributable profit of the parent company.
1. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2016:
According to auditing by Da Hua Certified Public Accountants Co., Ltd., the net profit attributable to the listed
company realized by the parent company in 2016 amounted to RMB 118,807,033.67, the undistributed profit at
the beginning of the year is RMB 63,085,510.75, and the current profit available for distribution to shareholders
was RMB 181,892,544.42. According to the Articles of Association and Shareholder Return Plan for the Next

                                                                    49
                                                                   Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


Three Years (2015-2017), the annual profit distribution plan of 2016 is as follows: The statutory surplus reserve
was 11,880,703.37, accrued at 10% of the achieved net profit of the current year; the other profit available for
distribution to shareholders was RMB 146,342,426.58. The Company decided not to distribute the profit nor
transfer reserves into share capital in 2016. The Company intends to distribute the profit properly after the
business of raising supporting funds is completed.
2. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2015:
According to auditing by Da Hua Certified Public Accountants Co., Ltd., the net profit attributable to the listed
company realized by the parent company in 2015 amounted to RMB 92,305,001.57, the undistributed profit at
the beginning of the year is RMB -22,209,989.62, and the current profit available for distribution to shareholders
was RMB 70,095,011.95. The annual profit distribution plan of 2015 was as follows: The statutory surplus
reserve was RMB 7,009,501.20, accrued at 10% of the profit available for distribution. Based on 784,799,010
share capital of the Company as of December 31, 2015, the cash dividends were distributed to all shareholders at
0.30 yuan (tax included) for every 10 shares. The total amount of profit distribution of the Company in 2015 was
RMB 23,543,970.30, in which cash dividends accounted for 100%. The Company did not transfer reserves into
share capital.
3. Profit distribution proposal and the proposal for transfer of capital reserves into share capital in 2014:
According to auditing by Da Hua Certified Public Accountants Co., Ltd., the net profit attributable to the listed
company realized by the parent company in 2014 amounted to RMB 32,887,973.01, the undistributed profit at
the beginning of the year is RMB -55,097,962.63, and the current profit available for distribution to shareholders
was RMB -22,209,989.62. The Company decided not to distribute the profit nor transfer capital reserves into
share capital.
Table of distribution of ordinary share cash dividends by the Company in the recent three years (including the
report period)
                                                                                                                                 Unit: Yuan

                                                  Net profit
                                                                        Ratio of net profit
                                                attributable to
                                                                          attributable to
                                                  ordinary
                                                                             ordinary            Amount of cash          Percentage of cash
   Year for bonus       Amount of cash         shareholders of
                                                                         shareholders of        dividends otherwise dividends otherwise
    distribution        bonus (incl. tax)     listed company in
                                                                        listed company in           distributed             distributed
                                                consolidated
                                                                          consolidated
                                              statement of bonus
                                                                          statement (%)
                                                     year

2016                                   0.00       107,560,213.41                        0.00%                     0.00                0.00%

2015                        23,543,970.30          74,242,090.49                    31.71%                        0.00                0.00%

2014                                   0.00        48,380,294.05                        0.00%                     0.00                0.00%

The net profit of the Company was positive and the profit of the parent company to be distributed to ordinary
shareholders was also positive, but the proposal for distribution of cash dividends was not put forward.
√ Applicable □ Not applicable
Reason for no common share cash dividend distribution proposal
   despite positive net profit and positive profit of the parent
                                                                              Purpose and usage plan of the undistributed profit
 company available for distribution to common shareholders in
                        the report period
As the Company has obtained the approval of the CSRC for The Company intends to distribute the profit after the business of


                                                                   50
                                                               Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


issuing shares to acquire assets and raise supporting funds, the raising supporting funds is completed.
release of the supporting fund is in progress. According to terms
of Article 18 of the Measures for the Administration of the
Offering and Underwriting of Securities (Order No. 121 of the
China Securities Regulatory Commission), if the profit
distribution plan and the plan of transferring reserves into share
capital are not submitted to the general meeting for voting or
passed by the general meeting but not implemented, the listed
company shall issue securities only after such plans are
implemented. In view of long-term development, shareholders'
interests, and the validity term of the approval for major assets
restructuring, the Company decides not to distribute the profit in
2016 nor transfer reserves into share capital.




II. Plan of profit distribution and plan of transfer of capital reserves into share capital in the
report period

□ Applicable √ Not applicable
The Company plans not to distribute cash dividends or bonus shares nor transfer reserves into share capital.

III. Fulfillment of Commitments

1. Commitments fulfilled in the report period or yet to be fulfilled as of the end of the report period by the
Company, shareholders, actual controllers, purchaser, directors, supervisors, senior executives or other
associates

√ Applicable □ Not applicable




                                                               51
                                                                                                                          Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.


                                                                                                                                                  Commitment Commitment
    Commitments            Subject            Type                                                Content                                                               Performance
                                                                                                                                                     date       term
Commitment for share
                     Not applicable
reform
                                                          "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
                                                          subject company due to non-operating events will 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 and no illegal occupation of funds of listed companies will occur;
                                                          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
                                       Commitment on Exchange business rules, and improve awareness of compliance;
                                       horizontal
                       Shenzhen SEG competition,          4. The Company will exercise the rights of shareholders according to law, and will not August 3,
                                                          abuse the rights of shareholders to damage the interests of listed companies and other 2016          Long-term   In progress
                       Group Co., Ltd. related
                                       transaction, and   shareholders;
                                       capital occupation 5. The Company will optimize the governance structure of listed companies, improve the
Commitments in the                                        internal control system, regulate the operation of the three organs, give full play to
Acquisition Report and                                    functions and supervisory role of independent directors and the Board of Supervisors, and
the Report of Changes                                     restrict decision-making and operation by controlling shareholders and actual controllers
on Equity                                                 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 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 economic organizations controlled by the
                                       Commitment on Company, will minimize and regulate associated transactions with Shenzhen SEG or the
                                       horizontal         subject company, other companies, enterprises, or other economic organizations
                       Shenzhen SEG competition,          controlled by the Company.                                                               August 3,               In normal
                                                                                                                                                               Long-term
                       Group Co., Ltd. related            2. When the restructuring is completed, the Company, other companies, enterprises, or 2016                       progress
                                       transaction, and   other economic organizations controlled by the Company will handle associated
                                       capital occupation 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-making
                                                          procedure for associated transactions according to relevant laws, regulations, and

                                                                                            52
                                                                                                        Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                    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
                                    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 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 some commercial electronics markets of
                                   SEG Group that constitute the horizontal competition have not been injected into 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 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
                Commitment on leasing agreement.
                horizontal         2. Except assets owned and business operated before the validity date of commitment,
Shenzhen SEG competition,          when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to August 03,               In normal
                                                                                                                                           Long-term
Group Co., Ltd. related            guarantee sustainable development of Shenzhen SEG, the Company will exercise 2016                                   progress
                transaction, and   supervision and restriction on operating activities of its own and affiliated enterprises
                capital occupation 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 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 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.

                                                                       53
                                                                                                   Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                   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 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. The Company will guarantee the independence of personnel of Shenzhen SEG and
                                 subject company: (1) After completion of the restructuring, the labor, personnel and
                                 compensation management of Shenzhen SEG are independent from the Company and
                                 related parties, such as other companies, enterprises, or other economic organizations
                                 controlled by 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'
                                 meeting and the Board of Directors' exercise of power in appointment/dismissal 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 the Board of Supervisors of Shenzhen
Shenzhen SEG                                                                                                                August 3,               In normal
                Other commitment SEG and the subject company will exercise duties and powers according to laws,                         Long-term
Group Co., Ltd.                                                                                                             2016                    progress
                                 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 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 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-oriented operation capability. (2) Except assets
                                 owned and business operated before the validity date of commitment, when acting as a
                                 controlling shareholder of Shenzhen SEG, in order to guarantee sustainable development
                                                                     54
                                                                     Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
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 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 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 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 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, 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 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 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."

                                    55
                                                                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.

                                                    "(I) Contract subjects and date of signing
                                                    Shenzhen SEG and SEG Group signed Performance Commitment and Compensation
                                                    Agreement on August 3, 2016.
                                                    (II) Performance commitment period
                                                    3 accounting periods following the completion of the transaction (including the year of
                                                    completion and the following 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 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/promised cash flow income/promised development profit (hereinafter
                                                    collectively referred to as "promised performance") related to assets within the transaction    Three
                                                    compensation scope agreed in the agreement, and recognize the promised performance or           accounting
                                                    impairment of assets within the transaction compensation scope in each year during the          years from
                                                    performance commitment period.                                                                  the year of
                                                                                                                                                    completion
                                                    (III) Performance commitment and performance compensation                                       of
Commitments made at                                 Underlying assets injected into Shenzhen SEG in this transaction are subject to multiple        restructuring
the time of            Shenzhen SEG Performance     appraisal methods: 100% of the equity of SegMaker, 55% of the equity of SEG Kangle, August 3,                 In normal
                                                                                                                                                    (including
restructuring of major Group Co., Ltd. Commitment   and 79.02% of the equity of SEG Property Investment are priced on the basis of appraisal 2016                 progress
                                                                                                                                                    the year of
assets                                              conclusion with the asset-based method, in which property assets are subject to the             completion
                                                    income method and market method and real estate development in the long-term equity             and the
                                                    investment is subject to the hypothetical development method; 100% of the equity of SEG         subsequent
                                                    Property Development and 100% of the equity of SEG Property Management (a                       two
                                                    wholly-owned subsidiary of SEG Property Investment) are subject to the income method.           accounting
                                                    Therefore, all parties recognize and agree that the performance guarantee of relevant           years)
                                                    underlying assets of the transaction and the compensation methods shall be carried out
                                                    according to the following stipulations:
                                                    1.     Performance guarantee of underlying assets appraised by income approach and
                                                    performance compensation
                                                    (1) If the transaction is completed before December 31, 2016 (included), SEG Group
                                                    warrants that: 1) Audited net profits of SEG Property Development after the deduction of
                                                    non-recurring profits and losses and investment income of 2016, 2017 and 2018
                                                    respectively (hereinafter referred to as "guaranteed net profits") shall not be lower than
                                                    RMB 8.05 million, RMB 7.85 million and RMB 7.75 million respectively; 2) The
                                                    guaranteed net profits of SEG Property Management of 2016, 2017 and 2018 shall not be
                                                    lower than RMB 4,05 million, RMB 3.45 million and RMB 3.6 million respectively; 3)
                                                    The net profits attributable to the parent company (net profits attributable to the parent
                                                    company = shareholding percentage of parent company x [income actually realized by
                                                    corresponding property assets (including the income of new area after renovation of
                                                    property assets)-depreciation and amortization of the cost of renovation-direct cost and

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                                                                   Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
management costs (including urban property tax, business tax, urban construction tax and
education surtax, stamp duty, maintenance tax, insurance premium and land use tax,
excluding depreciation and amortization)-relevant losses caused by renovation (if
any)-other operating costs and taxes of corresponding properties (including income tax)],
hereinafter referred to as "guaranteed net profits") of the property assets (minus the parts
used by the companies) of SegMaker, SEG Kangle and SEG Real Estate of 2016, 2017
and 2018 appraised by income approach shall not be lower than RMB 63,013,500, RMB
59,995,800 and RMB 77,627,200 respectively.
(2) If the transaction is completed after December 31, 2016 and before December 31,
2017 (included), SEG Group warrants that: 1) Guaranteed net profits of SEG Property
Development of 2017, 2018 and 2019 respectively shall not be lower than RMB 7.85
million, RMB 7.75 million and RMB 7.75 million respectively; 2) The guaranteed net
profits of SEG Property Management of 2017, 2018 and 2019 shall not be lower than
RMB 3.45 million, RMB 3.60 million and RMB 3.75 million respectively; 3) The
guaranteed net profits corresponding to the property assets (minus the parts used by the
companies) of 2017, 2018 and 2019 as appraised by income approach of SegMaker, SEG
Kangle and SEG Real Estate shall not be lower than RMB 59,995,800, RMB 77,627,200
and RMB 94,723,100 respectively.
(3) If the actual net profits on the foregoing assets appraised by income approach after
accumulative deduction of non-operating profits and losses as of the end of any year
during the performance guaranteed period are lower than the accumulatively guaranteed
net profits of corresponding assets as of the end of such year, SEG Group shall use Shen
SEG shares obtained by acquisition of relevant assets as the consideration to make
compensation for Shenzhen SEG in terms of the shares issued to SEG Group according to
the following calculation method. For the part not covered by shares, SEG Group shall
compensate in cash: 1) to compensate 100% of the equity of SEG Property Development
and 100% of the equity of SEG Property Management appraised by income approach: I.
Number of shares to be compensated every year = (accumulated guaranteed net profits as
of the end of the current period -actually accumulated net profits as of the end of the
current period)/total guaranteed net profits of years during the compensation period x total
subscribed shares-amount of compensated shares. Remarks: The "total subscribed shares"
refers to the total number of shares obtained by SEG Group by subscribing all shares
issued by Shenzhen SEG at 100% of the equity of SEG Property Development and 100%
of the equity of SEG Property Management appraised, i.e. total subscribed shares = 100%
of the equity of SEG Property Development or 100% of the equity of SEG Property
Management as the overall price/offering price of the shares issued this time to purchase
assets. When the number of shares of Shenzhen SEG is calculated by 100% of the equity
of SEG Property Management, the impact of the 79.02% of the equity of SEG Real Estate
(the parent company of SEG Property Management) held by SEG Group should be taken
into consideration. II. The part not covered by shares will be compensated by SEG Group
in cash. Amount of extra cash to be compensated = number of shares not covered x
offering price of the shares issued this time to purchase assets.
2)    Compensation of property assets held by all target companies appraised by income
approach

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I.    Number of shares to be compensated every year = (accumulated guaranteed net
profits as of the end of the current period -actually accumulated net profits as of the end
of the current period)/total guaranteed net profits of years during the compensation period
x total subscribed shares-amount of compensated shares. Remarks: The "total subscribed
shares" in the foregoing formula refers to the total number of shares obtained by SEG
Group by subscribing all shares issued by Shenzhen SEG at the price of the property
assets (including the property assets appraised by income approach and are held by
SegMaker, SEG Kangle and SEG Real Estate) appraised by income approach, i.e. total
subscribed shares = appraised price of the property assets appraised by all target
companies with income approach/the offering price of the shares issued this time to
purchase assets. When the number of shares of Shenzhen SEG is calculated, the impact of
the percentages of share rights of all target companies held by SEG Group shall be taken
into consideration. II. The part not covered by shares will be compensated by SEG Group
in cash. Amount of extra cash to be compensated = number of shares not covered x
offering price of the shares issued this time to purchase assets.
(4) When the performance guaranteed period expires, Shenzhen SEG shall hire the
Certified Public Accountants with securities practice qualification recognized by both
parties to carry out impairment test on the foregoing assets appraised by income approach
and issue the impairment test report. If the impairment amount at the end of the current
period of the assets appraised by income approach is greater than the total number of
shares compensated during the performance guaranteed period x offering price of the
shares issued this time to purchase assets + total amount of cash compensated, SEG
Group shall make compensation for the impaired part of such assets of Shenzhen SEG: 1)
Number of shares compensated for the impaired part of the assets appraised by income
approach = impairment amount at the end of the current period of the underlying assets
appraised by income approach/offering price of the shares issued this time - total shares
already compensated during the performance guaranteed period. 2) The part not covered
by shares will be compensated by SEG Group in cash. Amount of extra cash to be
compensated = number of shares not covered x offering price of the shares issued this
time to purchase assets.
(5) Under any circumstances, the total number of shares compensated arising from the
actual net profits less than the guaranteed net profits and the impairment test in total shall
be limited to the total number of Shen SEG shares (including share increase by transfer
and stock dividends) obtained by subscription with 100% of the equity of SEG Property
Development, 100% of the equity of SEG Property Management and property assets of
target companies appraised by SEG Group with income approach. The part not covered
will be compensated in cash by SEG Group, which is limited to the cash consideration
paid for Shen SEG shares with such assets.
2.    Performance guarantee of underlying assets appraised by hypothetical development
method and performance compensation
(1) SEG Group warrants that the actual development profits (hereinafter referred to as
"guaranteed development profits") of SEG ECO Phase I Project, Shenzhen SEG
International Electronics Industry Center Project of Shenzhen SEG New City
Construction and Development Co., Ltd. (hereinafter referred to as "SEG New City

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Development"), Xi'an SEG Plaza Project of Xi'an SEG (subsidiary of SEG Real Estate),
and the remaining building of Oriental Venice Project and SEG Holiday Plaza Project of
Huizhou Stars Real Estate Development Co., Ltd. (subsidiary of SEG Real Estate) shall
not be lower than RMB 104,007,500, RMB 449,494,900, RMB 661,619,900, RMB
18,501,000 and RMB 154,605,400 respectively.
(2) The compensation period of the transaction is three fiscal years from the year of
completion of the transaction (included). When the restructuring compensation period
expires, Shenzhen SEG shall hire the Certified Public Accountant with securities practice
qualification recognized by both parties to carry out auditing on the realized profits of the
foregoing real estate projects appraised by hypothetical development method (including
the development profits realized in the transitional period) and unrealized development
profits (if any), and issue special audit reports respectively. If, during the period from the
appraisal base date to the expiry date of the three-year guaranteed period, the achieved
sales area of the real estate projects under the underlying assets (hereinafter referred to the
"achieved sales area") fails to reach 90% of the remaining sellable area as of the appraisal
base date or the sellable area after completion, SEG Group agrees to extend the
performance guaranteed period of the real estate projects appraised by hypothetical
development method to the end of the year when the achieved sales area reaches 90% (i.e.
December 31 of that year). All the real estate projects appraised by hypothetical
development method shall be subject to the foregoing stipulations separately. During the
transaction compensation period, the amount of the capital raised this time with impact
shall be deducted from realized and unrealized development profits (if any) of the real
estate projects appraised by hypothetical development method, the calculation formula of
the amount of the supporting capital raised this time with impact is as below: amount of
the supporting capital raised this time with impact on the performance guarantee =
amount of the supporting capital raised this time actually used in funded projects x
interest of loan from the bank of corresponding period x (1 - income tax rate of the
implementation subject of implementation of the funded projects) x actual days of capital
use/365, in which the interest of loan from the bank of corresponding period shall be
determined by the interest rate of loan of 1 to 3 years of the People's Bank of China of the
corresponding period of the actual operation plus 20% extra, and the actual days of use of
the capital raised shall be calculated by the natural days during the period from the date
on which the raised capital is provided to the implementation subject of the funded project
till the earlier one of the expiry date of the compensation period and the date on which
relevant capital is repaid to the listed company. If the total amount of the realized
development profits and the unrealized development profits (if any) of such real estate
projects is lower than the guaranteed development profits, SEG Group shall compensate
Shenzhen SEG with the shares used by Shenzhen SEG as payment consideration acquired
from relevant project subscription according to the following calculation method, and
SEG Group shall compensate in cash the part not covered by shares: 1) number of shares
to be compensated = [accumulated realized development profits from the base date of
appraisal to the expiry date of the performance guarantee period - unrealized development
profits of the projects (if any)]/guaranteed development profits x total subscribed shares.
Remarks: In the foregoing formula, the "total subscribed shares" refer to the total number
of shares obtained by SEG Group by using the real estate projects held indirectly that are
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appraised by hypothetical development method to subscribe the total shares issued by
Shenzhen SEG. When the number of shares subscribed of Shenzhen SEG is calculated,
the impact of the percentage of equity of SEG Real Estate held by SEG Group and that of
the foregoing real estate projects held by SEG Real Estate shall be taken into
consideration. The realized development profits in the foregoing formula refer to the net
profits of the projects after deducting corresponding inventory development cost already
carried forward, expenses and taxes from the realized sales income of real estate projects
as of the expiry date of the restructuring compensation period. The unrealized
development profits refer to that if there are development products not sold yet in
corresponding real estate projects when the restructuring compensation period expires, the
unrealized development profits corresponding to the remaining development products
shall be determined according to the following methods: unrealized development profits =
estimated unit sales price of the remaining development products x area - book cost
corresponding to development products - estimated sales cost - estimated sales cost -
measured land VAT - measured income tax. Remarks: In the estimated unit sales price of
the remaining development products, if a sales contract has been signed, the unit price set
out in the contract shall prevail, and if no sales contract has been signed, the unit sales
price shall be determined by the unit sales price of the same type of products sold earlier;
the area shall be determined by the actually sold sales area corresponding to the
development product; estimated sales cost shall be determined according to the
percentage of the sales cost corresponding to the sales product in the sales income;
estimated sales taxes shall be determined according to the fee standard of the real estate
industry; and measured land VAT and income tax shall be calculated according to relevant
standards of the tax laws.
2)    The part not covered by shares will be compensated by SEG Group in cash. Amount
of extra cash to be compensated = number of shares not covered x offering price of the
shares issued this time to purchase assets.
(3) When the performance guaranteed period expires, Shenzhen SEG shall hire the
Certified Public Accountant with securities practice qualification recognized by both
parties to carry out impairment test on the foregoing assets appraised by hypothetical
development method and issue the impairment test report. If the impairment amount at the
end of period of the real estate projects appraised by hypothetical development method is
greater than the total number of shares compensated during the performance guaranteed
period x offering price of the shares issued this time to purchase assets + total amount of
cash compensated, SEG Group shall make compensation for the impaired part of such
assets of Shenzhen SEG: 1) Number of shares compensated for the impaired part of the
real estate projects appraised by hypothetical development method = impairment amount
at the end of period of the real estate projects appraised by hypothetical development
method/offering price of the shares issued this time - total shares already compensated
during the performance guaranteed period. 2) The part not covered by shares will be
compensated by SEG Group in cash. Amount of extra cash to be compensated = number
of shares not covered x offering price of the shares issued this time to purchase assets.
(4) Under any circumstances, the total of the total amount of actually realized
development profits and unrealized development profits (if any) and the total number of

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                                                                  Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
compensated shares occurred due to impairment test shall not exceed the total number of
shares of Shenzhen SEG (including the shares increased by transferring and stock
dividends) obtained by SEG Group subscribing the shares issued by Shenzhen SEG with
the real estate projects appraised by hypothetical development method. The insufficient
part will be compensated in cash by SEG Group with the limit as the cash consideration
paid for Shen SEG shares with such projects.
3.     Performance compensation of assets appraised by market approach
(1) For the property assets appraised by market approach, Shenzhen SEG shall engage
certified public accountants that possess the qualification in practicing the securities
business in the end of every year during the performance guaranteed period to carry out
impairment test, and issue impairment test report. SEG Group shall compensate Shenzhen
SEG with the shares used by Shenzhen SEG as payment consideration acquired from
relevant assets subscription according to the following calculation method, and SEG
Group shall compensate in cash the part not covered by shares: 1) Total number of shares
to be compensated = impairment amount at the end of the current period/offering price of
the shares issued this time to purchase assets -number of shares already compensated. 2)
The part not covered by shares will be compensated by SEG Group in cash. Amount of
extra cash to be compensated = number of shares not covered x offering price of the
shares issued this time to purchase assets.
(2) Under any circumstances, the total number of shares compensated arising from the
impairment test shall not exceed the total amount of Shenzhen SEG shares acquired by
SEG Group with the property assets appraised by market approach previously (including
share increase by transfer and stock dividends). The part not covered by shares and the
amount compensated in cash in total shall not exceed the cash consideration paid for
Shenzhen SEG shares acquired by SEG Group with such property assets. Relevant
compensation methods for the foregoing 100% of the equity of SEG Property
Development, 100% of the equity of SEG Property management and the property assets
held by the target companies appraised by income approach and the real estate projects
appraised by hypothetical development method as well as other property assets appraised
by market approach are independent. The number of shares compensated by assets
appraised by other methods is not considered when the number of shares compensated is
calculated. When the number of shares to be compensated and/or amount of cash
calculation of each year is calculated according to relevant stipulations mentioned above,
if the number of compensated shares calculated is smaller than 0, take 0, i.e. the shares
compensated will not be refunded; if the cash compensation amount calculated is smaller
than 0, take 0, and the cash compensated will not be refunded. When the impairment
amount is calculated, the impact of capital increase, decrease, acceptance of the gift and
profit distribution of the shareholders of underlying assets during the performance
guaranteed period on the amount of impairment shall be eliminated.
(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 or fail to achieve the promised
performance, SEG Group shall make compensation to Shenzhen SEG as agreed in the
agreement.

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                                                                                                     Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                  (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 or authorized
                                  agent of each party. As an integral part of the Asset Purchase Facility, the agreement shall
                                  come into effect from the date of effectiveness of the Asset Purchase Facility.
                                  When the Asset Purchase Facility 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 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
                                   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 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
                Commitment on property assets shall be shared by Shenzhen SEG. The parties shall separately enter into a
                horizontal         leasing agreement.
Shenzhen SEG competition,          2. Except assets owned and business operated before the validity date of commitment, August 3,                 In normal
                                                                                                                                      Long-term
Group Co., Ltd. related            when acting as a controlling shareholder or actual controller of Shenzhen SEG, in order to 2016                progress
                transaction, and   guarantee sustainable development of Shenzhen SEG, the Company will exercise
                capital occupation 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 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 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
                                                                     62
                                                                                                   Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                   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.
                                   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 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 Company acts as the controlling shareholder of Shenzhen SEG, the
                                   Company, other 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 or incurred
                Commitment on for reasonable cause at fair and reasonable market price, perform the decision-making
                horizontal         procedure for associated transactions according to relevant laws, regulations, and
Shenzhen SEG competition,          normative documents, fulfill the obligation of information disclosure and handle the August 3,                   In normal
                                                                                                                                        Long-term
Group Co., Ltd. related            approval procedures according to the law, do not use the dominant position of the 2016                           progress
                transaction, and   controlling shareholder to damage the legal rights and interests of Shenzhen SEG and
                capital occupation 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, 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 companies,
                                   enterprises, or other economic organizations controlled by the Company."
                                 1. The subject company is a limited liability company or stock-limited company
                                 established and validly existing according to law with legitimate business qualification;
                                 the subject company has obtained all approvals, permission, authorization and permits
                                 required for its setting up and operation of business, all such approvals, permission,
                                                                                                                                        Before
                                 authorization and permits are valid and there exists no reasons or situations which may
Shenzhen SEG                                                                                                                August 3,   completion In normal
                Other commitment cause the above approvals, permission, authorization and permits invalid.
Group Co., Ltd.                                                                                                             2016        of            progress
                                 2. The subject company has not been involved in any severe violation of laws or                        restructuring
                                 regulations during 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 predictable significant lawsuit, arbitration or administrative
                                                                    63
                                                                                                       Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                    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
                                    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 independent, complete and clear indication of
                                    ownership.
                                    6. The subject company has not been involved in 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 agrees to assume the above mentioned liability of
                                    indemnity/compensation to Shenzhen SEG/subject company.
                                 "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, and share
                                 holding percentage of SEG Property. The Company has no disputes over share ownership                     Before
Shenzhen SEG                     with SEG Property and other shareholders.                                                    August 3,   completion
                Other commitment                                                                                                                        In progress
Group Co., Ltd.                  2. In case any dispute over ownership of the 3.85% shares of SEG Property of which 2016                  of
                                 ownership has not been determine as of July 26, 2016 occurs in the future, the Company                   restructuring
                                 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 responsibilities."
                                 "1. The Company will guarantee the independence of personnel of Shenzhen SEG and
                                 subject company: (1) after completion of the restructuring, the labor, personnel and
                                 compensation management of Shenzhen SEG are independent from the Company and
                                 related parties, such as other companies, enterprises, or other economic organizations
Shenzhen SEG                     controlled by the Company. (2) Guarantee that after completion of this restructuring the August 3,                    In normal
                Other commitment senior executives of Shenzhen SEG and the subject company hold full-time position at                     Long-term
Group Co., Ltd.                                                                                                            2016                        progress
                                 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) Guarantee not to, after completion of this restructuring, interfere with
                                 the shareholders' meeting and board of directors meeting's exercise of power in

                                                                       64
                                                                     Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
appointment/dismissal 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 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 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 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-oriented 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 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. (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 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

                                    65
                                                                                                      Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                    from Shenzhen SEG, SEG Group will negotiate on acquisition and transfer 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, 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 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, 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 losses thus incurred to Shenzhen SEG, and the subject company."
                                 1. The Company does not exist 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 its shareholders 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 serious behaviors of breaching promises in securities market in              Before
Shenzhen SEG                                                                                                                  August 3,   completion
                Other commitment recent three years; (5) Other situations in which no acquisition of listed companies are                               In progress
Group Co., Ltd.                  allowed according to laws and administrative regulations and in the opinions of CSRC.        2016        of
                                                                                                                                          restructuring
                                 2. The Company and its main managers have not suffered from any administrative
                                 punishment (administrative punishment obviously unrelated to security market excluded),
                                 criminal punishment, major civil lawsuit or arbitration related to economic 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
                                                                                                                                          Before
                                 civil conduct and has the legal body qualification for participating in the restructuring,
Shenzhen SEG                                                                                                                August 3,     completion In normal
                Other commitment signing agreements with Shenzhen SEG, and performing rights and obligations under the
Group Co., Ltd.                                                                                                             2016          of            progress
                                 agreement.
                                                                                                                                          restructuring
                                 2. Except that the property located at 4F, Block 2, SEG Industry Building of SEG
                                                                  66
                                                                                                      Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                   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 responsibilities 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 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 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, 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 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 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 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
Shenzhen SEG                                                                                                               August 3,               In normal
                Other commitment utilized such insider information for insider trading. In case of breach of the foregoing             Long-term
Group Co., Ltd.                                                                                                            2016                    progress
                                 commitments, the Company will bear all losses thus incurred to Shenzhen SEG."
                                 "1. Shares of Shenzhen SEG subscribed by the Company in the restructuring will be
Shenzhen SEG                     locked up for 36 months from the date of listing. Shares of Shenzhen SEG acquired in the August 3,                In normal
                Other commitment restructuring shall not be traded or transferred or managed by others under entrustment or            Long-term
Group Co., Ltd.                                                                                                              2016                  progress
                                 repurchased 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

                                                                      67
                                                                                                        Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                    and converted equity capital shall be also subject to the foregoing agreement. When the
                                    foregoing 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 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
                                    representations, 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 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 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 the recent 5 years, except for those cases that have been concluded, such as the case
                                 of Hainan SEG International Trust and Investment Company, Zhongshi case, GTJA case
                                 and 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.                      Before
Shenzhen SEG                                                                                                                    August 3,   completion In normal
                Other commitment 3. The Company has never been suspected of insider trading related to major asset
Group Co., Ltd.                  restructuring and placed on file for investigation or placed on file with the case not 2016                of            progress
                                 settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill               restructuring
                                 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 foregoing commitments, the Company will bear all losses thus
                                 incurred to Shenzhen SEG."
Bo Hongxi,                          "1. I have not been subject to any administrative penalty by the CSRC in recent 36
Cao Xiang, Fan                      months, or public censure by the Stock Exchange in the recent 12 months.                                Before
Zhiqing, Li                                                                                                                  August 3,      completion In normal
               Other commitment     2. I have not been investigated by judicial authorities due to alleged crimes or by CSRC 2016
Luoli, Liu                                                                                                                                  of            progress
                                    due to alleged irregularities.                                                                          restructuring
Fusong, Liu
Zhijun, Ru                          In case of breach of the following commitments, I will bear all losses thus incurred to

                                                                       68
                                                                                                   Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
Guiqin, Song                       Shenzhen SEG."
Pingping, Tang
Chongyin,
Wang Li, Xu
Ning, Yu Qian,
Zhang
Guangliu,
Zhang Haifan,
Zheng Dan,
Zhu Longqing
                                  "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
                                  economic disputes.
Directors,
supervisors, and                  2. The Company has never been suspected of insider trading related to major asset                     Before
senior                            restructuring and placed on file for investigation or placed on file with the case not August 3,      completion In normal
                 Other commitment settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill
executives of                                                                                                                    2016   of            progress
Shenzhen SEG                      commitments, or been subject to administrative supervision measures by the CSRC or                    restructuring
Group Co., Ltd.                   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, SEG
Kangle, SEG                        "1. In the recent 3 years, the Company has not been subject to any major administrative
Property                           punishment or criminal punishment or involved in other major civil proceedings or
Development,                       arbitration related to economic disputes.
SEG Property                       2. The Company has never been suspected of insider trading related to major asset                    Before
Investment,                        restructuring and placed on file for investigation or placed on file with the case not August 3,     completion In normal
SEG New City Other commitment      settled. In the recent 5 years, the Company has never failed to repay large debts or fulfill 2016    of            progress
Construction,                      commitments, or been subject to administrative supervision measures by the CSRC or                   restructuring
SEG Property                       disciplinary action by the Stock Exchange due to insider trading related to major assets
Management,                        restructuring, or been held criminally liable by the judicial authorities according to law. In
Huizhou                            case of breach of the following commitments, I will bear all losses thus incurred to
Qunxing, Xi'an                     Shenzhen SEG."
SEG, Beijing
                                 "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 of transferred assets. Except for some mortgaged properties that require the
                                                                                                                                        Before
                                 consent of the mortgagee, there is no legal obstacle to the registration of ownership
Shenzhen SEG                                                                                                               August 3,    completion In normal
                Other commitment change.
Group Co., Ltd.                                                                                                            2016         of            progress
                                 2. The Company undertakes to complete the formalities of ownership registration change                 restructuring
                                 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

                                                                     69
                                                                                                 Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                  commitment or defects of the transferred assets."
                                 "As of the date of issuance of the commitment letter, SEG Kangle owns 9 properties with
                                 the total construction area of 12,941.28 square meters. The actual proprietor of 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 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 SEG in full.
                                 2. The construction in process-assembly 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, the property was registered under           Before
Shenzhen SEG                     SEG Group together with other properties of SEG Industry Building belonging to SEG August 3,        completion In normal
                Other commitment Group. Due to the restriction of transfer of industrial buildings as a whole, the transfer
Group Co., Ltd.                                                                                                               2016   of            progress
                                 formality has not been handled.SEG Property Investment has been occupying, using, and               restructuring
                                 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, 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 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 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.


                                                                    70
                                                                                                  Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.

                                 Before issuance date of the restructuring report of Shenzhen SEG, SEG Group will finish
                                 formalities related to transfer of ownership of the property (4F, Block 2, SEG Industry
                                 Building). If SEG Group fails to finish the formalities at expiration, SEG Group agrees to            Before
Shenzhen SEG                     compensate SEG Property Investment RMB 1.5 million in currency, and allows SEG August 3,              completion
                Other commitment                                                                                                                     In progress
Group Co., Ltd.                  Property Investment to continue to use the property for free until SEG Group transfers the 2016       of
                                 ownership of the property to SEG Property Investment. SEG Group agrees to compensate                  restructuring
                                 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.
                                 "After updating and restructuring of SEG Industry Building, SEG Economy Building, and
                                 SEG Kangle Industry Building, the area of added part that belongs to SegMaker, SEG
                                 Kangle 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, 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. 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
Shenzhen SEG                                                                                                               August 3,
                Other commitment during the period from expiration of the performance commitment period to expiration of               Long-term    In progress
Group Co., Ltd.                  the evaluated income expected period = (the predicted accumulated income to the end of 2016
                                 the report period - actual accumulated income to the end of the report period) - the
                                 compensated amount.
                                 3. The loss caused when 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 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 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
                                                                    71
                                                                                                                        Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                                           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 in cash in full amount."
                                                       "1. In case when, after the restructuring, the land/property use should be changed based
                                                       on the actual operating demands of the subject company or because the subject company
                                                       is required by the relevant house property management organ or the land regulatory
                                                       department to change the land/property use, SEG Group will assist the subject company
                      Shenzhen SEG                                                                                                              August 3,
                                      Other commitment in finishing the relevant formalities.                                                               Long-term   In progress
                      Group Co., Ltd.                                                                                                           2016
                                                       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 issuance date of this commitment 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.                                Within five
                                                                                                                                                            years from
                      Shenzhen SEG                     2. If the restoration work cannot be finished within the above mentioned period of time, August 3,   the date of In normal
                                      Other commitment SEG Group agrees to process the subject assets as follows: (1) paying in cash the
                      Group Co., Ltd.                                                                                                              2016     issue of the progress
                                                       evaluated value of the parking garage and the bank interest of the evaluated value in the            commitment
                                                       same period from the restructuring closing date to the expiration of this commitment time;           letter
                                                       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. If after the restructuring, Shen SEG is requested to make a supplementary payment for
                                                       land transfer and pay the overdue fine due to inconsistency between the actual use and the
                      Shenzhen SEG                     registered use of the above property, the Company undertakes to bear such expenses in August 3,                  In normal
                                      Other commitment full.                                                                                                Long-term
                      Group Co., Ltd.                                                                                                             2016                  progress
                                                       2. In case of breach of the foregoing commitments, the Company will bear all losses thus
                                                       incurred to Shen SEG."
                                                           According to the Article Five of the Equity Transfer Agreement signed by the Company
                                      Commitment on
                                                           with SEG Group when the Company was listed, SEG Group agreed that the Company and
                                      horizontal
                                                           its subsidiaries and associated companies to use the eight trademarks registered by SEG
                      Shenzhen SEG competition,                                                                                                                         In normal
                                                           Group at the National Trademark Bureau; SEG Group agreed that the Company used the July 1, 1996 Long-term
                      Group Co., Ltd. related                                                                                                                           progress
                                                           aforesaid trademarks or similar signs as the Company's logo and used the trademarks and
                                      transaction, and
Commitment made at                                         signs during its operation; the Company need not pay any fee to SEG Group for using the
                                      capital occupation
the time of initial                                        aforesaid trademarks or signs.
public offerings or                                        As for the problem pointed out by Shenzhen Office of China Securities Regulatory
refinancing                           Commitment on
                                      horizontal           Commission during on-site inspection in 2007 in the Company that the Company and
                      Shenzhen SEG competition,            SEG Group are competitive in the electronic business, the Company has received a September                   In normal
                                                           written Commitment Letter from SEG Group on September 14, 2007. The content of the 14, 2007      Long-term
                      Group Co., Ltd. related                                                                                                                           progress
                                      transaction, and     Commitment Letter is as follows: "The competition in electronic business between SEG
                                      capital occupation   Group and Shenzhen SEG Co., Ltd. occurs due to historical reasons and objective market
                                                           development background.SEG Group hereby commits that, we will not separately operate

                                                                                           72
                                                                                                                            Full Text of 2016 Annual Report of Shenzhen SEG Co., Ltd.
                                                           businesses similar to those of Shenzhen SEG in the same city."
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