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The 2015 Annual Report of Hubei Sanonda Co., Ltd.

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Hubei Sanonda Co., Ltd.

The 2015 Annual Report

March 2016

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

Section I. Important Statements, Contents & Terms

The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior management staff of Hubei Sanonda Co., Ltd. (hereinafter referred to as the “Company”) warrant that this Report is factual, accurate and complete without any false information, misleading statements or material omissions. And they shall be jointly and severally liable for that.

An Liru, person in charge of the Company, Liu Anping, person in charge of the accounting work, and Tu Zhiwen, person in charge of the accounting organization (chief of accounting), hereby confirm that the Financial Report enclosed in this Report is factual, accurate and complete.

All directors attended the board meeting for reviewing this Report.

This Report involves futures plans and some other forward-looking statements, which shall not be considered as virtual promises to investors. Investors and people concerned shall fully understand the risk as well as the difference between plans, forecasts and promises. Investors are kindly reminded to pay attention to possible risks.

The Company has described its future development strategies, work plan for 2016 and possible risks in “IX. Outlook of future development of the Company” in Section IV. China Securities Journal, Securities Times, Ta Kung Pao (HK) and www.cninfo.com.cn have been designated by the Company for its information disclosure in 2016. And all information about the Company shall be subject to what’s disclosed on the aforesaid media. Investors are kindly reminded to pay attention to possible risks.

The Company’s profit distribution preplan upon review and approval of this board meeting: Based on the total shares of the Company as at 31 Dec. 2015, a cash dividend of RMB0.25 (tax included) will be distributed for every 10 shares held by shareholders. No bonus shares will be granted and no capital reserve will be turned into share capital.

This Report is prepared in both Chinese and English. Should there be any discrepancy between the two versions, the Chinese version shall prevail.

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

Section I. Important Statements, Contents & Terms ................................................................................................................................ 2 Section II. Company Profile & Financial Highlights ............................................................................................................................... 5 Section III. Business Highlights .............................................................................................................................................................. 9 Section IV. Discussion & Analysis by Management .............................................................................................................................. 11 Section V. Significant Events ................................................................................................................................................................. 24 Section VI. Share Changes & Particulars about Shareholders ............................................................................................................... 41 Section VII. Preference Shares ............................................................................................................................................................ 48 Section VIII. Directors, Supervisors, Senior Management Staff & Employees ..................................................................................... 49 Section IX. Corporate Governance ........................................................................................................................................................ 57 Section X. Financial Report ................................................................................................................................................................... 63 Section XI. Documents Available for Reference ................................................................................................................................. 194

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

Terms

Term		Content
Company, the Company		Hubei Sanonda Co., Ltd.
CSRC Hubei		The Hubei bureau of China Securities Regulatory Commission
CSRC		China Securities Regulatory Commission
SSE		Shenzhen Stock Exchange
Reporting period, this period, current year		Year 2015
CNAC		China National Agrochemical Corporation
		ADAMA Celsius B.V., a company incorporated in the Netherlands
Celsius		according to its law, once called Celsius Property B.V., holding a stake of
		10.6% in the Company
		ADAMA Agricultural Solutions LTD., a subsidiary indirectly controlled
ADAMA		by CNAC, once called Makhteshim-Agan Industries Ltd., a company
		incorporated in Israel according to its law, indirectly holding the 100%

		equity of Celsius
		Jingzhou Sanonda Holdings Co., Ltd., once called Sanonda Group Co.,
Sanonda Holdings
		Ltd., the controlling shareholder of the Company

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

Section II. Company Profile & Financial Highlights

I. Basic information of the Company

Stock abbreviation	Sanonda A, Sanonda B	Stock code	000553, 200553
Stock exchange listed with	Shenzhen Stock Exchange
Chinese name of the Company	湖北沙隆达股份有限公司
Abbr. of the Chinese name of
	沙隆达
the Company

English name of the Company
	HUBEI SANONDA CO., LTD.
(if any)

Abbr. of the English name of
	SANONDA
the Company (if any)

Legal representative of the	An Liru
Company
Registered address	No. 93, Beijing East Road, Jingzhou, Hubei
Postal code for the registered
	434001
address

Office address	No. 93, Beijing East Road, Jingzhou, Hubei
Postal code for the office
	434001
address

Internet website of the
	http://www.sanonda.cn
Company

Email address	[email protected]

II. For contact

	Company Secretary
Name	Li Zhongxi
Contact address	No. 93, Beijing East Road, Jingzhou, Hubei
Tel.	0716-8208632
Fax	0716-8321099
E-mail	[email protected]

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

III. About information disclosure and where this Report is placed

Newspapers designated by the Company for China Securities Journal, Securities Times, and Ta Kung Pao information disclosure Internet website designated by CSRC for disclosing http://www.cninfo.com.cn this Report Where this Report is placed Office of the Company

IV. Changes in the registered information

Organizational code	70696228-7
Changes of the main business since listing
	Unchanged
(if any)

Changes of the controlling shareholder (if
	Unchanged
any)

V. Other information

The CPAs firm hired by the Company:

Name	Ruihua Certified Public Accountants (LLP)

	5-11F, West Tower, China Overseas Property Plaza, Building No. 7, Compound No. 8, Xibinhe
Office address
	Road, Yongding Men, Dongcheng District, Beijing, P.R.C.

Signing accountants	Tang Qiyong, Yin Donghan

Sponsor engaged by the Company to conduct sustained supervision during the reporting period

□ Applicable √ Inapplicable

Financial consultant engaged by the Company to conduct sustained supervision during the reporting period

□ Applicable √ Inapplicable

VI. Accounting and financial highlights

Does the Company adjust retrospectively or restate accounting data of previous years due to change of the accounting policy or correction of any accounting error?

□ Yes √ No

			Increase/decrease of
	2015	2014	current year over last	2013
			year
Operating revenue (RMB Yuan)	2,169,936,637.07	3,131,186,300.05	-30.70%	3,078,467,310.53
Net profit attributable to	141,840,462.97	491,771,929.22
shareholders of the Company			-71.16%	320,811,958.67
(RMB Yuan)

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

Net profit attributable to
shareholders of the Company after	137,328,557.39	490,238,498.19	-71.99%	326,183,175.01
extraordinary gains and losses
(RMB Yuan)
Net cash flows from operating	276,090,052.80	699,173,855.92
			-60.51%	799,701,589.04
activities (RMB Yuan)

Basic EPS (RMB Yuan/share)	0.2388	0.8280	-71.16%	0.5402
Diluted EPS (RMB Yuan/share)	0.2388	0.8280	-71.16%	0.5402
Weighted average ROE (%)	6.90%	27.68%	-20.78%	22.88%
			Increase/decrease of
	As at 31 Dec. 2015	As at 31 Dec. 2014	current year-end than	As at 31 Dec. 2013
			last year-end
Total assets (RMB Yuan)	2,977,268,169.32	2,934,299,657.47	1.46%	2,708,271,174.34
Net assets attributable to	2,097,382,469.60	2,007,631,150.60
shareholders of the Company			4.47%	1,546,189,571.66
(RMB Yuan)

VII. Differences between accounting data under domestic and overseas accounting standards

1. Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards

□ Applicable √ Inapplicable

No such differences for the reporting period

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

□ Applicable √ Inapplicable

No such differences for the reporting period

VIII. Financial highlights by quarter

Unit: RMB Yuan

	Q1	Q2	Q3	Q4
Operating revenue	554,976,943.28	680,274,739.53	558,298,652.20	376,386,302.06
Net profit attributable to
	77,028,787.65	40,649,387.94	29,447,643.10	-5,285,355.72
shareholders of the Company

Net profit attributable to
	76,147,879.11	39,343,900.70	28,446,817.75	-6,610,040.17
shareholders of the Company after
extraordinary gains and losses

Net cash flows from operating	-23,477,753.42	4,201,004.04	73,276,726.52	222,090,075.66

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

activities

Any material difference between the financial indicators above or their summations and those which have been disclosed in quarterly or semi-annual reports?

□ Yes √ No

IX. Extraordinary gains and losses

√ Applicable □ Inapplicable

Unit: RMB Yuan

Item	2015	2014	2013	Note
Gain/loss on the disposal of non-current	32,021.74
assets (including the offset part of the asset		54,813.19	-10,822,583.41
impairment provisions)
Government grants recognized in the current	5,585,426.21
period, except for those acquired in the
ordinary course of business or granted at		4,574,874.07	3,270,500.35
certain quotas or amounts according to the
government’s unified standards
Gain/loss on debt restructuring		-6,000.00	-152,001.61
Non-operating income and expense other	85,398.38
		-2,876,432.21	497,140.96
than the above

Less: Income tax effects	1,179,878.25	199,524.02	-1,801,735.93
Minority interests effects (after tax)	11,062.50	14,300.00	-33,991.44
Total	4,511,905.58	1,533,431.03	-5,371,216.34	--

Explain the reasons if the Company classifies an item as an extraordinary gain/loss according to the definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering Their Securities to the Public—Extraordinary Gains and Losses, or classifies any extraordinary gain/loss item mentioned in the said explanatory announcement as a recurrent gain/loss item □ Applicable √ Inapplicable

No such cases.

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

Section III. Business Highlights

I. Main business during reporting period

We specialize in production and sale of farm chemicals and other chemicals as well as import & export of farm chemicals, other chemicals and intermediates. We mainly produce farm chemicals and other chemicals for crop protection. We have glyphosate, paraqaut, 2,4-D, etc. for our herbicide series; acephate, DDVP, dipterex, carbofuran, methomyl, triazophos, etc. for our pesticide series; spermine, PMIDA, pyridine, etc. for our farm chemical intermediate series; and caustic soda, liquid chlorine, hydrochloric acid, formaldehyde, etc. for our other chemical series. No major changes occurred to the mode of production and operation of the Company in the reporting period.

The farm chemical industry where we are engaged is characteristic of obvious periodicity. In 2015, due to serious overcapacity, sluggish markets as well as falling and low-running product prices, farm chemical producers entered a period where they could only hope for meager profit or breakeven. Our business performance is closely related to the development of the farm chemical industry as well as prices of raw materials and farm chemicals. Meanwhile, the new Law on Production Safety and Law on Environmental Protection will impose stricter standards on farm chemical enterprises, allowing the strong to survive and develop while kicking out the weak. Amid these changes, some competitive enterprises will embrace new opportunities for development.

According to statistics from China Crop Protection Industry Association, we rank No. 6 in the top 100 list of China’s farm chemical producers.

II. Material changes in main assets

1. Material changes in main assets



Main asset	Material change

Equity assets	No material changes
Fixed assets	Ionic membrane project accounted in fixed assets in reporting period
Intangible assets	New land
Construction in progress	Ionic membrane project accounted in fixed assets in reporting period

2. Main assets overseas

□ Applicable √ Inapplicable

III. Core competitiveness analysis

In the reporting period, we enhanced our cooperation with colleges and research institutions for more technological progress as well as improved our production technique for better efficiency and energy saving & emission reduction, which resulted in safer and more environment-friendly production as well as more competitive products. We managed to maintain our leading position as a spermine and acephate producer, cost further decreased for paraquat, methomyl quality was further improved and pyridine equipment achieved

The 2015 Annual Report of Hubei Sanonda Co., Ltd.

continuous production and reached the designed capacity. In terms of marketing, we enjoy a distinct competitive edge in export due to our early access to international markets. Our products are exported to dozens of countries and regions such as Europe, America, Brazil, Southeast Asia and Taiwan. Our main customers are mostly famous agro-chemical enterprises, with which we have established long-term and stable cooperation. Our product and service quality is spoken highly of among our customers. As for patents, we applied for 2 patents and were granted 2 patents for invention in 2015. Up to the end of 2015, we had a total of 29 patents, including 20 for invention. Our core management and technical teams remained stable in the reporting period.

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section IV. Discussion & Analysis by Management

I. Business review

In 2015, the farm chemical industry was affected by factors such as sluggish economy, falling oil and grain prices, weak demand and stricter standards for environmental protection, causing great operational difficulty for farm chemical producers. Glyphosate, paraquat and some other main farm chemicals witnessed a considerable decrease in price. Under such a circumstance, we carefully analyzed the market, improved our system, enhanced business management, persisted in technological advance and strengthened operation control. As a result, we maintained general stability in our production and operation, and our main objectives were substantially fulfilled.

For the reporting period, we achieved operating revenues of RMB2.17 billion, down 30.70% over last year, of which export income stood at USD192 million, down 38% over last year; operating costs of RMB1.729 billion, a 21.11% decrease from last year; operating profit of RMB183 million, a year-on-year decrease of 72.51%; total profit of RMB189 million, representing a YoY drop of 71.73%; and net profit attributable to the shareholders of the Company of RMB142 million, down 71.11% from last year. The decrease in revenues and profit was mainly because demand for our main products was weak due to the continuous depression and fierce competition in the market, leading to a considerable drop in both of our sales income and gross profit margin. Meanwhile, the net cash flows from operating activities stood at RMB276 million, a 60.51% decrease from last year, mainly because of decrease in our sales income. Major work of Y2015:

Firstly is to be active in the market and grasp the sales in order to guarantee the operation of the devices. Aim at the weak demand of the pesticide market and the severe condition with decreasing price and quantities, the Company actively made the plans from the year-begin and faced to the difficulties as well as seriously carry out the “competition of 100-day marketing race”, which fully exerted the marketing leading role, took the initiative and positively seized the orders that basically guarantee the stable operation of the production and operating.

Secondly is to seize the production emphatic degree and to improve the operating level. As the gradually promotion of the construction of the Sanonda chemical new area, the commissioning of the new ionic membrane caustic soda and the salt nitrate device, especially the suspend production of the diaphragm caustic soda device which had been operated for decades of the old areas and the different operating load of the devices owning to the market reasons as well as the condition of the intermittent running of parts of the devices, the Company insists to take the monthly plan as the principle line to strengthen the coordination of the production, supply and sales. According to the timely adjustment production plan of the sales demand, the Company dynamic tracking the production of the badly needed products and reasonably deploy the resources. To comprehensively regulate and control the chlorine gas, steam, and cool supply and so on to ensure the production balance. Thridly is to urge the management and to reduce the cost to strive for the maximum of the efficiency. To insist to well convene the monthly meeting of “point to point” and the economy operating analysis meeting in order to study the indicator, to look for the problems, to analyse the reasons, to solve the major contradictions and prominent problems appear among the production and operating as well as to figure out the breakthrough point and the focus for improving the operating quality and realizing the costs reduction and efficiency increasing.

Fourth is to construct the system and seize the practice and to strictly protect the safety and environmental protection bottom line. The constantly promotion of the management system construction such as the SHE, TPM, TQM, 5S better promoted the work such as the enterprise safety and environmental protection management, equipments maintenance, quality management and field management, which led to the gradually improve of the enterprise management level. Fifth is to put emphasis on the training and to construct the team to enhance the employees quality. To insist on people oriented, to

2015 Annual Report of Hubei Sanonda Co., Ltd.

gradually construct the professional training system, to extrude the job-transfer and job rotational training, to comprehensively and systematically improve the employees quality and the operating techniques, to reduce the safety risks and to strengthen the sense of identity.

Lastly is to insist on the technology progress, to optimize the production techniques, to improve the products quality and to reduce the production cost.

II. Main business analysis

1. Overview

See details on the relevant contents of “I. Overview” of “Management Discussion and Analysis”.

2. Revenues and costs

(1) Operating income form

Unit: RMB Yuan

	2015	2015	2014	2014
		Ratio of the		Ratio of the	YoY +/-%
	Amount		Amount
		operating income		operating income

Total of the	2,169,936,637.07		3,131,186,300.05
		100%		100%	-30.70%
operating income

Classified by industries
Industry of
manufacturing
chemical raw	2,151,827,875.83	99.16%	3,103,955,333.69	99.13%	-30.67%
materials and
chemical products
Other	18,108,761.24	0.84%	27,230,966.36	0.87%	-33.50%
Classified by products
Chemical new
materials and	18,242,056.49	0.84%	15,453,278.80	0.49%	18.05%
specialty chemicals
Basis (chlor-alkali)
	211,401,177.36	9.74%	91,219,571.83	2.91%	131.75%
chemical products

Agrochemicals such
as fertilizers and	1,922,184,641.98	88.58%	2,997,282,483.06	95.73%	-35.87%
pesticides
Other	18,108,761.24	0.84%	27,230,966.36	0.87%	-33.50%
Classified by regions
Domestic	1,000,324,018.60	46.10%	1,284,670,774.73	41.03%	-22.13%

	2015 Annual Report of Hubei Sanonda Co.,Ltd.	2015 Annual Report of Hubei Sanonda Co.,Ltd.	2015 Annual Report of Hubei Sanonda Co.,Ltd.	2015 Annual Report of Hubei Sanonda Co.,Ltd.	2015 Annual Report of Hubei Sanonda Co.,Ltd.
				58.97% -36.66%
Foreign countries	1,169,612,618.47	53.90%	1,846,515,525.32	58.97%	-36.66%

(2) List of the industries, products or regions exceed 10% of the operating income or operating profits of the Company

√ Applicable □ Inapplicable

Unit: RMB Yuan

				YoY	YoY	YoY
				increase/decrease	increase/decrease	increase/decrease
	Operating income	Operating cost	Gross margin
				of the operating	of the operating	of the gross

				income	cost	margin
Classified by industries
Industry of
manufacturing
chemical raw
	2,151,827,875.83	1,715,138,392.14	20.29%	-30.67%	-21.23%	-9.55%
materials and

chemical
products
Classified by products
Chemical new
materials and
	18,242,056.49	11,113,695.28	39.08%	18.05%	9.76%	4.60%
specialty

chemicals
Basis
(chlor-alkali)
	211,401,177.36	202,936,440.64	4.00%	131.75%	217.61%	-25.95%
chemical

products
Agrochemicals
such as fertilizers	1,922,184,641.98	1,501,088,256.22	21.91%	-35.87%	-28.64%	-7.91%
and pesticides
Classified by regions
Domestic	982,215,257.36	775,537,579.89	21.04%	-21.89%	-10.70%	-9.89%
Foreign countries	1,169,612,618.47	939,600,812.25	19.67%	-36.66%	-28.22%	-9.45%

Under the circumstances that the statistical standards for the Company’s main business data adjusted in the Reporting Period, the Company's main business data in the recent year is calculated based on adjusted statistical standards at the end of the Reporting Period

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

(3) Whether the Company’s goods selling revenue higher than the service revenue

√ Yes □ No

Industries	Items	Units	2015	2014	YoY +/-%
Industry of	Sales volume	Ton	111,138	136,578	-18.63%
manufacturing	Output	Ton	108,223	142,773	-24.20%

chemical raw
materials and	Stock	Ton	11,987	14,895	-19.52%
chemical products

Reasons for any over -30% YoY movement of the data above: □ Applicable √ Inapplicable

(4) Execution of the significant sales contracts signed by the Company up to the reporting period

□ Applicable √ Inapplicable

(5) Operating cost form

Category of the industries

Unit: RMB Yuan

		2015	2015	2014	2014
Industries	Items		Ratio of the		Ratio of the	YoY +/-%
		Amount		Amount
			operating income		operating income

Industry of
manufacturing
	Cost of materials
chemical raw
	(procurement	1,222,076,407.77	71.25%	1,676,552,011.50	77.00%	-5.75%
materials and
	costs)
chemical

products
Industry of
manufacturing
chemical raw
	Labor cost	85,623,688.08	4.99%	139,427,185.71	6.40%	-1.41%
materials and

chemical
products
Industry of
manufacturing
chemical raw	Depreciation
		120,958,121.09	7.05%	154,851,600.00	7.11%	-0.06%
materials and	expense

chemical
products

Notes

2015 Annual Report of Hubei Sanonda Co., Ltd.

(6) Whether the consolidated scope changed during the reporting period

□ Yes √ No

(7) List of the significant changes or adjustment of the industries, products or services of the Company during the reporting period

□ Applicable √ Inapplicable

(8) List of the major trade debtors and major suppliers

List of the major trade debtors of the Company

List of the major trade debtors of the Company
Total sales to the top 5 customers (RMB Yuan)	551,123,407.63
Ratio of the total sales to the top 5 customers to the
	25.39%
annual total sales

Information of the top 5 customers of the Company

Serial No.	Name of customer	Sales amount (RMB Yuan)	Proportion in annual total sales
1	Foreign customer A	227,263,942.67	10.47%
2	Foreign customer B	100,038,551.33	4.61%
3	Domestic customer C	88,357,310.34	4.07%
4	Foreign customer D	71,881,654.57	3.31%
5	Domestic customer E	63,581,948.72	2.93%
Total	--	551,123,407.63	25.39%

Notes of other situation of the major customers □ Applicable √ Inapplicable

List of the major suppliers of the Company

List of the major suppliers of the Company
Total purchase to the top 5 suppliers (RMB Yuan)	478,815,840.32
Ratio of the total purchase to the top 5 suppliers to the
	27.69%
annual total purchase

Information of the top 5 suppliers of the Company

No.	Name of supplier	Purchase amount (RMB Yuan)	Ratio to the annual purchase amount
1	Supplier A	178,960,491.54	10.35%
2	Supplier B	99,016,264.74	5.72%
3	Supplier C	74,152,307.69	4.29%
4	Supplier D	66,854,297.71	3.87%
5	Supplier E	59,832,478.63	3.46%
Total	--	478,815,840.32	27.69%

Notes of the other situation of the major suppliers

2015 Annual Report of Hubei Sanonda Co., Ltd.

□ Applicable √ Inapplicable

3. Expenses

Unit: RMB Yuan

	2015	2014	YoY +/-%	Notes of the significant changes
	84,149,115.89	97,828,145.48		Mainly due to the YoY decrease of the
Selling expenses			-13.98%	export expenses during the reporting
				period.
Management expenses	116,918,295.25	125,293,281.02	-6.68%	No significant change.
	14,207,495.95	27,161,121.43		Mainly due to the YoY increase of the
Financial expenses			-47.69%	foreign exchange profits during the
				reporting period.

4. R&D investment

√ Applicable □ Inapplicable

The R&D projects mainly executed includes chlorination process of trichloracetic aldehyde and the optimization of the device, acephate continuous crystallization process, 2,4-D technology improvement, integrated anaerobic wastewater biochemical treatment and the phosphorus resource recycling technology development and so no, among which three of the projects had completed the pilot plant test and under the phase of production trial run, while the integrated anaerobic wastewater biochemical treatment and the phosphorus resource recycling technology development had completed the basic data test and small experiment. All of the above mainly were for improving the products quality, reducing the production cost and strengthening the market competitiveness and profitable capacity.

List of the R&D investment of the Company

	2015	2014	Varied ratio
Number of the R&D personnel
	20	20	0.00%
(person)

Ratio to the R&D personnel	1.07%	0.97%	0.10%
Investment amount of the R&D
	7,404,961.06	7,951,019.41	-6.87%
(RMB Yuan)

Ratio of the R&D investment to
	0.34%	0.25%	0.09%
the operating income

Amount of the capitalized R&D
	0.00	0.00	0.00%
investment (RMB Yuan)

Ratio of the capitalized R&D
investment to the R&D	0.00%	0.00%	0.00%
investment

Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating income

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

Reason of the greatly change of the ratio of the R&D investment capitalization and its reasonable explanation

□ Applicable √ Inapplicable

List of the patents number of the recent 2 years

√ Applicable □ Inapplicable

			Accumulative gained up to
	Applied	Gained
			the period-end

Patent for invention	2	2	20
Utility model	0	0	5
Appearance design	0	0	4
List of the changes of the core technology
team or the key technology personnel of	N/A
2015
Whether belongs to the high-tech
	No
enterprises recognized by the MOST

5. Cash flow

Unit: RMB Yuan

Item	2015	2014	YoY +/-%
Subtotal of cash inflows from	1,888,673,768.10	3,011,287,150.04
			-37.28%
operating activities

Subtotal of cash outflows from	1,612,583,715.30	2,312,113,294.12
			-30.25%
operating activities

Net cash flows from operating	276,090,052.80	699,173,855.92
			-60.51%
activities

Subtotal of cash inflows from	1,667,155.76	1,717,816.00
			-2.95%
investing activities

Subtotal of cash outflows from	299,433,155.03	394,819,264.29
			-24.16%
investing activities

Net cash flows from investing	-297,765,999.27	-393,101,448.29
			24.25%
activities

Subtotal of cash inflows from	416,105,350.00	479,659,359.80
			-13.25%
financing activities

Subtotal of cash outflows from	407,615,334.27	778,428,157.06
			-47.64%
financing activities

Net cash flows from financing	8,490,015.73	-298,768,797.26
			102.84%
activities

Net increase in cash and cash	-12,749,527.74	8,781,815.25	-245.18%

2015 Annual Report of Hubei Sanonda Co., Ltd.

equivalents

Notes of the major effects on the YoY significant changes occurred of the data above

√ Applicable □ Inapplicable

(1) The YoY cash inflows from operating activities decreased of 37.28%, mainly due to the YoY decrease of the sales outstanding of the reporting period.

(2) The YoY cash outflows from operating activities decreased of 30.25%, mainly due to the YoY decrease of the purchase expenditures of the raw materials and the expenses expenditures of the reporting period.

(3) The YoY net amount of the cash flow from operating activities decreased of 60.51%, mainly due to the YoY decrease of the sales outstanding of the reporting period.

(4) The YoY net amount of the cash flow from investment activities increased of 24.25%, mainly due to the YoY decrease of the projects investment of the reporting period.

(5) The YoY cash outflow of financing activities decreased of 47.64%, mainly due to the YoY decrease of the bank borrowings payment of the reporting period.

(6) The YoY net amount of the cash flow from financing activities increased of 102.84%, mainly due to the YoY decrease of the return of the bank borrowings of the reporting period.

(7) The YoY net added amount of the cash and cash equivalents decreased of 245.18%, mainly due to the YoY decrease of the net amount of the cash flow from operating activities of the reporting period.

Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of 2015 of the Company during the reporting period

√ Applicable □ Inapplicable

The net amount of the cash flow from operating activities during the reporting period of the Company was of RMB0.276 billion with the net profits of 2015 of RMB0.142 billion of the differentiated amount of RMB0.134 billion, mainly because the depreciation and amortization of the reporting period increase the influences of RMB0.215 billion, the influences of the financial expenses of RMB3300, the decreased influences of the inventories of RMB52 million and the influences of the net amount of the operating accounts receivable as well as the accounts payable of RMB0.195 billion.

III. Analysis of the non-core business

□ Applicable √ Inapplicable

IV. List of the assets and liabilities

1. List of the significant changes of the assets form

Unit: RMB Yuan

	As at 31 Dec. 2015	As at 31 Dec. 2015	As at 31 Dec. 2014	As at 31 Dec. 2014
					Proportio
		Proportion in		Proportion in		Explain any major change
	Amount		Amount		n change
		total assets		total assets

	406,098,208.7 2		423,347,736.46
Monetary funds		13.64%		14.43%	-0.79%	N/A

Accounts	180,450,531.9	6.06%	195,635,912.75	6.67%	-0.61%	N/A

2015 Annual Report of Hubei Sanonda Co., Ltd.

receivable	3
	287,824,164.3 0		330,541,606.05
Inventories		9.67%		11.26%	-1.59%	N/A

Investing real	5,036,745.54		5,363,928.28
		0.17%		0.18%	-0.01%	N/A
estate

	1,684,051,200. 09		1,248,826,394. 76			Due to the ionic membrane project
Fixed assets		56.56%		42.56%	14.00%
						transferred into the fixed assets.

Construction in	143,683,545.1 5		423,857,021.70			Due to the ionic membrane project
		4.83%		14.44%	-9.61%
progress						transferred into the fixed assets.

	20,000,000.00		75,000,000.00			Due to the payment of the short-term
Short-term loans		0.67%		2.56%	-1.89%
						loans of the reporting period.

	343,590,000.0 0		431,590,000.00			Due to part of the long-term loans
Long-term loans		11.54%		14.71%	-3.17%	transferred into the long-term loans due
						in 1 year of the reporting period.

2. Assets and liabilities measured at fair value

□ Applicable √ Inapplicable

V. List of the investment

1. Overall condition

□ Applicable √ Inapplicable

2. List of the significant equity investment acquired from the reporting period

□ Applicable √ Inapplicable

3. List of the significant non-equity investment has been executing during the reporting period

□ Applicable √ Inapplicable

4. Investment on the financial assets

(1) List of the securities investment

□ Applicable √ Inapplicable

The Company was not involved with such situation during the reporting period.

(2) List of the derivative investment

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

The Company was not involved with such situation during the reporting period.

5. Use of raised funds

□ Applicable √ Inapplicable

The Company was not involved with such situation during the reporting period.

VI. Selling of the significant assets and the equities

1. List of the selling of the significant assets

□ Applicable √ Inapplicable

The Company was not involved with such situation during the reporting period.

2. List of the selling of the significant equities

□ Applicable √ Inapplicable

VII. Analysis of the major controlling and stock-participating companies

√ Applicable □ Inapplicable

List of the stock-participating companies influenced over 10% of the net profits on the major subsidiaries and the Company

Unit: RMB Yuan

		Main	Registered			Operating	Operating
Name	Type			Total assets	Net assets			Net profit
		services	capital			revenues	profit

Sanonda
(Jingzhou)		Production of
Pesticides		pesticides			-1,918,657.6
	Subsidiary		30000000.00	2,644,609.09			-478,238.53	-478,238.53
and		and			9

Chemicals		intermediates
Co., Ltd.
Hubei		Import &
Sanonda		export of
				171,766,879.	44,294,235.1	220,934,715.	10,301,432.8
Foreign	Subsidiary	pesticides	10000000.00					8,330,920.52
				92	6	24	8
Trading Co.,		and

Ltd.		intermediates
Jingzhou		Production
Hongxiang		and sale of		207,815,961.	-8,120,147.0	175,586,961.
	Subsidiary		40000000.00				6,610,960.11	7,594,293.43
Chemical		chemical raw		67	3	62

Co., Ltd.		materials

Subsidiaries acquired or disposed during the reporting period

√ Applicable □ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

	Methods of gaining and disposing the	Influences on the overall production and
Name
	subsidiaries during the reporting period	operating as well as the performances

Jingzhou Hongxiang Chemical Co., Ltd.	Gained from the transfer agreement	N/A

Notes of the list of the major controlling and stock-participating companies

Subsidiary Sanonda (Jingzhou) Pesticides and Chemicals Co., Ltd. moved its production devices to the Company and had basically cleared during the reporting period.
The subsidiary of the Company, Jingzhou Hongxiang Chemical Co., Ltd.: on 26 Oct. 2015, Hubei Sanonda Co., Ltd. signed the equities transfer agreement with the minority shareholder Ms Zhang Hong, who voluntarily transferred 1.5% equities of the Jingzhou Hongxiang Chemical Co., Ltd. to Hubei Sanonda Co., Ltd., with the production and operating of the reporting period was normal.

VIII. List of the structured main bodies controlled by the Company

□ Applicable √ Inapplicable

IX. Outlook of the Company’s future development

(I) Industry competition structure and development tendency
Competitive situation in pesticide industry

First, the multinational pesticide companies with the six top innovative (R&D) enterprises including Syngenta, Bayer, BASF, Monsanto, Dow AgroSciences, DuPont as the core are controlling the high-end market of the industry, and their total sales amount accounts for around 75% of the total sales amount of pesticide in the whole world; second, the pesticide generics companies represented by Nufarm and ADAMA also have strong market competitiveness. Compared with the innovative enterprises, the generics enterprises can save a lot of R&D resources and quickly make its presence in the market relying on its low cost advantage; third, there is a large gap between the pesticide generics enterprises in the developing countries like China and India and the generics enterprises in the second echelon, especially in respect of scale, technology, and capital strength. Such generic enterprises are at the bottom of the international pesticide market, mainly producing the generic pesticides with low technical contents. Their positioning in the international market is to provide technical materials at a low price to the international pesticide giants. The enterprises specializing in the production of pesticide preparation limit their sales inside China. Fourth, the pesticide industry in China has very low industrial concentration, and fierce competition. The total pesticide sales amount of all the listed pesticide companies only accounts for about 10% of the total sales amount of pesticide enterprises in China. In recent years, though the Chinese pesticide industry has formed some industry-leading enterprises through M&A and restructuring, it fails to fundamentally solve the problem that there are too many, small-size pesticide companies in the industry which could not be held together, and the production capacity surplus and product homogenization problem are a common phenomenon.

Development trend of the pesticide industry.

According to the large amount of market data we collected and in combination with the industry forecast of multinational companies, it is expected that in 2016, the pesticide market will remain in the doldrums and the product price will remain low. According to the United Nations Food and Agriculture Organization (UNFAO)’s data, the food price index of 2015 have fallen by almost 19% compared with the index of 2014, the largest drop in the past seven years, and it is also the fourth consecutive year of falling. Affected by the price drop of the downstream and competitive industry, the pesticide industry is running low and the pesticide product prices are at a new low of the recent years. The industry’s future development will be affected by the downstream grain price. Seen from the current grain output and the consumption situations in China, the oversupply issue will not be solved in the short term. The global market is faced with the elastic supply and moderate demand for cereals. In 2015, the average global cereal inventory is

2015 Annual Report of Hubei Sanonda Co., Ltd.

488 million tons, up 5.17% year on year, a relatively high rate. Therefore, in the future, the grain price will take on a stable downward trend. As for the domestic market, the government has proposed the plan to realize the “zero growth” in chemical fertilizer and pesticide consumption by 2020, and it is expected that in 2016 the pesticide market will remain the steady low-price state. According to the statistical analysis of the primary forecasts from 31 provincial plant protection stations in China, in 2016, the total demand for pesticide of China (commodity) is forecast to be 961,700 tons, and the 100% concentration equivalent is 304.800 tons, down 6.18% year on year. It can be seen that the pesticide industry will endure a great pressure in the future.

(II) Company development strategy

Guided by the national industry policy and the overall development strategy of ChemChina and CNAC, make full use of the current resources and technologies, perfect and expand the existing the supporting systems for pesticide and chemical engineering, strive to develop the chemical product, and build a supporting energy supply system that can meet the company’s agrochemical product production process demands and build the three top industry chains like organophosphorus series, carbonyl chloride series and the pyridine series to increase the core competitive strength. Since August 2015, following the overall arrangement of the CNAC, the company is now pushing for the significant assets restricting by purchase of assets and raising of fund by issuing shares to the related parties of controlling shareholders and the third parties. The subject asset is the Israel-based subsidiary of the company’s actual shareholders, which engages in the agricultural plant protection business, a business highly complementary with the company’s businesses.

(III) 2016 operation plan

First, practically do a good job in safety and environmental protection and perfect the SHE management system. Seriously implement the new Production Safety Law, and practically carry out the production safety responsibility system, and realize the full-course control of safety. Deepen the building of SHE system, perfect the management systems, strengthen the safety management and emergency response, intensify the safety training, and cultivate a safety culture. Seriously implement the Environmental Protection Law, accelerate the building of environmental protection system, enhance the comprehensive control and utilization level of pollutants, promote the cyclic economy and strictly control the environmental risks. Second, actively expand the market sales, and ensure the operation loads of the company’s facilities. Strengthen the study and judgment ability of market trends, improve the ability to response to market changes, and size the market opportunities. Closely follow up the implementation of production and operation plan, monitor and analyze the operation of economy and effectively identify the operation risks. Actively participate in the market competition, strengthen the contacts and liaison with major customers, do everything to take more orders. Strengthen the market management and control and do a good job in the market planning and promotion of the key products. Take advantage of the production capacity, and expand the technical material sales channel, and form a stable customer base. Push the integration of domestic pesticide preparation sales business and ADAMA in an orderly manner. Improve the chemical product market arrangement, ensure the stable operation of ionic membrane caustic soda units under high load. Actively expand the international market and grab the market space.

Third, set off to promote the cost reduction to increase the profits, and fully enhance the company management. Seriously promote the energy and resources saving and benchmarking, strength the benchmarking of material and energy consumption. Continue to push for management enhancement through system building. Deepen the analysis to solve the prominent problems in production, find the breakthrough points and acting points, to increase the operation quality, reduce the costs and increase profits. Optimize the process flow, and enhance the technology level. Strengthen the implementation of budget and assessment; strictly control the expenses in four aspects. Strengthen the purchase logistics and fund management, further reduce the occupation of funds in these two aspects. Strengthen the quality management to ensure the stable product quality and avoid all the losses caused by quality issues. Improve the risk management and promote the governance of the corporate by law.

Fourth, stick to technological innovation, and increase the competitive strength of products. Stick to the market-oriented approach, implement the innovation drive, improve the innovation ability, and cultivate the company’s competition strength. Strengthen the technical exchange and cooperation with ADAMA, optimize the production process and reduce the production costs. Fifth, increase the efforts in training and assessment of employees to improve the staff team quality.

2015 Annual Report of Hubei Sanonda Co., Ltd.

(IV) Company fund demand plan

According to the company’s production and operation and the in-process and proposed expansion projects, in 2016, the forecast fund demand will be RMB 1.5 billion, which will be directly sourced from bank loans or the company’s own assets or by issuing new shares to raise more funds.

(VI) Risks and countermeasures of the company

First, production safety risks. The company is in the hazardous chemical industry, and some technical materials, semi-finished products used in the production or the finished products are inflammable, explosive, corrosive or toxic substances. The production processes cover the high-temperature and high-pressure process, which imposes high operation requirements and may cause accidental safety incidents because of equipment, process, storage and improper operation. The company will seriously push for the building of SHE system, and strengthen the safety hazard screening and rectification efforts to reduce the production safety risks.

Second, environmental protection risks. The company mainly engages in production of technical materials of chemical pesticides and chemical products, which will generate a certain amount of waste water, gas and solids. With China’s increasing emphasis on environmental protection and the promulgation and implementation of increasingly strict environmental protection laws and regulations such as the new Environmental Protection Law, the company is carrying out higher and stricter environmental protection standards, which will increase the company’s expenses in environmental protection facilities and waste water, gas and solids control,

and affect the company’s profitability to a certain degree. In recent years, the company has attached high importance on environmental protection, and continuously increased the input in environmental protection, and strengthened the comprehensive control. The company will strengthen the cooperation with scientific research institutes to improve the technical process, continuously improve the environmental protection measures and ensure to reach the national discharge standard.

Third, currency exchange rate risk. The company is increasing the proportion of export products. In 2015, the export products account for 60% of the whole production quantity, and therefore the currency exchange rate will have a big effect on the company. When the company signs the trade contract with customers, it will take in full account the exchange rate risk, and settle the exchange on spot, or reduce the payment term; at the same time, it will adjust the export product structure to address the rebate policy risks.

Fourth, market competition risk. The pesticide industry is sinking lower. From historic experience, 2 or 3 years in the future, the grain price is still exerting downward pressure on the price of pesticides. In 2016, the agricultural materials, chemical fertilizers and pesticides in particular, will be greatly affected by the grain price drop. The company will focus on the saving of resource and tapping into potentials, and reduction of costs and increase of profits, and do everything to control the costs, reduce the expenses and optimize the operation, deepen the energy and resource saving and benchmarking work, set off to solve the bottleneck and “short board” issues, highlight the improvement at some specific aspects, and push the corporate management to a new level as a whole.

X. List of the received researches, visits and interviews

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

□ Applicable √ Inapplicable

The Company was not involved with such situation during the reporting period.

2. Particulars about researches, visits and interviews received from the period-end to the disclosure date

□ Applicable √ Inapplicable

The Company was not involved with such situation during the reporting period.

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section V. Significant Events

I. List of the profits distribution of the common shares and turning capital reserve into share capital of the Company

Common profits distribution policies especially the formulation, execution or the adjustment of the cash dividend policies during the reporting period

√ Applicable □ Inapplicable

During the reporting period, the Company actively done well of the execution of the profits distribution proposal strictly abide by the regulations and the requirements of the relevant systems such as the Articles of Association. And fully protected the legal interests of the medium and small investors with the profits distribution proposal met with the relevant regulations of the Articles of Associations. The 35[th ] Session of the 6[th] Board of Directors held on 10 Mar. 2015 reviewed and approved the Preplan of the 2014 Profits Distribution and had been approved by the 2014 Annual General Meeting held on 3 Apr. 2015. On 18 Apr. 2015, the Company disclosed the Announcement of the Exection of the 2014 Interests Distribution.

Special explanation of the cash dividend policy	Special explanation of the cash dividend policy
Whether conformed with the regulations of the Articles of
association or the requirements of the resolutions of the	Yes
shareholders’ meeting:
Whether the dividend standard and the proportion were definite
	Yes
and clear:

Whether the relevant decision-making process and the system
	Yes
were complete:

Whether the independent director acted dutifully and exerted the
	Yes
proper function:

Whether the medium and small shareholders had the chances to
fully express their suggestions and appeals, of which their legal	Yes
interest had gained fully protection:
Whether the conditions and the process met the regulations and
was transparent of the adjustment or altered of the cash dividend	Inapplicable
policy:

List of the dividend distribution proposal (preplan) of the common shares and the proposal (preplan) of turning capital reserve into share capital of the Company of the recent 3 years:

2013 profits distribution proposal: based on the 2013 total share capital on 31 Dec. 2013, the Company distributed a cash dividend of RMB0.5 (tax included) for every 10 shares to the whole shareholders, with 0 share of the bonus shares (tax included), and there was no turn from capital reserve to share capital.

2014 profits distribution proposal: based on the total share capital on 31 Dec. 2014, the Company distributed a cash dividend of RMB1.0 (tax included) for every 10 shares to the whole shareholders, with 0 share of the bonus shares (tax included), and there was no turn from capital reserve to share capital.

2015 profits distribution proposal: based on the total share capital on 31 Dec. 2015, the Company distributed a cash dividend of

2015 Annual Report of Hubei Sanonda Co., Ltd.

RMB0.25 (tax included) for every 10 shares to the whole shareholders, with 0 share of the bonus shares (tax included), and there was no turn from capital reserve to share capital.

Cash dividend distribution of the common shares of the Company of the recent 3 years (including the reporting period)

Unit: RMB Yuan

			The ratio accounting
		Net profit belonging
			in net profit which
		to shareholders of
	Amount of cash		belongs to	Amount of the cash	Ratio of the cash
		the listed company
Dividend year	dividend (including		shareholders of the	dividend by other	dividend by other
		in consolidated
	tax)		listed company in	methods	methods
		statement of
			consolidated
		dividend year
			statement

2015	14,848,080.50	141,840,462.97	10.47%	0.00	0.00%
2014	59,392,322.00	491,771,929.22	12.08%	0.00	0.00%
2013	29,696,161.00	320,811,958.67	9.26%	0.00	0.00%

The Company (including its subsidiaries) made profit in the reporting period and the profits distribution of the common shares held by the shareholders of the Company (without subsidiaries) was positive, but it did not put forward a preplan for cash dividend distribution of the common shares:

□ Applicable √ Inapplicable

II. Pre-plan for profit allocation and turning capital reserve into share capital for the reporting period

√ Applicable □ Inapplicable

√ Applicable □ Inapplicable
Bonus shares for every 10 shares (share)	0
Dividend for every 10 shares (RMB Yuan) (tax
	0.25
included)

Turning capital reserve into share capital for every
	0
10 shares (share)

Total shares as the basis for the allocation preplan
	593,923,220
(share)

Total cash dividends (RMB Yuan) (tax included)	14,848,080.50
Distributable profit (RMB Yuan)	129,189,600.72
Percentage of the cash bonus of the total profits
	100.00%
dividends

Cash dividend situation
If the development phase of the Company was the mature period with significant funds expenditures arrangement, when executing
the profits distribution, the proportion of the cash bonus of the profits distribution should at least reach 40%.
Details about the profit allocation or turning capital reserve into share capital

2015 Annual Report of Hubei Sanonda Co., Ltd.

After the audit by Ruihua CPAs (LLP), the net profits realized by the Company of 2015 that attributed to the owners of the parent company was of RMB141,840,462.97 and the distributable profits of 2015 was of RMB129,189,600.72 after the withdrawal of the statutory surplus reserve of RMB12,650,862.25 which was of 10% of the current net profits of the parent company. and deducted the distributed 2014 cash bonus of RMB59,392,322.00 as well as added the retained profits at the year-begin of RMB957,050,401.65, thus the actual accumulative distributable profits for the shareholders was of RMB1,026,847,680.37. In view of the funds demand of the Company owning to the production and operating projects construction was still rather big, in order to ensure the sustainable and stable development, the preplan of the 2015 profits distribution and the transfer and increase from the reserved funds to the capital share was planed as: based on the total share capital on 31 Dec. 2015, the Company distributed a cash dividend of RMB0.25 (tax included) for every 10 shares to the whole shareholders, with 0 share of the bonus shares (tax included), and there was no turn from capital reserve to share capital.

III. Performance of commitments

1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the Directors, the Supervisors and the Senior Executives or the other related parties during the reporting period and those hadn’t been completed execution up to the period-end

√ Applicable □ Inapplicable

				Time of	Period of
	Commitmen	Commitmen
Commitment			Contents	making	commitmen	Fulfillment
	t maker	t type
				commitment	t

Commitment on

share reform

			I. Commitments on avoiding horizontal
			competition: 1. except for the Company
			proposed conducting transaction may
			lead to competition in domestic trade
			with Shenzhen NOPOSION
			Agrochemical Co., Ltd. disclosed in the
		Commitmen				The
			B Shares Offer Acquisition Report of
	ADAMA	ts on the				commitments
			Hubei Sanonda CO., Ltd. The Company
	Celsius	horizontal				were being
Commitment in the			will take effective measures to avoid the
	B.V.;ADAM	competition,				carried out
acquisition report or			Company and its controlling
	A	the related		2013-09-07	2020-09-06	and the
the report on equity			subsidiaries engaged in the same or
	Agricultural	transaction				commitment
changes			similar business with Hubei Sanonda
	Solutions	and the				makers abided
			CO., Ltd. within the territory.2. If the
	Ltd.	capital				by the above
			Company or its controlling subsidiaries
		occupation				commitments.
			domestically conduct related business

			which form horizontal competition with
			Hubei Sanonda CO., Ltd. in future
			(including related business of the
			Company proposed conducting
			transaction may lead to competition in

2015 Annual Report of Hubei Sanonda Co., Ltd.

		domestic trade with Shenzhen
		NOPOSION Agrochemical Co., Ltd.
		disclosed in the B Shares Offer
		Acquisition Report of Hubei Sanonda
		CO., Ltd.) The Company will according
		to the securities laws and regulations
		and industry policy within 7 years or
		when the management think the
		condition is ripe to actively take steps,
		gradually eliminate the competition, the
		concrete measures including but not
		limited to the following one or more:
		fight for internal assets reconstruction,
		(including putting the business into
		Hubei Sanonda CO., Ltd. or operated
		through Hubei Sanonda CO., Ltd. ) to
		adjust the industrial plan and business
		structure, to transform technology and
		to upgrade products, to divide the
		market so as to make each corporation
		differ in the products and its ultimate
		users, thus to avoid and eliminate the
		current domestic horizontal competition
		between the Company’s controlling
		subsidiaries and Sanonda.
		II. Commitments on maintaining the
		Company’s operation independence and
		specify the related transaction: 1. After
		the complement of the tender offer,
		Sanonda will continue to maintain
	Commitmen	complete purchase, production and sales			The
ADAMA	ts on the	system, and to gain the independent			commitments
Celsius	horizontal	intellectual property. The Company and			were being
B.V.;ADAM	competition,	its direct or indirect controlling			carried out
A	the related	shareholders and Sanonda of which the	2013-09-07	9999-12-31	and the
Agricultural	transaction	personnel, assets, finance, business and			commitment
Solutions	and the	institutions will be completely			makers abided
Ltd.	capital	separated, and at the same time			by the above
	occupation	maintain the operation ability of			commitments.
		Sanonda that independently face to the
		China agrochemical industry market. 2.
		The Company will avoid and reduce the
		related transactions with Sanonda
		according to the requirements stipulated

2015 Annual Report of Hubei Sanonda Co., Ltd.

		by the laws, regulations and other
		normative documents; but for those
		related transactions that are inevitable
		or occur with reasonable cause, will
		have to obey the just, fair and open
		market principles. And to sign the
		agreement according to the law and to
		carry out legal program, and to make
		sure not to harm the legal interest of
		Sanonda and other shareholders by
		related transaction according to the
		Articles of Association of Sanonda, the
		relevant system about related
		transaction and to conduct the duty of
		information disclosure as well as the
		approval process which stipulated by
		the relevant regulations."
		I. Commitments on avoiding horizontal
		competition: 1. The business of the
		Company’s subsidiaries-- Jiangsu
		Anpon Electrochemical Co., Ltd., Anhui
		Petroleum Chemical Group Co., Ltd.,
		Shangdong Dacheng Agrochemical Co.,
		Ltd. and Jiamusi Heilong
		Agrochemicals Co., Ltd., and Hunan
		Haohua Chemical Co., Ltd. and its
	Commitmen	subsidiary had the same or similar			The
	ts on the	situations with the main business of			commitments
	horizontal	Sanonda, and aimed at the domestic			were being
China
	competition,	horizontal competition, the Company			carried out
National
	the related	committed to gradually eliminate such	2013-09-07	2020-09-06	and the
Chemical
	transaction	kind of horizontal competition in the			commitment
Corporation
	and the	future and to fight for the internal assets			maker abided

	capital	reconstruction, to adjust the industrial			by the above
	occupation	plan and business structure, to transform			commitments.
		technology and to upgrade products, to
		divide the market so as to make each
		corporation differ in the products and its
		ultimate users according to the
		securities laws and regulations and
		industry policy within 7 years, thus to
		eliminate the current domestic
		horizontal competition between the
		Company’s controlling subsidiaries and

2015 Annual Report of Hubei Sanonda Co., Ltd.

		Sanonda. 2. Excepting the competition
		situation disclosed in the offer
		acquisition report, the Company take
		effective measures to avoid the
		Company and its controlling
		subsidiaries ( excepting Commitments
		respectively made in acquisition report
		by Celsius Property B.V. and MAI )’
		new increased business engaged in the
		same or similar business with Hubei
		Sanonda CO., Ltd. within the territory
		in future. 3. If the Company or its
		controlling subsidiaries (excepting
		Commitments respectively made in
		acquisition report by Celsius Property
		B.V. and MAI) domestically conduct
		related business which form horizontal
		competition with Hubei Sanonda CO.,
		Ltd. in future, the Company will
		actively take steps, gradually eliminate
		the competition, the concrete measures
		including but not limited to fight for
		internal assets reconstruction, (including
		putting the business into Hubei Sanonda
		CO., Ltd. or operated through Hubei
		Sanonda CO., Ltd.) to adjust the
		industrial plan and business structure, to
		transform technology and to upgrade
		products, to divide the market so as to
		make each corporation differ in the
		products and its ultimate users, thus to
		avoid and eliminate the current
		domestic horizontal competition
		between the Company’s controlling
		subsidiaries and Sanonda.
	Commitmen	II. Commitments on maintaining the			The
	ts on the	Company’s operation independence and			commitments
	horizontal	specify the related transaction: 1. After			were being
China
	competition,	the complement of the tender offer,			carried out
National
	the related	Sanonda will continue to maintain	2013-09-07	9999-12-31	and the
Chemical
	transaction	complete purchase, production and sales			commitment
Corporation
	and the	system, and to gain the independent			maker abided

	capital	intellectual property. The Company and			by the above
	occupation	its direct or indirect controlling			commitments.

2015 Annual Report of Hubei Sanonda Co., Ltd.

			shareholders and Sanonda of which the
			personnel, assets, finance, business and
			institutions will be completely
			separated, and at the same time
			maintain the operation ability of
			Sanonda that independently face to the
			China agrochemical industry market. 2.
			The Company will avoid and reduce the
			related transactions with Sanonda
			according to the requirements stipulated
			by the laws, regulations and other
			normative documents; but for those
			related transactions that are inevitable
			or occur with reasonable cause, will
			have to obey the just, fair and open
			market principles. And to sign the
			agreement according to the law and to
			carry out legal program, and to make
			sure not to harm the legal interest of
			Sanonda and other shareholders by
			related transaction according to the
			Articles of Association of Sanonda, the
			relevant system about related
			transaction and to conduct the duty of
			information disclosure as well as the
			approval process which stipulated by
			the relevant regulations.
Commitments made
at the time of assets
reorganization
Commitments made
in the initial public

offering or

refinancin
Commitment on

equity incentive

			“1. The Supervisory Board Chairman of			Owning to the
		Commitmen	the Company Mr. Jiang Chenggang			suspension of
Other commitments	Jiang	ts on the	planed to purchase the shares of the			the
made to minority	Chenggang;	increase of	Company of over 5000 shares through	13 Jul. 2015	2016-01-12	Company’s
shareholders	Li Zhongxi	the	the secondary market by the self-rising			shares from 5
		shareholding	funds in the future 6 months			Aug. 2015 to
			(2015.7.13-2016.1.12); 2. The Board			the disclosure

2015 Annual Report of Hubei Sanonda Co., Ltd.

		Secretary Mr. Li Zhongxi planed to	date, Mr. Li
		purchase the shares of the Company of	Zhongxi
		over 5000 shares through the secondary	could not
		market by the self-rising funds in the	execute the
		future 6 months	commitments
		(2015.7.13-2016.1.12)”.	on increasing
			the
			shareholding.
			While Mr.
			Jiang
			Chenggang
			had
			completed the
			execution of
			the
			commitments.
Executed timely or
	Yes
not?

If the commitments
failed to complete
the execution when
expired, should
specifically explain	Inapplicable
the reasons of
unfulfillment and
the net stage of the
working plan

2. The assets or projects existing profit forecast, which were still in the profit forecast period, the Company made note and explain to the assets or project arrived at original profit forecast

□ Applicable √ Inapplicable

IV. Occupation of the Company’s capital by the controlling shareholder or its related parties for non-operating purposes

□ Applicable √ Inapplicable

The Company was not involved with such situation during the reporting period.

V. Explanation by the Board of Directors and the Supervisory Committee about the “non-standard audit report” issued by the CPAs firm for the reporting period

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

VI. Explanation of the changes of the accounting policy, the accounting estimates and the accounting methods compared to the last financial report

□ Applicable √ Inapplicable

No such cases in the reporting period.

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

□ Applicable √ Inapplicable

No such cases in the reporting period.

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

□ Applicable √ Inapplicable

No such cases in the reporting period.

IX. Particulars about engagement and disengagement of CPAs firm

CPAs firm engaged at present

CPAs firm engaged at present
Name of domestic CPAs firm	Ruihua CPAs (LLP)
Remuneration for domestic CPAs firm for the
	85
reporting period (RMB Ten Thousand Yuan)

Consecutive years of the audit services provided by
	6
domestic CPAs firm

Name of domestic CPAs firm	Tang Qiyong, Yin Donghan

Reengage the CPAs firm at current period or not?

□ Yes √ No

Particulars on engaging the audit firm for the internal control, financial adviser or sponsor

√ Applicable □ Inapplicable

The CPAs engaged for the internal control and audit of the reporting period: Ruihua CPAs (LLP).

No financial consultant and sponsor.

X. Particulars about trading suspension and termination faced after the disclosure of annual report

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

XI. Bankruptcy and reorganization

□ Applicable √ Inapplicable

No such cases in the reporting period.

XII. Significant lawsuit or arbitration

□ Applicable √ Inapplicable

No such cases in the reporting period.

XIII. Punishment and rectification

□ Applicable √ Inapplicable

No such cases in the reporting period.

XIV. The honesty situations of the Company, its controlling shareholders and actual controller

□ Applicable √ Inapplicable

During reporting period, there was no effective judgment of a court and large amount of debt maturity that the Company, its controlling shareholders and actual controller failed to perform or pay off.

XV. The actual implementation of the stock incentive plan, ESOP, or other Staff incentives

□ Applicable √ Inapplicable

No such cases in the reporting period.

XVI. Significant related-party transactions

1. Related-party transactions relevant to routine operation

√ Applicable □ Inapplicable

								Approv		Settlem
				Pricing		Transact					Similar
		Type of	Content				Proporti	ed		ent
				principl		ion					Transact
		the	of the				on in	transacti	Over	method
				e of the	Transact	amount					ion	Disclo
Related	Relation	related-	related-p				same	on line	approve	of the			Disclosure
				related-	ion	(RMB					market	sure
party	ship	party	arty				kind of	(RMB	d line or	related-			index
				party	price	Ten					price	date
		transacti	transacti				transacti	Ten	not	party
				transacti		thousan					receivab
		on	on				ons (%)	thousan		transacti
				on		d)					le
								d)		on

Haohua	Under		Equipm							Cash		20	Announcem
		Purchas		Market
Engineeri	the		ents and		-	787.4		15,500	No	remittan		Jul.	ent NO.:
		e		price
ng Co.,	same		service							ce		2015	2013-34;

2015 Annual Report of Hubei Sanonda Co., Ltd.

Ltd.	ultimate											Name of the
	controll											announceme
	er											nt:
												Transactions
												Announcem
												ent Related
												Contract For
												Epc General
												Contracting
												Project
												Signed With
												Related
												Parties;
												information
												disclosed on
												http://www.c
												ninfo.com.c
												n
Bluestar	Under
			Purchas
(Beijing)	the
			e of the						Cash		20
Chemical	same	Purchas		Market
			raw		-	48.66	10,500	No	remittan		Jul.	Ditto
Machiner	ultimate	e		price
			material						ce		2015
y Co.,	controll
			s
Ltd.	er

Bluestar	Under
			Purchas
Environm	the
			e of the						Cash
ental	same	Purchas		Market
			raw		-	15.6		No	remittan	-
Engineeri	ultimate	e		price
			material						ce
ng Co.,	controll
			s
Ltd.	er

	Under
			Purchas
Beijing	the
			e of the						Cash
Grand	same	Purchas		Market
			raw		-	735.04		Yes	remittan	-
AgroChe	ultimate	e		price
			material						ce
m Ltd.	controll
			s
	er

												Announcem
	Under
ADAMA												ent NO.:
	the		Sales of
Agricultu									Cash			2015-3;
	same		the	Market		9,818.7					3 Feb.
ral		Sl			-		10,000	No	remittan	-		Name of the
	ultimate	aes	pesticide	price		3					2015
Solutions									ce			announceme
	controll		s
Ltd.												nt:
	er
												Announcem

2015 Annual Report of Hubei Sanonda Co., Ltd.

										ent on 2015
										Routine
										Related
										Transactions
										;
										information
										disclosed on
										http://www.c
										ninfo.com.c
										n
			11,405.
Total	--	--		--	36,000	--	--	--	--	--
			43

Details about return of large-amount
	N/A
sales

Where the Company classifies and
estimates the total amount of routine
	The amount purchased from the related party, Hao Hua and Bluestar Beijing Chemical
related-party transactions for the
	Machinery Co., Ltd. was of RMB8.3606 million, mainly due to the original EPC total contract
reporting period, explain the actual
	work contacts signed in Y2013 failed to complete the execution.
implementation during the reporting

period (if any)
Explain why the transaction price is	The company’s related transactions with related party shall be carried out in accordance with
greatly different from the market price	the principle of voluntary, equality and mutual benefit, fair, and will not harm the interests of
(if applicable)	the company.

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

□ Applicable √ Inapplicable

The Company was not involved in any related-party transactions arising from asset acquisition or sale during the reporting period.

3. Related-party transitions with joint investments

□ Applicable √ Inapplicable

The Company was not involved in any related-party transaction with joint investments during the reporting period.

4. Credits and liabilities with related parties

□ Applicable √ Inapplicable

Whether there was non-operating credit and liability with related parties

□ Yes √ No

The Company was not involved in any non-operating credit and liability with related parties.

2015 Annual Report of Hubei Sanonda Co., Ltd.

5. Other significant related-party transactions

√ Applicable □ Inapplicable

The parent company of the Group-Jingzhou Sanonda Holdings Co., Ltd.-paid & gained wages and social security through the Group with a total of RMB664,131.60.
Balance of bank deposit of Chemchina Finance Co., Ltd. of the Group at the period- begin was of RMB82,266,671.62 period-end was of RMB140,000,000.00; interest of bank deposit of this year was of RMB1,978,679.94, and interest of the paid of short-term loan of this year was of RMB1,404,208.34.
In reporting period, the 7[th] floor of the Company’s office building had rented to Jingzhou Sanonda Holdings Co., Ltd. for business operation in the reporting period with the annual rent of RMB 120,000.

The website to disclose the interim announcements on significant related-party transactions

	Disclosure date of the interim
Name of the interim announcement		Website to disclose the interim announcement
	announcement

Related transaction announcement of China National Chemical Financial Corporation Continuing to Provide Financial Services to the Company
	28 May 2013	www.cninfo.com.cn

XVII. Particulars about significant contracts and their fulfillment

1. Particulars about trusteeship, contract and lease

(1) Trusteeship

□ Applicable √ Inapplicable

There was no any trusteeship of the Company in the reporting period.

(2) Contract

□ Applicable √ Inapplicable

There was no any contract of the Company in the reporting period.

(3) Lease

√ Applicable □ Inapplicable

Explanation on the lease

The 7[th] floor of the Company’s office building had rented to Jingzhou Sanonda Holdings Co., Ltd. for business operation in the reporting period with the annual rent of RMB 120,000.

The lease whose profits reaching more than 10% of the total profits of the Company in the reporting period

□ Applicable √ Inapplicable

There was no any lease whose profits reaching more than 10% of the total profits of the Company in the reporting period.

2015 Annual Report of Hubei Sanonda Co., Ltd.

2. Significant guarantees

√ Applicable □ Inapplicable

(1) List of guarantees

Unit: RMB Ten Thousand Yuan

Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)	Guarantees provided by the Company for external parties (excluding those for subsidiaries)
	Disclosure
	date on							Guarante
			Actual
	relevant			Actual				e for a
		Amount for	occurrence date		Type of	Period of	Executed
Guaranteed party	announcem			guarantee				related
		guarantee	(date of		guarantee	guarantee	or not
	ent of			amount				party or
			agreement)
	guaranteed							not

	amount
Guarantees provided by the Company for its subsidiaries
	Disclosure
	date on							Guarante
			Actual
	relevant			Actual				e for a
		Amount for	occurrence date		Type of	Period of	Executed
Guaranteed party	announcem			guarantee				related
		guarantee	(date of		guarantee	guarantee	or not
	ent of			amount				party or
			agreement)
	guaranteed							not

	amount
Hubei Sanonda					Joint
Foreign Trading Co.,	3 Feb. 2015	31,900	3 Feb. 2015	12,400	Liability	1 year	No	Yes
Ltd.					Guarantee
				Total actual occurred
Total guarantee line approved for
				amount of guarantee for the
the subsidiaries during the		31,900						12,400
				subsidiaries during the
reporting period (B1)
				reporting period (B2)

				Total actual guarantee
Total guarantee line that has been
				balance for the subsidiaries
approved for the subsidiaries at the		31,900						12,400
				at the end of the reporting
end of the reporting period (B3)
				period (B4)

		Guarantees provided by subsidiaries for subsidiaries
	Disclosure
	date on							Guarante
			Actual
	relevant			Actual				e for a
		Amount for	occurrence date		Type of	Period of	Executed
Guaranteed party	announcem			guarantee				related
		guarantee	(date of		guarantee	guarantee	or not
	ent of			amount				party or
			agreement)
	guaranteed							not

	amount

2015 Annual Report of Hubei Sanonda Co., Ltd.

Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)	Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)	Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)	Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
		Total actual occurred
Total guarantee line approved
		amount of guarantee during
during the reporting period	31,900		12,400
		the reporting period
(A1+B1+C1)
		(A2+B2+C2)

Total guarantee line that has been		Total actual guarantee
approved at the end of the		balance at the end of the
	31,900		12,400
reporting period		reporting period

(A3+B3+C3)		(A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
		5.91%
assets of the Company

Of which:
Amount of debt guarantee provided for the guaranteed party
whose asset-liability ratio is not less than 70% directly or		12,400
indirectly (E)
Total amount of the above three guarantees (D+E+F)		12,400

Explanation on guarantee that adopts complex method

(2) Particulars about illegal external guarantee

□ Applicable √ Inapplicable

There was no particular about illegal external guarantee of the Company in the reporting period.

3. Cash assets management entrustment

(1) Wealth management entrustment

□ Applicable √ Inapplicable

No such cases in the reporting period.

(2) Entrustment loans

□ Applicable √ Inapplicable

No such cases in the reporting period.

(4) Other significant contracts

□ Applicable √ Inapplicable

No such cases in the reporting period.

2015 Annual Report of Hubei Sanonda Co., Ltd.

XVIII. Other significant events

√ Applicable □ Inapplicable

During the reporting period, the Company was planing the significant assets reorganization projects led to the subspension of the Company’s shares since 5 Aug. 2015 with the details of the progress of the reorganization, please refer to the Announcement on the Significant Assets Reorganization Progress successive disclosed by the Company.

XIX. Significant events of subsidiaries

□ Applicable √ Inapplicable

XX. Social responsibilities

√ Applicable □ Inapplicable

Through abiding by policy of safety, quality, environmental protection and benefit, the company carries out production operating activities in strict accordance with OHSAS18001 Occupation Health and Safety Management System, ISO14001 environment management system, ISO9001 quality management system and national cleaner production standards. Through vigorously developing technology improvement in the aspects of production equipments, technique and off-gas governance, the Company improves the intrinsically safe degree of the production device, promotes lean production, energy conservation and emission reduction, as well as educe energy and material consumption. And the comprehensive energy consumption and water consumption of ten thousand Yuan production value decreases gradually. The Company enlarges the investment in environmental protection, promotes the comprehensive improvement of the environment, develops the environmental protection technology transformation item and constantly improves the environmental performance.

The Company put emphasis on the training and education on the employees and constantly strengthens their awareness on safety and environmental protection. On the basis of increase of company benefits and sustainable development, the Company steadily improves the revenue of the employees. And at the same time, reinforces investment on safety protection for employees and strive to improve their work and life environment.

Our company strives to protecting consumers’ rights and interests in real sense through continuously promoting product quality and severely cracking down on counterfeit and shoddy products. We strengthen communications among customers, suppliers and other stakeholders and actively response to the appeal of the customers, and do great effort for realization of multi-win-win based on equality and free will. On the basis of safeguarding sustainable development, the company attaches great importance to investors’ returns, and enlarges the cash bonus vigor in recent years. To positively participate in and make the donation for the social public welfare and charity activities, and to drive the local economic development as well as to promote the coordinate harmonious development of the Company with the society, and the nature by the self development.

Does the listed company or its subsidiaries belong to the heavily polluting industries stipulated by the environmental protection authorities of the country?

√ Yes □ No □ Inapplicable

All the construction projects had gone through the evaluation of the environmental influence, and had passed the examination of the Principal, Municipal Environmental Protection Bureau, which agreed the approval documents of construction. Strictly carried out the three-simultaneous system of environmental protection, which stipulated the simultaneous design, the simultaneous construction, the simultaneous commissioning that ensured the volume increased without increased pollution.
The Company took the lead in carrying out the SO14001 International Environmental Management Standards System in the same

2015 Annual Report of Hubei Sanonda Co., Ltd.

industry and received the authentication certificate, which played an important role for promoting the enterprises environmental management level and improving the enterprises environmental appearance. Enlarged the environmental protection investment to ensure the three wastes emission met with the standards. Local environmental monitoring departments executed irregular monitoring of the release of the three wastes, and the result of the monitoring indicated that the Company turned out to reach the up-to-standard release of the three wastes basically; and the Company passed the clean production examination and approval as well as acceptance with no environmental pollution accident and other environmental violation for recent years. The expenditure amount of the 2015 environmental protection investment was of 37 million and with the newly constructed thermoelectric project out-of-stock device and the upgrade transformation system of the dust removal, the emission reductions of the nitric oxide and the smoke dust was respectively of 122 tons and 14 tons. During the review report of the conformance of the environmental protection laws and regulations which be executed every year, the Company successfully passed the evaluation of the certification authority (the third party) for the situation of laws and disciplines observation. The Company revised the Emergency Preplan for Environment to the Environmental Protection Department and passed the evaluation organized by Hubei province Environmental Protection Department and consistently organized training, maneuver and evaluation for ensure the effectiveness of the preplan.

Whether issue social responsibility report or not?

□ Yes √ No

XXI. Corporation bonds

Whether existing corporation bonds public issued and listed in Stock Exchange and maturity or maturity but not fully paid on the approval report date of annual report

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section VI. Change in Shares & Shareholders

I. Changes in shares

Unit: share

	Before the change	Before the change		Increase/decrease (+/-)	Increase/decrease (+/-)	Increase/decrease (+/-)	Increase/decrease (+/-)	After the change	After the change
					Capitaliza
			Newly
		Proportio		Bonus	tion of				Proportio
	Amount		issue			Other	Subtotal	Amount
		n		shares	public				n
			share
					reserves

I. Restricted shares	27,123	0.00%				-6,592	-6,592	20,531	0.00%
3. Shares held by domestic
	27,123	0.00%				-6,592	-6,592	20,531
investors

Shares held by domestic
	27,123	0.00%				-6,592	-6,592	20,531	0.00%
natural person

II. Shares not subject to	593,896,0							593,902,6
		100.00%				6,592	6,592		100.00%
trading moratorium	97							89

	363,899,1							363,902,6
1. RMB ordinary shares		61.27%				3,517	3,517		61.27%
	72							89

2. Domestically listed foreign	229,996,9							230,000,0
		38.73%				3,075	3,075		38.73%
shares	25							00

	593,923,2							593,923,2
III. Total shares		100.00%							100.00%
	20							20

Reason for the change in shares

√ Applicable □ Inapplicable

The Company's original Director Li Zuorong was retired, whose holding share of the Company ( Locking part of executives ) 8017 shares of A share were unlocked, the original supervisor Liu Jun left his post, whose holding share of the Company ( Locking part of executives ) 3075 shares of B share, Current chairman of supervisors Jiang Chenggang increase holding share of the Company ( Locking part of executives ) 6000 shares of A share duo to performing commitment which lead to the new increase of 4500 shares of executives lock share.

Approval of the change in shares

□ Applicable √ Inapplicable

Reason for the change in shares

□ Applicable √ Inapplicable

Effects of the change in shares on the basic EPS, diluted EPS, net assets per share attributable to common shareholders of the

2015 Annual Report of Hubei Sanonda Co., Ltd.

Company and other financial indexes over the last year and last period

□ Applicable √ Inapplicable

Other contents that the Company considered necessary or were required by the securities regulatory authorities to disclose

□ Applicable √ Inapplicable

2. Changes in restricted shares

√ Applicable □ Inapplicable

Unit: share

	Number of	Number of	Increase	Number of
Name of
	opening	unlocked	number of	closing restricted	Reason	Date of unlocked
shareholder
	restricted share	restricted shares	restricted share	share

					Executive lock
Li Zuorong	8,017	8,017	0	0		2015.10.29
					share

					Executive lock
Jiang Chenggang	0	0	4,500	4,500		9999.12.31
					share

					Executive lock
Liu Jun	3,075	3,075	0	0		2015.10.29
					share

Total	11,092	11,092	4,500	4,500	--	--

II. Issuance and listing of securities

1. Issuance of securities (excluding preferred stock) in reporting period

□ Applicable √ Inapplicable

2. Explanation on changes in share capital & the structure of shareholders, the structure of assets and liabilities

□ Applicable √ Inapplicable

3. Existent shares held by internal staffs of the Company

□ Applicable √ Inapplicable

III. Particulars about the shareholders and actual controller

1. Total number of shareholders and their shareholding

Unit: share

Total number	63,199（Of	Total number of	63,196（Of	Total number of		Total number of
					0		0
of shareholders	which A share	shareholders on	which A	preferred		preferred

2015 Annual Report of Hubei Sanonda Co., Ltd.

at the reporting	shareholders	the 30th trading	the 30th trading	share	share	stockholder with	stockholder with	stockholder with		stockholder with	stockholder with
period	44502）	day before the		shareholders		vote right				vote right
		disclosure date of		44499）		restored( if any)				restored on the
		the annual report								30th trading day
										before the
										disclosure date of
										the annual
										report( note 8)
	Shareholding of shareholders holding more than 5% shares
				Number	Increase		Number	Number	Pledged or frozen shares
				of	and		of shares	of shares
			Holding	sharehold	decrease		held	held not
Name of	Nature of
			percentag	ing at the	of shares		subject to	subject to
shareholder	shareholder								Status of shares		Amount
			e (%)	end of the	during		trading	trading
				reporting	reporting		moratoriu	moratoriu
				period	period		m	m
Sanonda Group Co., Ltd.	State-owned corporation		20.15%	119,687,2 02				119,687,2 02


ADAMA Celsius B.V.	Overseas corporation		10.60%	62,950,65 9				62,950,65 9


Chen Lichun	Domestic individual		1.14%	6,790,954	6,790,954			6,790,954


Qichun County State-owned Assets Administration	On behalf of government		0.70%	4,169,266				4,169,266


Jiang Jian	Domestic individual		0.61%	3,595,123	3,595,123			3,595,123


China Securities Finance Corp.	Other		0.47%	2,817,300	2,817,300			2,817,300


NORGES Bank	Overseas corporation		0.44%	2,634,504				2,634,504


ICBC- Lion Medium-and-small -cap Selected Stock Securities Investment Fund	Other		0.42%	2,480,384	2,480,384			2,480,384


BOC --MANULIFE Teda Total Return Bond Fund	Other		0.38%	2,252,947	2,252,947			2,252,947


ICBC - JT Tianfu	Other		0.36%	2,160,078	2,160,078			2,160,078

2015 Annual Report of Hubei Sanonda Co., Ltd.

Reform New Power Flexible Configuration of Hybrid Securities Investment Funds Strategic investors or the general legal person due to the placement of new Inapplicable shares become the top 10 shareholders (if any) (note 3) Sanonda Group Corporation and Celsius Property B.V. are related parties, and under the same control of China National Chemical Agrochemical Corporation, and are Explanation on associated relationship acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of or/and persons Listed Companies. It is unknown whether the other shareholders are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies.

Particulars about shares held by top 10 shareholders not subject to trading moratorium

Reform New Power Flexible Configuration of Hybrid Securities Investment Funds
Strategic investors or the general legal person due to the placement of new shares become the top 10 shareholders (if any) (note 3)	Inapplicable
Explanation on associated relationship or/and persons	Sanonda Group Corporation and Celsius Property B.V. are related parties, and under the same control of China National Chemical Agrochemical Corporation, and are acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies. It is unknown whether the other shareholders are related parties or acting-in-concert parties as prescribed in the Administrative Methods for Acquisition of Listed Companies.
Particulars about shares held by top 10 shareholders not subject to trading moratorium
	Number of shares held not subject to trading	Type of share
Name of shareholder
	moratorium at the end of the period	Type of share	Amount

Sanonda Group Co., Ltd.	119,687,202	RMB ordinary
			119,687,202
		shares

ADAMA Celsius B.V.	62,950,659	Domestically
		listed foreign	62,950,659
		shares
Chen Lichun	6,790,954	RMB ordinary
			6,790,954
		shares

Qichun County State-owned Assets Administration	4,169,266	RMB ordinary
			4,169,266
		shares

Jiang Jian	3,595,123	RMB ordinary
			3,595,123
		shares

China Securities Finance Corp.	2,817,300	RMB ordinary
			2,817,300
		shares

NORGES Bank	2,634,504	Domestically
		listed foreign	2,634,504
		shares
ICBC- Lion Medium-and-small-cap Selected Stock Securities Investment Fund	2,480,384
		RMB ordinary
			2,480,384
		shares


BOC --MANULIFE Teda Total Return Bond Fund	2,252,947	RMB ordinary
			2,252,947
		shares

ICBC - JT Tianfu Reform New Power	2,160,078	RMB ordinary	2,160,078

2015 Annual Report of Hubei Sanonda Co., Ltd.

Flexible Configuration of Hybrid Securities Investment Funds		shares

Explanation on associated relationship
	Qichun County Administration of State-Owned Assets held shares of the Company on
among the top ten shareholders of
	behalf of the state. Sanonda Group Corporation and Celsius Property B.V. are related
tradable share not subject to trading
	parties, and under the same control of China National Chemical Agrochemical Corporation,
moratorium, as well as among the top
	and are acting-in-concert parties as prescribed in the Administrative Methods for
ten shareholders of tradable share not
	Acquisition of Listed Companies. It is unknown whether the other shareholders are related
subject to trading moratorium and top
	parties or acting-in-concert parties as prescribed in the Administrative Methods for
ten shareholders, or explanation on
	Acquisition of Listed Companies.
acting-in-concert

	1. Shareholder Chen Lichun held 6,309,732 shares of the Company through a credit
	collateral securities trading account and held 481,222 shares of the Company through a
Particular about shareholder
	common securities account, who thus held 6,790,954 shares of the Company in total. 2.
participate in the securities lending and
	Shareholder Jiang Jian held 3,415,123 shares of the Company through a credit collateral
borrowing business ( if any)
	securities trading account and held 180,000 shares of the Company through a common

	securities account, who thus held 3,595,123 shares of the Company in total.

Did any top 10 common shareholders or the top 10 common shareholders not subject to trading moratorium of the Company carry out an agreed buy-back in the reporting period?

□ Yes √ No

The shareholders of a company did not conducted the transaction of repurchase under the agreement during the reporting period

2. Particulars about the controlling shareholder

Nature of controlling shareholder: The central state-owned

Type of controlling shareholder: legal person

Name of controlling	Legal representative
		Date of establishment	Organization code	Business scope
shareholder	/ company principal

				Pesticides and chemicals,
				chemical fertilizer,
				veterinary drug, feedstuff
				and chemical products;
				production and operation of
				thermoelectricity; medical
				product, circulation of
Jingzhou Sanonda Co., Ltd.	An Liru	22 Jun. 1994	17898778-9	agricultural product,
				development of real estate,
				agent and import & export
				of goods and technology
				(excluding goods or
				technology banned or
				limited to be imported and
				exported by the country)

2015 Annual Report of Hubei Sanonda Co., Ltd.

Shares held by the controlling shareholder in other listed companies by holding or Inapplicable shareholding during the reporting period

Change of the controlling shareholder during the reporting period

□ Applicable √ Inapplicable

The controlling shareholder did not change during the reporting period

3. Particulars about actual controller

Nature of actual controller: State-owned Assets Supervision and Administration Commission

Type of actual controller: nature person

	Legal
	representative /	Date of
Name of the actual controller			Organization code	Business scope
	company	establishment

	principal
State-owned Assets Supervision
and Administration Commission	-	23 Jul. 2008	-	-
of the State Council
Shares held by the actual
controller in other listed
companies by holding or	Inapplicable
shareholding during the
reporting period

Change of the actual controller during the reporting period

□ Applicable √ Inapplicable

The actual controller did not change during the reporting period

Block diagram of equity and control relationship between the company and actual controller:

2015 Annual Report of Hubei Sanonda Co., Ltd.

==> picture [434 x 353] intentionally omitted <==

----- Start of picture text -----

State-owned Assets Supervision and Administration Commission of the State Council
100%
China National Chemical Corporation
100%
China National Agrochemical Corporation
100%
CNAC International Company Limited
100%
100%
CNAC International Pte., Ltd. Jingzhou Sanonda Holdings Co., Ltd.
60%
20.15%
ADAMA Agrochemical Solutions Ltd.
Hubei Sanonda Co., Ltd.
100% 100%
10.6%
Makhteshim Agan
99.99% 0.01%
ADAMA Celsius B.V
----- End of picture text -----

The actual controller controls the Company via trust or other ways of asset management

□ Applicable √ Inapplicable

4. Particulars about other corporate shareholders with shareholding proportion over 10%

√ Applicable □ Inapplicable

	Legal representative / company principal	Date of		Main business or management activity
Name of corporate shareholder			Registered capital
		establishment

				Wholesale of basic and industrial chemicals
ADAMA Celsius B.V.	Inapplicable	24 Dec. 1987	EUR18,045.45

5. Particulars about restriction of reducing holding-shares of controlling shareholders, actual controller, restructuring parties and other commitment entities

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section VII. Preferred stock

□ Applicable √ Inapplicable

There was no preferred stock during reporting period.

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section VIII. Directors, Supervisors, Senior Management Staff &

Employees

I. Changes in shareholding of directors, supervisors and senior management staff

								Amount	Amount
							Shares	of shares	of shares		Shares
					Beginnin	Ending				Other
							held at	increased	decreased		held at
		Current/f			g date of	date of				changes
Name	Position		Gender	Age			the	at the	at the		the
		ormer			office	office				increase/d
							year-begi	reporting	reporting		year-begi
					term	term				ecrease
							n (share)	period	period		n (share)

								(share)	(share)
	Chairman
					29 Apr.
An Liru	of the	Current	Male	46			0	0	0	0	0
					2015
	Board

					29 Apr.
Guo Hui	Director	Current	Male	52			0	0	0	0	0
					2015

					29 Apr.
She Zhili	Director	Current	Female	51			0	0	0	0	0
					2015

Shiri					29 Apr.
	Director	Current	Female	40			0	0	0	0	0
Ailon					2015

	Independ
Ai					26 Feb.
	ent	Current	Male	47			0	0	0	0	0
Qiuhong					2010
	director

	Independ
Zhang					9 Jul.
	ent	Current	Female	51			0	0	0	0	0
Huide					2010
	director

	Independ
					9 Jul.
Li Dejun	ent	Current	Male	58			0	0	0	0	0
					2010
	director

Liu					11 May
	GM	Current	Male	48			0	0	0	0	0
Anping					2012

					6 Jan.
Yin Hong	Vice GM	Current	Male	48			0	0	0	0	0
					2013

Xie					6 Jan.
	Vice GM	Current	Male	48			0	0	0	0	0
Chengli					2013

Liu	GM	Current	Male	40	6 Jan.		21,375	0	0	0	21,375

2015 Annual Report of Hubei Sanonda Co., Ltd.

Zhiming					2013
	Chairman
Jiang
	of the				6 Jan.
Chenggan		Current	Male	41			0	6,000	0	0	6,000
	Superviso				2013
g
	r

	Superviso				6 Jan.
Fu Liping		Current	Male	50			0	0	0	0	0
	r				2013

Ding	Superviso				24 Jan.
		Current	Male	53			0	0	0	0	0
Shaojun	r				2013

Dong	Superviso				29 Apr.
		Current	Male	47			0	0	0	0	0
Chunji	r				2015

	Superviso				29 Apr.
Xu Yan		Current	Female	43			0	0	0	0	0
	r				2015

Li	Chairman				9 Feb.
		Current	Male	45			0	0	0	0	0
Zhongxi	Secretary				2000

	Original
Li	Chairman				18 Dec.	29 Apr.
		Former	Male	65			10,690	0	0	0	10,690
Zuorong	of the				2005	2015

	Board
	Original
He					18 Dec.	29 Apr.
	Director,	Former	Male	60			0	0	0	0	0
Xuesong					2005	2015
	CFO

Liu	Original				11 May	29 Apr.
		Former	Male	37			0	0	0	0	0
Jianhua	GM				2012	2015

	Original
Zhou					26 Feb.	29 Apr.
	superviso	Former	Male	46			0	0	0	0	0
Cheng					2010	2015
	r

	Original
					7 Feb.	29 Apr.
Liu Jun	superviso	Former	Female	54			4,100	0	0	0	4,100
					2001	2015
	r

Total	--	--	--	--	--	--	36,165	6,000	0		42,165

II. Particulars about changes of Directors, Supervisors and Senior Executives

Name	Position	Type	Date	Reason
	Chairman of the
An Liru		Engaged	29 Apr. 2015	General election
	Board

Guo Hui	Director	Engaged	29 Apr. 2015	General election
She Zhili	Director	Engaged	29 Apr. 2015	General election

2015 Annual Report of Hubei Sanonda Co., Ltd.

Shiri Ailon	Director	Engaged	29 Apr. 2015	General election
	Chairman of the	Left as serve
Li Zuorong			29 Apr. 2015	Retired
	Board	term expired

		Left as serve
Liu Anping	Director		29 Apr. 2015	Job changes
		term expired

		Left as serve
He Xuesong	Director, CFO		29 Apr. 2015	Job changes
		term expired

		Left as serve
Yin Hong	Director		29 Apr. 2015	Job changes
		term expired

		Left as serve
Xie Chengli	Director		29 Apr. 2015	Job changes
		term expired

	Employee
Dong Chunji		Engaged	29 Apr. 2015	Elected by workers’ conference
	supervisor

Xu Yan	Supervisor	Engaged	29 Apr. 2015	General election
Zhou Cheng	Supervisor	Former	29 Apr. 2015	Voluntary demission
		Left as serve
Liu Jun	Supervisor		29 Apr. 2015	Job changes
		term expired

Liu Jianhua	GM	Former	29 Apr. 2015	Job changes

III. Resumes of important personnel

Main working experience of current directors, supervisors and senior management staff

Mr. An Liru, Master of chemical engineering and MBA, senior engineering, senior economist, worked since 1991. He successively acted as Assistant of GM, Vice GM, GM, Deputy Party Secretary of Jiangsu Anpon Electrochemical Co., Ltd. Chairman of Directors, Party Secretary of Jiangsu Huaihe Chemicals Co., Ltd.. Since Apr. 2014, he acts as CCO and Party Secretary of China National Agrochemical Corporation and Executive Directors (Legal representative) and CEO of Jiangsu Maidao Agrochemical Co., Ltd.. Since 29 Apr. 2015, he acts as the Chairman of Directors of the Company.

Mr. Guo Hui, Master of Chemical Engineering, Professor Level Senior Engineer, work since 1985. He successively acted as Deputy Director of Chemical Investment Planning Department, Development Plan of SINOPEC, Senior GM of Dapeng Securities Investment Bank, Deputy Director of Enterprise Reform Department of China Haohua Chemical Group Co., Ltd. Deputy Director of Asset Operation Department of China National Chemical Corporation Since Dec. 2004; he acts as Deputy GM of China National Agrochemical Corporation. Since 29 Apr. 2015, he acts as Directors of the Company.

Ms. She Zhili, master of commercial economy, Senior Accountant, works since 1983; she successively acted as GM of Financial Department, Audit Department of China National Pharmaceutical Corporation and Deputy Chief Accountant and Director of Financial Department. Since Apr. 2014, he acts as Deputy Chief Accountant of China National Agrochemical Corporation and Director of Financial Department and Supervisor of Jingzhou Sanonda Co., Ltd. Since 29 Apr. 2015, he acts as Director of the Company.

Ms. Shiri Ailon, Israeli Citizenship, Lawyer of Israel Certification MBA of Saïd Business School, she acted as Assistant Lawyer of Erdinast Ben-Nathan&Co.,Executive Assistant of CEO and Strategy and Business Development Senior Assistant in ADAMA Agricultural Solutions Ltd., the Head of Executive Director, Development and Integration of China in ADAMA Agricultural Solutions Company Development and M&A. Since May 2014, she acts as Deputy CEO of Agricultural Solutions Company. Since 29

2015 Annual Report of Hubei Sanonda Co., Ltd.

Apr. 2015, he acts as Director of the Company.

Mr. Ai Qiuhong, he has been a teacher of Xiangtan University since 2003. From Sep. 2005 to Jun. 2008, he was a doctor scholar in Xiangtan University majored in chemical engineering and received doctor degree in Jun. 2008. He has been acted as Independent Director of the Company since Feb. 2010.

Ms. Zhang Huide, associate professor of Zhongnan University of Economics and Law, supervisor of postgraduate, a CPA, member of Accounting Society of China, committee of Accounting Computerization Commission of Department of Finance of Hubei Province, training teacher for primary and intermediate accounting computerization. She is a teacher for Auditing skill applied in accounting computerization in national tax and local tax and has been involving in accounting computerization, teaching and research of ERP accounting information system as well as its actual application for many years. Now she acts as independent director of Golden Laser Co., Ltd. Fubon Stock, TECH Stock. She has been acted as Independent Director of the Company since Jul. 2010.

Mr. Li Dejun, born in 1957, Doctor degree, he successively acted as Chief Officer, Deputy Chief, Chief of CCNU and Research Institute of Wuhan Province Commission for Restructuring Economic System and Editor in Chief of Overview of Private Economy, Secretary General of Research Institute of Hubei Province Commission for Restructuring Economic System and Hubei Province Culture and Economy Research Society, Chief of Hubei Regional Economic Development Research Center as well as Independent Director of Chutian High-speed, Angel Yeast, Xingfu Industry and so on. He has been acted as Independent Director of the Company since Jul. 2010.

Mr. Liu Anping, he acted as the Company's Director, Assistant of GM from Dec. 2005 to Aug. 2006; Director, Deputy General Manager of the Company from Aug, 2006 to May 2012; Director and GM of the Company from May 2012 to Apr. 2015; He acted as GM of the Company since 29 Apr. 2015.

Mr. Yin Hong, acted as the Director of the Company from Aug. 2006 to Apr. 2015; and he has been the Vice GM of the Company since Jan. 2013.

Mr. Xie Chengli, acted as General Manager and Chairman of the Board of Directors of Hubei Sanonda Tianmen Agrochemical Co., Ltd from Jan. 2006 to Feb. 2009; worked as Assistant to General Manager of the Company from Feb. 2009 to Jan. 2013; and he has been the Director and Vice GM of the Company from Jan. 2013 to Apr. 2015. He has been the Vice GM of the Company since 29 Apr. 2015.

Mr. Liu Zhiming, acted as the Factory Director and Party Branch Secretary of the Pesticide 1st Plant of the Company from Jan. 2007 to Dec. 2012; and he has been the Assistant to GM of the Company since Jan. 2013.

Mr. Jiang Chenggang, acted as the Supervisor, Deputy Director of the Office and Deputy Secretaries of the Discipline Inspection Commission of the Company from Jun. 2006 to Jun. 2012; acted as the Chairman of the Labor Union, Supervisor, Deputy Director of the Office and Deputy Secretaries of the Discipline Inspection Commission of the Company from Jun. 2012 to Dec. 2012; and he has been the Chairman of the Labor Union, Supervisor and Secretaries of the Discipline Inspection Commission of the Company since Jan. 2013.

Mr. Fu Liping, acted as the Vice Factory Director and Factory Director of the Pesticide 3rd Plant of the Company from Jan. 2007 to Dec. 2012; and he has been the Employee Supervisor and Factory Director of the Pesticide 4[th] Plant of the Company since Jan. 2013 and employee Supervisor and Factory Director of the Pesticide 3rd Plant of the Company since Jan. 2014.

Mr. Ding Shaojun, acted as the Vice GM and GM of the Sales Company of the Company from Jul. 2001 to Jun. 2009; and acted as the GM and Secretary of Party Branch of the Thermoelectricity Company of the Company from Jul. 2009 to Dec. 2012; and he has been the Supervisor of the Company, GM and Secretary of Party Branch of the Thermoelectricity Company of the Company since Jan. 2013.

Mr. Dong Chunji, Engineer. He acted as Deputy Plant Manager, Plant Manager of Energy Power Plant of the Company from Jan 2000 to Dec. 2012, and Minister of Audit Department since Jan. 2013. Since 29 Apr. 2015, he acts as Supervisor of the Company. Ms. Xu Yan, Senior Accountant, she worked since 1991, successively acted as Financial Director of Fine Chemical Factory of Hubei Sanonda Co., Ltd. and Sanonda Jianghan Pharmacy Factory, Financial Section Chief of Jingzhou Coal Chemical Industry Co., Ltd., Financial Executive, and Assistant of Finance Minister of Sanonda Group Co., Ltd. She acts as Deputy Finance Minister of Sanonda

2015 Annual Report of Hubei Sanonda Co., Ltd.

Group Co., Ltd. Since 29 Apr. 2015, acts as Supervisor of the Company.

Mr. Li Zhongxi, he has been the Secretary to the Board of Directors and the Office Chief of the Company since Feb. 2000. Post-holding in shareholder units

√ Applicable □ Inapplicable

Name of the	Name of the shareholder unit	Position in
person holding					Receives payment
		the	Beginning date	Ending date of
any post in any					from the
		shareholder	of office term	office term
shareholder					shareholder unit?
		unit
unit
	Jingzhou Sanonda Co., Ltd.	Party Secretary
Liu Anping			1 May 2012		No

Post-holding in other units

√ Applicable □ Inapplicable

Name of the
					Receives payment
person holding		Position in	Beginning date	Ending date of
	Name of other unit				from the
any post in any		other unit	of office term	office term
					shareholder unit?
shareholder unit

		Executive
Liu Anping	Hubei Sanonda Foreign Trading Co., Ltd.		1 Dec. 2005		No
		Director

		Chairman of
Yin Hong	Jingzhou Hongxiang Chemicals Co., Ltd.		1 Apr. 2007		No
		the Board

Ai Qiuhong	Xiangtan University	Professor	1 Jan. 2003		Yes
		Associate
Zhang Huide	Zhongnan University of Economics		1 Oct. 2002		Yes
		Professor

		Independent
Zhang Huide	Wuhan Golden Laser Co.,Ltd.		1 Apr. 2009		Yes
		director

		Independent
Zhang Huide	Hubei Fubon Technology Co., Ltd.		1 Feb. 2011		Yes
		director

		Independent
Zhang Huide	TECH Semiconductors Co., Ltd		6 Jan. 2015		Yes
		director

	The Economic System Reform Institute of	Secretary
Li Dejun			1 Dec. 2009		No
	Hubei Province	general

		Independent
Li Dejun	Angel Yeast Co., Ltd.		18 Apr. 2013		Yes
		director

		Independent
Li Dejun	Chutian Expressway Co., Ltd.		1 Jun. 2010		Yes
		director

Particulars about the Company's current directors, supervisors and senior punishments from Securities Regulatory Institution of recent three years in reporting period

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

IV. Remuneration for directors, supervisors and senior management

Decision-making procedure, determining basis and actual payment for the remuneration of directors, supervisors and senior management

In line with the Appraisal Scheme for Implementing Remuneration of Directors and Senior Management Staffs and the annual operating target, the remuneration of Management Staffs was recognized and the Board appraised Senior management staffs based on the work report and business achievement of Senior management staffs.

Independent directors would not enjoy salary in the Company while the Company would drop annual allowance (after tax) of RMB 50,000 to independent directors respectively. Independent directors would present relevant meetings, perform responsibilities according to Articles of Association and apply for allowance factually.

Annual salary for supervisors was paid according to their posts.

Remuneration of the directors, supervisors and senior management of the Company during the reporting period is as follow:

Unit: RMB Thousand Yuan

						Whether gained
					Total before-tax
						remuneration
					remuneration
Name	Position	Gender	Age	Current/former		from the related
					gained from the
						parties of the
					Company
						Company

	Chairman of the
An Liru		Male	46	Current	0	Yes
	Board

Guo Hui	Director	Male	52	Current	0	Yes
Yu Zhili	Director	Female	51	Current	0	Yes
Shiri Ailon	Director	Female	40	Current	0	Yes
	Independent
Ai Qiuhong		Male	47	Current	5	No
	director

	Independent
Zhang Huide		Female	51	Current	5	No
	director

	Independent
Li Dejun		Male	58	Current	5	No
	director

Liu Anping	GM	Male	48	Current	38	No
Yin Hong	Vice GM	Male	48	Current	34	No
Xie Chengli	Vice GM	Male	48	Current	34	No
Liu Zhiming	GM	Male	40	Current	31	No
	Chairman of the
Jiang Chenggang		Male	41	Current	28	No
	Supervisor

Fu Liping	Supervisor	Male	50	Current	13	No
Ding Shaojun	Supervisor	Male	53	Current	13	No
Dong Chunji	Supervisor	Male	47	Current	13	No
Xu Yan	Supervisor	Female	43	Current	13	No

2015 Annual Report of Hubei Sanonda Co., Ltd.

	Chairman
Li Zhongxi		Male	45	Current	28	No
	Secretary

	Original
Li Zuorong	Chairman of the	Male	65	Former	19	No
	Board
	Original Director,
He Xuesong		Male	60	Former	20	No
	CFO

Liu Jianhua	Original GM	Male	37	Former	5	No
	Original
Zhou Cheng		Male	46	Former	2	No
	supervisor

	Original
Liu Jun		Female	54	Former	13	No
	supervisor

Total	--	--	--	--	319	--

Situations of equity incentives awarded to the directors, supervisors and senior management of the Company during the reporting period

□ Applicable √ Inapplicable

V. About employees

(I) As at 31 Dec. 2015 the Company totally had 1877employees in service, and has to undertake partial expenses for 1494 retired workers. The Company executed overall labor contract system, and carried out relevant provisions stipulated by the state as well as local laws and statutes. Expenses for retirees were all paid by society.

(II) Specialty classification of employees:

(II) Specialty classification of employees:
Specialty category	Number
Production personnel	1474
Technicians	123
Financial personnel	23
Sales personnel	54
Administrative personnel	203

(III) Education classification of employees

(III) Education classification of employees
Education	Number
Master above	12
Bachelor	335
Junior college	466
Other	1046

Employee’s remuneration policy and training plan

The Company firstly reset the positions and personnel as well as adjusted the wage structure, set up Salary Management Regulations of 2015 and strengthened staffs’ position performance appraisal. Secondly, the Company established legal holiday overtime management regulations, according to the standard prescribed by the national legal holiday overtime pay.

2015 Annual Report of Hubei Sanonda Co., Ltd.

(V) Employee’s training plan and relevant situation

In 2015, the Company adhered to the people-oriented, paid attention to employee training, strengthen the quality promotion, gradually establish professional training system, focus on the professional training, set up annual training plan, highlight job-transfer rotational training, improved the employee's quality and operation skills comprehensively and systematically, reduced safety risk and enhanced sense of identity. The Company opened up comprehensive knowledge rotational training 44 people. Organized job training and completed training classes approximately 1800, training 12000 people. Sufficiently made use of self sources, almost 100 technical personnel held the post education training teachers. Organized job transfer training with 1847 training classes and trained 331 people. Organized 46 people take part in team leader remote network training.

Situation of remuneration cost of Company

	Reporting period
Total number of employees accepted
	1,877
salaries(person)

Total salaries (Ten thousand Yuan)	19,503
Proportion of operation revenue in reporting
	8.99%
period

Average salary of senior executives (Ten thousand
	32.17
Yuan/person)

Average salary of total employees (Ten thousand
	9.99
Yuan/person)

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section IX. Corporate Governance

I. Basic details of corporate governance

During the reporting period, the Company continuously improved the awareness of corporate governance and corporate governance structure and perfected the corporate system as well as standardized the operation of the Company, promoted internal control activities, and constantly improve the Company's management levels stringently according to requirements of relevant laws and regulations like the Company Law, Securities Law, and Corporate Governance Principle of Listed Company, as well as Rules for Listing Shares in Shenzhen Stock Exchange. During the reporting period, the Company set up “Management System of Change of Share Holding in Directors, Supervisors and Senior Managers "and" Media Questioned Response System of the Company”, and Revised the Remuneration and Appraisal Plan of Directors and Senior Management, and Perfected the Management System of Related transaction, etc according to announcement On Further Strengthening the Disclose Internal Management. During reporting period, the Company set up “Response System to Media Question” According to "Listed Company's Articles of Association Guidelines (Revised in 2014) and the Rules of the General Meeting of Shareholders of Listing Company (Revised in 2014)" issued by the China Securities Regulatory Commission. During the preparation of the report, “the Articles of Association” of the Company, "the Rules of Procedure of the Shareholders' General Meeting" was revised

Whether it exists any difference between the corporate governance and the Company Law and relevant rules of CSRC or not? □ Yes √ No

There is no difference between the corporate governance and the Company Law and relevant rules of CSRC.

II. Particulars about the Company’s separation from the controlling shareholder in respect of

business, personnel, assets, organization and financial affairs

In the aspect of personnel: the Company and controlling shareholder are mutually independent in the labor, personnel and salary management, the Company general manager, deputy general manager and other senior management personnel get the salary in the Company, and not perform administrative work in the controlling shareholder unit.
In respect of assets: the Company's production system, auxiliary systems and facilities property rights belong to the Company and have registered trademark and other intangible assets in law; the Company has independent procurement and sales system, The Company's assets relationship between the controlling shareholder and the Company was clear, there was no such thing as a free possession or usage.
In respect of financing, the Company owned independent financial department, established independent accounting system and financial management system, opened independent bank account, paid tax in line with laws.
In respect of organization, the Company has set up the organization that was independent from the controlling shareholder completely, the Board of Directors, the Supervisory Committee and internal organization could operate independently.
In respect of business: the Company had a complete business system and independent operation. There was no competition between the controlling shareholders.

III. Horizontal competition

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

IV. Particulars about the annual shareholders’ general meeting and special shareholders’ general meetings held during the reporting period

1. Particulars about the shareholders’ general meeting in reporting period

		Proportion of
					Index to the
Session	Type	investors'	Convening date	Disclosure date
					disclosed
		participation

					Announcement on
					Resolutions Made at
					the 2014 Annual
The Annual
	The Annual				Shareholders’
Shareholders’
	Shareholders’	0.11%	3 Apr. 2015	4 Apr. 2015	General Meeting
General Meeting
	General Meeting				(Announcement No.:
of 2014
					2015-17) was

					published on
					www.cninfo.com.cn
					Announcement on
					First Special
The First Special					Shareholders’
	Special
Shareholders’					General Meeting
	Shareholders’	0.08%	29 Apr. 2015	30 Apr. 2015
General Meeting for					(Announcement No.:
	General Meeting
2015					2015-26) was

					published on
					www.cninfo.com.cn
					Announcement on
					Second Special
The Second Special					Shareholders’
	Special
Shareholders’					General Meeting
	Shareholders’	0.20%	9 Nov. 2015	10 Nov. 2015
General Meeting for					(Announcement No.:
	General Meeting
2015					2015-54) was

					published on
					www.cninfo.com.cn
Particulars about institutional investors
Name of institutional investors		Numbers of directors		Participation times

2. Special Shareholders’ General Meeting applied by the preferred stockholder with restitution of voting right

□ Applicable √ Inapplicable

2015 Annual Report of Hubei Sanonda Co., Ltd.

V. Performance of the Independent Directors

1. Particulars about the independent directors attending the board sessions and the shareholders’ general meetings

1. Particulars about the independent directors attending the board sessions	1. Particulars about the independent directors attending the board sessions	1. Particulars about the independent directors attending the board sessions	1. Particulars about the independent directors attending the board sessions	1. Particulars about the independent directors attending the board sessions	1. Particulars about the independent directors attending the board sessions	1. Particulars about the independent directors attending the board sessions
	Sessions required		Attendance by			Non-attendance
	to attend during	Attendance in	way of	Entrusted		in person for two
Independent director					Absence rate
	the reporting	person	telecommunicati	presence (times)		consecutive

	period		on			times
Li Dejun	9	7	2	0	0	No
Zhang Huide	9	6	3	0	0	No
Ai Qiuhong	9	6	3	0	0	No
General meetings sat in on by
		3
independent directors

Note to non-attendance in person for two consecutive times

2. Particulars about independent directors proposing objection on relevant events

Whether independent directors propose objection on relevant events or not?

□ Yes √ No

During the reporting period, no independent directors proposed any objection on relevant events of the Company.

3. Other explanations about the duty performance of independent directors

Whether advices to the Company from independent directors were adopted or not

√ Yes □ No

Explanation on the advices of independent directors for the Company being adopted or not adopted

During the reporting period, the Company independent director according to the Company Law, the Listed Corporate Governance Standards, "Articles of Association" and "Company of the Independent Director System” focused on the Company operation actively, independently perform their duties, put forward lot of valuable professional suggestions to the company's information disclosure, complete system and daily management decision-making, etc. issue the independent and impartial advice to related transaction, hiring annual audit institutions, guaranty matters and other events need advice of the independent director, play a proper role in improving the supervision of company safeguard the legitimate rights and interests of company and all shareholders.

VI. Performance of the Special Committees under the Board during the reporting period

(I) Performance of the Audit Committee of the Board

According to regulations of CSRC and Shenzhen Stock Exchange, The Annual Work System of Independent Director and Detailed Rules for the Implementation of the Audit Committee of the Board of the Company, and based on the principle of faithfulness, the Company give full play to the supervisory function, during the reporting period mainly fulfill the following duties:

A. Supervise and review the Company's financial information and its disclosure. B. Supervise the Company's internal audit system

2015 Annual Report of Hubei Sanonda Co., Ltd.

and its implementation. C. Review whether the Company’s establish a sound internal control system and its implementation. D. Supervise the communication between internal audit and external audit:

(II) Duty performance of the Remuneration & Appraisal Committee under the Board: During the reporting period, the Remuneration & Appraisal Committee of the Company examined Proposal of the Remuneration of the Directors, Supervisors and Senior Management Staffs of the Company in 2015, evaluate annual performance of their duties of the directors, supervisors and senior management staffs of the Company, put forward the Company senior management staffs performance incentives and submitted to the board of directors of the Company.

(III) Duty performance of the Nomination Committee under the Board:

In accordance with the Company’s Articles of Association and Rules for Nomination Committee under the Board, the Company’s Nomination Committee carefully examined the senior management staffs engaged during the reporting period, further perfecting the corporate governance structure; standardize the Company directors and managers hiring procedure.

(IV) Duty performance of Strategy Committee under the Board:

During the reporting period, Strategy committee, in accordance with the Company the implementation details the strategy committee of the board to perform his duties; to enhance the competitiveness; the Strategy Committee studied long-term development strategic planning and put forward suggestions for the Company.

VII. Performance of the Supervisory Committee

During the reporting period, the Supervisory Committee found whether there was risk in the Company in the supervisory activity □ Yes √ No

The Supervisory Committee has no objection on the supervised events during the reporting period.

VIII. Performance Evaluation and Incentive Mechanism for Senior Management Staff

In respect of the appraisal for senior management staffs, the Company is mainly in accordance with the annual business performance and performance of personal duties to realize annual remuneration to senior management staffs. And the Company hasn’t conducted any equity incentive plan recently. The Company will, in line with market-oriented principles, constantly perfect appraisal and incentive mechanism, closely link remuneration of senior management staffs with administration level and business performance, fully arouse and motivate enthusiasm and creativity of senior management staffs, and maximize shareholder’s value as a result.

IX. Internal Control

1. Particulars about significant defects found in the internal control during reporting period

□ Yes √ No

2. Self-appraisal report on internal control

Disclosure date of the Self-appraisal 18 Mar. 2016 Report on Internal Control

2015 Annual Report of Hubei Sanonda Co., Ltd.

Disclosure index of the Self-appraisal
	http://www.cninfo.com.cn
Report on Internal Control

The proportion of total assets included in
evaluation scope entities in the
	100.00%
Company's total assets of the consolidated

financial statements
The proportion of operation revenue
included in evaluation scope entities in
	100.00%
the Company's operation revenue of the

consolidated financial statements
Defect judging standards
Category	Financial Report	Non-Financial Report
		Great defect was referred to one or
	Great defect was referred to one or several
		several defect groups may badly
	defect groups may badly influence the
		influence the effectiveness of overall
	effectiveness of overall internal control
Qualitative criteria		internal control which lead to the
	which lead to the Company cannot avoid or
		Company cannot avoid or find the
	find the consequence badly deviate from the
		consequence badly deviate from the
	overall control objectives.
		overall control objectives.

	Great defect was referred to one or several	Great defect was referred to one or
	defect groups may lead to the Company	several defect groups may lead to the
	badly deviate from the control objectives	Company badly deviate from the control
Quantitative criteria
	which arrived at 0.5% or above of total	objectives which arrived at 0.5% or

	operating revenue in consolidated financial	above of total operating revenue in
	statements.	consolidated financial statements.
Number of significant defects of financial
	0
report (Piece)

Number of significant defects of non-
	0
financial report (Piece)

Number of important defects of financial
	0
report (Piece)

Number of important defects of
	0
non-financial report (Piece)

X. Audit report on internal control

√ Applicable □ Inapplicable

Audit opinion paragraphs in the Audit Report on Internal Control

We believe that the Company has maintained effective internal control on financial report in all significant respects according to the Basic Rules for Enterprise Internal Control and relevant regulations on 31 Dec. 2015.

2015 Annual Report of Hubei Sanonda Co., Ltd.

Particulars about Audit Report on Disclosure Internal Control Disclosure date of the Audit Report 18 Mar. 2016 on Internal Control Disclosure index of the Audit http://www.cninfo.com.cn Report on Internal Control Type of Audit Report on Internal Unqualified auditor's report Control Whether there is significant defect No in non-financial report

Whether the CPAs firm issues an Audit Report on Internal Control with non-standard opinion or not?

□ Yes √ No

Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or not?

√ Yes □ No

2015 Annual Report of Hubei Sanonda Co., Ltd.

Section X. Financial Report

I. Auditor’s report

Type of audit opinion	Standard unqualified audit opinion
Date for signing the auditor’s report	15 Mar. 2016
Name of the audit firm	Ruihua China Certified Public Accountants (LLP)
Document Number of the auditor’s report	[2016] No. 02160006
Name of the CPA	Tang Qiyong, Yin Donghan

Text of the Auditor’s Report

Auditor’s Report

RHSZ [2016] No. 02160006

TO THE SHAREHOLDERS OF HUBEI SANONDA CO., LTD.

We have audited the accompanying financial statements of Hubei Sanonda Co., Ltd. (the “Company” or “Sanonda”) and its subsidiaries (hereinafter jointly referred to as “the Group”), which comprise the consolidated and the Company’s balance sheets as at 31 Dec. 2015, the consolidated and the Company’s income statements, the consolidated and the Company’s statements of change in equity, the consolidated and the Company’s cash flow statements for the year then ended, and notes to the financial statements.

I. The management level’s responsibility for the financial statements

The management of the Company is responsible for the preparation of these financial statements and fair presentation. These responsibilities include: (1) preparing financial statements according to the Accounting Standards for Business Enterprises and make them a fair presentation; and (2) designing, implementing and maintaining internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

II. Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with Auditing Standards for CICPA. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit includes performing audit procedures, so as to obtain audit evidence to support the amounts and disclosures in the financial statements. Audit procedures are relied on the auditors’ judgments, including assessment on the risk of material misstatement of these financial statements arising from fraud or error. In risk assessment procedures, we consider internal controls relating to the preparation of these financial statements to design appropriate audit procedures. An audit also includes assessing the reasonability of accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation.

We believe that the audit evidence we have obtained is sufficient and effective, providing a reasonable basis for our opinion.

III. Audit opinion

In our opinion, the financial statements comply with the Accounting Standards for Business Enterprises in all material respects and present fairly the Group’s consolidated financial position as at 31 Dec. 2015 and its consolidated business results and cash flows for the year then ended, as well as the Company’s financial position as at 31 Dec. 2015 and its business results and cash flows for the year then ended.

2015 Annual Report of Hubei Sanonda Co., Ltd.

Ruihua China Certified Public Accountants (LLP) CPA of China: Tang Qiyong Beijing·China CPA of China: Yin Donghan 15 Mar. 2016

II. Financial statements

Monetary unit of notes to financial statements: RMB Yuan

1. Consolidated balance sheet

Prepared by Hubei Sanonda Co., Ltd.

31 Dec. 2015

Unit: RMB Yuan

Item	31 Dec. 2015	31 Dec. 2014
Current Assets:
Monetary funds	406,098,208.72	423,347,736.46
Settlement reserves
Intra-group lendings
Financial assets measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial assets
Notes receivable	34,433,010.97	2,874,466.50
Accounts receivable	180,450,531.93	195,635,912.75
Accounts paid in advance	20,413,365.68	19,444,766.16
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract

reserves

Interest receivable
Dividend receivable
Other accounts receivable	9,847,451.35	19,679,596.65
Financial assets purchased under

agreements to resell

Inventories	287,824,164.30	330,541,606.05

2015 Annual Report of Hubei Sanonda Co., Ltd.

Assets held for sale
Non-current assets due within 1 year
Other current assets	14,685,220.14
Total current assets	953,751,953.09	991,524,084.57
Non-current assets:
Loans by mandate and advances

granted

Available-for-sale financial assets	9,153,782.63	9,153,782.63
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment
Investing real estate	5,036,745.54	5,363,928.28
Fixed assets	1,684,051,200.09	1,248,826,394.76
Construction in progress	143,683,545.15	423,857,021.70
Engineering materials		88,970,010.63
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets	165,569,924.44	140,020,897.12
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets	11,021,018.38	13,199,137.78
Other non-current assets	5,000,000.00	13,384,400.00
Total of non-current assets	2,023,516,216.23	1,942,775,572.90
Total assets	2,977,268,169.32	2,934,299,657.47
Current liabilities:
Short-term borrowings	20,000,000.00	75,000,000.00
Borrowings from Central Bank
Customer bank deposits and due to

banks and other financial institutions

Intra-group borrowings
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses

2015 Annual Report of Hubei Sanonda Co., Ltd.

Derivative financial liabilities
Notes payable		15,000,000.00
Accounts payable	134,357,481.77	216,786,274.77
Accounts received in advance	26,666,138.22	34,830,464.65
Financial assets sold for repurchase
Handling charges and commissions

payable

Payroll payable	30,308,341.73	25,740,973.02
Tax payable	26,858,466.27	72,051,904.29
Interest payable	1,123,849.31
Dividend payable	250,000.00	250,000.00
Other accounts payable	25,511,333.81	31,749,791.93
Reinsurance premiums payable
Insurance contract reserves
Payables for acting trading of

securities

Payables for acting underwriting of

securities

Liabilities held for sale
Non-current liabilities due within 1
	244,000,000.00	500,000.00
year

Other current liabilities
Total current liabilities	509,075,611.11	471,909,408.66
Non-current liabilities:
Long-term borrowings	343,590,000.00	431,590,000.00
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables	650,000.00	650,000.00
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income	26,570,088.61	22,754,814.82
Deferred income tax liabilities
Other non-current liabilities

2015 Annual Report of Hubei Sanonda Co., Ltd.

Total non-current liabilities	370,810,088.61	454,994,814.82
Total liabilities	879,885,699.72	926,904,223.48
Owners’ equity:
Share capital	593,923,220.00	593,923,220.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves	263,063,461.97	263,184,043.66
Less: Treasury stock
Other comprehensive income
Specific reserves	22,848,859.15	15,425,099.43
Surplus reserves	190,699,248.11	178,048,385.86
Provisions for general risks
Retained profits	1,026,847,680.37	957,050,401.65
Total equity attributable to owners of
	2,097,382,469.60	2,007,631,150.60
the Company

Minority interests		-235,716.61
Total owners’ equity	2,097,382,469.60	2,007,395,433.99
Total liabilities and owners’ equity	2,977,268,169.32	2,934,299,657.47

Legal representative: An Liru Person-in-charge of the accounting work: Liu Anping

Chief of the accounting division: Tu Zhiwen

2. Balance sheet of the Company

Unit: RMB Yuan

Item	31 Dec. 2015	31 Dec. 2014
Current Assets:
Monetary funds	378,450,204.94	349,250,284.42
Financial assets measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial assets
Notes receivable	32,331,010.97	2,874,466.50
Accounts receivable	352,274,073.40	360,573,034.99
Accounts paid in advance	19,218,775.50	18,069,109.19

2015 Annual Report of Hubei Sanonda Co., Ltd.

Interest receivable
Dividend receivable
Other accounts receivable	1,535,805.55	76,252,385.90
Inventories	275,057,647.64	319,798,378.74
Assets held for sale
Non-current assets due within 1 year
Other current assets	387,633.86
Total current assets	1,059,255,151.86	1,126,817,659.74
Non-current assets:
Available-for-sale financial assets	9,153,782.63	9,153,782.63
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investment	55,526,635.41	55,526,635.41
Investing real estate	5,036,745.54	5,363,928.28
Fixed assets	1,543,099,613.97	1,091,620,961.82
Construction in progress	139,297,997.97	423,857,021.70
Engineering materials		88,970,010.63
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets	150,253,232.11	127,725,897.93
R&D expense
Goodwill
Long-term deferred expenses
Deferred income tax assets	8,855,180.95	10,510,039.23
Other non-current assets	5,000,000.00	13,384,400.00
Total of non-current assets	1,916,223,188.58	1,826,112,677.63
Total assets	2,975,478,340.44	2,952,930,337.37
Current liabilities:
Short-term borrowings	20,000,000.00	75,000,000.00
Financial liabilities measured at fair
value of which changes are recorded in
current profits and losses
Derivative financial liabilities
Notes payable		15,000,000.00

2015 Annual Report of Hubei Sanonda Co., Ltd.

Accounts payable	129,017,385.70	210,008,050.11
Accounts received in advance	24,885,411.49	22,676,046.39
Payroll payable	28,311,263.93	22,596,483.36
Tax payable	21,773,193.24	85,567,106.10
Interest payable	1,123,849.31
Dividend payable	250,000.00	250,000.00
Other accounts payable	23,536,806.94	30,090,888.88
Liabilities held for sale
Non-current liabilities due within 1
	244,000,000.00	500,000.00
year

Other current liabilities
Total current liabilities	492,897,910.61	461,688,574.84
Non-current liabilities:
Long-term borrowings	343,590,000.00	431,590,000.00
Bonds payable
Of which: preferred shares
Perpetual bonds
Long-term payables	650,000.00	650,000.00
Long-term payroll payables
Specific payables
Estimated liabilities
Deferred income	19,686,755.26	14,888,148.15
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities	363,926,755.26	447,128,148.15
Total liabilities	856,824,665.87	908,816,722.99
Owners’ equity:
Share capital	593,923,220.00	593,923,220.00
Other equity instruments
Of which: preferred shares
Perpetual bonds
Capital reserves	263,799,837.18	263,799,837.18
Less: Treasury stock
Other comprehensive income

2015 Annual Report of Hubei Sanonda Co., Ltd.

Specific reserves	17,879,746.84	10,455,987.12
Surplus reserves	190,699,248.11	178,048,385.86
Retained profits	1,052,351,622.44	997,886,184.22
Total owners’ equity	2,118,653,674.57	2,044,113,614.38
Total liabilities and owners’ equity	2,975,478,340.44	2,952,930,337.37

3. Consolidated income statement

Unit: RMB Yuan

Item	2015	2014
I. Total operating revenues	2,169,936,637.07	3,131,186,300.05
Including: Sales income	2,169,936,637.07	3,131,186,300.05
Interest income
Premium income
Handling charge and commission

income

II. Total operating costs	1,988,281,269.45	2,465,984,036.81
Including: Cost of sales	1,729,416,788.12	2,192,274,088.19
Interest expenses
Handling charge and commission

expenses

Surrenders
Net claims paid
Net amount withdrawn for the

insurance contract reserve

Expenditure on policy dividends
Reinsurance premium
Taxes and associate charges	15,426,595.52	6,606,935.80
Selling and distribution expenses	84,149,115.89	97,828,145.48
Administrative expenses	116,918,295.25	125,293,281.02
Financial expenses	14,207,495.95	27,161,121.43
Asset impairment loss	28,162,978.72	16,820,464.89
Add: Gain/(loss) from change in fair

value (“-” means loss)

Gain/(loss) from investment (“-”
	1,667,155.76	1,716,466.00
means loss)

2015 Annual Report of Hubei Sanonda Co., Ltd.

Including: share of profits in

associates and joint ventures

Foreign exchange gains (“-” means

loss)

III. Business profit (“-” means loss)	183,322,523.38	666,918,729.24
Add: non-operating income	5,774,583.49	4,823,907.57
Including: Gains on disposal of
	80,003.58	76,490.60
non-current assets

Less: non-operating expense	71,737.16	3,076,652.52
Including: Losses on disposal of
	47,981.54	21,677.41
non-current assets

IV. Total profit (“-” means loss)	189,025,369.71	668,665,984.29
Less: Income tax expense	47,069,771.82	177,382,131.06
V. Net profit (“-” means loss)	141,955,597.89	491,283,853.23
Net profit attributable to owners of
	141,840,462.97	491,771,929.22
the Company

Minority shareholders’ income	115,134.92	-488,075.99
VI. After-tax net amount of other

comprehensive incomes

After-tax net amount of other
comprehensive incomes attributable to
owners of the Company
(I) Other comprehensive incomes
that will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees that

cannot be reclassified into gains and

losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and
losses
1. Enjoyable shares in other
comprehensive incomes in investees that

will be reclassified into gains and losses

under the equity method

2015 Annual Report of Hubei Sanonda Co., Ltd.

2. Gains and losses on fair
value changes of available-for-sale
financial assets
3. Gains and losses on
reclassifying held-to-maturity

investments into available-for-sale

financial assets
4. Effective hedging gains and

losses on cash flows

5. Foreign-currency financial

statement translation difference

6. Other
After-tax net amount of other
comprehensive incomes attributable to
minority shareholders
VII. Total comprehensive incomes	141,955,597.89	491,283,853.23
Attributable to owners of the
	141,840,462.97	491,771,929.22
Company

Attributable to minority
	115,134.92	-488,075.99
shareholders

VIII. Earnings per share
(I) Basic earnings per share	0.2388	0.8280
(II) Diluted earnings per share	0.2388	0.8280

Where business mergers under the same control occurred in this reporting period, the net profit achieved by the merged parties before the business mergers was RMB XXX, with the corresponding amount for the last period being RMB XXX.

Legal representative: An Liru Person-in-charge of the accounting work: Liu Anping Chief of the accounting division: Tu Zhiwen

4. Income statement of the Company

Unit: RMB Yuan

Item	2015	2014
I. Total sales	2,210,096,588.36	3,138,163,705.20
Less: cost of sales	1,793,926,045.78	2,207,188,868.64
Business taxes and surcharges	15,309,939.37	6,418,266.63
Distribution expenses	79,881,628.77	89,534,392.89
Administrative expenses	107,986,235.81	105,405,163.52

2015 Annual Report of Hubei Sanonda Co., Ltd.

Financial costs	18,002,209.57	27,979,173.45
Impairment loss	29,769,315.90	16,183,866.12
Add: gain/(loss) from change in fair

value (“-” means loss)

Gain/(loss) from investment (“-”
	1,667,155.76	1,716,466.00
means loss)

Including: income form investment

on associates and joint ventures

II. Business profit (“-” means loss)	166,888,368.92	687,170,439.95
Add: non-operating income	4,101,250.17	3,838,468.58
Including: Gains on disposal of
	80,003.28	74,384.94
non-current assets

Less: non-operating expense	55,101.89	1,900,607.83
Including: Losses on disposal of
	47,981.54	21,677.41
non-current assets

III. Total profit (“-” means loss)	170,934,517.20	689,108,300.70
Less: Income tax expense	44,425,894.73	171,966,925.23
IV. Net profit (“-” means loss)	126,508,622.47	517,141,375.47
V. After-tax net amount of other

comprehensive incomes

(I) Other comprehensive incomes that
will not be reclassified into gains and
losses
1. Changes in net liabilities or
assets with a defined benefit plan upon
re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees

that cannot be reclassified into gains

and losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and
losses
1. Enjoyable shares in other
comprehensive incomes in investees

that will be reclassified into gains and

losses under the equity method
2. Gains and losses on fair value

changes of available-for-sale financial

2015 Annual Report of Hubei Sanonda Co., Ltd.

assets
3. Gains and losses on
reclassifying held-to-maturity

investments into available-for-sale

financial assets
4. Effective hedging gains and

losses on cash flows

5. Foreign-currency financial

statement translation difference

6. Other
VI. Total comprehensive incomes	126,508,622.47	517,141,375.47
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share

5. Consolidated cash flow statement

Unit: RMB Yuan

Item	2015	2014
I. Cash flows from operating activities:
Cash received from sale of
	1,828,429,901.21	2,956,964,032.36
commodities and rendering of service

Net increase of deposits from

customers and dues from banks

Net increase of loans from the central

bank

Net increase of funds borrowed from

other financial institutions

Cash received from premium of

original insurance contracts

Net cash received from reinsurance

business

Net increase of deposits of policy

holders and investment fund

Net increase of disposal of financial
assets measured at fair value of which

changes are recorded into current gains

and losses

2015 Annual Report of Hubei Sanonda Co., Ltd.

Cash received from interest, handling

charges and commissions

Net increase of intra-group

borrowings

Net increase of funds in repurchase

business

Tax refunds received	36,715,951.72	30,957,390.54
Other cash received relating to
	23,527,915.17	23,365,727.14
operating activities

Subtotal of cash inflows from operating
	1,888,673,768.10	3,011,287,150.04
activities

Cash paid for goods and services	1,162,607,327.67	1,743,544,298.07
Net increase of customer lendings

and advances

Net increase of funds deposited in the
central bank and amount due from
banks
Cash for paying claims of the original

insurance contracts

Cash for paying interest, handling

charges and commissions

Cash for paying policy dividends
Cash paid to and for employees	203,266,586.53	207,427,145.93
Various taxes paid	168,416,970.49	225,801,242.06
Other cash payment relating to
	78,292,830.61	135,340,608.06
operating activities

Subtotal of cash outflows from
	1,612,583,715.30	2,312,113,294.12
operating activities

Net cash flows from operating activities	276,090,052.80	699,173,855.92
II. Cash flows from investing activities:
Cash received from withdrawal of

investments

Cash received from return on
	1,667,155.76	1,716,466.00
investments

Net cash received from disposal of
fixed assets, intangible assets and other		1,350.00
long-term assets
Net cash received from disposal of

2015 Annual Report of Hubei Sanonda Co., Ltd.

subsidiaries or other business units
Other cash received relating to

investing activities

Subtotal of cash inflows from investing
	1,667,155.76	1,717,816.00
activities

Cash paid to acquire fixed assets,
intangible assets and other long-term	299,433,155.03	394,819,264.29
assets
Cash paid for investment
Net increase of pledged loans
Net cash paid to acquire subsidiaries

and other business units

Other cash payments relating to

investing activities

Subtotal of cash outflows from
	299,433,155.03	394,819,264.29
investing activities

Net cash flows from investing activities	-297,765,999.27	-393,101,448.29
III. Cash Flows from Financing

Activities:

Cash received from capital

contributions

Including: Cash received from
minority shareholder investments by
subsidiaries
Cash received from borrowings	411,605,350.00	479,659,359.80
Cash received from issuance of

bonds

Other cash received relating to
	4,500,000.00
financing activities

Subtotal of cash inflows from financing
	416,105,350.00	479,659,359.80
activities

Repayment of borrowings	311,105,350.00	705,269,565.35
Cash paid for interest expenses and
	96,509,984.27	71,088,591.71
distribution of dividends or profit

Including: dividends or profit paid

by subsidiaries to minority shareholders

Other cash payments relating to
		2,070,000.00
financing activities

2015 Annual Report of Hubei Sanonda Co., Ltd.

Sub-total of cash outflows from
	407,615,334.27	778,428,157.06
financing activities

Net cash flows from financing activities	8,490,015.73	-298,768,797.26
IV. Effect of foreign exchange rate
	436,403.00	1,478,204.88
changes on cash and cash equivalents

V. Net increase in cash and cash
	-12,749,527.74	8,781,815.25
equivalents

Add: Opening balance of cash and
	418,847,736.46	410,065,921.21
cash equivalents

VI. Closing balance of cash and cash
	406,098,208.72	418,847,736.46
equivalents

6. Cash flow statement of the Company

Unit: RMB Yuan

Item	2015	2014
I. Cash flows from operating activities:
Cash received from sale of
	1,767,558,591.55	2,721,769,889.28
commodities and rendering of service

Tax refunds received	17,304,929.94	23,083,897.73
Other cash received relating to
	23,252,761.15	92,468,682.36
operating activities

Subtotal of cash inflows from operating
	1,808,116,282.64	2,837,322,469.37
activities

Cash paid for goods and services	1,063,025,264.15	1,663,650,870.84
Cash paid to and for employees	192,508,520.76	198,112,066.92
Various taxes paid	162,618,946.37	223,837,271.44
Other cash payment relating to
	70,888,821.44	118,306,489.22
operating activities

Subtotal of cash outflows from
	1,489,041,552.72	2,203,906,698.42
operating activities

Net cash flows from operating activities	319,074,729.92	633,415,770.95
II. Cash flows from investing activities:
Cash received from retraction of

investments

Cash received from return on
	1,667,155.76	1,716,466.00
investments

Net cash received from disposal of		1,350.00

2015 Annual Report of Hubei Sanonda Co., Ltd.

fixed assets, intangible assets and other
long-term assets
Net cash received from disposal of

subsidiaries or other business units

Other cash received relating to

investing activities

Subtotal of cash inflows from investing
	1,667,155.76	1,717,816.00
activities

Cash paid to acquire fixed assets,
intangible assets and other long-term	295,633,155.03	393,505,156.18
assets
Cash paid for investment
Net cash paid to acquire subsidiaries

and other business units

Other cash payments relating to

investing activities

Subtotal of cash outflows from
	295,633,155.03	393,505,156.18
investing activities

Net cash flows from investing activities	-293,965,999.27	-391,787,340.18
III. Cash Flows from Financing

Activities:

Cash received from capital

contributions

Cash received from borrowings	371,000,000.00	411,000,000.00
Cash received from issuance of

bonds

Other cash received relating to
	4,500,000.00
financing activities

Subtotal of cash inflows from financing
	375,500,000.00	411,000,000.00
activities

Repayment of borrowings	270,500,000.00	560,390,000.00
Cash paid for interest expenses and
	96,130,659.70	71,088,591.71
distribution of dividends or profit

Other cash payments relating to
		2,070,000.00
financing activities

Sub-total of cash outflows from
	366,630,659.70	633,548,591.71
financing activities

Net cash flows from financing activities	8,869,340.30	-222,548,591.71

2015 Annual Report of Hubei Sanonda Co., Ltd.

IV. Effect of foreign exchange rate
	-278,150.43	-178,674.99
changes on cash and cash equivalents

V. Net increase in cash and cash
	33,699,920.52	18,901,164.07
equivalents

Add: Opening balance of cash and
	344,750,284.42	325,849,120.35
cash equivalents

VI. Closing balance of cash and cash
	378,450,204.94	344,750,284.42
equivalents

7. Consolidated statement of changes in owners’ equity

2015

Unit: RMB Yuan

==> picture [480 x 467] intentionally omitted <==

----- Start of picture text -----

2015
Equity attributable to owners of the Company
Other equity
Other Minorit Total
Item instruments Less: General
Share Capital compre Specific Surplus Retaine y owners’
capital Prefer Perpet reserve treasury hensive reserve reserve risk d profit interests equity
red ual Other stock reserve
incomes
shares bonds
I.
Balanc
e at
I. Balance at the the 2,007,3
263,184 15,425, 178,048 957,050 -235,71
end of the end of 95,433.
,043.66 099.43 ,385.86 ,401.65 6.61
previous year the 99
previo
us
year
Add:
chang
Add: change of
e of
accounting policy
accou
nting
policy
Correction of Correc
errors in previous tion of
periods errors
in
----- End of picture text -----

2015 Annual Report of Hubei Sanonda Co., Ltd.

	previo
	us
	period
	s

	Busine
	ss
	merge
Business
	rs
mergers under the
	under
same control
	the

	same
	contro
	l

Other
	Other

	II.
	Balanc
	e at
II. Balance at the							2,007,3
	the	263,184	15,425,	178,048	957,050	-235,71
beginning of the							95,433.
	beginn	,043.66	099.43	,385.86	,401.65	6.61
year							99
	ing of

	the
	year
	III.
	Increa
	se/
	decrea
III. Increase/
	se in
decrease in the		-120,58	7,423,7	12,650,	69,797,	235,716	89,987,
	the
period (“-” means		1.69	59.72	862.25	278.72	.61	035.61
	period
decrease)
	(“-”

	means
	decrea
	se)
	(I)
	Total
(I) Total	compr
					141,840	115,134	141,955
comprehensive	ehensi
					,462.97	.92	,597.89
incomes	ve

	incom
	es

2015 Annual Report of Hubei Sanonda Co., Ltd.

	(II)
	Capita
	l
	increa
(II) Capital
	sed	-120,58	120,581
increased and
	and	1.69	.69
reduced by owners
	reduce

	d by
	owner
	s
	1.
	Comm
	on
1. Common
	shares
shares increased
	increa
by shareholders
	sed by

	shareh
	olders
	2.
	Capita
	l
	increa
2. Capital
	sed by
increased by
	holder
holders of other
	s of
equity instruments
	other

	equity
	instru
	ments
	3.
	Amou
	nts of
	share-
3. Amounts
	based
of share-based
	payme
payments
	nts
recognized in
	recogn
owners’ equity
	ized in

	owner
	s’
	equity
	4.	-120,58	120,581
4. Other
	Other	1.69	.69

2015 Annual Report of Hubei Sanonda Co., Ltd.

	(III)
(III) Profit	Profit	12,650,	-72,043,	-59,392,

distribution	distrib	862.25	184.25	322.00

	ution
	1.
	Appro
	priatio
1.
	ns to	12,650,	-12,650,
Appropriations to
	surplu	862.25	862.25
surplus reserves
	s

	reserv
	es
	2.
	Appro
2.	priatio
Appropriations to	ns to

general risk	genera

provisions	l risk
	provisi
	ons
	3.
	Appro
3.	priatio
Appropriations to	ns to		-59,392,	-59,392,

owners (or	owner		322.00	322.00

shareholders)	s (or
	shareh
	olders)
	4.
4. Other
	Other

	(IV)
	Intern
	al
(IV) Internal	carry-f
carry-forward of	orwar
owners’ equity	d of
	owner
	s’
	equity
1. New	1.
increase of capital	New
(or share capital)	increa

2015 Annual Report of Hubei Sanonda Co., Ltd.

from capital public	se of
reserves	capital
	(or
	share
	capital
	) from
	capital
	public
	reserv
	es
	2.
	New
	increa
	se of
2. New	capital
increase of capital	(or
(or share capital)	share
from surplus	capital
reserves	) from
	surplu
	s
	reserv
	es
	3.
	Surplu
	s
3. Surplus
	reserv
reserves for
	es for
making up losses
	makin

	g up
	losses
	4.
4. Other
	Other

	(V)
	Specif
(V) Specific		7,423,7	7,423,7
	ic
reserve		59.72	59.72
	reserv

	e
	1.
	Withdr
1. Withdrawn		10,793,	10,793,
	awn
for the period		695.00	695.00
	for the

	period

2015 Annual Report of Hubei Sanonda Co., Ltd.

	2.
2. Used in the	Used		3,369,9			3,369,9

period	in the		35.28			35.28

	period
	(VI)
(VI) Other
	Other

	IV.					2,097,3 82,469. 60
	Closin				1,026,8
IV. Closing		263,063	22,848,	190,699
	g				47,680.
balance		,461.97	859.15	,248.11
	balanc				37

	e

2014

Unit: RMB Yuan

							2014	2014	2014	2014
		Equity attributable to o					wners of the Company
		Other equity										Minorit
							Other						Total
Item
		instruments				Less:				General		y
	Share				Capital		compre	Specific	Surplus		Retaine		owners’
		Prefer	Perpet			treasury				risk		interest
	capital				reserve		hensive	reserve	reserve		d profit		equity
		red	ual	Other		stock				reserve		s
							incomes
		shares	bonds

I. Balance at the	593,92												1,546,4
					263,184			16,059,	126,334		546,688	252,359
end of the	3,220.												41,931.
					,043.66			288.71	,248.31		,770.98	.38
previous year	00												04

Add: change of

accounting policy

Correction of
errors in previous
periods
Business
mergers under the
same control
Other
II. Balance at the	593,92												1,546,4
					263,184			16,059,	126,334		546,688	252,359
beginning of the	3,220.												41,931.
					,043.66			288.71	,248.31		,770.98	.38
year	00												04

III. Increase/
decrease in the								-634,18	51,714,		410,361	-488,07	460,953

period (“-” means								9.28	137.55		,630.67	5.99	,502.95

decrease)

2015 Annual Report of Hubei Sanonda Co., Ltd.

(I) Total
		491,771	-488,07	491,283
comprehensive
		,929.22	5.99	,853.23
incomes

(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by

holders of other

equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit	51,714,	-81,410,		-29,696,

distribution	137.55	298.55		161.00

1.
	51,714,	-51,714,
Appropriations to
	137.55	137.55
surplus reserves

2.
Appropriations to

general risk

provisions
3.
Appropriations to		-29,696,		-29,696,

owners (or		161.00		161.00

shareholders)
4. Other
(IV) Internal
carry-forward of
owners’ equity
1. New
increase of capital

(or share capital)

from capital public

2015 Annual Report of Hubei Sanonda Co., Ltd.

reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific			-634,18				-634,18

reserve			9.28				9.28

1. Withdrawn			11,062,				11,062,

for the period			407.36				407.36

2. Used in the			11,696,				11,696,

period			596.64				596.64

(VI) Other
	593,92						2,007,3
IV. Closing		263,184	15,425,	178,048	957,050	-235,71
	3,220.						95,433.
balance		,043.66	099.43	,385.86	,401.65	6.61
	00						99

8. Statement of changes in owners’ equity of the Company

2015

Unit: RMB Yuan

==> picture [480 x 267] intentionally omitted <==

----- Start of picture text -----

2015
Other equity instruments Other
Less: Total
Item Share Capital comprehe Specific Surplus Retaine
Preferre Perpetu treasury owners’
capital Other reserve nsive reserve reserve d profit
d shares al bonds stock equity
incomes
I. Balance at the
593,923, 263,799,8 10,455,98 178,048,3 997,886 2,044,113
end of the previous
220.00 37.18 7.12 85.86 ,184.22 ,614.38
year
Add: change of
accounting policy
Correction of
errors in previous
periods
Other
II. Balance at the 593,923, 263,799,8 10,455,98 178,048,3 997,886 2,044,113
----- End of picture text -----

2015 Annual Report of Hubei Sanonda Co., Ltd.

beginning of the	7.12	85.86	,184.22	,614.38
year
III. Increase/
decrease in the	7,423,759	12,650,86	54,465,	74,540,06

period (“-” means	.72	2.25	438.22	0.19

decrease)
(I) Total
			126,508	126,508,6
comprehensive
			,622.47	22.47
incomes

(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by

holders of other

equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit		12,650,86	-72,043,	-59,392,3

distribution		2.25	184.25	22.00

1.
		12,650,86	-12,650,
Appropriations to
		2.25	862.25
surplus reserves

2.
Appropriations to		-59,392,3	-59,392,	-59,392,3

owners (or		22.00	322.00	22.00

shareholders)
3. Other
(IV) Internal
carry-forward of
owners’ equity
1. New

increase of capital

2015 Annual Report of Hubei Sanonda Co., Ltd.

(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific			7,423,759			7,423,759

reserve			.72			.72

1. Withdrawn			10,793,69			10,793,69

for the period			5.00			5.00

2. Used in the			3,369,935			3,369,935

period			.28			.28

(VI) Other
					1,052,3	2,118,653 ,674.57
IV. Closing	593,923,	263,799,8	17,879,74	190,699,2
					51,622.
balance	220.00	37.18	6.84	48.11
					44

2014

Unit: RMB Yuan

					2014	2014
		Other equity instruments					Other
						Less:					Total
Item	Share		Perpetu al bonds Other		Capital		comprehe	Specific	Surplus	Retaine
		Preferre	Perpetu			treasury					owners’
	capital			Other	reserve		nsive	reserve	reserve	d profit
		d shares	al bonds			stock					equity
							incomes

I. Balance at the
	593,923,				263,799,8			11,090,17	126,334,2	562,155	1,557,302
end of the previous
	220.00				37.18			6.40	48.31	,107.30	,589.19
year

Add: change of

accounting policy

Correction of
errors in previous
periods
Other
II. Balance at the	593,923,				263,799,8			11,090,17	126,334,2	562,155	1,557,302

2015 Annual Report of Hubei Sanonda Co., Ltd.

beginning of the	6.40	48.31	,107.30	,589.19
year
III. Increase/
decrease in the	-634,189.	51,714,13	435,731	486,811,0

period (“-” means	28	7.55	,076.92	25.19

decrease)
(I) Total
			517,141	517,141,3
comprehensive
			,375.47	75.47
incomes

(II) Capital
increased and
reduced by owners
1. Common
shares increased
by shareholders
2. Capital
increased by

holders of other

equity instruments
3. Amounts
of share-based
payments
recognized in
owners’ equity
4. Other
(III) Profit		51,714,13	-81,410,	-29,696,1

distribution		7.55	298.55	61.00

1.
		51,714,13	-51,714,
Appropriations to
		7.55	137.55
surplus reserves

2.
Appropriations to			-29,696,	-29,696,1

owners (or			161.00	61.00

shareholders)
3. Other
(IV) Internal
carry-forward of
owners’ equity
1. New

increase of capital

2015 Annual Report of Hubei Sanonda Co., Ltd.

(or share capital)
from capital public
reserves
2. New
increase of capital
(or share capital)
from surplus
reserves
3. Surplus
reserves for
making up losses
4. Other
(V) Specific			-634,189.			-634,189.

reserve			28			28

1. Withdrawn			11,062,40			11,062,40

for the period			7.36			7.36

2. Used in the			11,696,59			11,696,59

period			6.64			6.64

(VI) Other
IV. Closing	593,923,	263,799,8	10,455,98	178,048,3	997,886	2,044,113

balance	220.00	37.18	7.12	85.86	,184.22	,614.38

III. Company profile

Hubei Sanonda Co., Ltd. (hereinafter referred to as “Company” or “the Company”) is formerly known as Hubei Sha City Pesticides Factory, a state-run enterprise set up in 1958. As approved by the Hubei Commission for Economic System Reformation and other authorities, Hubei Sha City Pesticides Factory was reorganized as Hubei Sanonda Co., Ltd., which marked Hubei’s first large state-run industrial enterprise to adopt the stock system. On 8 Sept. 1992, upon the said reorganization, the Company was formally established. Later, as approved by the People's Government of Hubei Province and the China Securities Regulatory Commission (“CSRC”), the Company issued 30,000,000 RMB-denominated ordinary shares ("A shares") to the public in Nov. 1993. And the total share capital of the Company was 104,933,900 shares after the public offering. The Sha City Bureau for State-owned Assets Supervision and Administration is the first majority shareholder of the Company, with a capital contribution of RMB57,467,900, accounting for 54.77% of the Company’s total share capital. On 3 Dec. 1993, shares of the Company were listed in the Shenzhen Stock Exchange.

In Apr. 1994, a dividend distribution plan was reviewed and approved at the 1993 Annual Shareholders’ General Meeting. RMB2.00 was distributed in cash for every 10 shares held by the state and two bonus shares for every 10 shares held by individuals. The bonus shares were listed in 3 May 1994. And the Company’s total share capital rose to 113,988,000 shares after distribution of the said bonus shares, with shares held by the first majority shareholder accounting for 50.42% of the Company’s total shares.

In 1994, Jingzhou City and Sha City were combined and renamed as “Jingsha City”, Jiangling County as “Jiangling District of Jingsha City”, and the Sha City Bureau for State-owned Assets Supervision and Administration and the Jiangling County Bureau for State-owned Assets Supervision and Administration (originally two shareholders of the Company) as “the Jingsha City Bureau for

2015 Annual Report of Hubei Sanonda Co., Ltd.

State-owned Assets Supervision and Administration”. As such, the 50.42% and 1.93% equity interests of the Company formerly held by the Sha City Bureau for State-owned Assets Supervision and Administration and the Jiangling County Bureau for State-owned Assets Supervision and Administration respectively were transferred to the Jingsha City Bureau for State-owned Assets Supervision and Administration, which held 52.35% of the Company’s total shares.

On 9 Aug. 1995, as approved at the Company’s 1994 Annual Shareholders’ General Meeting, the Jingsha City Bureau for State-owned Assets Supervision and Administration transferred 3,002,700 shares it held in the Company (2.14% of the Company’s total shares) to the Qichun County Bureau for State-owned Assets Supervision and Administration. After the said transfer, the Jingsha City Bureau for State-owned Assets Supervision and Administration (the Company’s first majority shareholder) held 50.21% of the Company’s total shares.

In Jul. 1995, the Company held the 1994 Annual Shareholders’ General Meeting, at which a share allotment plan (three shares being allotted for every ten shares) was reviewed and approved. After the said share allotment, the Company’s total number of shares rose to 139,970,500, with the Jingsha City Bureau for State-owned Assets Supervision and Administration holding 44.66%.

In Nov. 1996, as approved by the “Document Zheng-Jian-Shang-Zi [1996] No. 13” issued by CSRC, the Company carried out the share allotment plan (three shares being allotted for every ten shares) for the year 1996. A total of 41,991,100 shares of the Company were allotted, of which 19,552,900 shares were allotted for state-held shares and 22,438,200 shares for individual-held shares. After the said share allotment, the Company’s total number of shares rose to 181,969,600. And the shareholding ratio of every shareholder remained unchanged after the allotment.

In 1996, pursuant to the “E-Zheng-Ban-Han [1995] No.92 Reply of People’s Government of Hubei Province on Authorizing Sanonda Group to Operate State-owned Assets”, in order to safeguard the state-owned shares of the Company held by it, the Jingsha City Bureau for State-owned Assets Supervision and Administration incorporated Sanonda Group and transferred the Company’s equity interests it held to Sanonda Group. As such, Sanonda Group became the Company’s first majority shareholder, holding 44.66% of the Company’s total shares.

From 29 Apr. to 5 May 1997, as approved by the “Zheng-Fa (1997) No.23 Document” issued by the Securities Commission under the State Council, the Company issued 0.1 billion domestically-listed foreign shares (B shares) of RMB 1.00 par value, which were listed in the Shenzhen Stock Exchange for trading on 15 May 1997. And the Company exercised the over-allotment options of 15 million shares from 15 May to 21 May in the same year. After issuance of the said B shares, the Company’s total number of shares rose to 296,961,600 shares, and the shareholding ratio of Sanonda Group—the Company’s first majority shareholder—was changed to 27.52%.

On 20 May 2005, the Jingzhou City Bureau for State-owned Assets Supervision and Administration and China National Agrochemical Corporation (a wholly-owned subsidiary under China National Chemical Corporation) signed the “Agreement on Transferring Assets of Sanonda Group”. The State-Owned Assets Supervision and Administration Commission of the People’s Government of Hubei Province issued the “E-Guo-Zi-Chan-Quan [2005] No.177 Reply on Transferring State-owned Assets of Sanonda Group with Compensation”. As a result, the People’s Government of Jingzhou City was approved to transfer all state-owned assets of Sanonda Group to China National Agrochemical Corporation with compensation, with the transfer base date on 31 Dec. 2004. After the said transfer, Sanonda Group became a wholly-owned subsidiary under China National Agrochemical Corporation.

In 2006, pursuant to the “Guo-Zi-Chan-Quan [2006] No.767 Reply of State-owned Assets Supervision and Administration Commission under the State Council on Affairs Related to Share Reform of Hubei Sanonda Co., Ltd.”, the “Share Reform Plan of Hubei Sanonda Co., Ltd.” was reviewed and approved at the shareholders’ general meeting held on 8 Jul. 2006. And the share reform was completed in Aug. 2006. With the base of 296,961,600 tradable shares, 2.2 shares were paid to tradable A-share holders by non-tradable share holders as consideration for every 10 tradable A-shares, with the total number of shares paid by non-tradable share

2015 Annual Report of Hubei Sanonda Co., Ltd.

holders to tradable share holders reaching 21,391,100,000 shares. After the share reform, the total number of the Company’s shares remained unchanged, of which Sanonda Group held 61093,600 shares, accounting for 20.57% of the Company’s total shares.

In Nov. 2006 and Mar. 2007, due to a dispute case concerning the provision of a loan guarantee by the Company’s first majority shareholder—Sanonda Group—for an other company, 1.25 million and 0.40 million state-owned corporate shares of the Company held by Sanonda Group were forcibly transferred and auctioned by the court. After the auctions, shares of the Company held by Sanonda Group were reduced to 59,443,600 shares, accounting for 20.02% of the Company’s total shares.

In May 2007, the Company held the 2006 Annual Shareholders’ General Meeting, at which the plan for turning capital reserve to share capital was reviewed and approved. As a result, 10 shares were increased for every 10 shares held by all shareholders in Jul. 2007. After the increase, the Company’s total number of shares rose to 593,923,200 shares. The first majority shareholder—Sanonda Group—held 118,887,200 shares, accounting for 20.02% of the Company’s total shares.

On 16 Nov. 2012, Sanonda Group Co., Ltd. acquired 800,000 shares of the Company held by the to-be-cancelled subsidiary—Jingzhou Sanonda Advertising Co., Ltd. through the block trading market, then it held a total of 119,687,200 shares of the Company, accounting for 20.15% of the Company’s total share capital, and up to 31 Dec. 2012, the share capital of the Company remained unchanged. On 8 Apr. 2014, Sanonda Group Co., Ltd. changed its name into “Jingzhou Sanonda Holdings Co., Ltd.”

As at the balance sheet date, Legal representative of the Company: An Liru; Business license No.: 420000400004491; Registered address: No.93, Beijing East Road, Jingzhou, Hubei Province, PRC; Stock abbreviation: Sanonda A/ Sanonda B; and Stock code: 000553/ 200553.

The Company and its subsidiaries (hereinafter referred to as “the Group”) is principally engaged in pesticide products such as triazophos, methomyl, paraquat, DDVP, acephate, glyphosate, dipterex and imidacloprid; and chemical products such as liquid caustic soda, ionic membrane caustic soda, spermine, PMIDA and trimethyl hydrochloric acid. The Company has the rights of handling import and export business. And the Company has passed ISO9002 Quality System Certification and ISO14001 Environment Management System Certification.

The parent company of the Group is Jingzhou Sanonda Holdings Co., Ltd. and the ultimate controller is China National Chemical Corporation.

The financial statements for 2014 have been authorized for issuance by the Board of Directors of the Group on 16 Mar. 2016.

There were 3 subsidiaries included in to the consolidated scope in 2015 of the Company with no change of the consolidated scope of the reporting period compared of that of the last year.

IV. Basis for the preparation of financial statements

1. Preparation basis

With the going-concern assumption as the basis and based on transactions and other events that actually occurred, the Group prepared financial statements in accordance with issued by the Ministry of Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting standards, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations issued and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.

2015 Annual Report of Hubei Sanonda Co., Ltd.

In accordance with relevant provisions of the Accounting Standards for Business Enterprises, the Group adopted the accrual basis in accounting. Except for some financial instruments, where impairment occurred on an asset, an impairment reserve was withdrawn accordingly pursuant to relevant requirements.

2. Continuation

There will be no such events or situations in the 12 months from the end of the reporting period that will cause material doubts as to the continuation capability of the Company.

V. Important accounting policies and estimations

Indication of specific accounting policies and estimations:

1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Group are in compliance with in compliance with the Accounting Standards for Business Enterprises, which factually and completely present the Company’s and the Group’s financial positions as at 31 Dec. 2015, business results and cash flows for the year of 2015, and other relevant information. In addition, the Company’s and the Group’s financial statements meet the requirements of disclosing financial statements and notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.

2. Fiscal period

The Group’s fiscal periods include fiscal years and fiscal periods shorter than a complete fiscal year. The Group’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year according to the Gregorian calendar.

3. Operating cycle

A normal operating cycle refers to a period from the Group purchasing assets for processing to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which are also the classification criteria for the liquidity of its assets and liabilities.

4. Recording currency

Renminbi is the dominant currency used in the economic circumstances where the Group and its domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries use Renminbi as their bookkeeping base currency. And the Group adopted Renminbi as the bookkeeping base currency when preparing the financial statements for the reporting year.

5. Accounting treatment methods for business combinations under the same control or not under the same control

Business combinations, it is refer to two or more separate enterprises merge to form a reporting entity transactions or events.

Business combination is divided into under the same control and those non under the same control.

2015 Annual Report of Hubei Sanonda Co., Ltd.

(1) Business combinations under the same control

A business combination under the same control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or the same parties both before and after the business combination and on which the control is not temporary. In a business combination under the same control, the party which obtains control of other combining enterprise(s) on the combining date is the combining party, the other combining enterprise(s) is (are) the combined party. The “combining date” refers to the date on which the combining party actually obtains control on the combined party.

The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party on the combining date. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it (or the total par value of the shares issued), the additional paid-in capital (share premium) shall be adjusted. If the additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings shall be adjusted.

The direct cost for the business combination of the combining party shall be recorded into the profits and losses at the current period.

(2) Business combinations not under the same control

A business combination not under the same control is a business combination in which the combining enterprises are not ultimately controlled by the same party or the same parties both before and after the business combination. In a business combination not under the same control, the party which obtains the control on other combining enterprise(s) on the purchase date is the acquirer, and other combining enterprise(s) is (are) the acquiree.

For a business combination not under the same control, the combination costs shall include the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed and the equity securities issued by the acquirer in exchange for the control on the acquiree, the expenses for audit, legal services and assessment, and other administrative expenses, which are recorded into the profits and losses in the current period. The trading expenses for the equity securities or debt securities issued by the acquirer as the combination consideration shall be recorded into the amount of initial measurement of the equity securities or debt securities. The involved contingent consideration shall be recorded into the combination costs at its fair value on the acquiring date. Where new or further evidences emerge, within 12 months since the acquiring date, against the existing circumstances on the acquiring date and the contingent consideration thus needs to be adjusted, the combined goodwill shall be adjusted accordingly. The combination costs of the acquirer and the identifiable net assets obtained by it in the combination shall be measured according to their fair values at the acquiring date. The acquirer shall recognize the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from the acquiree as business reputation. Where the combination costs are less then the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs. If, after the reexamination, the combination costs are still less than the fair value of the identifiable net assets it obtains from the acquiree, the acquirer shall record the balance into the profits and losses of the current period.

As for the deductible temporary differences the acquirer obtains from the acquiree which are not recognized into deferred income tax liabilities due to their not meeting the recognition standards, if new or further information shows that the relevant situation has existed on the acquiring date and the economic benefits brought by the deductible temporary differences the acquirer obtains from the acquiree on the acquiring date can be realized, they shall be recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where the goodwill is not sufficient to be offset, the difference shall be recognized into the profits and losses in the current period. In other circumstances than the above, where the deductible temporary differences are recognized into deferred income tax assets on the acquiring date, they shall be recorded into the profits and losses in the current period.

In a business combination not under same control realized by two or more transactions of exchange, according to about the 5[th] Notice about the Treasury Issuing the Accounting Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the "

2015 Annual Report of Hubei Sanonda Co., Ltd.

package deal" (see note 4, 4 (2)), Whether the deals are "package deal" or not, belong to the "package deal", see the previous paragraphs described in this section and note 4, 10 “long term equity investment transaction” and conduct accounting treatment, those not belong to the "package deal" distinguish between the individual financial statements and the consolidated financial statements and conduct relevant accounting treatment.

In the individual financial statements, the sum of the book value and new investment cost of the Group holds in the acquiree before the acquiring date shall be considered as initial cost of the investment. Other related comprehensive gains in relation to the equity interests that the Group holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others shall be transferred into current investment gains).

In the Group’s consolidated financial statements, as for the equity interests that the Group holds in the acquiree before the acquiring date, they shall be re-measured according to their fair values at the acquiring date; the positive difference between their fair values and carrying amounts shall be recorded into the investment gains for the period including the acquiring date. Other related comprehensive gains in relation to the equity interests that the Group holds in the acquiree before the acquiring date shall be treated on the same basis as the acquiree directly disposes the related assets or liabilities when disposing the investment (that is, except for the corresponding share in the changes in the net liabilities or assets with a defined benefit plan measured at the equity method arising from the acquiree’s re-measurement, the others shall be transferred into current investment gains on the acquiring date).

6. Methods for preparing consolidated financial statements

(1) Principle for determining the consolidation scope

The consolidation scope for financial statements is determined on the basis of control. The term “control” is the power of the Group upon an investee, with which it can take part in relevant activities of the investee to obtain variable returns and is able to influence the amount of returns. The consolidated financial statements comprise the financial statements of the Group and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Group.

(2) Methods for preparing the consolidated financial statements

Subsidiaries are fully consolidated from the date on which the Group obtains control on their net assets and operation decision-making and are de-consolidated from the date when such control ceases. As for a disposed subsidiary, its operating results and cash flows before the disposal date has been appropriately included in the consolidated income statement and cash flow statement; and as for subsidiaries disposed in the current period, the opening items in the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business combination not under the same control, its operating results and cash flows after the acquiring date have been appropriately included in the consolidated income statement and cash flow statement, and the opening items and comparative items in the consolidated financial statements are not adjusted. For a subsidiary acquired in a business combination under the same control or a combined party obtained in a takeover, its operating results and cash flows from the beginning of the reporting period of the combination to the combination date have been appropriately included in the consolidated income statement and cash flow statement, and the comparative items in the consolidated financial statements are adjusted at the same time.

The financial statements of subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Group during the preparation of the consolidated financial statements, where the accounting policies and the accounting periods are inconsistent between the Group and subsidiaries. For a subsidiary acquired from a business combination not under the same control, the individual financial statements of the subsidiary are adjusted based on the fair value of the identifiable net assets at the acquisition date.

All significant inter-group balances, transactions and unrealized profits are offset in the consolidated financial statements.

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The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits and losses for the period not held by the Group are recognized as minority interests and minority shareholder profits and losses respectively and presented separately under shareholders’ equity and net profits in the consolidation financial statements. The portion of a subsidiary’s net profits and losses for the period that belong to minority interests is presented as the item of “minority shareholder profits and losses” under the bigger item of net profits in the consolidated financial statements. Where the loss of a subsidiary shared by minority shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s opening owners’ equity, minority interests are offset.

Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other reasons, the residual equity interests are re-measured according to the fair value on the date when such control ceases. The summation of the consideration obtained from the disposal of equity interests and the fair value of the residual equity interests, minus the portion in the original subsidiary’s net assets measured on a continuous basis from the acquisition date that is enjoyable by the Group according to the original shareholding percentage in the subsidiary, is recorded in investment gains for the period when the Group’s control on the subsidiary ceases. Other comprehensive incomes in relation to the equity investment in the original subsidiary are treated on the same accounting basis as the acquiree directly disposes the relevant assets or liabilities (that is, except for the changes in the net liabilities or assets with a defined benefit plan resulted from re-measurement of the original subsidiary, the rest shall all be transferred into current investment gains) when such control ceases. And subsequent measurement is conducted on the residual equity interests according to the No.2 Accounting Standard for Business Enterprises —Long-term Equity Investments or the No.22 Accounting Standard for Business Enterprises—Recognition and Measurement of Financial Instruments. For details, see the “long term equity investment” or “financial instruments” of this note.

Where the Group losses control on its original subsidiaries due to step by step disposal of equity investments through multiple transactions, it need to distinguish the Group losses control on its subsidiaries due to disposal of equity investments whether belongs to a package deal. All the transaction terms, conditions and economic impact of the disposal of subsidiaries’ equity investment are in accordance with one or more of the following conditions, which usually indicate the multiple transactions should be considered as a package deal for accounting treatment. ① These deals are at the same time or under the condition of considering the influence of each other to concluded; ② These transactions only be as a whole can achieve a complete business result; ③ The occurrence of a deal depends on at least one other transactions; ④ A deal alone is not economical, it is economical with other trading together. Those not belong to a package deal, each of them a deal depends on circumstances respectively conduct accounting treatment in accordance with the applicable principles of “part disposal of subsidiaries of a long-term equity investment under the condition of not losing control on its subsidiaries” and “Where the Group losses control on its original subsidiaries due to disposal of some equity investments or other reasons” (See the front paragraph) relevant transactions of the Group losses control on its subsidiaries due to disposal of equity investments belonging to a package deal, considered as a transaction and conduct accounting treatment. However, Before losing control, every disposal cost and corresponding net assets balance of subsidiary of disposal investment are confirmed as other comprehensive income in consolidated financial statements, which together transferred into the current profits and losses in the lose of control , when the Group losing control on its subsidiary.

7. Classification of joint arrangements and accounting treatment of joint operations

A joint arrangement refers to an arrangement jointly controlled by two participants or above. The Group classifies joint arrangements into joint operations and joint ventures according to its rights and duties in the joint arrangements. A joint operation refers to a joint arrangement where the Group enjoys assets and has to bear liabilities related to the arrangement. A joint venture refers to a joint arrangement where the Group is only entitled to the net assets of the arrangement.

The Group’s investments in joint ventures are measured at the equity method according to the accounting policies mentioned in “Long-term equity investments measured at the equity method” of this note.

2015 Annual Report of Hubei Sanonda Co., Ltd.

For a joint operation, the Group, as a joint operator, recognizes the assets and liabilities that it holds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borne liabilities according to the Group’s stake in the joint operation; recognizes the income from sale of the Group’s share in the output of the joint operation; recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it; and recognizes the expense solely incurred to the Group and the expense incurred to the joint operation according to the Group’s stake in it.

When the Group, as a joint operator, transfers or sells assets (the assets not constituting business, the same below) to the joint operation, or purchases assets from the joint operation, before the assets are sold to a third party, the Group only recognizes the share of the other joint operators in the gains and losses arising from the sale. Where impairment occurs to the assets as prescribed in , the Group shall fully recognizes the loss for a transfer or sale of assets to a joint operation; and shall recognize the loss according to its stake in the joint operation for a purchase of assets from the joint operation.

8. Recognition standard for cash and cash equivalents

In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit that can be used for cover, and short-term (usually due within 3 months since the day of purchase) and high circulating investments, which are easily convertible into known amount of cash and whose risks in change of value are minimal.

9. Foreign currency businesses and translation of foreign currency financial statements

(1) Accounting treatments for translation of foreign currency transactions

As for a foreign currency transaction, the Company shall convert the amount in a foreign currency into amount in its bookkeeping base at the spot exchange rate (usually referring to the central parity rate announced by the People’s Bank of China, the same below) of the transaction date, while as for such transactions as foreign exchange or involving in foreign exchange, the Company shall converted into amount in the bookkeeping base currency at actual exchange rate the transaction is occurred.

(2) Accounting treatments for translation of foreign currency monetary items and non-monetary items

On the balance sheet date, the foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The exchange difference arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate at the time of initial recognition or prior to the balance sheet date shall be recorded in the profits and losses in the current period, excluding the following situations: ① the exchange difference arising from foreign currency loans related to acquisition of fixed assets shall be treated at the principle of capitalization of borrowing costs; ② the exchange difference arising from the hedging instruments used for effective hedging of net overseas operation investments shall be recorded into other comprehensive incomes, and shall be recognized into current gains and losses when the net investments are disposed; and ③ the exchange difference arising from change in the book balance of foreign currency monetary items available for sale except the amortized costs shall be recorded into other comprehensive gains and losses.

When it involves overseas business in preparing the consolidated financial statement, for the translation difference of foreign currency monetary items of net investment in overseas business arising from the change in exchange rate, it shall be recorded into other comprehensive incomes; and be recorded into disposal gains and losses at current period when disposing overseas business.

A foreign currency non-monetary item measured at the historical costs shall still be translated at the spot exchange rate on the transaction date. Where the foreign non-monetary items measured at the fair value shall be converted into amount in its bookkeeping base currency at spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in fair value, and recorded into the current period gains and losses or as other comprehensive incomes.

(3) Translation of foreign currency financial statements

2015 Annual Report of Hubei Sanonda Co., Ltd.

When it involves overseas business in preparing the consolidated financial statement, for the translation difference of foreign currency monetary items of net investment in overseas business arising from the change in exchange rate, it shall be recorded into the item of “difference of foreign currency financial statement translation” under the owners’ equity; and be recorded into disposal gains and losses at current period when disposing overseas business.

The foreign currency financial statement of overseas business should be translated in to RMB financial statement by the following methods: The asset and liability items in the balance sheets shall be translated at a spot exchange rate on the balance sheet date. Among the owner’s equity items, except for the items as “undistributed profits”, other items shall be translated at the spot exchange rate at the time when they are incurred. The income and expense items in the profit statements shall be translated at the spot exchange rate of the transaction date. The undistributed profits at year-begin is the undistributed profits at the end of last year after the translation; undistributed profits at year-end shall be listed as various distribution items after the translation; after the translation, the balance between assets and the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains and losses as difference of foreign currency translation. Where an enterprise disposes of an overseas business without the control right, it shall shift the differences, which is presented under the items of the owner’s equities in the balance sheet and which arises from the translation of foreign currency financial statements relating to this overseas business, into the disposal profits and losses of the current period by all or proportion of the disposed overseas business.

Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow incurred. The influence of exchange rate on the cash flow shall be adjustment item and individually listed in the cash flow statement.

And the opening balance and the actual balance of last year shall be listed at the amounts after translation of foreign currency financial statement in last year.

Where the control of the Group over an overseas operation ceases due to disposal of all or some of the Group’s owner’s equity in the overseas operation or other reasons, the foreign-currency statement translation difference belonging to the parent company’s owner’s equity in relation to the overseas operation which is stated under the shareholders’ equity in the balance sheet shall be all restated as gains and losses of the disposal period.

Where the Group’s equity in an overseas operation decreases due to disposal of some equity investment or other reasons but the Group still has control over the overseas operation, the foreign-currency statement translation difference in relation to the disposed part of the overseas operation shall be recorded into minority interests instead of current gains and losses. If what’s disposed is some equity in an overseas associated enterprise or joint venture, the foreign-currency statement translation difference related to the overseas operation shall be recorded into the gains and losses of the current period of the disposal according to the disposal ratio.

10. Financial instruments

The Group recognizes a financial asset or liability when it becomes a party of the relevant financial instrument contract. Financial assets and liabilities are measured at fair value in initial recognition. As for the financial assets and liabilities measured at fair value of which changes are recorded into current gains and losses, the relevant dealing expenses are directly recorded into gains and losses; and the dealing expenses on other kinds of financial assets and liabilities are included in the amounts initially recognized.

(1) Determination of the fair value of main financial assets and financial liabilities

Fair value refers to the price that a market participant shall receive for selling an asset or shall pay for transferring a liability in an orderly transaction on the measurement date. As for the financial assets or financial liabilities for which there is an active market, the quoted prices in the active market shall be used to determine the fair values thereof. The quoted prices in the active market refers to the prices available from stock exchange, broker’s agencies, guilds, pricing organization and etc., which represent the actual trading price under equal transaction. Where there is no active market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques, including the prices adopted by the parties, who are familiar with the condition, in the latest market transaction upon their own free will, the current fair value obtained by referring to other financial instruments of the same essential nature, the cash flow capitalization method and the option pricing model, etc., to determine its fair value.

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(2) Classification, recognition and measurement of financial assets

The purchase and sale of financial assets under the normal ways shall be recognized and stopped to be recognized respectively at the price of transaction date. Financial assets shall be classified into the following four categories when they are initially recognized: (a) the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period, (b) the investments which will be held to their maturity; (c) loans and the account receivables; and (d) financial assets available for sale.

① The financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period

Including transactional financial assets and the financial assets which are designated to be measured at their fair value when they are initially recognized and of which the variation is recorded into the profits and losses of the current period;

The financial assets meeting any of the following requirements shall be classified as transactional financial assets：A. The purpose to acquire the said financial assets is mainly for selling them in the near future; B. Forming a part of the identifiable combination of financial instruments which are managed in a centralized way and for which there are objective evidences proving that the enterprise may manage the combination by way of short-term profit making in the near future; C. Being a derivative instrument, excluding the designated derivative instruments which are effective hedging instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are connected with the equity instrument investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and which shall be settled by delivering the said equity instruments.

The financial assets meeting any of the following requirements shall be designated as financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period for initial recognition: A. the designation can eliminate or significantly reduce the difference of relevant gains and losses between recognition and measurement causing from different bases for measurement of financial assets; B. The official written documents for risk management and investment strategies of the enterprise have clearly stated that it shall ,manage, evaluate and report to important management personnel based on the fair value, about the financial assets group or the group of financial assets & liabilities which the financial assets are belong to.

For the financial assets which are measured at their fair values and the variation of which is recorded into the profits and losses of the current period shall continue to be measured by fair value, gains and losses of change in fair value, dividends and interest related with these financial assets should be recorded into gains and losses of current period.

② Held-to-maturity investment

The term "held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed or determinable amount of repo price and which the enterprise holds for a definite purpose or the enterprise is able to hold until its maturity.

For the held-to-maturity investment adopting actual interest rate method, which is measured at the post-amortization costs, the profits and losses that arise when such financial assets or financial liabilities are terminated from recognition, or are impaired or amortized, shall be recorded into the profits and losses of the current period.

The actual interest rate method refers to the method by which the post-amortization costs and the interest incomes of different installments or interest expenses are calculated in light of the actual interest rates of the financial assets or financial liabilities (including a set of financial assets or financial liabilities). The actual interest rate refers to the interest rate adopted to cash the future cash flow of a financial asset or financial liability within the predicted term of existence or within a shorter applicable term into the current carrying amount of the financial asset or financial liability.

When the actual interest rate is determined, the future cash flow shall be predicted on the basis of taking into account all the contractual provisions concerning the financial asset or financial liability (the future credit losses shall not be taken into account).and also the various fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected by the parties to a financial asset or financial liability contract and which form a part of the actual interest rate.

③ Loans and the accounts receivables

2015 Annual Report of Hubei Sanonda Co., Ltd.

Loans and the accounts receivables refer to non-derivative financial assets, which there is no quotation in the active market, with fixed recovery cost or recognizable.

Financial assets that are defined as loans and the accounts receivables by the Group including notes receivables, accounts receivables, interest receivable, dividends receivable and other receivables etc..

Loans and the accounts receivables are made follow-up measurement on the basis of post-amortization costs employing the effective interest method. Gains or loss arising from the termination recognition, impairment occurs or amortization shall be recorded into the profits and losses of the current period.

④ Assets available for sales

Assets available for sales including non-derivative financial asset that has been assigned as assets available for sales on the initial recognition and financial assets excluded those measured at fair value and of which the variation into profits and losses of the current period, they are some financial assets, loans and accounts receivables, held-to-maturity investment.

The cost at the period-end of the available-for-sale liabilities instruments should be confirmed according to its amortized cost method, that is the initially recognized amount which deduct the principal that had been repaid, to plus or minus the accumulative amortization amount formed by the amortization between the difference of the initially recognized amount and the amount on the due date that adopted the actual interest rate method, and at the same time deduct the amount after the impairment loss happened. The cost at the period-end of the available-for-sale liabilities instruments is its initial cost.

Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the fair value are recognized as other comprehensive income，and be carried forward when the said financial assets stopped recognition, then it shall be recorded into the profits and losses of the current period. But, the equity instrument investment which neither have quotation in the active market nor its fair value could not be reliable measured, as well as the derivative financial assets that concern with the equity instruments and should be settled through handing over to its equity instruments, should take the follow-up measurement according to the cost.

Interest receive during the holding of assets available for sales and cash dividends with distribution announcement by invested companies, it shall be recorded into the profits and losses of the current period.

(3) Impairment of financial assets

The Group assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided for the impairment.

The Group carries out a separate impairment test for every financial asset which is individually significant. As for a financial asset which is individually insignificant, an impairment test is carried out separately or in the financial asset group with similar credit risk. Where the financial asset (individually significant or insignificant) is found not impaired after the separate impairment test, it is included in the financial asset group with similar credit risk and tested again on the group basis. Where the impairment loss is recognized for an individual financial asset, it is not included in the financial asset group with similar credit risk for an impairment test.

① Impairment on held-to maturity investment, loans and receivables

The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the reserving date.

② Impairment of available-for-sale financial assets

When it judged that the decrease of fair value of the available-for-sale equity instrument investment is serious and not temporarily after comprehensive considering relevant factors, it reflected that the available-for-sale equity instrument investment occurred

100

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impairment. Of which, the “serious decline” refers to the accumulative decline range of the fair value over 20%; while the “non-temporary decline” refers to the consecutive decline time of the fair value over 12 months.

Where an available-for-sale financial asset is impaired, the accumulative losses arising from the decrease of the fair value of the capital reserve which is directly included are transferred out and recorded in the profits and losses for the current period. The accumulative losses transferred out are the balance obtained from the initially obtained cost of the said financial asset after deducting the principals as taken back, the amortized amount, the current fair value and the impairment loss originally recorded in the profits and losses.

Where the impairment loss has been recognized for an available-for-sale financial asset, if, within the accounting periods thereafter, there is any objective evidence proving that the value of the said financial asset has been restored and the restoration is objectively related to the events that occur after the impairment loss was recognized, the originally recognized impairment loss is reversed. The impairment losses on the available-for-sale equity instrument investments are reversed and recognized as other comprehensive incomes, and the impairment losses on the available-for-sale liability instruments are reversed and recorded in the profits and losses for the current period.

The impairment loss incurred to an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably measured, or incurred to a derivative financial asset which is connected with the said equity instrument investment and which must be settled by delivering the said equity investment, is not reversed.

(4) Recognition and measurement of financial asset transfers

Where a financial asset satisfies any of the following requirements, the recognition of it is terminated: ① The contractual rights for collecting the cash flow of the said financial asset are terminated; ② The said financial asset has been transferred and nearly all of the risks and rewards related to the ownership of the financial asset to the transferee; or ③ The said financial asset has been transferred. And the Group has ceased its control on the said financial asset though it neither transfers nor retains nearly all of the risks and rewards related to the ownership of the financial asset.

Where the Group neither transfers nor retains nearly all of the risks and rewards related to the ownership of a financial asset, and it does not cease its control on the said financial asset, it recognizes the relevant financial asset and liability accordingly according to the extent of its continuous involvement in the transferred financial asset. The term "continuous involvement in the transferred financial asset" refers to the risk level that the enterprise faces resulting from the change of the value of the financial asset.

If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following 2 items is recorded in the profits and losses of the current period: (1) The book value of the transferred financial asset; and (2) The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair value originally recorded in other comprehensive incomes.

If the transfer of partial financial asset satisfies the conditions to stop the recognition, the book value of the transferred financial asset is apportioned between the portion whose recognition has been stopped and the portion whose recognition has not been stopped according to their respective relative fair value, and the difference between the amounts of the following 2 items is included into the profits and losses of the current period: (1) The summation of the consideration received from the transfer and the portion of the accumulative amount of changes in the fair value originally recorded in other comprehensive incomes which corresponds to the portion whose recognition has been stopped; and (2) The amortized carrying amounts of the aforesaid amounts.

In respect of the assets using recourse to sell or using endorsement to transfer, the Group needs to determine whether almost all of the risks and rewards of the financial asset ownership are transferred. If almost all of the risks and rewards of the financial asset ownership had been transferred to the transferee, derecognize the financial assets. For almost all of the risks and rewards of the financial asset ownership retained, do not end to recognize the financial assets. For which neither transfer or retain almost all of the risks and rewards of the financial asset ownership, continuously judge whether the Company retain the control of the assets, and conduct accounting treatment according to the principle of mentioned in the previous paragraphs.

(5) Classification and measurement of financial liabilities

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In the initial recognition, financial liabilities are divided into the financial liabilities measured at fair values and whose changes are recorded in current gains and losses and other financial liabilities. Financial liabilities are initially recognized at their fair values. As for a financial liability measured at fair value and whose changes are recorded in current gains and losses, the relevant trading expense is directly recorded in the profits and losses for the current period. As for other financial liabilities, the relevant trading expenses are recorded in the initially recognized amounts.

① Financial liabilities measured at fair values and whose changes are recorded in current gains and losses

Such financial liabilities are divided into transactional financial liabilities and financial liabilities designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition under the same conditions where such financial assets are divided into transactional financial assets and financial assets designated to be measured at fair values and whose changes are recorded in current gains and losses in the initial recognition.

Financial liabilities measured at fair values and whose changes are recorded in current gains and losses are subsequently measured at their fair values. Gains or losses arising from the fair value changes, as well as the dividend and interest expenses in relation to the said financial liabilities, are recorded in the profits and losses for the current period.

② Other financial liabilities

As for a derivative financial liability connected to an equity instrument for which there is not quoted price in an active market and whose fair value cannot be reliably measured and which must be settled by delivering the equity instrument, it is subsequently measured on the basis of costs. Other financial liabilities are subsequently measured according to the amortized cost using the actual interest rate method. Gains or losses arising from de-recognition or amortization of the said financial liabilities is recorded in the profits and losses for the current period.

③ Financial guarantee contract and loan commitment

For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and the variation thereof is recorded into the profits and losses of the current period, or the loan commitment which is not designated as a financial liability measured at its fair value and the variation thereof is recorded into the gains and losses that will be loaned lower than the market interest rate, which shall be initially recognized by fair value, and the subsequent measurement shall be made after they are initially recognized according to the higher one of the following: a. the amount as determined according to the Accounting Standards for Enterprises No. 13 – Contingencies; b. the surplus after accumulative amortization as determined according to the principles of the Accounting Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized amount.

(6) De-recognition of financial liabilities

Only when the prevailing obligations of a financial liability are relieved in all or in part may the recognition of the financial liability be terminated in all or partly. Where the Group (debtor) enters into an agreement with a creditor so as to substitute the existing financial liabilities by way of any new financial liability, and if the contractual stipulations regarding the new financial liability is substantially different from that regarding the existing financial liability, it terminates the recognition of the existing financial liability, and at the same time recognizes the new financial liability.

Where the recognition of a financial liability is totally or partially terminated, the enterprise concerned shall include into the profits and losses of the current period for the gap between the book value which has been terminated from recognition and the considerations it has paid (including the non-cash assets it has transferred out and the new financial liabilities it has assumed)

(7) Derivatives and embedded derivatives

Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss.

An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Company is

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unable to measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or loss.

(8) Offsetting financial assets and financial liabilities

When the Group has a legal right that is currently enforceable to set off the recognized financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet and shall not be offset.

(9) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. The Group issues (including refinancing), re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the equity. The Group not recognized the changes of the fair value of the equity instrument. The transaction expenses related to the equity transaction would be deducted from the equity.

All types of distribution (excluding stock dividends) made by the Group to holders of equity instruments are deducted from shareholders’ equity. The Group does not recognize any changes in the fair value of equity instruments.

11. Receivables

(1) Accounts receivable with significant single amount for which the bad debt provision is made individually

Receivables with the amount of RMB5 million or more than Judgement basis or monetary standards of provision for bad RMB5 million should recognize as the receivables with debts of the individually significant accounts receivable significant single amount. The Company made an independent impairment test on receivables with significant single amounts; the financial assets without impairment by independent impairment test should be Method of individual provision for bad debts of the individually included in financial assets portfolio with similar credit risk to significant accounts receivable take the impairment test. Receivables was recognized with impairment should no longer be included in receivables portfolio with similar credit risk to take the impairment test.

(2) Accounts receivable which the bad debt provision is withdrawn by credit risk characteristics

Name of portfolios	Bad debt provision method
Related party portfolios	Other method
Risk-free portfolios	Other method
Age portfolios	Aging analysis

In the groups, adopting aging analysis method to withdraw bad debt provision:

√ Applicable □ Inapplicable

	Withdrawal proportion for accounts	Withdrawal proportion for other accounts
Age
	receivable (%)	receivable (%)

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Within 1 year (including 1 year)	5.00%	5.00%
1-2 years	10.00%	10.00%
2-3 years	30.00%	30.00%
3-4 years	50.00%	50.00%
4-5 years	50.00%	50.00%
Over 5 years	100.00%	100.00%

In the groups, adopting balance percentage method to withdraw bad debt provision:

□ Applicable √ Inapplicable

In the groups, adopting other methods to withdraw bad debt provision:

□ Applicable √ Inapplicable

(3) Accounts receivable with an insignificant single amount but for which the bad debt provision is made individually

The Group made independent impairment test on receivables with insignificant amount but with the following characteristics (for example: receivables have dispute with the other parties or Reason of individually withdrawing bad debt provision involving lawsuit and arbitration; receivables have obvious indication showing that the debtors are likely to fail to perform the duty of repayment, etc.). The Group made independent impairment test on receivables with insignificant amount but with the following characteristics, if any objective evidence shows that the accounts receivable has been impaired, impairment loss shall be recognized on the basis of the gap between the current values of the future cash flow Withdrawal method for bad debt provision lower than its book value so as to withdraw provision for bad debts (for example: receivables have dispute with the other parties or involving lawsuit and arbitration; receivables have obvious indication showing that the debtors are likely to fail to perform the duty of repayment, etc.).

12. Inventory

(1) Classification

Inventories mainly include raw materials, work-in-progress and self-made semi-manufactured goods, revolving materials, finished products as well as stock products etc.

(2) Valuation method of inventories acquiring and issuing

The inventories should be measured by the actual cost when acquired, and the cost of the inventories including the procurement cost, processing cost and other cost. Bulk chemical raw materials, work-in-progress goods and finished products should be measured by the actual cost and should carry forward the cost by weighted average method when issuing; auxiliary materials, packing materials should be measured by actual cost and adopt the planned cost for accounting as well as included the difference between the actual

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cost and the planned cost into the material cost variance and according the material cost variance rate, work out the material cost variance which should be shared at the end of the month, and to adjust the planned cost that had issued the materials as the actual cost; low priced and easily worn articles should be recorded by actual cost and should adopt the one-time amortization method for accounting when consuming.

(3) Basis for determining net realizable value of inventories and provision methods for decline in value of inventories

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into consideration the purpose of holding inventories and effect of post balance sheet events.

At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined normally by the difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories, provision for decline in value is made based on categories of inventories. For items of inventories relating to a product line that are produced and marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from other items in that product line provision for decline in value is determined on an aggregate basis.

After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit or loss for the period.

(4) The perpetual inventory system is maintained for stock system.

13. Divided as assets held for sale

If a non-current assets could be immediately sold only according to the usual terms of selling this kind of assets under current situation, and the Group has made a decision on disposing a non-current asset, entered into an irreversible transfer agreement with the transferee and the transfer is likely to be completed within one year, the non-current asset is measured as a non-current asset held for sale, which shall not be depreciated or amortized since the date held for sale but shall be measured at the lower one of the net amounts of the book value and the fair value after deducting the disposal expense. Non-current assets held for sale include single-item assets and disposal groups. Where a disposal group is an asset group and the goodwill obtained in the business combination is apportioned to the asset group according to the “Accounting Standard No. 8 for Business Enterprises—Asset Impairment”, or a disposal group is an operation in such an asset group, the disposal group shall include the goodwill in the business combination.

The non-current assets of single amount and the assets among the disposing group that both be divided as assets held for sale, should be listed alone of the current assets on the balance sheet; liabilities related to the assets transfer among the disposing group which be divided as assets held for sale, should be listed alone of the current assets on the balance sheet.

An asset or an disposal group was classified as held for sale before, but if it couldn’t meet the recognition conditions for held-for-sale non-current asset later, the Company shall cease to classify it as held for sale, and measure it by the lower amount of the followings: (1) its carrying amount before the asset (or disposal group) was classified as held for sale, adjusted for any depreciation, amortization or impairment before the asset (or disposal group) being classified as held for sale; or (2) its recoverable amount on the date of the subsequent decision not to sell.

14. Long-term equity investments

The long-term equity investments of this part refer to the long-term equity investments that the Group has control, joint control or significant influence over the investees. The long-term equity investment that the Group does not have control, joint control or

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significant influence over the investees, should be recognized as available-for-sale financial assets or be measured by fair value with the changes should be included in the financial assets accounting of the current gains and losses, and please refer the details of the accounting polices to “financial instrument” of this note.

Joint control, refers to the control jointly owned according to the relevant agreement on an arrangement by the Group and the relevant activities of the arrangement should be decided only after the participants which share the control right make consensus. Significant influence refers to the power of the Group which could anticipate in the finance and the operation polices of the investees, but could not control or jointly control the formulation of the policies with the other parties.

(1) Recognition of investment costs

As for long-term equity investments acquired by enterprise merger, if the merger is under the same control, the share of the book value of the owner’s equity of the merged enterprise, on the date of merger, is regarded as the initial cost of the long-term equity investment. The difference between the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the book value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities, it shall, on the date of merger, regard the share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equities of the combined party which respectively acquired through multiple transaction under the same control that ultimately form into the combination of the enterprises under the same control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book value of the shareholder's equity of the merged enterprise on the consolidated financial statement of the ultimate control party as the initial cost of the long-term equity investment, and as for the difference between the initial investment cost of the long-term equity investment and sum of the book value of the long-term equity investment before the combination and the book value of the consideration of the new payment that further required on the combination date, should adjust the capital reserve; if the capital reserve is insufficient to dilute, the retained earnings shall be adjusted. The equity investment held before the combination date which adopted the equity method for accounting, or the other comprehensive income confirmed for the available-for-sale financial assets, should not have any accounting disposal for the moment.

For the long-term investment required from the business combination under different control, the initial investment cost regarded as long-term equity investment on the purchasing date according to the combination cost, the combination costs shall be the sum of the fair values of the assets paid, the liabilities incurred or assumed and the equity securities issued by the Company. The equities of the acquirees which respectively acquired through multiple transaction that ultimately form into the combination of the enterprises under the different control, should be disposed according whether belongs to package deal; if belongs to package deal, each transaction would be executed accounting treatment by the Company as a transaction of acquiring the control right. If not belongs to package deal, the sum of the book value of the original held equity investment of the acquirees and the newly added investment cost should be regarded as the initial investment cost of the long-term equity investment that changed to be accounted by cost method. If the original held equity is calculated by cost method, the other relevant comprehensive income would not have any accounting disposal for the moment. If the original held equity investment is the financial assets available for sale, its difference between the fair value and the book value as well as the accumulative changes of the fair value that include in the other comprehensive income, should transfer into the current gains and losses.

The commission fees for audit, law services, assessment and consultancy services and other relevant expenses occurred in the business combination by the combining party or the purchase party, shall be recorded into current profits and losses upon their occurrence; the transaction expense from the issuance of equity securities or bonds securities which are as consideration for combination by the combining party, should be recorded as the initial amount of equity securities and bonds securities.

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Besides the long-term equity investments formed by business combination, the other long-term equity investments shall be initially measured by cost, the cost is fixed in accordance with the ways of gaining, such as actual cash payment paid by the Group, the fair value of equity securities issued by the Group, the agreed value of the investment contract or agreement, the fair value or original carrying amount of exchanged assets from non-monetary assets exchange transaction, the fair value of the long-term equity investments, etc. The expenses, taxes and other necessary expenditures directly related with gaining the long-term equity investments shall also be recorded into investment cost. The long-term equity investment cost for those could execute significant influences on the investees because of appending the investment or could execute joint control but not form as control, should be as the sum of the fair value of the original held equity investment and the newly added investment cost recognized according to the No.22 of Accounting Standards for Business Enterprises—Recognition and Measurement of Financial Instrument.

(2) Subsequent measurement and recognition of gains or losses

A long-term equity investment where the investing enterprise has joint control (except for which forms into common operators) or significant influence over the investors should be measured by equity method. Moreover, long-term equity investment adopting the cost method in the financial statements, and which the Company has control on invested entity.

① Long-term equity investment measured by adopting cost method

The price of a long-term equity investment measured by adopting the cost method shall be included at its initial investment cost and append as well as withdraw the cost of investing and adjusting the long-term equity investment. The return on investment at current period shall be recognized in accordance with the cash dividend or profit announced to distribute by the invested entity, except the announced but not distributed cash dividend or profit included in the actual payment or consideration upon gaining the investment. ②Long-term equity investment measured by adopting equity method

If the initial cost of a long-term equity investment is more than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the initial cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term equity investment is less than the Company's attributable share of the fair value of the invested entity's identifiable net assets for the investment, the difference shall be included in the current profits and losses and the cost of the long-term equity investment shall be adjusted simultaneously.

When measured by adopting equity method, respectively recognize investment income and other comprehensive income according to

the net gains and losses as well as the portion of other comprehensive income which should be enjoyed or be shared, and at the same time adjust the book value of the long-term equity investment; corresponding reduce the book value of the long-term equity investment according to profits which be declared to distribute by the investees or the portion of the calculation of cash dividends which should be enjoyed; for the other changes except for the net gains and losses, other comprehensive income and the owners’ equity except for the profits distribution of the investees, should adjust the book value of the long-term equity investment as well as include in the capital reserve. The investing enterprise shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested entity after it adjusts the net profits of the invested entity. If the accounting polices adopted by the investees is not accord with that of the Group, should be adjusted according to the accounting policies of the Group and the financial statement of the investees during the accounting period and according which to recognize the investment income as well as other comprehensive income. For the transaction happened between the Group and associated enterprises as well as joint ventures, if the assets launched or sold not form into business, the portion of the unrealized gains and losses of the internal transaction, which belongs to the Group according to the calculation of the enjoyed proportion, should recognize the investment gains and losses on the basis. But the losses of the unrealized internal transaction happened between the Group and the investees which belongs to the impairment losses of the transferred assets, should not be neutralized. The assets launched by the Group to the associated enterprises or the joint ventures if could form into business, the long-term equity investment without control right which acquired by the investors, should regard the fair value of the launched business as the initial investment cost the newly added long-term equity investment, and for the difference between the initial investment cost and the book value of the launched business, should be included into the current gains and losses with full amount. The assets sold by the Group to the associated enterprises or the joint ventures if could form into business, the difference

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between the acquired consideration and the book value of the business should be included in the current gains and losses with full amount. The assets purchased by the Group to the associated enterprises or the joint ventures if could form into business, should be accounting disposed according to the regulations of No. 20 of ASBE—Business Combination, and should be recognized gains or losses related to the transaction with full amount.

The Group shall recognize the net losses of the invested enterprise until the book value of the long-term equity investment and other long-term rights and interests which substantially form the net investment made to the invested entity are reduced to zero. However, if the Group has the obligation to undertake extra losses, it shall be recognized as the estimated liabilities in accordance with the estimated duties and then recorded into investment losses at current period. If the invested entity realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsets against its attributable share of the un-recognized losses, resume recognizing its attributable share of profits.

For the long-term equity investment held by the Group before the first execution of the new accounting criterion on 1 Jan. 2008 of the associated enterprises and joint ventures, if there is debit difference of the equity investment related to the investment, should be included in the current gains and losses according to the amount of the straight-line amortization during the original remained period.

③ Acquiring shares of minority interest

In the preparation for the financial statements, the balance existed between the long-term equity investment increased by acquiring shares of minority interest and the attributable net assets on the subsidiary calculated by the increased shares held since the purchase date (or combination date), the capital reserves shall be adjusted, if the capital reserves are not sufficient to offset, the retained profits shall be adjusted.

④ Disposal of long-term equity investment

In the preparation of financial statements, the Company disposed part of the long-term equity investment on subsidiaries without losing its controlling right on them, the balance between the disposed price and attributable net assets of subsidiaries by disposing the long-term equity investment shall be recorded into owners’ equity; where the Company losses the controlling right by disposing part of long-term equity investment on such subsidiaries, it shall treated in accordance with the relevant accounting policies in Method on preparation of combined financial statements of this note.

For other ways on disposal of long-term equity investment, the balance between the book value of the disposed equity and its actual payment gained shall be recorded into current profits and losses.

For the long-term equity investment measured by adopting equity method, if the remained equity after disposal still adopts the equity method for measurement, the other comprehensive income originally recorded into owners’ equity should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees according to the corresponding proportion. The owners’ equity recognized owning to the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current gains and losses according to the proportion.

For the long-term equity investment which adopts the cost method of measurement, if the remained equity still adopt the cost method, the other comprehensive income recognized owning to adopting the equity method for measurement or the recognition and measurement standards of financial instrument before acquiring the control of the investees, should adopt the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees and should be carried forward into the current gains and losses according to the proportion; the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion.

For those the Group lost the control of the investees by disposing part of the equity investment as well as the remained equity after disposal could execute joint control or significant influences on the investees, should change to measure by equity method when compiling the individual financial statement and should adjust the measurement of the remained equity to equity method as adopted since the time acquired; if the remained equity after disposal could not execute joint control or significant influences on the investees,

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should change the accounting disposal according to the relevant regulations of the recognition and measurement standards of financial instrument, and its difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized by adopting equity method for measurement or the recognition and measurement standards of financial instrument before the Group acquired the control of the investees, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when lose the control of them, while the changes of the other owners’ equity except for the net gains and losses, other comprehensive income and the profits distribution among the net assets of the investees which recognized by adopting the equity method for measurement, should be carried forward into the current gains and losses according to the proportion. Of which, for the disposed remained equity which adopted the equity method for measurement, the other comprehensive income and the other owners’ equity should be carried forward according to the proportion; for the disposed remained equity which changed to execute the accounting disposal according to the recognition and measurement standards of financial instrument, the other comprehensive income and the other owners’ equity should be carried forward in full amount.

For those the Group lost the control of the investees by disposing part of the equity investment, the disposed remained equity should change to calculate according to the recognition and measurement standards of financial instrument, and difference between the fair value and book value on the date lose the control right should be included in the current gains and losses. For the other comprehensive income recognized from the original equity investment by adopting the equity method, should execute the accounting disposal by adopting the same basis of the accounting disposal of the relevant assets or liabilities directly disposed by the investees when terminate the equity method for measurement, while for the owners’ equity recognized owning to the changes of the other owner’s equity except for the net gains and losses, other comprehensive income and the profits distribution of the investees, should be transferred into the current investment income with full amount when terminate adopting the equity method.

The Group respectively disposes the equity investment of the subsidiaries through multiple transactions until lose the control right, if the above transactions belongs to the package deal, should execute the accounting disposal by regarding each transaction as a deal of disposing the equity investment of the subsidiaries until lose the control right, while the difference between each expenses of the disposal and the book value of the long-term equity investment in accord with the disposed equity before losing the control right, should firstly be recognized as other comprehensive income then be transferred into the current gains and losses of losing the control right along until the time when lose it.

15. Investment real estates

Measurement mode of investment real estates

Measurement of cost method

Depreciation or amortization method

The term "investment real estates" refers to the real estates held for generating rent and/or capital appreciation. Investment real estates of the Group include the right to use any land which has already been rented; the right to use any land which is held and prepared for transfer after appreciation; and the right to use any building which has already been rented.

The initial measurement of the investment real estate shall be made at its cost. Subsequent expenditures incurred for an investment real estate is included in the cost of the investment real estate when it is probable that economic benefits associated with the investment real estate will flow to the Group and the cost can be reliably measured, otherwise the expenditure is recognized in profit or loss in the period in which they are incurred.

The Group shall make a follow-up measurement to the investment real estates by employing the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall be made for the investment real estates in the light of the accounting policies of the use right of buildings or lands.

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For details of impairment test method and withdrawal method of impairment provision of investment real estates, please refer to Note IV. 16. Impairment of Non-current Non-financial Assets.

When owner-occupied real estate or inventories are changed into investment real estate or investment real estate is changed into owner-occupied real estate, of which book value prior to the change shall be the entry value after the change.

When an investment real estate is changed to an owner-occupied real estate, it would be transferred to fixed assets or intangible assets at the date of such change. When an owner-occupied real estate is changed to be held to earn rental or for capital appreciation, the fixed asset or intangible asset is transferred to investment real estate at the date of such change. If the fixed asset or intangible asset is changed into investment real estate measured by adopting the cost pattern, whose book value prior to the change shall be the entry value after the change; if the fixed asset or intangible asset is changed into investment real estate measured by adopting the fair value pattern, whose fair value on the date of such change shall be the entry value after the change

An investment real estate is derecognized on disposal or when the investment real estate is permanently withdrawn from use and no future economic benefits are expected from its disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment real estate less its carrying amount and related taxes and expenses is recognized in profit or loss in the period in which it is incurred.

16. Fixed assets

(1) Conditions for recognition

The term “fixed assets” refers to the tangible assets that simultaneously possess the features as follows: (a) they are held for the sake of producing commodities, rendering labor service, renting or business management; and (b) their useful life is in excess of one fiscal year. The fixed assets are only recognized when the relevant economic benefits probably flow in the Group and its cost could be reliable measured. The fixed assets should take the initial measurement according to the cost and at the same time consider the influences of the factors of the estimated discard expenses.

(2) Depreciation methods

			Expected net salvage
Category of fixed assets	Method	Useful life		Annual deprecation
			value

	Average method of
Housing and building		15-24	2%-4%	4%--6.53%
	useful life

	Average method of
Machinery equipment		3-15	2%-4%	6.4%--32.67%
	useful life

	Average method of
Electronic equipment		9-18	4.00%	5.33%--10.67%
	useful life

Transportation	Average method of
		9	2.00%	10.89%
equipment	useful life

(3) Recognition basis, pricing and depreciation method of fixed assets by finance lease

The "finance lease" shall refer to a lease that has transferred in substance all the risks and rewards related to the ownership of an asset. Its ownership may or may not eventually be transferred. The fixed assets by finance lease shall adopt the same depreciation policy for self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease

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term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life.

17. Construction in progress

Construction in process is measured at actual cost. Actual cost comprises construction costs, borrowing costs that are eligible for capitalization before the fixed assets being ready for their intended us and other relevant costs. Construction in process is transferred to fixed assets when the assets are ready for their intended use.

18. Borrowing costs

The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. When the borrowing costs can be directly attributable to the construction or production of assets eligible for capitalization, and the asset disbursements or the borrowing costs have already incurred, and the construction or production activities which are necessary to prepare the asset for its intended use or sale have already started, the capitalization of borrowing costs begins. When the asset eligible for capitalization under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when incurred.

The to-be-capitalized amount of interests shall be determined in light of the actual interests incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or as a temporary investment; the enterprise shall calculate and determine the to-be-capitalized amount on the general borrowing by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined in light of the weighted average interest rate of the general borrowing.

During the period of capitalization, the exchange balance on foreign currency special borrowings shall be capitalized; the exchange balance on foreign currency general borrowings shall be recorded into current profits and losses.

The term “assets eligible for capitalization” refers to the fixed assets, investment real estate, inventories and other assets, of which the acquisition and construction or production may take quite a long time to get ready for its intended use or for sale.

Where the acquisition and construction or production of a qualified asset is interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be suspended.

19. Biological assets

20. Oil-gas assets

21. Intangible assets

(1) Pricing method, useful life and impairment test

The term "intangible asset" refers to the identifiable non-monetary assets possessed or controlled by enterprises which have no physical shape.

The intangible assets shall be initially measured according to its cost. The costs related with the intangible assets, if the economic benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably,

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shall be recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits and losses upon the occurrence. The use right of land gained is usually measured as intangible assets. For the self-developed and constructed factories and other constructions, the related expenditures on use right of land and construction costs shall be respectively measured as intangible assets and fixed assets. For the purchased houses and buildings, the related payment shall be distributed into the payment for use right of land and the payment for buildings, if it is difficult to be distributed, the whole payment shall be treated as fixed assets.

For intangible assets with a finite service life, from the time when it is available for use, the cost after deducting the sum of the expected salvage value and the accumulated impairment provision shall be amortized by straight line method during the service life. While the intangible assets without certain service life shall not be amortized.

At the end of period, the Group shall check the service life and amortization method of intangible assets with finite service life, if there is any change, it shall be regarded as a change of the accounting estimates. Besides, the Group shall check the service life of intangible assets without certain service life, if there is any evidence showing that the period of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall be estimated the service life and amortized in accordance with the amortization policies for intangible assets with finite service life.

(2) Accounting polices of internal R & D expenses

The expenditures for internal research and development projects of an enterprise shall be classified into research expenditures and development expenditures.

The research expenditures shall be recorded into the profit or loss for the current period.

The development expenditures shall be confirmed as intangible assets when they satisfy the following conditions simultaneously, and shall be recorded into profit or loss for the current period when they don’t satisfy the following conditions.

① It is feasible technically to finish intangible assets for use or sale;

② It is intended to finish and use or sell the intangible assets;

③ The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to prove that there is a potential market for the products manufactured by applying the intangible assets or there is a potential market for the intangible assets itself or the intangible assets will be used internally;

④ It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the support of sufficient technologies, financial resources and other resources;

⑤ The development expenditures of the intangible assets can be reliably measured.

As for expenses that can’t be identified as research expenditures or development expenditures, the occurred R & D expenses shall be all included in current profits and losses.

22. Impairment of long-term assets

For non-current financial Assets of fixed Assets, projects under construction, intangible Assets with limited service life, investing real estate with cost model, long-term equity investment of subsidiaries, cooperative enterprises and joint ventures, the Group should judge whether decrease in value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible intangible assets should be tested for decrease in value no matter whether it exists.

If the recoverable amount is less than book value in impairment test results, the provision for impairment of differences should include in impairment loss. Recoverable amounts would be the higher of net value of asset fair value deducting disposal charges or present value of predicted cash flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales agreement exists but with asset active market, fair value should be determined according to the Buyer’s price of the asset. If no

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sales agreement or asset active market exists, asset fair value could be acquired on the basis of best information available. Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of predicted asset cash flow should be determined by the proper discount rate according to Assets in service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable amounts should be determined according to the belonging asset group. Asset group is the minimum asset combination producing cash flow independently.

In impairment test, book value of the business reputation in financial report should be shared to beneficial asset group and asset group combination in collaboration of business merger. It is shown in the test that if recoverable amounts of shared business reputation asset group or asset group combination are lower than book value, it should determine the impairment loss. Impairment loss amount should firstly be deducted and shared to the book value of business reputation of asset group or asset group combination, then deduct book value of all assets according to proportions of other book value of above assets in asset group or asset group combination except business reputation.

After the asset impairment loss is determined, recoverable value amounts would not be returned in future.

23. Amortization method of long-term deferred expenses

Long-term deferred expenses refer to general expenses with the apportioned period over one year (one year excluded) that have occurred but attributable to the current and future periods.

24. Payroll

(1) Accounting treatment of short-term compensation

Short-term compensation mainly including salary, bonus, allowances and subsidies, employee services and benefits, medical insurance premiums, birth insurance premium, industrial injury insurance premium, housing fund, labor union expenditure and personnel education fund, non-monetary benefits etc. The short-term compensation actually happened during the accounting period when the active staff offering the service for the Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost. Of which the non-monetary benefits should be measured according to the fair value.

(2) Accounting treatment of the welfare after demission

Welfare after demission mainly includes setting drawing plan. Of which setting the drawing plan mainly includes basic endowment insurance, unemployment insurance and annuity etc, and the corresponding payable and deposit amount should be included into the relevant assets cost or the current gains and losses when happen.

If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor contract or brings forward any compensation proposal for the purpose of encouraging the employee to accept a layoff, and should recognize the payroll liabilities occurred from the demission welfare base on the earlier date between the time when the Group could not one-sided withdraw the demission welfare which offered by the plan or layoff proposal owning to relieve the labor relationship and the date the Group recognizes the cost related to the reorganization of the payment of the demission welfare and at the same time includes which into the current gains and losses. But if the demission welfare is estimated that could not totally pay after the end of the annual report within 12 months, should be disposed according to other long-term payroll payment.

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(3) Accounting treatment of the demission welfare

The inside employee retirement plan is treated by adopting the same principle with the above dismiss ion welfare. The group would recorded the salary and the social security insurance fees paid and so on from the employee’s service terminative date to normal retirement date into current profits and losses (dismiss ion welfare) under the condition that they meet the recognition conditions of estimated liabilities.

(4) Accounting treatment of the welfare of other long-term staffs

The other long-term welfare that the Group offers to the staffs, if met with the setting drawing plan, should be accounting disposed according to the setting drawing plan, while the rest should be disposed according to the setting revenue plan.

25. Estimated liabilities

The company should recognize the related obligation as a provision for liability when the obligation meets the following conditions: (1) That obligation is a present obligation of the enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be required to settle the obligation; (3) A reliable estimate can be made of the amount of the obligation.

On the balance sheet date, an enterprise shall take into full consideration of the risks, uncertainty, time value of money, and other factors pertinent to the Contingencies to measure the estimated liabilities in accordance with the best estimate of the necessary expenses for the performance of the current obligation.

When all or some of the expenses necessary for the liquidation of an estimated liabilities of an enterprise is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the reimbursement will be obtained. Besides, the amount recognized for the reimbursement should not exceed the book value of the estimated liabilities.

(1) Loss contract

The term "loss contract" refers to a contract whose performance of the contractual obligations will inevitably incur costs in excess of the expected economic benefits. Where an executory contract turns to be a loss contract, and the obligations occur from the loss contact meet with the above recognition conditions of the estimated liabilities, should recognize the confirmed part of the impairment losses (if any) which estimated to loss exceed the underlying assets of the contract as the estimated liabilities.

(2) Reorganization obligations

For the reorganization plan which is specific, formal as well as had been public announced, if meet with the above recognition conditions of the estimated liabilities, should recognize the amount of the estimated liabilities according to the direct expense related to the reorganization. For the reorganization obligations of the selling business, only when the Group commits to sell partly of the business (the time signed the restricted selling agreement), could recognize the relevant business of the reorganization.

26. Share-based payment

(1) Accounting treatment of share-based payment

Share-based payment refers to the transaction in order to require the service offered by the employees and other parties that grants the equity instruments or responsible for the liabilities recognized on the basis of the equity instruments. Share-based payment divided into equity-settled share-based payment and cash-settled share-based payment.

①Equity-settled share-based payment

It is a share-based payment settled by equity used for exchange the service offered by the staffs and be measured by the fair value on the grant date of granting the equity instrument for the staffs. When the services are fully rendered during vesting period or specified

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performance targets are met, based on the best estimate of the number of the vesting equity instruments during vesting period and according to the straight-line method to calculate and to include into the relevant cost or expenses/when using the vesting power immediately after the granting, should include the relevant cost or expenses on the grant date and correspondingly increase the capital reserve.

On each balance sheet date within the vesting period, the Group makes the best estimate base on the subsequent information newly required such as the changes of the vesting staffs’ number to modify the number of the estimated vesting equity instrument. The above influences of the estimation should be included into the current relevant cost or expenses and correspondingly adjust the capital surplus.

For equity-settled share-based payment made in return of other parties' services and the fair value of the other parties' services can be reliably measured, it will be measured based on the fair value of the other parties' services on the date of grant; if the fair value of the other parties' services cannot be reliably measured but the fair value of equity instruments can be reliably measured, it will be recognized in relevant costs or expenses and the capital reserves shall be adjusted accordingly at the fair value of such instruments on the date of the grant.

② Cash-settled share-based payment

The cash-settled share-based payment should be measured according to the fair value of the liabilities recognized based on the shares or other equity instrument undertaken by the Group. For the cash-settled share-based payment made in return for the rendering of employee services that may be exercised immediately after the grant, the fair value of the liability incurred by the Group shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For cash-settled share-based payment made in return for the rendering of employee services that cannot be exercised until the services are fully provided during the vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Group.

On each balance sheet date and the settlement date before the settlement of the relevant liabilities, the Group should re-measure the fair value of the liabilities and its changes should be included in the current gains and losses.

(2) Relevant accounting treatment about revision and termination of share-based payment plans

As to the revision on the share-based payment plan made by the Group, if the fair value of the granted equity instrument increases after the revision, it shall recognize the increase of the service gained according to the increase of the fair value of equity instrument. The increase of the fair value of equity instrument refers to the balance between the fair value on the revising date of the equity instruments before and after the revision. If the total fair value of share-base payment decreases after the revision or adopting other ways against the staffs in the revision, it shall continue to conduct accounting treatment on the service gained as if the revision never happens, only if the Group cancel partial or total granted equity instrument.

During the vesting period, if the Group cancels the granted equity instrument, the Group shall treat the cancel of granted equity instrument as accelerating the vesting, and includes the amount shall be recognized during the remained vesting period into current profit and loss, and also recognize the capital reserves. If staffs or other party can choose to meet the non-vesting conditions but not meets with them during the vesting period, which will be treated as the cancel of granted equity instrument by the Group.

(3) Accounting treatment of the share-based payment transactions involved with the Group, the shareholders of the Group or the actual controllers

The share-based equity payment transaction which involved with the Group, the shareholders or actual controllers of the Group, if one between the settlement enterprises and the service accepted enterprises are within the Group and the others are not, should be accounting disposed according to the following regulations in the consolidation financial statement of the Group:

① For the settlement enterprises settle by the equity instruments of itself, should dispose the share-based payment transaction as the share payment of the equity settlement; besides the rest should be disposed as the cash-settled share-based payment.

If the settlement enterprises accept the investor of the service enterprise, should recognize as the long-term equity investment on the

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enterprises which accept service according to the fair value of the equity instruments on the granted date or the fair value which should undertake the liabilities and at the same time be recognized as capital reserve (other capital reserve) or liabilities.

② For the enterprises accept the service without settlement obligations or the equity instruments granted for the staffs of the enterprises are its own instruments, the share-based payment transaction should be disposed as the equity-settled share-based payment; for the enterprises accept the service with the settlement obligations and the equity instruments are not its own instruments, the share-based payment transaction should be disposed as the cash-settled share-based payment.

The share-based payment transaction occur among each enterprise of the Group, if the enterprises accept service and the settlement enterprises are not the same enterprises, the recognition and the measurement of the share-based payment transaction among each individual financial statement of the service accepting enterprises and the settlement enterprises according to the above principles.

27. Other financial instruments such as preferred shares and perpetual capital securities

(1) Distinguish between perpetual capital securities and preferred shares etc.

The financial instruments such as perpetual capital securities and preferred shares issued by the Group that meet with the following conditions at the same time are regarded as equity instruments:

① the financial instruments not including the contact obligations such as pay for the cash or other financial assets to other parties, or to exchange the financial assets or financial liabilities under the potential disadvantages;

② if in the future have to use or could use the own equity instruments of the enterprises to settle the financial instruments, for example, the financial instruments are non-derivative instruments, there would be no contact obligations for delivering the variable own equity instruments for settlement; if they are derivative instruments, the Group could only settle the financial instruments through exchange its own equity instruments with a fixed number for the cash or other financial assets with fixed amount.

The other financial instruments issued by the Group should be classified into financial liabilities except for the financial instruments which could be classified into equity instruments according to the above conditions.

For the financial instruments issued by the Group which are complex financial instruments, should be recognized as an item of liabilities according to the fair value of the liabilities and at the same time be recognized as “other equity instruments” according to the amount that the actual received amount deduct the fair value of the liabilities. The transaction expenses occur when issuing the complex financial instruments should be shared according each proportion of the total issue price between the liabilities and the equities.

(2) Accounting treatment of perpetual capital securities and preferred shares etc.

The financial instruments such as the perpetual capital securities and preferred shares which be classified as financial liabilities, its relevant interests, dividends (or stock dividends), profits or losses, and the profits or losses occur from the redemption or the re-financing, should both be included in the current gains and losses except for the borrowing expenses that meet with the capitalization conditions (see details to Notes VI 17 “Borrowing expenses”).

For the financial instruments such as the perpetual capital securities and preferred shares which be classified as equity instruments, their issuance (including re-financing), re-purchase, selling or logout, the Group dispose them as the changes of the equities and the relevant transaction expenses are also minus from the equities. The Group disposes the distribution of the holder of the equity instruments as the profits distribution.

The Group not confirms the changes of the fair value of the equity instruments.

28. Revenue

No revenue from selling goods may be recognized unless the following conditions are met simultaneously: the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; the enterprise retains neither continuous

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management right that usually keeps relation with the ownership nor effective control over the sold goods; the relevant amount of revenue can be measured in a reliable way; the relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to be incurred can be measured in a reliable way.

(2) Providing labor services

If the Group can reliably estimate the outcome of a transaction concerning the labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method on the date of the balance sheet. The completed proportion of a transaction concerning the providing of labor services shall be decided by the proportion of the labor service already provided to the total labor service to provide.

The outcome of a transaction concerning the providing of labor services can be measured in a reliable way, means that the following conditions shall be met simultaneously: ① The amount of revenue can be measured in a reliable way; ② The relevant economic benefits are likely to flow into the enterprise; ③ The schedule of completion under the transaction can be confirmed in a reliable way; and ④ The costs incurred or to be incurred in the transaction can be measured in a reliable way.

If the outcome of a transaction concerning the providing of labor services can not be measured in a reliable way, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred and expected to be compensated, and make the cost of labor services incurred as the current expenses. If it is predicted that the cost of labor services incurred couldn’t be compensated, thus no revenue shall be recognized.

Where a contract or agreement signed between Group and other enterprises concerns selling goods and providing of labor services, if the part of sale of goods and the part of providing labor services can be distinguished from each other and can be measured respectively, the part of sale of goods and the part of providing labor services shall be treated respectively. If the part of selling goods and the part of providing labor services can not be distinguished from each other, or if the part of sale of goods and the part of providing labor services can be distinguished from each other but can not be measured respectively, both parts shall be conducted as selling goods.

(3) Construction contract revenue

If the Group can reliably estimate the outcome of a construction contact, the contact revenue and the expenses should be recognized according to the percentage of completion method on the balance sheet date. The completion progress of the contact should be recognized according to the proportion of the accumulative actual occurred contact cost among the estimated total cost of the contact. If the result of the construction contact is reliable for estimate refers to meet the following conditions at the same time: ① the total revenue of the contact could be reliable measured; ② the economic benefits related to the contact probably flow into the enterprises; ③ the contact cost actual occurred could be clearly distinguish as well as reliable measured; ④ the completion progress of the contact and cost which would still occur for completing the contact could be reliable confirmed.

If the result of the construction contact could not be reliable estimated while the contact cost could be returned, the contact revenue should be recognized according to the returnable actual contact cost, and the contact cost should be recognized as contact expenses as the period it occurs; if the contact cost could not be returned, should recognized as contact expenses immediately when it occurs and not be confirmed as contact revenue. For the disadvantage factor no longer exist which lead the result of the construction contact could not be reliable estimated, the revenue and expenses related to the construction contact should be recognized according to the completion percentage method.

If the estimated total cost of the contact exceeds the total revenue, the estimated losses should be recognized as current expenses.

The accumulatively occurred cost of the contact under construction and the accumulative confirmed gross margin (losses) as well as the settled price should be listed as the written-off net amount among the balance sheet. The amount the sum of the accumulatively occurred cost of the contact under construction and the accumulative confirmed gross margin (losses) which exceed the settled price should be listed as inventory; the part the settled price of the contact under construction exceeds the sum of the accumulatively occurred cost of the contact under construction and the accumulative confirmed gross margin (losses) should be listed as prepayments.

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(4) Royalty revenue

In accordance with relevant contract or agreement, the amount of royalty revenue should be recognized as revenue on accrual basis.

(5) Interest revenue

The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the Group’s monetary fund is used by others and the agreed interest rate.

29. Government subsidies

(1) Judgment basis and accounting treatment of government subsidies related to assets

The Company defines the government subsidies formed as the long-term assets which acquired for purchasing and constructing or by other methods as the government subsidies related to assets and confirms which as the deferred income and executes the average distribution as well as includes in the current gains and losses within the service life of the relevant assets.

(2) Judgment basis and accounting treatment of government subsidies related to profits

The Company defines the government subsidies formed as the long-term assets which acquired for purchasing and constructing or by other methods as the government subsidies related to assets while the rest of which as the government subsidies related to profits. The government subsidies related to profits used for supplementing the relevant expenses and losses during the follow-up period should be regarded as the deferred income, and be included in the current gains and losses during the period of confirming the related expenses; as those used for supplementing the occurred relevant expenses and losses, should be directly included in the current gains and losses.

30. Deferred income tax assets/deferred income tax liabilities

(1) Income tax of the current period

On the balance sheet date, for the current income tax liabilities (or assets) of the current period as well as the part formed during the previous period, should be measured by the income tax of the estimated payable (returnable) amount which be calculated according to the regulations of the tax law. The amount of the income tax payable which is based by the calculation of the current income tax expenses, are according to the result measured from the corresponding adjustment of the pre-tax accounting profit of 2015 which in accord to the relevant regulations of the tax law.

(2) Deferred income tax assets and deferred income tax liabilities

The difference between the book value of certain assets and liabilities and their tax assessment basis, as well as the temporary difference occurs from the difference between the book value of the items which not be recognized as assets and liabilities but could confirm their tax assessment basis according to the regulations of the tax law, the deferred income tax assets and the deferred income tax liabilities should be recognized by adopting liabilities law of the balance sheet.

No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill, the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary differences related to the investments of subsidiary companies, associated enterprises and joint enterprises, and the investing enterprise can control the time of the reverse of temporary differences as well as the temporary differences are unlikely to be reversed in the excepted future. Otherwise, the Company should recognize the deferred income tax liabilities arising form other taxable temporary difference.

No deferred taxable assets should be recognized for the deductible temporary difference of initial recognition of assets and liabilities

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arising from the transaction which is not business combination, the accounting profits will not be affected, nor will the taxable amount or deductible loss be affected at the time of transaction. Besides, no deferred taxable assets should be recognized for the deductible temporary difference related to the investments of the subsidiary companies, associated enterprises and joint enterprises, which are not likely to be reversed in the expected future or is not likely to acquire any amount of taxable income tax that may be used for making up such deductible temporary differences. Otherwise, the Company shall recognize the deferred income tax assets arising from a deductible temporary difference basing on the extent of the amount of the taxable income that is likely to be acquired to make up such deductible temporary differences

For any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred income tax asset shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.

On the balance sheet date, the deferred income tax assets and the deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.

The book value of deferred income tax assets shall be reviewed at each balance sheet date. If it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred income tax asset, the book value of the deferred income tax assets shall be written down. Any such write-down should be subsequently reversed where it becomes probable that sufficient taxable income will be available.

(3) Income tax expenses

Income tax expenses include current income tax and deferred income tax.

The rest current income tax and the deferred income tax expenses or revenue should be included into current gains and losses except for the current income tax and the deferred income tax related to the transaction and events that be confirmed as other comprehensive income or be directly included in the shareholders’ equity which should be included in other comprehensive income or shareholders’ equity as well as the book value for adjusting the goodwill of the deferred income tax occurs from the business combination.

(4) Offset of income tax

The current income tax assets and liabilities of the Company should be listed by the written-off net amount which intend to executes the net amount settlement as well as the assets acquiring and liabilities liquidation at the same time while owns the legal rights of settling the net amount.

The deferred income tax assets and liabilities of the Company should be listed as written-off net amount when having the legal rights of settling the current income tax assets and liabilities by net amount and the deferred income tax and liabilities is relevant to the income tax which be collected from the same taxpaying bodies by the same tax collection and administration department or is relevant to the different taxpaying bodies but during each period which there is significant reverse of the deferred income assets and liabilities in the future and among which the involved taxpaying bodies intend to settle the current income tax and liabilities by net amount or are at the same time acquire the asset as well as liquidate the liabilities.

31. Lease

(1) Accounting treatment of operating lease

Business of operating leases recorded by the Group as the lessee

The rent expenses from operating leases shall be recorded by the lessee in the relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs shall be recognized as the profits and losses of the current period. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.

Business of operating leases recorded by the Company as the lessor

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The rent incomes from operating leases shall be recognized as the profits and losses of the current period by using the straight-line method over each period of the lease term. The initial direct costs of great amount shall be capitalized when incurred, and be recorded into current profits and losses in accordance with the same basis for recognition of rent incomes over the whole lease term. The initial direct costs of small amount shall be recorded into current profits and losses when incurred. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.

(2) Accounting treatments of financial lease

Business of finance leases recorded by the Company as the lessee

On the lease beginning date, the Company shall record the lower one of the fair value of the leased asset and the present value of the minimum lease payments on the lease beginning date as the entering value in an account, recognize the amount of the minimum lease payments as the entering value in an account of long-term account payable, and treat the balance between the recorded amount of the leased asset and the long-term account payable as unrecognized financing charges. Besides, the initial direct costs directly attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value of the current period. The balance through deducting unrecognized financing charges from the minimum lease payments shall be respectively stated in long-term liabilities and long-term liabilities due within 1 year.

Unrecognized financing charges shall be adopted by the effective interest rate method in the lease term, so as to calculate and recognize current financing charges. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.

Business of finance leases recorded by the Company as the lessor

On the beginning date of the lease term, the Company shall recognize the sum of the minimum lease receipts on the lease beginning date and the initial direct costs as the entering value in an account of the financing lease values receivable, and record the unguaranteed residual value at the same time. The balance between the sum of the minimum lease receipts, the initial direct costs and the unguaranteed residual value and the sum of their present values shall be recognized as unrealized financing income. The balance through deducting unrealized financing incomes from the finance lease accounts receivable shall be respectively stated in long-term claims and long-term claims due within 1 year.

Unrecognized financing incomes shall be adopted by the effective interest rate method in the lease term, so as to calculate and recognize current financing revenues. The contingent rents shall be recorded into the profits and losses of the current period in which they actually arise.

32. Other significant accounting policies and estimates

Operation termination refers to the compose part that meet with one of the following conditions which had been disposed by the Company or be classified to held-to-sold as well as could be individually distinguished in operating and compiling the financial statement: ① the compose part represents an individual main business or a main operation area; ② the compose part is a part intends to dispose and plan an individual main business or a main operation area; ③ the compose part is a subsidiary which be acquired only for resold.

For the details of the accounting treatment of the operation termination, please refer to the relevant description in “Divided as held-to-sold assets” of this note.

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33. Changes in main accounting policies and estimates

(1) Change of accounting policies

□ Applicable √ Inapplicable

(2) Change of main accounting estimates

□ Applicable √ Inapplicable

34. Other

VI. Taxation

1. Main taxes and tax rate

Category of taxes	Tax basis	Tax basis	Tax rate
VAT	Taxable income		13% 17%
Business tax	Taxable income		5%
Urban maintenance and construction tax	Turnover tax payable		5% 7%
Enterprise income tax	Income tax payable		25%
Education surtax	Turnover tax payable		3%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name		Income tax rate

2. Tax preference

3. Other

VII. Notes on major items in consolidated financial statements of the Company

1. Monetary funds

	Unit: RMB Yuan Closing balance Opening balance 406,098,208.72 418,847,736.46 4,500,000.00 406,098,208.72 423,347,736.46	Unit: RMB Yuan Closing balance Opening balance 406,098,208.72 418,847,736.46 4,500,000.00 406,098,208.72 423,347,736.46
Item	Closing balance	Opening balance
Bank deposits	406,098,208.72	418,847,736.46
Other monetary funds		4,500,000.00
Total	406,098,208.72	423,347,736.46

Other notes

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2. Financial assets measured by fair value and the changes be included in the current gains and losses

Unit: RMB Yuan

Item Closing balance Opening balance

Other notes:

3. Derivative financial assets

□ Applicable √ Inapplicable

4. Notes receivable

(1) Notes receivable listed by category

Unit: RMB Yuan

Item	Closing balance	Opening balance
Bank acceptance bill	34,433,010.97	2,874,466.50
Total	34,433,010.97	2,874,466.50

(2) Notes receivable pledged by the Company at the period-end

Unit: RMB Yuan

Item Amount

(3) Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end

Unit: RMB Yuan

	Amount of recognition termination at the	Amount of not terminated recognition at
Item
	period-end	the period-end

Bank acceptance bill	164,051,144.39
Total	164,051,144.39

(4) Notes transferred to accounts receivable because drawer of the notes fails to executed the contract or agreement

Unit: RMB Yuan

Amount of the notes transferred to accounts receivable at the Item period-end

Other notes

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2015 Annual Report of Hubei Sanonda Co., Ltd.

5. Accounts receivable

(1) Accounts receivable disclosed by category

==> picture [64 x 7] intentionally omitted <==

----- Start of picture text -----

Unit: RMB Yuan
----- End of picture text -----

==> picture [480 x 325] intentionally omitted <==

----- Start of picture text -----

Closing balance Opening balance
Book balance Bad debt provision Book balance Bad debt provision
Withdra
Category Book
Proportio wal Proportio Withdrawal Book value
Amount Amount value Amount Amount
n proportio n proportion
n
Accounts receivable
withdrawn bad debt
198,651, 18,200,6 180,450,5 214,581 18,946,02 195,635,91
provision according 99.71% 9.16% 99.73% 8.83%
132.62 00.69 31.93 ,941.01 8.26 2.75
to credit risks
characteristics
Accounts receivable
with insignificant
single amount for 584,457. 584,457. 584,457 584,457.5
0.29% 100.00% 0.27% 100.00%
which bad debt 52 52 .52 2
provision separately
accrued
199,235, 18,785,0 180,450,5 215,166 19,530,48 195,635,91
Total 100.00% 100.00%
590.14 58.21 31.93 ,398.53 5.78 2.75
----- End of picture text -----

Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end

□ Applicable √ Inapplicable

In the groups, accounts receivable adopting aging analysis method to accrue bad debt provision:

√ Applicable □ Inapplicable

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance
Aging
	Accounts receivable	Bad debt provision	Withdrawal proportion

Subitem within 1 year
Within 1 year	189,324,758.87	9,466,237.94	5.00%
Subtotal within 1 year	189,324,758.87	9,466,237.94	5.00%
1 to 2 years	539,514.86	53,951.49	10.00%
Over 3 years	8,786,858.89	8,680,411.26	98.79%
3 to 4 years	110,148.25	55,074.12	50.00%
4 to 5 years	102,747.00	51,373.50	50.00%
Over 5 years	8,573,963.64	8,573,963.64	100.00%

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Total 198,651,132.62 18,200,600.69 9.16%

Notes of the basis of recognizing the group:

In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision

□ Applicable √ Inapplicable

In the groups, accounts receivable adopting other methods to accrue bad debt provision:

Accounts receivable (classified by units)		Year end balance	Year end balance
	Accounts receivable	Bad debt provision	Withdraw proportion	Withdraw reason
Jiangxi Nanchang Red Valley Plant Protection Center	584,457.52	584,457.52	100.00%	No result after multiple collection and estimate to be unable to take back
Total	584,457.52	584,457.52	—	—

(2) Accounts receivable withdraw, reversed or collected during the reporting period

The withdrawal amount of the bad debt provision during the reporting period was of RMB0.00; the amount of the reversed or collected part during the reporting period was of RMB745,427.57.

Of which the significant amount of the reversed or collected part during the reporting period was of RMB 000:

Unit: RMB Yuan

Name of the units Reversed or collected amount Method

(3) The actual write-off accounts receivable

Unit: RMB Yuan

Item Amount

Of which the significant actual write-off accounts receivable:

Unit: RMB Yuan

					Whether occurred
Name of the units	Nature	Amount	Reason	Process	from the related
					transactions

Notes of the write-off the accounts receivable:

(4) Top 5 of the closing balance of the accounts receivable colleted according to the arrears party

Name of units	Year end balance	Aging	Proportion of the total year end balance of the accounts receivable (%)	Bad debt provision
Customer	17,428,770.45	Within 1 year	8.75%	871,438.52

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2015 Annual Report of Hubei Sanonda Co., Ltd.

receivable A
Customer receivable B	15,894,862.29	Within 1 year	7.98%	794,743.11
Customer receivable C	12,083,316.85	Within 1 year	6.06%	604,165.84
Customer receivable D	11,274,188.32	Within 1 year	5.66%	563,709.42
Customer receivable E	10,896,130.93	Within 1 year	5.47%	544,806.55
Total	67,577,268.84		33.92%	3,378,863.44

(5) Account receivable which terminate the recognition owning to the transfer of the financial assets

(6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable

Other notes:

6. Prepayment

(1) List by aging analysis:

Unit: RMB Yuan

	Closing balance	Closing balance	Opening balance	Opening balance
Aging
	Amount	Proportion	Amount	Proportion

Within 1 year	19,657,116.96	96.30%	19,334,348.47	99.43%
1 to 2 years	695,831.03	3.40%	60,417.69	0.31%
2 to 3 years	60,417.69	0.30%	50,000.00	0.26%
Total	20,413,365.68	--	19,444,766.16	--

Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time:

(2) Top 5 of the closing balance of the prepayment colleted according to the prepayment target

Name of units	Year end balance	Aging	Proportion of the total year end balance of the accounts receivable (%)

Supplier A	8,873,069.70	Within 1 year	43.47%

Supplier B	2,869,573.82	Within 1 year	14.06%

Supplier C	2,134,819.98	Within 1 year	10.46%

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Supplier D	1,129,662.11	Within 1 year	5.53%

Supplier E	1,036,000.00	Within 1 year	5.08%

Total	16,043,125.61		78.59%

Other notes:

7. Interest receivable

(1) Category of interest receivable

Unit: RMB Yuan Item Closing balance Opening balance (2) Significant overdue interest Whether occurred Borrower Closing balance Overdue time Reason impairment and its judgment basis Other notes:

8. Dividend receivable

(1) Dividend receivable

				Unit: RMB Yuan Opening balance Unit: RMB Yuan Reason Whether occurred impairment and its judgment basis	Unit: RMB Yuan Opening balance Unit: RMB Yuan Reason Whether occurred impairment and its judgment basis
Item (or investees)		Closing balance		Opening balance
(2) Significant dividend receivable aged over 1 year
					Whether occurred
Item (or investees)	Closing balance		Aging	Reason	impairment and its
					judgment basis
Other notes:

9. Other accounts receivable

(1) Other accounts receivable disclosed by category

		Unit: RMB Yuan Opening balance
Category	Closing balance	Opening balance

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2015 Annual Report of Hubei Sanonda Co., Ltd.

	Book balance	Book balance	Bad debt provision	Bad debt provision		Book balance	Book balance	Bad debt provision	Bad debt provision
				Withdra
					Book
		Proportio		wal			Proportio		Withdrawal	Book value
	Amount		Amount		value	Amount		Amount
		n		proportio			n		proportion

				n
Other accounts
receivable withdrawn
	15,211,4		5,363,99		9,847,451	25,024,		5,344,601		19,679,596.
bad debt provision		100.00%		35.26%			100.00%		21.36%
	42.84		1.49		.35	198.47		.82		65
according to credit

risks characteristics
	15,211,4		5,363,99		9,847,451 .35	25,024,		5,344,601		19,679,596. 65
Total		100.00%		35.26%			100.00%		21.36%
	42.84		1.49			198.47		.82

Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end

□ Applicable √ Inapplicable

In the groups, other accounts receivable adopting aging analysis method to accrue bad debt provision:

√Applicable □ Inapplicable

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance
Aging
	Other accounts receivable	Bad debt provision	Withdrawal proportion

Subitem within 1 year
Within 1 year	475,017.80	23,750.89	5.00%
Subtotal within 1 year	475,017.80	23,750.89	5.00%
2 to 3 years	20,000.00	6,000.00	30.00%
Over 3 years	5,474,632.88	5,334,240.60	97.44%
3 to 4 years	270,784.57	135,392.29	50.00%
4 to 5 years	10,000.00	5,000.00	50.00%
Over 5 years	5,193,848.31	5,193,848.31	100.00%
Total	5,969,650.68	5,363,991.49	89.85%

Notes of the basis of recognizing the group:

In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision

□ Applicable √ Inapplicable

In the groups, other accounts receivable adopting other methods to accrue bad debt provision:

√ Applicable □ Inapplicable

√ Applicable □ Inapplicable
Name of group	Year end balance
	Other accounts receivable	Bad debt provision	Withdrawal proportion (%)
Non-risk group	9,241,792.16
Total	9,241,792.16

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Notes: the content of the non-risk group is the export tax refunds receivable.

(2) Accounts receivable withdraw, reversed or collected during the reporting period

The withdrawal amount of the bad debt provision during the reporting period was of RMB19,389.67; the amount of the reversed or collected part during the reporting period was of RMB 000.

Of which the significant amount of the reversed or collected part during the reporting period was of RMB 000:

		Unit: RMB Yuan Method
Name of units	Reversed or collected amount	Method

(3) The actual write-off other accounts receivable

Unit: RMB Yuan

Item	Item	Item		Amount
Of which the significant write-off other accounts receivable:					Unit: RMB Yua
					Whether occurred
Name of units	Nature	Amount	Reason	Process	from the related
					transactions

Unit: RMB Yuan

Notes of write-off other accounts receivable:

(4) Other accounts receivable classified by the nature of accounts

Unit: RMB Yuan

Nature	Closing book balance	Opening book balance
Export tax refunds	9,241,792.16	18,466,106.58
Liquidation amount of investment fund	3,398,275.80	3,398,275.80
Cash pledge	700,000.00	1,029,784.57
Pretty cash	728,854.26	714,696.62
Liquidation amount of goods payment	548,500.00	548,500.00
Other	594,020.62	866,834.90
Total	15,211,442.84	25,024,198.47

(5) Top 5 of the closing balance of the other accounts receivable colleted according to the arrears party

Unit: RMB Yuan

				Proportion of the	Closing balance of
				total year end	bad debt provision
Name of units	Nature	Closing balance	Aging
				balance of the

				accounts receivable

128

2015 Annual Report of Hubei Sanonda Co., Ltd.

Jingzhou Center
Subtreasury of State	Export rebates	9,241,792.16	Within 1 year	60.76%
Treasury
	Settlement payment
Shantou Biyue
	for investment	3,125,000.00	Over 5 years	20.54%	3,125,000.00
Plastic Co., Ltd.
	accounts

Hubei Jingzhou
Shashi Agricultural	Settlement payment
		548,500.00	Over 5 years	3.61%	548,500.00
Production Materials	for goods

Co., Ltd.
Jingzhou Production
Safety Supervision	Cash pledge	300,000.00	Over 5 years	1.97%	300,000.00
Bureau
Jingzhou Property	Housing system ref
		237,784.57	3 to 4 years	1.56%	118,892.29
Authority	orm fund

Total	--	13,453,076.73	--	88.44%	4,092,392.29

(6) Accounts receivable involved with government subsidies

Unit: RMB Yuan

	Project of government			Estimated received time,
Name of units		Closing balance	Closing age
	subsidies			amount and basis

(7) Other account receivable which terminate the recognition owning to the transfer of the financial assets

(8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable

Other notes:

10. Inventory

(1) Category of inventory

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance	Opening balance	Opening balance	Opening balance
Item		Falling price			Falling price
	Book balance		Book value	Book balance		Book value
		reserves			reserves

Raw materials	39,185,122.07	941,716.73	38,243,405.34	34,032,778.64	1,215,718.28	32,817,060.36
Goods in process	60,066,222.32	687,819.54	59,378,402.78	74,264,991.68	2,102,897.22	72,162,094.46
Inventory goods	194,848,529.59	4,646,173.41	190,202,356.18	237,121,880.01	12,537,290.76	224,584,589.25

129

2015 Annual Report of Hubei Sanonda Co., Ltd.

Turnover
				977,861.98		977,861.98
materials

Total	294,099,873.98	6,275,709.68	287,824,164.30	346,397,512.31	15,855,906.26	330,541,606.05

(2) Falling price reserves of inventory

Unit: RMB Yuan

			Increased amount	Increased amount		Decreased amount	Decreased amount
Item	Opening balance					Reverse or		Closing balance
			Withdrawal	Other			Other
						write-off

Raw materials	1,215,718.28		9,571,692.76			9,845,694.31		941,716.73
Goods in process	2,102,897.22		2,035,835.85			3,450,913.53		687,819.54
Inventory goods	12,537,290.76		17,361,488.01			25,252,605.36		4,646,173.41
Total	15,855,906.26		28,969,016.62			38,549,213.20		6,275,709.68
Item		Specific basis of withdrawal of falling price reserves of inventory			Reasons for reversal		Reasons for write-off
Raw materials		The net realizable value lower than the cost					Consumed
Goods in process		The net realizable value lower than the cost					Consumed
Inventory goods		The net realizable value lower than the cost					Sold
Turnover materials

(3) Notes of the closing balance of the inventory which includes capitalized borrowing expenses

(4) Completed unsettled assets formed from the construction contact at the period-end

Unit: RMB Yuan

Item Amount

Other notes:

11. Assets divided as held-to-sold

Unit: RMB Yuan

			Estimated disposal
Item	Closing book value	Fair value		Estimated disposal time
			expense

Other notes:

130

2015 Annual Report of Hubei Sanonda Co., Ltd.

12. Non-current assets due within 1 year

Unit: RMB Yuan

Item Closing balance Opening balance

Other notes:

13. Other current assets

Unit: RMB Yuan

Item	Closing balance	Opening balance
Input tax to be deducted	14,297,586.28
Tax prepayments	387,633.86
Total	14,685,220.14

Other notes:

14. Available-for-sale financial assets

(1) List of available-for-sale financial assets

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance	Opening balance	Opening balance	Opening balance
Item		Depreciation			Depreciation
	Book balance		Book value	Book balance		Book value
		reserves			reserves

Available-for-sale equity
	9,153,782.63		9,153,782.63	9,153,782.63		9,153,782.63
instruments

Measured by cost	9,153,782.63		9,153,782.63	9,153,782.63		9,153,782.63
Total	9,153,782.63		9,153,782.63	9,153,782.63		9,153,782.63

(2) Available-for-sale financial assets measured by fair value at the period-end

Unit: RMB Yuan


Available-for-sale equity	Available-for-sale
		Total
instruments	liabilities instruments

(3) Available-for-sale financial assets measured by cost at the period-end

Unit: RMB Yuan

		Book balance	Book balance			Impairment provision	Impairment provision
									Shareholdi	Cash
Investee
	Period-beg	Increase	Decrease	Period-end	Period-beg	Increase	Decrease	Period-end	ng	bonus of

131

2015 Annual Report of Hubei Sanonda Co., Ltd.

	in		proportion	the
			among the	reporting
			investees	period
Hubei	8,008,982.	8,008,982.		1,667,155.
			0.71%
Bank	63	63		76

Guangxi
Zhongding	580,800.00	580,800.00	1.41%
Co., Ltd.
Hubei
Shendian
Auto	564,000.00	564,000.00	0.60%
Motor Co.,
Ltd.
	9,153,782.	9,153,782.		1,667,155.
Total			--
	63	63		76

(4) Changes of the impairment of the available-for-sale financial assets during the reporting period

Unit: RMB Yuan

Category of the
	Available-for-sale equity	Available-for-sale
available-for-sale			Total
	instruments	liabilities instruments
financial assets

(5) Relevant notes of the fair value of the available-for-sale equity instruments which seriously fell or temporarily fell but not withdrawn the impairment provision

Unit: RMB Yuan

Item of
			Falling range of		Withdrawn	Reason of not
available-for-sale		Fair value of the		Continued falling
	Investment cost		the fair value		amount of	withdrawn the
equity		period-end		time (month)
			against the cost		impairment	impairment
instruments

Other notes

15. Investment held-to-maturity

(1) List of investment held-to-maturity

Unit: RMB Yuan

		Closing balance			Opening balance
Item		Impairment			Impairment
	Book balance		Book value	Book balance		Book value
		provision			provision

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2015 Annual Report of Hubei Sanonda Co., Ltd.

(2) Significant held-to-maturity investment at the period-end

Unit: RMB Yuan

Bond item Par value Nominal interest rate Actual interest rate Due date

(3) Re-classified held-to-maturity investment during the reporting period

Other notes

16. Long-term accounts receivable

(1) List of long-term accounts receivable

Unit: RMB Yuan

		Closing balance	Closing balance		Opening balance	Opening balance
							Discount rate
Item		Bad debt			Bad debt
	Book balance		Book value	Book balance		Book value	range
		provision			provision

(2) Long-term accounts receivable which terminate the recognition owning to the transfer of the financial assets

(3) The amount of the assets and liabilities formed by the transfer and the continues involvement of long-term accounts receivable

Other notes

17. Long-term equity investment

Unit: RMB Yuan

		Increase/decrease	Increase/decrease	Increase/decrease	Increase/decrease	Increase/decrease	Increase/decrease	Increase/decrease	Increase/decrease
											Closing
				Gains and	Adjustme
							Cash	Withdraw			balance
Investees	Opening	Additiona	Reduced	losses	nt of	Changes	bonus or	al of		Closing	of
		l		recognize	other
	balance		investmen			of other	profits	impairme	Other	balance	impairme
		investmen		d under	comprehe
			t			equity	announce	nt			nt
		t		the equity	nsive
							d to issue	provision			provision
				method	income

I. Joint ventures
II. Associated enterprises

Other notes

133

2015 Annual Report of Hubei Sanonda Co., Ltd.

18. Investment property

(1) Investment property adopted the cost measurement mode

√ Applicable □ Inapplicable

Unit: RMB Yuan

Item	Houses and buildings	Total
I. Original book value
1. Opening balance	7,934,843.00	7,934,843.00
2. Increased amount

of the period

(1) Outsourcing
(2) Transfer of
inventory\fixed

assets\project under

construction
(3) Increased from

enterprise merger


3. Decreased

amount of the period

(1) Disposal
(2) Other transfer

4. Closing balance	7,934,843.00	7,934,843.00
II. Accumulative
depreciation and

accumulative

amortization
1.Opening balance	2,570,914.72	2,570,914.72
2. Increased amount
	327,182.74	327,182.74
of the period

(1) Withdrawal or
	327,182.74	327,182.74
amortization


3. Decreased

amount of the period

(1) Disposal

134

2015 Annual Report of Hubei Sanonda Co., Ltd.

(2) Other transfer

4. Closing balance	2,898,097.46	2,898,097.46
III. Depreciation reserves
1.Opening balance
2. Increased amount

of the period

(1) Withdrawal

3. Decreased

amount of the period

(1) Disposal
(2) Other transfer

4. Closing balance
IV. Book value
1. Closing book		5,036,745.54
	5,036,745.54
value

2. Opening book		5,363,928.28
	5,363,928.28
value

(2) Investment property adopted fair value measurement mode

□ Applicable √ Inapplicable

(3) Details of investment property failed to accomplish certification of property

Unit: RMB Yuan

Item	Book value	Reason
Other notes

19. Fixed assets

(1) List of fixed assets

Unit: RMB Yuan

			Transportation
Item	Houses and buildings	Machinery equipment		Total
			equipment

I. Original book value

135

2015 Annual Report of Hubei Sanonda Co., Ltd.

1. Opening balance	715,720,344.32	1,461,271,999.07	11,142,137.17	2,188,134,480.56
2. Increased amount of
	128,349,454.43	516,957,716.99	5,110.00	645,312,281.42
the period

(1) Purchase	7,535,201.35	13,709,334.23	5,110.00	21,249,645.58
(2) Transfer of
project under	120,814,253.08	503,248,382.76		624,062,635.84
construction
(3) Increased from

enterprise merger


3. Decreased amount
	186,262.51	15,271,340.53	331,373.00	15,788,976.04
of the period

(1) Disposal or
	186,262.51	15,271,340.53	331,373.00	15,788,976.04
scrap


4. Closing balance	843,883,536.24	1,962,958,375.53	10,815,874.17	2,817,657,785.94
II. Accumulative

depreciation

1.Opening balance	200,449,067.92	717,616,569.65	6,431,697.57	924,497,335.14
2. Increased amount of
	36,555,526.89	173,285,022.57	20,945.77	209,861,495.23
the period

(1) Withdrawal	36,555,526.89	173,285,022.57	20,945.77	209,861,495.23

3. Decreased amount
	186,262.51	15,051,097.67	325,635.00	15,562,995.18
of the period

(1) Disposal or
	186,262.51	15,051,097.67	325,635.00	15,562,995.18
scrap


4. Closing balance	236,818,332.30	875,850,494.55	6,127,008.34	1,118,795,835.19
III. Depreciation reserves
1.Opening balance	2,848,203.34	11,962,547.32		14,810,750.66
2. Increased amount of

the period

(1) Withdrawal

3. Decreased amount

of the period

136

2015 Annual Report of Hubei Sanonda Co., Ltd.

(1) Disposal or

scrap


4. Closing balance	2,848,203.34	11,962,547.32		14,810,750.66
IV. Book value
1. Closing book value	604,217,000.60	1,075,145,333.66	4,688,865.83	1,684,051,200.09
2. Opening book value	512,423,073.06	731,692,882.10	4,710,439.60	1,248,826,394.76

(2) List of temporarily idle fixed assets

Unit: RMB Yuan

		Accumulative	Impairment
Item	Original book value			Book value	Notes
		depreciation	provision

Houses and
	8,736,063.10	6,927,877.30	1,757,484.71	50,701.09
buildings

Machinery
	813,358.79	813,358.79
equipment

Total	9,549,421.89	7,741,236.09	1,757,484.71	50,701.09

（ (3) Fixed assets leased in from financing lease

Unit: RMB Yuan

		Accumulative
Item	Original book value		Impairment provision	Book value
		depreciation

(4) Fixed assets leased out from operation lease

Unit: RMB Yuan

Item Closing book value

(5) Details of fixed assets failed to accomplish certification of property

Unit: RMB Yuan

Item Book value Reason

Other notes

137

2015 Annual Report of Hubei Sanonda Co., Ltd.

20. Construction in progress

(1) List of construction in progress

Unit: RMB Yuan

	Closing balance	Closing balance		Opening balance	Opening balance
Item		Impairment			Impairment
	Book balance		Book value	Book balance		Book value
		provision			provision

Mating Sewage
	66,464,190.24		66,464,190.24
Treatment Project

Modification of
the 110KV
	38,133,049.11		38,133,049.11
transformer

substation
Saline wastewater
incineration
project such as
sewage
	27,058,639.76		27,058,639.76
N-phosphonomet

hyliminadiacetic
acid and
glyphosate
Optimization of
the pyridine
engineering
	4,385,547.18		4,385,547.18
technology and

the safety
modification
Dynamic 110KV
ionic membrane
	4,240,933.05		4,240,933.05	3,787,115.96		3,787,115.96
substation access

system
116 acres public
engineering
projects in	2,289,680.28		2,289,680.28
Sanonda new area
southeast corner
Ionic membrane
				222,497,321.45		222,497,321.45
project (Zone B)

Salt mine and
				136,688,326.31		136,688,326.31
sodium nitrate

138

2015 Annual Report of Hubei Sanonda Co., Ltd.

(Zone A)
110KV
transformer
substation and			47,436,445.22	47,436,445.22
exterior line
(Zone A)
Pesticide Plant I
spermine
amination			7,114,614.90	7,114,614.90
wastewater
treatment project
Newly built
clean-water
reservoir project			106,837.62	106,837.62
of the sewage
treatment plant
Other	1,111,505.53	1,111,505.53	6,226,360.24	6,226,360.24
Total	143,683,545.15	143,683,545.15	423,857,021.70	423,857,021.70

(2) Changes of significant construction in progress

Unit: RMB Yuan

==> picture [480 x 325] intentionally omitted <==

----- Start of picture text -----

Of
Amount Proporti which:
Accumul
that on the Capitaliz
Other ative
Increase transferr estimate amount ation rate
Estimate decrease amount
Name o f Opening d amount ed to Closing d of the Project of the of the Capital
d d amount of
item balance of the fixed balance project progress capitaliz interests resources
number of the capitaliz
period assets of accumul ed of the
period ed
the ative interests period
interests
period input of the
period
Mating
Sewage
108,500, 66,464,1 66,464,1
Treatme 61.26% 61.26% Other
000.00 90.24 90.24
nt
Project
Modifica
tion of
45,000,0 38,133,0 38,133,0
the 86.55% 86.55% Other
00.00 49.11 49.11
110KV
transfor
----- End of picture text -----

139

2015 Annual Report of Hubei Sanonda Co., Ltd.

mer
substatio
n
Saline
wastewat
er
incinerat
ion
project
such as
	35,300,0		27,058,6	27,058,6
sewage					76.65%	76.65%	Other
	00.00		39.76	39.76
N-phosp

honomet
hylimina
diacetic
acid and
glyphosa
te
Optimiza
tion of
the
pyridine
engineeri
ng	3,910,00		4,385,54	4,385,54
					112.16%	95.00%	Other
technolo	0.00		7.18	7.18

gy and
the
safety
modifica
tion
Dynamic
110KV
ionic
membra	4,900,00	3,787,11	453,817.	4,240,93
					86.55%	86.55%	Other
ne	0.00	5.96	09	3.05

substatio
n access
system
116
acres
	6,500,00		2,289,68	2,289,68
public					35.23%	35.23%	Other
	0.00		0.28	0.28
engineeri

ng

140

2015 Annual Report of Hubei Sanonda Co., Ltd.

projects
in
Sanonda
new area
southeast
corner
Ionic
membra											Financial
	374,599,	222,497,	83,316,4	305,813,				11,151,4	2,376,27
ne						81.64%	100.00%			6.40%	institutio
	000.00	321.45	88.41	809.86				41.43	3.17
project											n loans

(Zone B)
Salt
mine and											Financial
	247,021,	136,688,	92,362,7	229,051,				10,158,8	2,376,29
sodium						92.73%	100.00%			6.40%	institutio
	100.00	326.31	90.34	116.65				44.09	9.55
nitrate											n loans

(Zone A)
110KV
transfor
mer
substatio	89,365,8	47,436,4	4,092,53	51,528,9
						57.66%	100.00%				Other
n and	00.00	45.22	7.63	82.85

exterior
line
(Zone A)
Pesticide
Plant I
spermine
aminatio
	9,200,00	7,114,61	3,180,42	10,295,0
n						111.90%	100.00%				Other
	0.00	4.90	1.98	36.88
wastewat

er
treatmen
t project
	924,295,	417,523,	321,737,	596,688,	142,572,			21,310,2	4,752,57
Total						--	--				--
	900.00	823.84	162.02	946.24	039.62			85.52	2.72

(3) List of the withdrawal of the impairment provision of the construction in progress

Unit: RMB Yuan

Item Withdrawn amount Reason

Other notes

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2015 Annual Report of Hubei Sanonda Co., Ltd.

21. Engineering material

Unit: RMB Yuan

Item	Closing balance	Opening balance
Special-purpose material	0.00	88,970,010.63
Total		88,970,010.63

Other notes:

22. Liquidation of fixed assets

Unit: RMB Yuan

Item Closing balance Opening balance

Other notes:

23. Productive biological assets

(1) Productive biological assets measured at cost methods

□ Applicable √ Inapplicable

(2) Productive biological assets measured at fair value

□ Applicable √ Inapplicable

24. Oil and gas assets

□ Applicable √ Inapplicable

25. Intangible assets

(1) Information

Unit: RMB Yuan

Item	Land use right	Non-patents	Other	Total
I. Total original

book value

1. Opening balance	204,865,439.07	14,943,699.96	2,500.00	219,811,639.03
2. Increase in the
	26,478,075.00	3,800,000.00		30,278,075.00
reporting period

(1) Purchase	26,478,075.00	3,800,000.00		30,278,075.00
(2) Internal R &D
(3) Increase from

142

2015 Annual Report of Hubei Sanonda Co., Ltd.

enterprise
combination

3. Decrease in the

reporting period

(1) Purchase

4. Closing balance	231,343,514.07	18,743,699.96	2,500.00	250,089,714.03
II. Total accrued

amortization

1. Opening balance	40,567,115.17	7,149,033.21	2,500.00	47,718,648.38
2. Increase in the
	3,645,496.66	1,083,551.02		4,729,047.68
reporting period

(1) Withdrawal	3,645,496.66	1,083,551.02		4,729,047.68

3. Decrease in

the reporting period

(1) Disposal

4. Closing balance	44,212,611.83	8,232,584.23	2,500.00	52,447,696.06
III. Total impairment

provision

1. Opening balance	32,072,093.53			32,072,093.53
2. Increase in the

reporting period

(1) Withdrawal

3. Decrease in the

reporting period

(1) Disposal

4. Closing balance	32,072,093.53			32,072,093.53
IV. Total book value

of intangible assets

1. Book value
	155,058,808.71	10,511,115.73		165,569,924.44
of the period-end

2. Book value	132,226,230.37	7,794,666.75		140,020,897.12

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2015 Annual Report of Hubei Sanonda Co., Ltd.

of the period-begin

The proportion the intangible assets formed from the internal R&D through the Company amount the balance of the intangible assets at the period-end.

(2) Details of fixed assets failed to accomplish certification of land use right

==> picture [485 x 47] intentionally omitted <==

----- Start of picture text -----

Unit: RMB Yuan
Item Book value Reason
Other notes:
----- End of picture text -----

26. R&D expenses

==> picture [485 x 63] intentionally omitted <==

----- Start of picture text -----

Unit: RMB Yuan
Opening Closing
Item Increase Decrease
balance balance
Other notes
----- End of picture text -----

27. Goodwill

(1) Original book value of goodwill

==> picture [481 x 81] intentionally omitted <==

----- Start of picture text -----

Unit: RMB Yuan
Name of the
investees or the
Opening balance Increase Decrease Closing balance
events formed
goodwill
----- End of picture text -----

(2) Impairment provision of goodwill

Unit: RMB Yuan

Name of the
investees or the
	Opening balance	Increase	Decrease	Closing balance
events formed

goodwill

Notes of the testing process of goodwill impairment, parameters and the recognition method of goodwill impairment losses:

Other notes

28. Long-term unamortized expenses

Unit: RMB Yuan

			Amortization amount
Item	Opening balance	Increase		Decrease	Closing balance

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Other notes

29. Deferred income tax assets/deferred income tax liabilities

(1) Deferred income tax assets had not been off-set

Unit: RMB Yuan

	Closing balance	Closing balance	Opening balance	Opening balance
Item	Deductible temporary	Deferred income tax	Deductible temporary	Deferred income tax
	difference	assets	difference	assets
Assets impairment
	44,084,073.53	11,021,018.38	52,796,551.11	13,199,137.78
provision

Total	44,084,073.53	11,021,018.38	52,796,551.11	13,199,137.78

(2) Deferred income tax liabilities had not been off-set

Unit: RMB Yuan

Closing balance	Closing balance	Opening balance	Opening balance
Deductible temporary	Deferred income tax	Deductible temporary	Deferred income tax
difference	liabilities	difference	liabilities

(3) Deferred income tax assets or liabilities listed by net amount after off-set

Unit: RMB Yuan

	Mutual set-off amount of	Amount of deferred	Mutual set-off amount of	Amount of deferred
	deferred income tax	income tax assets or	deferred income tax	income tax assets or
Item
	assets and liabilities at	liabilities after off-set at	assets and liabilities at	liabilities after off-set at

	the period-end	the period-end	the period-begin	the period-begin
Deferred income tax		11,021,018.38		13,199,137.78

assets

(4) List of unrecognized deferred income tax assets

Unit: RMB Yuan

Item	Closing amount	Opening amount
Deductible temporary difference	69,714,547.42	71,308,304.31
Deductible losses	43,388,031.90	51,356,774.22
Total	113,102,579.32	122,665,078.53

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2015 Annual Report of Hubei Sanonda Co., Ltd.

(5) Deductible losses of unrecognized deferred income tax assets will due the following years

Unit: RMB Yuan

Years	Closing amount	Opening amount	Note
Y2015	0.00	117,087.68
Y 2016	0.00	2,296,001.70
Y 2017	615,390.77	4,936,338.43
Y 2018	10,520,149.83	11,984,122.85
Y 2019	31,712,691.47	32,023,223.56
Y 2020	539,799.83
Total	43,388,031.90	51,356,774.22	--

Other notes:

30. Other non-current assets

Unit: RMB Yuan

Item	Closing balance	Opening balance
Land compensation prepayments	5,000,000.00	13,384,400.00
Total	5,000,000.00	13,384,400.00

Other notes:

31. Short-term loans

(1) Category of short-term loans

Unit: RMB Yuan

Item	Closing balance	Opening balance
Mortgage loan		75,000,000.00
Guaranteed loan	20,000,000.00
Total	20,000,000.00	75,000,000.00

Notes of short-term loans category

The mortgage loans of the Company mainly were the loans acquired from the mortgage of the houses and buildings as well as lands. The guaranteed loans of the Company mainly were the loans acquired from the guarantee from the Jingzhou Sanonda Shareholding Co., Ltd., China National Agrochemical Company and China National Chemical Corporation for the Company.

(2) List of the short-term loans overdue but not return

The total amount of the overdue but not return short-term borrowings at the period-end was of RMB 000, of which the situation of the significant overdue but not return short-term borrowings as follows:

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Unit: RMB Yuan

Entity Closing balance Borrowing rate Overdue time Overdue rate

Other notes:

32. Financial liabilities measured by fair value and the changes included in the current gains and losses

Unit: RMB Yuan

Item Closing balance Opening balance

Other notes:

33. Derivative financial liabilities

□ Applicable √ Inapplicable

34. Notes payable

Unit: RMB Yuan

Category	Closing balance	Opening balance
Bank acceptance bill	0.00	15,000,000.00
Total		15,000,000.00

The total amount of the due but not pay notes payable at the period-end was of RMB 000.

35. Accounts payable

(1) List of accounts payable

Unit: RMB Yuan

Item	Closing balance	Opening balance
Within 1 year (including 1 year)	95,743,429.46	203,899,132.32
1 to 2 years (including 2 years)	32,840,902.38	10,223,689.60
2 to 3 years (including 3 years)	3,416,655.30	84,199.83
Over 3 years	2,356,494.63	2,579,253.02
Total	134,357,481.77	216,786,274.77

(2) Notes of the accounts payable aging over one year

Unit: RMB Yuan

Item	Closing balance	Unpaid reason
Bluestar (Beijing) Chemical Machinery
	5,580,000.00	Unsettled
Co., Ltd.

147

2015 Annual Report of Hubei Sanonda Co., Ltd.

Beijing NDW Power Technology
	835,000.00	Unsettled
Development Co., Ltd.

Hubei Taigxin Chemical Co., Ltd	555,000.00	Unsettled
Jizhou Zhongyi Composite Material Co.,
	531,600.00	Unsettled
Ltd

Shanghai Zhongfa Relay Co., Ltd	446,000.00	Unsettled
Total	7,947,600.00	--

Other notes:

36. Advance from customers

(1) List of advance from customers

Unit: RMB Yuan

Item	Closing balance	Opening balance
Within 1 year (including 1 year)	24,854,970.29	32,985,625.10
1 to 2 years (including 2 years)	99,517.70	182,240.27
2 to 3 years (including 3 years)	58,832.56	244,913.05
Over 3 years	1,652,817.67	1,417,686.23
Total	26,666,138.22	34,830,464.65

(2) Significant advance from customers aging over one year

Unit: RMB Yuan

Item	Closing balance	Unpaid reason
Retailer A	129,250.00	Unsettled
Retailer B	111,800.00	Unsettled
Retailer C	100,000.00	Unsettled
Retailer D	100,000.00	Unsettled
Retailer E	93,720.00	Unsettled
Total	534,770.00	--

(3) Particulars of settled but unfinished projects formed by construction contract at period-end.

Unit: RMB Yuan

Item	Amount
Other notes:

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2015 Annual Report of Hubei Sanonda Co., Ltd.

37. Payroll payable

(1) List of Payroll payable

Unit: RMB Yuan

Item	Opening balance	Increase	Decrease	Closing balance
I. Short-term salary	19,953,603.92	185,247,748.19	181,592,500.23	23,608,851.88
II. Post-employment
benefit-defined	5,787,369.10	36,604,881.45	35,692,760.70	6,699,489.85
contribution plans
Total	25,740,973.02	221,852,629.64	217,285,260.93	30,308,341.73

(2) List of Short-term salary

Unit: RMB Yuan

Item	Opening balance	Increase	Decrease	Closing balance
1. Salary, bonus,
	18,025,415.47	136,427,069.71	138,506,918.18	15,945,567.00
allowance, subsidy

2. Employee welfare		8,968,172.08	8,968,172.08
3. Social insurance	1,908,785.83	12,373,366.29	12,847,753.79	1,434,398.33
Including: 1.
Medical insurance	1,515,672.95	9,936,111.85	10,417,487.61	1,034,297.19
premiums
Work-related
	306,824.84	1,948,029.71	1,942,986.16	311,868.39
injury insurance

Maternity
	86,288.04	489,224.73	487,280.02	88,232.75
insurance

4. Housing fund	19,402.62	26,786,518.61	20,577,034.68	6,228,886.55
5. Labor union budget
and employee education		692,621.50	692,621.50
budget
Total	19,953,603.92	185,247,748.19	181,592,500.23	23,608,851.88

(3) List of drawing scheme

Unit: RMB Yuan

Item	Opening balance	Increase	Decrease	Closing balance
Basic pension benefits	4,581,831.58	27,395,404.06	27,322,509.34	4,654,726.30
Unemployment insurance	516,529.25	2,941,849.35	2,282,171.36	1,176,207.24

149

2015 Annual Report of Hubei Sanonda Co., Ltd.

Annuity	689,008.27	6,267,628.04	6,088,080.00	868,556.31
Total	5,787,369.10	36,604,881.45	35,692,760.70	6,699,489.85

Other notes:

38. Taxes payable

Unit: RMB Yuan

Item	Closing balance	Opening balance
VAT	9,039,619.15	10,548,434.36
Business tax	12,430.71	7,216.92
Corporate income tax	13,798,269.67	57,100,869.86
Personal income tax	265,402.33	355,234.25
Urban maintenance and construction tax	1,995,399.58	833,195.31
Resource tax	86,809.90	48,112.29
Property tax	67,652.33	471,205.11
Land use tax	31,682.42	171,385.78
Education Surcharge	1,022,110.33	2,210,912.83
Other	539,089.85	305,337.58
Total	26,858,466.27	72,051,904.29

Other notes:

39. Interest payable

Unit: RMB Yuan

Item	Closing balance	Opening balance
Long-term loan interest of installment
payment of interest and repay the due	1,123,849.31
capital
Total	1,123,849.31
Particulars of significant overdue unpaid interest:		Unit: RMB Yua
Entity	Overdue amount	Overdue reason
Other notes:

Unit: RMB Yuan

40. Dividends payable

Unit: RMB Yuan

Item Closing balance Opening balance

150

2015 Annual Report of Hubei Sanonda Co., Ltd.

Common stock dividends	250,000.00	250,000.00
Total	250,000.00	250,000.00

Note: Including significant unpaid dividends payable over one year, the unpaid reason shall be disclosed:

41. Other accounts payable

(1) Other accounts payable listed by nature of the account

Unit: RMB Yuan

Item	Closing balance	Opening balance
Carriage	6,835,291.65	11,705,414.25
Energy charge	4,080,486.80	5,286,764.80
Commission	2,340,403.65	1,592,490.41
Sewage charge	1,763,989.00
Local charge	1,430,886.11	3,429,939.32
Cash pledge	1,338,163.11	1,390,763.11
Export price difference	1,028,363.50	1,153,378.24
Margin	835,800.00	1,042,000.00
Other	5,857,949.99	6,149,041.80
Total	25,511,333.81	31,749,791.93

(2) Other significant accounts payable with aging over one year

Unit: RMB Yuan

Item	Closing balance	Unpaid reason
Qichun County Bureau for State-owned
	300,270.90	Unsettled
Assets

Jingzhou Xintaida Logistics Co., Ltd.	300,000.00	Margin
Total	600,270.90	--

Other notes:

42. Liabilities classified as holding for sale

Unit: RMB Yuan

Item Closing balance Opening balance

Other notes:

151

2015 Annual Report of Hubei Sanonda Co., Ltd.

43. Non-current liabilities due within 1 year

Unit: RMB Yuan

Item	Closing balance	Opening balance
Long-term loans due within 1 year	244,000,000.00	500,000.00
Total	244,000,000.00	500,000.00

Other notes:

44. Other current-liabilities

Unit: RMB Yuan

	Item	Item	Item		Closing balance	Closing balance		Opening balance	Opening balance	Opening balance	Opening balance
Changes o	n short term bonds payable:									Unit: RMB Yua
								Overflow
						The	Withdraw		Pay in
Name of	Book			Issue	Opening			discount			Closing
		Issue date	Period			current	interest at		current
the bond	value			amount	balance			amortizati			balance
						issue	par		period
								on

Unit: RMB Yuan

Other notes:

45. Long-term loan

(1) Category of long-term loan

Unit: RMB Yuan

Item	Closing balance	Opening balance
Guaranteed loan	587,590,000.00	432,090,000.00
Less: Long-term loans due within 1 year	244,000,000.00	500,000.00
Total	343,590,000.00	431,590,000.00

Notes of short-term loans category:

Other notes including interest rate range:

46. Bonds payable

(1) Bonds payable

Unit: RMB Yuan

Item Closing balance Opening balance

152

2015 Annual Report of Hubei Sanonda Co., Ltd.

(2) Changes on bonds payable (not including other financial instrument classified as preferred stock and perpetual capital securities of financial liabilities)

Unit: RMB Yuan

(3) Note to conditions and time of share transfer of convertible bonds

(4) Note to other financial instrument classified as financial liabilities

Basic information of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-end

Change list of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-end

Unit: RMB Yuan

Financial	Opening period	Opening period	Increase	Increase	Decrease	Decrease	Closing period	Closing period
instruments
outstanding	Amount	Book value	Amount	Book value	Amount	Book value	Amount	Book value
issued

Notes to the basis of other financial instrument classified as financial liabilities

Other notes:

47. Long-term payable

(1) Long-term payable listed by nature of the account

Unit: RMB Yuan

Item	Closing balance	Opening balance
Loan for glyphosate project	490,000.00	490,000.00
Borrowing for the cooperation project with
Guangzhou Chemical Industry Research	160,000.00	160,000.00
Institute
Total	650,000.00	650,000.00

Other notes:

48. Long term payroll payable

(1) List of long term payroll payable

Unit: RMB Yuan

Item Closing balance Opening balance

(2) Changes of defined benefit plans

Present worth of defined benefit plans obligation:

153

2015 Annual Report of Hubei Sanonda Co., Ltd.

		Unit: RMB Yuan Same period of last year Unit: RMB Yuan Same period of last year Unit: RMB Yuan Same period of last year
Item	Reporting period	Same period of last year
Plan assets:
Item	Reporting period	Same period of last year
Net liabilities (net assets) of defined benefit	plans
Item	Reporting period	Same period of last year

Notes to the influence of the content and related risk of defined benefit plans to the future cash flows, time and uncertainty of the Company:

Notes to analysis results of major actuarial assumptions and sensibility of defined benefit plans Other notes:

49. Special payable

					Unit: RMB Yuan Formation reasons
Item	Opening balance	Increase	Decrease	Closing balance	Formation reasons
Other notes:

50. Accrued liabilities

Unit: RMB Yuan

Item Closing balance Opening balance Formation reasons

Other notes, including related important assumptions and estimates of accrued liabilities:

51. Deferred income

	Unit: RMB Yuan Opening balance Increase Decrease Closing balance Formation reasons 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 --	Unit: RMB Yuan Opening balance Increase Decrease Closing balance Formation reasons 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 --	Unit: RMB Yuan Opening balance Increase Decrease Closing balance Formation reasons 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 --	Unit: RMB Yuan Opening balance Increase Decrease Closing balance Formation reasons 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 --	Unit: RMB Yuan Opening balance Increase Decrease Closing balance Formation reasons 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 22,754,814.82 7,715,600.00 3,900,326.21 26,570,088.61 --
Item	Opening balance	Increase	Decrease	Closing balance	Formation reasons
Government
	22,754,814.82	7,715,600.00	3,900,326.21	26,570,088.61
subsidies

Total	22,754,814.82	7,715,600.00	3,900,326.21	26,570,088.61	--

Items involved in government subsidies:

Unit: RMB Yuan

			Amount accrued
		Amount of newly				Related to the
Item	Opening balance		in non-business	Other changes	Closing balance
		subsidy				assets/ income
			income

Pyridine project						Related to the
	7,866,666.67		983,333.32		6,883,333.35
subsidies						assets

154

2015 Annual Report of Hubei Sanonda Co., Ltd.

Special fund for
					Related to the
industry clean	6,287,037.04		777,777.78	5,509,259.26
					assets
production

Appropriation for
CTC consuming					Related to the
	3,916,666.67		1,000,000.00	2,916,666.67
and eliminating					assets

project
Government
Subsidy for					Related to the
	3,106,666.67		776,666.67	2,330,000.00
Highly toxic					assets

pesticide
Special fund for
management of					Related to the
	977,777.76		244,444.45	733,333.31
source of					assets

pollution
Special fund for
transferring
					Related to the
environmental	600,000.01		66,666.66	533,333.35
					assets
protection

deferred
Land					Related to the
		7,715,600.00	51,437.33	7,664,162.67
compensates					assets

Total	22,754,814.82	7,715,600.00	3,900,326.21	26,570,088.61	--

Other notes:

52. Other non-current liabilities

Unit: RMB Yuan

Item Closing balance Opening balance

Other notes:

53. Share capital

Unit: RMB Yuan

			Increase/decrease (+/-)	Increase/decrease (+/-)	Increase/decrease (+/-)
	Opening			Capitalization			Closing
		Newly issue
	balance		Bonus shares	of public	Other	Subtotal	balance
		share
				reserves

The sum of	593,923,220.00						593,923,220.00

shares

Other notes:

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2015 Annual Report of Hubei Sanonda Co., Ltd.

54. Other equity instruments

(1) Basic information of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-begin

(2) Change list of preferred stock, perpetual capital securities and other financial instruments outstanding issued at period-begin

Unit: RMB Yuan

Financial	Opening period	Opening period	Increase	Increase	Decrease	Decrease	Closing period	Closing period
instruments
outstanding	Amount	Book value	Amount	Book value	Amount	Book value	Amount	Book value
issued

Changes, reason of change and basis of relevant accounting treatment of other equity instruments in reporting period: Other notes:

55. Capital reserves

Unit: RMB Yuan

Item	Opening balance	Decrease	Closing balance
Capital premium	254,688,951.94	120,581.69	254,568,370.25
Other capital reserves	8,495,091.72		8,495,091.72
Total	263,184,043.66	120,581.69	263,063,461.97

Other notes, including changes and reason of change:

Note: the decrease in the reporting period was the free purchase of 1.5% minority equity of subsidiary Jingzhou Huaxiang Chemical Co., Ltd.

56. Treasury stock

Unit: RMB Yuan

Item Opening balance Increase Decrease Closing balance

Other notes, including changes and reason of change:

57. Other comprehensive income

Unit: RMB Yuan

			Reporting period	Reporting period	Reporting period
	Opening	Amount	Less: Amount	Less:	After-tax	After-tax	Closing
Item
	balance	incurred	transferred	income tax	attribute to	attribute to	balance

		before	into profit and	expense	the parent	minority

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		income tax	loss in the		company	shareholder
			current period
			that
			recognized
			into other
			comprehensive
			income in
			prior period

Other notes, including the adjustment of the recognition of initial amount of effective part of the cash flow hedging gains and losses transfer into arbitraged items:

58. Special reserves

Unit: RMB Yuan

Item	Opening balance	Increase	Decrease	Closing balance
Safety production cost	15,425,099.43	10,793,695.00	3,369,935.28	22,848,859.15
Total	15,425,099.43	10,793,695.00	3,369,935.28	22,848,859.15

Other notes, including changes and reason of change:

59. Surplus reserves

Unit: RMB Yuan

Item	Opening balance	Increase	Closing balance
Statutory surplus
	174,233,300.21	12,650,862.25	186,884,162.46
reserves

Discretional surplus
	3,815,085.65		3,815,085.65
reserves

Total	178,048,385.86	12,650,862.25	190,699,248.11

Other note, including changes and reason of change

Notes: Based on the regulations of the Corporation Law and Constitution, the Company should withdraw 10% of the statutory surplus reserves according to the net profits. If the accumulated amount of the statutory surplus reserves exceeded the 50% of the registered capital, the Company could no more withdraw.

60. Retained profits

Unit: RMB Yuan

Item	Reporting period	Last period
Opening balance of retained profits before
	957,050,401.65	546,688,770.98
adjustments

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Opening balance of retained profits after	957,050,401.65
		546,688,770.98
adjustments

Add: Net profit attributable to owners of the
	141,840,462.97	491,771,929.22
Company

Less: Withdrawal of statutory surplus reserves	12,650,862.25	51,714,137.55
Dividend of common stock payable	59,392,322.00	29,696,161.00
Closing retained profits	1,026,847,680.37	957,050,401.65

List of adjustment of opening retained profits:

61. Revenues and operating costs

Unit: RMB Yuan

	Reporting period	Reporting period	Same period of last year	Same period of last year
Item
	Revenue	Operating costs	Revenue	Operating costs

Main operations	2,151,827,875.83	1,715,138,392.14	3,103,955,333.69	2,177,467,206.31
Other operations	18,108,761.24	14,278,395.98	27,230,966.36	14,806,881.88
Total	2,169,936,637.07	1,729,416,788.12	3,131,186,300.05	2,192,274,088.19

62. Business tax and surcharges

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Business tax	133,912.54	262,154.25
Urban maintenance and construction tax	8,920,731.75	2,693,160.15
Education Surcharge	3,823,170.72	1,154,211.51
Local education surtax	2,548,780.51	2,497,409.89
Total	15,426,595.52	6,606,935.80

Other notes:

63. Sales expenses

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Transport fees	36,465,361.26	36,695,479.80
Export fees	30,821,340.18	242,315,968.58
Employee’s remuneration	5,253,594.43	4,225,823.56
Handling charges	3,644,177.58	2,252,469.67

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Conference service fees	1,480,952.00	1,669,674.92
Charge of the business license, the
organization code certificate, and the	1,264,114.90	978,967.40
certificate of taxation registration
Business travel charges	1,122,413.57	977,216.00
Premium	1,091,034.99	2,006,494.68
Advertising and general publicity expense	620,071.34	899,492.53
Other	2,386,055.64	5,806,558.34
Total	84,149,115.89	97,828,145.48

Other notes:

64. Administrative expenses

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Employee’s remuneration	53,588,811.88	59,492,609.66
Loss on work stoppages	22,696,320.96	12,675,218.60
Tax expenses	9,235,489.18	10,239,707.95
Depreciation charge	6,083,525.92	5,923,354.12
Amortization of intangible assets	4,729,047.68	4,504,699.29
Amortization of low-price consumables	2,868,956.20	2,532,105.81
Office expenses	2,036,006.36	1,786,381.70
Business entertainment fees	2,008,579.37	2,420,196.72
Water & electricity fees	1,818,170.90	2,558,162.97
Other	11,853,386.80	23,160,844.20
Total	116,918,295.25	125,293,281.02

Other notes:

65. Financial expenses

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Interest expenses	38,241,511.58	41,392,430.71
Less: Interest income	5,429,875.87	5,467,128.58
Less: Amount of capitalized interest	4,752,572.72	15,038,563.92
Exchange gains and losses	-14,791,279.30	-3,123,253.13
Other	939,712.26	9,397,636.35

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Total 14,207,495.95 27,161,121.43

Other notes:

The financial expenses had a YOY decrease of 47.69%, mainly was the influence of exchange rate, the exchange rate revenue had a YOY increase in the reporting period

66. Asset impairment loss

Unit: RMB Yuan

Item	Reporting period	Same period of last year
I. Bad debt loss	-806,037.90	-112,223.82
II. Inventory falling price loss	28,969,016.62	16,932,688.71
Total	28,162,978.72	16,820,464.89

Other notes:

Notes: the asset impairment loss increased 71.08%, when compared to that in last year, mainly because the part of the finished goods withdrawing inventory falling price loss increased.

67. Gains on the changes in the fair value

Unit: RMB Yuan

Source Reporting period Same period of last year

Other notes:

68. Investment income

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Investment income received from holding of
	1,667,155.76	1,716,466.00
available-for-sale financial assets

Total	1,667,155.76	1,716,466.00

Other notes:

69. Non-operating gains

Unit: RMB Yuan

			Recorded in the amount of the
Item	Reporting period	Same period of last year
			non-recurring gains and losses

Total gains from disposal of	80,003.58	76,490.60
			80,003.28
non-current assets

Including: Gains from disposal	80,003.28	76,490.60	80,003.28

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2015 Annual Report of Hubei Sanonda Co., Ltd.

of fixed assets
Government subsidies	5,585,426.21	4,574,874.07	5,585,426.21
Other	109,154.00	172,542.90	109,154.00
Total	5,774,583.49	4,823,907.57

Government subsidies recorded into current profits and losses

Unit: RMB Yuan

				Whether
					Whether
				influence the				Related to the
	Distribution	Distribution			Special	Reporting	Same period
Item			Nature/type	profits or				assets/
	entity	reason			subsidy or	period	of last year
				losses of the				income
					not
				year or not

			Due to
			engaged in
			special
			industry that
			the state
Appropriatio			encouraged
n for CTC	China		and
consuming	National		supported,					Related to the
		Subsidy		Yes	No	1,000,000.00	1,000,000.00
and	Chemical		gained					assets

eliminating	Corporation		subsidy
project			( obtaining in
			line with the
			law and the
			regulations of
			national
			policy)
			Due to
			engaged in
			special
			industry that
			the state
			encouraged
	China
Pyridine			and
	National							Related to the
project		Subsidy	supported,	Yes	No	983,333.32	983,333.33
	Chemical							assets
subsidies			gained
	Corporation
			subsidy

			( obtaining in
			line with the
			law and the
			regulations of
			national

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			policy)
Received
			Subsidy
interest
			gained due to
subsidy of
			undertaking
2014 for
	China		the state
China
	National		protecting
National
	Agricultural		one public					Related to the
Agricultural
	Means of	Award	utility or	Yes	No	785,100.00	790,800.00	assets/
Means of
	Production		social					income
Production
	Group Co.,		necessary
Group Co.,
	Ltd.		products
Ltd. transfer
			supply or
into Pesticide
			price
Federal
			controlling
Enterprise

			Due to
			engaged in
			special
			industry that
			the state
			encouraged
Special fund	China		and
for industry	National		supported,					Related to the
		Subsidy		Yes	No	777,777.78	712,962.96
clean	Chemical		gained					assets

production	Corporation		subsidy
			( obtaining in
			line with the
			law and the
			regulations of
			national
			policy)
			Due to
			engaged in
			special
			industry that
Government			the state
	Hubei
Subsidy for			encouraged					Related to the
	Department	Subsidy		Yes	No	776,666.67	776,666.67
Highly toxic			and					assets
	of Finance
pesticide			supported,

			gained
			subsidy
			( obtaining in
			line with the

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2015 Annual Report of Hubei Sanonda Co., Ltd.

			law and the
			regulations of
			national
			policy)
			Subsidy
Special fund			gained due to
for provincial			confirming
level			with local
	FINANCE
promoting			government					Related to the
	BUREAU	Award		Yes	No	540,000.00
foreign trade			attracting					income
	OF WUXI
and attracting			investment

investment of			and local
2015			supportive
			policy etc.
			Subsidy
			gained due to
			confirming
Special fund
	Jingzhou		with local
for
	Environment		government					Related to the
management		Subsidy		Yes	No	244,444.45	244,444.45
	al Protection		attracting					assets
of source of
	Agency		investment
pollution
			and local

			supportive
			policy etc.
Special fund
appropriation			Subsidy from
for safety			R&D,
	FINANCE
production of			technical					Related to the
	BUREAU	Award		Yes	No	200,000.00
2014			updating and					income
	OF WUXI
received from			transformatio

Jingzhou			n, etc.
city
			Subsidy
			gained due to
			confirming
Award for
			with local
foreign trade	Jingzhou
			government					Related to the
export in	Bureau of	Award		Yes	No	150,000.00
			attracting					income
Jingzhou of	Commerce
			investment
2014
			and local

			supportive
			policy etc.
Special fund	Jingzhou	Subsidy	Subsidy	Yes	No	66,666.66	66,666.66	Related to the

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for	Environment		gained due to					assets
transferring	al Protection		confirming
environmenta	Agency		with local
l protection			government
deferred			attracting
			investment
			and local
			supportive
			policy etc.
			Subsidy
			gained due to
			confirming
	Financial
			with local
	Bureau
Land			government					Related to the
	development	Subsidy		Yes	No	51,437.33
compensates			attracting					assets
	zone of
			investment
	Jingzhou
			and local

			supportive
			policy etc.
			Subsidy
			gained due to
			confirming
	Disabled
			with local
Award for job	Employment
			government					Related to the
placement for	Service	Award		Yes	No	10,000.00
			attracting					income
the disabled	Center of
			investment
	Jingzhou
			and local

			supportive
			policy etc.
Total	--	--	--	--	--	5,585,426.21	4,574,874.07	--

Other notes:

70. Non-operating expenses

Unit: RMB Yuan

			Recorded in the amount of the
Item	Reporting period	Same period of last year
			non-recurring gains and losses

Loss on disposal of non-current	47,981.54	21,677.41
			47,981.54
assets

Including: Loss on disposal of
	47,981.54	21,677.41	47,981.54
fixed assets

Loss on debt reconstruction		6,000.00

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Other	23,755.62	3,048,975.11	23,755.62
Total	71,737.16	3,076,652.52	71,737.16

Other notes:

71. Income tax expense

(1) Lists of income tax expense

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Current income tax expense	44,891,652.42	177,961,320.70
Deferred income tax expense	2,178,119.40	-579,189.64
Total	47,069,771.82	177,382,131.06

(2) Adjustment process of accounting profit and income tax expense

Unit: RMB Yuan

Item	Reporting period
Total profits	189,025,369.71
Current income tax expense accounted by tax and relevant
	47,256,342.43
regulations

Influence of non taxable income	-416,788.94
Influence of not deductible costs, expenses and losses	2,009,232.06
Influence of the subsidiary making up losses of previous years	-1,779,013.73
Income tax expense	47,069,771.82

Other notes:

72. Other comprehensive income

Refer to the notes

73. Supplementary information to cash flow statement

(1) Other cash received relevant to operating activities

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Interest income	5,429,875.87	5,467,128.58
Collect A/B shares withholding individual	4,487,602.32	1,895,263.56

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2015 Annual Report of Hubei Sanonda Co., Ltd.

income tax
Allowance for payment and others	4,899,736.98	8,212,535.00
Government subsidies	8,710,700.00	7,790,800.00
Total	23,527,915.17	23,365,727.14

Notes:

(2) Other cash paid relevant to operating activities

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Transport fees	40,074,543.68	42,659,379.71
Export fees	12,656,586.55	40,135,942.33
Office expenses	3,863,617.75	2,386,321.07
Handling charges	3,644,177.58	2,342,434.89
Business entertainment fees	2,974,483.77	3,021,672.79
Asset insurance fees	2,935,991.19	1,310,300.21
Business travel charges	2,507,022.95	3,129,321.43
Water & electricity fees	1,871,825.30	2,958,732.21
Advertising and general publicity expense	750,995.25	899,492.53
Other	7,013,586.59	36,497,010.89
Total	78,292,830.61	135,340,608.06

Notes:

(3) Other cash received relevant to investment activity

Unit: RMB Yuan

Item Reporting period Same period of last year

Notes:

(4) Other cash paid relevant to investment activity

Unit: RMB Yuan

Item Reporting period Same period of last year

Notes:

(5) Other cash received relevant to financing activities

Unit: RMB Yuan

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Item	Reporting period	Same period of last year
Unfreeze reversal of margin notes	4,500,000.00
Total	4,500,000.00

Notes:

(6) Other cash paid relevant to financing activities

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Loan guarantee fees paying for China
		1,150,000.00
National Agrochemical Corporation

Freeze of margin notes		500,000.00
Loan guarantee fees paying for Sanonda
		420,000.00
Co., Ltd.

Total		2,070,000.00

Notes:

74. Supplementary information to cash flow statement

(1) Information of net profit to net cash flows generated from operating activities

Unit: RMB Yuan

Supplementary materials	Reporting period	Last period
1．Reconciliation of net profit to net cash
	--	--
flows generated from operating activities

Net profit	141,955,597.89	491,283,853.23
Add: Provision for impairment of assets	28,162,978.72	16,820,464.89
Depreciation of fixed assets, of oil-gas
	210,188,677.97	174,510,815.75
assets, of productive biological assets

Amortization of intangible assets	4,729,047.68	4,504,683.98
Losses on disposal of fixed assets, intangible
assets and other long-term assets (gains:	-32,021.74	-54,813.19
negative)
Financial cost (gains: negative)	33,488,938.86	26,353,866.79
Investment loss (gains: negative)	-1,667,155.76	-1,716,466.00
Decrease in deferred income tax assets
	2,178,119.40	-579,189.64
(gains: negative)

Decrease in inventory (gains: negative)	52,297,638.33	-89,199,836.88

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Decrease in accounts receivable from
	57,871,551.24	56,075,260.90
operating activities (gains: negative)

Increase in payables from operating
	-253,083,319.79	21,175,216.09
activities (decrease: negative)

Net cash flows generated from operating	276,090,052.80	699,173,855.92
activities
2. Investing and financing activities that do
	--	--
not involving cash receipts and payment:

3. Net increase in cash and cash equivalents	--	--
Closing balance of cash	406,098,208.72	418,847,736.46
Less: Opening balance of cash	418,847,736.46	410,065,921.21
Net increase in cash and cash equivalents	-12,749,527.74	8,781,815.25

(2) Net Cash paid of obtaining the subsidiary

Unit: RMB Yuan

	Amount
Of which:	--
Of which:	--
Of which:	--

Other notes:

(3) Net Cash receive of disposal of the subsidiary

Unit: RMB Yuan

	Amount
Of which:	--
Of which:	--
Of which:	--

Other notes:

(4) Cash and cash equivalents

Unit: RMB Yuan

Item	Closing balance	Opening balance
I. Cash	406,098,208.72	418,847,736.46
Bank deposit on demand	406,098,208.72	418,847,736.46
III. Closing balance of cash and cash	406,098,208.72	418,847,736.46

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2015 Annual Report of Hubei Sanonda Co., Ltd.

equivalents

Other notes:

75. Note of statement of changes in the owner's equity

Explain "other" project name and adjustment amount of the adjustment of closing balance in previous year, etc.:

76. The assets with the ownership or use right restricted

Unit: RMB Yuan

Item	Closing book value	Restricted reason
Other notes:

77. Foreign currency monetary items

(1) Foreign currency monetary items

Unit: RMB Yuan

	Closing foreign currency		Closing convert to RMB
Item		Exchange rate
	balance		balance

Monetary capital	--	--	11,972,040.82
Including: USD	1,844,690.42	6.49	11,972,040.82
Account receivable	--	--	139,743,247.99
Including: USD	21,520,150.30	6.49	139,743,247.99
Advance from customers	220,120.00	6.49	1,429,371.23
Including: USD	220,120.00	6.49	1,429,371.23

Other notes:

(2) Note to oversea entities including: for significant oversea entities, shall disclose main operating place, recording currency and selection basis, if there are changes into recording currency, shall also disclose the reason.

□ Applicable √ Inapplicable

78. Arbitrage

According to arbitrage category to disclose arbitrage item, relevant arbitrage tools and been arbitraged risk qualitative and quantitative information:

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2015 Annual Report of Hubei Sanonda Co., Ltd.

79. Other

VIII. Changes of merge scope

1. Business merger not under same control

(1) Business merger not under same control in reporting period

Unit: RMB Yuan

							Income of	Net profits of
	Time and
		Cost of		Way to gain		Recognition	acquiree	acquiree
Name of	place of		Proportion of
		gaining the		the stock	Purchase date	basis of	during the	during the
acquiree	gaining the		stock rights
		stock rights		rights		purchase date	purchase date	purchase date
	stock rights
							to period-end	to period-end

Other notes:

(2) Combined cost and goodwill

Unit: RMB Yuan

Combination cost

Note to determination method, consideration and changes of fair value of combined cost:

The main formation reason for the large goodwill:

Other notes:

(3) The identifiable assets and liabilities of acquiree at purchase date

Unit: RMB Yuan

Fair value on purchase date Book value on purchase date

The recognition method of the fair value of identifiable assets and liabilities

Contingent liability of acquiree undertaken by business merger Other notes:

(4) The profit or loss from equity held by the date before acquisition in accordance with the fair value measured again

Whether there is a transaction that through multiple transaction step by step to realize enterprises merger and gaining the control during the reporting period

□ Yes √ No

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2015 Annual Report of Hubei Sanonda Co., Ltd.

(5) Note to merger could not be determined reasonable consideration or Identifiable assets, Fair value of liabilities of the acquiree at acquisition date or closing period of the merge

(6) Other notes

2. Business combination under the same control

(1) Business combination under the same control during the reporting period

Unit: RMB Yuan

					Income from	Net profits
					the	from the
				Recognition			Income	Net profits
					period-begin	reporting
Combined	Proportion of		Combination	basis of			during the	during the
		Basis			to the	period to the
party	the profits		date	combination			period of	period of
					combination	combination
				date			comparison	comparison
					date of the	date of the

					combination	combination

Other notes:

(2) Combination cost

Unit: RMB Yuan

Combination cost

Note to contingent consideration or other changes:

Other notes:

(3) The book value of the assets and liabilities of the combined party at combining date

Unit: RMB Yuan

Combination date Period-end of last period

Contingent liabilities of the combined party undertaken in combination

Other notes:

3. Counter purchase

Basic information of trading, the basis of transactions constitute counter purchase, the retain assets , liabilities of the listed companies whether constituted a business and its basis, the determination of the combination costs, the amount and calculation of adjusted rights and interests in accordance with the equity transaction process.

4. The disposal of subsidiary

Whether there is a single disposal of the investment to subsidiary and lost control

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2015 Annual Report of Hubei Sanonda Co., Ltd.

□ Yes √ No

Whether there are multiple transactions step by step dispose the investment to subsidiary and lost control in reporting period

□ Yes √ No

5. Other reasons for the changes in combination scope

Note to reasons for the changes in combination scope (Newly established subsidiary and subsidiary of liquidation) and relevant information:

6. Other

IX. Equity in other entities

1. Equity in subsidiary

(1) The structure of the enterprise group

Name of the	Main operating		Nature of	Holding percentage (%)	Holding percentage (%)
		Registration place				Way of gaining
subsidiary	place		business	Directly	Indirectly

Sanonda
(Jingzhou)
			Manufacturing
Pesticide	Jingzhou	Jingzhou		100.00%		Investment
			industry
Chemical Co.,

Ltd.
Hubei Sanonda
Foreign Trading	Jingzhou	Jingzhou	Trading	100.00%		Investment
Co., Ltd.
Jingzhou
						Under the same
Hongxiang			Manufacturing
	Jingzhou	Jingzhou		100.00%		control business
Chemicals Co.,			industry
						combination
Ltd.

Notes: holding proportion in subsidiary different from voting proportion:

Basis of holding half or less voting rights but still been controlled investee and holding more than half of the voting rights not been controlled investee:

Significant structure entities and controlling basis in the scope of combination:

Basis of determine whether the Company is the agent or the principal:

Other notes:

(2) Significant not wholly owned subsidiary

Unit: RMB Yuan

Name of the subsidiary Shareholding proportion The profits and losses Declaring dividends Balance of minority

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2015 Annual Report of Hubei Sanonda Co., Ltd.

==> picture [97 x 34] intentionally omitted <==

of minority shareholder arbitrate to the minority distribute to minority shareholder at closing shareholders shareholder period

Holding proportion of minority shareholder in subsidiary different from voting proportion:

Other notes:

(3) The main financial information of significant not wholly owned subsidiary

Unit: RMB Yuan

Name of			Closing balance	Closing balance	Closing balance				Opening balance	Opening balance	Opening balance
the		Non-curr	Total assets		Non-curr			Non-curr			Non-curr
	current			Current		Total	current		Total	Current		Total
subsidiar		ent			ent			ent			ent
	assets			liabilities		liabilities	assets		assets	liabilities		liabilities
y		assets			liability			assets			liability

Unit: RMB Yuan

		Reporting period	Reporting period			Same period of last year	Same period of last year
Name of the			Total				Total
	Operation			Operating	Operation			Operating
subsidiary		Net profit	comprehensi			Net profit	comprehensi
	revenue			cash flow	revenue			cash flow
			ve income				ve income

Other notes:

(4) Significant restrictions of using enterprise group assets and pay off enterprise group debt

(5) Provide financial support or other support for structure entities incorporate into the scope of consolidated financial statements

Other notes:

2. The transaction of the Company with its owner’s equity share changed but still controlling the subsidiary

(1) Note to owner’s equity share changed in subsidiary

26 Oct. 2015, Hubei Sanonda Co., Ltd. signed equity transfer agreement with minority shareholder Zhang Hong, who voluntarily transferred his holding's of 1.5% equity of Jingzhou Hongxiang Chemical Co., Ltd. to Hubei Sanonda Co., Ltd. for free. On 4 Nov. 2015, Jingzhou Hongxiang Chemical Co., Ltd. had changed its (Jing Commercial) industrial and commercial registration [2015] No. 2433.

(2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company

Unit: RMB Yuan Less: subsidiary net assets proportion calculated by share -120,581.69	Unit: RMB Yuan Less: subsidiary net assets proportion calculated by share -120,581.69

Less: subsidiary net assets proportion calculated by share	-120,581.69

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2015 Annual Report of Hubei Sanonda Co., Ltd.

proportion obtained/disposal
Difference	120,581.69
Of which: Adjustment of capital reserves	-120,581.69

Other notes:

3. Equity in joint venture arrangement or associated enterprise

(1) Significant joint venture arrangement or associated enterprise

				Holding percentage (%)	Holding percentage (%)	Accounting
						treatment of the
	Main operating		Nature of			investment of
Name		Registration place
	place		business	Directly	Indirectly	joint venture or

						associated
						enterprise

Notes to holding proportion of joint venture or associated enterprise different from voting proportion:

Basis of holding less than 20% of the voting rights but has a significant impact or holding 20% or more voting rights but does not have a significant impact:

(2) Main financial information of significant joint venture

Unit: RMB Yuan

Closing balance/ reporting period Opening balance /last period

Other notes:

(3) Main financial information of significant associated enterprise

Unit: RMB Yuan

Closing balance/ reporting period Opening balance /last period

Other notes:

(4) Summary financial information of insignificant joint venture or associated enterprise

Unit: RMB Yuan

	Closing balance/ reporting period	Opening balance /last period
Joint venture:	--	--
The total of following items according to the
	--	--
shareholding proportions

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Associated enterprise:	--	--
The total of following items according to the
	--	--
shareholding proportions

Other notes:

(5) Note to the significant restrictions of the ability of joint venture or associated enterprise transfer funds to the Company

(6) The excess loss of joint venture or associated enterprise

			Unit: RMB Yuan The noncumulative unrecognized losses in reporting period
	The cumulative recognized	The derecognized losses or the	The noncumulative
Name	losses in previous	share of net profit in reporting	unrecognized losses in reporting
	accumulatively derecognized	period	period

Other notes:

(7) The unrecognized commitment related to joint venture investment
(8) Contingent liabilities related to joint venture or associated enterprise investment

4. Significant common operation

				Proportion /share portion	Proportion /share portion

Name	Main operating place	Registration place	Nature of business	Directly	Indirectly

Note to holding proportion or share portion in common operation different from voting proportion: Basis of common operation as a single entity, classify as common operation

Other notes:

5. Equity of structure entity not including in the scope of consolidated financial statements

Related notes to structure entity not including in the scope of consolidated financial statements

6. Other

X. The risk related financial instruments

XI. The disclosure of the fair value

1. Closing fair value of assets and liabilities calculated by fair value

Unit: RMB Yuan Item Closing fair value

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2015 Annual Report of Hubei Sanonda Co., Ltd.

	Fair value measurement	Fair value measurement	Fair value measurement
				Total
	items at level 1	items at level 2	items at level 3

I. Consistent fair value
	--	--	--	--
measurement

II. Inconsistent fair value
	--	--	--	--
measurement

2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1

3. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 2

4. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 3

5. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3

6. Explain the reason for conversion and the policy governing when the conversion happens if conversion happens among consistent fair value measurement items at different levels

7. Changes in the valuation technique in the current period and the reason for change

8. Fair value of financial assets and liabilities not measured at fair value

9. Other

XII. Related party and related Transaction

1. Information related to parent company of the Company

					Proportion of voting
				Proportion of share
					rights owned by
Name of parent				held by parent
	Registration place	Nature of business	Registered capital		parent company
company				company against the
					against the Company
				Company (%)
					(%)

		Production and
Jingzhou Sanonda		operation of
	Jingzhou, Hubei		240,661,000.00	20.15%	20.15%
Co., Ltd.		pesticide and

		chemicals products

Notes: Information on the parent company:

Note: The finial control of the Company was China National Chemical Corporation China National Chemical Corporation (hereinafter referred to as Chemical Corporation) held 100.00% equity of China National

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Agrochemical Corporation, while China National Agrochemical Corporation held 100.00% equity of Sanonda Group Corporation, and China National Chemical Corporation is a central enterprise under the management of State-owned Assets Supervision and Administration Commission of the State Council.

The finial control of the Company was China National Chemical Corporation

Other notes:

2. Subsidiaries of the Company

See details to Notes IV.

3. Information on the joint ventures and associated enterprises of the Company

The details of significant joint venture and associated enterprise of the Company

Information on other joint venture and associated enterprise of occurring related party transactions with the Company in reporting period, or form balance due to related party transactions in previous period:

Name Relationship

Other notes:

4. Information on other related parties of the Company

Name	Relationship
China National Chemical Corporation	The finial control party
Jiamusi Heilong Agrochemicals Co., Ltd.	Under the same control of China National Chemical Corporation
Beijing Grand AgroChem.,Ltd.	Under the same control of China National Chemical Corporation
Bluestar (Beijing) Chemical Machinery Co., Ltd.	Under the same control of China National Chemical Corporation
China National Agrochemical Corporation	Under the same control of China National Chemical Corporation
Jiangsu Anpon Electrochemical Co., Ltd.	Under the same control of China National Chemical Corporation
Shangdong Dacheng Agrochemical Co., Ltd.	Under the same control of China National Chemical Corporation
China National Chemical Financial Corporation	Under the same control of China National Chemical Corporation
Bluestar Environmental Engineering Co., Ltd.	Under the same control of China National Chemical Corporation
Haohua Engineering Co., Ltd.	Under the same control of China National Chemical Corporation
ADAMA Agricultural Solutions Ltd.	Under the same control of China National Chemical Corporation
FarmozPtyLtd.	Under the same control of China National Chemical Corporation

Other notes:

177

2015 Annual Report of Hubei Sanonda Co., Ltd.

5. List of related-party transactions

(1) Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan)

Information on acquisition of goods and reception of labor service (unit: ten thousand Yuan)

Unit: RMB Yuan

			The approval trade	Whether exceed trade	Same period of last
Related-party	Content	Reporting period
			credit	credit or not	year

Haohua
	Equipment and
Engineering Co.,		7,874,023.88		No	41,753,812.56
	services
Ltd.

Beijing Grand	Purchase of raw
		7,350,427.35
AgroChem.,Ltd.	material

Bluestar (Beijing)
	Purchase of raw
Chemical		486,623.93		No	52,640,427.35
	material
Machinery Co., Ltd.

Bluestar
Environmental	Purchase of raw
		155,982.90
Engineering Co.,	material

Ltd.
Jingzhou Sanonda	Raw materials&
					1,131,882.05
Co., Ltd.	package

Information of sales of goods and provision of labor service

Unit: RMB Yuan

Related-party	Content	Reporting period	Same period of last year
ADAMA Agricultural Solutions
	Sales of pesticides	98,187,315.54	43,770,184.02
Ltd.

Shangdong Dacheng
	Sales of pesticides		14,758,849.56
Agrochemical Co., Ltd.

Sale of pesticide	Sales of pesticides		7,334,103.40
Jiangsu Anpon Electrochemical
	Sales of pesticides		3,119,469.03
Co., Ltd.

Jiamusi Heilong Agrochemicals
	Sales of pesticides		1,817,699.12
Co., Ltd.

Notes:

(2) Related trusteeship/contract

Lists of related trusteeship/contract:

Unit: RMB Yuan

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Name of the	Name of the					Income
entruster/contract	entrustee/	Type	Initial date	Due date	Pricing basis	recognized in the
ee	contractor					reporting period

Notes:

Lists of entrust/contractee

Unit: RMB Yuan

Name of the	Name of the					Charge
entruster/contract	entrustee/	Type	Initial date	Due date	Pricing basis	recognized in the
ee	contractor					reporting period

Notes:

(3) Information of related lease

The Company was lessor:

Unit: RMB Yuan

		The lease income confirmed in	The lease income confirmed in
Name of lessee	Category of leased assets
		this year	last year

Jingzhou Sanonda Co., Ltd.	7/F of the office	120,000.00	120,000.00
The Company was lessee:

		The lease income confirmed in
lessor	Category of leased assets		Category of leased assets
		this year

Notes:

(4) Related-party guarantee

The Company was guarantor:

Unit: RMB Yuan

				Execution accomplished
Secured party	Guarantee amount	Start date	End date
				or not

Hubei Sanonda Foreign
	120,000,000.00	23 Jun. 2013	22 Jun. 2017	Yes
Trading Co., Ltd.

Hubei Sanonda Foreign
	65,000,000.00	26 Jan. 2014	26 Jan. 2017	Yes
Trading Co., Ltd.

Hubei Sanonda Foreign
	64,000,000.00	11 Dec. 2013	10 Dec. 2018	No
Trading Co., Ltd.

Hubei Sanonda Foreign
	60,000,000.00	29 Apr. 2014	28 Apr. 2017	Yes
Trading Co., Ltd.

Hubei Sanonda Foreign	60,000,000.00	29 Apr. 2015	28 Apr. 2018	No

179

2015 Annual Report of Hubei Sanonda Co., Ltd.

Trading Co., Ltd.
Hubei Sanonda Foreign
	50,000,000.00	22 Jan, 2013	21 Jan. 2017	Yes
Trading Co., Ltd.

The Company was Secured party

Unit: RMB Yuan

				Execution accomplished
Guarantor:	Guarantee amount	Start date	End date
				or not

Jingzhou Sanonda Co.,
	170,000,000.00	26 Dec. 2014	25 Dec. 2019	No
Ltd.

Jingzhou Sanonda Co.,
	140,000,000.00	1 Feb. 2015	31 Jan. 2018	No
Ltd.

Jingzhou Sanonda Co.,
	98,000,000.00	25 Dec. 2012	24 Dec. 2017	Yes
Ltd.

Jingzhou Sanonda Co.,
	50,000,000.00	13 Mar. 2015	13 Mar. 2018	Yes
Ltd.

China National
Agrochemical	300,000,000.00	19 Nov. 2014	17 Nov. 2019	No
Corporation
China National
Agrochemical	150,000,000.00	10 Sept. 2013	10 Sept. 2018	No
Corporation
China National
Agrochemical	50,000,000.00	19 Mar. 2015	19 Mar. 2019	No
Corporation
China National
Agrochemical	30,000,000.00	2 Jun. 2015	29 Nov. 2017	Yes
Corporation
China National Chemical
	200,000,000.00	25 Sept. 2013	25 Sept. 2020	No
Corporation

China National Chemical
	160,000,000.00	10 Jun. 2014	9 Jun. 2021	No
Corporation

China National Chemical
	150,000,000.00	14 Oct. 2013	13 Oct. 2020	No
Corporation

Notes:

(5) Inter-bank lending of capital of related parties ：

Unit: RMB Yuan

Related-party Amount borrowed and Initial date Due date Explanation

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2015 Annual Report of Hubei Sanonda Co., Ltd.

loaned Borrowed Loaned

(6) Related party asset transfer and debt restructuring

Unit: RMB Yuan

Related-party Content Reporting period Same period of last year

(7) Rewards for the key management personnel

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Rewards for the key management
	2,450,000.00	3,190,000.00
personnel

(8) Other related-party transactions

The parent company of the Group—Sanonda Group Corporation paid & gained wages and social security through the Group with a total of RMB664, 131.60
Balance of bank deposit of Chemchina Finance Co., Ltd. of the Group at the period- begin was of RMB82,266,671.62, period-end was of RMB140,000,000.00. Interest of bank deposit of this year was of RMB1, 978,679.94, and interest of the paid of short-term loan of this year was of RMB1, 404,208.34.

6. Receivables and payables of related parties

(1) Receivables

Unit: RMB Yuan

		Closing balance	Closing balance	Opening balance	Opening balance
Name o f item	Related-party
		Book balance	Bad debt provision	Book balance	Bad debt provision

	ADAMA
Account receivable	Agricultural	19,683,913.31	984,195.67	20,109,257.16	1,005,462.86
	Solutions Ltd

(2) Payables

Unit: RMB Yuan

Name o f item	Related-party	Closing book balance	Opening book balance
Accounts payable	Bluestar (Beijing) Chemical	6,094,350.00	9,225,000.00

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2015 Annual Report of Hubei Sanonda Co., Ltd.

	Machinery Co., Ltd.
Accounts payable	Haohua Engineering Co., Ltd.	171,940.88	961,417.30
Accounts payable	Beijing Grand AgroChem.,Ltd.	79,260.00
	Jiamusi Heilong Agrochemicals
Accounts received in advance		10,020.00	10,000.00
	Co., Ltd.

	Shangdong Dacheng
Accounts received in advance		1,500.00	1,500.00
	Agrochemical Co., Ltd.

7. Related party commitment

8. Other

XIII. Stock payment

1. The Stock payment overall situation

□ Applicable √ Inapplicable

2. The Stock payment settled by equity

□ Applicable √ Inapplicable

3. The Stock payment settled by cash

□ Applicable √ Inapplicable

4. Modification and termination of the stock payment

5. Other

XIV. Commitments

1. Significant commitments

Significant commitments at balance sheet date

As of 31 Dec. 2015, there were no significant commitments to be disclosed.

2. Contingency

(1) Significant contingency at balance sheet date

As of 31 Dec. 2015, there was no significant contingency to be disclosed.

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2015 Annual Report of Hubei Sanonda Co., Ltd.

(2) The Company have no significant contingency to disclose, also should be stated

There was no significant contingency in the Company.

3. Other

XV. Events after balance sheet date

1. Significant events had not adjusted

==> picture [485 x 66] intentionally omitted <==

----- Start of picture text -----

Unit: RMB Yuan
Influence number to the
Reason of unable to estimate
Item Content financial position and operating
influence number
results
----- End of picture text -----

2. Profit distribution

Unit: RMB Yuan

3. Sales return

4. Notes of other significant events

As of 31 Dec. 2015, there were no other significant events to be disclosed.

XVI. Other significant events

==> picture [247 x 10] intentionally omitted <==

----- Start of picture text -----

1. The accounting errors correction in previous period
----- End of picture text -----

(1) Retrospective restatement

==> picture [485 x 116] intentionally omitted <==

----- Start of picture text -----

Unit: RMB Yuan
Name of the influenced report
Content Processing program Cumulative impact
items during comparison period
(2) Prospective application
Content Processing program Reason of adopting prospective application
----- End of picture text -----

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2015 Annual Report of Hubei Sanonda Co., Ltd.

2. Debt restructuring

3. Replacement of assets

(1) Non-monetary assets exchange

(2) Other assets replacement

4. Pension plan

5. Discontinuing operation

Unit: RMB Yuan

						Termination of
						the business
				Income tax		profits
Item	Revenue	Expense	Total profits		Net profit
				expense		attributable to the

						parent company
						owner

Other notes:

6. Segment information

(1) Recognition basis and accounting policies of reportable segment

(2) The financial information of reportable segment

Unit: RMB Yuan

Item Offset in segment Total

(3) There was no reportable segment, or the total amount of assets and liabilities of each part of reportable segment, shall disclose the reason.

(4) Other notes

7. Other important transactions and events have an impact on investors decision-making

8. Other

Due to planning significant assets reorganization, the Company applied to SZSE that the Company suspended since the start trading date, 5 Aug. 2015. On 19 Jan. 2016, the 6th Meeting of 8th Board of Directors reviewed and approved the Proposal on extension Resumption of Significant Assets Reorganization, the Company stock continuous to suspended after the original suspension period expired, and committed that at least before May 2016, disclosed significant assets reorganization information in term of Publicly Issuing Securities Companies’

184

2015 Annual Report of Hubei Sanonda Co., Ltd.

Information Disclosure Content and Format Guidelines-No.26-Significant Assets Reorganization of Listed Companies.

The involving target assets of significant reorganization was the actual controller 's subordinate company, DAMA Agricultural Solutions Ltd. which engaged in crop protection business, and had strong complementary with the business of the Company.

So far, the Company actively organizing independent financial adviser, legal counsel, audit institution, appraisal agency and other related intermediary organ conducting due diligence, audit, appraisal. Each work was tensely and orderly processing.

XVII. Notes of main items in the financial statements of the Company

1. Accounts receivable

(1) Accounts receivable classified by category

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance	Closing balance	Closing balance	Opening balance	Opening balance	Opening balance	Opening balance	Opening balance
	Book balance		Bad debt provision			Book balance		Bad debt provision
Category				Withdra	Book
		Proportio		wal			Proportio		Withdrawal	Book value
	Amount		Amount		value	Amount		Amount
		n		proportio			n		proportion

				n
Accounts receivable
withdrawal of bad
	361,912,		9,638,65		352,274,0	368,860		8,287,410		360,573,03
debt provision of by		99.84%		2.66%			99.84%		2.25%
	727.20		3.80		73.40	,445.78		.79		4.99
credit risks

characteristics:
Accounts receivable
with insignificant
single amount for	584,457.		584,457.			584,457		584,457.5
		0.16%		100.00%			0.16%		100.00%
which bad debt	52		52			.52		2

provision separately
accrued
	362,497,		10,223,1		352,274,0 73.40	369,444		8,871,868		360,573,03 4.99
Total		100.00%		2.82%			100.00%		2.40%
	184.72		11.32			,903.30		.31

Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end

□ Applicable √ Inapplicable

In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:

√ Applicable □ Inapplicable

Unit: RMB Yuan

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2015 Annual Report of Hubei Sanonda Co., Ltd.

	Closing balance	Closing balance	Closing balance
Aging
	Account receivable	Bad debt provision	Withdrawal proportion

Subentry within 1 year
Within 1 year	45,003,813.02	2,250,190.65	5.00%
Subtotal of within 1 year	45,003,813.02	2,250,190.65	5.00%
1 to 2 years	539,514.86	53,951.49	10.00%
Over 3 years	7,440,959.29	7,334,511.66	98.57%
3 to 4 years	110,148.25	55,074.12	50.00%
4 to 5 years	102,747.00	51,373.50	50.00%
Over 5 years	7,228,064.04	7,228,064.04	100.00%
Total	52,984,287.17	9,638,653.80

Notes:

In the groups, accounts receivable adopting balance percentage method to withdraw bad debt provision:

□ Applicable √ Inapplicable

In the groups, accounts receivable adopting other methods to withdraw bad debt provision:

Name of the group		Balance at year- end
	Account receivable	Bad debt provision	Withdrawal reason
Risk-free groups	308,928,440.03		Internal funds of the group
Total	308,928,440.03

Accounts receivable with significant single amount and individually withdrawn bad debt provision at the end of the year

Account receivable		Balance at year- end	Balance at year- end
	Account receivable	Bad debt provision	Withdrawal proportion	Withdrawal reason
Jiangxi Nanchang Red Valley Plant Protection Center	584,457.52	584,457.52	100.00%	Multiple collection failed, not expected to recover
Total	584,457.52	584,457.52	—	—

(2) Bad debt provision withdrawal, reversed or recovered in the report period

The amount of bad debt provision was RMB1, 351,243.01; the amount of reversed or recovered bad debt provision in the report period was of RMB 000.

Significant amount of reversed or recovered bad debt provision

Unit: RMB Yuan

Name of the entity Amount Method

(3) Particulars of the actual verification of accounts receivable during the reporting period

Unit: RMB Yuan

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Item Amount

Of which: significant actual verification of accounts receivable

					Unit: RMB Yuan Whether occurred because of related party transactions
					Whether occurred
Name of the entity	Nature	Amount	Reason	Procedure	because of related
					party transactions

Notes:

(4) Top five of account receivable of closing balance collected by arrears party

The total amount of top five of account receivable of closing balance collected by arrears party was RMB333,431,752.53, 91.98% of total balance of account receivable at year-end, the relevant total bad debt provision was RMB1,225,165.63 at year-end.

(5) Derecogniziton of account receivable due to the transfer of financial assets

(6) The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable

Other notes:

2. Other accounts receivable

(1) Other account receivable classified by category

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance	Closing balance	Closing balance	Opening balance	Opening balance	Opening balance	Opening balance	Opening balance
	Book balance		Bad debt provision			Book balance		Bad debt provision
Category				Withdra	Book
		Proportio		wal			Proportio		Withdrawal	Book value
	Amount		Amount		value	Amount		Amount
		n		proportio			n		proportion

				n
Other accounts
receivable withdrawn
	6,784,72		5,248,91		1,535,805	81,481,		5,229,030		76,252,385.
bad debt provision		100.00%		77.36%			100.00%		6.42%
	1.32		5.77		.55	416.37		.47		90
according to credit

risks characteristics
	6,784,72		5,248,91		1,535,805 .55	81,481,		5,229,030		76,252,385. 90
Total		100.00%		77.36%			100.00%		6.42%
	1.32		5.77			416.37		.47

Other accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end

□ Applicable √ Inapplicable

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2015 Annual Report of Hubei Sanonda Co., Ltd.

In the groups, other accounts receivable adopting aging analysis method to withdraw bad debt provision:

√ Applicable □ Inapplicable

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance
Aging
	Other accounts receivable	Bad debt provision	Withdrawal proportion

Subentry within 1 year
Within 1 year	275,017.80	13,750.89	5.00%
Subtotal of within 1 year	275,017.80	13,750.89	5.00%
2 to 3 years	20,000.00	6,000.00	30.00%
Over 3 years	5,369,557.16	5,229,164.88	97.39%
3 to 4 years	270,784.57	135,392.29	50.00%
4 to 5 years	10,000.00	5,000.00	50.00%
Over 5 years	5,088,772.59	5,088,772.59	100.00%
Total	5,664,574.96	5,248,915.77

Notes:

In the groups, other accounts receivable adopting balance percentage method to withdraw bad debt provision

□ Applicable √ Inapplicable

In the groups, other accounts receivable adopting other methods to withdraw bad debt provision:

√ Applicable □ Inapplicable

√ Applicable □ Inapplicable
Name of the group	Balance at year- end
	Other accounts receivable	Bad debt provision	Withdrawal reason
Sanonda Jingzhou Agrochemicals Co., Ltd	1,120,146.36		Internal funds of the group
Total	1,120,146.36

(2) Bad debt provision withdrawal, reversed or recovered in the report period

The withdrawal amount of the bad debt provision during the reporting period was of RMB 19,885.30; the amount of the reversed or collected part during the reporting period was of RMB 000.

Significant amount of reversed or recovered bad debt provision

Unit: RMB Yuan

Name of the entity Reversed or collected amount Method

(3) Particulars of the actual verification of other accounts receivable during the reporting period

Unit: RMB Yuan

Item Amount

Of which: significant actual verification of other accounts receivable

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2015 Annual Report of Hubei Sanonda Co., Ltd.

Unit: RMB Yuan

					Whether occurred
Name of the entity	Nature	Amount	Reason	Procedure	because of related
					party transactions

Notes of write-off other accounts receivable:

(4) Other account receivable classified by account nature

Unit: RMB Yuan

Nature	Closing book balance	Opening book balance
Liquidation amount of investment fund	3,398,275.80	3,398,275.80
Turnover accounts with the subsidiary	1,120,146.36	70,660,146.36
Pretty cash	714,944.37	690,874.23
Cash pledge	500,000.00	1,029,784.57
Liquidation amount of goods payment	548,500.00	548,500.00
Export tax refunds		4,578,166.34
Other	502,854.79	575,669.07
Total	6,784,721.32	81,481,416.37

(5) Top 5 of the closing balance of the other accounts receivable collected according to the arrears party

Unit: RMB Yuan

					Closing balance of
Name of the entity	Nature	Closing balance	Aging	Proportion%
					bad debt provision

Shantou Biyue Plastic	Liquidation amount
		3,125,000.00	Over 5 years	46.06%	3,125,000.00
Co., Ltd.	of investment fund

Sanonda Jingzhou
	Turnover accounts
Agrochemicals Co.,		1,120,146.36	1-3years	16.51%
	with the subsidiary
Ltd

Hubei Jingzhou
Shashi Agricultural	Liquidation amount
		548,500.00	Over 5 years	8.08%	548,500.00
Production Materials	of goods payment

Co., Ltd.
Jingzhou Production
Safety Supervision	Cash pledge	300,000.00	Over 5 years	4.42%	300,000.00
Bureau
Jingzhou Real
	House renewal fund	237,784.57	3-4 years	3.50%	118,892.29
Estate Administration

Total	--	5,331,430.93	--	78.57%	4,092,392.29

189

2015 Annual Report of Hubei Sanonda Co., Ltd.

(6) Account receivable involving government subsidies

Unit: RMB Yuan

	Project of government			Estimated recovering
Name of the entity		Closing balance	Closing aging
	subsidies			time, amount and basis

(7) Other account receivable derecognized due to the transfer of financial assets

(8) Amount of transfer other account receivable and assets and liabilities formed by its continuous involvement

Other notes:

3. Long-term equity investment

Unit: RMB Yuan

	Closing balance	Closing balance	Closing balance	Opening balance	Opening balance	Opening balance
Item		Depreciation			Depreciation
	Book balance		Book value	Book balance		Book value
		reserves			reserves

Investment to the
	80,026,635.41	24,500,000.00	55,526,635.41	80,026,635.41	24,500,000.00	55,526,635.41
subsidiary

Total	80,026,635.41	24,500,000.00	55,526,635.41	80,026,635.41	24,500,000.00	55,526,635.41

(1) Investment to the subsidiary

Unit: RMB Yuan

==> picture [480 x 254] intentionally omitted <==

----- Start of picture text -----

Withdrawn
Closing balance
impairment
Investee Opening balance Increase Decrease Closing balance of impairment
provision in the
provision
reporting period
Jingzhou
Hongxiang
37,619,905.41 37,619,905.41
Chemicals Co.,
Ltd.
Sanonda
(Jingzhou)
30,413,700.00 30,413,700.00 24,500,000.00
Pesticide Chemical
Co., Ltd.
Hubei Sanonda
Foreign Trading 11,993,030.00 11,993,030.00
Co., Ltd.
----- End of picture text -----

190

2015 Annual Report of Hubei Sanonda Co., Ltd.

Total 80,026,635.41 80,026,635.41 24,500,000.00

(2) Investment to joint ventures and associated enterprises

Unit: RMB Yuan

==> picture [480 x 176] intentionally omitted <==

----- Start of picture text -----

Increase/decrease in reporting period
Investme Closing
Adjustme
nt profit Withdraw balance
Additiona nt of Declarati
Opening Negative and loss Other n Closing of
Investee l other on of cash
balance investmen recognize equity impairme Other balance impairme
investmen comprehe dividends
t d under changes nt nt
t nsive or profits
the equity provision provision
income
method
I. Joint ventures
II. Associated enterprises
----- End of picture text -----

(3) Other notes

4. Revenues and operating costs

Unit: RMB Yuan

	Reporting period	Reporting period	Same period of last year	Same period of last year
Item
	Revenue	Operating costs	Revenue	Operating costs

Main operations	2,053,580,429.52	1,641,240,252.20	3,044,864,870.25	2,122,938,073.28
Other operations	156,516,158.84	152,685,793.58	93,298,834.95	84,250,795.36
Total	2,210,096,588.36	1,793,926,045.78	3,138,163,705.20	2,207,188,868.64

Other notes:

5. Investment income

Unit: RMB Yuan

Item	Reporting period	Same period of last year
Investment income received from holding of
	1,667,155.76	1,716,466.00
available-for-sale financial assets

Total	1,667,155.76	1,716,466.00

191

2015 Annual Report of Hubei Sanonda Co., Ltd.

6. Other

XVIII. Supplementary materials

1. Items and amounts of extraordinary gains and losses

√ Applicable □ Inapplicable

Unit: RMB Yuan

Item	Amount	Explanation
Gains/losses on the disposal of non-current
	32,021.74
assets

Tax rebates, reductions or exemptions due to
approval beyond authority or the lack of	5,585,426.21
official approval documents
Other non-operating income and expenses
	85,398.38
other than the above

Less: Income tax effects	1,179,878.25
Minority interests effects	11,062.50
Total	4,511,905.58	--

2. Return on equity (ROE) and earnings per share (EPS)

		EPS (Yuan/share)	EPS (Yuan/share)
Profit as of reporting period	Weighted average ROE (%)
		EPS-basic	EPS-diluted

Net profit attributable to common		0.2388	0.2388
	6.90%
shareholders of the Company

Net profit attributable to common
shareholders of the Company after
	6.68%	0.2388	0.2388
deduction of non-recurring profit

and loss

3. Differences between accounting data under domestic and overseas accounting standards

(1) Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards

□ Applicable √ Inapplicable

192

2015 Annual Report of Hubei Sanonda Co., Ltd.

(2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards

□ Applicable √ Inapplicable

(3) Explain reasons for the differences between accounting data under domestic and overseas accounting standards, for audit data adjusting differences had been foreign audited, should indicate the name of the foreign institutions

4. Other

Section XI. Documents Available For Reference

(I) Financial Statements carried with signatures and seals of Legal Representative and Accounting Principal, as well as Head of the Accounting Organ;

193

2015 Annual Report of Hubei Sanonda Co., Ltd.

(II) Original of the Auditor’s Report with the seals of accounting firm and the signatures and seals of certified public accountants; (III) In the reporting period, originals of all documents of the Company ever disclosed publicly in media designated by China Securities Regulatory Commission as well as the originals of all the public notices were deposited in the office of the Company.

Hubei Sanonda Co., Ltd.

Legal representative: Mr. An Liru

18 Mar. 2016

194

AI assistant

ADAMA Ltd. — Annual Report 2016

53671_rns_2016-03-17_e78e59bf-dd20-4469-b453-5fa8e371aa21.PDF

Hubei Sanonda Co., Ltd.

The 2015 Annual Report

March 2016

Section I. Important Statements, Contents & Terms

Contents

Terms

Section II. Company Profile & Financial Highlights

I. Basic information of the Company

II. For contact

III. About information disclosure and where this Report is placed

IV. Changes in the registered information

V. Other information

VI. Accounting and financial highlights

VII. Differences between accounting data under domestic and overseas accounting standards

1. Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards

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

VIII. Financial highlights by quarter

IX. Extraordinary gains and losses

Section III. Business Highlights

I. Main business during reporting period

II. Material changes in main assets

1. Material changes in main assets

2. Main assets overseas

III. Core competitiveness analysis

Section IV. Discussion & Analysis by Management

I. Business review

II. Main business analysis

1. Overview

2. Revenues and costs

(1) Operating income form

(2) List of the industries, products or regions exceed 10% of the operating income or operating profits of the Company

(3) Whether the Company’s goods selling revenue higher than the service revenue

(4) Execution of the significant sales contracts signed by the Company up to the reporting period

(5) Operating cost form

(6) Whether the consolidated scope changed during the reporting period

(7) List of the significant changes or adjustment of the industries, products or services of the Company during the reporting period

(8) List of the major trade debtors and major suppliers

3. Expenses

4. R&D investment

√ Applicable □ Inapplicable

□ Applicable √ Inapplicable

√ Applicable □ Inapplicable

5. Cash flow

√ Applicable □ Inapplicable

√ Applicable □ Inapplicable

III. Analysis of the non-core business

IV. List of the assets and liabilities

1. List of the significant changes of the assets form

2. Assets and liabilities measured at fair value

V. List of the investment

1. Overall condition

2. List of the significant equity investment acquired from the reporting period

3. List of the significant non-equity investment has been executing during the reporting period

4. Investment on the financial assets

(1) List of the securities investment

(2) List of the derivative investment

5. Use of raised funds

VI. Selling of the significant assets and the equities

1. List of the selling of the significant assets

2. List of the selling of the significant equities

VII. Analysis of the major controlling and stock-participating companies

√ Applicable □ Inapplicable

VIII. List of the structured main bodies controlled by the Company

IX. Outlook of the Company’s future development

(VI) Risks and countermeasures of the company

X. List of the received researches, visits and interviews

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

2. Particulars about researches, visits and interviews received from the period-end to the disclosure date

□ Applicable √ Inapplicable

Section V. Significant Events

I. List of the profits distribution of the common shares and turning capital reserve into share capital of the Company

√ Applicable □ Inapplicable

II. Pre-plan for profit allocation and turning capital reserve into share capital for the reporting period

III. Performance of commitments

1. Commitments completed by the Company, the shareholders, the actual controllers, the purchasers, the Directors, the Supervisors and the Senior Executives or the other related parties during the reporting period and those hadn’t been completed execution up to the period-end

2. The assets or projects existing profit forecast, which were still in the profit forecast period, the Company made note and explain to the assets or project arrived at original profit forecast

IV. Occupation of the Company’s capital by the controlling shareholder or its related parties for non-operating purposes

ADAMA Ltd. Annual Report 2016