Auditors’ Report SGW[2012]No.:A476 To all shareholders of Weifu High-Technology Group Co., Ltd.,: We have audited the accompanying financial statements of Weifu High-Technology Group Co., Ltd. (―the Company‖), including consolidated balance sheet and balance sheet of parent company of 31 December 2011, and consolidated profit statement and profit statement, and consolidated cash flow statement and cash flow statement for the year ended, consolidated statement on changes of shareholders’ equity and statement on changes of shareholders’ equity, and notes to the financial statements for the year ended. I. Management’s responsibility for the financial statements Management of the Company is responsible for prepare and present financial statement of the Company, which including: (1) Prepare financial statements with fair presentation in line with Accounting Standards for Business Enterprises; (2) Designing, executed and maintaining necessary internal control in order to prevent fundamental miscarrying in financial statement from fraudulent or errors. II. Auditor’s responsibility Our responsibility is to express an audit opinion on these financial statements based on our audit. We performed our audit in accordance with Chinese Certified Public Accountants' Auditing Standards. Those standards require us to comply with professional ethics of Chinese CPA, and to plan and perform our audit so as to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures of the financial statements. The selective audit procedures depend on auditor’s judgment, including the evaluation of the risk of material misstatement of the consolidated financial statements due to frauds or errors. When evaluating risk, CPA considers internal control related to preparation and presentation of financial statements, in order to design auditing procedures, but not for the purpose of expressing an opinion on the internal control’s effectiveness. An audit also includes assessing the appropriateness of the accounting policies adopted and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that we have obtained sufficient and appropriate audit evidences to provide a basis for our audit opinion. III. Auditing opinion In our opinion, the Company’s financial statements have been prepared in accordance with the Enterprises Accounting Standards, and they fairly present, in all material respects, the financial position of consolidated and parent company as of December 31, 2011, and its operation results and cash flows for the year ended. Jiangsu Gongzheng Tianye Certified Public Accountants Co., Ltd. Chinese CPA: Bo Lingjing Wuxi, P.R.China Chinese CPA: He Xiaofeng 16 April 2012 1 Balance Sheet Prepared by Weifu High-Technology Group Co., Ltd. 2011-12-31 In RMB Balance at period-end Balance at year-begin Items Merger Parent Company Merger Parent Company Current assets: Monetary funds 855,053,599.38 189,135,416.49 596,958,764.21 149,943,763.55 Settlement provisions Capital lent Transaction finance asset Notes receivable 1,227,018,757.27 440,248,528.54 835,266,266.32 291,611,147.00 Accounts receivable 1,167,123,155.04 822,357,590.99 999,798,439.30 567,607,398.18 Accounts paid in advance 183,407,859.04 58,227,907.25 105,176,780.11 42,468,803.76 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable Dividend receivable 8,496,690.22 Other receivables 11,983,410.88 167,045,153.49 6,892,216.92 137,067,355.21 Purchase restituted finance asset Inventories 883,582,090.78 296,385,165.44 917,694,296.54 277,723,002.78 Non-current asset due within one year Other current assets 10,235,025.21 9,210,782.24 Total current assets 4,338,403,897.60 1,973,399,762.20 3,470,997,545.64 1,474,918,160.70 Non-current assets: Granted loans and advances Finance asset available for sales Held-to-maturity securities Long-term account receivable Long-term equity investment 1,786,481,972.85 2,576,168,955.22 1,892,112,152.46 2,558,225,582.62 Investment property 4,352,211.86 4,965,879.52 Fixed assets 1,357,509,509.59 689,680,279.76 1,110,068,115.28 538,628,218.28 Construction in progress 98,288,407.69 56,239,272.06 142,256,732.63 125,932,175.31 Engineering material Disposal of fixed asset Productive biological asset Oil and gas asset Intangible assets 249,921,186.58 187,843,427.92 85,655,823.12 26,733,764.37 Expense on Research and Development Goodwill 1,784,086.79 1,784,086.79 Long-term expenses to be 9,144,280.20 7,473,629.75 apportioned Deferred income tax asset 83,331,883.03 47,881,534.77 46,308,844.71 16,198,870.70 Other non-current asset Total non-current asset 3,590,813,538.59 3,557,813,469.73 3,290,625,264.26 3,265,718,611.28 Total assets 7,929,217,436.19 5,531,213,231.93 6,761,622,809.90 4,740,636,771.98 2 Balance Sheet (Contd) Prepared by Weifu High-Technology Group Co., Ltd. 2011-12-31 In RMB Current liabilities: Short-term loans 495,000,000.00 465,000,000.00 270,000,000.00 240,000,000.00 Loan from central bank Absorbing deposit and interbank deposit Capital borrowed Transaction financial liabilities Notes payable 164,301,719.94 85,000,000.00 389,985,533.69 200,278,487.00 Accounts payable 1,297,893,239.74 632,112,594.66 1,195,053,077.84 766,617,178.72 Accounts received in advance 55,289,941.25 8,150,899.35 42,271,899.15 20,438,892.15 Selling financial asset of repurchase Commission charge and commission payable Wage payable 278,771,987.97 175,803,158.72 269,751,945.96 168,133,427.32 Taxes payable 77,737,123.74 25,748,688.27 107,903,963.31 28,582,184.41 Interest payable 930,000.00 780,000.00 490,000.00 320,000.00 Dividend payable 3,444,762.15 18,696,539.18 Other accounts payable 83,991,571.43 69,856,690.02 62,501,613.74 56,125,853.06 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Non-current liabilities due within 1 3,000,000.00 year Other current liabilities 34,608,609.47 24,330,259.35 Total current liabilities 2,494,968,955.69 1,462,452,031.02 2,380,984,832.22 1,480,496,022.66 Non-current liabilities: Long-term loans 3,000,000.00 Bonds payable Long-term account payable 18,840,000.00 15,670,000.00 Special accounts payable Projected liabilities 1,481,745.84 Deferred income tax liabilities 2,689,975.40 2,801,008.40 Other non-current liabilities 72,330,000.00 56,830,000.00 13,350,000.00 Total non-current liabilities 93,859,975.40 56,830,000.00 34,821,008.40 1,481,745.84 Total liabilities 2,588,828,931.09 1,519,282,031.02 2,415,805,840.62 1,481,977,768.50 Owner’s equity (or shareholders’ equity): Paid-in capital (or share capital) 567,275,995.00 567,275,995.00 567,275,995.00 567,275,995.00 Capital public reserve 895,918,416.59 923,981,806.57 895,918,416.59 923,981,806.57 Less: Inventory shares Reasonable reserve Surplus public reserve 283,637,997.50 283,637,997.50 283,637,997.50 283,637,997.50 Provision of general risk Retained profit 3,317,227,992.26 2,237,035,401.84 2,359,375,974.53 1,483,763,204.41 Balance difference of foreign currency translation Total owner’s equity attributable to 5,064,060,401.35 4,011,931,200.91 4,106,208,383.62 3,258,659,003.48 parent company Minority interests 276,328,103.75 239,608,585.66 Total owner’s equity 5,340,388,505.10 4,011,931,200.91 4,345,816,969.28 3,258,659,003.48 Total liabilities and owner’s equity 7,929,217,436.19 5,531,213,231.93 6,761,622,809.90 4,740,636,771.98 3 Profit statement and profit distribution statement Prepared by Weifu High-Technology Group Co., Ltd. January – December 2011 In RMB Amount in this period Amount in last period Items Merger Parent Company Merger Parent Company I. Total operating income 5,898,113,089.49 2,788,219,421.85 5,371,213,196.45 2,740,148,715.35 Including: Operating income 5,898,113,089.49 2,788,219,421.85 5,371,213,196.45 2,740,148,715.35 Interest income Insurance gained Commission charge and commission income II. Total operating cost 5,035,288,701.55 2,524,397,344.82 4,575,399,369.81 2,518,148,150.69 Including: Operating cost 4,314,627,953.07 2,212,560,781.97 3,879,197,923.08 2,160,670,478.65 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Operating tax and extras 33,003,660.27 8,863,173.41 31,979,087.88 12,733,210.70 Sales expenses 226,887,211.67 123,385,639.56 123,454,157.96 59,298,338.33 Administration expenses 427,945,464.77 164,282,347.00 457,166,602.80 220,770,095.02 Financial expenses 26,348,164.48 13,352,081.65 33,354,876.99 21,866,382.01 Losses of devaluation of asset 6,476,247.29 1,953,321.23 50,246,721.10 42,809,645.98 Add: Changing income of fair value(Loss is listed with ―-‖) Investment income (Loss is listed with 497,941,948.54 753,513,412.15 690,474,746.82 666,107,945.71 ―-‖) Including: Investment income on 497,916,948.54 442,582,074.71 684,229,162.07 615,827,725.94 affiliated company and joint venture Exchange income (Loss is listed with ―-‖) III.