Description of the incident On February 29, the company signed an “Equity Transfer Contract” with Shanghai Sisheng Investment Center to transfer 29.36% of Shenzhen Century Tianyuan Environmental Protection Technology Co., Ltd. (hereinafter referred to as “Century Tianyuan”) for 50 million yuan. The company is the largest shareholder of Century Tianyuan. After this transfer, the company no longer holds shares in Century Tianyuan. The transaction did not involve a transfer of the company's debts or changes in consolidated statements. Incident Review transferred an environmental protection company to focus its advantages on developing the smart city construction business. Century Tianyuan received a capital increase of 50 million yuan (of which 16.2095 million yuan was included in the registered capital). After the capital increase, the company held 29.36% of the shares (the largest shareholder). Century Tianyuan's performance promise indicates that it will achieve profit after tax of more than 21 million yuan in 2015, and guarantee a compound increase of more than 30% in profit after tax within 3 years. However, the actual operating results were extremely disappointing. Century Tianyuan lost 28.1463 million yuan from January to September 2015, falling short of expectations, which is one of the main reasons for the company's share transfer. Another factor is the low level of business fit. Century Tianyuan specializes in technology development of environmental protection instruments and computer software; design and construction of environmental protection engineering and building waterproof engineering; purchase and sale of environmental protection instruments and other domestic trade; production of COD monitoring systems and continuous flue gas monitoring systems. Since the current functions of environmental protection equipment are mainly performed by single devices, the requirements for overall system intelligence are low, and the business correlation with the company's core business (intelligent buildings, intelligent transportation, smart medical care, and smart energy efficiency) is low, which is also a factor in divestment. This transfer of shares yielded 50 million yuan, which is the same amount as the initial capital increase, and did not cause major losses to the company. Due to the company's total share capital of 730 million shares, the impact on EPS in the current year is negligible based on the loss amount calculated based on the shareholding ratio. The pioneering vertical mergers and acquisitions strategy prompts the company to increase further mergers and acquisitions in core business segments in the future. Smart city construction is a major trend in future urban development. The market space is huge, and there are many segments. The company has established an acquisition strategy of “vertical mergers and acquisitions first, horizontal mergers and acquisitions followed” to deepen the company's business. Among them, vertical mergers and acquisitions are further segmentation of existing sectors, and deep business cultivation is further completed through acquisitions. For example, in the field of smart medical care, after passing through the merger and acquisition of Chengdu Chengdian Medical Star Digital Health Software Co., Ltd. in October 2014, the competitiveness of the smart medical sector was greatly enhanced, and smart medical business revenue surged 119.35% year on year. Based on this, the future company will rely on the new nursing community and technology support platform projects to launch a series of products such as the “Elderly Care Service Platform” for community home care and institutional care. The plan is to create a three-in-one regional health service for the public Service platform. The platform is expected to make significant progress this year. Guided by a pioneering vertical merger and acquisition strategy, we expect the company to continue to promote mergers and acquisitions in other fields in the coming years to further consolidate the company's core competitiveness. Risk Warning (1) This equity transfer is subject to review and approval by the company's board of directors to take effect, and there is still uncertainty.