Sinofert : Financial Statements/ESG Information -

About this Report 2

Company Profile 2

Report Introduction 2

Reporting Period 2

Reporting Guideline 2

Feedback 3

Chairman's Message 4

Environmental 6

Emissions Control 7

Resource Consumption 8

Soil Protection 11

Our Employees 12

Employees Composition 12

Employee Health Protection 13

Training and Development 14

Discipline Inspection 14

High Quality Product Management 17

Supplier Management 17

Quality Control 17

Community Care 19

Performance Data Summary 22

ESG Content Index 24

Sinofert Holdings Limited (referred to as "Sinofert" or the "Company") is China's largest fertilizer distributor and supplier of imported fertilizer products and one of the largest producers in China. With an emphasis on distribution operation, Sinofert integrates its upstream and downstream value chain, produces and markets fertilizer products such as nitrogenous fertilizer, phosphate fertilizer, potash fertilizer and compound fertilizer. It offers the widest range of fertilizer products in China. Sinofert has the largest agricultural resources distribution network in China and a complete agrochemical service system.

This Environmental, Social and Governance ("ESG") Report is the first ESG report published by Sinofert. To increase each stakeholder's understanding of the Company's sustainability development direction, this report will disclose Sinofert's work and performance on environmental and social aspects during 2016.

From 1 January 2016 to 31 December 2016, inclusively.

This report is prepared in compliance with the ESG Reporting Guide set out in Appendix 27 to the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange. The content of this report conforms to the phased requirements of the Hong Kong Stock Exchange, disclosing Sinofert's performance in environmental and social aspects.

We welcome and value each of your feedback. If you have any feedback or suggestions regarding this report, you are welcomed to contact Sinofert Holdings Limited.

Hong Kong Office

Address: Units 4705, 47th Floor, Office Tower, Convention Plaza,1 Harbour Road, Wanchai, Hong Kong

Tel: 852-3656 1588 Fax: 852-2850 7229

Investor Relation Department, Sinofert Holding Limited

Address: Level 10, Central Tower, Chemsunny World Trade Center, 28 Fuxingmennei Street, Beijing

Postal Code: 100031

Tel: 010-5956 9358 Fax: 010-5956 9095

"To create value with excellence" is one of our core values. As one of the biggest fertilizer producers in China, we have an inescapable responsibility towards the promotion of sustainable development in our industry. In addition to the promotion of food safety and service improvement of agricultural production in China, Sinofert understands that the fertilizer production process involves problems such as the development of natural resources, energy consumption and waste emissions etc. With this in mind, the Company has established a Health, Safety and Environmental (HSE) Management Committees for each subsidiary, with the corporate's main person-in-charge having to act as the primary individual accountable for environmental protection and take full responsibility for environmental protection work. With collective efforts, we hope to become the industry's role model regarding advanced technology, resource conversation and being environmentally friendly, and an essential base for the nation's improvement in agricultural safety and chemical technologies.

In the past year, Sinofert has allocated resources to lower our production impact on the environment and continuously strengthening our environmental production system. The Company is not only strengthening promotional education in environment protection and pushing forward employee's involvement in sustainability development, we have also greatly increased the allocation of corporate resources to upgrade production equipment, reducing emissions and pollution. With each party's hard work, the Company successfully achieved the emission reduction target set for 2016, and hence reduced total energy consumption by a considerable amount. The Company has invested RMB 25.93 million into enterprise-wide environmental projects, which clearly shows our determination to become the industry leader of being environmentally friendly.

For employees, the Company assures a safe work environment by our comprehensive "professional safety and health" and disciplinary regulation policy. Moreover, we always provide our customers with excellent service through quality management and ongoing product improvement. In order to drive the sustainability development in the first industry sector, the Company also cares for the needs of farmers and strives to improve their lives by providing fertilizers, education and material support.

In the future, the Company will continue to work with stakeholders to drive the sustainable development of enterprise and the national economy.

Zhang Wei Chairman of the Board

25 May 2017

The Company is committed to the basic national policy of protecting the environment. We adhere to national laws and regulations on environmental protection, cleaner production and the conservation of water and soil. An environmental protection plan and regulation has been set up by the Company and we actively promote clean production by insisting on being people-oriented, placing being environmentally friendly at a priority, taking a preventing approach and adopting a comprehensive management. As we prevent the production of new polluting sources, we have also adopted the latest technology and equipment to continuously reduce the amount of pollutants we have emitted, maintaining an effective environmental protection mechanism in the long term, creating harmony between energy and the environment, continuously improving the Company's environmental performance.

The Company carried out promotional and educational environmental protection activities to provide employees with environmental protection knowledge and skill- based training for their roles. We actively implemented an environmental protection target responsibility system, and considered environmental management as a factor of HSE risk assessment. At the beginning of each year, we sign HSEs, allocating and putting into practice environmental protection goals to every job position and employee. Through strictly implementing our "three simultaneous" environmentally friendly management protocols for construction projects, we ensure compliance with national environmental laws.

We also formulated contingency plans for sudden environmental events and carried out pre-drills; established regular management and monitoring mechanisms for emission targets, carried out rigorous evaluations on the operation efficiency, maintenance effectiveness and the completion of pollutant discharge targets of our environmentally friendly facilities. In addition, we strengthened industrial exhaust emissions, boiler emissions, radioactive sources and solid waste management, so as to earnestly fulfill our corporate environmental responsibility.

Throughout the years, our strict controls have been effective, our subsidiaries have strictly implemented management policies such as "Sinofert Group's Measures for Energy and Water Saving", "Sinofert Administration Measures of Environmental Protection" and "Sinofert Measures for the Administration of Energy Saving and Emission Reduction" etc., resulting in a stable production and well-controlled pollution emissions.

Gas & Sewage Management

Sinofert's main industrial emissions included exhaust gas from boilers, industrial gas emissions and sewage from production etc. The Company imposes strict controls on industrial emission targets, including SO2, COD, NH3-N and NOX. The performances of the four types of industrial emission in the past three years are as follow:

Table 1: The performance of the four gas emission factors

Exhaust Emission Control

Sinochem Shandong Fertilizer Co. Ltd. ("Sinochem Shandong") finished the transformation of low-carbon boiler and implemented the project of enhancing the pollution management of our spray granulation devices this year. The project upgraded three wet electrostatic precipitators, a set of denitrification device and other related improvements, resulting in Shandong Fertilizer's current boiler and spray granulation devices to satisfy extremely low emission requirements: dust

≤10mg/m3, SO2 ≤50 mg/m3, NOx≤200mg/m3. Hubei Sinochem Orient Fertilizer Co. Ltd.'s 4t/h boiler and two hot air furnaces switched its fuel feed from bituminous coal to biomass, causing the concentration of SO2 and NOx to decline. Furthermore, Fujian Sinochem Zhisheng Chemical Fertilizer Co. Ltd carried out technological transformations to its hot air furnace exhaust scrubber nozzle and rainwater separation tank, enhancing dust removal ability, lowering the concentration of industrial exhaust particulates emitted and emission rate.

Sewage Discharge Control

Sinochem Chongqing Fuling Chemicals Co. Ltd ("Sinochem Fuling") comprehensively cleaned up each production area's rain and sewage diversion system, implementing standardized improvements to it. Nine terminal collection pools were constructed to ensure the collection of rain water in the early stage. Sinochem Jilin Changshang Chemical Co. Ltd. ("Sinochem Changshan") implemented capacity assessments to the terminal wastewater treatment facility in Xidapao. Implementing measures from two aspects - reducing pollution from source and a comprehensive wastewater treatment, water saving management was strengthened to reduce the amount of water discharged during production whilst improvements were made to the sewage treatment facilities, ultimately

strengthening wastewater treating ability. Sinchem Yunlong Co., Ltd. ("Sinochem Yunlong") also completed the upgrades made to its rain and sewage diversion system during the end of the year, strengthening its sewage control.

Waste Control

The Company has formulated a management guideline on general industrial solid waste and hazardous waste, all waste produced is handled responsibly. Waste is first divided by category. For remaining steel and cables they are later recycled and used within the company, whilst for other recyclable materials they are recycled and reused by other relevant handling units. Also, as the phosphate fertilizer emits general solid waste - phosphogypsum during its production process, the Company has developed a guideline for handling the phosphogypsum yard. According to the guideline, phosphogypsum has to be stored in the phosphogypsum yard whilst a portion of phosphogypsum is used in the production of gypsum powder and cement retarder.

Table 2: Performance of hazardous waste emission and disposal

Table 3: Performance of unhazardous waste emission and disposal

To strengthen Sinofert's energy consumption management, according to the national and Company's requirements regarding energy reduction work, Sinofert established an energy management system and accredited the system before the end of 2016. An energy management leading group was set up, with our deputy general manager as the group leader, other related senior staff as vice group leader and key staff from Office Operations, Human Resources, and the Financial Department as group members. The leading group is based in the Corporate

Management Department and is responsible for handling daily duties of energy management. Each member in the leading group has clear duties and responsibilities so as to ensure the effectiveness of energy reduction management work.

Sinofert and its subsidiaries have signed the HSE commitment letter and energy reduction letter of responsibility, implementing clear goals and tasks on emission reduction and energy reduction targets. Including the completion status of our energy reduction targets as one of the aspects to assess each subsidiary's performance, we have strengthened our monitoring efforts, carrying out examinations for each grade levels and implementing rewards and punishments. Through strengthening the promotional education towards our employees, we advocate an energy saving environmentally friendly idea, increasing all employee's energy saving awareness. The Company implements 6S+TPM management. As we regulate our operations, we have also standardized the practices of using the Company's electrical appliances, resulting in a more efficient use of energy.

Through establishing a comprehensive energy management system, the Company has strengthened energy management and regulated the use of energy. We have established policy documents such as "Sinofert Measures for Assessment of Energy Conservation and Emission Reduction", "Sinochem Group Measures for Energy and Water Saving", "Instructions on Reporting Energy Saving and Environmental Protection Information Statistics", and "Instructions on Energy Resources Management", hoping to realize a reduction in energy through managing the energy usage process.

Our energy-consuming units are equipped with energy measuring devices. The Company has established an energy auditing position, summarizing the energy usage record and maintaining accounts according to the "Sinochem Group HSE Information Management System", also regular analytical work has been carried out on energy data regularly. We have also frequently organized trainings for our energy management employees to enhance their competence.

To achieve our energy reduction targets, Sinofert and its subsidiaries in light of the Company's actual operation considerations have developed the following energy reduction measures.

Table 4: Different region's energy reduction measures

Through implementing the above measures, the total energy consumption in 2016 significantly decreased by 40.2%. In the meantime, the usage of coal and electricity decreased by 59.64% and 30.84% respectively, which effectively reduced the Company's carbon footprint. Total energy consumption per output value fell from 1.50 in 2015 to 1.16 in 2016, showing Sinofert's determination to promote clean production.

Table 5: Energy consumption of 2014-2016

Besides measures in energy reduction, the energy management leading group also carried out measures on cutting water usage, including pipeline transformation, and device insulation carried out by Sinochem Fuling. Through transforming some of the pumps, increasing pipelines and valves etc., annual water usage amounted to 240,000 tonnes. With the complement of other water saving projects, the new water consumption usage in 2016 decreased by 1,877,714.6 tonnes, compared to that of 2015.

Table 6: Water usage of 2014-2016

Sinofert aims to manufacture high quality fertilizers so as to boost China's agricultural development and provide a stable food supply. Nevertheless, inappropriate or over use of fertilizers leads to environmental problems such as water source pollution, soil ecology destruction and soil depletion. In order to educate farmers about the proper use of fertilizers, Sinofert apart from selling fertilizers, offers farmers soil testing formulas and uses science to direct farmers to choose the appropriate fertilizer products, enhancing the efficiency of using fertilizers and reducing the impact on the environment and ecology.

The soil testing formula prescribes the most suitable amount of fertilizers to be used according to crop fertilizing patterns, soil fertility and fertilizer response. Fertilizers are applied scientifically under the guidance of agricultural scientific personnel. The formulated fertilizer and fertilizer technology can regulate and solve the conflicts between soil fertility and crop nutrition, providing specific nutrients for the crops. As a result, the soil testing formula enhances the efficiency of fertilizers and reduces the amount of fertilizers used. Other than that, it improves the quality and quantity of crops produced, lowers the cost and labour of the farmers, ultimately achieving the aim to reduce costs and increase revenue.