(1) The risk associated with impacts arising from periodic fluctuation of macro economy

The Company’s businesses　are closely related　to the development　 of macro-economy,　especially for infrastructure　design, infrastructure　construction  and heavy machinery manufacturing  business, of which the industry development　is subject to the effects of macroeconomic　factors including investment　scale of social fixed assets and the process of urbanisation. In recent years, the national economy has kept a rapid growth and the global economy has gradually come out of the shadow of financial crisis and is in the process of recovering. However, the possibility of periodic fluctuations of macro-economy cannot be eliminated. If the global macro-economy is in the down cycle or the national economic growth speed significantly slows down, there will be a gliding risk in the operation performance of the Company. To eliminate the impact of macroeconomic cycle fluctuations, the Company is stepping up business restructuring with the aim of changing into an urban complex developer and operator, a characteristic real estate developer and a general infrastructural investor through heavy investment. Uncertain investment risks may appear in business restructuring.

 (2) The risk associated with volatile raw material price

Business development of the Company relies on timely procurement of raw materials (e.g. steel, cement, fuel, sand and gravel and bitumen, etc. which shall meet the quality and quantity requirements of the Company) at reasonable prices. However, these materials may have volatile prices to some extent. The Company rarely concludes long-term supply contract or guarantee with suppliers due to the business line it is dedicated to. Instead, the Company concludes contracts with the suppliers in respect of specific project with period ranging from 1 year to 5 years. And in most cases, the contracts that are concluded between the Company and the owners fall into the category of fixed price contract. Although some of the contracts specify that in case price inflation of the raw materials goes beyond expectation, the clients shall make up for the extra costs. However, the extra costs caused by short supply of raw materials and significant price soaring that cannot be made up by the clients completely will transfer to us and bring profit shrinkage or loss to the Company.

(3) The risks associated with overseas markets and changes in international economy and political situation

The Company conducts its business in over 120 countries and regions, with major overseas business in Africa, Southeast Asia, Eurasia, Latin America and Middle East. Due to various factors, the political and economic conditions in Africa, Eurasia and Middle East are usually subject to uncertainty.　If the political and economic　conditions  of such countries　and regions change adversely, or there　are frictions or disputes　in the diplomatic　and economic  relations　among　the PRC government　and governments　of such relevant countries and regions, the overseas business of the Company in such countries and regions would be exposed to certain risks. If one of the situations abovementioned occurs, it will influence the business in an adverse manner, which will further affect businesses overseas and the profits of the Company.

(4)The risks associated with fluctuations in interest rate and exchange rate

The risks associated with fluctuations in interest rate are mainly from interest bearing liabilities, such as loans and bonds payable. Loans with floating interest rate expose the Company to cash flow interest risk, while loans with fixed interest rate expose the Company to fair value interest risk. Both in the past and in the future, the Company lays emphasis on the international market and large-scale overseas businesses enable massive foreign exchange receipts and payments. The foreign currencies that are mainly involved in the businesses are U.S. Dollar, Euro, Japanese Yen and Hongkong Dollar and the exchange rate volatility between them and Renminbi may result in increased costs or decreased earnings, which will further influence the profits of the Company.

(5) The risks associated with price fluctuation in securities market

The equity instruments of the Company can be categorized as financial assets available for sale and other financial assets measured at fair value through current profit and loss. Since these financial assets should be presented by fair value, the Company will be affected by price fluctuation in securities market. To make the price risks arising from equity securities investments manageable, the Company disperses investments portfolio to spread the risks. Thus, the Company disperses the portfolio into different areas according to the established line.

(6) The risks arising from force majeure