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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 20-F





(Mark One)

| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2012

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Date of event requiring this shell company report

For
the Transition period from  to

Commission file number: 001-12126





CHINA
ENTERPRISES LIMITED

(Exact Name of Registrant as Specified in its Charter)





Bermuda

(Jurisdiction of
Incorporation or Organization)

25th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong

(Address of Principal Executive Office)

Telephone: (852) 3151-0300 Fax: (852) 2372-0620

(Name, Telephone, E-mail/and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which Registered
|N/A                 |  | N/A                                      

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common stock, par value $0.01 per share

(Title of Class)

Securities for which there is a reporting obligation pursuant to section l5(d) of the Act:

None

(Title of Class)







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Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of
the close of the period covered by the Annual Report.

Common Stock: 9,017,310 shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     ̈  Yes    x  No

If this
is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.     ̈  Yes    x  No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required file such reports), and (2) has been subject to such filing requirements for the past 90 days.     ̈  Yes    x  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     ̈  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (check one):



|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated filer   ̈ |  | Accelerated filer   ̈ |  | Non-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP  x |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board   ̈ |  | Other   ̈

If Other has been checked in response to the previous question, indicate by check mark which financial statement
item the registrant has elected to follow.   ̈    Item 17   ̈    Item 18

If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   ̈    Yes    x  No









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TABLE OF CONTENTS



|                                                                                     |  |  |    | 
|------------------------------------------------------------------------------------ |  |  | -- | 
|PART I                                                                               |  |  |    | 
|                                                                                     | 
|Item 1 Identity of Directors, Senior Management and Advisers                         |  |  | 4  | 
|                                                                                     | 
|Item 2 Offer Statistics and Expected Timetable                                       |  |  | 4  | 
|                                                                                     | 
|Item 3 Key Information                                                               |  |  | 4  | 
|                                                                                     | 
|Item 4 Information on the Company                                                    |  |  | 13 | 
|                                                                                     | 
|Item 5 Operating and Financial Review and Prospects                                  |  |  | 17 | 
|                                                                                     | 
|Item 6 Directors, Senior Management and Employees                                    |  |  | 21 | 
|                                                                                     | 
|Item 7 Major Shareholders and Related Party Transactions                             |  |  | 24 | 
|                                                                                     | 
|Item 8 Financial Information                                                         |  |  | 27 | 
|                                                                                     | 
|Item 9 The Listing                                                                   |  |  | 28 | 
|                                                                                     | 
|Item 10 Additional Information                                                       |  |  | 29 | 
|                                                                                     | 
|Item 11 Quantitative and Qualitative Disclosure about Market Risk                    |  |  | 35 | 
|                                                                                     | 
|Item 12 Description of Securities Other than Equity Securities                       |  |  | 36 | 
|                                                                                     | 
|PART II                                                                              |  |  |    | 
|                                                                                     | 
|Item 13 Defaults, Dividend Arrearages and Delinquencies                              |  |  | 36 | 
|                                                                                     | 
|Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds |  |  | 37 | 
|                                                                                     | 
|Item 15 Controls and Procedures                                                      |  |  | 37 | 
|                                                                                     | 
|Item 16A Audit Committee Financial Expert                                            |  |  | 38 | 
|                                                                                     | 
|Item 16B Code of Ethics                                                              |  |  | 38 | 
|                                                                                     | 
|Item 16C Principal Accountant Fees and Services                                      |  |  | 38 | 
|                                                                                     | 
|Item 16D Exemptions from the Listing Standards for Audit Committees                  |  |  | 38 | 
|                                                                                     | 
|Item 16E Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |  |  | 38 | 
|                                                                                     | 
|Item 16F Change in Registrants Certifying Accountant                                |  |  | 38 | 
|                                                                                     | 
|Item 16G Corporate Governance                                                        |  |  | 39 | 
|                                                                                     | 
|PART III                                                                             |  |  |    | 
|                                                                                     | 
|Item 17 Financial Statements                                                         |  |  | 39 | 
|                                                                                     | 
|Item 18 Financial Statements                                                         |  |  | 39 | 
|                                                                                     | 
|Item 19 Exhibits                                                                     |  |  |    | 
|                                                                                     | 
|Exhibit 8                                                                            |  |  |    | 
|Exhibit 12(1)                                                                        |  |  |    | 
|Exhibit 12(2)                                                                        |  |  |    | 
|Exhibit 13(1)                                                                        |  |  |    | 
|Exhibit 13(2)                                                                        |  |  |    | 
|Exhibit 14(1)                                                                        |  |  |    | 



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PART I

This Annual Report for China Enterprises Limited (referred to in this report as the Company or we and which terms
shall include, when the context so requires, the subsidiaries of the Company during the applicable period) should be read in conjunction with the consolidated financial statements and accompanying notes included in this report.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F for the year ended December 31, 2012 contains certain forward-looking statements within the meaning of
Section 21E of the Securities Act of 1934, as amended. These forward-looking statements are, by their nature, subject to significant risks and uncertainties, and include, without limitation, statements relating to:



| |  |  | our business, operating and expansion strategy;
| | - |  | -----------------------------------------------



| |  |  | our ability to finance our business strategy;
| | - |  | ---------------------------------------------



| |  |  | our future business conditions and financial results; and
| | - |  | ---------------------------------------------------------



| |  |  | future developments in the economic and political environment in China.
| | - |  | -----------------------------------------------------------------------

The words
anticipate, believe, estimate, expect, intend, plan, may and similar expressions, as they relate to us, are intended to identify certain of such forward-looking
statements. We do not intend to update these forward-looking statements except as required by the U.S. securities laws.

These
forward-looking statements reflect our current views with respect to future events and are not a guarantee of future performance. They are based upon various assumptions, many of which are based, in turn, upon further assumptions, including, without
limitation, managements examination of historical operating trends, data contained in the Companys records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made,
because these assumptions are inherently subject to significant uncertainties and contingencies that are difficult or impossible to predict and are beyond the Companys control, there can be no assurance that the company will achieve or
accomplish these expectations or beliefs.

In addition to the factors and matters discussed elsewhere herein, there are a number of
important factors that, in the Companys view, could cause actual results to differ materially from those discussed in the forward-looking statements, including, without limitation, the strength of world economies and currencies, general market
conditions, changes in general domestic and international political conditions, and other matters described in the Risk Factors included in this Annual Report or otherwise described in the reports the Company files with the Securities
and Exchange Commission.

EXCHANGE RATE INFORMATION

Unless otherwise specified, all references in this document to U.S. Dollars, Dollars, US$ or $
are to United States dollars; all references to Renminbi or Rmb are to Renminbi, which is the legal tender currency of the Peoples Republic of China, or the PRC or China; and all references to
HK$ are to Hong Kong dollars, which is the legal tender currency of the Hong Kong Special Administrative Region, or Hong Kong. Where made for the convenience of the reader, conversions of amounts from Renminbi to U.S. Dollars
have been made in this document at US$1.00 to Rmb6.2301, the noon buying rate from the Federal Reserve Bank of New York on December 31, 2012. No representation is made that the Renminbi amounts could have been, or could be, converted into U.S.
Dollars at that or at any other rate. See section Exchange Rate Information under Item 3. Key Information in this Annual Report for more details on the exchange rate between Renminbi and US Dollars.

References and statements contained in this document regarding China do not apply to Taiwan or the Republic of China.



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|ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|------- | -----------------------------------------------------

Not applicable.



|ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE
|------- | ---------------------------------------

Not applicable.



|ITEM 3. | KEY INFORMATION
|------- | ---------------

A. SELECTED FINANCIAL DATA

The following table represents the selected consolidated financial information of the Company as of and for the years ended December 31,
2008, 2009, 2010, 2011 and 2012. The Consolidated Statements of Operations Data for each of the three years in the period ended December 31, 2012 and the Consolidated Balance Sheet Data as of December 31, 2011 and 2012 has been derived
from the audited consolidated financial statements, or the Consolidated Financial Statements, included in Item 17 Financial Statements of this Annual Report. The Consolidated Statements of Operations Data for the years
ended December 31, 2008 and 2009 and the Consolidated Balance Sheet Data as of December 31, 2008, 2009 and 2010, as set forth below, have been derived from audited consolidated financial statements not included in this Annual Report. The
Consolidated Financial Statements have been prepared in conformity with generally accepted accounting principles in the United States, or U.S. GAAP. The selected financial information should be read in conjunction with, and is qualified in its
entirety by reference to, the respective consolidated financial statements and their accompanying notes.

Selected Consolidated
Financial Information of the Company

(Amounts in thousands, except number of shares, their par values and per share data)



|                                                        |  |                         |           |   |      |  |           |      |  |  |           |   |  |      |           |   |     |  |           |   |  |  |           |  
|------------------------------------------------------- |  | ----------------------- | --------- | - | ---- |  | --------- | ---- |  |  | --------- | - |  | ---- | --------- | - | --- |  | --------- | - |  |  | --------- | -
|                                                        |  | Year ended December 31, |          
|                                                        |  | 2008                    |           |   | 2009 |  |           | 2010 |  |  | 2011 (b)  |   |  | 2012 |          
|                                                        |  | Rmb                     |           |   | Rmb  |  |           | Rmb  |  |  | Rmb       |   |  | Rmb  |           |   | US$ | 
|Consolidated Statements of Operations Data:             |  |                         |           |   |      |  |           |      |  |  |           |   |  |      |           |   |     |  |           |   |  |  |           |  
|Revenues                                                |  |                         |          |   |      |  |          |      |  |  |          |   |  |      |          |   |     |  |          |   |  |  |          |  
|Loss from operations                                    |  |                         | (5,770    | ) |      |  | (2,819    | )    |  |  | (3,316    | ) |  |      | (4,186    | ) |     |  | (1,708    | ) |  |  | (274      | )
|Net (loss) income                                       |  |                         | (71,441   | ) |      |  | 246,951   |      |  |  | 168,029   |   |  |      | (274,955  | ) |     |  | 2,931     |   |  |  | 470       |  
|Basic and diluted (loss) earnings per common share (a)  |  |                         | (7.92     | ) |      |  | 27.39     |      |  |  | 18.63     |   |  |      | (30.49    | ) |     |  | 0.33      |   |  |  | 0.05      |  
|Weighted-average number of common share outstanding (a) |  |                         | 9,017,310 |   |      |  | 9,017,310 |      |  |  | 9,017,310 |   |  |      | 9,017,310 |   |     |  | 9,017,310 |   |  |  | 9,017,310 |  
|Consolidated Balance Sheets Data :                      |  |                         |           |   |      |  |           |      |  |  |           |   |  |      |           |   |     |  |           |   |  |  |           |  
|Total assets                                            |  |                         | 677,945   |   |      |  | 903,905   |      |  |  | 1,076,077 |   |  |      | 721,172   |   |     |  | 701,312   |   |  |  | 112,569   |  
|Shareholders equity (Net assets)                       |  |                         | 458,805   |   |      |  | 705,411   |      |  |  | 877,567   |   |  |      | 597,752   |   |     |  | 597,135   |   |  |  | 95,847    |  
|Common stock  par value US$0.01 per share              |  |                         | 770       |   |      |  | 770       |      |  |  | 770       |   |  |      | 770       |   |     |  | 770       |   |  |  | 124       |  

Note:



|(a) | The calculation of basic and diluted (loss) earnings per common share from 2008 to 2012 is based on the weighted-average number of shares of common stock outstanding during each of the years ended December 31,
2008 to 2012. The number of shares of common stock outstanding for 2008 to 2012 was 9,017,310. There were no dilutive securities issued by the Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | In November 2011, the Company disposed of all of its interest in Hangzhou Zhongce Rubber Co., Ltd or Hangzhou Zhongce and it ceased to be an equity method affiliate of the Company thereafter.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Exchange Rate Information

The Consolidated Financial Statements are published and denominated in Renminbi. Where made for the convenience of the reader, conversion of
amounts from Renminbi to U.S. Dollars has been made in this document at US$1.00 to Rmb6.2301, the noon buying rate certified by the Federal Reserve Bank of New York on December 31, 2012. For the purpose of this Annual Report, the latest
practicable date with respect to share and certain exchange rate information is February 27, 2015. As of February 27, 2015, the noon buying rate certified by the Federal Reserve Bank of New York was US$1.00 to Rmb6.2695. No representation
is made that the Renminbi amounts could have been, or could be, converted into U.S. Dollars at that or at any other rate.

The following
table sets forth the average unified exchange rates for each of the years ended December 31, 2008, 2009, 2010, 2011 and 2012:



|                                                                                                                       |  |                         |      |  |      |  |      |      |  |  |      |  |  |      |      |  |  |  |      | 
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ---- |  | ---- |  | ---- | ---- |  |  | ---- |  |  | ---- | ---- |  |  |  | ---- | 
|                                                                                                                       |  | Year Ended December 31, |     
|                                                                                                                       |  | 2008                    |      |  | 2009 |  |      | 2010 |  |  | 2011 |  |  | 2012 |     
|(Rmb equivalent of US$1.00)                                                                                            |  | Rmb                     |      |  | Rmb  |  |      | Rmb  |  |  | Rmb  |  |  | Rmb  |     
|At unified exchange rate                                                                                               |  |                         |      |  |      |  |      |      |  |  |      |  |  |      |      |  |  |  |      | 
|- average rate calculated by using the average of the exchange rates on the last day of each month during each period. |  |                         | 6.93 |  |      |  | 6.83 |      |  |  | 6.76 |  |  |      | 6.45 |  |  |  | 6.31 | 

The following table sets forth the high and low exchange rates for each month during the previous six months:



|                            |  |                          |      |  |     |  |      | 
|--------------------------- |  | ------------------------ | ---- |  | --- |  | ---- | 
|                            |  | At Unified Exchange Rate |     
|(Rmb equivalent of US$1.00) |  | High                     |      |  | Low | 
|February 28, 2015           |  |                          | 6.27 |  |     |  | 6.24 | 
|January 31, 2015            |  |                          | 6.28 |  |     |  | 6.20 | 
|December 31, 2014           |  |                          | 6.23 |  |     |  | 6.15 | 
|November 30, 2014           |  |                          | 6.16 |  |     |  | 6.11 | 
|October 31, 2014            |  |                          | 6.15 |  |     |  | 6.11 | 
|September 30, 2014          |  |                          | 6.15 |  |     |  | 6.13 | 

B. CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C. REASONS
FOR THE OFFER AND PROCEEDS

Not applicable.



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D. RISK FACTORS

Investing in our shares involves various risks, including the risks described below. You should carefully consider the following risks and the
other information contained in this Annual Report before investing in our shares. Additional risks not currently known to us or that we currently believe are immaterial also may impair our business operations, financial condition and our liquidity.

Risks Related to Our Business

AS A RESULT OF CHANGES IN THE COMPANYS ASSETS AND SOURCES OF INCOME, THE COMPANY MAY BE AN INVESTMENT COMPANY FOR PURPOSES OF THE
UNITED STATES INVESTMENT COMPANY ACT OF 1940

While the Company believes that in the past, through its subsidiaries and affiliates,
it has actively engaged in operating businesses and did not meet the definition of an investment company for purposes of the United States Investment Company Act of 1940, or the 1940 Act, depending on the composition and valuation of the
Companys assets and the sources of the Companys income from time to time, including after the consummation of the transactions in 2012 to 2014 described in Item 4.A., History and Development of the Company, the Company may fall
within the technical definition of the term investment company for purposes of the 1940 Act. The Company is not registered, nor is it eligible to register under the 1940 Act. As a result, if the Company is deemed to be an investment
company under the 1940 Act, the Companys operations and results may be negatively impacted, including among other possible effects, so long as the Company is an investment company, it would neither be able to raise capital through the offer
and sale of its securities in the United States nor to conduct business in the United States. The Company may be unable to continue operating as it currently does and might need to acquire or sell assets that it would not otherwise acquire or sell
in order to avoid continuing to be deemed an investment company as defined under the 1940 Act.

THE COMPANY MAY NOT BE
ABLE TO SUCCESSFULLY IMPLEMENT ITS BUSINESS STRATEGY, IN WHICH CASE ITS BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION WOULD SUFFER

During the past few years, the Company diversified outside of tire manufacturing. In addition, the Company has disposed of certain operations
that it deemed to be underperforming. During 2003, the Company reduced its interest in Hangzhou Zhongce from a majority to a minority position (from 51% interest to 26% interest). During 2007, following the purchase and disposal of certain shares of
Rosedale, the interest of Rosedale held by the Company was diluted and was accounted for as trading securities of the Company thereafter. While a key part of the Companys business strategy is to expand through acquiring new businesses and
business lines and the Company has been actively seeking new opportunities, its results have been driven almost entirely by its affiliate Hangzhou Zhongce (which has been accounted for as an equity method affiliate in the preparation of the
Companys financial statements). In November 2011, the Company disposed of all of its interest in Hangzhou Zhongce and it ceased to be an equity method affiliate of the Company. In addition, all of the subsidiaries of the Company were inactive
during fiscal years 2011 and 2012.

Despite the Companys efforts to identify new investments, it has had limited success in doing so
and, if it does identify new investments, it may not be able to consummate them. Even if the Company successfully identifies and consummates new investments, the acquisition of new businesses and business lines carries substantial risk and
uncertainties. Depending on the specific acquisition, there may be risks relating to the acquired business itself, risks relating to the industry in which the business operates and risks relating to the Company itself.

THE COMPANY MAY NOT BE ABLE TO FINANCE ACQUISITIONS, STRATEGIC INVESTMENTS OR OTHER EXPANSIONS OR MAY INCUR FINANCIAL OBLIGATIONS OR
LIABILITIES IN CONNECTION WITH ANY ACQUISITION OR EXPANSION

Although as of December 31, 2012, the Company had a strong cash
position, the Company may experience difficulty in funding acquisitions, investments or expansion. The Company may fund any such activities through bank loans or other debt financing and could incur an increase in debt or other liabilities in
connection with any acquisitions, strategic investments or other expansions.



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FUTURE ACQUISITIONS OR STRATEGIC INVESTMENTS MAY NOT BE SUCCESSFUL AND MAY HARM OUR
OPERATING RESULTS

Selective acquisitions or strategic investments form a large part of our strategy to further expand our
business. If we are presented with appropriate opportunities, we may acquire or invest in other companies, ventures or businesses. Future acquisitions and the subsequent integration of new companies into ours would require significant attention from
our management. Potential problems encountered by each organization during mergers and acquisitions would be unique, posing additional risks to the company. Future acquisitions or investments would expose us to potential risks, including risks
associated with the assimilation of new operations, and could have a material adverse effect on our business and financial results because of possible charges for purchased technology, restructuring or impairment charges related to goodwill or
amortization expenses associated with intangible assets; potential increases in our expenses and working capital requirements and the incurrence of debt and contingent liabilities; diversion or our capital and managements attention to other
business concerns; risks of entering markets or geographic areas in which we have limited prior experience; or potential loss of key employees of acquired organizations or inability to hire key employees necessary for expansion.

DIVERSIFICATION MAY RESULT IN LOWERED RESPONSIVENESS TO CYCLICAL CHANGES OF DIFFERENT BUSINESSES

Any diversification of the Companys businesses, including through any investments in other businesses will result in assets, resources
and management being committed or allocated to businesses in different fields. As a result, the Companys flexibility in responding to seasonal changes or periodic fluctuations in the business cycle in a particular business operation may be
limited.

CHANGES IN COMPOSITION OF THE COMPANYS ASSETS LIKELY RESULTED IN THE COMPANY BEING DEEMED A PASSIVE FOREIGN
INVESTMENT COMPANY WHICH COULD HAVE A NEGATIVE IMPACT ON U.S. HOLDERS

U.S. investors in the Companys common stock
should be aware that the Company believes it would be classified as a PFIC during the tax year ended December 31, 2012, and based on current business plans and financial expectations, the Company believes that it may be a PFIC in subsequent tax
years. If the Company is a PFIC for any year during a U.S. shareholders holding period, then such U.S. shareholder generally will be required to treat any gain realized upon a disposition of the Companys common stock, or any so-called
excess distribution received on such common stock, as ordinary income, and to pay an interest charge on a portion of such gain or distributions, unless the shareholder makes a timely and effective qualified electing fund
election (QEF Election) with respect to such common stock. A U.S. shareholder who makes a QEF Election generally must report on a current basis its share of the Companys net capital gain and ordinary earnings for any year in which
the Company is a PFIC, whether or not the Company distributes any amounts to its shareholders. However, U.S. shareholders should be aware that the Company did not satisfy record keeping requirements that apply to a qualified electing fund for its
tax year ended December 31, 2012 and there can be no assurance that the Company will in the future satisfy record keeping requirements that apply to a qualified electing fund, or that the Company will supply U.S. shareholders with information
that such U.S. shareholders are required to report under the QEF Election rules, in the event that the Company is a PFIC and a U.S. shareholder wishes to make a QEF Election. Thus, U.S. shareholders may not be able to make a QEF Election with
respect to their Company common stock. This paragraph is qualified in its entirety by the discussion below under the heading TaxationCertain Material United States Federal Income Tax Consequences. Each U.S. shareholder should
consult its own tax advisor regarding the PFIC rules and the U.S. federal income tax consequences of the acquisition, ownership, and disposition of the Companys common stock.

CHANGES IN ACCOUNTING STANDARDS AND TAXATION REQUIREMENTS COULD AFFECT OUR FINANCIAL RESULTS

New accounting standards or pronouncements that may become applicable to us from time to time, or changes in the interpretation of existing
standards and pronouncements, could have a significant effect on our reported results for the affected periods. We also expect to become subject to income tax in jurisdictions in which we expect to commence generating revenues. Increases in income
tax rates could reduce our after-tax income from affected jurisdictions, while increases in indirect taxes could affect our financial results.

FAILURE OF INFORMATION TECHNOLOGY COULD HAVE A NEGATIVE IMPACT ON OUR OPERATIONS

Growing standardization, more reliance on global systems, information technology services and increased regulations lead to a risk that our
information technology systems may fail. This could affect the Companys operational performance and financial position.



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OUR OPERATIONS, ASSETS AND STAFF CAN BE EXPOSED TO RISKS RELATED TO EVENTS OF AN
EXCEPTIONAL NATURE

The Company, including its assets and staff, could be exposed to risks related to events of an exceptional
nature such as, but not limited to, severe weather, natural disasters, terrorist attacks, political unrest and accidents. Such events could have a significant effect on our financial condition, results of operations and cash flows.

FAILURE TO ESTABLISH AND MAINTAIN EFFECTIVE INTERNAL CONTROLS OVER FINANCIAL REPORTING COULD HAVE A MATERIAL ADVERSE EFFECT ON THE
ACCURACY IN REPORTING OUR FINANCIAL RESULTS OR PREVENTING FRAUD

Undetected internal control weaknesses or controls that function
ineffectively represent a risk of loss or financial misstatement. Internal control over financial reporting may not prevent or detect misstatements because of inherent limitations, including the possibility of human error, the circumvention or
overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. If the Company fails to maintain the adequacy of its
internal controls, including any failure to implement required new or improved controls, or if it experiences difficulties in the implementation of internal controls, the Companys business and operating results could be harmed, and it could
fail to meet its reporting obligations.

We are subject to reporting obligations under the U.S. securities laws. The Securities and
Exchange Commission, or the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, adopted rules requiring every public company to include a management report on such companys internal control over
financial reporting in its Annual Report that contains managements assessment of the effectiveness of the Companys internal control over financial reporting.

Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important in helping prevent
financial fraud. If we are not able to provide reliable financial reports on a timely basis or prevent financial fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and
the trading price of our stock could drop significantly.



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Risks for Doing Business in China

THE COMPANYS BUSINESS FOCUS ON THE GREATER CHINA REGION SUBJECTS THE COMPANY AND ITS BUSINESS TO THE POLITICAL, ECONOMIC AND OTHER
DEVELOPMENTS IN THE REGION

As a result of the Companys traditional business focus on the Greater China Region, the
Companys business and its financial and operating results may be affected by significant political, economic, social and cultural developments in the region. A substantial portion of the Companys investment opportunities, major
businesses of which are located in China. These businesses are dependent in large part on the performance of the Chinese economy and Chinese government policy. As a result, the future financial condition and results of operations of the Company
could be adversely affected by slowdowns in the Chinese economy, Chinese macroeconomic policies that de-emphasize the development of industries that utilize products or services of the Company or other governmental policies, including changes in
laws, regulations or the interpretation thereof; confiscatory taxation; restrictions on currency conversion, imports or sources of supplies; or the expropriation or nationalization of private enterprises. Any measures or actions taken by the Chinese
government to control industries that utilize products or services of the Company could restrict their business operations and adversely affect the financial positions of the Company.

Although the Company believes that the economic reforms and macroeconomic policies and measures adopted by the Chinese government will
continue to have a positive effect on economic development in China and that the Company will continue to benefit from these policies and measures, there is no assurance that the government will continue to pursue such policies or that such policies
may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting Chinas political, economic and social life.

In addition, the Companys financial results are significantly dependent on the economy in the region. The economy of the Greater China
Region differs significantly from the economies of the United States and Western Europe in such respects as structure, level of development, growth rate, capital reinvestment, resource allocation, self-sufficiency, rate of inflation and balance of
payments position, among others. Furthermore, the recent global economic downturn has had a significant impact on the regions economic growth as it is primarily an export-oriented economy. Future adverse economic factors or changes in the
policies of the Chinese government could have a material adverse effect on the overall economic growth of China. These developments could adversely affect the financial condition, results of operations and business of the Company by reducing the
demand for the products and services of the Company.

As a member of the World Trade Organization, Chinas economic activity is
expected to become more and more export driven and Chinas internal market is expected to see more competition through imports. The expected change in economic activity in China and the Greater China Region and a greater interdependence of the
Chinese economy on the general world economy as a result of such changes could also impact the Companys financial results.

RESTRICTIONS ON FOREIGN CURRENCY EXCHANGE MAY LIMIT OUR ABILITY TO RECEIVE AND USE OUR RESOURCES EFFECTIVELY

Any future restrictions on currency exchanges may limit our ability to use resources generated in Renminbi to fund our business activities
outside China or other payments in Hong Kong dollars or other foreign currencies. Although the PRC government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions
still remain, including primarily the restriction that foreign invested enterprises may only buy, sell or remit foreign currencies at those banks authorized to conduct foreign exchange business after providing valid commercial documents. In
addition, remittance of foreign currencies abroad and conversion of Renminbi for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate
foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi, especially with respect to foreign exchange
transactions.



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FLUCTUATIONS IN THE VALUE OF THE RENMINBI COULD NEGATIVELY IMPACT OUR RESULTS OF OPERATIONS

Our reporting currency is the Renminbi as a substantial portion of our investments are denominated in Renminbi. Our remaining
assets and liabilities and all of our operating expenses are denominated in Hong Kong dollars. As a result, we may be exposed to foreign exchange risk, and our results of operations may be negatively impacted by fluctuations in the exchange rate of
Renminbi against other currencies. As our major assets and liabilities comprise a mixture of items that are denominated in Renminbi and Hong Kong dollars, our business and operating results may be materially affected in the event of a severe
increase or decrease in the value of the Renminbi against other currencies.

The value of the Renminbi is subject to changes in
Chinas governmental policies and to international economic and political developments. Since January 1, 1994, the PRC government has used a unitary managed floating rate system. Under this system, the Peoples Bank of China, or PBOC,
publishes a daily based exchange rate with reference primarily to the supply and demand of Renminbi against U.S. dollars and other foreign currencies in the market during the previous day. Authorized banks and financial institutions are allowed to
quote buy and sell rates for Renminbi within a specified band around the central banks daily exchange rate. On March 17, 2014, the PBOC announced that the RMB exchange rate flexibility increased to 2% in order to proceed further with
reform of the RMB exchange rate regime. These could result in a further and more significant floatation in the RMBs value against the U.S. Dollars.

While the international reaction to the Renminbi revaluation has generally been positive, there remains significant international pressure on
the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant fluctuation of the Renminbi against the U.S. dollar and other currencies.

NATURAL DISASTERS IN THE GREATER CHINA REGION COULD CAUSE SIGNIFICANT DAMAGE TO THE COMPANYS BUSINESS AND FINANCIAL RESULTS

The Companys investment opportunities are primarily located in the PRC. During the past several years, the PRC has
experienced natural disasters, including floods, fires and earthquakes. A disaster could cause significant damage to the facilities of potential investees, which may not be adequately covered by insurance proceeds and could materially and adversely
impact the business of the Company. The disaster relief and assistance in the PRC is not well developed and there can be no assurance that adequate government assistance would be available in the absence of sufficient insurance coverage.

OUR RESULTS COULD BE HARMED IF WE HAVE TO COMPLY WITH NEW ENVIRONMENTAL REGULATIONS

The operations of the Company could create environmentally sensitive waste depending on the nature of the operations of potential investees.
The general issue of the disposal of hazardous waste has received increasing attention from Chinese national and local governments and foreign governments and agencies and has been subject to increasing regulation. Currently, relevant Chinese
environmental protection laws and regulations impose fines on the discharge of waste materials and empower certain environmental authorities to close any facility that causes serious environmental problems. Although it has not been alleged by
Chinese government officials that the Company have violated any current environmental regulations, there is no assurance that the Chinese government will not amend its current environmental protection laws and regulations. Our financial results
could be materially and adversely affected if the Company was to increase expenditures to comply with environmental regulations affecting the operations of potential investees.

LEGAL SYSTEM DIFFERENCES BETWEEN THE GREATER CHINA REGION AND THE UNITED STATES OF AMERICA COULD IMPACT INVESTORS

Unlike common law systems in the western world, China has a civil law system based on written statutes and, therefore, decided legal cases are
without binding legal effect, although they are often followed by judges as guidance. As the Chinese legal system develops, the promulgation of new laws, changes to existing laws and the preemption of local regulations by national laws may adversely
affect the interests of foreign investors.



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YOU MAY HAVE DIFFICULTY ENFORCING JUDGMENTS AGAINST US.

We are a Bermuda holding company and all of our assets are located outside of the United States. Most of our current business is conducted in
Hong Kong and in the PRC. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons is located outside the United States. As a result,
it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against
us and our officers and directors whom are not residents in the United States.

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRMS AUDIT DOCUMENTATION RELATED TO THEIR AUDIT REPORTS INCLUDED IN THIS ANNUAL REPORT MAY BE LOCATED IN THE PEOPLES REPUBLIC OF CHINA. THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD CURRENTLY CANNOT INSPECT AUDIT DOCUMENTATION LOCATED
IN CHINA AND, AS SUCH, YOU MAY BE DEPRIVED OF THE BENEFITS OF SUCH INSPECTION

Our independent registered public accounting firms
that issue the audit reports included in our annual reports filed with the U.S. Securities and Exchange Commission, as auditors of companies that are traded publicly in the United States and a firm registered with the Public Company Accounting
Oversight Board (United States) (the PCAOB), are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the applicable laws of the United States and professional standards.
Because the audit documentation relating to our audits are located in the Peoples Republic of China, a jurisdiction where the PCAOB, notwithstanding the requirements of U.S. law, is currently unable to conduct inspections without the approval
of the Chinese authorities, such auditors, like other independent registered public accounting firms operating in China, are not currently inspected by the PCAOB. In May 2013, the PCAOB announced that it had entered into a Memorandum of
Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the
PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are
registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges.

Inspections of other firms that the PCAOB has
conducted outside of China have identified deficiencies in those firms audit procedures and quality control procedures, which may be addressed as part of the inspection process to improve future audit quality. The inability of PCAOB to conduct
inspections of independent registered public accounting firms operating in China makes it more difficult to evaluate the effectiveness of our auditors audit procedures or quality control procedures. As a result, investors may be deprived of
the benefits of PCAOB inspections.



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Risks Related to Our Capital Stock

LIMITED LIQUIDITY IN THE COMPANYS SECURITIES MAY MAKE IT DIFFICULT TO SELL SHARES

The public trading market for our common stock is limited. Beginning in November 2002, our common stock was traded on the OTCQB Securities
Market. The OTCQB Securities Market is an inter-dealer, over-the-counter market that provides significantly less liquidity than other markets. As a foreign private issuer whose business is substantially in China and other Asian markets, the Company
has less exposure in the U.S. capital markets than comparable U.S. issuers. In addition, the Company has a relatively small public float of its securities. These and other general economic, industry or Company factors may result in low trading
volumes or prices of the Companys securities. Accordingly, shareholders of the Company bear risks regarding the liquidity of the Companys shares and may not be able to sell shares in desired quantities, at desired times or desired
prices, or a combination thereof.

POSSIBLE VOLATILITY OF SHARE PRICES WORLDWIDE MAY HAVE SIGNIFICANT EFFECTS ON THE COMPANYS
SHARE PRICE

The trading price of the Companys shares has been and may continue to be subject to wide fluctuations. Capital
markets worldwide have generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the listed companies themselves. There can be no assurance that trading prices and
price earnings ratios previously experienced by the Companys common shares will be matched and maintained. Broad market and industry factors may adversely affect the market price of shares in the Company, regardless of its operating
performance.



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|ITEM 4. | INFORMATION ON THE COMPANY
|------- | --------------------------

A. HISTORY AND DEVELOPMENT OF THE COMPANY

The Company was incorporated as an exempted company under the laws of Bermuda on January 28, 1993. From July 15, 1993 to late 2002,
the Companys shares were listed on the New York Stock Exchange. On November 26, 2002, the Companys shares began trading on the OTCQB Securities Market in the United States. The legal name of the Company is China Enterprises
Limited and the Company is registered in Hong Kong under the commercial name of China Tire Holdings Limited due to local company registration considerations. The Company has historically been engaged in tire manufacturing and
trading and related businesses.

In 2001, the Company decided to reorganize its operations to improve its financial performance. The
Company began to dispose of loss-making subsidiaries and tried to diversify its business. In early 2002, the Company acquired a substantive equity interest of approximately 35% in Rosedale, which allowed it to diversify its business into the travel
industry. In fiscal year 2003, the Company further completed its disposals of its loss-making subsidiaries, Yinchuan CSI (Greatwall) Rubber Co., Limited, and the Companys remaining interests in Double Happiness Tyre Industries Corporation
Limited and ceased to account for the results of operations and the assets and liabilities of these subsidiaries from their respective disposal dates.

In order to realize part of its investment, the Company entered into a contract to sell a 25% interest in its subsidiary Hangzhou Zhongce, a
PRC company, on June 15, 2003. As a result, the Company reduced its interest in Hangzhou Zhongce from 51% to 26%. The sale was completed in September 2003 and Hangzhou Zhongce became an equity method affiliate of the Group thereafter.

During 2006 and 2007, the Companys interest in its affiliate Rosedale, decreased from 20.36% to 12.77% as a result of dilution caused by
capital raising activities of Rosedale and the disposal of Rosedale shares by the Company in the market. As a result of its decreased ownership of Rosedale, the Company began accounting for its remaining interest in Rosedale as trading securities
instead of as an interest in an affiliate company as it was in previous years.

The Company, through Manwide Holdings Limited, a then
direct wholly-owned subsidiary, entered into a conditional sale and purchase agreement dated June 16, 2004 with an independent third party, Shanghai Jiu Sheng Investment Limited, or Jiu Sheng, for the acquisition and further development of
Xiang Zhang Garden, a parcel of land containing a 24-story building under construction located in Shanghai, PRC. In June 2005, the Company commenced legal proceedings against Jiu Sheng, among other things, to demand that Jiu Sheng meet its
obligations under the two agreements related to the purchase of Xiang Zhang Garden and petitioned a PRC court for an injunction order to prevent Xiang Zhang Garden from being transferred to the secured creditors of Jiu Sheng and the main contractor.
In June 2006, the Peoples High Court of the City of Shanghai ruled in favor of the Company and ordered Jiu Sheng to continue fulfilling its obligations under the applicable agreements and to proceed with the transfer of legal title of
Xiang Zhang Garden to the Company. The judgment also required Jiu Sheng to pay Rmb5.9 million to the Company as compensation for the breach of the sale and purchase agreements. In August 2006, the Group petitioned the Peoples High
Court of Shanghai for a court execution order to enforce the June 2006 judgment against Jiu Sheng. In March 2008, the Group entered into a settlement agreement with Jiu Sheng whereby the Company disclaimed its rights in Xiang Zhang Garden in
exchange for a payment of Rmb75 million, which was received in April 2008. A gain of Rmb17 million has been recognized in the consolidated statement of operations for the year ended December 31, 2008.

In March 2008, Hanny Holdings Limited (a publicly listed company in Hong Kong), or Hanny, and certain of its subsidiaries entered into
conditional sale and purchase agreements with an independent third party whereby it disposed of a 29.2% interest in the Group for cash consideration of approximately Rmb142 million. The sale closed on May 8, 2008. Following this sale,
Hannys interest in the Company decreased from approximately 55.3% to 26.1% and the Company ceased to be a subsidiary of Hanny.

In
April 2008, the Company acquired 100% of the equity interests in Cosmos Regent Ltd, Cyber Generation Limited and Whole Good Limited, all of which are engaged in securities investment, from Hanny Magnetics (B.V.I.) Limited, a wholly owned
subsidiary of Hanny. Total consideration for the three companies was Rmb34,417,000, and the amount was settled through the cancellation of obligations from Hanny to the Company.

In April 2008, the Company entered into a Memorandum of Understanding to acquire a certain equity interest in a property investment
company for consideration of Rmb150 million. A refundable deposit of Rmb75 million was paid to the third party vendor pursuant to the Memorandum of Understanding during the year ended December 31, 2008 and recorded as a deposit paid
for the acquisition of investments for the years ended December 31, 2008 and 2009. The Memorandum of Understanding lapsed in June 2011. The deposit of Rmb67.5 million was refunded to the Company and the remaining Rmb7.5 million was charged
as an administrative charge in the year ended December 31, 2011.

In April 2009, X One Holdings Limited, or X One, an affiliate
of the Company, was dissolved pursuant to Section 291 of the Hong Kong Companies Ordinance.



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In its Report on Form 6-K filed with the Securities and Exchange Committee on November 21,
2011, the Company reported that it had entered into a definitive agreement with CZ Tire Holdings Limited, or CZ. The Agreement provided for the sale of all of the Companys ownership interests in Hangzhou Zhongce to CZ for RMB600 million or
approximately US$95.33 million in cash. The Company reported the closing of the transaction in its Report on Form 6-K filed with the Securities and Exchange Committee on November 28, 2011.

In its Report on Form 6-K filed with the Securities and Exchange Committee on October 4, 2012, the Company reported that its wholly owned
subsidiary, Wealth Faith Limited, or Wealth Faith had entered into a definitive agreement with Fortuneasy Limited, or Fortuneasy. The agreement provides for the purchase by Wealth Faith of 40% of the shares of Million Cube Limited, or Million Cube
from Fortuneasy. The total purchase price for the shares being acquired by Wealth Faith is HK$200 million or approximately US$25.6 million. The Company, through Wealth Faith, previously deposited HK$154.8 million or approximately Rmb127.3 million in
earnest money with Fortuneasy, which will be applied toward the purchase price. As provided in the agreement, Million Cube has acquired 45% of the issued share capital and corresponding shareholder loans of Paragon Winner Company Limited, or
Paragon. Paragon was formed to invest in a joint venture that has developed the Sanya Sun Valley Golf Resort in Yalong Bay, Sanya City, Peoples Republic of China and that is seeking to develop a related hotel and resort complex at such resort.
The closing of the transaction is subject to, among other things, the Company and Wealth Faith satisfactorily completing due diligence and the receipt of all necessary governmental and other consents. The parties to the transaction anticipate that
the transaction will close sometime in the first quarter of 2015.

Following the closing of the transaction and pursuant to the Agreement,
the Company will have the right to appoint one director to Million Cubes board of directors, in order to exercise influence over the financial and operating decisions of the golf resort business. The Company has continued to seek new strategic
investment opportunities in the PRC, including Hong Kong. Apart from the golf resort business, the Company is also looking at other potential investments and has a long term goal to build a platform of value-added and productive businesses under the
strategic direction of the Company whereby it can exercise significant influence over the financial and operating decisions of its investees, and then have a degree of responsibility for the return on its investments.

The Company is a holding company and had interests in a number of subsidiaries as of December 31, 2012. The principal interests of the
Company were as follows:



| |  |  | Cosmos Regent Ltd, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | Cyber Generation Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Great Windfall Agents Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Million Good Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Orion Tire Corporation, a U.S. corporation in which the Company has a 60% interest.
| | - |  | -----------------------------------------------------------------------------------



| |  |  | Orion (B.V.I.) Tire Corporation, a British Virgin Islands company in which the Company has a 60% interest.
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | Supreme Solutions Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Ventures Kingdom Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | Wealth Faith Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | Whole Good Limited, a British Virgin Islands company in which the Company has a 100% interest.
| | - |  | ----------------------------------------------------------------------------------------------

Additional information about the Company is available through the Internet at http://www.chinaenterpriseslimited.com. The principal place of
business and the executive offices of the Company are located at 25th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong and its telephone number is (852) 2372 0130.



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B. BUSINESS OVERVIEW

The financial results of the Company in fiscal years 2010 and 2011 were dependent on its equity share of the results from Hangzhou Zhongce,
which the Company disposed of in November 2011, as discussed above. All of the subsidiaries of the Company were inactive during fiscal years 2011 and 2012. The Company is actively seeking new investment opportunities.

Hangzhou Zhongce

Hangzhou Zhongce is incorporated in the Peoples Republic of China. Its principal subsidiaries are mainly engaged in the manufacture and
sale of rubber tires, tire rubber and carbon powder. Hangzhou Zhongce established Hangzhou Sunrise Rubber Co., Ltd with three other PRC enterprises in 1998 and acquired Hangzhou Fu Chun Jiang Chemical Industrial Co., Ltd in 1999, which manufactures
radial tire products and a number of raw materials including tire rubbers and carbon powder. In 2008, Hangzhou Zhongce incorporated a PRC subsidiary Zhongce Rubber Fu Yang Co., Ltd, which is engaged in the manufacture and sale of rubber tires. In
September 2003, the Company disposed of a portion of its interest in Hangzhou Zhongce and ceased to consolidate the results of Hangzhou Zhongce and its subsidiaries. As a result of that disposal, the Company held a 26% interest in Hangzhou
Zhongce, which was treated as an equity method affiliate of the Company for the years ended December 31, 2009 and 2010 and the first eleven months of 2011. In November 2011, the Company disposed of all of its interest in Hangzhou Zhongce and it
ceased to be an equity method affiliate of the Company.

Rosedale

Rosedale is an exempted company incorporated in Bermuda with limited liability. Its shares are listed on the HKSE. Its principal subsidiaries
are engaged in the business of hotel operation and trading of securities.

In 2002, the Company diversified into the travel business
through an investment in Rosedale. However, following the disposal of a significant portion of its equity interest during fiscal year 2007, the Companys equity interest in Rosedale decreased to 12.77% and was subsequently reclassified as
trading securities of the Company. As of December 31, 2012, the equity interest had further decreased to 7.40%.



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C. ORGANIZATIONAL STRUCTURE

As of December 31, 2012, the principal subsidiaries of the Company were:



|                                |  |               |  |                      |                    |  |                             |  |     |            |  |  |   | 
|------------------------------- |  | ------------- |  | -------------------- | ------------------ |  | --------------------------- |  | --- | ---------- |  |  | - | 
|                                |  | Country of    |  |                      |                    |  | CompanysOwnership Interest | 
|Consolidated Subsidiary         |  | Incorporation |  | Principal Activities |                    |  | Directly                    |  |     | Indirectly | 
|Cosmos Regent Ltd               |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Cyber Generation Limited        |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Great Windfall Agents Limited   |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Million Good Limited            |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Orion Tire Corporation          |  | USA           |  |                      | Investment holding |  |                             |  | 60  | %          |  |  |  | 
|Orion (B.V.I.) Tire Corporation |  | BVI           |  |                      | Investment holding |  |                             |  | 60  | %          |  |  |  | 
|Supreme Solution Limited        |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Ventures Kingdom Limited        |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Wealth Faith Limited            |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 
|Whole Good Limited              |  | BVI           |  |                      | Investment holding |  |                             |  | 100 | %          |  |  |  | 

D. PROPERTY, PLANT AND EQUIPMENT

The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. Only corporate administrative
matters are conducted at this office, through the Companys agent, MUFG Fund Services (Bermuda) Limited (formerly known as Butterfield Fulcrum Group (Bermuda) Limited.) The Companys principal executive office is located at 25th Floor,
Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong. The Company neither owns nor leases property in Bermuda or Hong Kong.

The
Company did not incur any principal capital expenditures, investment and divestitures over the last three years ended December 31, 2012.



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|ITEM 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------

Except for statements of historical facts,
this section contains forward-looking statements involving risks and uncertainties. You can identify these statements by forward-looking words including expect, anticipate, believe, seek,
estimate, intends, should or may. Forward-looking statements are not guarantees of our future performance or results and our actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set forth under the section of this Report entitled Item 3 Key Information  Risk Factors. This section should be read along with our Consolidated
Financial Statements included as Item 17 of this Report, including the accompanying notes, that are included in this Annual Report on Form 20-F. The following discussion of operating results and the financial review and prospects as well as our
consolidated financial statements have been presented and prepared in accordance with U.S. GAAP. The forward-looking statements in this Item 5 are not guarantees of future performance. They involve both risk and uncertainty. Several important
factors could cause our actual results to differ materially from those anticipated by these statements. Many of those factors are macroeconomic in nature and are, therefore, beyond the control of our management. Please see the Risk
Factors in this Annual Report for more details.

A. OPERATING RESULTS

Overview

After
disposal of all of its interest in the tire business in 2011 discussed above in History and Development of the Company, the Company is still actively looking for new investments. The PRC market continues to be the focus of world
industry, and the Company is confident in the PRC market and continues to explore appropriate investment projects to expand its business network in the PRC.

Critical Accounting Policies

The preparation of our financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and
judgments that affect our reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions based upon historical
experience and various other factors and circumstances. Management believes that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions under different future
circumstances. The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Companys consolidated financial statements. For further discussion of our significant accounting
policies, refer to Note 2  Summary of Significant Accounting Policies to the Consolidated Financial Statements included in Item 17  Financial Statements of this Annual Report.

Accounting Estimates

The
accounting estimates inherent in the preparation of the consolidated financial statements of the Company mainly include estimates associated with respect to collectability of receivables, impairment of deposits paid for acquisition of investments
and available-for-sale securities and valuation allowances of deferred tax assets. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, as well as current and expected
economic conditions. Additionally, the Company constantly re-evaluates these significant factors and makes adjustments where facts and circumstances dictate.

Income Taxes

The Company
records a valuation allowance to reduce its deferred tax assets to the amount that the Company believes is more likely than not to be realized. In the event the Company determines that it would be able to realize its deferred tax assets in the
future in excess of its recorded amount, an adjustment to the deferred tax asset would be made that would increase income in the period such determination was made. Likewise, should the Company determine that it would not be able to realize all or
part of its net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.



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Results of Operations: Fiscal year ended December 31, 2012 compared with fiscal year
ended December 31, 2011

The Company

For 2012, the Company recorded consolidated net income of Rmb2.9 million, or Rmb0.33 per share. By comparison, the net loss and the loss
per share in 2011 was Rmb275.0 million and Rmb30.49, respectively. The significant loss in fiscal year 2011 was primarily due to the loss on disposal of the Companys 26% interest in Hangzhou Zhongce of Rmb364.5 million.

The Rmb1.7 million loss from operating activities represented the administrative expenses incurred for the year ended December 31,
2012. General and administrative expenses were comprised of expenditures for personnel and administrative functions, including accounting, information technology, human resources, legal and administration. The general and administrative expenses in
2011 were Rmb4.2 million. Higher legal and professional fees were incurred in 2011 on the disposal of Hangzhou Zhongce.

Apart from the
general and administrative expenses of Rmb1.7 million, components of net profit of Rmb2.9 million for the year ended December 31, 2012 were interest income of Rmb0.2 million, realized gain recognized on disposal of securities of Rmb1.3 million
and unrealized gain recognized on trading securities of Rmb4.5 million, offset by interest expenses of Rmb0.9 million and an exchange loss of Rmb0.5 million.

Loss before income tax and equity in earnings from affiliates was Rmb401.3 million for the year ended December 31, 2011. Apart from the
general and administrative expenses of Rmb4.2 million, losses before income tax and equity in earnings from affiliates for the year ended December 31, 2011 were mainly comprised of loss on the disposal of the interest in Hangzhou Zhongce of
Rmb364.5 million, net unrealized loss on investments of Rmb27.1 million, an administrative charge on investment of Rmb7.5 million, an impairment loss recognized on available-for-sale investments of Rmb2.3 million and interest expenses of Rmb2.2
million, offset by net realized gains recognized on investments of Rmb4.4 million and interest income of Rmb1.5 million. In April 2008, we entered into a Memorandum of Understanding to acquire certain equity interest in a property investment
company for consideration of Rmb150 million. A refundable deposit of Rmb75 million was paid to the third party vendor pursuant to the Memorandum of Understanding during the year ended December 31, 2008. The Memorandum of Understanding
lapsed in June 2011. The deposit of Rmb67.5 million was refunded to us and the remaining Rmb7.5 million was charged as administrative charges in the year ended December 31, 2011. The net loss for fiscal year 2011, apart from the loss
before income tax and equity in earnings from affiliates of Rmb401.3 million, consisted mainly of the Companys share of net profit of Hangzhou Zhongce of Rmb157.7 million and income tax expense of Rmb31.4 million.

Results of Operations: Fiscal year ended December 31, 2011 compared with fiscal year ended December 31, 2010

The Company

For 2011, the
Company recorded a consolidated net loss of Rmb275.0 million, or Rmb30.49 per share. By comparison, the net profit and the net profit per share in 2010 was Rmb168.0 million and Rmb18.63, respectively. Loss before income tax and equity in
earnings from affiliates for the year ended December 31, 2011 increased to Rmb401.3 million compared to a loss of Rmb6.9 million in 2010. The significant loss in fiscal year 2011 was primarily due to the loss on disposal of the
Companys 26% interest in Hangzhou Zhongce of Rmb364.5 million.

The Rmb4.2 million loss from operating activities represented
the administrative expenses incurred for the year ended December 31, 2011. General and administrative expenses were comprised of expenditures for personnel and administrative functions, including accounting, information technology, human
resources, legal and administration. The general and administrative expenses in 2011 amounted to Rmb4.2 million, an increase of Rmb0.9 million, compared to Rmb3.3 million in 2010. The increase in our administrative expenses during fiscal
year 2011 is in line with the increase in certain legal and professional costs and administrative costs incurred on the disposal of our equity interest in Hangzhou Zhongce.

Apart from the general and administrative expenses of Rmb4.2 million, losses before income tax and equity in earnings from affiliates for the
year ended December 31, 2011 were mainly comprised of loss on the disposal of the interest in Hangzhou Zhongce of Rmb364.5 million, net unrealized loss on investments of Rmb27.1 million, an administrative charge on investment of Rmb7.5 million,
an impairment loss recognized on available-for-sale investments of Rmb2.3 million and interest expenses of Rmb2.2 million, offset by net realized gains recognized on investments of Rmb4.4 million and interest income of Rmb1.5 million. In
April 2008, we entered into a Memorandum of Understanding to acquire certain equity interest in a property investment company for consideration of Rmb150 million. A refundable deposit of Rmb75 million was paid to the third party
vendor pursuant to the Memorandum of Understanding during the year ended December 31, 2008. The Memorandum of Understanding lapsed in June 2011. The deposit of Rmb67.5 million was refunded to us and the remaining Rmb7.5 million was charged
as administrative charges in the year ended December 31, 2011. Loss before income tax and equity in earnings from affiliates was Rmb6.9 million for the year ended December 31, 2010. The significant deterioration in financial performance in
2011 was primarily due to the loss on disposal of our equity interest in Hangzhou Zhongce of Rmb364.5 million incurred in the fiscal year.



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The net loss for fiscal year 2011, apart from the loss before income tax and equity in earnings
from affiliates of Rmb401.3 million, consisted mainly of the Companys share of net profit of Hangzhou Zhongce of Rmb157.7 million and income tax expense of Rmb31.4 million. Net income for fiscal year 2010, apart from the loss before income tax
and equity in earnings from affiliates of Rmb6.9 million, consisted mainly of the Companys share of net profit of Hangzhou Zhongce of Rmb190.2 million and income tax expense of Rmb15.2 million. The share of profit of Hangzhou Zhongce decreased
Rmb32.5 million primarily due to the increase in the cost of materials causing a drop in gross profit and the Company only sharing the profit of Hangzhou Zhongce for the 11 months ended November 30, 2011 compared to a full 12 months of profit
taken into account for fiscal year 2010.

Tire Business

For the 11 months ended November 30, 2011 Hangzhou Zhongce recorded a consolidated turnover of approximately Rmb23,959 million, an
increase of approximately 18.3% as compared to the whole year 2010 of approximately Rmb20,258 million. The audited consolidated net profit for the 11 months ended November 30, 2011 decreased to approximately Rmb606.6 million from
approximately Rmb731.4 million for the year ended December 31, 2010. In 2011, the cost of raw materials, in particular the cost of natural rubber, in the tire industry kept increasing, resulting in a drop in gross margin from 9.5% in 2010 to
8.5% in 2011.

Impact of Inflation

Inflation and deflation in the PRC and Hong Kong has not had a material effect on our past business. During the times of inflation, the
affiliated companies of the Company have generally been able to increase the price of their products or services in order to keep pace with inflation.

Impact of Tax Regulations

For the impact of tax regulations on the Company, see Note 8 to the Consolidated Financial Statements of the Company included in
Item 17. Financial Statements.



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##### Table of Contents

B. LIQUIDITY AND CAPITAL RESOURCES

For 2012, cash for financing the operations of the Company was principally obtained through the disposal of trading securities. During 2011 and
2012, the Company still saw a continuation of challenging financial and economic conditions. Although some signs of improvement have started to emerge, the performance of key economies remains uncertain.

The Companys working capital, calculated as current assets less current liabilities, remained at a similar level in 2012 and 2011, A
positive working capital of Rmb455.7 million as of December 31, 2012 was compared to Rmb456.3 million as of December 31, 2011.

Over the last few years, cash flow for financing the operations of the Company was primarily obtained from the disposal of trading securities.
As at December 31, 2012, the Company still held approximately Rmb39.9 million of marketable securities. In 2012, the net cash used in operating activities was approximately Rmb4.8 million compared to Rmb47.2 million in 2011. The
operating cash outflows were mainly caused by cash used for general and administrative expense and changes in operating assets and liabilities. The net cash provided by investing activities and used in financing activities in 2012 was approximately
Rmb4.8 million and Rmb1.7 million, respectively, compared with Rmb588.1 million provided by investing activities and Rmb16.9 million used in financing activities in 2011. The investing cash inflows were mainly related to advances from
related and unrelated parties, investments in and proceeds from trading securities and changes in payables to securities brokers. The financing cash flows were mainly related to changes in amounts due to related parties.

Other than (i) the settlement of Convertible Notes receivable of Rosedale and accrued interest as described in Item 7 of this Form
20-F, (ii) the investment agreement as described in Item 4 of this Form 20-F; and (iii) the disposal of the Companys interest in Hangzhou Zhongce as described in Item 4 of this Form 20-F, no transactions, arrangements or
other relationships with unconsolidated entities or other persons that are reasonably likely to affect materially the liquidity or the availability of or requirement for capital resources of the Company have been entered into during 2012. In
managements opinion, the Company has sufficient cash and cash equivalents, notes receivable and trading securities to support its working capital for its present requirements.

For the years ended December 31, 2011 and 2012, the Company had no expenditures for property, plant and equipment.

Cash and cash equivalents of the Company decreased to Rmb517.6 million at December 31, 2012 from approximately Rmb523.6 million at
December 31, 2011 of which Rmb517.5 million (approximately US$83.1 million) were U.S. dollar deposits included in cash and cash equivalents.

There are no material restrictions, including foreign exchange controls, on the ability of the Companys subsidiaries to transfer funds
to the Company in the form of cash dividends, loans, advances or product/material purchases.

For related party information, please see
Item 7. Major Shareholders and Related Party Transactions in this Annual Report. In the opinion of management, these related party transactions have no material effect on the Companys liquidity or cash flows.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES

The Company does not conduct any research and development and does not rely on any patents or licenses.

D. TREND INFORMATION

Following the disposal of its interest in Hangzhou Zhongce in November 2011, the Company continues to position itself as a conglomerate
investor in China and anticipates that it will maintain its conservative and cautious investment posture in the coming year and to continue its efforts to explore new investment opportunities.

E. OFF-BALANCE SHEET ARRANGEMENTS

For the year of 2012, the Company did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on the Companys financial condition, changes in financial conditions, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. Additionally, the Company had not undertaken any guarantees
as of December 31, 2012.

F. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

As of December 31, 2011 and 2012, the Company did not have any contractual obligations and commercial commitments.



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##### Table of Contents

|ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|------- | ------------------------------------------

A. DIRECTORS AND SENIOR MANAGEMENT



|                                               |  |     |  |                                                 |  |        
|---------------------------------------------- |  | --- |  | ----------------------------------------------- |  | -------
|Name                                           |  | Age |  | Position                                        |  | Since  
|Allan Yap                                      |  | 59  |  | Chairman, Chief Executive Officer and Director  |  | 2001(1)
|Eva Chan Ling                                  |  | 49  |  | Deputy Chairman and Director                    |  | 2004(2)
|Dorothy Law                                    |  | 45  |  | Director                                        |  | 2000   
|Richard Whittall                               |  | 56  |  | Independent Director and Audit Committee Member |  | 2000   
|Lien Kait Long                                 |  | 66  |  | Director                                        |  | 1999   
|Sin Chi Fai                                    |  | 55  |  | Independent Director and Audit Committee Member |  | 2010(3)
|Jimmy Chow Chun Man (resigned on May 15, 2014) |  | 45  |  | Chief Financial Officer                         |  | 2003   
|Ken Lau (appointed on May 15, 2014)            |  | 43  |  | Chief Financial Officer                         |  | 2014   



|(1) | Dr. Allan Yap is the chairman of Hanny and Rosedale Hotel Holdings Limited (Rosedale), both are publicly listed companies in Hong Kong. He served as an executive director of China Strategic Holdings
Limited (CSH), a publicly listed company in Hong Kong, until his resignation on June 16, 2006.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Ms. Eva Chan Ling is the managing director of Rosedale. She served as an executive director of CSH until her resignation on June 1, 2014.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

|(3) | Mr. Sin Chi Fai is an independent non-executive director of Hanny and Rosedale. He was also an independent non-executive director, a member of the audit committee and a member of the remuneration committee of CSH
until his resignation on October 30, 2007.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

There is no family relationship between any director or executive officer
listed above and any other director or executive officer listed above. None of the directors or executive officers was elected or appointed pursuant to an arrangement or understanding with any third party.

Biographies of Directors and Senior Management

Dr. Allan Yap, age 59, is the chairman, chief executive officer and a director of the Company. He holds an honorary degree of Doctor of
Laws and has over 30 years experience in finance, investment and banking. Dr. Yap is the chairman of Hanny and Rosedale, and an alternate director of Television Broadcasts Limited, both are publicly listed companies in Hong Kong. He is
also the chairman and chief executive officer of Burcon NutraScience Corporation, a company whose shares are listed on the Toronto Stock Exchange in Canada, NASDAQ Stock Exchange in the United States and the Frankfurt Stock Exchange in Germany.
Dr. Yap is an executive chairman of Hanwell Holdings Limited (formerly known as PSC Corporation Limited) and Tat Seng Packaging Group Limited, both are publicly listed companies in Singapore. He was also the chairman of MRI Holdings Limited,
which had been deregistered on February 28, 2015. Dr. Yap had been an executive chairman of Intraco Limited, a public listed company in Singapore, and resigned on December 6, 2012. He had also been an executive director of China
Strategic Holdings Limited, Big Media Group Limited (now known as Neo Telemedia Limited) and See Corporation Limited, all are publicly listed companies in Hong Kong, and resigned on June 16, 2006, July 20, 2009 and June 13, 2011,
respectively. Dr. Yap was appointed as the chairman and chief executive officer of the Company on December 1, 2004.

Ms. Chan Ling, Eva, age 49, is a deputy chairman and a director of the Company. She has over 25 years experience in auditing,
accounting and finance in both international accounting firms and listed companies. Ms. Chan is a member of the Chartered Accountants in Australia and New Zealand, a fellow member of the Association of Chartered Certified Accountants and also a
practicing member of the Hong Kong Institute of Certified Public Accountants. Effective from June 1, 2009, Ms. Chan is the managing director of Rosedale. She was also a director of MRI Holdings Limited. She had been an executive director
of China Strategic Holdings Limited, and an independent non-executive director of each of Well Way Group Limited (formerly known as Trasy Gold Ex Limited) and Wonson International Holdings Limited (now known as China Ocean Shipbuilding Industry
Group Limited), both are publicly listed companies in Hong Kong, and resigned on June 1, 2014, and June 23, 2014 and August 13, 2008 respectively. Ms. Chan was appointed as deputy chairman of the Company on December 1, 2004.

Ms. Dorothy Law, age 45, is a director of the Company. She received her Bachelor of Commerce and Bachelor of Laws degrees from the
University of British Columbia in Canada. Ms. Law is a Barrister and Solicitor licensed to practice law in British Columbia and she has also been admitted as a Solicitor of the High Court of Hong Kong (non-practicing). Ms. Law is Senior
Vice President, Legal and Corporate Secretary of Burcon NutraScience Corporation.



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##### Table of Contents

Mr. Richard Whittall, age 56, is an independent director and the chairman of the audit
committee of the Company. He is a partner in Watershed Capital Partners Inc., an investment banking firm, based in Vancouver, British Columbia, Canada. Mr. Whittall has over 23 years experience in investment banking, advising domestic and
international companies in the areas of fund raising, mergers, acquisitions, divestitures and strategic business alliances. Mr. Whittall currently serves as a director of a number of public and private companies, including Fortress Paper Ltd,
GVIC Communications Corp., Canadian General Investments Limited and Canadian World Fund Limited.

Mr. Lien Kait Long, age 66, is a
director of the Company. Mr. Lien holds a bachelors degree in commerce and is a fellow member of the Institute of Singapore Chartered Accountants (ISCA) and CPA Australia. He has extensive experience in finance, corporate management and
business investment. He has held a number of senior management positions as well as executive directorships in various public and private corporations in Singapore, Hong Kong and China. Mr. Lien currently serves as an independent director on
the board of several Singapore and Chinese Companies listed on the Singapore Exchange Securities Trading Limited. He was also a director of MRI Holdings Limited.

Mr. Sin Chi Fai, age 55, is appointed an independent director and an audit committee member of the Company on June 9, 2010.
Mr. Sin obtained a diploma in Banking from The Hong Kong Polytechnic (now known as The Hong Kong Polytechnic University). He has over 17 years experience in banking field and has over 17 years sales and marketing experience in
information technology industries. Mr. Sin currently serves as an independent non-executive director of Rosedale and Hanny, both publicly listed companies in Hong Kong. Mr. Sin is also currently a director and shareholder of a Singapore
company engaged in the distribution of data storage media and computer-related products throughout Asia. Mr. Sin had been an independent non-executive director, member of the audit committee, and member of the remuneration committee of China
Strategic Holdings Limited, and Wonson International Holdings Limited (now known as China Ocean Shipbuilding Industry Group Limited), both publicly listed companies in Hong Kong, and resigned on October 30, 2007 and May 15, 2008
respectively.

Mr. Ken Lau, aged 43, was appointed as the Chief Financial Officer of the Company on May 15,
2014. Mr. Lau is a member of CPA Australia and a certificate holder of American Institute of Certified Public Accountants. He has over 15 years of experience in international accounting and financial reporting in multinational
corporations.

B. COMPENSATION

For the year ended December 31, 2012, the aggregate amount of compensation paid by the Company and its subsidiaries to the Companys
directors and executive officers, for service in all capacities, was approximately Rmb673,900 (approximately US$108,170). The grant of bonuses is determined at the discretion of the board of directors. No bonuses were paid in the year 2012 or
granted with respect to the year 2012.

The following table summarizes the compensation received by our executive and non-executive
directors and senior management for the year 2012.



|                       |  |                   |        |  |                   |  |         | 
|---------------------- |  | ----------------- | ------ |  | ----------------- |  | ------- | 
|Name                   |  | TotalSalary (USD) |        |  | TotalSalary (Rmb) | 
|Executive Director     |  |                   |        |  |                   |  |         | 
|Allan Yap              |  |                   | 20,000 |  |                   |  | 124,600 | 
|Eva Chan Ling          |  |                   | 20,000 |  |                   |  | 124,600 | 
|Non-Executive Director |  |                   |        |  |                   |  |         | 
|Dorothy Law            |  |                   | 20,000 |  |                   |  | 124,600 | 
|Lien Kait Long         |  |                   | 20,000 |  |                   |  | 124,600 | 
|Richard Whittall       |  |                   | 20,000 |  |                   |  | 124,600 | 
|Sin Chi Fai            |  |                   | 8,170  |  |                   |  | 50,900  | 

No officer or director received any non-cash compensation in 2012.



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##### Table of Contents

C. BOARD PRACTICES

The 2014 annual general meeting of the Company will be held on March 30, 2015, the shareholders of the Company will be asked to re-elect
all six existing directors and to serve until the next annual general meeting of the Company.

No director of the Company has entered into
any service contract nor is entitled to any benefits upon termination of employment with the Company.

The audit committee of the board of
directors reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the selection of our auditors, the scope of the annual audits, fees to be paid to the auditors, the performance of
the auditors and our accounting practices. During the year 2012 and as of the date of this filing, the audit committee of the Company consisted of Mr. Richard Whittall and Mr. Sin Chi Fai.

D. EMPLOYEES

As of
December 31, 2010, 2011 and 2012, the Company had no employees.

E. SHARE OWNERSHIP

As of December 31, 2012, none of the Companys directors, officers or their associates had any personal, family, corporate or other
interests in any shares of the Company or any of its associated corporations.



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##### Table of Contents

|ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|------- | -------------------------------------------------

A. MAJOR SHAREHOLDERS

Based on filings on Schedule 13G under the Exchange Act and public announcements/circulars/annual reports of Hanny pursuant to the Listing
Rules of HKSE, as of December 31, 2012, the following persons beneficially owned shares representing 5% or more of the issued share capital of the Company:



|                                           |  |                      |           |  |                     |  |       |  
|------------------------------------------ |  | -------------------- | --------- |  | ------------------- |  | ----- | -
|Name of holder                             |  | Number of sharesheld |           |  | Percentage of class | 
|Hanny Holdings Limited (1) (2) (3) (4) (5) |  |                      | 2,610,600 |  |                     |  | 28.95 | %
|William F. Harnisch (6)                    |  |                      | 467,175   |  |                     |  | 5.18  | %



|(1) | On March 26, 2008, Hanny disclosed by way of announcement posted on the website of the HKSE that it would sell to an independent third party its entire issued share capital held in Kamthorn Limited, which held
approximately 18.1% equity interest in the issued share capital of the Company. The transaction was completed in May 2008.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On July 30, 2008, Hanny further disclosed in its annual report 2007-08 that 29.2% interest including the interest as mentioned in (1) above in the issued share capital of the Company was disposed of subsequent
to its financial year ended March 31, 2008.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The 2,610,600 shares that Hanny beneficially owned during the fiscal year 2009 included 610,600 shares held by its indirect, non-wholly owned subsidiary, which represented an effective equity interest of 3.88% in the
issued share capital of the Company.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | On December 7, 2010, Hanny disclosed by way of announcement posted on the website of the HKSE that its indirect wholly-owned subsidiary had conditionally agreed to purchase 610,600 shares of the Company from its
indirect, non-wholly owned subsidiary (that is, the number of shares as mentioned in note (3) above). Hanny further disclosed in its annual report 2010-2011 that the transaction was completed on December 30, 2010. Hannys effective
equity interest in the Company therefore increased to 28.95%.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | On July 30, 2013, Hanny disclosed in its annual report 2012-2013 that it held an equity interest of 28.95% in the issued share capital of the Company as at March 31, 2012 and 2013. On July 30, 2014, Hanny
also disclosed in its annual report 2013-2014 that it held an equity interest of 28.95% in the issued share capital of the Company as at March 31, 2013 and 2014.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | (a) According to Amendment No. 6 to a report on Schedule 13G/A dated February 14, 2012, the 469,875 shares beneficially owned by William F. Harnisch as of December 31, 2011, consisting of (A) 79,800
shares beneficially owned individually by Mr. Harnisch; and (B) (i) 218,775 shares beneficially owned by Grenadier Fund; (ii) 116,100 shares beneficially owned by Triumph Fund II L.P.; (iii) 52,500 shares beneficially owned
by Peconic Partners International Fund Ltd.; and (iv) 2,700 shares beneficially owned by Triumph Fund III L.P., all of which shares Mr. Harnisch may be deemed to beneficially own by virtue of his position as President and Chief Executive
Officer of Peconic Partners LLC, the investment adviser to the above-mentioned clients.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b) According to Amendment
No. 7 to a report on Schedule 13G/A dated February 14, 2013, the number of shares beneficially owned by William F. Harnisch as of December 31, 2012 changed to 467,175 shares, representing a 5.18% equity interest in the Company,
consisting of (A) 79,800 shares beneficially owned individually by Mr. Harnisch; and (B) (i) 218,775 shares beneficially owned by Grenadier Fund; (ii) 116,100 shares beneficially owned by Triumph Fund II L.P.;
(iii) 52,500 shares beneficially owned by Peconic Partners International Fund Ltd.; and (iv) 0 shares beneficially owned by Triumph Fund III L.P., all of which shares Mr. Harnisch may be deemed to beneficially own by virtue of his
position as President and Chief Executive Officer of Peconic Partners LLC, the investment adviser to the above-mentioned clients.

(c)
According to Amendment No. 8 to a report on Schedule 13G/A dated February 13, 2014, the 467,175 shares beneficially owned by William F. Harnisch as of December 31, 2013, representing 5.18% equity interest in the Company, consisting of
(A) 79,800 shares beneficially owned individually by Mr. Harnisch; and (B)(i) 218,775 shares beneficially owned by Grenadier Fund; (ii) 116,100 shares beneficially owned by Triumph Fund II L.P.; (iii) 52,500 shares beneficially
owned by Peconic Partners International Fund Ltd., all of which shares Mr. Harnisch may be deemed to beneficially own by virtue of his position as President and Chief Executive Officer of Peconic Partners LLC, the investment adviser to the
above-mentioned clients.

(d) According to Amendment No. 9 to a report on Schedule 13G/A dated February 9, 2015, the 467,175
shares beneficially owned by William F. Harnisch as of December 31, 2014, representing 5.18% equity interest in the Company, consisting of (A) 79,800 shares beneficially owned individually by Mr. Harnisch; and (B)(i) 218,775 shares
beneficially owned by Grenadier Fund; (ii) 116,100 shares beneficially owned by Triumph Fund II L.P.; (iii) 52,500 shares beneficially owned by Peconic Partners International Fund Ltd., all of which shares Mr. Harnisch may be deemed
to beneficially own by virtue of his position as President and Chief Executive Officer of Peconic Partners LLC, the investment adviser to the above-mentioned clients.

According to the shareholders list provided to the Company by its transfer agent, there were 51 shareholders (representing all issued common
stock of 9,017,310 shares) of record of the Companys common stock as of February 28, 2015.



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B. RELATED PARTY TRANSACTIONS

Convertible Notes

On March 23, 2006, Rosedale entered into a subscription agreement with the Company and other subscribers for convertible notes with an
aggregate principal amount of HK$1,000 million, of which the Company agreed to subscribe for HK$300 million. The initial conversion price of the convertible notes was HK$0.79 per share, subject to anti-dilutive adjustments. In July 2008, the
conversion price was reduced from HK$0.79 per share to HK$0.339 per share as a result of rights issued by Rosedale. Unless previously converted or lapsed or redeemed by Rosedale, Rosedale will redeem the convertible notes on the fifth anniversary
from the date of issue of the convertible notes at a redemption amount equal to 110% of the principal amount of the convertible notes outstanding. The Company has the right to convert the whole or any part (in an amount or integral multiple of HK$1
million) of the principal amount of the convertible notes into shares of Rosedale at the then prevailing conversion price.

Subject to
certain restrictions intended to facilitate compliance with relevant rules and regulations, each noteholder has the right to exchange all or part (in the amount or integral multiple of HK$10 million) of 50% of the initial principal amount of its
convertible notes for shares of any company that is an affiliated company of Rosedale as defined in the Rules Governing the Listing of Securities on the HKSE or a subsidiary of Rosedale that is to be listed on a stock exchange through an
initial public offering at the price, subject to anti-dilutive adjustments, at which the such shares are actually issued to the public at the time of the listing on that stock exchange. The decision on whether to list any of its affiliated company
or subsidiary in the future is at the sole discretion of the directors of Rosedale. During 2007, the Company converted a total of HK$237 million of convertible notes of Rosedale into ordinary shares at a conversion price of HK$0.79 per share. The
Company did not convert any convertible notes of Rosedale in 2009, 2010 and 2011.

In July 2009, Rosedale made a repurchase offer to
all Convertible Notes holders to repurchase the Convertible Notes at their full value by issuing its share at HK$0.035 per share (the Repurchase Offer I). Rosedale has to fulfill several conditions before the completion of the offer as
stated in the Repurchase Offer I agreement. As of November 11, 2009, the Board of Directors of Rosedale determined Rosedale could not fulfill certain of the conditions and the Repurchase Offer I lapsed automatically.

In December 2009, Rosedale made another repurchase offer to all Convertible Notes holders to repurchase the Convertible Notes at a price
equal to 80% of the outstanding principal amount of the Convertible Notes (the Repurchase Offer II). The Repurchase Offer II is conditional upon fulfillment of several conditions. The Company accepted the Repurchase Offer II in full.
However, Rosedale could not fulfill certain of the conditions and the Repurchase Offer II also lapsed automatically.

In February 2010,
Rosedale had completed a capital reorganization which involved, among others, consolidation of every twenty (20) of its then issued shares of HK$0.01 each into 1 issued consolidated share of HK$0.20 each. Consequently, the conversion price of
the Convertible Notes was adjusted from HK$0.339 to HK$6.780 with effect from February 1, 2010.

In June 2010, Rosedale announced
that it proposed to make a repurchase offer to repurchase the Convertible Notes (the Repurchase Offer III). The Company did not accept the Repurchase Offer III.

Pursuant to the instrument constituting the Convertible Notes, the conversion price of the Convertible Notes is to be adjusted from HK$6.780
to HK$6.774 (the Adjustment) as a result of the issue and allotment of 111,666,000 shares pursuant to the terms of the Repurchase Offer III. Since the Adjustment when aggregated with the 2009 Adjustment is less than 3% of the prevailing
conversion price of HK$6.780, pursuant to the terms and conditions of the Notes, the 2009 Adjustment and the Adjustment will not take effect but shall be carried forward and be taken into account in the next subsequent adjustment.

On June 7, 2011, the maturity date of the Convertible Notes, there were a total of HK$63 million, or approximately US$8 million, of
Convertible Notes remained outstanding. All such Convertible Notes, together with accrued interest of HK$10.8 million, or approximately US$1.4 million, have been subsequently fully settled (see Item 8 below).



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##### Table of Contents

Other Related Party Transactions

The Company entered into the following related party transactions:



|                                              |  |         |        |  |         |  |        |         |  |  |        | 
|--------------------------------------------- |  | ------- | ------ |  | ------- |  | ------ | ------- |  |  | ------ | 
|                                              |  | 2011    |        |  | 2012    |  |        | 2012    | 
|                                              |  | Rmb000 |        |  | Rmb000 |  |        | USD000 | 
|Due from:                                     |  |         |        |  |         |  |        |         |  |  |        | 
|CSH and its subsidiaries                      |  |         | 90     |  |         |  | 90     |         |  |  | 14     | 
|GDI and its subsidiaries (GDI Group)        |  |         | 2      |  |         |  | 2      |         |  |  | 1      | 
|Hanny and its subsidiaries (except GDI Group) |  |         | 1, 207 |  |         |  | 1,327  |         |  |  | 213    | 
|Rosedale and its subsidiaries                 |  |         | 13,399 |  |         |  |       |         |  |  |       | 
|                                              |  |         |        |  |         |  |        |         |  |  |        | 
|                                              |  |         | 14,698 |  |         |  | 1,419  |         |  |  | 228    | 
|                                              |  |         |        |  |         |  |        |         |  |  |        | 
|Due to:                                       |  |         |        |  |         |  |        |         |  |  |        | 
|CSH and its subsidiaries                      |  |         | 295    |  |         |  | 295    |         |  |  | 47     | 
|GDI and its subsidiaries                      |  |         | 1,737  |  |         |  |       |         |  |  |       | 
|Hanny and its subsidiaries (except GDI Group) |  |         | 70,641 |  |         |  | 70,117 |         |  |  | 11,255 | 
|                                              |  |         |        |  |         |  |        |         |  |  |        | 
|                                              |  |         | 72,673 |  |         |  | 72,412 |         |  |  | 11,302 | 
|                                              |  |         |        |  |         |  |        |         |  |  |        | 

As of December 31, 2011 and 2012, the amounts due from/to related parties were unsecured, non-interest
bearing and had no fixed repayment terms.



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##### Table of Contents

|ITEM 8. | FINANCIAL INFORMATION
|------- | ---------------------

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

See the Consolidated Financial Statements to the Company included in Item 17. Financial Statements of this Annual
Report.

Dividend Policy

On July 3, 2001, the board of directors of the Company announced that the Company would suspend the declaration and payment of any
quarterly dividend until the profitability of the Company and its subsidiaries reached an acceptable level. During 2010, 2011 and 2012, no dividend was declared or paid by the Company. Any future determination to pay a dividend to shareholders of
the Company will depend on the Companys results of operations and financial condition, and other factors deemed relevant by its board of directors.

Since the Company is a holding company, its ability to pay dividends depends substantially on its receipt of distributions from its
subsidiaries. Applicable Chinese laws and regulations require that, before a Sino-foreign equity joint venture enterprise (such as each PRC subsidiary) distributes profits to investors, it must: (1) satisfy all tax liabilities; (2) provide
for losses in previous years; and (3) make allocations, in proportions determined at the sole discretion of the board of directors, to a general reserve fund and an enterprise expansion fund. During 2010, 2011 and 2012, no distribution of
dividends was made from any subsidiary to the Company.

B. SIGNIFICANT CHANGES

The Company did not convert any of the Convertible Notes of Rosedale that it held in 2011. On June 7, 2011, the maturity date of the
Convertible Notes, there were a total of HK$63 million, or approximately US$8 million, of Convertible Notes remained outstanding. All such Convertible Notes, together with accrued interest of HK$10.8 million, totaled Rmb59.8 million, have been
subsequently fully settled (see below).

On June 30, 2011, the Memorandum of Understanding, dated April 15, 2008, between a
direct wholly owned subsidiary of the Company and a third party regarding the acquisition of a certain equity interest in a property investment company, lapsed. The deposit of Rmb67.5 million was refunded to the Company (see below).

On November 28, 2011, the Company sold all of its ownership interests in Hangzhou Zhongce Rubber Company Limited to CZ Tire Holdings
Limited, an independent third-party company incorporated in the British Virgin Islands, for a purchase price of Rmb600 million or approximately US$95.3 million. The Company is required to pay an income tax of Rmb79.5 million on the disposal of
Hangzhou Zhongce. According to the disposal agreement, CZ Tire Holdings Limited bore the difference of the tax payment in excess of Rmb40 million or approximately US$6.4 million.

On September 28, 2012, the Company reported that its wholly owned subsidiary, Wealth Faith Limited had entered into a definitive
agreement with Fortuneasy Limited, a third party. The agreement provides for the purchase by Wealth Faith Limited of 40% of the shares of Million Cube Limited from Fortuneasy Limited. The total purchase price for the shares being acquired by Wealth
Faith Limited is HK$200 million or approximately US$25.6 million. The Company, through Wealth Faith Limited, previously deposited HK$154.8 million or approximately Rmb127.3 million in earnest money with Fortuneasy Limited, which will be applied
toward the purchase price. The deposits are refundable in full and were funded by the settlement of the Convertible Notes of Rosedale and accrued interest that totaled HK$73.8 million, or approximately Rmb59.8 million (see above), and a refund of
deposits paid for acquisition of a property investment company of Rmb67.5 million (see above).

As provided in the agreement, effective on
May 31, 2012, Million Cube Limited acquired from ITC Properties Group Limited (ITC Properties), a company incorporated in Bermuda and listed on The Stock Exchange of Hong Kong Limited (HKSE), 45% of the issued share
capital and corresponding shareholder loans of Paragon Winner Company Limited, or Paragon. Paragon was incorporated in the British Virgin Islands and formed to invest in a joint venture that has developed and operated the Sanya Sun Valley Golf
Resort in Yalong Bay, Sanya City, the Peoples Republic of China which is seeking to develop a related hotel and resort complex at such resort. The closing of the transaction is subject to, among other things, the Company and Wealth Faith
Limited satisfactorily completing due diligence and the receipt of all necessary governmental and other consents. The parties to the transaction anticipate that the transaction will close sometime in the fourth quarter of 2014. According to the 2014
annual report of ITC Properties, ITC Corporation Limited (also a company listed on the HKSE) held a 30% equity interest in ITC Properties as of June 25, 2014, and the chairman of ITC Properties is also the chairman and a director of Rosedale.



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|ITEM 9. | THE LISTING
|------- | -----------

Since November 26, 2002, the Companys common stock has traded on
the OTC Pink Sheets and OTCQB Securities Market under the stock symbol CSHEF. The OTCQB is a regulated quotation service that displays real-time quotes, last sale prices and volume information in over-the-counter equity securities for
companies that are registrants with the SEC. Prior to that, the Companys common stock traded on the New York Stock Exchange, or NYSE, under the symbol CSH. However, the trading was suspended on September 27, 2002 by the NYSE
for the failure of the Company to meet the NYSEs continuing listing standards. Effective December 30, 2002, the common stock of the Company was removed from listing on the NYSE.

The following table sets forth, for the periods indicated, the high and low closing sale prices of the common stock as reported by the OTCQB
Securities Market from January 1, 2008 to December 31, 2012.



|                  |  |           |      |  |          |  |      | 
|----------------- |  | --------- | ---- |  | -------- |  | ---- | 
|Year Ended        |  | High(US$) |      |  | Low(US$) | 
|December 31, 2012 |  |           | 1.75 |  |          |  | 0.10 | 
|December 31, 2011 |  |           | 0.76 |  |          |  | 0.04 | 
|December 31, 2010 |  |           | 0.19 |  |          |  | 0.01 | 
|December 31, 2009 |  |           | 0.50 |  |          |  | 0.03 | 
|December 31, 2008 |  |           | 0.60 |  |          |  | 0.02 | 

The following table sets forth the high and low closing sale prices for the common stock as reported during
each of the quarters in the two-year period ended December 31, 2012 and each of the most recent periods.



|                   |  |           |      |  |          |  |      | 
|------------------ |  | --------- | ---- |  | -------- |  | ---- | 
|Quarter Ended      |  | High(US$) |      |  | Low(US$) | 
|December 31, 2014  |  |           | 0.36 |  |          |  | 0.15 | 
|September 30, 2014 |  |           | 0.40 |  |          |  | 0.36 | 
|June 30, 2014      |  |           | 0.37 |  |          |  | 0.27 | 
|March 31, 2014     |  |           | 0.37 |  |          |  | 0.31 | 
|December 31, 2013  |  |           | 0.50 |  |          |  | 0.19 | 
|September 30, 2013 |  |           | 0.26 |  |          |  | 0.16 | 
|June 30, 2013      |  |           | 0.74 |  |          |  | 0.26 | 
|March 31, 2013     |  |           | 0.80 |  |          |  | 0.21 | 
|December 31, 2012  |  |           | 0.62 |  |          |  | 0.25 | 
|September 30, 2012 |  |           | 1.10 |  |          |  | 0.10 | 
|June 30, 2012      |  |           | 1.11 |  |          |  | 1.10 | 
|March 31, 2012     |  |           | 1.75 |  |          |  | 0.85 | 
|December 31, 2011  |  |           | 0.76 |  |          |  | 0.10 | 
|September 30, 2011 |  |           | 0.40 |  |          |  | 0.20 | 
|June 30, 2011      |  |           | 0.50 |  |          |  | 0.25 | 
|March 31, 2011     |  |           | 0.35 |  |          |  | 0.04 | 

The following table sets forth the high and low closing sale prices for the common stock as reported during
each of the most recent six months.



|                   |  |           |      |  |          |  |      | 
|------------------ |  | --------- | ---- |  | -------- |  | ---- | 
|Month Ended        |  | High(US$) |      |  | Low(US$) | 
|February 28, 2015  |  |           | 0.20 |  |          |  | 0.20 | 
|January 31, 2015   |  |           | 0.20 |  |          |  | 0.20 | 
|December 31, 2014  |  |           | 0.20 |  |          |  | 0.20 | 
|November 30, 2014  |  |           | 0.20 |  |          |  | 0.15 | 
|October 31, 2014   |  |           | 0.36 |  |          |  | 0.15 | 
|September 30, 2014 |  |           | 0.36 |  |          |  | 0.36 | 



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|ITEM 10. | ADDITIONAL INFORMATION
|-------- | ----------------------

A. SHARE CAPITAL

The Company was incorporated with an initial 1,200,000 shares of common stock, US$0.01 par value, all of which were later reclassified as
Supervoting Common Stock. On May 14, 1993, the authorized number of shares of the Company was increased by the creation of 50,000,000 shares of Common Stock, US$0.01 par value, and 18,800,000 shares of Supervoting Common Stock, US$0.01 par
value. As a result, the total number of authorized Supervoting Common Stock is 20,000,000 shares and the total number of authorized shares of Common Stock is 50,000,000. 6,000,000 shares of Supervoting Common Stock (including the 1,200,000 Common
Stock reclassified to Supervoting Common Stock) were issued to the then ultimate parent company of the Company.

On June 23, 1993,
the Company redeemed 3,000,000 shares of its outstanding Supervoting Common Stock at the par value of US$0.01 per share. In September 2006, upon the request of the sole holder of the Supervoting Common Stock and pursuant to the Companys
bylaws, the Company converted the entire outstanding 3,000,000 shares of Supervoting Common Stock into the same number of shares of Common Stock, US$0.01 par value. There were no outstanding shares of Supervoting Common Stock as of December 31,
2011 and 2012.

Each share of Supervoting Common Stock is entitled to 10 votes whereas each share of Common Stock is entitled to one vote.
The Common Stock is identical to the Supervoting Common Stock as to the payment of dividends. Except for the difference in voting rights described above, the Supervoting Common Stock and the Common Stock rank pari passu in all respects.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

For a summary of the Companys Memorandum and Articles of Association see Item 10 of the Companys Form 20-F for the year ended
2001 to which specific reference is made.

C. MATERIAL CONTRACTS

The following is a summary of material contracts, other than contracts entered into in the ordinary course of business, to which the Company or
any subsidiary of the Company is a party, for the two years immediately preceding the filing of this report.



| |  |  | On November 21, 2011, the Company entered into an agreement pursuant to which the Company sold all of its ownership interests in Hangzhou Zhongce Rubber Company Limited to CZ Tire Holdings Limited, an independent
third-party company incorporated in the British Virgin Islands, for a purchase price of Rmb600 million or approximately US$91 million.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | On September 28, 2012, the Companys wholly owned subsidiary, Wealth Faith Limited entered into a definitive agreement with Fortuneasy Limited. The agreement provides for the purchase by Wealth Faith Limited
of 40% of the shares of Million Cube Limited from Fortuneasy Limited. The total purchase price for the shares being acquired by Wealth Faith Limited is HK$200 million or approximately US$25.6 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

D. EXCHANGE CONTROLS

Certain Foreign Issuer Considerations

The Company has been designated as a non-resident for exchange control purposes by the Bermuda Monetary Authority, Foreign Exchange Control,
whose permission for the issue of shares of common stock of the Company has been obtained. The transfer of shares between persons regarded as resident outside Bermuda for exchange control purposes and the issue of shares to or by such persons may be
effected without specific consent under the Exchange Control Act of 1972 and regulations thereunder. Issues and transfers of shares involving any person regarded as resident in Bermuda for exchange control purposes require specific prior approval
under the Exchange Control Act of 1972.

There are no limitations on the rights of non-Bermuda owners of the Companys common stock
to hold or vote their shares. Because the Company has been designated as a non-resident for Bermuda exchange control purposes, there are no restrictions on its ability to transfer funds in and out of Bermuda or to pay dividends to United States
residents who are holders of the Companys common stock, other than in respect of local Bermuda currency.

In accordance with Bermuda
law, share certificates are only issued in the names of corporations or individuals. In the case of an applicant acting in a special capacity (for example, as an executor or trustee), certificates may, at the request of the applicant, record the
capacity in which the applicant is acting. Notwithstanding the recording of any such special capacity, the Company is not bound to investigate or incur any responsibility in respect of the proper administration of any such estate or trust. The
Company will take no notice of any trust applicable to any of its shares whether or not it had notice of such trust.



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As an exempted company, the Company is exempt from Bermuda laws restricting the percentage of
share capital that may be held by non-Bermudan persons, but as an exempted company the Company may not participate in certain business transactions, including: (1) the acquisition or holding of land in Bermuda (except land required for business
and held by way of lease or tenancy for terms of not more than 21 years) without the express authorization of the Bermuda legislature; (2) the taking of mortgages on land in Bermuda to secure an amount in excess of US$50,000 without the
consent of the Minister of Finance of Bermuda; (3) the acquisition of securities created or issued by, or any interest in, any local company or business, other than certain types of Bermuda government securities or securities of another
exempted company, partnership or other corporation resident in Bermuda but incorporated abroad; or (4) the carrying on of business of any kind in Bermuda, except in furtherance of the business of the Company carried on outside Bermuda or under
a license granted by the Minister of Finance of Bermuda.

The Bermuda government actively encourages foreign investment in exempted
entities like the Company that are based in Bermuda but do not operate in competition with local business. In addition to having no restrictions on the degree of foreign ownership, the Company is subject neither to taxes on its income or dividends
nor to any foreign controls in Bermuda. In addition, there is no capital gains tax in Bermuda, and profits can be accumulated by the Company, as required, without limitation.

E. TAXATION

The
following discussion is a summary of certain tax consequences of an investment in the Companys common stock under Bermuda tax laws and United States Federal income tax laws. The discussion does not deal with all possible tax consequences
relating to an investment in the common stock and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as dealers in securities, insurance companies and tax-exempt entities) may be subject
to special rules. In particular, the discussion does not address the tax consequences under State, local and other laws (e.g., non-Bermuda, non-United States Federal tax laws). This discussion is based upon laws and relevant interpretations thereof
in effect as of the date of this Annual Report, all of which are subject to change.

Bermuda Taxation

The Company is incorporated in Bermuda. Under current Bermuda law, the Company is not subject to tax on income or capital gains, and no Bermuda
withholding tax will be imposed upon payments of dividends by the Company to its shareholders. Furthermore, the Company has received from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act of 1966, as amended, an
undertaking that, in the event that Bermuda enacts any legislation imposing any tax computed on profits or income, including any dividend or capital gains withholding tax, or computed on any capital assets appreciation thereof, or any tax in the
nature of an estate, duty or inheritance tax, the imposition of such tax will not be applicable to the Company or any of its operations, nor to the shares, debentures or other obligations of the Company, until March 28, 2016. This undertaking
does not, however, prevent the imposition of property taxes on Company-owned real property or leasehold interests in Bermuda.

The United
States does not have a comprehensive income tax treaty with Bermuda.

As an exempted company, the Company is required to pay to the Bermuda
government an annual registration fee calculated on a sliding-scale basis by reference to its assessable capital, that is, its authorized capital plus any share premium.

British Virgin Islands (BVI) Taxation

The Company has certain of its subsidiaries incorporated under the laws of the BVI. Pursuant to the rules and regulations of the BVI, these
subsidiaries are not subject to any income tax in the BVI.

Under the International Business Companies Act of the BVI, as currently in
effect, a holder of common stock who is not a resident of BVI is exempt from BVI income tax on dividends paid with respect to the common stock and all holders of common stock are not liable for BVI income tax on gains realized during that year on
sale or disposal of such shares; BVI does not impose a withholding tax on dividends paid by a company incorporated under the International Business Companies Act.

There are no capital gains, gift or inheritance taxes levied by the BVI on companies incorporated under the International Business Companies
Act. In addition, the common stock is not subject to transfer taxes, stamp duties or similar charges.

There is no income tax treaty or
convention currently in effect between the United States and the BVI.



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Certain Material United States Federal Income Tax Consequences

Taxation of Shareholders

The following is a summary of certain material U.S. federal income tax consequences to U.S. holders (as defined below) relating to the
purchase, ownership, and disposition of the Companys common stock. This discussion is based upon current provisions of the Internal Revenue Code of 1986, as amended (the Code), Treasury regulations promulgated thereunder, rulings,
pronouncements, judicial decisions, and administrative interpretations of the Internal Revenue Service (the IRS), in each case as in effect and publicly available on the date hereof, all of which are subject to change and differing
interpretation, possibly on a retroactive basis, at any time by legislative, judicial, or administrative action. We cannot assure you that the IRS will not challenge the conclusions stated below or that a court will not find in the IRSs favor.
No legal opinion from U.S. counsel or ruling from the IRS has been (or will be) sought on any of the matters discussed herein nor. The discussion set forth below is limited to U.S. holders who holder the Companys common stock as a capital
asset within the meaning of Section 1221 of the Code.

The following discussion does not purport to be a complete analysis of all the
potential U.S. federal income tax effects relating to the purchase, ownership, and disposition of the Companys common stock. Without limiting the generality of the foregoing, this discussion does not address the effect of any rules applicable
to U.S. holders that are subject to special treatment under the U.S. federal income tax laws, including, without limitation: traders and dealers in securities or currencies; insurance companies; financial institutions, banks, and thrifts; regulated
investment companies, real estate investment trusts, controlled foreign corporations, passive foreign investment companies, and holders of interests in such entities; tax-exempt entities; U.S. persons whose functional currency is not the U.S.
dollar; U.S. expatriates; persons who hold the Companys common stock as part of a straddle, hedge, conversion transaction, or other risk reduction or integrated investment transaction; persons subject to the alternative minimum tax; holders of
securities that elect to use a mark-to-market method of accounting for their securities holdings; individual retirement accounts, qualified pension plans, other retirement plans, and tax-deferred accounts; and pass-through entities, including
partnerships and Subchapter S corporations, and beneficial owners of interests in such passthrough entities. Finally, this discussion does not address the effect of any: U.S. state or local tax laws, U.S. federal tax laws other than U.S. federal
income tax laws, or foreign tax laws.

The following discussion of certain material U.S. federal income tax considerations is for
general information only. It is not tax advice. Each prospective investor should consult its own tax advisor regarding the particular U.S. federal, state, local and foreign tax consequences of purchasing, holding, and disposing of the Companys
common stock, including the consequences of any proposed change in applicable laws.

U.S. Holder

For purposes of this discussion, the term U.S. holder means a beneficial owner of the Companys common stock that is for U.S.
federal income tax purposes:



| |  |  | an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or who meets the substantial presence test under
Section 7701(b) of the Code;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a corporation or other entity taxable for U.S. federal income tax purposes as a corporation created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust,
or if a valid election is in effect under applicable Treasury regulations to treat the trust as a U.S. person.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Passive Foreign Investment Company

The Company generally will be a PFIC if, for a taxable year, (a) 75% or more of the gross income of the Company for such taxable year is
passive income or (b) 50% or more of the assets held by the Company either produce passive income or are held for the production of passive income. Gross income generally includes all sales revenues less the cost of goods sold, plus
income from investments and from incidental or outside operations or sources. Passive income includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains
from commodities transactions.

For purposes of the PFIC income and asset test described above, if the Company owns, directly or
indirectly, 25% or more of the total value of the outstanding shares of another foreign corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other foreign corporation and (b) received
directly a proportionate share of the income of such other foreign corporation. If the Company is a PFIC, in addition to the rules discussed below, U.S. Holders generally may be required to file certain information returns with the IRS. The PFIC
rules are extremely complex, and U.S. Holders should consult their own U.S. tax advisors concerning the application of the PFIC rules.

The Company believes it was classified as a PFIC during the tax year ended December 31, 2012, and based on current business plans and
financial expectations, the Company believes that it may be a PFIC in subsequent tax years. The determination of whether any foreign corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal
income tax rules, which are subject to differing interpretations. In addition, whether any corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such year and, as a result, cannot be
predicted with certainty as of the date of this document.

In any year in which the Company is classified as a PFIC, U.S. Holders are
required to file an annual report with the IRS containing such information as Treasury Regulations and/or other IRS guidance may require.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. holder of the acquisition, ownership, and disposition of the
Companys common stock will depend on whether such U.S. holder makes an election to treat the Company as a qualified electing fund under Section 1295 of the Code (a QEF Election), A U.S. holder that does not make a
QEF Election will be referred to in this summary as a Non-Electing U.S. holder.

A Non-Electing U.S. holder will be subject to
the rules of Section 1291 of the Code with respect to any gain on the disposition of the Companys common stock and any excess distribution paid on the Companys common stock.

Under Section 1291 of the Code, any gain recognized on the sale or other disposition of the Companys common stock, and any excess
distribution paid on such common stock, must be ratably allocated to each day in a Non-Electing U.S. holders holding period for such common stock. The amount of any such gain or excess distribution allocated to prior years of such Non-Electing
U.S. holders holding period will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year. A Non-Electing U.S. holder will be required to pay interest on the resulting tax liability for
each such prior year, calculated as if such tax liability had been due in each such prior year. The amount of any such gain or excess distribution allocated to the current year of such Non-Electing U.S. holders holding period for the
Companys common stock will be treated as ordinary income in the current year (but will not qualify for the preferential dividend rate previously discussed), and no interest charge will be incurred with respect to the resulting tax liability
for the current year.

If the Company is a PFIC for any taxable year during which a Non-Electing U.S. holder holds the Companys
common stock, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent years. A Non-Electing U.S. holder may terminate this
deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such common stock were sold on the last day of the last taxable year for which the Company was a PFIC.



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QEF Election

A U.S. holder that makes a QEF Election generally will not be subject to the rules of Section 1291 of the Code discussed above. However, a
U.S. holder that makes a QEF Election will be subject to U.S. federal income tax annually on such U.S. holders pro rata share of (a) net capital gain of the Company, which will be taxed as capital gain to such U.S. holder, and
(b) the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. holder, regardless of whether such amounts are actually distributed to such U.S. holder by the Company. A U.S. holder that makes a QEF
Election may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge. In addition, a U.S. holder that makes a QEF Election generally will recognize capital gain or
loss on the sale or other taxable disposition of the Companys common stock, as long as the U.S. holder always had a QEF election in effect.

Each U.S. holder should consult its own U.S. tax advisors regarding the advisability of, and procedure for making, a QEF Election. However,
U.S. holders should be aware that the Company did not satisfy record keeping requirements that apply to a qualified electing fund for its tax year ended December 31, 2012 and there can be no assurance that the Company will in future satisfy
record keeping requirements that apply to a qualified electing fund, or that the Company will supply U.S. holders with information that such U.S. shareholders require to report under the QEF Election rules, in the event that the Company is a PFIC
and a U.S. shareholder wishes to make a QEF Election. Thus, U.S. holders may not be able to make a QEF Election with respect to the Companys common stock.

Distributions on the Companys Common Stock

Generally, and subject to the discussion above concerning PFICs, a U.S. holder that receives a distribution, including a constructive
distribution, with respect to the Companys common stock will be required to include the amount of such distribution in gross income as a dividend (without reduction for any foreign income tax withheld from such distribution) to the extent of
the current or accumulated earnings and profits of the Company (as determined under U.S. tax principles). To the extent that a distribution exceeds the current and accumulated earnings and profits of the Company, such
distribution will be treated (a) first, as a tax-free return of capital to the extent of a U.S. holders tax basis in the Companys common stock and, (b) thereafter, as gain from the sale or exchange of such common stock. (See
more detailed discussion at Disposition of the Companys Common Stock below.) However, the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. holder
should therefore assume that any distribution by the Company with respect to the Companys common stock will constitute ordinary dividend income. Dividends received on the Companys common stock generally will not be eligible for the
dividends received deduction or eligible for the preferential tax rates applicable to long-term capital gains for dividends received by individuals.

Disposition of the Companys Common Stock

Subject to the discussion of the PFIC rules, above, a U.S. holder will recognize gain or loss on the sale or other taxable disposition of the
Companys common stock in an amount equal to the difference, if any, between (a) the amount of cash plus the fair market value of any property received and (b) such U.S. holders adjusted basis in the Companys common stock
sold or otherwise disposed of. Any such gain or loss generally will be capital gain or loss, which will be long-term capital gain or loss if the Companys common stock is held for more than one year.

Although preferential tax rates currently apply to long-term capital gains of a U.S. holder that is an individual, estate, or trust, such
preferential tax rates are not available if the Company is a PFIC, unless a qualified electing fund (QEF) election is timely made, as described above. Deductions for capital losses and net capital losses are subject to
limitations.

Foreign Tax Credit

A U.S. holder who pays (whether directly or through withholding) foreign income tax with respect to the Companys common stock may be
entitled, at the election of such U.S. holder, to receive either a deduction or a credit for such foreign income tax paid. This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding)
by a U.S. holder during such year.

The foreign tax credit is subject to complex limitations, including the general limitation that the
credit cannot exceed the proportionate share of a U.S. holders U.S. federal income tax liability that such U.S. holders foreign source taxable income bears to such U.S. holders worldwide taxable income. Generally,
dividends paid by a foreign corporation should be treated as foreign source for this purpose, and gains recognized on the sale of stock of a foreign corporation by a U.S. holder generally should be treated as U.S. source for this purpose.



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Receipt of Foreign Currency

The amount of any distribution paid to a U.S. holder in foreign currency, or on the sale, exchange or other taxable disposition of the
Companys common stock, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that
time). A U.S. holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Any U.S. holder who converts or otherwise disposes of the foreign currency after the date of receipt may have a foreign currency
exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes.

Unearned Medicare Income Tax

For tax years beginning after December 31, 2012, certain individuals, estates and trusts whose income exceeds certain thresholds will be
required to pay a 3.8% Medicare surtax on net investment income including, among other things, dividends and net gain from dispositions of property other than property held in a trade or business.

Information Reporting; Backup Withholding Tax

The Foreign Account Tax Compliance Act (FATCA) generally requires that individuals that hold certain specified foreign financial
assets in excess of $50,000 report such ownership to the IRS using IRS Form 8938. The definition of specified foreign financial assets includes not only financial accounts maintained in foreign financial institutions, but also, unless held in
accounts maintained by a financial institution, any stock or security issued by a non-U.S. person, any financial instrument or contract held for investment that has an issuer or counterparty other than a U.S. person and any interest in a foreign
entity. U.S. holders may be subject to these reporting requirements unless their Company common stock is held in an account at a domestic financial institution. Penalties for failure to file certain of these information returns are substantial.

Payments of dividends made on, and proceeds arising from certain sales or other taxable dispositions of, the Companys common stock
generally will be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. holder (a) fails to furnish such U.S. holders U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an
incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such
U.S. holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. holder that it is subject to backup withholding tax. U.S. holders that are corporations generally are excluded from these
information reporting and backup withholding tax rules. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. holders U.S. federal income tax liability, if any, or will be refunded, if such
U.S. holder furnishes required information to the IRS.



34



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##### Table of Contents

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G.
STATEMENTS BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

The Company is subject to certain of the information reporting requirements of the Exchange Act. The Company, as a foreign private
issuer, is exempt from the rules and regulations under the Exchange Act prescribing the furnishing and content of proxy statements, and the officers, directors and principal shareholders of the Company are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchase and sale of the Companys shares. In addition, the Company is not required to file reports and financial
statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However, the Company does file with the SEC an Annual Report on Form 20-F containing consolidated financial statements
audited by an independent accounting firm.

Documents concerning us that are referred to herein may be inspected at the Companys
offices at 25th Floor, Paul Y. Centre, 51 Hung To Road, Kwun Tong, Kowloon, Hong Kong. You may read and copy any document that the Company files with the SEC at its public reference facilities at 100 F Street, N.E., Washington, D.C. 20549. You may
also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. The SEC also maintains a web site that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC. The address of this web site is http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.



|ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

The Company is exposed to
fluctuations in interest rates and currency exchange rates primarily with respect to any borrowings it may make and to our operating results. Under its current policies, the Company does not use interest rate derivative instruments to manage
exposure to interest rate changes.

Exchange Rate Information

The Consolidated Financial Statements are prepared in Rmb. The financial statements of foreign subsidiaries are translated into Renminbi in
accordance with ASC Topic 830, Foreign Currency Matters.

The Hong Kong dollar is tied to and allowed to fluctuate within a narrow range
against the value of the U.S. dollar. Historically, there has been no material fluctuation in the exchange rate between the Rmb and the U.S. dollar and restrictions were set on the flow of Rmb between the PRC and the United States. Starting on
July 21, 2005, the PRC shifted to a managed floating exchange rate regime based on market supply and demand with reference to a basket of other currencies. The Renminbi is no longer pegged to the U.S. dollar.

Fluctuations in the value of foreign currencies cause U.S. dollar translated amounts to change in comparison with previous periods. However,
the fluctuation in exchange rates did not have material effect on the financial position of the Company in the past three years.



35



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##### Table of Contents

Foreign Currency Risk

As our major assets and liabilities are comprised of a mixture of items denominated in Renminbi, U.S. dollars and Hong Kong dollars, our
business and operating results may be materially affected in the event of a severe increase or decrease in the value of Renminbi against other currencies. If Renminbi appreciates against U.S. dollars/Hong Kong dollars, our operating expenses and net
income may be affected depending upon the then composition of our assets and liabilities.

Historically, both Hong Kong dollars and
Renminbi were pegged to U.S. dollars. As a result, the exchange rate of U.S. dollars/Hong Kong dollars to Renminbi fluctuated within a narrow range. However, on July 21, 2005, the PBOC adjusted the exchange rate of U.S. dollars to Renminbi from
1:8.27 to 1:8.11, resulting in an approximately 2% appreciation in the value of Renminbi against U.S. dollars. As Hong Kong dollars are pegged to U.S. dollars, such adjustment has effectively resulted in an approximately 2% appreciation in the value
of Renminbi against Hong Kong dollar.

On June 19, 2010, the PBOC released a statement indicating that it would proceed further
with reform of the Renminbi exchange rate regime and increase the Renminbi exchange rate flexibility. There remains significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which
could result in a further and more significant appreciation in the Renminbis value against the U.S. dollars. On March 17, 2014, the PBOC announced that the Renminbi exchange rate flexibility increased to 2% in order to proceed further
with reform of the Renminbi exchange rate regime. These could result in a further and more significant floatation in the Renminbis value against the U.S. dollars.

For more details, see RISK FACTORS  FLUCTUATIONS IN THE VALUE OF THE RENMINBI COULD NEGATIVELY IMPACT OUR RESULTS OF
OPERATIONS.

As of December 31, 2012, the Company had no open forward contracts or option contracts. The Companys cash
and cash equivalents as of December 31, 2012 was Rmb517.6 million of which approximately Rmb517.5 million equivalents (approximately US$83.1 million) were held in U.S. dollar deposits.

Interest Rate Fluctuations

The Companys interest income is sensitive to change in interest rates. However, the amount of interest income has been immaterial to the
Company.

The Company did not have any short-term or long-term debt which bore a floating interest rate as of December 31, 2011 or
2012.

The Company will be exposed to interest rate fluctuations on its cash on hand and any new borrowings under any new loan facility
and any change in interest rate could affect its results of operations and cash flows.



|ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|-------- | ------------------------------------------------------

Not applicable.

PART II



|ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|-------- | -----------------------------------------------

There has been no material default in
the payment of principal or interest or other material default requiring disclosure pursuant to this item. There have been no arrears in the payment of dividends or other material delinquency requiring disclosure pursuant to this item.



36



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##### Table of Contents

|ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|-------- | ----------------------------------------------------------------------------

There has
been no material modification to the rights of security holders required to be disclosed pursuant to this item.



|ITEM 15. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of Disclosure Controls and Procedures

Management of the Company, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of the Companys disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) and 15d-15(e), as of the end of the period covered by this Annual Report on Form 20-F. Based upon this
evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of December 31,2012, the Companys disclosure controls and procedures are ineffective as they are not sufficient to ensure that the information
that the Company is required to disclose in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission
rules and forms. The Company is developing a set of procedures and controls that will allow it to meet such time periods specified in the Securities and Exchange Commission rules and forms and to ensure that information required to be disclosed by
it in its reports is accumulated and communicated to its management, including the Issuers principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

Managements Annual Report on Internal Control over Financial Reporting

The directors and management of the Company are responsible for establishing and maintaining adequate internal control over our financial
reporting. The Companys internal control over financial reporting is a process designed under the supervision of the our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance, but not absolute assurance, regarding
the reliability of financial reporting and the preparation of its published financial statements. Internal control over financial reporting includes policies and procedures that:



| | 1. | Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with the generally accepted accounting principles;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Provide reasonable assurance that receipts and expenditures are being made only in accordance with the authorizations of management and directors of the Company; and
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | Provide reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial statements will be prevented or detected in a timely manner.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurances, but not absolute assurances, with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may decline.

Our management conducted an assessment of the effectiveness of the Companys internal control over financial reporting as of
December 31, 2012 based on the criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the assessment, management has concluded that
our internal control over financial reporting was ineffective as of December 31, 2012.

This Annual Report does not include an
attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial
reporting pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report on Form 20-F.

There have been no changes in the Companys internal control over financial reporting during the period covered by this Annual Report on
Form 20-F that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



37



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|ITEM 16A | AUDIT COMMITTEE FINANCIAL EXPERT
|-------- | --------------------------------

As the Companys common stock is not currently
listed on a U.S. national securities exchange, the Company is not obligated to have an audit committee of the board of directors. The Company has, however, had an Audit Committee for many years and continues to do so. As of December 31, 2012,
the Companys Board of Directors has determined that the two members of the Audit Committee, Mr. Richard Whittall and Mr. Sin Chi Fai, do not qualify as audit committee financial experts as defined by Item 401(h) of
Regulation S-K adopted pursuant to the Exchange Act. The Company is currently in the process of seeking a qualified financial expert for the audit committee.



|ITEM 16B | CODE OF ETHICS
|-------- | --------------

The Company has adopted a Code of Ethics for the Chief Executive and
Senior Financial Officers, which applies to the Companys principal executive officer and to its principal financial and accounting officers. A copy of the Code of Ethics is attached as Exhibit 14.1 to this Annual Report on Form 20-F.



|ITEM 16C | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The following table presents the aggregate fees
for services rendered by our principal external auditors for the periods indicated below:



|                   |  |         |     |  |         |  |    | 
|------------------ |  | ------- | --- |  | ------- |  | -- | 
|                   |  | 2011    |     |  | 2012    | 
|                   |  | US$000 |     |  | US$000 | 
|Audit Fees         |  |         | 328 |  |         |  | 78 | 
|Audit-Related Fees |  |         |    |  |         |  |   | 
|Tax Fees           |  |         |    |  |         |  |   | 
|All Other Fees     |  |         |    |  |         |  |   | 
|                   |  |         |     |  |         |  |    | 
|Total              |  |         | 328 |  |         |  | 78 | 
|                   |  |         |     |  |         |  |    | 

Audit fees means the aggregate fees in each of the fiscal years listed for professional services rendered by
our principal auditors for the audit of our annual consolidated financial statements or services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements. Services comprising the fees disclosed
under this category also involve principally limited reviews performed on our consolidated financial statements and the audits of the annual financial statements of our subsidiaries and affiliated companies.

Audit-related fees means the aggregate fees in each of the fiscal years listed for assurance and related services by our principal auditors
that are reasonably related to the performance of the audit or review of our financial statements and are not reported under Audit fees.

The Audit Committee members are responsible for the review of the quality and performance of external auditors. The Audit Committee has
adopted a policy regarding pre-approval of audit and permissible non-audit services provided by our independent auditors. Under the policy, the Audit Committee pre-approves all auditing services. The engagement of Crowe Horwath (HK) CPA Limited
as independent registered public accounting firm has been approved by the Audit Committee. If the Audit Committee approves an audit service within the scope of the engagement of the audit service, such audit service is deemed to have been
pre-approved.



|ITEM 16D | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|-------- | ----------------------------------------------------------

As the Companys common
stock is not listed on a U.S. national securities exchange, the information called for by Part II, Item 16D of the Form 20-F is not applicable.



|ITEM 16E | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|-------- | ----------------------------------------------------------------------

The Company has
not made any repurchases of its equity securities during the period covered by this report.



|ITEM 16F | CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
|-------- | --------------------------------------------

No applicable.



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##### Table of Contents

|ITEM 16G | CORPORATE GOVERNANCE
|-------- | --------------------

Not applicable.

PART III



|ITEM 17. | FINANCIAL STATEMENTS
|-------- | --------------------

See the Index to the Consolidated Financial Statements
accompanying this report beginning page F-1.



|ITEM 18. | FINANCIAL STATEMENTS
|-------- | --------------------

Not applicable.



39



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##### Table of Contents

CHINA ENTERPRISES LIMITED

Report of Independent Registered Public Accounting Firm and Consolidated Financial Statements

For the years ended December 31, 2010, 2011 and 2012



---

##### Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

CHINA ENTERPRISES LIMITED



|                                                                                                                     |  |  |     | 
|-------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Report of Independent Registered Public Accounting Firm                                                              |  |  | F-1 | 
|                                                                                                                     | 
|Consolidated Financial Statements:                                                                                   |  |  |     | 
|                                                                                                                     | 
|Consolidated Statements of Operations and Comprehensive Income for the years ended December 
31, 2010, 2011 and 2012 |  |  | F-2 | 
|                                                                                                                     | 
|Consolidated Balance Sheets as of December 31, 2011 and 2012                                                         |  |  | F-3 | 
|                                                                                                                     | 
|Consolidated Statements of Shareholders Equity for the years ended December 
31, 2010, 2011 and 2012                |  |  | F-4 | 
|                                                                                                                     | 
|Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2011 and 2012                           |  |  | F-5 | 
|                                                                                                                     | 
|Notes to Consolidated Financial Statements                                                                           |  |  | F-6 | 



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF

CHINA
ENTERPRISES LIMITED

We have audited the accompanying consolidated balance sheets of China Enterprises Limited (Company) and subsidiaries
as of December 31, 2012 and 2011, and the related consolidated statements of operations and comprehensive income, shareholders equity and cash flows for each of the years in the three-year period ended December 31, 2012. These
financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of the Companys internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of
the Company and subsidiaries as of December 31, 2012 and 2011 and the consolidated results of their operations and cash flows for each of the years in the three-year period ended December 31, 2012 in conformity with U.S. generally accepted
accounting principles.

As discussed in Note 2(l) to the consolidated financial statements, such statements have been adjusted for the retrospective
application of the authoritative guidance regarding the presentation of comprehensive income, which was adopted by the Company on January 1, 2012.

Our audits also included the translation of Renminbi (RMB) amounts into United States dollar (US$) amounts and, in our opinion, such translation, where
provided, has been made in conformity with the basis stated in Note 2(h) to the consolidated financial statements. Such United States dollar amounts are presented for the convenience of the readers.

/s/ Crowe Horwath (HK) CPA Limited

Hong Kong, China

February 11, 2015



F-1



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##### Table of Contents

CHINA ENTERPRISES LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands, except number of shares and per share data)



|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|--------------------------------------------------------------------------------------------- |  | ----------------------- | --------- | - | ---- |  | --------- | ---- |  |  | --------- | - |  |  | --------- | -
|                                                                                              |  | Year ended December 31, |          
|                                                                                              |  | 2010                    |           |   | 2011 |  |           | 2012 |  |  | 2012      |  
|                                                                                              |  | Rmb                     |           |   | Rmb  |  |           | Rmb  |  |  | US$       |  
|Operating activities                                                                          |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|General and administrative expenses                                                           |  |                         | (3,316    | ) |      |  | (4,186    | )    |  |  | (1,708    | ) |  |  | (274      | )
|Non-operating income (expenses):                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Interest income                                                                               |  |                         | 3,379     |   |      |  | 1,471     |      |  |  | 164       |   |  |  | 26        |  
|Interest expense                                                                              |  |                         | (3,299    | ) |      |  | (2,239    | )    |  |  | (916      | ) |  |  | (147      | )
|Investment income                                                                             |  |                         | 5,989     |   |      |  |          |      |  |  |          |   |  |  |          |  
|Net realized (loss) gain recognized on investments                                            |  |                         | (1,287    | ) |      |  | 4,393     |      |  |  | 1,330     |   |  |  | 213       |  
|Unrealized gain (loss) on trading securities still held at the balance sheet date             |  |                         | (3,555    | ) |      |  | (27,063   | )    |  |  | 4,541     |   |  |  | 729       |  
|Change in fair value of conversion option (note 6)                                            |  |                         | (185      | ) |      |  |          |      |  |  |          |   |  |  |          |  
|Impairment loss recognized on available-for-sale securities                                   |  |                         | (6,015    | ) |      |  | (2,281    | )    |  |  |          |   |  |  |          |  
|Loss on disposal of an affiliate (note 3)                                                     |  |                         |          |   |      |  | (364,480  | )    |  |  |          |   |  |  |          |  
|Administrative charges on investment (note 7)                                                 |  |                         |          |   |      |  | (7,500    | )    |  |  |          |   |  |  |          |  
|Others (note 13(a))                                                                           |  |                         |          |   |      |  | 744       |      |  |  | 10        |   |  |  | 2         |  
|Exchange gain (loss)                                                                          |  |                         | 1,345     |   |      |  | (114      | )    |  |  | (490      | ) |  |  | (79       | )
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Profit (loss) before income tax and equity in earnings of equity method affiliates            |  |                         | (6,944    | ) |      |  | (401,255  | )    |  |  | 2,931     |   |  |  | 470       |  
|Income tax expense (note 8)                                                                   |  |                         | (15,194   | ) |      |  | (31,411   | )    |  |  |          |   |  |  |          |  
|Equity in earnings of equity method affiliates (note 3)                                       |  |                         | 190,167   |   |      |  | 157,711   |      |  |  |          |   |  |  |          |  
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Net income (loss)                                                                             |  |                         | 168,029   |   |      |  | (274,955  | )    |  |  | 2,931     |   |  |  | 470       |  
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Other comprehensive income, net of tax                                                        |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Foreign currency translation adjustment                                                       |  |                         | (1,023    | ) |      |  | 119       |      |  |  | (3,548    | ) |  |  | (569      | )
|Available-for-sale investment securities:                                                     |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Change in unrealized losses                                                                   |  |                         | (865      | ) |      |  | (2,281    | )    |  |  |          |   |  |  |          |  
|Impairment loss                                                                               |  |                         | 6,015     |   |      |  | 2,281     |      |  |  |          |   |  |  |          |  
|Less: reclassification adjustment for gains recorded in net income                            |  |                         |          |   |      |  | (4,979    | )    |  |  |          |   |  |  |          |  
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Net change                                                                                    |  |                         | 4,127     |   |      |  | (4,860    | )    |  |  | (3,548    | ) |  |  | (569      | )
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Total comprehensive income                                                                    |  |                         | 172,156   |   |      |  | (279,815  | )    |  |  | (617      | ) |  |  | (99       | )
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Earnings (loss) per common share                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Basic and diluted                                                                             |  |                         | 18.63     |   |      |  | (30.49    | )    |  |  | 0.33      |   |  |  | 0.05      |  
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Weighted average number of shares used in the calculation of earnings (loss) per common share |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  
|Basic and diluted                                                                             |  |                         | 9,017,310 |   |      |  | 9,017,310 |      |  |  | 9,017,310 |   |  |  | 9,017,310 |  
|                                                                                              |  |                         |           |   |      |  |           |      |  |  |           |   |  |  |           |  

See accompanying notes to consolidated financial statements.



F-2



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##### Table of Contents

CHINA ENTERPRISES LIMITED

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except number of shares and their par values)



|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ---- |  | --------- | ---- |  |  | ------- | -
|                                                                                                                                                                      |  | As of December 31, |          
|                                                                                                                                                                      |  | 2011               |           |   | 2012 |  |           | 2012 | 
|                                                                                                                                                                      |  | Rmb                |           |   | Rmb  |  |           | US$  | 
|ASSETS                                                                                                                                                                |  |                    |           |   |      |  |           |      |  |  |         |  
|Current assets:                                                                                                                                                       |  |                    |           |   |      |  |           |      |  |  |         |  
|Cash and cash equivalents                                                                                                                                             |  |                    | 523,594   |   |      |  | 517,551   |      |  |  | 83,073  |  
|Prepaid expenses and other current assets                                                                                                                             |  |                    | 284       |   |      |  | 154       |      |  |  | 25      |  
|Other receivables (note 4)                                                                                                                                            |  |                    | 15,465    |   |      |  | 15,001    |      |  |  | 2,408   |  
|Due from related parties (note 13)                                                                                                                                    |  |                    | 14,698    |   |      |  | 1,419     |      |  |  | 228     |  
|Trading securities (note 5)                                                                                                                                           |  |                    | 25,634    |   |      |  | 25,795    |      |  |  | 4,140   |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Total current assets                                                                                                                                                  |  |                    | 579,675   |   |      |  | 559,920   |      |  |  | 89,874  |  
|Deposits paid for acquisition of investments (note 7)                                                                                                                 |  |                    | 127,278   |   |      |  | 127,278   |      |  |  | 20,430  |  
|Available-for-sale securities (note 5)                                                                                                                                |  |                    | 14,213    |   |      |  | 14,108    |      |  |  | 2,264   |  
|Other assets                                                                                                                                                          |  |                    | 6         |   |      |  | 6         |      |  |  | 1       |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Total assets                                                                                                                                                          |  |                    | 721,172   |   |      |  | 701,312   |      |  |  | 112,569 |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                  |  |                    |           |   |      |  |           |      |  |  |         |  
|Current liabilities:                                                                                                                                                  |  |                    |           |   |      |  |           |      |  |  |         |  
|Due to related parties (note 13)                                                                                                                                      |  |                    | 72,673    |   |      |  | 70,412    |      |  |  | 11,302  |  
|Payables to securities brokers (note 14)                                                                                                                              |  |                    | 19,776    |   |      |  | 4,943     |      |  |  | 793     |  
|Other payables                                                                                                                                                        |  |                    | 204       |   |      |  | 290       |      |  |  | 47      |  
|Accrued liabilities                                                                                                                                                   |  |                    | 5,285     |   |      |  | 3,179     |      |  |  | 510     |  
|Other taxes payable                                                                                                                                                   |  |                    | 2,753     |   |      |  | 2,753     |      |  |  | 442     |  
|Income taxes payable                                                                                                                                                  |  |                    | 22,729    |   |      |  | 22,600    |      |  |  | 3,628   |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Total current liabilities                                                                                                                                             |  |                    | 123,420   |   |      |  | 104,177   |      |  |  | 16,722  |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Total liabilities                                                                                                                                                     |  |                    | 123,420   |   |      |  | 104,177   |      |  |  | 16,722  |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Commitments and contingencies (note 11)                                                                                                                               |  |                    |           |   |      |  |           |      |  |  |         |  
|Shareholders equity:                                                                                                                                                 |  |                    |           |   |      |  |           |      |  |  |         |  
|Common stock - par value US$0.01 per share (50,000,000 shares authorized; 9,017,310 shares issued and outstanding at December 31,
2011 and December 31, 2012)(note 9) |  |                    | 770       |   |      |  | 770       |      |  |  | 124     |  
|Additional paid-in capital                                                                                                                                            |  |                    | 1,000,958 |   |      |  | 1,000,958 |      |  |  | 160,665 |  
|Accumulated other comprehensive losses                                                                                                                                |  |                    | (16,445   | ) |      |  | (19,993   | )    |  |  | (3,209  | )
|Accumulated deficit                                                                                                                                                   |  |                    | (387,531  | ) |      |  | (384,600  | )    |  |  | (61,733 | )
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Total shareholders equity                                                                                                                                            |  |                    | 597,752   |   |      |  | 597,135   |      |  |  | 95,847  |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  
|Total liabilities and shareholders equity                                                                                                                            |  |                    | 721,172   |   |      |  | 701,312   |      |  |  | 112,569 |  
|                                                                                                                                                                      |  |                    |           |   |      |  |           |      |  |  |         |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

CHINA ENTERPRISES LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(Amounts in thousands, except number of shares)



|                                                                                                    |  |                        |   |  |             |  |           |                        |  |  |             |  |  |                          |     |  |                                              |  |           |                    |  |  |         |   |  |  |          |   |  |  |          |  
|--------------------------------------------------------------------------------------------------- |  | ---------------------- | - |  | ----------- |  | --------- | ---------------------- |  |  | ----------- |  |  | ------------------------ | --- |  | -------------------------------------------- |  | --------- | ------------------ |  |  | ------- | - |  |  | -------- | - |  |  | -------- | -
|                                                                                                    |  | Supervotingcommonstock |   |  | Commonstock |  |           | Supervotingcommonstock |  |  | Commonstock |  |  | Additionalpaid-incapital |     |  | Accumulatedothercompre-hensive(losses)income |  |           | Accumulateddeficit |  |  | Total   |  
|                                                                                                    |  | Number                 |   |  | Number      |  |           | Rmb                    |  |  | Rmb         |  |  | Rmb                      |     |  | Rmb                                          |  |           | Rmb                |  |  | Rmb     |  
|Balance at January 1, 2010                                                                          |  |                        |  |  |             |  | 9,017,310 |                        |  |  |            |  |  |                          | 770 |  |                                              |  | 1,000,958 |                    |  |  | (15,712 | ) |  |  | (280,605 | ) |  |  | 705,411  |  
|Net income                                                                                          |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  |        |   |  |  | 168,029  |   |  |  | 168,029  |  
|Foreign currency translation adjustment                                                             |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | (1,023  | ) |  |  |         |   |  |  | (1,023   | )
|Unrealized loss on available-for-sale securities                                                    |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | (865    | ) |  |  |         |   |  |  | (865     | )
|Impairment loss on available-for-sale securities                                                    |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | 6,015   |   |  |  |         |   |  |  | 6,015    |  
|                                                                                                    |  |                        |   |  |             |  |           |                        |  |  |             |  |  |                          |     |  |                                              |  |           |                    |  |  |         |   |  |  |          |   |  |  |          |  
|Balance at December 31, 2010                                                                        |  |                        |  |  |             |  | 9,017,310 |                        |  |  |            |  |  |                          | 770 |  |                                              |  | 1,000,958 |                    |  |  | (11,585 | ) |  |  | (112,576 | ) |  |  | 877,567  |  
|Net loss                                                                                            |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  |        |   |  |  | (274,955 | ) |  |  | (274,955 | )
|Foreign currency translation adjustment                                                             |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | 119     |   |  |  |         |   |  |  | 119      |  
|Reclassification adjustments relating to available-for-sale investments disposed of during the year |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | (4,979  | ) |  |  |         |   |  |  | (4,979   | )
|Unrealized loss on available-for-sale securities                                                    |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | (2,281  | ) |  |  |         |   |  |  | (2,281   | )
|Impairment loss on available-for-sale securities                                                    |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | 2,281   |   |  |  |         |   |  |  | 2,281    |  
|                                                                                                    |  |                        |   |  |             |  |           |                        |  |  |             |  |  |                          |     |  |                                              |  |           |                    |  |  |         |   |  |  |          |   |  |  |          |  
|Balance at December 31, 2011                                                                        |  |                        |  |  |             |  | 9,017,310 |                        |  |  |            |  |  |                          | 770 |  |                                              |  | 1,000,958 |                    |  |  | (16,445 | ) |  |  | (387,531 | ) |  |  | 597,752  |  
|Net income                                                                                          |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  |        |   |  |  | 2,931    |   |  |  | 2,931    |  
|Foreign currency translation adjustment                                                             |  |                        |  |  |             |  |          |                        |  |  |            |  |  |                          |    |  |                                              |  |          |                    |  |  | (3,548  | ) |  |  |         |   |  |  | (3,548   | )
|                                                                                                    |  |                        |   |  |             |  |           |                        |  |  |             |  |  |                          |     |  |                                              |  |           |                    |  |  |         |   |  |  |          |   |  |  |          |  
|Balance at December 31, 2012                                                                        |  |                        |  |  |             |  | 9,017,310 |                        |  |  |            |  |  |                          | 770 |  |                                              |  | 1,000,958 |                    |  |  | (19,993 | ) |  |  | (384,600 | ) |  |  | 597,135  |  
|                                                                                                    |  |                        |   |  |             |  |           |                        |  |  |             |  |  |                          |     |  |                                              |  |           |                    |  |  |         |   |  |  |          |   |  |  |          |  
|Balance at December 31, 2012 (in US$)                                                               |  |                        |   |  |             |  |           |                        |  |  |            |  |  |                          | 124 |  |                                              |  | 160,665   |                    |  |  | (3,209  | ) |  |  | (61,733  | ) |  |  | 95,847   |  
|                                                                                                    |  |                        |   |  |             |  |           |                        |  |  |             |  |  |                          |     |  |                                              |  |           |                    |  |  |         |   |  |  |          |   |  |  |          |  

See accompanying notes to consolidated financial statements.



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##### Table of Contents

CHINA ENTERPRISES LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)



|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | -------- | - | ---- |  | -------- | ---- |  |  | ------- | - |  |  | ------ | -
|                                                                                                                                                                                     |  | Year ended December 31, |         
|                                                                                                                                                                                     |  | 2010                    |          |   | 2011 |  |          | 2012 |  |  | 2012    |  
|                                                                                                                                                                                     |  | Rmb                     |          |   | Rmb  |  |          | Rmb  |  |  | US$     |  
|Cash flows from operating activities:                                                                                                                                                |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Net income (loss)                                                                                                                                                                    |  |                         | 168,029  |   |      |  | (274,955 | )    |  |  | 2,931   |   |  |  | 470    |  
|Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:                                                                                   |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Net realized loss (gain) recognized on investments                                                                                                                                   |  |                         | 1,287    |   |      |  | (4,393   | )    |  |  | (1,330  | ) |  |  | (213   | )
|Unrealized (gain) loss on trading securities still held at the balance sheet date                                                                                                    |  |                         | 3,555    |   |      |  | 27,063   |      |  |  | (4,541  | ) |  |  | (729   | )
|Impairment loss on available-for-sale securities                                                                                                                                     |  |                         | 6,015    |   |      |  | 2,281    |      |  |  |        |   |  |  |       |  
|Loss on disposal of an affiliate                                                                                                                                                     |  |                         |         |   |      |  | 364,480  |      |  |  |        |   |  |  |       |  
|Administrative charges on investment                                                                                                                                                 |  |                         |         |   |      |  | 7,500    |      |  |  |        |   |  |  |       |  
|Others                                                                                                                                                                               |  |                         |         |   |      |  | (744     | )    |  |  |        |   |  |  |       |  
|Change in fair value of conversion option                                                                                                                                            |  |                         | 185      |   |      |  |         |      |  |  |        |   |  |  |       |  
|Equity in earnings of equity method affiliates                                                                                                                                       |  |                         | (190,167 | ) |      |  | (157,711 | )    |  |  |        |   |  |  |       |  
|Amortization of discount on subscription of convertible note receivable                                                                                                              |  |                         | (3,379   | ) |      |  | (1,471   | )    |  |  |        |   |  |  |       |  
|Interest income collected on convertible note                                                                                                                                        |  |                         | 1,097    |   |      |  | 458      |      |  |  |        |   |  |  |       |  
|Deferred tax                                                                                                                                                                         |  |                         | 19,017   |   |      |  | 15,771   |      |  |  |        |   |  |  |       |  
|Changes in operating assets and liabilities:                                                                                                                                         |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Prepaid expenses and other current assets                                                                                                                                            |  |                         | 804      |   |      |  | (123     | )    |  |  | 130     |   |  |  | 21     |  
|Other payables                                                                                                                                                                       |  |                         | (429     | ) |      |  | (463     | )    |  |  | 86      |   |  |  | 14     |  
|Accrued liabilities                                                                                                                                                                  |  |                         | 1,292    |   |      |  | (530     | )    |  |  | (2,106  | ) |  |  | (338   | )
|Income taxes payable                                                                                                                                                                 |  |                         |         |   |      |  | (24,360  | )    |  |  |        |   |  |  |       |  
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Net cash provided by (used in) operating activities                                                                                                                                  |  |                         | 7,306    |   |      |  | (47,197  | )    |  |  | (4,830  | ) |  |  | (775   | )
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Cash flows from investing activities:                                                                                                                                                |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|(Advances to) repayment from an unrelated party                                                                                                                                      |  |                         |         |   |      |  | (15,465  | )    |  |  | 234     |   |  |  | 38     |  
|Decrease in due from related parties                                                                                                                                                 |  |                         | 6,155    |   |      |  | 1,595    |      |  |  | 13,260  |   |  |  | 2,128  |  
|Purchases of trading securities                                                                                                                                                      |  |                         | (165     | ) |      |  | (3       | )    |  |  | (4,787  | ) |  |  | (768   | )
|Proceeds from trading securities                                                                                                                                                     |  |                         | 3,215    |   |      |  | 693      |      |  |  | 10,946  |   |  |  | 1,757  |  
|Decrease in payables to securities brokers                                                                                                                                           |  |                         | (4,879   | ) |      |  | (4,185   | )    |  |  | (14,833 | ) |  |  | (2,381 | )
|Proceeds from available-for-sale securities                                                                                                                                          |  |                         |         |   |      |  | 13,118   |      |  |  |        |   |  |  |       |  
|Proceeds from disposal of an affiliate (note 3)                                                                                                                                      |  |                         |         |   |      |  | 592,380  |      |  |  |        |   |  |  |       |  
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Net cash provided by investing activities                                                                                                                                            |  |                         | 4,326    |   |      |  | 588,133  |      |  |  | 4,820   |   |  |  | 774    |  
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Cash flows used in financing activities:                                                                                                                                             |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Changes in due to related parties                                                                                                                                                    |  |                         | (13,282  | ) |      |  | (16,932  | )    |  |  | (1,736  | ) |  |  | (279   | )
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Net cash (used in) provided by financing activities                                                                                                                                  |  |                         | (13,282  | ) |      |  | (16,932  | )    |  |  | (1,736  | ) |  |  | (279   | )
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Effect of exchange rate change                                                                                                                                                       |  |                         | 1,508    |   |      |  | (497     | )    |  |  | (4,297  | ) |  |  | (690   | )
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Net increase (decrease) in cash and cash equivalents                                                                                                                                 |  |                         | (142     | ) |      |  | 523,507  |      |  |  | (6,043  | ) |  |  | (970   | )
|Cash and cash equivalents, beginning of year                                                                                                                                         |  |                         | 229      |   |      |  | 87       |      |  |  | 523,594 |   |  |  | 84,043 |  
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Cash and cash equivalents, end of year                                                                                                                                               |  |                         | 87       |   |      |  | 523,594  |      |  |  | 517,551 |   |  |  | 83,073 |  
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Supplemental schedule of cash flow information:                                                                                                                                      |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Income taxes paid (note 3)                                                                                                                                                           |  |                         |         |   |      |  | 40,000   |      |  |  |        |   |  |  |       |  
|Interest paid                                                                                                                                                                        |  |                         | 3,299    |   |      |  | 2,239    |      |  |  | 916     |   |  |  | 147    |  
|                                                                                                                                                                                     |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Non-cash investing and financing activities:                                                                                                                                         |  |                         |          |   |      |  |          |      |  |  |         |   |  |  |        |  
|Deposits paid for new investment through settlement of Convertible Notes and accrued interest, refund of investment deposit and
settlement of amount due to a related party (note 7) |  |                         |         |   |      |  | 127,278  |      |  |  |        |   |  |  |       |  
|Income tax on disposal of HZ borne by an independent party (note 3)                                                                                                                  |  |                         |         |   |      |  | 39,485   |      |  |  |        |   |  |  |       |  

See accompanying notes to consolidated financial statements.



F-5



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|1. | ORGANIZATION AND PRINCIPAL ACTIVITIES
|-- | -------------------------------------

China Enterprises Limited (the
Company) was incorporated in Bermuda on January 28, 1993. Its common stock trades on the OTC (Over-the-Counter) Securities Market in the United States of America (the US).

China Strategic Holdings Limited (CSH), a public company listed on The Stock Exchange of Hong Kong Limited (the HKSE),
was the Companys ultimate parent company before its completion of a group reorganization in May 2006 following which the Company became a wholly-owned subsidiary of Group Dragon Investments Limited (GDI), a then equity method
affiliate of Hanny Holdings Limited (Hanny), a public company listed on the HKSE. In June 2006, Hanny acquired a controlling interest in GDI and became the parent company. On December 8, 2006, Hanny became a subsidiary of ITC
Corporation Limited (ITC), a public company listed on HKSE and, as a result, ITC became the ultimate parent company. On May 18, 2007, Hanny ceased to be a subsidiary of ITC and Hanny became the ultimate parent company until 2008
when Hanny reduced its equity interest in the Company. Following the completion of the distribution of its Hanny shares to its shareholders in November 2010, ITCs interests in Hanny dropped from 42% to 0.1%. As of December 31, 2012, Hanny
held a 28.95% equity interest in the Company. There have been no further changes in the Companys ownership status.

The accompanying
financial statements include the financial statements of the Company and its wholly owned subsidiaries which primarily consist of Million Good Limited (Million Good, incorporated in the British Virgin Islands, BVI,
principally engaged in investment holding), Wealth Faith Limited (Wealth Faith, incorporated in the BVI, principally engaged in investment holding), Cosmos Regent Limited (Cosmos Regent, incorporated in the BVI, principally
engaged in investment holding), Cyber Generation Limited (Cyber Generation, incorporated in the BVI, principally engaged in investment holding) and Whole Good Limited (Whole Good, incorporated in the BVI, principally engaged
in investment holding). The Company and all of its subsidiaries are collectively referred to as the Group.

Based in Hong Kong,
the Company has historically been engaged in tire manufacturing, trading and related businesses, and actively participated in the management of China-based companies in a variety of industries for strategic operating purposes.

As of January 1, 2010, the Company had a 26% equity interest in Hangzhou Zhongce Rubber Co., Limited (HZ, located in Hangzhou,
Zhejiang Province, the PRC). HZ and its consolidated subsidiaries (the PRC entities) are engaged in the manufacture of rubber tires in the PRC.

On November 28, 2011, the Company sold all of its ownership interests in HZ to CZ Tire Holdings Limited, an independent third party
company incorporated in the British Virgin Islands (note 3).



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|1. | ORGANIZATION AND PRINCIPAL ACTIVITIES - continued
|-- | -------------------------------------------------



After disposal of all of its interest in the tire business in 2011, the Company is actively
seeking new investment opportunities, including entering into an agreement through its wholly owned subsidiary to purchase a 40% equity interest in Million Cube Limited (Million Cube) in 2012. Million Cube has acquired a 45% equity
interest and corresponding shareholder loans of Paragon Winner Company Limited (Paragon). Paragon was formed to invest in a joint venture that is developing a golf course, hotel and resort complex at Sanya City in the PRC.

The closing of this transaction is subject to the receipt of all necessary governmental and other consents, and is expected to be completed in
the first quarter of 2015. Following the closing of the transaction and pursuant to the Agreement, the Company will have the right to appoint one director to Million Cubes board of directors, in order to exercise influence over the financial
and operating decisions of the golf resort business.

The Company has continued to seek new strategic investment opportunities in the PRC,
including Hong Kong. Apart from the golf resort business, the Company is also looking at other potential investments and has a long term goal to build a platform of value-added and productive businesses under the strategic direction of the Company
whereby it can exercise significant influence over the financial and operating decisions of its investees, and then have a degree of responsibility for the return on its investments.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------



| | (a) | Basis of Presentation
| | --- | ---------------------

The consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (U.S. GAAP).



| | (b) | Basis of Consolidation
| | --- | ----------------------

The Company consolidates all entities in which it is the primary
beneficiary of variable interests in variable interest entities and entities in which it has a controlling financial interest. The Company did not have a variable interest in any variable interest entity during the periods presented.

The consolidated financial statements include the assets, liabilities, revenue and expenses of the Company and its consolidated subsidiaries.
All intercompany balances and transactions have been eliminated on consolidation.



F-7



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (c) | Equity Method Investments in Affiliates
| | --- | ---------------------------------------

Investments in 50% or less owned companies over
which the Company exercises significant influence but not control, are accounted for using the equity method. Under the equity method, the Companys proportionate share of the affiliates net income or loss is included in the consolidated
statements of operations.

The investment is recorded at cost, with adjustments to recognize the Groups share of the earnings or
losses of the unconsolidated subsidiaries from the date of acquisition. The amount recorded in income is adjusted to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between the Groups cost and the
underlying equity in net assets of the affiliate at the date of investment. The investment amount is also adjusted to reflect the Groups share of changes in the equity method affiliates capital. Dividends received from the unconsolidated
subsidiaries reduce the carrying amount of the investment.



| | (d) | Cash and Cash Equivalents
| | --- | -------------------------

The Company considers cash on hand, demand deposits with
banks with original maturities of three months or less when purchased to be cash and cash equivalents.



| | (e) | Trading Securities
| | --- | ------------------

Trading securities refer to equity securities that are bought and
held principally for the purpose of selling them in the near term, and are reported at fair value, with unrealized gains and losses included in earnings. The fair value of the Companys investments in trading securities is based on the quoted
market price on the last business day of the fiscal year.



F-8



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (f) | Available-for-sale Securities
| | --- | -----------------------------

Available-for-sale securities consist of quoted equity
securities that are not designated as trading securities. They are held at fair value with unrealized gains and losses, net of tax, reported in accumulated other comprehensive gain or losses. Any unrealized losses that are deemed
other-than-temporary are included in current period earnings and removed from accumulated other comprehensive gain or losses.

Realized
gains and losses on investment securities are included in current period earnings. For purposes of computing realized gains and losses, the cost basis of each investment sold is generally based on the average cost method.

The Company regularly evaluates whether the decline in fair value of available-for-sale securities is other-than-temporary and objective
evidence of impairment could include:



| |  |  | The severity and duration of the fair value decline;
| | - |  | ----------------------------------------------------



| |  |  | Deterioration in the financial condition of the issuer; and
| | - |  | -----------------------------------------------------------



| |  |  | Evaluation of the factors that could cause individual securities to have an other-than-temporary impairment.
| | - |  | ------------------------------------------------------------------------------------------------------------

During the years ended December 31, 2010 and 2011, Rmb6,015 and Rmb2,281 of losses previously classified in other comprehensive gain or
losses were reclassified into earnings to recognize an other-than-temporary decline in fair value. No such other-than-temporary decline in fair value was recognized during the year ended December 31, 2012.



| | (g) | Income Taxes
| | --- | ------------

Deferred income taxes are recognized for temporary differences between the
tax basis of assets and liabilities and their reported amounts in the consolidated financial statements and unutilized tax loss carry forwards by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided in accordance with the laws of the relevant taxing
authorities.

The Company adopted ASC Topic 740, Income Taxes, which clarifies the accounting for uncertainty in income taxes recognized in
an enterprises financial statements. The interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC
Topic 740 also provides accounting guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.



F-9



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (h) | Foreign Currencies
| | --- | ------------------

The functional currency of the Company and its Hong Kong domiciled
subsidiaries is Hong Kong dollars. The Company has elected Renminbi as its reporting currency.

Foreign currency transactions are
translated into the functional currencies of the Company and its subsidiaries at the applicable exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into
functional currencies using the applicable exchange rates prevailing at the respective balance sheet dates. Exchange differences are included in the consolidated statements of operations.

Assets and liabilities of the Company and its subsidiaries domiciled in Hong Kong have been translated into Renminbi at the rates of exchange
prevailing at the balance sheet dates and all income and expense items are translated into Renminbi at the average rates of exchange over the year. Exchange differences resulting from the translation have been recorded as a component of
comprehensive losses.

The translation of Renminbi amounts into US$ amounts are included solely for the convenience of readers and have
been made at US$1.00 = Rmb6.2301, the noon buying rate from the Federal Reserve Bank of New York on December 31, 2012. No representation is made that the Renminbi amounts could have been, or could be, converted into United States dollar at that
rate or at any other rate.



| | (i) | Earnings (Loss) Per Share
| | --- | -------------------------

Basic earnings (loss) per share is computed by dividing net
income (loss) by the weighted-average number of common shares outstanding during the year. The Company did not have dilutive potential common shares during fiscal 2010, 2011 and 2012.



| | (j) | Use of Estimates
| | --- | ----------------

The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses for the years presented. Actual results may differ from those estimates. Significant estimates in these financial statements that are susceptible to change as more information becomes available are collectability of receivables, impairment
of deposits paid for acquisition of investments and available-for-sale securities, and valuation allowances for deferred tax assets.



F-10



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (k) | Financial Instruments
| | --- | ---------------------

The Company recognizes all derivative instruments on the balance
sheet at fair value with changes in fair values reported in the consolidated statements of operations.

The Companys financial
instruments that are exposed to concentration of credit risk consist primarily of its cash and cash equivalents, advances to affiliates and amounts due from related parties. The Company has reviewed the credit worthiness and financial position of
its related parties for credit risks associated with amounts due from them. These entities have good credit standing and the Company does not expect to incur significant losses for uncollected advances from these entities.



| | (l) | Comprehensive Income
| | --- | --------------------

Comprehensive income represents changes in equity resulting from
transactions and other events and circumstances from non-owner sources. Comprehensive income consists of net income (loss) and the foreign exchange differences arising from translation to the reporting currency and unrealized gains and losses on
available-for-sale securities.

The consolidated financial statements have been adjusted for the retrospective application of the
authoritative guidance regarding presentation of comprehensive income, which was adopted by the Company on January 1, 2012.



| | (m) | Recently Issued Accounting Pronouncements
| | --- | -----------------------------------------

In July 2012, the FASB issued ASU 2012-02
Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment. This ASU simplifies how entities test indefinite-lived intangible assets for impairment to improve consistency in impairment
testing requirements among long-lived asset categories. These amended standards permit an assessment of qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its
carrying value. For assets in which this assessment concludes it is more likely than not that the fair value is more than its carrying value, these amended standards eliminate the requirement to perform quantitative impairment testing as outlined in
the previously issued standards. The guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012; early adoption is permitted. The adoption of this standard is not expected to have
a material impact on the Companys consolidated financial position or results of operations.



F-11



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (m) | Recently Issued Accounting Pronouncements - continued
| | --- | -----------------------------------------------------



In February 2013, the FASB issued Accounting Standards Update No. 2013-02 Comprehensive
Income (Topic 220): The objective of this update is to improve the reporting of reclassifications out of accumulated other comprehensive income. The amendments in this update seek to attain that objective by requiring an entity to report the effect
of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in
its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP
that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account (for example, inventory) instead of
directly to income or expense in the same reporting period. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. The Company does not expect the adoption of the provisions in
this update will have a significant impact on its consolidated financial statements.

In March 2013, the FASB issued ASU No. 2013-05,
Foreign Currency Matters, (Topic 830): Parents Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity, to
resolve a diversity in accounting for the cumulative translation adjustment of foreign currency upon derecognition of a foreign subsidiary or group of assets. This ASU requires the parent to apply the guidance in Subtopic 830-30 to release any
related cumulative translation adjustment into net income when a reporting entity (parent) ceases to have a controlling financial interest in a subsidiary or group of assets within a foreign entity. Accordingly, the cumulative translation adjustment
should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity in which the subsidiary or group of assets had resided. Further, this ASU clarified that the parent
should apply the guidance in subtopic 810-10 if there is a sale of an investment in a foreign entity, including both (1) events that result in the loss of a controlling financial interest in a foreign entity and (2) events that result in
an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date. Accordingly, the cumulative translation adjustment should be released into net income upon the occurrence of those events. The
provisions in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the
Companys consolidated financial position or results of operations.



F-12



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (m) | Recently Issued Accounting Pronouncements - continued
| | --- | -----------------------------------------------------



In June 2013, the Financial Accounting Standards Board (FASB) issued Accounting
Standards Update No. 2013-08, Financial ServicesInvestment Companies (Topic 946)Amendments to the Scope, Measurement, and Disclosure Requirements. The amendments in this update affect the scope, measurement, and
disclosure requirements for investment companies under U.S. GAAP. The amendments: (1) change the approach to the investment company assessment in Topic 946, clarify the characteristics of an investment company, and provide comprehensive
guidance for assessing whether an entity is an investment company; (2) require an investment company to measure non-controlling ownership interests in other investment companies at fair value rather than using the equity method of accounting;
and (3) require the following additional disclosures: (a) the fact that the entity is an investment company and is applying the guidance in Topic 946, (b) information about changes, if any, in an entitys status as an investment
company, and (c) information about financial support provided or contractually required to be provided by an investment company to any of its investees. These amendments are effective for interim and annual reporting periods in fiscal years
beginning after December 15, 2013. Early adoption is not permitted. The Company does not expect ASU 2013-08 to have a significant impact on its consolidated financial statements.

In July 2013, the FASB issued Accounting Standards Update No. 2013-11, Income Taxes (Topic 740). The amendments in this update
provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, similar tax loss, or tax credit carryforward exists. These amendments provide that an unrecognized tax benefit, or a
portion thereof, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except to the extent that a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date to settle any additional income taxes that would result from disallowance of a tax position, or the tax law does not require the entity to use, and
the entity does not intend to use, the deferred tax asset for such purpose, then the unrecognized tax benefit should be presented as a liability. The amendments in this update are effective for fiscal years, and interim periods within those years,
beginning after December 15, 2013. Early adoption is permitted. The Company does not expect ASU 2013-11 to have a significant impact on its consolidated financial statements.

In April 2014, the FASB issued ASU 2014-08 Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic
360)Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which changes the threshold for reporting discontinued operations and adds new disclosures. The new guidance defines a discontinued operation
as a disposal that represents a strategic shift that has (or will have) a major effect on an entitys operations and financial results. The standard is required to be adopted by public business entities in annual periods beginning
on or after December 15, 2014, and interim periods within those annual periods. Entities may early adopt the guidance for new disposals. The Company does not expect ASU 2014-08 to have a significant impact on its consolidated
financial statements.



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
|-- | ------------------------------------------------------



| | (m) | Recently Issued Accounting Pronouncements - continued
| | --- | -----------------------------------------------------



In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic
606) which clarifies and improves the principles for recognizing revenue and develops a common revenue standard for United States generally accepted accounting principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) that
among other things, improves comparability of revenue recognition practices and provides more useful information to users of financial statements through improved disclosure requirements. The amendments in ASU 2014-09 are effective for annual
reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company does not expect ASU 2014-09 to have a significant impact on its revenue recognition.

In June 2014, the FASB issued ASU 2014-12, CompensationStock Compensation (Topic 718) which provides explicit guidance
on the treatment of awards with performance targets that could be achieved after the requisite service period. The amendments in ASU 2014-12 are effective for annual periods and interim periods within those annual periods beginning after
December 15, 2015. The Company does not expect that the adoption will have a material impact on its consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a
future date are not expected to have a material impact on the Companys consolidated financial statements upon adoption.



|3. | DISPOSAL OF AN AFFILIATE
|-- | ------------------------

On November 28, 2011, the Company sold all of its
ownership interests in HZ to CZ Tire Holdings Limited, an independent third party company incorporated in the British Virgin Islands, for cash consideration of Rmb600,000 or approximately US$95,330. The Company is subject to the PRC EIT on the
taxable gain arising from the disposal of HZ (notes 6 and 9) at a statutory rate of 10%. As such, the Company is required to pay an income tax of Rmb79,485 on the disposal of HZ. According to the disposal agreement, CZ Tire Holdings Limited bore the
difference of the tax payment in excess of Rmb40,000 or approximately US$6,355.

The proceeds, net of expenses, were fully settled on
November 28, 2011.



F-14



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|3. | DISPOSAL OF AN AFFILIATE - continued
|-- | ------------------------------------



A loss on disposal of Rmb364,480 was recognized which was the difference between the
consideration and the net book value of HZs consolidated net assets at the date of disposal summarized in the table below:



|                                                     |  |     |           |  
|---------------------------------------------------- |  | --- | --------- | -
|                                                     |  | Rmb |          
|Current assets                                       |  |     | 8,859,419 |  
|Non-current assets                                   |  |     | 6,393,798 |  
|Current liabilities                                  |  |     | 8,953,480 |  
|Non-current liabilities                              |  |     | 2,101,789 |  
|                                                     |  |     |           |  
|Total equity, excluding non-controlling interests    |  |     | 3,832,622 |  
|                                                     |  |     |           |  
|Companys net equity interest                        |  |     | 26        | %
|Investments in equity method affiliates              |  |     | 996,345   |  
|                                                     |  |     |           |  
|Net consideration received                           |  |     | (592,380  | )
|Income tax payment borne by CZ Tire Holdings Limited |  |     | (39,485   | )
|                                                     |  |     |           |  
|Loss on disposal                                     |  |     | 364,480   |  
|                                                     |  |     |           |  

Summarized financial information of HZ:



|                                                                       |  |      |            |  |       |  |            | 
|---------------------------------------------------------------------- |  | ---- | ---------- |  | ----- |  | ---------- | 
|                                                                       |  | 2010 |            |  | 2011* | 
|                                                                       |  | Rmb  |            |  | Rmb   | 
|Revenues                                                               |  |      | 20,258,466 |  |       |  | 23,959,478 | 
|                                                                       |  |      |            |  |       |  |            | 
|Net income and comprehensive income attributable to shareholders of HZ |  |      | 731,411    |  |       |  | 606,582    | 
|                                                                       |  |      |            |  |       |  |            | 
|Companys share of net income of HZ                                    |  |      | 190,167    |  |       |  | 157,711    | 
|                                                                       |  |      |            |  |       |  |            | 



|* | Up to the date of disposal.
|- | ---------------------------



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|4. | OTHER RECEIVABLES
|-- | -----------------

Other receivables as of December 31, 2011 and 2012 represented a
short-term advance to an independent third party company which was unsecured, non-interest bearing and had no fixed repayment terms. The amount was settled in full in December 2013.



|5. | INVESTMENTS
|-- | -----------



|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|-------------------------------------- |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------ | -
|                                       |  | 2011 |         |   | 2012 |  |         | 2012 | 
|                                       |  | Rmb  |         |   | Rmb  |  |         | US$  | 
|Trading securities:                    |  |      |         |   |      |  |         |      |  |  |        |  
|Adjusted cost                          |  |      | 110,667 |   |      |  | 80,638  |      |  |  | 12,943 |  
|Unrealized gains                       |  |      | 876     |   |      |  | 1,511   |      |  |  | 242    |  
|Unrealized losses                      |  |      | (85,909 | ) |      |  | (56,354 | )    |  |  | (9,045 | )
|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|Total at fair value                    |  |      | 25,634  |   |      |  | 25,795  |      |  |  | 4,140  |  
|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|Equity securities listed in Hong Kong  |  |      | 16,557  |   |      |  | 12,126  |      |  |  | 1,946  |  
|Equity securities listed in Singapore  |  |      | 9,077   |   |      |  | 13,669  |      |  |  | 2,194  |  
|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|Total                                  |  |      | 25,634  |   |      |  | 25,795  |      |  |  | 4,140  |  
|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|Available-for-sale securities:         |  |      |         |   |      |  |         |      |  |  |        |  
|Equity securities listed in Hong Kong: |  |      |         |   |      |  |         |      |  |  |        |  
|Cost                                   |  |      | 16,494  |   |      |  | 14,108  |      |  |  | 2,264  |  
|Impairment recognized in earnings      |  |      | (2,281  | ) |      |  |        |      |  |  |       |  
|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|Adjusted amortized cost                |  |      | 14,213  |   |      |  | 14,108  |      |  |  | 2,264  |  
|                                       |  |      |         |   |      |  |         |      |  |  |        |  
|Total at fair value                    |  |      | 14,213  |   |      |  | 14,108  |      |  |  | 2,264  |  
|                                       |  |      |         |   |      |  |         |      |  |  |        |  

As of the end of reporting period, the Company considers the declines in market value of one of its marketable
securities in its investment portfolio to be other than temporary in nature and considers this investment other-than-temporarily impaired. Fair values were determined using closing prices of each individual security in the investment portfolio. When
evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, and the
Companys intent to sell, or whether it is more likely than not it will be required to sell, the investment before recovery of the investments cost basis. During 2010, 2011 and 2012, the Company recognized impairment charges of Rmb6,015,
Rmb2,281 and Nil, respectively.



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|6. | CONVERTIBLE NOTE RECEIVABLE
|-- | ---------------------------

On March 23, 2006, Rosedale Hotel Holdings Limited
(Rosedale) entered into a subscription agreement with the Company and other subscribers for 2% convertible exchangeable notes (the Convertible Notes) with an aggregate principal amount of HK$1,000,000. The Company and other
subscribers agreed to subscribe for the Convertible Notes in exchange for cash in the principal amount of HK$300,000 and HK$700,000, respectively.

Unless previously converted or lapsed or redeemed by Rosedale, Rosedale will redeem the Notes on the fifth anniversary from the date of issue
of the Notes (i.e. June 7, 2011, the Maturity Date) at the redemption amount which is 110% of the principal amount of the Notes outstanding.

The Company shall have the right to convert, on any business day commencing from the 7th day after the date of issue of the Convertible Note up
to and including the date which is 7 days prior to the Maturity Date, the whole or any part (in an amount or integral multiple of HK$1,000) of the principal amount of the Convertible Note into shares of Rosedale at the then prevailing conversion
price.

Subject to certain restrictions which are intended to facilitate compliance with relevant rules and regulations, each noteholder
shall have the right to exchange from time to time all or part (in the amount of HK$10,000 or integral multiples thereof) of 50% of the initial principal amount of its Convertible Notes for shares in the share capital of any company which is an
affiliated company of Rosedale as defined in the Rules Governing the Listing of Securities on the HKSE or subsidiary of Rosedale that is to be listed on a stock exchange through an initial public offering at the price (the Spin-off
Shares), subject to anti-dilutive adjustments, at which the Spin-off Shares are actually issued to the public at the time of the listing on that stock exchange. The decision on whether to list any of its affiliated companies or subsidiaries in
the future is at the sole discretion of the directors of Rosedale.

The subscription of the Convertible Notes by the Company was completed
on June 8, 2006.

The Company exercised certain of its conversion rights in the principal amount of HK$158,000 (equivalent to
approximately Rmb148,916) and HK$79,000 (equivalent to approximately Rmb74,458) in June 2007 and July 2007, respectively, under the terms of the Convertible Notes. No Convertible Notes were converted during the years ended 2010 and 2011.

In accordance with Derivative and Hedging Topic of the FASB Accounting Standards Codification Topic 815 (ASC 815), the conversion
option element of the Convertible Notes represents an embedded derivative instrument which must be accounted for separately from the Convertible Notes and, as such, to be measured at fair value when initially recorded and at subsequent reporting
dates. The debt element of the Convertible Notes was also measured at fair value initially and subsequently at amortized cost with an effective interest rate of 6.5%. The fair value of the conversion option was estimated using the Black-Scholes
option pricing model at the date of its issuance and at each subsequent balance sheet date. The impact of changes in fair value of this conversion option was a loss of Rmb185 which has been recognized in the consolidated statements of operations for
2010. No changes in fair value of conversion option were recognized in the consolidated statement of operations for 2011.



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|6. | CONVERTIBLE NOTE RECEIVABLE - continued
|-- | ---------------------------------------



On June 7, 2011, the maturity date of the Convertible Notes, Convertible Notes in the
amount of HK$63,000 remained outstanding. All such Convertible Notes, together with accrued interest of HK$10,800, totaled Rmb59,778, were later refunded to the Company (note 7).

As of December 31, 2011 and 2012, the Company held a 7.4% equity interest of Rosedale, of which 43,325,554 shares and 5,334,860 shares
were recorded as available-for-sale securities and trading securities, respectively.



|7. | DEPOSIT PAID FOR ACQUISITION OF INVESTMENTS
|-- | -------------------------------------------



| | a) | On April 15, 2008, Wealth Faith, a direct, wholly owned subsidiary, entered into a Memorandum of Understanding (MOU) with a third party for the acquisition of a 10% equity ownership interest in Always
Rich Resources Inc. (Always Rich), an unrelated investment holding company. Always Rich indirectly holds a partial interest in a property under development and a parcel of land situated in Guangzhou, the PRC.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The total consideration for the acquisition of the interest in Always Rich was Rmb150,000. A deposit of Rmb75,000 was paid to a third party
vendor on April 24, 2008.

On June 30, 2011, the MOU lapsed. The deposit of Rmb67,500 was refunded to the Company. Rmb7,500 was
charged by the third party as an administrative fee and recorded as an expense of the Company for the year ended December 31, 2011.



| | b) | On June 1, 2011, the Company, through Wealth Faith, entered into a Memorandum of Understanding under which Wealth Faith will acquire an equity interest from a third party in an investment holding company with the
intention of jointly operating a golf and hotel complex in the PRC. Under the Memorandum of Understanding, refundable deposits amounting to HK$154,800 or Rmb127,278 have been paid to the third party. The deposits were funded by the settlement of the
Convertible Notes of Rosedale and accrued interest that totaled HK$73,800 or Rmb59,778 (note 6) and a refund of deposits paid for acquisition of a property investment company of Rmb67,500 (see (a) above).
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|7. | DEPOSIT PAID FOR ACQUISITION OF INVESTMENTS - continued
|-- | -------------------------------------------------------



| | b) | Continued
| | -- | ---------



On September 28, 2012, the Company entered into a definitive investment agreement (the
Agreement) with a third party vendor. The Agreement provides for the purchase by Wealth Faith Limited of 40% of the equity interest in Million Cube Limited (Million Cube), a company incorporated in the BVI from the third
party vendor at a consideration of HK$200,000 or approximately US$25,600.

The Company, through Wealth Faith, has previously deposited
HK$154,800 or Rmb127,278 in earnest money with the third party vendor, which will be applied toward the purchase price. According to the Agreement, the earnest money is refundable in full, without interest, within one month from the date of the
receipt of a written notice from the Company if the Company is not satisfied with the conditions precedent as stated in the Agreement. At the date of these financial statements, this transaction is not yet completed. The closing of the transaction
is subject to, among other things, the Company and Wealth Faith Limited satisfactorily completing due diligence and the receipt of all necessary governmental and other consents. The parties to the transaction anticipate that the transaction will
close in the first quarter of 2015. Million Cube is currently held 51% by the third party vendor and 49% by a company listed in Singapore, the chairman of which is Dr Allan Yap, the chairman, chief executive director and a director of the Company.

Business of Million Cube

Effective on May 31, 2012, Million Cube acquired from ITC Properties Group Limited, a company incorporated in Bermuda and listed on the
HKSE (ITC Properties), a 45% equity interest of Paragon Winner Company Limited (Paragon). Paragon was incorporated in the BVI and engages in the development and operation of Sanya Sun Valley Golf Resort in Yalong Bay, Sanya
City, PRC.

ITC Properties retained a 55% equity interest in Paragon, then reduced its interest to 36.5% in February 2014 and further
reduced it to 11% in April 2014. The chairman of ITC Properties was also the chairman and a director of Rosedale (note 13) until December 30, 2014.



F-19



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|8. | INCOME TAXES
|-- | ------------

The components of profit (loss) from operations before income taxes and
equity in earnings of equity method affiliates are as follows:



|                                  |  |                         |        |   |      |  |          |      |  |  |       |  |  |  |     | 
|--------------------------------- |  | ----------------------- | ------ | - | ---- |  | -------- | ---- |  |  | ----- |  |  |  | --- | 
|                                  |  | Year ended December 31, |       
|                                  |  | 2010                    |        |   | 2011 |  |          | 2012 |  |  | 2012  | 
|                                  |  | Rmb                     |        |   | Rmb  |  |          | Rmb  |  |  | US$   | 
|The PRC                           |  |                         |       |   |      |  | (371,980 | )    |  |  |      |  |  |  |    | 
|All other jurisdictions           |  |                         | (6,944 | ) |      |  | (29,275  | )    |  |  | 2,931 |  |  |  | 470 | 
|                                  |  |                         |        |   |      |  |          |      |  |  |       |  |  |  |     | 
|                                  |  |                         | (6,944 | ) |      |  | (401,255 | )    |  |  | 2,931 |  |  |  | 470 | 
|                                  |  |                         |        |   |      |  |          |      |  |  |       |  |  |  |     | 
|                                  |  |                         |        |  
|Income taxes expense consists of: |  |                         |        |   |      |  |          |      |  |  |       |  |  |  |     | 
|                                  | 
|                                  |  | Year ended December 31, |       
|                                  |  | 2010                    |        |   | 2011 |  |          | 2012 |  |  | 2012  | 
|                                  |  | Rmb                     |        |   | Rmb  |  |          | Rmb  |  |  | US$   | 
|Current                           |  |                         | (3,823 | ) |      |  | 15,640   |      |  |  |      |  |  |  |    | 
|Deferred                          |  |                         | 19,017 |   |      |  | 15,771   |      |  |  |      |  |  |  |    | 
|                                  |  |                         |        |   |      |  |          |      |  |  |       |  |  |  |     | 
|                                  |  |                         | 15,194 |   |      |  | 31,411   |      |  |  |      |  |  |  |    | 
|                                  |  |                         |        |   |      |  |          |      |  |  |       |  |  |  |     | 

Bermuda

The Company was incorporated under the laws of Bermuda and, under current Bermuda law, is not subject to tax on income or on capital gains. The
Company has received an undertaking from the Ministry of Finance of Bermuda pursuant to the provisions of the Exempted Undertakings Tax Protection Act, 1966, as amended, that in the event that Bermuda enacts any legislation imposing tax computed on
profits or income, including any dividend or capital gains withholding tax, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, then the imposition of any such tax shall not be
applicable to the Company or to any of its operations or the shares, debentures or other obligations of the Company until March 28, 2016. This undertaking is not to be construed so as to (i) prevent the application of any such tax or duty
on such person as an ordinary resident in Bermuda; or (ii) prevent the application of any tax payable in accordance with the provision of the Land Tax Act, 1967 or otherwise payable in relation to any land leased to the Company in Bermuda.

British Virgin Islands (BVI)

The Company has certain of its subsidiaries incorporated under the laws of the BVI. Pursuant to the rules and regulations of the BVI, these
subsidiaries are not subject to any income tax in the BVI.

Under the International Business Companies Act of the BVI as currently in
effect, a holder of common stock who is not a resident of the BVI is exempt from BVI income tax on dividends paid with respect to the common stock and all holders of common stock are not liable for BVI income tax on gains realized during that year
on sale or disposal of such shares; the BVI does not impose a withholding tax on dividends paid by a company incorporated under the International Business Companies Act.



F-20



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|8. | INCOME TAXES - continued
|-- | ------------------------



British Virgin Islands (BVI) - continued

There are no capital gains, gift or inheritance taxes levied by the BVI on companies incorporated under the International Business Companies
Act. In addition, the common stock is not subject to transfer taxes, stamp duties or similar charges.

There is no income tax treaty or
convention currently in effect between the United States and the BVI.

Hong Kong

The Company and certain of its subsidiaries are operating in Hong Kong and their income taxes have been calculated by applying a profits tax
rate of 16.5% to the estimated taxable income earned in or derived from Hong Kong.

PRC

The Groups PRC entities (note 3) were subject to income taxes calculated at tax rates (15% to 25% beginning from January 1, 2008) on
the taxable income.

Deferred tax for the years ended December 31, 2010 and 2011 of Rmb19,017 and Rmb15,771 had been recognized on the
undistributed earnings of the Companys affiliate in the PRC at a rate of 10%.

The Company was subject to the PRC EIT on the taxable
gain arising from the disposal of HZ (note 3) at a statutory rate of 10%. As such, the Company was required to pay an income tax of Rmb79,485 on the disposal of HZ, A provision of Rmb15,640 was charged as current income tax expense for the year
ended December 31, 2011 being the excess of Rmb79,485 over the carrying amount of deferred tax liabilities of Rmb63,845.

The Company
adopted the provisions of ASC Topic 740 effective January 1, 2007. The Group has made its assessment of the level of tax authority for each tax position (including the potential application of interest and penalties) based on the technical
merits, and has measured the unrecognized tax benefits associated with the tax positions. Based on the evaluation by the Company, it is concluded that there are no significant uncertain tax positions requiring recognition in the financial
statements.

The Company has no material unrecognized tax benefit which would favorably affect the effective income tax rate in future
periods and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. The Company classifies interest and/or penalties related to income tax matters in income tax expense.
As of December 31, 2011 and 2012, there is no interest and penalties related to uncertain tax positions.

The tax positions for the
years 2005 to 2012 may be subject to examination by the Hong Kong tax authorities.



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|8. | INCOME TAXES - continued
|-- | ------------------------



According to the PRC Tax Administration and Collection Law, the statute of limitations is
three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a
related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

The tax
impact of temporary differences gives rise to the following deferred tax asset and liability:



|                                 |  |      |         |   |      |  |         |      |  |  |        |  
|-------------------------------- |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------ | -
|                                 |  | 2011 |         |   | 2012 |  |         | 2012 | 
|                                 |  | Rmb  |         |   | Rmb  |  |         | US$  | 
|Current deferred tax asset:      |  |      |         |   |      |  |         |      |  |  |        |  
|Tax losses                       |  |      | 21,814  |   |      |  | 21,949  |      |  |  | 3,523  |  
|Valuation allowances             |  |      | (21,814 | ) |      |  | (21,949 | )    |  |  | (3,523 | )
|                                 |  |      |         |   |      |  |         |      |  |  |        |  
|                                 |  |      |        |   |      |  |        |      |  |  |       |  
|                                 |  |      |         |   |      |  |         |      |  |  |        |  
|                                 |  |      |        
|Movement in valuation allowance: |  |      |         |   |      |  |         |      |  |  |        |  
|                                 |  |      |        
|                                 |  | 2011 |         |   | 2012 |  |         | 2012 | 
|                                 |  | Rmb  |         |   | Rmb  |  |         | US$  | 
|At the beginning of the year     |  |      | 17,132  |   |      |  | 21,814  |      |  |  | 3,501  |  
|Current year movement            |  |      | 4,682   |   |      |  | 135     |      |  |  | 22     |  
|                                 |  |      |         |   |      |  |         |      |  |  |        |  
|At the end of the year           |  |      | 21,814  |   |      |  | 21,949  |      |  |  | 3,523  |  
|                                 |  |      |         |   |      |  |         |      |  |  |        |  

The Group has total tax operating loss carry forwards of RMB132,211 and RMB133,026 as of December 31, 2011
and 2012, respectively, which are available for offset against future profits that may be carried forward indefinitely. The valuation allowance refers to the estimated portion of the deferred tax assets that are not more likely than not
to be realized.

The reconciliation of the effective income tax rate based on profit (loss) from operations before income taxes to the
statutory income tax rates in Hong Kong is as follows:



|                                                                                 |  |                         |       |    |      |  |       |      |  |  |       |   
|-------------------------------------------------------------------------------- |  | ----------------------- | ----- | -- | ---- |  | ----- | ---- |  |  | ----- | --
|                                                                                 |  | Year ended December 31, |      
|                                                                                 |  | 2010                    |       |    | 2011 |  |       | 2012 | 
|Profits tax rate in Hong Kong                                                    |  |                         | 16.5  | %  |      |  | 16.5  | %    |  |  | 16.5  | % 
|Permanent differences relating to non-taxable income and non-deductible expenses |  |                         | (17.4 | %) |      |  | (13.8 | %)   |  |  | (24.3 | %)
|Effect on withholding income tax on dividends                                    |  |                         | 10.4  | %  |      |  | (6.5  | %)   |  |  |      |   
|Tax on disposal of HZ                                                            |  |                         |      |    |      |  | (6.4  | %)   |  |  |      |   
|Change in valuation allowance                                                    |  |                         | 0.9   | %  |      |  | (2.7  | %)   |  |  | 7.8   | % 
|Change in estimate                                                               |  |                         | (2.1  | %) |      |  |      |      |  |  |      |   
|                                                                                 |  |                         |       |    |      |  |       |      |  |  |       |   
|Effective tax rate                                                               |  |                         | 8.3   | %  |      |  | (12.9 | %)   |  |  |      |   
|                                                                                 |  |                         |       |    |      |  |       |      |  |  |       |   



F-22



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|9. | CAPITAL STOCK
|-- | -------------

Share Capital

The Company was incorporated with an initial share capital of 1,200,000 shares of Common Stock with a par value of US$0.01 each which was later
reclassified to Supervoting Common Stock. On May 14, 1993, the authorized share capital of the Company was further increased from US$12 to US$700 by the creation of 50,000,000 shares of Common Stock of par value US$0.01 each and 18,800,000
shares of Supervoting Common Stock of par value US$0.01 each. As a result, there are 20,000,000 shares of authorized Supervoting Common Stock. 6,000,000 shares of Supervoting Common Stock (including the 1,200,000 shares of Common Stock reclassified
to Supervoting Common Stock) were issued to the then ultimate parent company of the Company as consideration for the transfer of two PRC entities to the Company on June 23, 1993.

The Company subsequently redeemed 3,000,000 shares of its outstanding Supervoting Common Stock at their par value of US$0.01 per share and in
September 2006, the Company converted the remaining outstanding 3,000,000 shares of Supervoting Common Stock into the same number of shares of Common Stock with a par value of US$0.01 each pursuant to the by-laws of the Company upon receipt of a
written notification from the sole holder of Supervoting Common Stock. There was no outstanding Supervoting Common Stock as of December 31, 2011 and 2012.

Capital Stock

Each share
of Supervoting Common Stock is entitled to 10 votes whereas each share of Common Stock is entitled to one vote. The Common Stock is identical to the Supervoting Common Stock as to the payment of dividends. Except for the difference in voting rights
described above, the Supervoting Common Stock and the Common Stock rank pari passu in all respects.



|10. | FAIR VALUE MEASUREMENTS
|--- | -----------------------

Effective from January 1, 2008, the Company adopted ASC
Topic 820 Fair Value Measurement and Disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring
basis (at least annually). ASC Topic 820 defines fair value as the price that would be received to sell the asset or paid to transfer a liability (i.e. the exit price) in an orderly transaction between market participants at the
measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and also
considers assumptions that market participants would use when pricing the asset or liability.



F-23



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|10. | FAIR VALUE MEASUREMENTS - continued
|--- | -----------------------------------



Fair Value Hierarchy

ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instruments categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 establishes three
levels of inputs that may be used to measure fair value:

Level 1 applies to assets or liabilities for which there are quoted prices
in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than
quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient
volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities.



F-24



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|10. | FAIR VALUE MEASUREMENTS - continued
|--- | -----------------------------------



The following table summarizes the Companys financial assets and liabilities measured
at fair value on a recurring basis as of December 31, 2011 and 2012:



|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------- | ------ |  | --------------------------------------------- |  | - | ------------------------------------------- |  |  | --------------------------------- |  |  |  | ------ | 
|                                                                                                                                      |  | Quoted pricesIn ActiveMarket forIdentical Assets(Level 1)
Rmb |        |  | SignificantOtherObservableInputs
(Level 2)Rmb |  |   | Significant
UnobservableInputs (Level
3)Rmb |  |  | Balance
as ofDecember 31,2011
Rmb | 
|Current Assets:                                                                                                                       |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|Trading securities                                                                                                                    |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|- Equity securities listed in Hong Kong                                                                                               |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|- Hotel operations                                                                                                                    |  |                                                               | 1,750  |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 1,750  | 
|- Gaming, entertainment and tourist-related                                                                                           |  |                                                               | 7,763  |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 7,763  | 
|- Property development and investment                                                                                                 |  |                                                               | 5,631  |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 5,631  | 
|- Others                                                                                                                              |  |                                                               | 1,413  |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 1,413  | 
|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|                                                                                                                                      |  |                                                               | 16,557 |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 16,557 | 
|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|- Equity securities listed in Singapore                                                                                               |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|- Business management and consultancy, and provision of telecommunications and information technology services (through an
associate) |  |                                                               | 9,077  |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 9,077  | 
|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|                                                                                                                                      |  |                                                               | 25,634 |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 25,634 | 
|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|Available-for-sale securities:                                                                                                        |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|- Equity securities listed in Hong Kong                                                                                               |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|- Hotel operations                                                                                                                    |  |                                                               | 14,213 |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 14,213 | 
|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 
|Total                                                                                                                                 |  |                                                               | 39,847 |  |                                               |  |  |                                             |  |  |                                  |  |  |  | 39,847 | 
|                                                                                                                                      |  |                                                               |        |  |                                               |  |   |                                             |  |  |                                   |  |  |  |        | 



F-25



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|10. | FAIR VALUE MEASUREMENTS - continued
|--- | -----------------------------------



|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------ |  | ----------- |  | - | ------------ |  |  | ------------ |  |  | --- | ------ |  |  |  | ----- | 
|                                                                                                                                      |  | Quoted prices    |        |  | Significant |  |   |              |  |  |              |  |  |     |       
|                                                                                                                                      |  | In Active        |        |  | Other       |  |   | Significant  |  |  | Balance      | 
|                                                                                                                                      |  | Market for       |        |  | Observable  |  |   | Unobservable |  |  | as of        | 
|                                                                                                                                      |  | Identical Assets |        |  | Inputs      |  |   | Inputs       |  |  | December 31, | 
|                                                                                                                                      |  | (Level 1)        |        |  | (Level 2)   |  |   | (Level 3)    |  |  | 2012         | 
|                                                                                                                                      |  | Rmb              |        |  | Rmb         |  |   | Rmb          |  |  | Rmb          |  |  | US$ |       
|Current Assets:                                                                                                                       |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|Trading securities                                                                                                                    |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|- Equity securities listed in Hong Kong                                                                                               |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|- Hotel operations                                                                                                                    |  |                  | 1,737  |  |             |  |  |              |  |  |             |  |  |     | 1,737  |  |  |  | 279   | 
|- Gaming, entertainment and tourist-related                                                                                           |  |                  | 2,802  |  |             |  |  |              |  |  |             |  |  |     | 2,802  |  |  |  | 450   | 
|- Property development and investment                                                                                                 |  |                  | 6,475  |  |             |  |  |              |  |  |             |  |  |     | 6,475  |  |  |  | 1,039 | 
|- Others                                                                                                                              |  |                  | 1,112  |  |             |  |  |              |  |  |             |  |  |     | 1,112  |  |  |  | 178   | 
|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|                                                                                                                                      |  |                  | 12,126 |  |             |  |  |              |  |  |             |  |  |     | 12,126 |  |  |  | 1,946 | 
|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|- Equity securities listed in Singapore                                                                                               |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|- Business management and consultancy, and provision of telecommunications and information technology services (through an
associate) |  |                  | 13,669 |  |             |  |  |              |  |  |             |  |  |     | 13,669 |  |  |  | 2,194 | 
|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|                                                                                                                                      |  |                  | 25,795 |  |             |  |  |              |  |  |             |  |  |     | 25,795 |  |  |  | 4,140 | 
|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|Available-for-sale securities:                                                                                                        |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|- Equity securities listed in Hong Kong                                                                                               |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|- Hotel operations                                                                                                                    |  |                  | 14,108 |  |             |  |  |              |  |  |             |  |  |     | 14,108 |  |  |  | 2,264 | 
|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 
|Total                                                                                                                                 |  |                  | 39,903 |  |             |  |  |              |  |  |             |  |  |     | 39,903 |  |  |  | 6,404 | 
|                                                                                                                                      |  |                  |        |  |             |  |   |              |  |  |              |  |  |     |        |  |  |  |       | 



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|11. | COMMITMENTS AND CONTINGENCIES
|--- | -----------------------------

There were no outstanding capital commitments as of
December 31, 2011 or 2012.



|12. | DISTRIBUTION OF PROFIT
|--- | ----------------------



| | (a) | Dividends
| | --- | ---------

The Company did not propose or pay any dividends on the outstanding Common
Stock for the years ended December 31, 2010, 2011 and 2012.



| | (b) | Profit appropriation
| | --- | --------------------

As of December 31, 2011 and 2012 the Company had no
distributable reserves.



|13. | RELATED PARTY BALANCES, TRANSACTIONS AND ARRANGEMENTS
|--- | -----------------------------------------------------

Parties are considered to be
related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its
management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the
other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an
ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Other than those disclosed elsewhere in the consolidated financial statements, the Company had the following related party balances:



| | (a) | During the year ended December 31, 2011, the Company wrote off long outstanding balances from related parties of Rmb744. There was no such write off during the year ended December 31, 2012.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|13. | RELATED PARTY BALANCES, TRANSACTIONS AND ARRANGEMENTScontinued
|--- | ---------------------------------------------------------------



| | (b) | Due from/to Related Parties
| | --- | ---------------------------



|                                                       |  |      |        |  |      |  |        |      |  |  |        | 
|------------------------------------------------------ |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                       |  | 2011 |        |  | 2012 |  |        | 2012 | 
|                                                       |  | Rmb  |        |  | Rmb  |  |        | US$  | 
|Due from:                                              |  |      |        |  |      |  |        |      |  |  |        | 
|CSH1and its subsidiaries                               |  |      | 90     |  |      |  | 90     |      |  |  | 14     | 
|GDI and its subsidiaries (GDI Group)                 |  |      | 2      |  |      |  | 2      |      |  |  | 1      | 
|Hanny and its subsidiaries (except GDI Group) (note 1) |  |      | 1,207  |  |      |  | 1,327  |      |  |  | 213    | 
|Rosedale1and its subsidiaries (note 6)                 |  |      | 13,399 |  |      |  |       |      |  |  |       | 
|                                                       |  |      |        |  |      |  |        |      |  |  |        | 
|                                                       |  |      | 14,698 |  |      |  | 1,419  |      |  |  | 228    | 
|                                                       |  |      |        |  |      |  |        |      |  |  |        | 
|Due to:                                                |  |      |        |  |      |  |        |      |  |  |        | 
|CSH1and its subsidiaries                               |  |      | 295    |  |      |  | 295    |      |  |  | 47     | 
|GDI and its subsidiaries                               |  |      | 1,737  |  |      |  |       |      |  |  |       | 
|Hanny and its subsidiaries (except GDI Group) (note 1) |  |      | 70,641 |  |      |  | 70,117 |      |  |  | 11,255 | 
|                                                       |  |      |        |  |      |  |        |      |  |  |        | 
|                                                       |  |      | 72,673 |  |      |  | 70,412 |      |  |  | 11,302 | 
|                                                       |  |      |        |  |      |  |        |      |  |  |        | 



| | 1 | Ms Eva Chan Ling is the deputy chairman and a director of the Company. She is also an executive director of CSH and the managing director of Rosedale (note 6). Dr. Allan Yap is the chairman, chief executive
director and a director of the Company. He is appointed as the chairman of Rosedale with effect from December 30, 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2011 and 2012, the amounts due from/to related parties were unsecured, non-interest bearing and had no fixed repayment
terms.



|14. | PAYABLES TO SECURITIES BROKERS
|--- | ------------------------------

As of December 31, 2011 and 2012, the payables to
securities brokers were bearing interest at 8% to 11.25% per annum, repayable on demand, and secured by trading and available-for-sale securities (note 16).



|15. | STAFF RETIREMENT PLANS
|--- | ----------------------

All of the Chinese employees of the PRC entities are entitled to
an annual pension on retirement, which is equal to their ending basic salaries at their retirement dates. The Chinese government is responsible for the pension liabilities to these retired employees. The PRC entities are only required to make
specified contributions to the state-sponsored retirement plan calculated at rates ranging from 12% to 20% of average monthly salaries for the year ended December 31, 2010 and eleven months ended November 30, 2011. The Company is no longer
required to contribute to such retirement plans after the disposal of all its ownership interests in HZ (note 3).



F-28



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##### Table of Contents

CHINA ENTERPRISES LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except number of shares,

per share data and unless otherwise stated)



|16. | PLEDGE OF ASSETS
|--- | ----------------

As of December 31, 2011 and 2012, trading and available-for-sale
securities amounting to Rmb38,172 and Rmb38,241 (US$6,138) are collateralized to secure the security trading margin facilities of the Company.



|17. | SUBSEQUENT EVENTS
|--- | -----------------

The Company has evaluated all events or transactions that occurred
through the date the consolidated financial statements were issued, and has determined that there were no material recognizable nor subsequent events or transactions which would require recognition or disclosure in the consolidated financial
statements other than those disclosed elsewhere in the consolidated financial statements.



F-29



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##### Table of Contents

|ITEM 19. | EXHIBITS
|-------- | --------

The following exhibits are filed as part of this Annual Report:



|               |  |                                                                                                                                                                                                                                                                                                                                
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                    
|               | 
|1              |  | Memorandum and Articles of Association (incorporated by reference to Exhibit 1 to the Companys Form 20-F for the fiscal year ended December 31, 2001, Document Control Number: 02048962)                                                                                                                                      
|               | 
|4(a)1          |  | Contract dated November 21, 2011 between CZ Tire Holdings Limited and the Company for the sale of the Companys ownership interest in Hangzhou Zhongce Rubber Company Limited (incorporated by reference to Exhibit 4(a)1 to the
Companys Form 20-F for the fiscal year ended December 31, 2010)                              
|               | 
|4(a)2          |  | Contract dated September 28, 2012 between Fortuneasy Limited and Wealth Faith Limited, a wholly owned subsidiary of the Company, for the purchase of shares of Million Cube Limited by Wealth Faith Limited (incorporated by reference
to Exhibit 4(a)2 to the Companys Form 20-F for the fiscal year ended December 31, 2010)
|               | 
|8              |  | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                    
|               | 
|12(1)          |  | Certification of the CEO of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                          
|               | 
|12(2)          |  | Certification of the CFO of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                          
|               | 
|13(1)          |  | Certification of the CEO of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|               | 
|13(2)          |  | Certification of the CFO of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|               | 
|14(1)          |  | Code of Ethics for Chief Executive and Senior Financial Officers                                                                                                                                                                                                                                                               



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##### Table of Contents

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this Annual Report on its behalf.



China Enterprises Limited
(Registrant)/s/ Ken LauKEN LAUChief Financial Officer


Date: March 24, 2015



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##### Table of Contents

EXHIBITS INDEX



|               |  |                                                                                                                                                                                                                                                                                                                                
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                    
|               | 
|1              |  | Memorandum and Articles of Association (incorporated by reference to Exhibit 1 to the Companys Form 20-F for the fiscal year ended December 31, 2001, Document Control Number: 02048962)                                                                                                                                      
|               | 
|4(a)1          |  | Contract dated November 21, 2011 between CZ Tire Holdings Limited and the Company for the sale of the Companys ownership interest in Hangzhou Zhongce Rubber Company Limited (incorporated by reference to Exhibit 4(a)1 to the
Companys Form 20-F for the fiscal year ended December 31, 2010)                              
|               | 
|4(a)2          |  | Contract dated September 28, 2012 between Fortuneasy Limited and Wealth Faith Limited, a wholly owned subsidiary of the Company, for the purchase of shares of Million Cube Limited by Wealth Faith Limited (incorporated by reference
to Exhibit 4(a)2 to the Companys Form 20-F for the fiscal year ended December 31, 2010)
|               | 
|8              |  | Subsidiaries of the Company                                                                                                                                                                                                                                                                                                    
|               | 
|12(1)          |  | Certification of the CEO of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                          
|               | 
|12(2)          |  | Certification of the CFO of the Company pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                          
|               | 
|13(1)          |  | Certification of the CEO of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|               | 
|13(2)          |  | Certification of the CFO of the Company pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                              
|               | 
|14(1)          |  | Code of Ethics for Chief Executive and Senior Financial Officers