Sinosoft Technology : (1) FURTHER CLARIFICATION ANNOUNCEMENT IN RELATION TO THE ZHONGKUI REPORTS; AND (2) FINDINGS OF BAKER TILLY WITH RESPECT TO AGREED-UPON PROCEDURES

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SINOSOFT TECHNOLOGY GROUP LIMITED 中國擎天軟件科技集團有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1297)

1. FURTHER CLARIFICATION ANNOUNCEMENT IN RELATION TO THE ZHONGKUI REPORTS; AND
2. FINDINGS OF BAKER TILLY WITH RESPECT TO AGREED-UPON PROCEDURES CARRIED OUT FOR CERTAIN MATTERS SUBJECT TO THE

ALLEGATIONS IN THE ZHONGKUI REPORTS

Reference is made to the announcements of the Company dated 29 December 2016 and 3 January 2017 in relation to the Zhongkui Reports.

This announcement is made to: (i) present the Company's further clarifications in relation to the Allegations made in the Zhongkui Reports; and (ii) give details as to the Agreed-upon Procedures performed by Baker Tilly engaged by the Audit Committee to address certain financial-related issues raised in the Zhongkui Reports.

Shareholders and investors are advised to exercise caution when dealing in the securities of the Company.

Reference is made to the announcements of Sinosoft Technology Group Limited (the "Company") dated 29 December 2016 and 3 January 2017 (the "Previous Announcements"). Capitalised but not defined terms used herein shall, unless the context indicate otherwise, have the same meanings as that ascribed to them in the Previous Announcements.

AGREED-UPON PROCEDURES PERFORMED BY BAKER TILLY

Since the Company first became aware of the allegations (the "Allegations") made against the Group in the reports dated 28 December 2016 (the "First Zhongkui Report") and 30 December 2016 (the "Second Zhongkui Report") by Zhongkui Research (collectively, the "Zhongkui Reports"), the audit committee of the Company (the "Audit Committee") has been in continuing discussion with the Company's ex-auditor, Deloitte Touche Tohmatsu ("Deloitte"), and other professional advisors to address the Allegations. In order to provide further support for the Company's responses against the Allegations as set out in the Previous Announcements (the "Responses"), the Audit Committee has engaged Baker Tilly Hong Kong Limited ("Baker Tilly") to perform certain agreed-upon procedures (the "Agreed-upon Procedures") with respect to certain financial-related issues raised in the Zhongkui Reports in order to address the Allegations.

The Agreed-upon Procedures were performed in accordance with HKSRS 4400 and the work scope of the Agreed-upon Procedures performed by Baker Tilly are divided into (1) the reviewing of the reasonableness of the reconciliation and adjustments thereon, and (2) the substantive testing on certain financial-related issues raised in the Zhongkui Reports, and includes the following:

1. reviewing the reconciliation prepared by the Company's management (the "Management Reconciliation") of both the revenue and net profits reported in the PRC statutory accounts (the "PRC Statutory Accounts") of the Company's major PRC subsidiaries (the "PRC Subsidiaries") and reflected in the Group's filings with the State Administration for Industry and Commerce (the "SAIC") filing (the "SAIC Records", and together with the PRC Statutory Accounts, the "PRC Financial Records") against the consolidated financial statements of the Group (the "Financial Statements") for the years ended 31 December 2010, 2011, 2012, 2013, 2014 and 2015 (the "First Relevant Period");

2. reviewing the Group's revenue recognition policies in relation to the export tax rebate business of the Group and the revenue from the Group's export tax rebate business for the period from 2013 to first half of 2016 (the "Second Relevant Period") and the cut-off of such revenue;

3. reviewing the Group's revenue from the e-Government business and carbon management business for the Second Relevant Period, and the allocation among different channels that the Group secures such revenue; and

4. reviewing the Group's software procurement costs and research and development ("R&D") costs for the Second Relevant Period.

The findings of Baker Tilly based on the Agreed-upon Procedures were delivered to the Audit Committee on 23 February 2017.

The Audit Committee is of the view that the work scope of the Agreed-upon Procedures is sufficient to address the Allegations on the following basis:

1. the Audit Committee has been reviewing and monitoring the Company's financial reporting processes and the internal control procedures on a continuous basis with regular meetings held with the Company's management and Deloitte. Since Listing, the Audit Committee did not receive any indication of fraud and material errors in relation to the Company's financial reporting for the First Relevant Period. The relevant figures in the PRC Financial Records and the list of adjustments used in preparation of the Management Reconciliation are same as the financial information provided to Deloitte in the course of its audits for the First Relevant Period, and the results of the Management Reconciliation, i.e. consolidated revenue and consolidated net profits, are consistent with the Financial Statements for the First Relevant Period. Any key audit issues identified in the course of Deloitte's audit were discussed in the Audit Committee's meetings before the issuance of each of the Company's preliminary results announcements for the First Relevant Period;

2. the Audit Committee has assessed the independence and the capabilities of Baker Tilly. Baker Tilly has proven record of experience, the team performing the Agreed-upon Procedures has adequate knowledge and capability to perform the required fieldwork and procedures to address the Allegations. No procedure under the Agreed-upon Procedures would be outside of Baker Tilly's expertise and which Baker Tilly would not be able to present its views on; and

3. the Allegations relate to subject matters that can be clearly identified, including (i) fabricated financial data that does not tie to the SAIC Records; (ii) overstatement of revenue and profits resulting in the need to inflate R&D expenses and procurement; and (iii) early recognition of sales. The truthfulness of the aforesaid Allegations can be verified or refuted by objective evidential information, such as inspection of specific transactions/records/details and random sampling of the supporting documents to perform exception testing, performing cut-off test and reasonableness test etc., which are not open to subjective interpretations. In this regard, the Audit Committee has conducted several discussions with Baker Tilly to understand, among others, the rationale for the Agreed-upon Procedures and whether such procedures can sufficiently address the Allegations. The sample size selected for the purpose of the Agreed-upon-Procedures was determined as a matter of materiality based on (i) the revenue amount for each business segment as compared with the Group's total revenue, and (ii) the individual transaction amount for each business segment. Further to the aforesaid and having

considered the work procedures of Baker Tilly as summarised below in this announcement and the factors described in paragraph (a) and (b) above, the Audit Committee is thus of the view that the work scope and the coverage of the samples are considered sufficient to address the Allegations.

The Audit Committee understands that, based on its previous discussions with Deloitte, Deloitte has previously recommended that an independent investigation (including forensic procedures) be conducted into the Allegations. While the Company has informed Deloitte that the Company is satisfied that the Agreed-upon Procedures will provide sufficient evidence to address the Allegations, Deloitte is nonetheless of the view that the Agreed-upon Procedures has a narrower scope of work than an investigation. Accordingly, Deloitte is of the view that the Agreed-upon Procedures will not provide them with sufficient evidence to enable them to reach a conclusion on the Allegations for the purpose of its audit and to confirm whether any amendment is required for its audit of the Company for the First Relevant Period and for the purpose of audit work for the financial year ended 31 December 2016. As such, Deloitte has resolved to tender its resignation as auditor of the Company on 17 February 2017. While the Audit Committee understands Deloitte's suggestion for an independent investigation in the form of a forensic audit to be conducted, the Audit Committee nonetheless considers a forensic audit to be unnecessary at this stage given that:

1. under normal circumstances, forensic audit will only be conducted in cases where there are strong suspicions or evidence indicating that fraud was involved in the subject matter. In the present case, the Audit Committee is not aware, and has not been informed by Deloitte of its awareness of any evidence or strong suggestion of fraud relating to matters arising from the Allegations;

2. a forensic investigation can be time consuming and potentially disruptive to the Company's normal business operations, and is not a proportionate and appropriate step to take at this stage; and

3. the Audit Committee has discussed and agreed with Baker Tilly on the work scope of the Agreed-upon Procedures to specifically address each of the Allegations. Having reviewed Baker Tilly's findings based on the Agreed-upon Procedures, the Audit Committee is of the view that the Agreed-upon Procedures are sufficient to address the Allegations for the reasons set out above.