Sinosoft Technology : CLARIFICATION ANNOUNCEMENT IN RELATION TO THE SECOND ZHONGKUI REPORT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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) CLARIFICATION ANNOUNCEMENT IN RELATION TO THE SECOND ZHONGKUI REPORT

The board of directors (the "Board") of Sinosoft Technology Group Limited (the "Company", together with its subsidiaries, the "Group") has noted that, subsequent to the Company's clarification announcement dated 29 December 2016 (the "Clarification Announcement"), ZhongKui Research released a second report on the Company on 30 December 2016 (the "Second ZhongKui Report").

The Second ZhongKui Report has made further allegations which again are groundless and contains various misrepresentations, malicious and false allegations and obvious factual errors of the Group. The Company wishes to clarify those new allegations in the Second ZhongKui Report and the allegation relating to the Group's software procurement cost and research and development ("R&D") cost in the ZhongKui Report and the Second ZhongKui Report as below.

Based on the Company's understanding, ZhongKui Research is not an institution registered with the Securities and Futures Commission of Hong Kong and its website does not contain any information indicating the registration of the website with the Ministry of Industry and Information Technology of the PRC ( 中國工業和信息化部 ). The Company does not rule out the possibility that ZhongKui Research or a third party will use ZhongKui Research's reports on the Company and the information obtained/to be obtained from the Company's responses to such reports to benefit from an ongoing litigation between the Company's subsidiary, Nanjing Skytech and a third party. As such, the Company has determined not to publicly disclose any detailed information (but to disclose them directly to the Stock Exchange) in order to avoid any impact of such disclosure on the said litigation.

Capitalised terms used herein shall have the same meanings as defined in the Clarification Announcement unless the context requires otherwise.

1. HISTORICAL FINANCIAL DATA The allegation

   The Second ZhongKui Report alleges that the revenue and profit of all subsidiaries of the Group appearing in the AIC record, especially those for financial years 2011 and 2012, when added up, are significantly less than the revenue and profit of the Group as stated in other publicly available documents of the Company including its Listing prospectus.

   The Company's response

   The Company will submit all the AIC filing information of the relevant subsidiaries of the Group for the period from 2006 to 2015 (the "Relevant AIC Filing Information") to the Stock Exchange. The information contained in the Second ZhongKui Report is not consistent with the Relevant AIC Filing Information. As AIC filing information is not publicly available, the Company questions the source and authenticity of the AIC filing information contained in the Second ZhongKui Report.

   During the Company's Listing process, the relevant professional parties involved in the Listing performed due diligence on the AIC filing information of the relevant subsidiaries of the Group for the financial reporting period for the Listing, which was between 2010 and 2012, and confirmed that such information was consistent with the financial information set out in the management accounts provided by the Group and for the preparation of the financial information in the Listing prospectus.

   The Company's financial information is based on the statutory records maintained by the AIC, with adjustments and reclassifications recorded for the purpose of a fair presentation of the information in accordance with IFRS. The Company will submit detailed explanations on the adjustments to the Stock Exchange.

2. REVENUE FROM E-GOVERNMENT AND CARBON MANAGEMENT BUSINESSES The allegation

   The Second ZhongKui Report alleges that during a conference call held by the Company on 28 December 2016, the management of the Company claimed that projects won by the Company through public tendering channel accounted for 22% of the Company's e-government business revenue. However, the total value of contracts for publicly tendered projects earned by the Company in 2015 and the first half of 2016 tracked through public channels was only RMB10.59 million and RMB11.89 million, respectively, which implies that the Company's e-government revenue for 2015 and the first half of 2016 is only approximately RMB48.14 million and RMB54.05 million, respectively given that the e-government business of the Company earned through public tendering channel contributed to 22% of its total e-government revenue. These revenue numbers are significantly less than the Company's e-government business revenue as stated in its financial reports, which was approximately RMB183.3 million for 2015 and RMB103.5 million for the first half of 2016. The Second ZhongKui Report also alleges that during the said conference call, the management of the Company did not even bother to disclose the channel mix of the Company's carbon management business because the inflated figures for this business are too big.

   The Company's response

   The Company would like to clarify that, in 2015 and the first half of 2016, the aggregate value of e-government solutions and carbon management solutions contracts obtained by the Company through participation in public tenders amounted to RMB72.21 million and RMB29.74 million, respectively. Given that in 2015 and the first half of 2016, the Group's aggregate revenue from e-government solutions and carbon management solutions was approximately RMB269.9 million and RMB125.9 million, respectively, relevant business won by the Group through participation in public tenders accounted for approximately 27% and 24%, respectively, of the Group's revenue in 2015 and the first half of 2016.

   As stated in the Clarification Announcement, in addition to participation in public tender, the Company secures e-governance business contracts through a number of other channels, including competing with others through negotiations, conducting one to one negotiations and participation in biddings for key projects that are opened to a limited number of market participants. In 2015 and the first half of 2016, the Group also derived revenue from contracts obtained through these channels whose aggregate numbers are consistent with those appearing in the Group's financial reports.

3. SOFTWARE PROCUREMENT COST AND R&D EXPENSES The allegation

   The ZhongKui Report and the Second ZhongKui Report allege that the Company has fabricated its software procurement cost and R&D cost and has capitalised a large amount of such costs in order to fill the cash flow gap caused by inflated revenue.

   The Company's response

   In 2015, the Company developed a total of 32 new products, details of which are set out in the table below.

   Software Certificate Number (Note 1)	Product Name (Note 2)	Intellectual Property Right of	Registration Number	Certificate Issued Date
   0920018	Qingtian Public Service Industry Cloud Platform Software	Nanjing Skytech	2015SR032940	15 February 2015
   [Abbreviation: Public Service Cloud Platform] V1.0
   0920047	Qingtian Emancipists Resettlement & Assistant System for Judicial Administration [Abbreviation: Resettlement & Assistant System] V1.0	Nanjing Skytech	2015SR032969	15 February 2015
   0920055	Qingtian Populace Dispute Online Resolution System for Judicial Administration [Abbreviation: Dispute Resolution System] V1.0	Nanjing Skytech	2015SR032977	15 February 2015
   0954560	Qingtian Proposal Processing System [Abbreviation: Proposal Processing System] V1.0	Nanjing Skytech	2015SR067474	23 April 2015
   0963548	Qingtian Lawyer Management System for Judicial Administration [Abbreviation: Lawyer Management System] V1.0	Nanjing Skytech	2015SR076462	7 May 2015
   0976185	Qingtian Regional Ecological Civilization Management Cloud Platform [Abbreviation: Regional Ecological Management Cloud Platform] V1.0	Nanjing Skytech	2015SR089099	23 May 2015
   1007005	Qingtian Regional Greenhouse Gas Emission Inventory System [Abbreviation: Regional Greenhouse Gas Emission Inventory System] V1.0	Nanjing Skytech	2015SR119919	30 June 2015
   1043498	Qingtian Mobile Big data Analysis & Decision Support System V1.0	Nanjing Skytech	2015SR156412	13 August 2015
   1043548	Qingtian Major Project Management Public Service Cloud platform V1.0	Nanjing Skytech	2015SR156462	13 August 2015
   1043520	Qingtian Industrial Economic Monitoring Public Service Cloud Platform V1.0	Nanjing Skytech	2015SR156434	13 August 2015
   1043553	Qingtian Service Enterprises Cluster Public Service Cloud Platform V1.0	Nanjing Skytech	2015SR156467	13 August 2015
   1149996	Qingtian Disciplinary Inspection Integrated Management Platform V1.0	Nanjing Skytech	2015SR262910	16 December 2015
   1150005	Qingtian Political, Legal and Security Monitoring Platform V1.0	Nanjing Skytech	2015SR262919	16 December 2015
   1150311	Qingtian Judicial Administrative Affairs Management Platform V1.0	Nanjing Skytech	2015SR263225	16 December 2015
   1150318	Qingtian Judicial Authentication Platform for Judicial Administration V1.0	Nanjing Skytech	2015SR263232	16 December 2015

   Notes:

4. The English translation of the certificate numbers are for identification purpose only.

5. The English translation of the product names are for reference only.