深深宝B：2018年半年度报告（英文版）

深圳市深宝实业股份有限公司 2018 年半年度报告全文

SHENZHEN SHENBAO INDUSTRIAL CO. LTD.

SEMI-ANNUAL REPORT 2018

August 2018

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section I. Important Notice Contents and Paraphrase

Board of Directors Supervisory Committee all directors supervisors and senior

executives of Shenzhen Shenbao Industrial Co. Ltd.(hereinafter referred to as

the Company) hereby confirm that there are no any fictitious statements

misleading statements or important omissions carried in this report and shall

take all responsibilities individual and/or joint for the reality accuracy and

completion of the whole contents.

Chairman of the Company Zheng Yuxi General Manager Yan Zesong Chief

Financial Officer Wang Zhiping and Financial Management Department

Manager Xu Qiming hereby confirm that the Financial Report of Semi-Annual

Report 2018 is authentic accurate and complete.

All Directors are attended the Board Meeting for deliberation of this Report.

Concerning the forward-looking statements with future planning involved in the

annual report they do not constitute a substantial commitment for investors

Securities Times China Securities Journal Hong Kong Commercial Daily and

Juchao Website (www.cninfo.com.cn) are the media appointed by the Company

for information disclosure all information of the Company disclosed in the

above mentioned media should prevail. Investors are advised to exercise caution

of investment risks.The Company has analyzed the risk factors that the Company may exist and its

countermeasures in the report investors are advised to pay attention to read

“Risks and Countermeasures” in the report of Section IV-Discussion and

Analysis of the Operation.

The Company plans not to distributed cash dividend bonus and no capitalizing

of common reserves either.This report has been prepared in Chinese and English version respectively. In

the event of difference in interpretation between the two versions Chinese

report shall prevail.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Contents

Section I. Important Notice Contents and Paraphrase ....................................................................................... 2

Section II Company Profile and Main Financial Indexes .................................................................................... 6

Section III Summary of Company Business ........................................................................................................ 10

Section IV Discussion and Analysis of the Operation ......................................................................................... 12

Section V. Important Events ................................................................................................................................. 20

Section VI. Changes in Shares and Particulars about Shareholders ................................................................ 32

Section VII. Preferred Stock ................................................................................................................................. 38

Section VIII. Particulars about Directors Supervisor and Senior Executives ................................................. 39

Section IX Corporate Bonds ................................................................................................................................. 40

Section X. Financial Report .................................................................................................................................. 41

Section XI. Documents available for Reference ................................................................................................ 160

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Paraphrase

Items Refers to Contents

Shenshenbao/Shenbao Company/ Listed

Company /the Company/

Refers to Shenzhen Shenbao Industrial Co. Ltd.Shenbao Huacheng Refers to Shenzhen Shenbao Huacheng Science and Technology Co.Ltd

Wuyuan Ju Fang Yong Refers to Ju Fang Yong Tea Industry Co. Ltd. in Wuyuan County

Hangzhou Ju Fang Yong Refers to Hangzhou Ju Fang Yong Holding Co. Ltd.Shenbao Technology Center Refers to Shenzhen Shenbao Technology Center Co. Ltd.Huizhou Shenbao Science & Technology Refers to Huizhou Shenbao Science & Technology Co. Ltd.Shenbao Sanjing Refers to Shenzhen Shenbao Sanjing Food & Beverage Development Co. Ltd

Shenbao Industrial & Trading Refers to Shenzhen Shenbao Industrial & Trading Co. Ltd.Shenbao Properties Refers to Shenzhen Shenbao Properties Management Co. Ltd.Shenshenbao Investment Refers to Shenzhen Shenshenbao Investment Co. Ltd.Yunnan Supply Chain Refers to Yunnan Shenbao Pu’er Tea Supply Chain Management Co. Ltd.

Fuhaitang Ecological Refers to Fuhaitang Tea Ecological Technology Co. Ltd.

Fuhaitang Restaurant Refers to Hangzhou Fuhaitang Restaurant Management Co. Ltd.

Chunshi Network Refers to Hangzhou Chunshi Network Technology Co.Ltd.

Jufangyong Trading Refers to Hangzhou Jufangyong Trading Co. Ltd

Shenshenbao Tea Culture Refers to Shenzhen Shenshenbao Tea Culture Management Co. Ltd

Pu’er Tea Trading Center/Tea Trading

Center

Refers to Yunnan Pu’er Tea Trading Center Co. Ltd.Huizhou Shenbao Food Refers to Huizhou Shenbao Food Co. Ltd.Shenbao Rock Tea Refers to Mount Wuyi Shenbao Rock Tea Co. Ltd.Shenbao Tea-Shop Refers to Shenzhen Shenbao Tea-Shop Co. Ltd.

Fude Capital Refers to Shenzhen Fude State-Owned Capital Operation Co. Ltd.

Agricultural Products Refers to Shenzhen Agricultural Products Co. Ltd

Shenzhen Investment Holding Refers to Shenzhen Investment Holding Co. Ltd

SZCG Refers to Shenzhen Cereals Group Co. Ltd.

SASAC Refers to

State-owned Assets Supervision and Administration Commission of the

State Council

Shenzhen SASAC Refers to

Shenzhen Municipal People’s Government State-owned Assets

Supervision & Administration Commission

CSRC Refers to China Securities Regulation Commission

SSE Refers to Shenzhen Stock Exchange

Dahua CPA Refers to Dahua Certified Public Accountants (Special General Partnership)

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Article of Association Refers to Article of Association of Shenzhen Shenbao Industrial Co. Ltd

RMB/10 thousand Yuan Refers to CNY/ten thousand Yuan

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section II Company Profile and Main Financial Indexes

I. Company profile

Short form for share SHENSHENBAO-A SHENSHENBAO-B Stock code 000019 200019

Listing stock exchange Shenzhen Stock Exchange

Chinese name of the Company 深圳市深宝实业股份有限公司

Abbr. of Chinese name of the

Company (if applicable)深宝

English name of the

Company(if applicable)

SHENZHEN SHENBAO INDUSTRIAL CO.LTD.

Abbr. of English name of the

Company(if applicable)

SBSY

Legal Representative Zheng Yuxi

II. Person/Way to contact

Secretary of the Board Rep. of security affairs

Name Li Yiyan Huang Bingxia

Contact add.

8/F Tower-B Building 4 Software

Industry Base Science & Technology Park

(South) Xuefu Road Nanshan District

Shenzhen

8/F Tower-B Building 4 Software

Industry Base Science & Technology Park

(South) Xuefu Road Nanshan District

Shenzhen

Tel. 0755-82027522 0755-82027522

Fax. 0755-82027522 0755-82027522

E-mail lyy@sbsy.com.cn huangbx@sbsy.com.cn

III. Others

1. Way of contact

Whether registrations address offices address and codes as well as website and email of the Company changed in reporting period or

not

□ Applicable √ Not applicable

Registrations address offices address and codes as well as website and email of the Company has no change in reporting period

found more details in Annual Report 2017

深圳市深宝实业股份有限公司 2018 年半年度报告全文

2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not

□ Applicable √ Not applicable

The newspaper appointed for information disclosure website for semi-annual report publish appointed by CSRC and preparation

place for semi-annual report have no change in reporting period found more details in Annual Report 2017

IV. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data

□Yes √No

Current period Same period of last year Changes over last year

Operating revenue (RMB) 136721215.40 138158382.95 -1.04%

Net profit attributable to shareholders of

the listed Company(RMB)

-18246639.07 -17759776.83 -2.74%

Net profit attributable to shareholders of

the listed Company after deducting

non-recurring gains and losses(RMB)

-18884920.69 -19357560.01 2.44%

Net cash flow arising from operating

activities(RMB)

9795470.07 -50432648.15 119.42%

Basic earnings per share (RMB/Share) -0.0367 -0.0357 -2.80%

Diluted earnings per share (RMB/Share) -0.0367 -0.0357 -2.80%

Weighted average ROE -1.95% -1.74% -0.21%

End of current period End of last year

Changes over end of last

year

Total assets (RMB) 1040484135.20 1070386220.55 -2.79%

Net assets attributable to shareholder of

listed Company(RMB)

928673938.26 946920577.33 -1.93%

V. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

√ Applicable □ Not applicable

In RMB

Net profit attributable to shareholders of listed

Company

Net assets attributable to shareholders of listed

Company

Current period Last period Period-end Period-begin

Chinese GAAP -18246639.07 -17759776.83 928673938.26 946920577.33

Items and amount adjusted by IAS

Adjustment for other payable

fund of stock market

regulation

1067000.00 1067000.00

深圳市深宝实业股份有限公司 2018 年半年度报告全文

IAS -18246639.07 -17759776.83 929740938.26 947987577.33

2. Difference of the net profit and net assets disclosed in financial report under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company has no above mentioned condition occurred in the period

3. Explanation on differences of the data under accounting standards in and out of China

□ Applicable √ Not applicable

VI. Items and amounts of extraordinary profit (gains)/loss

√ Applicable □ Not applicable

In RMB

Item Amount Note

Gains/losses from the disposal of non-current asset (including the

write-off that accrued for impairment of assets) -67563.97

Governmental subsidy reckoned into current gains/losses (not

including the subsidy enjoyed in quota or ration according to

national standards which are closely relevant to enterprise’s

business)

1377862.18

Gains and losses from change of fair values of

held-for-transaction financial assets and financial liabilities except

for the effective hedge business related to normal business of the

Company and investment income from disposal of transactional

financial assets and liabilities and financial assets available for

sale

-425718.15

Other non-operating income and expenditure except for the

aforementioned items 56049.77

Less: impact on income tax 52636.76

Impact on minority shareholders’ equity (post-tax) 249711.45

Total 638281.62 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss explain reasons

□ Applicable √ Not applicable

In reporting period the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to

深圳市深宝实业股份有限公司 2018 年半年度报告全文

the Public --- Extraordinary Profit/loss

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section III Summary of Company Business

I. Main businesses of the Company in the reporting period

Does the Company need to comply with disclosure requirements of the special industry?

The Company mainly engaged in the production R&D and sale business of ingredient/raw-food material based on

tea and deep processing of natural plants. After decades of development we have established relatively complete

industrial chain involving tea cultivation purified tea tea extract boutique tea sales tea cultural experience

e-commerce tea trading platform and tea finance. Its main business comprises tea refining and fine tea sales

tea-life experience tea e-commerce food and beverage research and development and so on. The Company has

established three major business directions namely the “health technology” development direction with plant

extraction technology as the core business the “industrial service” development direction with tea exchange

industry finance and electronic trading as the core business and the “life experience” development direction with

iTealife / Teabank tea fashion consumption as the core business and promotes the integration and coordinated

development of all business segments and enhances the overall value of the industry by vigorously expanding the

three major business directions.Main products are including "Golden Eagle" instant tea powder juice ect series; "Jufangyong" "Gutan" "Fuhai

tang" and “Shenbao Tea-Shop” ect series; "Mitsui" oyster sauce chicken seafood sauce and other condiments;

"Shenbao" chrysanthemum tea lemon tea herbal tea and other drinks.II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets No major Change

Fixed assets No major Change

Intangible assets No major Change

Construction in progress No major Change

Other current assets

Increase of the other current assets: the financial products have more account from a year

earlier at end of the period

2. Main overseas assets

□ Applicable √ Not applicable

III. Core Competitiveness Analysis

Does the Company need to comply with disclosure requirements of the special industry?

深圳市深宝实业股份有限公司 2018 年半年度报告全文

During the reporting period core competence wasn’t significantly changed. The Company has established relatively complete

industrial chain involving tea cultivation purified tea tea extract boutique tea sales tea cultural experience e-commerce tea trading

platform and tea finance forming a good industrial base; relying strong R & D capabilities leading edge technology two state-level

high-tech enterprises a quality control system recognized by large international food and beverage companies the Company brought

a group of high-quality large domestic and foreign clients. The Company will continue to innovate institutional mechanisms

innovative ideas innovative products to enhance synergies and core competitiveness of the tea industry chain.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section IV Discussion and Analysis of the Operation

I. Introduction

In first half of 2018 the Company continued to promote scientific and technological innovation by focusing on the existing industrial

layout and market development trends fully implemented various operational measures to consolidate the industrial foundation and

enhance the industrial value vigorously expand the main business and enhance the profitability and core competitiveness of the

enterprise. At the same time in line with the overall strategic deployment of state-owned grain and agricultural enterprises in

Shenzhen it was planned to acquire 100% equity of Shenzhen Cereals Group Co. Ltd. by issuing shares to purchase assets. During

this period the Company adhered to grasping two objects at the same time in the case of steadily implementing various intrinsic

management measures ensured the stable development of various business segments actively promoted the progress of major assets

restructuring projects adjusted and optimized the industrial layout and achieved resource integration by superior resource

complementary of all parties which ultimately promoted the Company’s sustainable operation ability and profitability and improved

the quality and efficiency of enterprise development.

During the reporting period the Company continuously promoted the project research and development and technical support

promoted the industrial development by product breakthroughs and technological innovations steadily improved the advantages of

traditional business segments and strived to improve quality and reduce losses and increase revenue. In the first half of the year theTechnology Center completed a number of government application projects including “Shenzhen High-tech Enterprise Cultivationand Storage” and “Shenzhen R&D Expenses Funding” and reached cooperation with many brand customers which providedintegrative solutions with multiple dimensions and aspects for related enterprises from concept to product realization; the deep

processing business module somewhat increased the product gross margin through a series of strict cost control measures such as

optimizing supply chain reducing consumption and increasing efficiency; Huizhou Shenbao Technology continued to improve the

production process and formula of the beverage and condiments business and completed various production tasks by guaranteeing

both quality and quantity; the overall sales of specialty tea business of Hangzhou Ju Fang Yong did not meet the expectations but the

fast drink business of its subordinate “iTealife” has gradually opened up the franchise market through the third party cooperation and

the performance has been improved to some extent; under the premise of the existing business model Shenbao tea culture continued

to promote the internal rectification sorted out the product system and achieved expectations in new product development cost

control and operation procedure improvement and reduced losses.

During the reporting period the Company actively promoted the major assets restructuring projects and fulfilled the relevant internal

decision-making procedures and information disclosure obligations.In the first half of 2018 the Company achieved a total operating income of 136721215.40 Yuan a decline of 1.04% over the same

period of last year; operating profit of -18090617.03 Yuan a decrease of 15.97% over the same period of last year; net profit

attributable to shareholders of listed companies was -18246639.07 Yuan a decline of 2.74% compared with the same period of last

year. The main reason for the change was that the Company’s profit from tea deep processing business increased compared with the

same period of the previous year by optimizing the product structure. At the same time the Company added new assets restructuring

related expenses in the current period which caused the Company’s overall losses were basically the same as that of the same period

of last year.II. Main business analysis

See the “I-Introduction” in “Discussion and Analysis of the Operation”

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Y-o-y changes of main financial data

In RMB

Current period Same period of last year Y-o-y increase/decrease Reasons for changes

Operation revenue 136721215.40 138158382.95 -1.04%

Operation cost 98142437.41 104400839.32 -5.99%

Sales expenses 18475423.94 21174407.31 -12.75%

Management expenses 37057054.07 33082783.76 12.01%

Financial expenses -1547896.32 -1533397.02 0.95%

Income tax expense 1125027.35 36586.58 2974.97%

Part of the subordinate

enterprise gains in the

period thus the income

tax expense increased

R&D investment 1308711.37 1162154.46 12.61%

Net cash flow arising

from operation activities 9795470.07 -50432648.15 -119.42%

The cash flow from good

sales increased in the

period; the cash out-flow

from goods purchasing

declined

Net cash flow arising

from investment

activities

-31925603.80 -84671733.66 -62.29%

The cash paid for

purchasing financial

products in the period

declined from a year

earlier

Net cash flow arising

from financing activities -10610098.89 -17904646.76 -40.74%

At same period of last

year there was a cash

expenses from dividend

distribution while no

such account in the

period

Net increase of cash and

cash equivalent

-32614983.97 -153076370.04 -78.69%

Other current assets 32071685.68 2758494.99 1062.65%

Balance of the financial

products increased over

same period of last year

Major changes on profit composition or profit resources in reporting period

□ Applicable √ Not applicable

No major changes on profit composition or profit resources occurred in reporting period

Composition of main business

深圳市深宝实业股份有限公司 2018 年半年度报告全文

In RMB

Operating

revenue

Operating cost Gross profit ratio

Increase or

decrease of

operating revenue

over same period

of last year

Increase or

decrease of

operating cost

over same period

of last year

Increase or

decrease of gross

profit ratio over

same period of

last year

According to industries

Industry 121178697.27 91848572.71 24.20% -0.03% -4.70% 3.71%

Trading 10621768.13 3833267.60 63.91% -22.27% -41.67% 12.00%

According to products

Soft drink 16625023.79 11744617.80 29.36% 9.18% 11.83% -1.67%

Tea products 111557314.93 81501902.46 26.94% -4.01% -9.76% 4.66%

According to region

Exportation 7247844.78 5160648.34 28.80% 3.14% 5.99% -1.91%

South China 19580861.50 14230891.31 27.32% -39.38% -38.76% -0.74%

North China 11331470.49 9336777.66 17.60% 32.09% 20.12% 8.21%

East China 74819223.73 51324665.29 31.40% 10.93% 2.52% 5.63%

Central China 12754935.79 10041568.45 21.27% 9.24% 5.81% 2.55%

III. Analysis of the non-main business

□ Applicable √ Not applicable

IV. Assets and liability

1. Major changes of assets composition

In RMB

End of current period End of period of last year

Ratio

changes

Notes of major changes

Amount

Ratio in total

assets

Amount

Ratio in total

assets

Monetary fund 223346666.44 21.47% 255961650.41 23.91% -2.44%

Account

receivable

65057127.05 6.25% 77193068.03 7.21% -0.96%

Inventory 162120133.29 15.58% 155306108.94 14.51% 1.07%

Investment

property

18165479.87 1.75% 18401275.03 1.72% 0.03%

Long-term equity

investment

5063724.67 0.49% 5248629.66 0.49% 0.00%

Fix assets 303675729.05 29.19% 313742404.72 29.31% -0.12%

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Construction in

process

864175.33 0.08% 134918.91 0.01% 0.07%

2. Assets and liability measured by fair value

√ Applicable □ Not applicable

In RMB

Items

Amount at the

beginning

period

Changes of fair

value

gains/losses in

this period

Accumulative

changes of fair

value reckoned

into equity

Devaluation of

withdrawing in

the period

Amount of

purchase in the

period

Amount of sale

in the period

Amount in the

end of period

Financial assets

1. Financial

assets

measured by

fair value and

whose change

is recorded in

current gains

and losses

(excluding

derivative

financial

assets)

1599668.20 -425718.15 92883.96 1173950.05

Subtotal 1599668.20 -425718.15 92883.96 1173950.05

Aforementione

d total

1599668.20 -425718.15 92883.96 1173950.05

Financial

liabilities

0.00 0.00

Whether there have major changes on measurement attributes for main assets of the Company in report period or not

□ Yes √No

3. The assets rights restricted till end of the period

Ended as reporting period the Company has no assets rights restricted

V. Investment Analysis

1. Overall situation

√ Applicable □ Not applicable

Investment in reporting period (Yuan) Investment in the same period of last year Range

深圳市深宝实业股份有限公司 2018 年半年度报告全文

(Yuan)

0.00 5500000.00 -100.00%

2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable

3. The major non-equity investment carrying in the reporting period

□ Applicable √ Not applicable

4. Financial assets investment

(1) Securities investment

√ Applicable □ Not applicable

Variety

securitie

Code of

securitie

Short

form of

securitie

Initial

investm

ent cost

Account

ing

measure

ment

model

Book

value at

the

beginni

ng of

the

period

Changes

in fair

value of

the

current

profit

and loss

Cumulat

ive fair

value

changes

equity

Current

purchas

amount

Current

sales

amount

Profit

and loss

in the

Reporti

Period

Book

value at

the end

of the

period

Account

ing

subject

Capital

Source

Domesti

c and

overseas

stock

000017 CBC-A --

Measure

d by fair

value

15996

68.20

-42571

8.15

92883.

0.00 0.00 0.00

11739

50.05

Transact

ional

financia

l assets

repaid

from

debt

reorgani

zation

Total -- --

15996

68.20

-42571

8.15

92883.

0.00 0.00 0.00

11739

50.05

-- --

Disclosure date of

securities investment

approval of the Board

Not applicable

Disclosure date of

securities investment

approval of the Shareholder

Meeting (if applicable)

Not applicable

(2) Derivative investment

□ Applicable √ Not applicable

The Company has no derivatives investment in the Period

深圳市深宝实业股份有限公司 2018 年半年度报告全文

VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable

The Company had no sales of major assets in the reporting period.

2. Sales of major equity

□ Applicable √ Not applicable

VII. Analysis of main Holding Company and stock-jointly companies

√ Applicable □ Not applicable

Particular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company

name

Type

Main

business

Operating

revenue

Operating

profit

Net profit

Wuyuan

Ju Fang

Yong

Subsidiary

Sales and

production

of tea

products

290000000.00 406980655.84 324994035.58 84705491.88 5186849.97 3882637.49

Shenbao

Technolog

y Center

Subsidiary

Developm

ent

consulting

and

transfer of

technolog

54000000.00 44100092.63 33847707.32 12528.05 -2020660.37 -2020660.37

Hangzhou

Ju Fang

Yong

Subsidiary

Sales and

production

of tea

products

175000000.00 211729223.62 156892147.26 15424604.46 -5146570.80 -5035099.00

Pu’er Tea

Trading

Center

Subsidiary

Service

industry

50000000.00 45407102.16 34590516.81 76410.93 -2164182.09 -2164182.09

Particular about subsidiaries obtained or disposed in report period

□ Applicable √ Not applicable

Explanation on main holding/stock-jointly enterprise

1.Ju Fang Yong Tea Industry Co. Ltd. in Wuyuan County is a wholly-owned subsidiary of the Company. Business scope: tea

natural plants tea and natural plant extracts planting tea import and export trade agricultural and sideline products acquisition

processing sales; pre-packaged food sales. (The above projects for which the country has special provisions should be operated with

a valid qualification certificate or permit). Registered capital amounted as 290000000 Yuan. Up to the reporting period total asstes

of Wuyuan Ju Fang Yong comes to 406980655.84 Yuan net assets amounted as 324994035.58 Yuan the shareholdres equity

深圳市深宝实业股份有限公司 2018 年半年度报告全文

attributable to parent Company amounted as 324994035.58 Yuan; in the reporting period operation revenue amounted as

84705491.88 Yuan net profit achived 3882637.49 Yuan and net profit attributable to parent Company was 3882637.49 Yuan.

2. Shenzhen Shenbao Technology Center Co. Ltd. is a wholly-owned subsidiary of the Company its business scope includes

technical development technical consultation technology transfer and inspection services for tea plant products soft drinks and

food (except for projects subject to approval before registration by laws administrative regulations State Council decisions);

domestic trade; prepackaged food wholesale liquor wholesale. Register capital was 54 million Yuan. Ended as this period-end total

assets of Shenbao Technology Center amounted as 44100092.63 Yuan net assets amounting to 33847707.32 Yuan the

shareholders equity attributable to parent Company amounted as 33847707.32 Yuan; in the reporting period Shenbao Technology

Center achieved operation revenue of 12528.05 Yuan net profit amounting to (2020660.37) Yuan and net profit attributable to

parent Company amounted as (2020660.37) Yuan

3. Hangzhou Ju Fang Yong Holding Co. Ltd. a wholly owned subsidiary. Business scope: sell both retail and wholesale: wholesale

retail of the prepackaged food and bulk food (pre-approval items should be operated within validity period ): tea set; acquisitions: tea

business sales required (limited to the acquisition of the original producer of primary industry directly); Services: Tea business

investment and asset management technology development cultivation breeding technical consulting technical services transfer of

results the other all legitimate projects without approval subsidiaries’ business scope included. Register capital was 175 million

Yuan. Ended as this period-end the total assets of Ju Fang Yong is 211729223.62 Yuan and net assets amounting to

156892147.26 Yuan shareholders’ equity attributable to parent Company is 157204306.46 Yuan; in the reporting period Ju Fang

Yong achieved operation income net profit and net profit attributable to shareholder of parent Company as 15424604.46 Yuan

(5035099.00) Yuan and (5029801.36) Yuan respectively.

4. Yunnan Pu'er Tea Trading Center Co. Ltd. is a controlling subsidiary of the Company its business scope includes providing places

facilities and intermediary brokerage auction finance and consulting services for tea and other agricultural and sideline products

spot trading of industrial raw materials and bulk stock and related financial services; investment and management of other related

projects; conference and exhibition services (projects subject to approval according to law operating activities only be carried out

after the approval of relevant departments). Register capital was 50 million Yuan. Ended as this period-end total assets of Pu’er Tea

Trading Center amounted as 45407102.16 Yuan net assets amounting to 34590516.81 Yuan the shareholders equity attributable to

parent Company amounted as 34590516.81 Yuan; in the reporting period Pu’er Tea Trading Center achieved operation revenue of

76410.93 Yuan net profit amounting to (2164182.09) Yuan and net profit attributable to parent Company amounted as

(2164182.09) Yuan

VIII. Structured vehicle controlled by the Company

□ Applicable √ Not applicable

IX. Prediction of business performance from January – September 2018

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the

warning of its material change compared with the corresponding period of the last year and explanation on reason

□ Applicable √ Not applicable

X. Risks and countermeasures

1. Restricted by the challenges faced by the overall environment of the domestic beverage market the competition in the industry is

intensifying the Company’s profits are not satisfactory and the return expectations of various projects are relatively slow. The

Company is actively promoting various improvement measures to reduce consumption and increase efficiency drive the product

深圳市深宝实业股份有限公司 2018 年半年度报告全文

upgrades and innovations to improve market competitiveness enhance overall profit margins and accelerate the efficiency

promotion.

2. In recent years the consumption trend is changing day by day but the Company’s business structure and talent structure are

relatively simple the team construction is lagging behind and the professional talent team is lacking as a result in the cultivation of

new business the Company’s innovation ability and strain capacity are inadequate when facing the competition in new areas which

increases the cycle and cost of business transformation. The Company will continue to introduce professional talents from the outside

train talents at home strengthen the construction of talent teams and open up the development channels for employees to create

career development opportunities.

3. As the Company is actively promoting major asset restructuring projects during the reporting period the Company has disclosed

the various risk factors in detail in the “Report on Issuing Shares for Asset Purchase and Related Transactions” (draft) (revised

version) see the Company’s announcement disclosed at www.cninfo.com.cn on June 23 2018.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section V. Important Events

I. Annual General Meeting and extraordinary shareholders general meeting held in this

period

1. AGM in the period

Sessions Type

Investor

participati

on (%)

Opening date Disclosure date Disclosure index

2017 Annual

general meeting

Annual general

meeting

35.34% 2018-05-15 2018-05-16

Resolution Notice of AGM 2017 of

Shenzhen Shenbao Industrial Co. Ltd.(Notice No.: 2018-44) released on

Juchao website dated 16 May 2018

The First

Interim

Shareholders

General Meeting

of 2018

Interim

Shareholders

General Meeting

4.83% 2018-06-27 2018-06-28

Resolution Notice of The First Interim

Shareholders General Meeting of 2018

of Shenzhen Shenbao Industrial Co. Ltd.(Notice No.: 2018-57) released on

Juchao website dated 28 June 2018

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

□ Applicable √ Not applicable

The Company plans not to carried out distribution of cash dividend bonus shares and share converted from capital reserve either for

the half year

III. Commitments completed in Period and those without completed till end of the Period from actual

controller shareholders related parties purchaser and companies etc.

□ Applicable √ Not applicable

There are no commitments completed in Period and those without completed till end of the Period from actual controller

shareholders related parties purchaser and companies etc.IV. Appointment and non-reappointment (dismissal) of CPA

Whether the financial report has been audited or not

深圳市深宝实业股份有限公司 2018 年半年度报告全文

□Yes √No

The financial report has not been audited

V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion”

that issued by CPA

□ Applicable √ Not applicable

VI. Explanation from the BOD for “Qualified Opinion” of last year

□ Applicable √ Not applicable

VII. Bankruptcy reorganization

□ Applicable √ Not applicable

No bankruptcy reorganization for the Company in end of this period

VIII. Lawsuits

Significant lawsuits and arbitrations

□ Applicable √ Not applicable

No significant lawsuits and arbitrations occurred in the reporting period

Other lawsuits

√ Applicable □ Not applicable

Lawsuits (arbitrations)

Amount

involved

(in 10

thousand

Yuan)

Resulted an

accrual

liability

(Y/N)

Progress

Trial result and

influence

Execution

judgment

Disc

losur

date

Discl

osure

index

Shenzhen Shenbao Industrial Co. Ltd.(hereinafter referred to as “Shenbao

Company”) received the Civil Complaint

from Shenzhen Agricultural Products

Financing Guarantee Co. Ltd. (hereinafter

referred to as “Guarantee Company”) in July

2016 Case No.: (2016)Y0304MC15008

required Changzhou Shenbao Tea

Warehousing E-commerce Co. Ltd. a

shareholding enterprise of Shenbao Company

to repay the loan principal and interest

500 N

In second

instance final

judgment has

not been made

out while the

second instance

has completed

The first

instance

judgment has

been issued the

court ruled to

reject the appeal

of Guarantee

Company that

Shenbao

Company

should

Adjudicati

on has not

been made

in second

instance

court

Not

appli

cabl

Not

applic

able

深圳市深宝实业股份有限公司 2018 年半年度报告全文

penalty interest and compensation with a

total of RMB 8690240.31 the shareholder

Shenbao Company undertook joint liability

for the (loan principal) borrowings of RMB

5000000.00.

After holding a hearing Shenbao Company

received the written judgment of first instance

in June 2017 the court ruled to reject the

appeal of Guarantee Company that Shenbao

Company should undertake joint liability.

Guarantee Company refused to accept the

judgment of the first instance and appealed to

Shenzhen Intermediate People's Court Case

is in second instance final judgment has not

been made out while the second instance has

completed

undertake joint

liability

Hangzhou Fuhaitang Tea Ecological

Technology Co. Ltd. sued Ma Xuezhong and

required Ma Xuezhong to pay the equity

transfer payment of 600000 Yuan and the

overdue interest Shangsi Court of Hangzhou

West Lake District People’s Court held a

hearing for this equity transfer dispute case

which has not yet been decided.

60 N

In process of

first instance

Not yet verdict Invalid

Not

appli

cabl

Not

applic

able

IX. Penalty and rectification

□ Applicable √ Not applicable

No penalty and rectification for the Company in reporting period.X. Integrity of the Company and its controlling shareholders and actual controllers

√ Applicable □ Not applicable

During the reporting period the Company and its controlling shareholder always obeyed final judgment in the court case relatively

large amount of debt overdue and other non-compliance.XI. Implementation of the Company’s stock incentive plan employee stock ownership plan or

other employee incentives

□ Applicable √ Not applicable

During the reporting period the Company has no stock incentive plan employee stock ownership plan or other employee incentives

that have not been implemented.深圳市深宝实业股份有限公司 2018 年半年度报告全文

XII. Major related transaction

1. Related transaction with routine operation concerned

□ Applicable √ Not applicable

No related transaction occurred in the period with routine operation concerned

2. Assets or equity acquisition and sales of assets and equity

□ Applicable √ Not applicable

No related transaction concerning the asses or equity acquisition and sold at period-end

3. Related transaction of foreign investment

□ Applicable √ Not applicable

No related transaction of foreign investment occurred at period-end

4. Related credits and liabilities

□ Applicable √ Not applicable

No related credits and liabilities occurred in period

5. Other major related transaction

√ Applicable □ Not applicable

On 8 June 2018 and 27 June the 17th session of 9th BOD and First Extraordinary General Meeting of 2018 are deliberated and

approved the Proposal as Purchasing Assets by Issuing of Shares and Report of Related Transactions (Draft) and its Summary the

Company agreed to purchased 100% equity of Shenzhen Cereals Group held by Fude Capital by shares offering with considerate of

5875546441.66 Yuan for the target assets.

The counterparty-Fude Capital is the controlling shareholder of the Shenbao Industry and in accordance with relevant regulations as

Restructuring Measures and Listing Rules from Shenzhen Stock Exchange the transaction constitutes related transactions.Up to now the matter is still in the audit stage of the China Securities Regulatory Commission and will be implemented after it has

been approved.Relevant information of website for announcement disclosed with major related transaction concerned

Announcement Date for disclosure Website for inquiry

Purchasing Assets by Issuing of Shares and Report of

Related Transactions (Draft)

2018-06-11

Juchao Website

(www.cninfo.com.cn)

Resolution of First Extraordinary General Meeting of 2018 2018-06-28 Juchao Website

深圳市深宝实业股份有限公司 2018 年半年度报告全文

(www.cninfo.com.cn)

XIII. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √ Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.XIV. Significant contract and implementations

1. Trusteeship contract and leasing

(1) Trusteeship

□ Applicable √ Not applicable

No trusteeship for the Company in reporting period

(2) Contract

□ Applicable √ Not applicable

No contract for the Company in reporting period

(3) Leasing

□ Applicable √ Not applicable

No leasing in the Period

2. Major Guarantee

√ Applicable □ Not applicable

(1) Guarantee

In 10 thousand Yuan

External Guarantee (not including guarantees to subsidiaries)

Name of the

Company

guaranteed

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening (Date

of signing

agreement)

Actual

guarantee limit

Guarantee

type

Guarantee

term

Complete

implemen

tation or

not

Guarante

e for

party

Guarantee between the Company and subsidiary

Name of the

Company

guaranteed

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening (Date

of signing

agreement)

Actual

guarantee limit

Guarantee

type

Guarantee

term

Complete

implemen

tation or

not

Guarante

e for

party

Shenzhen Shenbao 2017-04-24 3000 2017-07-27 3000 Joint liability One year N Y

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Huacheng Science

and Technology

Co. Ltd

guaranty

Total amount of approving

guarantee for subsidiaries in

report period (B1)

Total amount of actual

occurred guarantee for

subsidiaries in report period

(B2)

3000

Total amount of approved

guarantee for subsidiaries at the

end of reporting period (B3)

3000

Total balance of actual

guarantee for subsidiaries at

the end of reporting period

(B4)

3000

Guarantee between the subsidiaries

Name of the

Company

guaranteed

Announce

ment

disclosure

date

Guarantee

limit

Actual date of

happening (Date

of signing

agreement)

Actual

guarantee limit

Guarantee

type

Guarantee

term

Complete

implemen

tation or

not

Guarante

e for

party

Total amount of guarantee of the Company( total of three abovementioned guarantee)

Total amount of approving

guarantee in report period

(A1+B1+C1)

Total amount of actual

occurred guarantee in report

period (A2+B2+C3)

3000

Total amount of approved

guarantee at the end of report

period (A3+B3+C2)

3000

Total balance of actual

guarantee at the end of report

period (A4+B4+C4)

3000

The proportion of the total amount of actually guarantee in the

net assets of the Company(that is A4+ B4+C4)

3.23%

Including:

Amount of guarantee for shareholders actual controller and its

related parties(D) 0

The debts guarantee amount provided for the guaranteed

parties whose assets-liability ratio exceed 70% directly or

indirectly(E)

Proportion of total amount of guarantee in net assets of the

Company exceed 50%(F) 0

Total amount of the aforesaid three guarantees(D+E+F) 0

Explanations on possibly bearing joint and several liquidating

responsibilities for undue guarantees (if applicable)

Not applicable

Explanations on external guarantee against regulated

procedures (if applicable)

Not applicable

Explanation on compound guarantee

Nil

(2) Illegal external guarantee

□ Applicable √ Not applicable

No illegal external guarantee in the period

深圳市深宝实业股份有限公司 2018 年半年度报告全文

3. Other material contracts

√ Applicable □ Not applicable

Compan

y Name

of the

Contract

Conclusi

Other

Party

Name of

the

Contract

Conclusio

Contrac

Object

Date of

the

Contract

Book

Value

of Asset

Involvi

ng in

Contrac

t (ten

thousan

d Yuan)

(if any)

Estimate

d Value

of Assets

Involvin

g in

Contract

(ten

thousand

Yuan) (if

any)

Evaluation

Authority Na

me (if any)

Base

Date

of Asset

Evaluati

on (if

any)

Pricing Principle

Transac

tion

Price

(ten

thousand

Yuan)

Whether

Transacti

ons

Relation

Implementat

ion as of the

end of the

Reporting

Period

Date of

Disclosu

Disclosure Index

Shenzhe

Shenbao

Industria

l Co.

Ltd.Shenzhen

Fude

State-Ow

ned

Capital

Operation

Co. Ltd.

Shenzh

Cereals

Group

Co.

Ltd.

2018-06-

314259

587554.

Beijing

China

Enterprise

Appraisals

Consultation

Co. Ltd.

2017-09-

See details on the“Report on IssuingShares for Asset

Purchase and

RelatedTransactions” (draft)

(revised

version) disclosed

at www.cninfo.com.cn on June 23 2018.

587554.

The

counterparty-F

ude Capital is

the controlling

shareholder of

the Shenbao

Industry this

transaction

constituted a

transaction.

As of the

end of the

reporting

period the

transaction

is still

subject to

the

centralized

review of

the

operators of

the Ministry

Commerce

and the

2018-06-

As for the Agreement on

Shenzhen Shenbao

Industrial Co. Ltd. and

Shenzhen Fude

State-owned Capital

Operation Co.Ltd. Issuing Shares to

Purchase Assets and its

supplementary

agreements please refer to

the relevant

announcement published

at www.cninfo.com.cn on

March 24 2018 April 4

2018 and June 11

2018.

深圳市深宝实业股份有限公司 2018 年半年度报告全文

approval of

the China

Securities

Regulatory

Commission

and there is

uncertainty

as to

whether it

can pass and

be approved

and the time

being

approved.XV. Social responsibility

1. Major environment protection

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department

Yes

Name

Name of Major

Pollutants and

Particular Pollutants

Emission Method

Quantity of

Discharge

Outlet

Distribution of

Discharge Outlet

Emission

Concentration

Executed Pollutant

Discharge

Standards

Total

Emissions

Approved

Total

Emissions

Excessive

Discharge

Shenzhen Shenbao

Huacheng Science and

Technology Co.Ltd

Chemical oxygen

demand

Emission after the

qualified biochemical

treatment

Concentrative

emissions

10 90 0.22 tons

15.44 tons

/Year

Shenzhen Shenbao Suspended matter Emission after the 1 Concentrative 5 60 0.11 tons 10.293 tons N

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Huacheng Science and

Technology Co.Ltd

qualified biochemical

treatment

emissions /Year

Shenzhen Shenbao

Huacheng Science and

Technology Co.Ltd

Five-day biochemical

oxygen demand

Emission after the

qualified biochemical

treatment

Concentrative

emissions

1.8 20 0.04 tons

3.431 tons

/Year

Shenzhen Shenbao

Huacheng Science and

Technology Co.Ltd

Ammonia nitrogen

Emission after the

qualified biochemical

treatment

Concentrative

emissions

0.146 10 0.003 tons

1.716 tons

/Year

Shenzhen Shenbao

Huacheng Science and

Technology Co.Ltd

Chroma

Emission after the

qualified biochemical

treatment

Concentrative

emissions

2 40 0.044 tons

6.862 tons

/Year

Shenzhen Shenbao

Huacheng Science and

Technology Co. Ltd

PH value

Emission after the

qualified biochemical

treatment

Concentrative

emissions

7.43 6~9 —— —— N

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Construction and operation of pollution prevention and control facilities

1. In the initial stage of production the first phase of sewage treatment capacity was 230T/day. However due to the increase in

production capacity and management needs the second phase of the treatment capacity of 240T/day was rebuilt in 2007 and the total

sewage treatment design capacity reached 470T/day.

2. In the past three years the Company’s sewage treatment facilities have performed well and there has been no excessive discharge.

Environmental impact assessment of construction projects and other environmental protection administrative licenses

1. The Company obtained the latest environmental protection approval in 2009:

Shenzhen Longgang District Environmental Protection Bureau Construction Project Environmental Impact Review and Approval No.SLHP[2009]703873; the Company’s industrial wastewater discharge is not allowed to exceed 470 tons/day the wastewater discharge

performs the first-level standard for the second period of DB44/26-2001.

2. The Company obtained the latest “Guangdong Province Pollutant Discharge Permit” in 2016 which is valid until 2021.

Emergency response plan for environmental emergencies

The Company strengthened the operation maintenance and management of environmental protection facilities formulated a strict

responsibility system for environmental protection posts established an emergency response team with the chairman of the pollutant

discharge unit as the core of leadership and revised the Company’s Emergency Response Plan for Environmental Emergencies to

ensure the stable and normal operation rate of the pollution control facilities reaches 100%.

Environmental self-monitoring scheme

1. The Company installed COD PH value and flowmeter pollution source online monitor for all-weather on-line monitoring in

2010.

2. Engage a third-party professional organization to test the industrial discharge of wastewater for every half year.

Other environmental information that should be disclosed

1. Oil-to-gas project: In 2011 the Company transformed its two boilers from diesel boilers into natural gas boilers that burn clean

energy which greatly reduced the greenhouse gas emissions.

2. Clean production audit: The Company passed the voluntary clean production audit of Shenzhen in 2016.

Other environment protection

Nil

2. Execution of social responsibility of targeted poverty alleviation

The Company has no targeted poverty alleviation in the period and no follow-up poverty alleviation plan either temporary

XVI. Other major events

√ Applicable □ Not applicable

Shenzhen Shenbao Industrial has applied for a suspension of the Company’s stock (referred to as: Shenshenbao A Shenshenbao B

stock code: 000019 200019) from the opening of the market on August 22 2017 to the Shenzhen Stock Exchange due to theplanning and preparation of major events. On September 5 2017 the Company disclosed the “Announcement on the Suspension forthe Major Asset Restructuring of the Company” the Company’s stock has been transferred to major asset restructuring and continued

to be suspended since the opening of the market on September 5 2017. During the suspension of the Company’s stock the Company

has disclosed the “Announcement on Suspension Progress of Major Asset Restructuring” at least every five trading days in

accordance with relevant regulations.On March 23 2018 the Company convened the fifteenth meeting of the Ninth Session of Board of Directors which discussed and

深圳市深宝实业股份有限公司 2018 年半年度报告全文approved the “Proposal on Preplanning of Shenzhen Shenbao Industrial Co. Ltd. Issuing Shares to Purchase Assets and RelatedTransactions” and the proposals related to this major asset restructuring.

On 27 March 2018 the Company received the “Inquiry Letter on the Restructuring of Shenzhen Shenbao Industrial Co. Ltd.”

[License Restructuring Inquiry Letter [2018] No. 6] issued by the Shenzhen Stock Exchange. According to the requirements of the

inquiry letter the Company promptly organized various intermediaries to carry out careful research implemented and replied therelevant issues term by term and supplemented and revised the original planning and compiled the “Preplanning of ShenzhenShenbao Industrial Co. Ltd. Issuing Shares to Purchase Assets and Related Transactions (revised version)”

By application the Company’s stock resumed the trading on the opening of the market on the morning of April 4 2018 (Wednesday).On June 8 2018 the Company held the 17th meeting of the ninth board of directors which deliberated and approved the “Proposal on‘the Company’s Share Issuance for Purchasing Assets and Related Transactions Report (Draft)’ and its Summary” and other

proposals related to major asset restructuring.On June 15 2018 the Company received the “Approval of Shenzhen State-owned Assets Supervision and Administration

Commission on the Company’s Share Issuance for the Acquisition of 100% Equity of Shenzhen Cereals Group and Relevant Issuesof Major Assets Restructuring” (SGZWH [2018] No. 499) issued by Shenzhen SASAC from Fude Capital agreed the restructuring

plan reported by Fude Capital.On June 19 2018 the Company received the “Inquiry Letter on the Company’s Restructuring” [XKLCZWXH[2018] No. 18] issued

by the Shenzhen Stock Exchange. According to the requirements of the inquiry letter the Company supplemented and improved the

documents related to this major asset restructuring and established the Report on Share Issuance of Shenzhen Shenbao Industrial Co.Ltd. for Purchasing Assets and Related Transactions (Revised Version).On June 27 2018 the Company held the first extraordinary meeting in 2018 which reviewed and approved the “Proposal on ‘the

Company’s Share Issuance for Purchasing Assets and Related Transactions Report (Draft)’ and its Summary” and other proposals

related to this major asset restructuring.On July 5 2018 the Company received the “Notice of Correction on Application for Administrative License of China SecuritiesRegulatory Commission” (No. 181013) (hereinafter referred to as the “Notice of Correction”) issued by the China SecuritiesRegulatory Commission. The CSRC reviewed the application materials for the administrative license of the “Approval of the

Company’s Listed Companies to Issue Shares to Purchase Assets” submitted by the Company and requested the Company to submit

the relevant correction materials to the acceptance department of CSRC for administrative license application within 30 working days

from the date of issuance of the Notice of Correction. The Company strictly followed the requirements of the Notice of Correction

and actively prepared the correction materials and submitted them in time.On July 27 2018 the Company received the “Administrative License Application Acceptance Form of CSRC” issued by the China

Securities Regulatory Commission (acceptance number is 181013). The China Securities Regulatory Commission examined theapplication materials for the administrative license of the “Approval of the Issuance of Shares by Listed Companies to Purchase

Assets” submitted by the Company in accordance with the law considering that all materials were complete decided to accept the

application for the administrative license.

On August 9 2018 the Company obtained the “Notice of Investigation of China Securities Regulatory Commission” (YZDCTZ No.

180133) from Jonten the audit institution responsible for this major asset restructuring because it was suspected of violating

securities laws and regulations in the audit process of other enterprises CSRC decided to file a case and investigate it. In accordance

with the relevant regulations of the CSRC Decree No. 138 the Company convened the board meeting on August 13 2018 anddecided to apply to the CSRC for the suspension of the “Approval of the Issuance of Shares by Listed Companies to Purchase

Assets” and submitted the application to the CSRC on the same day. On August 15th the Company received the “Notice of theSuspension of the Review about Administrative License Application from China Securities Regulatory Commission (No. 181013)

and CSRC decided to agree to the Company’s suspension of the review.深圳市深宝实业股份有限公司 2018 年半年度报告全文

In view of the fact that Jonten had fulfilled the corresponding review procedures and issued the review report in accordance with theregulations on August 19 2018 the Company convened the board meeting to deliberate and approve the “Proposal on Resuming theReview about the Application for ‘the Approval of Issuance of Assets by Listed Companies to Purchase Assets’ to the ChinaSecurities Regulatory Commission” and agreed the Company to apply to the China Securities Regulatory Commission for

resumption of review.

On 23 August 2018 the Company received a Decision of Anti-monopoly Examination of the Acts of Concentration of Business

Operators without Further Examination (Anti- monopoly CS Letter [2018] No.153) from Anti-monopoly Bureau of the State

Administration of Market Supervision and Administration the Bureau agrees to conduct no further examination on the equity

acquisition of Shenzhen Cereals Group by the Company and the Company can implement centralization from now on.The material assets restructuring should be approved by CSRC and there is no certainty in approval.XVII. Significant event of subsidiary of the Company

□ Applicable √ Not applicable

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Shares

1. Changes in shares

In Share

Before the Change Increase/Decrease in the Change (+ -) After the Change

A mount Proportion

New

issued

Bonus

Capitalizat

ion of

public

reserve

Others Subtotal A mount

Proportio

I. Restricted shares

2906844

5.85% 0 0 0 9942 9942

2907838

5.85%

1. State-owned shares 0 0.00% 0 0 0 0 0 0 0.00%

2. State-owned corporate

1343178

2.70% 0 0 0

-1343178

0 0.00%

3. Other domestic shares

1558332

3.14% 0 0 0

1344172

2902505

5.84%

Including: Domestic legal

person’s shares

1538483

3.10% 0 0 0

1343178

2881661

5.80%

Domestic nature

person’s shares 198493 0.04% 0 0 0 9943 9943 208436 0.04%

4. Foreign shares 53336 0.01% 0 0 0 -1 -1 53335 0.01%

Including: Foreign

corporate shares

0 0.00% 0 0 0 0 0 0 0.00%

overseas nature

person’s share

53336 0.01% 0 0 0 -1 -1 53335 0.01%

II. Un-restricted shares

4677138

94.15% 0 0 0 -9942 -9942

4677039

94.15%

1. RMB common shares

4159645

83.73% 0 0 0 -9942 -9942

4159546

83.73%

2. Domestically listed

foreign shares

5174928

10.42% 0 0 0 0 0

5174928

10.42%

3. Foreign listed foreign

0 0.00% 0 0 0 0 0 0 0.00%

4. Other 0 0.00% 0 0 0 0 0 0 0.00%

III. Total shares 4967823 100.00% 0 0 0 0 0 4967823 100.00%

深圳市深宝实业股份有限公司 2018 年半年度报告全文

03 03

Reasons for share changed

√ Applicable □ Not applicable

1. On January 19 2018 the Company received the notice from the Company’s actual controller Shenzhen State-owned Assets

Supervision and Administration Commission: In order to promote the overall strategic adjustment of in Shenzhen municipal

state-owned grain and agricultural enterprises the Shenzhen Municipal People’s Government issued SFH [2018] No. 17 on January

18 2018 agreed to carry out holistic changes to Shenzhen municipal state assets and transfer 16% equity of Shenshenbao held byShenzhen Investment Holdings to Fude Capital without compensation. For details please refer to the “Prompt Announcement of the

Company on the Free Transfer of State-owned Shares” disclosed at www.cninfo.com.cn on January 20 2018.

2. Ms. Li Fang the original senior manager of the Company submitted a written resignation report to the Company on May 31 2018and immediately took effect. According to the relevant provisions of the “Detailed Rules for Reducing Shareholdings of Shareholders

Directors Supervisors and Senior Management of Listed Companies of the Shenzhen Stock Exchange” 9942 shares of outstanding

shares of the Company held by Ms. Li Fang were converted into restricted shares from this date. For details please refer to the

“Announcement of the Company on the Resignation of Senior Management” disclosed at www.cninfo.com.cn on June 2 2018.

3. Due to the rounding off in the annual recalculation of shares locked by senior executive the Company’s director Mr. Yan Zesong

of whom one share of the Company was lifted restriction on January 2 2018; the Company’s senior management Mr. Yao Xiaopeng

of whom one share of the Company was restricted on January 2 2018.

Approval of share changed

√ Applicable □ Not applicable

It has been approved by the State-owned Assets Supervision and Administration Commission of the State Council the Ministry of

Commerce and the China Securities Regulatory Commission that the 13431784 shares of the Company held by ShenzhenInvestment Holdings should be transferred to Fude Capital for details please refer to the “Announcement on the Progress of the

Company’s Free Transfer of State-owned Shares” disclosed at www.cninfo.com.cn on February 18 2018 and the “Announcement ofthe Company on the Approval of China Securities Regulatory Commission for the Application for the Exemption of Tender Offer

Obligations Obtained by Shenzhen Fude State-owned Capital Operation Co. Ltd. and the Progress of Major Assets Restructuringand Delisting” disclosed at www.cninfo.com.cn on March 17 2018.Ownership transfer of share changed

√ Applicable □ Not applicable

On April 3 2018 China Securities Depository and Clearing Co. Ltd. completed the transfer of 13431784 shares of the Companyheld by Shenzhen Investment Holdings to Fude Capital. For details please refer to the “Announcement of the Company on the

Completion of Free Transfer of State-owned Shares” disclosed at www.cninfo.com.cn on April 4 2018.

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common

shareholders of Company in latest year and period

□ Applicable √ Not applicable

Other information necessary to disclose or need to disclosed under requirement from security regulators

□ Applicable √ Not applicable

深圳市深宝实业股份有限公司 2018 年半年度报告全文

2. Changes of restricted shares

√ Applicable □ Not applicable

In Share

Shareholders’ name

Number of

restricted at

Period-begin

Number of

released in

the Year

Number of new

shares restricted

in the Year

Number of

restricted at

Period-end

Restriction

reasons

Released date

Shenzhen Fude Capital Operation

Co. Ltd.

0 0 13431784 13431784

Restricted

shares of

share reform

Restrict shares of

Shenzhen Investment

Holding transfer for

free

Shenzhen Investment Holding

Co. Ltd

13431784 13431784 0 0

Restricted

shares of

share reform

Restricted shares

transfer to Fude

Capital for free

Yan Zesong 53336 1 0 53335

Executives

locked-up

Shares unlock every

year takes 25% of the

total shares holding

Li Fang 29824 0 9942 39766

Executives

locked-up

Found more in“Notice of Senior

ExecutiveResignation” released

on Juchao Website

dated 2 June 2018

Yao Xiaopeng 33288 0 1 33289

Executives

locked-up

Shares unlock every

year takes 25% of the

total shares holding

Total 13548232 13431785 13441727 13558174 -- --

II. Securities issuance and listing

□ Applicable √ Not applicable

III. Amount of shareholders and particulars about shares holding

In Share

Total common stock

shareholders in reporting

period-end

71459

Total preference shareholders

with voting rights recovered at

end of reporting period (if

applicable) (found in note8)

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Particulars about shares held above 5% by common shareholders or top ten common shareholders

Full name of Shareholders Nature of shareholder

Proporti

on of

held

Total common

shares hold at

the end of

report period

Changes in

report

period

Amount of

restricted

common

shares held

Amount of

un-restricted

common

shares held

Number of share

pledged/frozen

State of

Amoun

Shenzhen Agricultural Products

Co. Ltd

Other 19.09% 94832294 0 15384832 79447462

Shenzhen Fude State-Owned

Capital Operation Co. Ltd.

Other 16.00% 79484302 79484302 13431784 66052518

Sun Huiming

Domestic

nature

person

0.69% 3403262 0 0 3403262

Hu Xiangzhu

Domestic

nature

person

0.45% 2238400 328400 0 2238400

Zhou Jun

Domestic

nature

person

0.33% 1636790 1636790 0 1636790

Central Huijin Asset Management

Co. Ltd.

State-owned

legal person

0.30% 1472625 0 0 1472625

Li Qian

Domestic

nature

person

0.26% 1278311 -4367 0 1278311

Ye Xiuxia

Domestic

nature

person

0.20% 1000230 0 0 1000230

Chen Xianping

Domestic

nature

person

0.20% 990000 0 0 990000

Gu Fengyuan

Domestic

nature

person

0.19% 950300 950300 0 950300

Strategy investors or general corporation comes

top 10 common shareholders due to rights issue

(if applicable) (see note 3)

N/A

Explanation on associated relationship among

the aforesaid shareholders

Shenzhen SASAC directly holds 100% equity of Fude Capital and holds 34% of

Agricultural Products indirectly through Fude Capital; the Company was not aware

of any related relationship between other shareholders above and whether they

belonged to parties acting in concert as defined by the Acquisition Management

Method of Listed Company.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Particular about top ten common shareholders with un-restrict shares held

Shareholders’ name

Amount of un-restrict common shares held at

Period-end

Type of shares

Type Amount

Shenzhen Agricultural Products Co. Ltd 79447462

RMB common

79447462

Shenzhen Fude State-Owned Capital Operation

Co. Ltd.

66052518

RMB common

66052518

Sun Huiming 3403262

Domestically

listed foreign

3403262

Hu Xiangzhu 2238400

RMB common

2238400

Zhou Jun 1636790

RMB common

1636790

Central Huijin Asset Management Co. Ltd. 1472625

RMB common

1472625

Li Qian 1278311

RMB common

1278311

Ye Xiuxia 1000230

RMB common

1000230

Chen Xianping 990000

RMB common

990000

Gu Fengyuan 950300

RMB common

950300

Expiation on associated relationship or

consistent actors within the top 10 un-restrict

shareholders and between top 10 un-restrict

shareholders and top 10 shareholders

Shenzhen SASAC directly holds 100% equity of Fude Capital and holds 34% of

Agricultural Products indirectly through Fude Capital; the Company was not aware

of any related relationship between other shareholders above and whether they

belonged to parties acting in concert as defined by the Acquisition Management

Method of Listed Company.

Explanation on top 10 shareholders involving

margin business (if applicable) (see note 4)

N/A

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back

agreement dealing in reporting period

□ Yes √ No

The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no

buy-back agreement dealing in reporting period.深圳市深宝实业股份有限公司 2018 年半年度报告全文

IV. Change of controlling shareholder or actual controller

Changes of controlling shareholders in reporting period

√ Applicable □ Not applicable

New controlling shareholder Shenzhen Fude State-Owned Capital Operation Co. Ltd.

Date of change 2018-04-03

Query index in appointed website

”Notice of State-owned Shares Transfer for Free”(Notice

No.:2018-27) released on Juchao Website

Disclosure date in appointed website 2018-04-04

Changes of actual controller in reporting period

□ Applicable √ Not applicable

The Company had no changes of actual controller in reporting period

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section VII. Preferred Stock

□ Applicable √ Not applicable

The Company had no preferred stock in the Period.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section VIII. Particulars about Directors Supervisor and Senior

Executives

I. Changes of shares held by directors supervisors and senior executives

√ Applicable □ Not applicable

Name Title

Post-ho

lding

status

held at

period-beg

in (Share)

Increasing

shares held

in this

period

(Share)

Decreasing

shares held

in this

period

(Share)

held at

period-end

(Share)

Number of

restricted

granted at

period-begin

(share)

Number of

restricted

granted in

this period

(share)

Number of

restricted shares

granted at

period-end

(share)

Yan

Zesong

Director GM

Current

ly in

office

71114 0 0 71114 53336 -1 53335

Li Fang

Deputy party

secretary

deputy SCID

Deputy GM

Office

leaving

39766 0 0 39766 29824 9942 39766

Yao

Xiaopeng

Deputy GM

Current

ly in

office

44385 0 0 44385 33288 1 33289

Total -- -- 155265 0 0 155265 116448 9942 126390

II. Changes of directors supervisors and senior executives

√ Applicable □ Not applicable

Name Position Type Date Causes

Wang Li Director Election 2018-05-15 Job transfer

Ni Yue Director Election 2018-05-15 Job transfer

Wang Huimin Supervisor Election 2018-05-15 Job transfer

Liu Zhengyu Director Resignation 2018-04-13 Job transfer

Huang Yu Director Resignation 2018-04-13 Job transfer

Li Xinjian Supervisor Resignation 2018-05-15 Job transfer

Li Fang

Deputy party secretary

SCID Deputy GM

Dismiss 2018-05-31 Job transfer

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section IX Corporate Bonds

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when

semi-annual report approved for released or fail to cash in full on due

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Section X. Financial Report

I. Audit reports

Whether the semi-annual report was audited or not

□ Yes √ No

The financial report of this semi-annual report was unaudited

II. Financial statements

Units in Notes of Financial Statements is RMB

1. Consolidated Balance Sheet

Prepared by Shenzhen Shenbao Industrial Co. Ltd.

2018-06-30

In RMB

Items Ending balance Opening balance

Current assets:

Monetary fund 223346666.44 255961650.41

Settlement provisions

Capital lent

Financial assets measured by fair

value and with variation reckoned into

current gains/losses

1173950.05 1599668.20

Derivative financial assets

Notes receivable

Account receivable 65057127.05 77193068.03

Account paid in advance 4269088.68 11787432.82

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance

receivable

Interest receivable

Dividends receivable

Other receivables 23327599.67 23311599.67

Purchase restituted finance asset

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Inventory 162120133.29 155306108.94

Assets held for sale

Non-current assets due within one

year

Other current assets 32071685.68 2758494.99

Total current assets 511366250.86 527918023.06

Non-current assets:

Loans and payments on behalf

Available-for-sale financial assets 57500.00 57500.00

Held-to-maturity investments

Long-term receivables

Long-term equity investment 5063724.67 5248629.66

Investment property 18165479.87 18401275.03

Fix assets 303675729.05 313742404.72

Construction in process 864175.33 134918.91

Project materials

Disposal of fixed assets

Productive biological assets 411925.10 416771.28

Oil and natural gas assets

Intangible assets 183861850.82 187321246.43

Research and development costs 1308711.37

Goodwill

Long-term deferred expenses 9494951.88 11136767.80

Deferred income tax assets 5479370.41 5524575.14

Other non-current assets 734465.84 484108.52

Total non-current assets 529117884.34 542468197.49

Total assets 1040484135.20 1070386220.55

Current liabilities:

Short-term loans 10000000.00

Loan from central bank

Absorbing deposit and interbank

deposit

Capital borrowed

Financial liability measured by fair

value and with variation reckoned into

深圳市深宝实业股份有限公司 2018 年半年度报告全文

current gains/losses

Derivative financial liability

Notes payable

Accounts payable 26880720.28 23546074.15

Accounts received in advance 3762920.01 2866288.61

Selling financial asset of

repurchase

Commission charge and

commission payable

Wage payable 9686311.51 14385332.90

Taxes payable 6573488.08 6605186.44

Interest payable

Dividend payable 2909182.74 2909182.74

Other accounts payable 33918453.99 32812938.61

Reinsurance payables

Insurance contract reserve

Security trading of agency

Security sales of agency

Liability held for sale

Non-current liabilities due within

one year

Other current liabilities

Total current liabilities 83731076.61 93125003.45

Non-current liabilities:

Long-term loans

Bonds payable

Including: preferred stock

Perpetual capital

securities

Long-term account payable

Long-term wages payable

Special accounts payable

Accrual liabilities

Deferred income 11725164.61 12863139.81

Deferred income tax liabilities 1100382.37 1244747.03

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Other non-current liabilities

Total non-current liabilities 12825546.98 14107886.84

Total liabilities 96556623.59 107232890.29

Owners’ equity:

Share capital 496782303.00 496782303.00

Other equity instrument

Including: preferred stock

Perpetual capital

securities

Capital reserve 358999356.28 358999356.28

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus reserve 54736482.14 54736482.14

Provision of general risk

Retained profit 18155796.84 36402435.91

Total owners’ equity attributable to

parent Company

928673938.26 946920577.33

Minority interests 15253573.35 16232752.93

Total owners’ equity 943927511.61 963153330.26

Total liabilities and owner’s equity 1040484135.20 1070386220.55

Legal Representative: Zheng Yuxi

Person in charge of accounting works: Wang Zhiping

Person in charge of accounting institute: Xu Qiming

2. Balance Sheet of Parent Company

In RMB

Items Ending balance Opening balance

Current assets:

Monetary fund 204909638.50 239662344.24

Financial assets measured by fair

value and with variation reckoned into

current gains/losses

1173950.05 1599668.20

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Derivative financial assets

Notes receivable

Account receivable 30642294.02 53950930.37

Account paid in advance 2000.00 2000.00

Interest receivable

Dividends receivable

Other receivables 175501929.20 163404561.75

Inventory 5565296.97 4963517.93

Assets held for sale

Non-current assets due within one

year

Other current assets 30022990.25

Total current assets 447818098.99 463583022.49

Non-current assets:

Available-for-sale financial assets

Held-to-maturity investments

Long-term receivables

Long-term equity investment 921321502.00 921506982.37

Investment property 18165479.87 18401275.03

Fix assets 31999586.52 32560534.94

Construction in process

Project materials

Disposal of fixed assets

Productive biological assets 411925.10 416771.28

Oil and natural gas assets

Intangible assets 6963913.95 7264135.59

Research and development costs

Goodwill

Long-term deferred expenses 516479.28 623337.06

Deferred income tax assets 3446486.27 3395295.39

Other non-current assets

Total non-current assets 982825372.99 984168331.66

Total assets 1430643471.98 1447751354.15

Current liabilities:

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Short-term loans 10000000.00

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes payable

Accounts payable 43762494.53 65683781.46

Accounts received in advance 197695.57 194269.96

Wage payable 3384755.58 6577772.01

Taxes payable 2487005.15 2832009.17

Interest payable

Dividend payable 2909182.74 2909182.74

Other accounts payable 256275316.62 225624530.71

Liability held for sale

Non-current liabilities due within

one year

Other current liabilities

Total current liabilities 309016450.19 313821546.05

Non-current liabilities:

Long-term loans

Bonds payable

Including: preferred stock

Perpetual capital

securities

Long-term account payable

Long-term wages payable

Special accounts payable

Accrual liabilities

Deferred income 46684.60 47239.24

Deferred income tax liabilities 23220.99 129650.53

Other non-current liabilities

Total non-current liabilities 69905.59 176889.77

Total liabilities 309086355.78 313998435.82

Owners’ equity:

Share capital 496782303.00 496782303.00

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Other equity instrument

Including: preferred stock

Perpetual capital

securities

Capital reserve 382444482.45 382444482.45

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus reserve 54736482.14 54736482.14

Retained profit 187593848.61 199789650.74

Total owners’ equity 1121557116.20 1133752918.33

Total liabilities and owner’s equity 1430643471.98 1447751354.15

3. Consolidated Profit Statement

In RMB

Item Amount in this period Amount in last period

I. Total operating income 136721215.40 138158382.95

Including: Operating income 136721215.40 138158382.95

Interest income

Insurance gained

Commission charge and

commission income

II. Total operating cost 155026741.38 159770044.15

Including: Operating cost 98142437.41 104400839.32

Interest expense

Commission charge and

commission expense

Cash surrender value

Net amount of expense of

compensation

Net amount of withdrawal of

insurance contract reserve

Bonus expense of guarantee

slip

Reinsurance expense

Operating tax and extras 2699973.08 2454733.49

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Sales expenses 18475423.94 21174407.31

Administration expenses 37057054.07 33082783.76

Financial expenses -1547896.32 -1533397.02

Losses of devaluation of

asset

199749.20 190677.29

Add: Changing income of fair

value(Loss is listed with “-”)

-425718.15 -990762.24

Investment income (Loss is

listed with “-”)

-184904.99 1093417.06

Including: Investment income

on affiliated Company and joint venture

-184904.99 -159244.04

Exchange income (Loss is

listed with “-”)

Income from assets disposal

(Loss is listed with “-”)

-1339.93 -21015.26

Other income 826872.02

III. Operating profit (Loss is listed with

“-”)

-18090617.03 -21530021.64

Add: Non-operating income 69507.48 1011697.45

Less: Non-operating expense 79681.75 22122.68

IV. Total Profit (Loss is listed with “-”) -18100791.30 -20540446.87

Less: Income tax expense 1125027.35 36586.58

V. Net profit (Net loss is listed with “-”) -19225818.65 -20577033.45

(i) continuing operation net profit

(Net loss is listed with “-”)

-19225818.65 -20577033.45

(ii)dis-continuing operation net

profit (Net loss is listed with “-”)

Net profit attributable to owner’s of

parent Company

-18246639.07 -17759776.83

Minority shareholders’ gains and

losses

-979179.58 -2817256.62

VI. Net after-tax of other comprehensive

income

Net after-tax of other comprehensive

income attributable to owners of parent

Company

(I) Other comprehensive income

items which will not be reclassified

深圳市深宝实业股份有限公司 2018 年半年度报告全文

subsequently to profit of loss

1. Changes as a result of

re-measurement of net defined benefit

plan liability or asset

2. Share of the other

comprehensive income of the investee

accounted for using equity method which

will not be reclassified subsequently to

profit and loss

(II) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

1. Share of the other

comprehensive income of the investee

accounted for using equity method which

will be reclassified subsequently to profit

or loss

2. Gains or losses arising

from changes in fair value of

available-for-sale financial assets

3. Gains or losses arising

from reclassification of held-to-maturity

investment as available-for-sale financial

assets

4. The effect hedging portion

of gains or losses arising from cash flow

hedging instruments

5. Translation differences

arising on translation of foreign currency

financial statements

6.Other

Net after-tax of other comprehensive

income attributable to minority

shareholders

VII. Total comprehensive income -19225818.65 -20577033.45

Total comprehensive income

attributable to owners of parent Company

-18246639.07 -17759776.83

Total comprehensive income

attributable to minority shareholders

-979179.58 -2817256.62

VIII. Earnings per share:

深圳市深宝实业股份有限公司 2018 年半年度报告全文

(i) Basic earnings per share -0.0367 -0.0357

(ii) Diluted earnings per share -0.0367 -0.0357

Enterprise combine under the same control in the Period the combined party realized net profit of 0 Yuan before combination and

realized 0 Yuan at last period for combined party.Legal Representative: Zheng Yuxi

Person in charge of accounting works: Wang Zhiping

Person in charge of accounting institute: Xu Qiming

4. Profit Statement of Parent Company

In RMB

Item Amount in this period Amount in last period

I. Operating income 67228720.81 49271727.89

Less: Operating cost 63731294.22 45987989.13

Operating tax and extras 292769.77 37532.38

Sales expenses 1943060.61 1562377.52

Administration expenses 14366353.12 9942760.18

Financial expenses -1565736.21 -1563751.20

Losses of devaluation of asset 203706.33 194763.50

Add: Changing income of fair

value(Loss is listed with “-”)

-425718.15 -990762.24

Investment income (Loss is

listed with “-”)

-185480.37 1095403.43

Including: Investment income

on affiliated Company and joint venture

-185480.37 -157257.67

Income from assets

disposal(Loss is listed with “-”)

2270.24

Other income 554.64

II. Operating profit (Loss is listed

with “-”)

-12353370.91 -6783032.19

Add: Non-operating income 53528.63

Less: Non-operating expense 51.64

III. Total Profit (Loss is listed with

“-”)

-12353422.55 -6729503.56

Less: Income tax expense -157620.42 -298881.44

深圳市深宝实业股份有限公司 2018 年半年度报告全文

IV. Net profit (Net loss is listed with

“-”)

-12195802.13 -6430622.12

(i) continuing operation net profit

(Net loss is listed with “-”)

-12195802.13 -6430622.12

(ii) dis-continuing operation net

profit (Net loss is listed with “-”)

V. Net after-tax of other comprehensive

income

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1. Changes as a result of

re-measurement of net defined benefit

plan liability or asset

2. Share of the other

comprehensive income of the investee

accounted for using equity method

which will not be reclassified

subsequently to profit and loss

(II) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

1. Share of the other

comprehensive income of the investee

accounted for using equity method

which will be reclassified subsequently

to profit or loss

2. Gains or losses arising

from changes in fair value of

available-for-sale financial assets

3. Gains or losses arising

from reclassification of held-to-maturity

investment as available-for-sale

financial assets

4. The effect hedging

portion of gains or losses arising from

cash flow hedging instruments

5. Translation differences

arising on translation of foreign

currency financial statements

深圳市深宝实业股份有限公司 2018 年半年度报告全文

6.Other

VI. Total comprehensive income -12195802.13 -6430622.12

VII. Earnings per share:

(i) Basic earnings per share

(ii) Diluted earnings per share

5. Consolidated Cash Flow Statement

In RMB

Item Amount in this period Amount in last period

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor

services

178673382.75 146109487.53

Net increase of customer deposit

and interbank deposit

Net increase of loan from central

bank

Net increase of capital borrowed

from other financial institution

Cash received from original

insurance contract fee

Net cash received from reinsurance

business

Net increase of insured savings

and investment

Net increase of amount from

disposal financial assets that measured

by fair value and with variation

reckoned into current gains/losses

Cash received from interest

commission charge and commission

Net increase of capital borrowed

Net increase of returned business

capital

Write-back of tax received 893445.54 582422.91

Other cash received concerning

operating activities

4991347.26 6348302.37

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Subtotal of cash inflow arising from

operating activities

184558175.55 153040212.81

Cash paid for purchasing

commodities and receiving labor

service

103282399.62 110998020.02

Net increase of customer loans and

advances

Net increase of deposits in central

bank and interbank

Cash paid for original insurance

contract compensation

Cash paid for interest commission

charge and commission

Cash paid for bonus of guarantee

slip

Cash paid to/for staff and workers 38390713.80 38799120.95

Taxes paid 10981751.13 33095652.63

Other cash paid concerning

operating activities

22107840.93 20580067.36

Subtotal of cash outflow arising from

operating activities

174762705.48 203472860.96

Net cash flows arising from operating

activities

9795470.07 -50432648.15

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

189350000.00

Cash received from investment

income

1252661.10

Net cash received from disposal of

fixed intangible and other long-term

assets

8600.00 31780.00

Net cash received from disposal

of subsidiaries and other units

Other cash received concerning

investing activities

Subtotal of cash inflow from investing

activities

8600.00 190634441.10

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Cash paid for purchasing fixed

intangible and other long-term assets

1934203.80 5306174.76

Cash paid for investment 30000000.00 270000000.00

Net increase of mortgaged loans

Net cash received from

subsidiaries and other units

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

activities

31934203.80 275306174.76

Net cash flows arising from investing

activities

-31925603.80 -84671733.66

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Including: Cash received from

absorbing minority shareholders’

investment by subsidiaries

Cash received from loans 10000000.00

Cash received from issuing bonds

Other cash received concerning

financing activities

Subtotal of cash inflow from financing

activities

10000000.00

Cash paid for settling debts 10000000.00 5000000.00

Cash paid for dividend and profit

distributing or interest paying

610098.89 22904646.76

Including: Dividend and profit of

minority shareholder paid by

subsidiaries

Other cash paid concerning

financing activities

Subtotal of cash outflow from financing

activities

10610098.89 27904646.76

Net cash flows arising from financing

activities

-10610098.89 -17904646.76

IV. Influence on cash and cash 125248.65 -67341.47

深圳市深宝实业股份有限公司 2018 年半年度报告全文

equivalents due to fluctuation in

exchange rate

V. Net increase of cash and cash

equivalents

-32614983.97 -153076370.04

Add: Balance of cash and cash

equivalents at the period -begin

255961650.41 358564242.83

VI. Balance of cash and cash

equivalents at the period -end

223346666.44 205487872.79

6. Cash Flow Statement of Parent Company

In RMB

Item Amount in this period Amount in last period

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor

services

99228621.54 70267796.87

Write-back of tax received 737441.54 433663.93

Other cash received concerning

operating activities

27633986.64 34066372.91

Subtotal of cash inflow arising from

operating activities

127600049.72 104767833.71

Cash paid for purchasing

commodities and receiving labor

service

96230177.23 63220288.40

Cash paid to/for staff and workers 12384561.21 13078753.60

Taxes paid 2194673.02 15149260.25

Other cash paid concerning

operating activities

11572835.91 21420055.12

Subtotal of cash outflow arising from

operating activities

122382247.37 112868357.37

Net cash flows arising from operating

activities

5217802.35 -8100523.66

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

189350000.00

Cash received from investment 1252661.10

深圳市深宝实业股份有限公司 2018 年半年度报告全文

income

Net cash received from disposal of

fixed intangible and other long-term

assets

Net cash received from disposal

of subsidiaries and other units

31000.00

Other cash received concerning

investing activities

Subtotal of cash inflow from investing

activities

190633661.10

Cash paid for purchasing fixed

intangible and other long-term assets

18200.00 133049.80

Cash paid for investment 30000000.00 275500000.00

Net cash received from

subsidiaries and other units

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

activities

30018200.00 275633049.80

Net cash flows arising from investing

activities

-30018200.00 -84999388.70

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Cash received from loans 10000000.00

Cash received from issuing bonds

Other cash received concerning

financing activities

Subtotal of cash inflow from financing

activities

10000000.00

Cash paid for settling debts 10000000.00 5000000.00

Cash paid for dividend and profit

distributing or interest paying

28710.00 22904646.76

Other cash paid concerning

financing activities

Subtotal of cash outflow from financing

activities

10028710.00 27904646.76

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Net cash flows arising from financing

activities

-10028710.00 -17904646.76

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

76401.91 -8996.28

V. Net increase of cash and cash

equivalents

-34752705.74 -111013555.40

Add: Balance of cash and cash

equivalents at the period -begin

239662344.24 305477853.97

VI. Balance of cash and cash

equivalents at the period -end

204909638.50 194464298.57

7. Statement of Changes in Owners’ Equity (Consolidated)

Current period

In RMB

Items

Current period

Owners’ equity attributable to parent Company

Minorit

interests

Total

owners’

equity

capital

Other equity

instrument

Capital

reserve

Less:

Invento

Other

compre

hensive

income

Reason

able

reserve

Surplus

reserve

Provisio

n of

general

risk

Retaine

d profit Prefer

red

stock

Perpet

ual

capita

securi

ties

Other

I. Balance at the

end of the last year

49678

2303.

358999

356.28

54736

482.14

36402

435.91

16232

752.93

963153

330.26

Add:

Changes of

accounting policy

Error

correction of the

last period

Enterprise

combine under the

same control

Other

深圳市深宝实业股份有限公司 2018 年半年度报告全文

II. Balance at the

beginning of this

year

49678

2303.

358999

356.28

54736

482.14

36402

435.91

16232

752.93

963153

330.26

III. Increase/

Decrease in this

year (Decrease is

listed with “-”)

-18246

639.07

-97917

9.58

-19225

818.65

(i) Total

comprehensive

income

-18246

639.07

-97917

9.58

-19225

818.65

(ii) Owners’

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4.Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Withdrawal of

general risk

provisions

3. Distribution for

owners (or

shareholders)

4.Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

深圳市深宝实业股份有限公司 2018 年半年度报告全文

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4.Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the

end of the report

period

49678

2303.

358999

356.28

54736

482.14

18155

796.84

15253

573.35

943927

511.61

Last Year

In RMB

Items

Last period

Owners’ equity attributable to parent Company

Minorit

interest

Total

owners’

equity

capital

Other equity

instrument

Capital

reserve

Less:

Invento

Other

compre

hensive

income

Reason

able

reserve

Surplus

reserve

Provisio

n of

general

risk

Retaine

d profit Prefer

red

stock

Perpet

ual

capita

securi

ties

Other

I. Balance at the

end of the last year

45162

0276.

367172

017.79

54736

482.14

158239

612.94

17970

173.99

10497

38562.

Add:

Changes of

accounting policy

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Error

correction of the

last period

Enterprise

combine under the

same control

Other

II. Balance at the

beginning of this

year

45162

0276.

367172

017.79

54736

482.14

158239

612.94

17970

173.99

10497

38562.

III. Increase/

Decrease in this

year (Decrease is

listed with “-”)

45162

027.0

-81726

61.51

-12183

7177.0

-1737

421.06

-86585

232.60

(i) Total

comprehensive

income

-54094

136.23

-7158

791.96

-61252

928.19

(ii) Owners’

devoted and

decreased capital

-81726

61.51

54213

70.90

-27512

90.61

1.Common shares

invested by

shareholders

640000

.00

640000

.00

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4.Other

-81726

61.51

47813

70.90

-33912

90.61

(III) Profit

distribution

45162

027.0

-67743

040.80

-22581

013.80

1. Withdrawal of

surplus reserves

2. Withdrawal of

深圳市深宝实业股份有限公司 2018 年半年度报告全文

general risk

provisions

3. Distribution for

owners (or

shareholders)

45162

027.0

-67743

040.80

-22581

013.80

4.Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4.Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the

end of the report

period

49678

2303.

358999

356.28

54736

482.14

36402

435.91

16232

752.93

963153

330.26

8. Statement of Changes in Owners’ Equity (Parent Company)

Current period

In RMB

Items

Current period

capital

Other equity instrument

Capital

reserve

Less:

Inventory

Other

comprehe

nsive

Reasonab

le reserve

Surplus

reserve

Retaine

d profit

Total

owners’

equity

Preferre

d stock

Perpetu

Other

深圳市深宝实业股份有限公司 2018 年半年度报告全文

capital

securiti

income

I. Balance at the

end of the last year

496782

303.00

3824444

82.45

5473648

2.14

199789

650.74

1133752

918.33

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

II. Balance at the

beginning of this

year

496782

303.00

3824444

82.45

5473648

2.14

199789

650.74

1133752

918.33

III. Increase/

Decrease in this

year (Decrease is

listed with “-”)

-12195

802.13

-121958

02.13

(i) Total

comprehensive

income

-12195

802.13

-121958

02.13

(ii) Owners’

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4.Other

(III) Profit

distribution

1. Withdrawal of

深圳市深宝实业股份有限公司 2018 年半年度报告全文

surplus reserves

2. Distribution for

owners (or

shareholders)

3．Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4.Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the

end of the report

period

496782

303.00

3824444

82.45

5473648

2.14

187593

848.61

1121557

116.20

Last Year

In RMB

Items

Last Period

capital

Other equity instrument

Capital

reserve

Less:

Inventory

Other

comprehe

nsive

income

Reasonab

le reserve

Surplus

reserve

Retaine

d profit

Total

owners’

equity

Preferre

d stock

Perpetu

capital

securiti

Other

深圳市深宝实业股份有限公司 2018 年半年度报告全文

I. Balance at the

end of the last year

451620

276.00

3824444

82.45

5473648

2.14

283746

524.30

1172547

764.89

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

II. Balance at the

beginning of this

year

451620

276.00

3824444

82.45

5473648

2.14

283746

524.30

1172547

764.89

III. Increase/

Decrease in this

year (Decrease is

listed with “-”)

451620

27.00

-83956

873.56

-387948

46.56

(i) Total

comprehensive

income

-16213

832.76

-162138

32.76

(ii) Owners’

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4.Other

(III) Profit

distribution

451620

27.00

-67743

040.80

-225810

13.80

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

451620

27.00

-67743

040.80

-225810

13.80

深圳市深宝实业股份有限公司 2018 年半年度报告全文

shareholders)

3．Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4.Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI)Others

IV. Balance at the

end of the report

period

496782

303.00

3824444

82.45

5473648

2.14

199789

650.74

1133752

918.33

III. Basic situation of Company

1. The history of the Company

Shenzhen Shenbao Industrial Co. Ltd. (the “Company” or “Company” for short) formerly named Shenzhen

Shenbao Canned Food Company obtained approval (Document (1991) No.978) from Shenzhen Municipal

People’s Government to change to the present name as on 1 August 1991.Then with the approval (Document

(1991)No.126) from People’s Bank of China the Company began to list on Shenzhen Stock Exchange. The

certificate for uniform social credit code: 91440300192180754J

The Company initially issued 107312935 shares in the stock exchange. In 1992 one bonus share was dispatched

for each 10 shares held by its shareholders thus totally 10731290 shares were increased. In 1993 one bonus

share and one allotted share were dispatched for each 10 shares held by its shareholders thus totally 20878845

深圳市深宝实业股份有限公司 2018 年半年度报告全文

shares were increased. Subsequently one bonus share was dispatched for each 10 shares held by shareholders

upon the basis of total share capital as at the end of 1996 and capitalizing of capital reserves was carried out at

one to ten basis thus totally 27784614 shares were increased. In 2001 based on the total share capital as at the

end of 1999 three shares were allotted for each 10 shares held by shareholders and totally 15215404 shares

were allotted. The registered capital of the Company amounts to RMB181 923088.

On 22 June 2011 the Company privately offering 68977066 shares of RMB ordinary share (A share) to target

investors with issuing price of RMB 8.70 each while book value of RMB 1.00. Total monetary capital RMB

600100474.20 was raised. Change procedures of industrial and commerce has completed on 12 July 2011.

On 9 April 2014 the equity allocation plan was deliberated and approved by Annual General Meeting of 2013.

Based on 250900154 shares dated 31st December 2013 increase 2 shares by each 10 shares transferring to all

shareholders. Share capital increased to 301080184 shares after transferring.

On 17 May 2016 the equity allocation plan was deliberated and approved by Annual General Meeting of 2015.

Based on 301080184 shares dated 31st December 2015 increase 5 shares by each 10 shares transferring to all

shareholders. Share capital increased to 451620276 shares after transferring.

On 15 May 2017 the equity allocation plan was deliberated and approved by Annual General Meeting of 2016.

Based on 451620276 shares dated 31st December 2016 distributed 0.50 Yuan (tax included) for every 10 shares

held by all shareholders with one bonus shares (tax included) no capitalization from public reserves. Shares

capital increased to 496782303 shares after bonus stock distributed.

End as June 30 2018 the total share capital of the Company was 496782303 shares.

Xuefu Street Yuehai Avenue Nanshan District Shenzhen P.R. China.

2. Industry nature

The Company is the food and beverage industry.

3. Business scope

Business scope: production of tea tea products extract of tea and natural plant canned food beverage and native

products (business license for the production place should apply separately); technology development and

technology service of tea plant products soft beverage and foods; info tech development and supporting service;

on-line trading; investment operation management and development of tea plantation; investment in industrial

projects (apply separately for detail projects); domestic trading(excluding special sales specific control and

深圳市深宝实业股份有限公司 2018 年半年度报告全文

exclusive commodity); import and export business; engaged in real estate development and operation in the landlegally obtained; lease and sales of the self-owned property and property management.” (as for the projects

subject to examination and approval regulated by the state laws administrative regulations and state council

approval should be obtained before operation). Business in license: wholesale of prepackaged food (excluding

reheating prepackaged food) (in non-physical way).

4. Report approval for the financial statement

The statement has been approved by all directors of the Company dated 24 August 2018 for reporting.

Consolidated financial statement scope

Totally 19 subsidiaries are included in consolidate financial statement mainly including:

Subsidiaries Type Level

Shareholding ratio

(%)

Voting rights ratio (%)

Shenzhen Shenbao Huacheng Science and

Technology Co.Ltd. (Shenbao Huacheng for short)

Wholly-owned

subsidiary

First grade

100 100

Ju Fang Yong Tea Industry Co. Ltd. in Wuyuan

County (Wuyuan Ju Fang Yong for short)

Wholly-owned

subsidiary

First grade

100 100

Shenzhen Shenbao Sanjing Food & Beverage

Development Co. Ltd. (Shenbao Sanjing for short)

Wholly-owned

subsidiary

First grade

100 100

Huizhou Shenbao Science & Technology Co. Ltd.(Huizhou Shenbao Science & Technology for short)

Wholly-owned

subsidiary

First grade

100 100

Shenzhen Shenbao Properties Management Co.Ltd.(Shenbao Properties for short)

Wholly-owned

subsidiary

First grade

100 100

Shenzhen Shenbao Industrial & Trading Co.Ltd.(Shenbao Industrial & Trading for short)

Wholly-owned

subsidiary

First grade

100 100

Hangzhou Ju Fang Yong Holding Co. Ltd.(Hangzhou Ju Fang Yong for short)

Wholly-owned

subsidiary

First grade

100 100

Shenzhen Shenbao Technology Center Co.Ltd.(Shenbao Technology Center for short)

Wholly-owned

subsidiary

First grade

100 100

Shenzhen Shenshenbao Investment Co.Ltd.(Shenshenbao Investment for short)

Wholly-owned

subsidiary

First grade

100 100

Yunnan Shenbao Pu’er Tea Supply Chain

Management Co. Ltd.(Yunnan Supply Chain for

short)

Wholly-owned

subsidiary

First grade

100 100

Huizhou Shenbao Food Co. Ltd.(Huizhou Shenbao

Food for short)

Wholly-owned

subsidiary

First grade

100 100

Yunnan Pu’er Tea Trading Center Co. Ltd. (Pu’er

Tea Trading Center for short)

Holding subsidiary First grade

55 55

Mount Wuyi Shenbao Rock Tea Co. Ltd. (Shenbao

Rock Tea for short)

Wholly-owned

subsidiary

Second grade

100 100

Hangzhou Fuhaitang Tea Ecological Technology Co. Wholly-owned Second grade 100 100

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Ltd. (Fuhaitang Ecological for short)) subsidiary

Hangzhou Chunshi Network Technology Co.Ltd.

(Chunshi Network for short)

Wholly-owned

subsidiary

Second grade

100 100

Shenzhen Shenshenbao Tea Culture Management Co.Ltd. (Shenshenbao Tea Culture for short)

Wholly-owned

subsidiary

Second grade

100 100

Hangzhou Jufangyong Trading Co. Ltd. (Jufangyong

Trading for short)

First grade Second grade

60 60

Shenzhen Shenbao Tea-Shop Co. Ltd. (Shenbao

Tea-Shop for short)

Wholly-owned

subsidiary

Second grade

100 100

Hangzhou Fuhaitang Catering Management chain Co.Ltd. (Fuhaitang Catering for short)

Wholly-owned

subsidiary

Second grade

100 100

1. Subsidiary excluded in consolidated financial statement

(1) Shenzhen Shenbao (Liaoyuan) Industrial Company has established for a long time without normal operation

Industry and Commerce Bureau has canceled the business license of the Company the long-term equity

investment for the Company has been accrual for impairment totally. Financial statement of the Company is out of

the consolidation range.

(2) Huizhou Baomanan Biotechnology Co. Ltd. (Former Shenzhen Baomanan Biotechnology Co. Ltd.)is a

subsidiary of the Company set up by Huizhou Shenbao Technology and Guangzhou Shen Guangsheng

biotechnology limited liability Company according to the contract signed by both parties on March 28 2014

Huizhou Shenbao Technology does not have the right to manage this Company thus it is accounted by the equity

method.

(3) Shenzhen Shichumingmen Restaurant Management Co. Ltd. (hereinafter referred to as "Shichumingmen

Company") set up by a subsidiary of the Company Shenshenbao tea culture and Shenzhen Investment Co. Ltd. F.

according to Articles of Association the Board of Directors to vote by one vote one person. Attendees to the

board of directors should be more than 2/3 of the whole number of directors and all participants approve the

resolution thus it is effective. The Company only accounted for 3/5 of the voting rights in Shichumingmen

Company control can not be reached so it is accounted for by the equity method.

IV. Basis of preparation of financial statements

1. Basis of preparation

Based on continuing operation the Company conducts recognition and measurement according to actual

occurrence of transactions and issues pursuant to the accounting principles for enterprise-basic rules and specific

accounting principle as well as the application guidance for the accounting principles for enterprise interpretation

to the accounting principles for enterprise and other related requirements (hereinafter referred to as Enterprise

Accounting Principles) issued by the ministry of finance on that basis combining the Information Disclosure

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Preparation Rules for Company Public Issuing Securities No.15-General Rules for Financial Report (amended in

2014) of the CSRC for statement preparation.

2. Going concern

The Company was evaluated on continued viability of 12 months for the reporting period and found to have no

significant doubt. Accordingly the financial statements have been prepared on the basis of going concern

assumptions.V. Major accounting policy accounting estimation

Specific accounting policies and estimation attention:

Nil

1. Statement for observation of Accounting Standard for Enterprise

The financial statements prepared by the Company are in accordance to requirements of Accounting Standard for

Enterprise which truly and completely reflect the information related to financial position operational results and

cash flow of the Company.

2. Accounting period

Calendar year is the accounting period for the Company that is falls to the range starting from 1 January to 31

December.

3. Operating cycle

Operating cycle of the Company was 12 months and the operating cycle is the determining criterion for liquidity

of assets and liabilities.

4. Standard currency

The Company and its subsidiaries take RMB as the standard currency for bookkeeping.

5. Accounting treatment for business combinations under the same control and those not under the same

control

1. If the terms conditions and economic impact of each transaction involved in business combination

achieved in stages fall within one or more of the following situations such transactions will be accounted for

as a package deal:

(1) Such transactions are entered into simultaneously or in the case of considering the impact of each other;

(2) Such transactions as a whole in order to reach a complete business results;

深圳市深宝实业股份有限公司 2018 年半年度报告全文

(3) The occurrence of a transaction subject to that of at least one other transaction;

(4) One transaction alone is not economic but otherwise when considered with other transactions.

2. Business combination under the same control

The assets and liabilities the Company acquired in a business combination shall be measured in accordance with

book value of assets liabilities (including the ultimate controlling party of goodwill acquired by the merging

parties and the formation of) stated in combined financial report of the ultimate controlling party on the merger

date. The net book value of assets and the payment of the merger consideration in the merger book value (or

nominal value of shares issued) shall be adjusted in the share premium of reserve capital. the share premium in

capital reserve is not enough for deducting retained earnings .If the capital reserve is not sufficient to absorb the difference any excess shall be adjusted against retained

earnings. In case there is existence of contingent consideration which needs to confirm projected liabilities or

assets then the difference between the projected liabilities or assets and settlement amount for consequent

contingent consideration is utilized to adjust capital reserve (capital premium or equity premium); in case of

insufficient capital reserve adjust retained earnings.

As for business combination realized through numbers of transactions and if these transactions belong to a bundle

of transactions then each of them shall be accounted as a transaction to acquire controlling right; and if not belong

to a bundle of transactions then the difference between the initial investment cost of the long term equity

investment as of the date on which the Company obtains controlling right and the carrying value of the long term

equity investment prior to combination plus the carrying value of the new consideration paid for further

acquisition of shares as of the combination date shall be used to adjust capital reserve; in case of insufficient

capital reserve adjust retained earnings. For equity investment held prior to the combination date the other

comprehensive income recognized due to calculation by equity method or based on recognition and measurement

principles for financial instruments would not be accounted for temporarily until the Company disposes of this

investment on the same basis as the investee directly disposes of relevant assets or liabilities; other changes of

owners’ equity in the net assets of investee as recognized under equity method except for net profit or loss other

comprehensive income and profit distribution shall not be accounted for until being transferred to current profit

or loss when this investment is disposed of.

3. Business combination not under the same control

Purchase date refers to the date on which the Company actually obtains control over the acquiree that is the date

when the acquiree’s net assets or control of production and business decisions are transferred to the Company.When satisfying the following conditions at the same time the Company generally believes that the transfer of

control rights has been achieved:

① The business merger contract or agreement has been approved by the Company’s internal authority.

② Business merger matters need to be approved by the relevant national competent authority and approval has

深圳市深宝实业股份有限公司 2018 年半年度报告全文

been obtained.③ The necessary procedures for the transfer of property rights have been completed.④ The Company has paid most of the merger cost and has the ability and plan to pay the remaining amount.⑤ The Company has actually controlled the finance and operating policies of the acquiree and enjoys

corresponding benefits and assumes corresponding risks.

Assets paid and liabilities taken for business combination on the acquisition date shall be measured at fair value.

The difference between the fair value and book value is recognized in profit or loss.Goodwill is realized by the Company as for the difference between the combination cost and the fair value of the

recognizable net assets of the acquiree acquired by acquirer in such business combination. In case that the above

cost is less than the above fair value even with re-review then the difference shall be recorded in current gains

and losses.

As for the business combination not under the same control realized through several exchange transactions step by

step part of the package deal than carrying accounting treatment on transactions with controlling rights obtained

through vary transactions; as for non-package: for equity investment held prior to combination date which is

calculated under equity method the sum between carrying value of the equity investment prior to acquisition date

and cost of additional investment made on the acquisition date is deemed to be the initial investment cost of this

investment. Other comprehensive income recognized for equity investment held prior to combination date under

equity method shall be accounted for when the Company disposes of this investment on the same basis as the

investee directly disposes of relevant assets or liabilities. In case that equity investment held prior to combination

date is calculated based on recognition and measurement principles for financial instruments then the fair value of

this equity investment as of combination date plus new investment cost shall be deemed as initial investment cost.The difference between fair value and carrying value of the originally held equity interests and the accumulated

fair value movements as originally recorded in other comprehensive income shall be all transferred to investment

income of the period in which the combination date falls.

4. Expenses related to the merger

Audit legal consulting services and other intermediary costs and other expenses directly related to the business

combination shall be included in current profit or loss in the event; any transaction fee for issuing equity

securities for business combination which can be directly attributable to the equity transaction shall be deducted

from equity.

6. Methods for preparation of consolidated financial statements

1. Merger scope

深圳市深宝实业股份有限公司 2018 年半年度报告全文

The consolidation scope of the consolidated financial statements of the Company is fixed on the basis of control

and all subsidiaries have been consolidated.

2. Merger procedure

The Company edits the consolidated financial statements based on its own financial statements and the

subsidiaries’ as well as other relevant information. The consolidated financial statements hold the enterprise

group as a whole accounting entity. It is recognized in accordance with relevant Accounting Standards

measurement and presentation requirements. Uniform accounting policies reflect the overall financial position of

the Group's business operating results and cash flow.The accounting policies and accounting period adopted by the subsidiaries taken into account of the consolidation

scope are in line with the Company. If it is not the same as the Company necessary adjustments will be made

when preparing consolidated financial statements according to the accounting policy and accounting period of the

Company.

Internal transactions between the Company and its subsidiaries and between subsidiaries to each other shall put

impact on the consolidated balance sheet consolidated income statement consolidated cash flow statement the

consolidated shareholders' equity. The impact shall be offset when combing financial statements. If it is not the

same when you stand Enterprise Group and the angle of the Company or its subsidiaries as the accounting entity

identified on the same transaction the business point of view shall be adjusted to the Group's transactions.Subsidiary's equity current net profits or losses and current comprehensive income belonging to minority

shareholders shall be listed respectively under item of owners’ equity in the consolidated balance sheet item of

net profit in profit sheet and item of total comprehensive income. Current loss minority shareholders of a

subsidiary exceed the minority shareholders in the subsidiary's opening owners' equity share and the formation of

balance offset against minority interests.

For the subsidiaries acquired through business combination under common control its assets and liabilities

(including goodwill formed from ultimate controlling party acquiring the subsidiary to) shall be adjusted based on

the book value in the financial statements of the ultimate controlling party.

For the subsidiaries acquired through business combination under uncommon control financial statements shall

be adjusted based on the fair value of the identifiable net assets on acquiring date.

1. Increase of subsidiary or business

During the reporting period the merger of the enterprises under the same control results in additional subsidiaries

or business then adjust the opening amount of consolidated balance sheet; income expenses and profit of the

subsidiaries or business from beginning to the end of the reporting shall be included in the consolidated profit

深圳市深宝实业股份有限公司 2018 年半年度报告全文

statement; cash flows of the subsidiaries or business from beginning to the end of reporting period shall be

included into the consolidated cash flow statement. And relevant comparative items of comparable statement shall

be adjusted since reporting entity is controlled by the ultimate controller.If additional investment and other reasons can lead investee to be controlled under the same control all parties

shall be adjusted at the beginning when the ultimate controlling party starts control. Equity investments made

before obtaining controlling right relevant gains and losses and other comprehensive income as well as other

changes in net assets confirmed during the latter date between point obtaining original equity and merger and

mergered under the same control day to the combined day shall be offset against the retained earnings or profit or

loss of the comparative reporting period.

During the reporting period opening amount of consolidated balance sheet shall not be adjusted since enterprise

under different control combine or increase holding of subsidiary or business; the income expense and profit of

the subsidiaries or business from the acquisition date to the end of reporting period shall be included in the

consolidated profit statement; while cash flows shall be included into the consolidated cash flow statement.

Equity held from investee before acquisition date shall be measured at fair value of acquisition date if additional

investment and other reasons can lead investee to be controlled under the same control. Difference between the

fair value and the book value is recognized as investment income. other comprehensive income and other owners'

equity except for net profit or loss other comprehensive income and the distribution of profits related to equity

held from investee before acquisition date as well as relevant other comprehensive income associated with all

other by changes in equity shall be included in current investment income except for other comprehensive income

arising from change of net assets or net liabilities redefined by investee.

2. Disposal of subsidiaries or business

1) The general approach

During the reporting period the Company carry out disposal of subsidiaries or business revenue expense and

profit of the subsidiary or business included in the consolidated profit statement from the beginning to the disposal

date; while the cash flow into cash flow table.If losing controlling right to investee due to disposal of partial equity the remaining equity after the disposal shall

be re-measured at fair value at the date when control is lost. Price of equity disposal plus fair value of the

remaining equity then subtracting net assets held from the former subsidiary from the acquisition date or

combination date initially measured in accordance with original stake and goodwill the difference shall be

included in investment income of the period losing controlling right. other comprehensive income and other

owners' equity except for net profit or loss other comprehensive income and the distribution of profits related to

equity held from investee before acquisition date as well as relevant other comprehensive income associated with

all other by changes in equity shall be included in current investment income except for other comprehensive

深圳市深宝实业股份有限公司 2018 年半年度报告全文

income arising from change of net assets or net liabilities redefined by investee.

2) Step disposal of subsidiaries

As multiple transactions over disposal of the subsidiary's equity lead to loss of controlling right if the terms of the

transaction situation and economic impact subject to one or above of the following conditions usually it indicates

repeated transactions should be accounted for as a package deal:

A. These transactions are made considering at the same time or in the case of mutual impact;

B. These transactions only reach a complete business results when as a whole;

C. A transaction occurs depending on the occurrence of at least one other transaction;

D. Single transaction is not economical but considered together with other transactions it is economical.

If disposal of equity in subsidiaries lead the loss of control and the transactions can be seen as a package deal the

Company will take accounting treatment of the transaction; however before the loss of control the difference

between the disposal price and the corresponding net assets of the subsidiary recognized as other comprehensive

income in the consolidated financial statements into current profit and loss at current period when losing

controlling right.If disposal of equity in subsidiaries lead the loss of control and the transactions doesn’t form a package deal

equity held from subsidiary shall be accounted in accordance with relevant rules before losing controlling right

while in accordance with general accounting treatment when losing controlling right.

3. Purchase of a minority stake in the subsidiary

Long-term equity investment of the Company for the purchase of minority interests in accordance with the newly

acquired stake in the new calculation shall be entitled to the difference between the net assets from the acquisition

date (or combination date) initially measured between the consolidated balance sheet adjustment capital balance

of the share premium in the capital reserve share premium insufficient any excess is adjusted to retained earnings.

4. Disposal of equity in subsidiary without losing control

Disposal price and disposal of long-term equity investment without a loss of control due to partial disposal of

subsidiaries and long-term equity investment made between the relative net assets from the purchase date or the

date of merger were initially measured at the difference between the subsidiary shall enjoy the consolidated

balance sheet adjustment in the balance of the share premium capital balance of the share premium insufficient

any excess is adjusted to retained earnings.

7. Classification of joint venture arrangement and accounting for joint operations

1. Classification of joint venture arrangement

The Company classifies joint venture arrangement into joint operations and joint ventures based on the structure

legal form agreed terms of the arrangement and other related facts and conditions.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Joint venture arrangement not concluded through separate entity is classified as joint operation; and those

concluded through separate entity are generally classified as joint ventures. However joint venture arrangement

which meets any of the following conditions as proven by obvious evidence and satisfies relevant laws and rules

is grouped as joint operation:

1. The legal form of the arrangement shows that parties to the arrangement are entitled to and assume rights and

obligations in respect of the relevant assets and liabilities.

2. It is agreed by the terms of the arrangement that parties to the arrangement are entitled to and assume rights and

obligations in respect of the relevant assets and liabilities.

3. Other related facts and conditions show that parties to the arrangement are entitled to and assume rights and

obligations in respect of the relevant assets and liabilities. For instance joint parties are entitled to almost all the

output related to joint venture arrangement and settlement of the liabilities under the arrangement continues to rely

on supports from the joint parties.

2. Accounting for joint operations

The Company recognizes its proportion of interests in joint operation as related to the Company and accounts for

under relevant business accounting principles:

(1) To recognize separately-held assets and jointly-held assets under its proportion;

(2) To recognize separately-assumed liabilities and jointly-assumed liabilities under its proportion;

(3) To recognize revenue from disposal of the output which the Company is entitled to under the proportion;

(4) To recognize revenue from disposal of the output under the proportion;

(5) To recognize separately occurred expenses and to recognize expenses occurred for joint operations under its

proportion.

For injection to or disposal of assets of joint operations (other than those assets constituting business operation)

gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the

joint operation before the joint operation is sold to any third party. In case those assets injected or disposed satisfy

the condition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment the

Company recognizes this loss in full.

For acquisition of assets from joint operations (other than those assets constituting business operation) gain or

loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint

operation before the relevant assets are sold to any third party. In case that the acquired assets satisfy the condition

for asset impairment loss under Business Accounting Principle No.8-Assets Impairment the Company recognizes

relevant loss according to the proportion it assumes.The Company exercises no common control over joint operations. If the Company is entitled to relevant assets of

the joint operation and assure relevant liabilities it shall be accounted for under the above principle otherwise it

would be accounted for under the relevant business accounting principles.深圳市深宝实业股份有限公司 2018 年半年度报告全文

8. Recognition standards for cash and cash equivalents

When preparing cash flow statement the Company recognized the stock cash and deposits available for payment

at any time as cash and investments featuring with the following four characters at the same time as cash

equivalents: short term (expire within 3 months commencing from purchase day) active liquidity easy to convert

to already-known cash and small value change risks.

9. Foreign currency business and conversion of foreign currency statement

For the foreign currency business the Company converts the foreign currency into RMB for book-keeping based

on spot exchange rate at date of trading occurred.On balance sheet date balance of foreign currency monetary items shall be converted based on the spot rate as at

the balance sheet date and the arising exchange difference shall be recorded in current gains and losses other than

those arising from the special foreign currency borrowings related to purchasing assets qualifying for

capitalization which is treated under the principle of borrowing expense capitalization. As for the foreign currency

non-monetary items measured in historical cost conversion is still conducted with the spot rate as at the

transaction date without any change to its functional currency. As for the foreign currency non-monetary items

measured in fair value conversion is conducted with the spot rate as at the date for determination of fair value

and the arising exchange difference shall be recorded in current gains and losses or capital reserve.

As for the foreign currency non-monetary items measured in fair value conversion is conducted with the spot rate

as at the date for determination of fair value and the arising exchange difference shall be recorded in current gains

and losses or capital reserve.

10. Financial instruments

Financial instruments include financial assets financial liabilities and equities instruments.

1. Categories of financial instruments

According to the contract terms of the financial instrument issued and economic substance reflects by such

instrument not only in form of law combine with purposes held for financial assets and liabilities the Company

categorizes financial assets and liability into different types: financial assets (or financial liabilities) at fair value

through current gains and losses; accounts receivable; financial assets available for sale; other financial liabilities

etc.

2. Recognition and measurement for financial instrument

1. Financial assets or liabilities at fair value through profit or loss

Financial assets or liabilities at fair value through profit or loss include transactional financial assets or financial

liabilities and financial assets or liabilities directly designated at fair value through profit or loss.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Transactional financial assets or financial liabilities refer to those meeting any of the following conditions:

1) Purpose for holding the assets or liabilities are to disposal repurchase or redemption in a short time;

2) Constitute part of the identifiable financial instrument group for central management and there is objective

evidence proving that the Company manages this group in a short-time-return way recently;

3) Belong to derivative financial instrument other than those derivatives designated as effective hedge

instruments belonging to financial guarantee contracts and those linked to equity instrument investment which is

not quoted in an active market and whose fair cannot be measured reliably and the settlement of which is

conditional upon delivery of the equity instrument.Subject to satisfaction of any of the following conditions financial assets or liabilities can be designated as

financial assets or liabilities at fair value through profit or loss upon initial measurement:

1) The designation can eliminate or substantially eliminate the inconsistencies between profit and loss from the

financial assets arising from different measurement basis;

2) The portfolio of financial assets and liabilities in which the financial asset belongs to are designated as

measured at fair value in the risk management report or investment strategic report handed in to key management

personnel;

3) Hybrid instruments which contains one or more embedded derivatives unless the containing of embedded

derivatives does not have substantial effect on the cash flows of the hybrid instruments or the embedded

derivatives obviously should not be separated from relevant hybrid instruments;

4) Hybrid instruments which contains embedded derivatives that should split but cannot be measured separately

when acquired or on the subsequent balance sheet date.The Company initially measures financial assets or liabilities at fair value through profit or loss at their fair values

when acquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond

interests which is due for interest payment but not received) and the relevant transaction fee is included in current

profit or loss. Interest or cash dividend acquired during the holding period shall be recognized as investment

income and movement of fair value at the end of period is included in current profit or loss. Upon disposal the

difference between its fair value and initial accounting amount shall be recognized as investment income with

corresponding adjustment to gains and losses from movement of fair value.

1. Account receivables

Account receivable refers to the non-derivative financial assets without price in active market and with amount to

be fixed or to be determined

The contract price charged to the buyers shall be recognized as initial value for those account receivables which

mainly comprise the receivable creditor’s right caused by the sale of goods and providing of labor service to

external customers by the Company and receivables in other companies excluding debt instruments priced in

active markets includes but not limited to trade receivables notes receivables account paid in advance other

receivables and advance payment. If characterized as of financing nature the initial recognition shall be priced at

深圳市深宝实业股份有限公司 2018 年半年度报告全文

the present value.Upon disposal the difference between the sale value and the book value of the receivables shall be accounted into

current profit or loss on its recovery or disposal.

2. Held-to-maturity investment

The non-derivative financial assets with maturity date fix return amount or amount able to determined and the

Company held with specific intention and ability.

The Company takes the sum of fair value (after deducting bond interests which is due for interest payment but not

received) and related transaction fee as initial recognition amount in respect of held-to-maturity investment upon

acquisition of the investment. During the holding period the Company recognizes interest income at amortized

cost and effective interest rate which is included in investment income. The effective interest rate is determined

upon acquisition of the investment and remains unchanged for the expected continuous period or appropriate

shorter period. Difference between sale price and carrying value of the investment is included in investment

income.If held-to-maturity investment is disposed or reclassified as other types of financial asset and the relevant amount

is relatively bigger than the total amount of our all held-to-maturity investments prior to disposal or

reclassification the remaining held-to-maturity investments shall be reclassified as available-for-sale financial

assets immediately following such disposal or reclassification. On the reclassification date difference between the

carrying value and fair value of the investment is included in other comprehensive income and is transferred out

into current profit or loss when the available-for-sale financial assets experience impairment or derecognition.However the followings are exceptions:

1) The date of disposal or reclassification is approaching to the date of expiration or redemption of the investment

(such as three months prior to expiration) and change of market rate has no material influences over the fair value

of the investment.

2) Company has already recovered nearly all initial principal under the repayment means as agreed in contract.

3) Disposal or reclassification is arising from separate matters which are out of our control which are expected

not to occur repeatedly and which are difficult to predict reasonably.

3. Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale upon

initial recognition and financial assets other than other categories of financial assets.The Company initially measures available-for-sale financial assets at the sum between their fair values when

acquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond interests

which is due for interest payment but not received) and the relevant transaction fee. Interest or cash dividend

深圳市深宝实业股份有限公司 2018 年半年度报告全文

acquired during the holding period shall be recognized as investment income. Gains or losses arising from

movement of fair value is directly included in other comprehensive income except for impairment loss and

exchange difference arising from foreign currency monetary financial assets. When disposing available-for-sale

financial assets the Company includes the difference between the acquired price and carrying value of the

financial assets into investment profit or loss. Meanwhile accumulated fair value movement attributable to the

disposed part which is originally directly included in other comprehensive income is transferred out and included

investment profit or loss.

For equity instrument investment which is not quoted in an active market and whose fair value cannot be reliably

measured and derivative financial assets which are linked to the equity instrument and whose settlement is

conditional upon delivery of the equity instrument they are stated at cost by the Company.

4. Other financial liabilities

Initial recognition amount is determined at the sum of fair value and relevant transaction fee. Subsequent

measurement is conducted at amortized cost.

3. Confirmation evidence and measurement methods for transfer of financial assets

When transfer of financial assets occurs the Company shall stop recognition of such financial assets if all risks

and remunerations related to ownership of such financial assets have almost been transferred to the receiver; while

shall continue to recognize such financial assets if all risks and remunerations related to ownership of such

financial assets have almost been retained.When judging whether or not the aforesaid terminal recognition condition for financial assets is arrived at for

transfer of financial assets the Company generally adopts the principle that substance overweighs format. The

Company divides such transfer into entire transfer and part transfer. As for the entire transfer meeting condition

for discontinued recognition balance between the following two items is recorded in current gains and losses:

(1) Carrying value of financial assets in transfer;

(2) Aggregate of the consideration received from transfer and accumulative movements of fair value originally

recorded in owners’ equity directly (applicable when financial assets involved in transfer belong to financial assets

available for sale).

As for the part transfer meeting condition for discontinued recognition entire carrying value of financial assets in

transfer is shared by discontinued recognition part and continued recognition part in light of their respective fair

value. Balance between the following two items is recorded in current gains and losses:

(1) Carrying value of discontinued recognition part;

(2) Aggregate of the consideration of discontinued recognition part and amount of such part attributable to

accumulative movements of fair value originally recorded in owners’ equity directly (applicable when financial

assets involved in transfer belong to financial assets available for sale).深圳市深宝实业股份有限公司 2018 年半年度报告全文

Financial assets are still subject to recognition if transfer of such assets doesn’t satisfy the condition for

discontinued recognition. And consideration received is recognized as financial liability.

4. De-recognition condition for financial liability

As for the financial liabilities with its whole or part present obligations released the Company shall de-realize

such financial liabilities or part of it. if the Company enters into agreement with its creditor to substitute for the

existing financial liabilities by means of assuming new financial liabilities then the Company shall de-realize the

existing financial liabilities and realize the new financial liabilities provided that the contract clauses of the new

and the existing financial liabilities are different in substance.If the Company makes substantial amendment to the whole or part contract clauses of the existing financial

liabilities it shall de-realize the existing financial liabilities or part of it. Meanwhile the financial liabilities with

amendment to its clauses shall be realized as new financial liabilities.In case of derecognizing of financial liabilities in whole or part the difference between the carrying value of such

de-realized financial liabilities and consideration paid (including the non-cash assets exchanged or new financial

liabilities assumed) shall be recorded in current gains and losses.In case that the Company repurchases part of financial liabilities based on the comparative fair value of the

continuing recognition part and the derecognizing part the Company shall allocate the carrying value of the

financial liabilities in whole on the repurchase date. Difference between the carrying value allocated to the

derecognizing part and the consideration paid (including the non-cash assets exchanged or new financial liabilities

assumed) shall be recorded in current gains and losses.

5. Determination method for fair value of financial assets and financial liabilities

As for the financial assets or financial liabilities with an active market the fair value is determined by the offer of

the active market; the offer of the active market includes the offers of underlying assets or liabilities easily and

regularly obtained from the exchange the dealer the broker the industry group the pricing institution or the

regulatory body which can represent the market transactions actually and frequently occur on the basis of fair

trade.The initial acquisition or financial assets or financial liabilities assumed market transaction price to determine the

fair value basis.There is no active market for a financial asset or financial liability the valuation techniques to determine its fair

value. At the time of valuation the Company adopted applicable in the present case and there is enough available

data and other information technology to support valuation assets or liabilities of feature selection and market

participants in the trading of the underlying asset or liability considered consistent input value and priority as the

relevant observable inputs. Where relevant observable inputs can not get or do not get as far as practicable the use

深圳市深宝实业股份有限公司 2018 年半年度报告全文

of unobservable inputs.

6. Provision of impairment reserve for impairment of financial assets (excluding account receivables)

The Company reviews the carrying value of the financial assets (excluding those measured by fair value and the

change thereof is recorded in current gains and losses) on the balance sheet date if there is objective evidence

showing impairment of the financial assets it shall provide impairment reserve.Objective evidence that a financial asset is impaired includes the following observable events:

1. Significant financial difficulty of the issuer or obligor;

2. A breach of contract by the borrower such as a default or delinquency in interest or principal payments;

3. The creditor for economic or legal reasons relating to the borrower’s financial difficulty granting a concession

to the borrower;

4. It becoming probable that the borrower will enter bankruptcy or other financial reorganizations;

5. The disappearance of an active market for that financial asset because of financial difficulties of the issuer;

6. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group

of financial assets since the initial recognition of those assets although the decrease cannot yet be identified with

the individual financial assets in the group including: adverse changes in the payment status of borrowers in the

group an increase in the unemployment rate in the country or geographical area of the borrowers a decrease in

property prices for mortgages in the relevant area or adverse changes in industry conditions that affect the

borrowers in the group;

7. Significant adverse changes in the technological market economic or legal environment in which the issuer

operates indicating that the cost of the investment in the equity instrument may not be recovered by the investor;

8. A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost;

Details for impairment of financial assets are set out below:

(1) Impairment provision for available-for-sale financial assets

The Group has separately tested various available-for-sale equity instruments at the balance sheet date. It will be

defined as impairment if the fair value is lower than the initial investment cost by more than 50% (including 50%)

or the low state has lasted for no less than 1 year. While the lower proportion is between 20% and 50% the Group

will take other factors such as price fluctuation into consideration to estimate whether the equity instrument has

impaired or not.Initial segment of the "cost" of the sale of equity instruments in accordance with available cost less any principal

repayment and amortization impairment loss has been included in determining profit or loss; The fair value of the

available-for-sale equity instrument investment without an active market is determined by the present value

determined on the basis of the current market return similar to financial assets versus the future discounted cash;

the fair value of available-for-sale equity instrument investment with offers in the active market is determined by

the closing price of the stock exchange at the end of the period unless this available-for-sale equity instrument

深圳市深宝实业股份有限公司 2018 年半年度报告全文

investment has a restricted stock trade period. For the presence of restricted investments in equity instruments

available for sale according to the end of the closing price of the stock exchange market participants by deducting

the risk equity instrument within a specified period cannot be sold on the open market and the requirements to

obtain compensation.When an available-for-sale financial asset is impaired the cumulative loss arising from decline in fair value that

had been recognized in other comprehensive income is reclassified to the profit or loss even though the financial

asset has not been derecognized. The amount of the cumulative loss that is removed from equity is the difference

between the acquisition cost (net of any principal repayment and amortization) and current fair value less any

impairment loss on that financial asset previously recognized in profit or loss.If there are objective evidences showing that the value of available-for-sale debt instrument is recovered and it

relates to the matters happened after the impairment loss recognition the impairment loss recognized shall be

reversed and accounted in current profit or loss. Impairment losses recognized for equity instrument investments

classified as available-for-sale are reversed through equity. However impairment loss occurred by equity

instrument investment which is not quoted in an active market and whose fair value cannot be measured reliably

and derivative financial assets which are linked to the equity instrument and whose settlement is conditional upon

delivery of the equity instrument shall not be reversed.

(2) Impairment provision for held-to-maturity investment

For held-to-maturity investment if there is object evidence showing the investment is impaired then impairment

loss is determined based on the difference between its fair value and present value of predicted future cash flow.

After provision if there is evidence showing its value has been restored the originally recognized impairment loss

can be reversed and included in current profit or loss provided that the reversed carrying value shall not exceed

the amortized cost of the financial asset as at reversal date assuming no impairment provision had been made.

7. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are stated in balance sheet separately without inner-offset. However the

net amount after inner offset is stated in balance sheet date when the following conditions are all met:

(1) The Company has legal right to offset recognized amount and the right is enforceable;

(2) The Company plans to settle on a net basis or simultaneously realize the financial assets and settle the

financial liabilities.

11. Account receivable

(1) Account receivable with single significant amount and withdrawal single item bad debt provision

Account with single significant amount Amount occupied 10 percent (including 10 percent) of the

balance of account receivable.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Withdrawal method for bad debt provision of account receivable

with single significant amount

Conducted impairment testing separately balance between the

present value of future cash flow and its carrying value bad debt

provision withdrawal and reckoned into current gains/losses. For

those without impairment being found after test collected into

relevant combination for accrual.

(2) Accounts receivable whose bad debts provision was accrued by combination based on credit risk

characteristics portfolio

Combination Bad debt provision accrual

Party composition within the scope of consolidation related Other method

Aging of accounts group Age analysis method

Group with bad debt provision accrual by aging:

√ Applicable □ Not applicable

Age Accrual ratio Accrual ratio for other receivable

Within one year (one year included) 0.00% 0.00%

1－2 years 5.00% 5.00%

2－3 years 10.00% 10.00%

Over 3 years 15.00% 15.00%

3－4 years 15.00% 15.00%

4－5 years 15.00% 15.00%

Over 5 years 15.00% 15.00%

In combination withdrawal proportion of bad debt provision based on balance proportion

□ Applicable √ Not applicable

In combination withdrawal proportion of bad debt provision based on other methods:

□ Applicable √ Not applicable

(3) Account receivable with minor single amount but with withdrawal bad debt provision for single item

Reasons for provision of bad debt reserve

There is objective evidence that the Company will not be able to

recover the money under the original terms of receivables.Provision method of bad debt reserve

Withdrawn according to the difference between present value of

expected future cash flows and the book value of the receivables.

12. Inventories

Whether the Company needs to comply with the disclosure requirements of the particular industry

1. Classification

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Inventory means finished goods and merchandise that are ready for sale work-in-progress or material used in the

process of production or provision of service in the ordinary course of business. Inventory includes merchandise

in warehouse delivered goods work- in-progress raw materials subcontracted materials packages etc.

2. Valuation method

Inventory carried initial measured by cost including purchasing cost processing cost and other costs. The

inventory in transit was valued by weighted average method.

3. Recognized standards of the net realizable value for inventory and withdrawal method on provision of

inventory

After inventory at period-end the inventories are accounted depending on which is lower between the cost and the

net realizable value or adjusted the provision of inventory. The net realizable value of inventory products and

sellable materials in normal business production is measured as the residual value after deducting the estimated

sales expense and related taxes and fees from the estimated selling price; the net realizable value of an item of

inventories subject to further processing in normal business production is measured as the residual value after

deducting the sum of the estimated costs of completion sales expense and related taxes and fees from the

estimated selling price of the sellable item. The net realizable value of the quantity of inventories held to satisfy

firm sales or service contracts is based on the contract price. If the sales contracts are for less than the inventory

quantities held the net realizable value of the excess is based on general selling prices.

An impairment allowance if any is generally individually recognized for each type of inventories at period-end

except: For an individual impairment allowance if any is recognized for the whole category of inventories of low

value and large quantities; and for an individual impairment allowance if any is recognized for a group of

inventories which are held for the production and sales of products of a single territory and for identical or similar

usages or purposes and which are indistinguishable from other types of inventories within the group.If the previous factors resulting in deduction of inventories values disappear then such deduction of value shall be

reversed back from the original provision of inventory depreciation reserve and turns to current gains and losses.

4. Inventory system

Inventory system is the perpetual inventory system.

5. Amortization of low-value consumables and packaging materials

1. Adopt five-five amortization for low-value consumables;

2. Adopt one-off writing off process for packaging materials.

13. Classified as assets held for sale

1. The confirmation standards for classifying as available for sale

深圳市深宝实业股份有限公司 2018 年半年度报告全文

The Company recognizes the non-current assets or disposal groups that meet both of the following conditions as

the component of available for sale:

(1) According to the practice in similar transactions of selling such assets or disposal groups it can be sold

immediately under current conditions;

(2) The sale is very likely to occur that is the Company has already made a resolution on one sales plan and has

obtained a certain purchase commitment and it is anticipated that the sale will be completed within one year.The confirmed purchase commitment refers to the legally binding purchase agreement signed between the

Company and other parties. The agreement contains important terms such as transaction price time and enough

severe penalties for breach of contract etc. so that it is very unlikely to make major adjustments or cancellations

to the agreement.

2. Accounting methods for available for sale

The Company does not calculate and distill depreciation or amortization for the non-current assets or disposal

group available for sale if the book value is higher than the net amount after deducting selling cost from fair value

the book value shall be written down to the net amount after deducting selling cost from fair value the write-down

amount is recognized as asset impairment loss and is included in the current gains and losses and makes provision

for impairment of available-for-sale assets at the same time.

For the non-current assets or disposal group classified as available for sale at the acquisition date compare the

initial measurement amount with the net amount after deducting selling cost from fair value based on the

assumption that it is not classified as available for sale at the initial measurement and measure by the lower

amount.The above principles are suitable for all non-current assets but not including the investment real estate that adopts

fair value model for follow-up measurement or the biological assets that are measured at the net amount after

deducting selling cost from fair value or the assets formed by employee compensation or the deferred income tax

assets or the financial assets regulated by the relevant accounting standards of financial instruments or the rights

arising from the insurance contracts regulated by the relevant accounting standards of insurance contracts.

14. Long-term equity investment

1. Recognition of investment cost

(1) As for the long-term equity investment formed from business combination under the same control accounting

policy found in (V) Accounting method for business combination (not) under the same control of Note IV

(2) Long-term equity investment obtained by other means

For long-term equity investments obtained through payment with cash then the actual payment shall be viewed as

initial investment cost. Initial investment cost including the expenses taxes and other necessary costs that directly

concerned with the long-term equity investment that acquired.深圳市深宝实业股份有限公司 2018 年半年度报告全文

For long-term equity investments obtained through issuance of equity securities then the fair value of such

securities shall be viewed as initial investment cost; for transaction expenses from issuing or own equity

instrument acquired it can be deducted from the equity when such expenses attributable directly to equity

transaction.Under the precedent condition that non-monetary assets exchanges are featured with commercial nature and fair

values of exchange-in or exchange-out assets can be reliably measured long-term equity investment exchange-in

through non-monetary assets exchange shall be recognized with initial investment cost on the basis of the fair

value of the assets exchange-out unless there is obvious evidence showing that fair value of exchange-in assets is

more reliable; as for non-monetary assets exchanges not satisfying such precedent condition initial investment

cost of exchange-in long-term equity investment falls to the carrying value of exchange-out assets and relevant

taxes payable.

For long-term equity investments obtained through debt reorganization its initial investment cost is recognized

based on fair value.

2. Subsequent measurement and recognition of gains and losses

(1) Cost method

The long-term equity investment control by invested entity shall counted by cost method and pricing on initial

investment cost cost of the long-term equity investment shall be adjusted while additional investment or

dis-investment.Other than payment actually paid for obtaining investment or cash dividend or profit included in consideration

which has been declared while not granted yet the Company recognizes investment income according to its share

in the cash dividend or profit declared for grant by the invested unit.

(2) Equity method

The Company calculates long term equity investment in associates and joint ventures under equity method. For

certain equity investments in associates indirectly held through risk investment institutions joint funds trust

companies or similar entities including investment linked insurance fund the Company measures the investment

at fair value through profit or loss.Where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of

the investee’s identifiable net assets at the time of acquisition no adjustment is made to the initial investment cost.Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net

assets at the time of acquisition the difference is recognized in profit or loss for the period.Return on investments and other comprehensive income is recognized respectively by shares of net gains and

losses realized by the invested Company and other comprehensive income after acquisition of long-term equity

深圳市深宝实业股份有限公司 2018 年半年度报告全文

and book value of such investment is adjusted accordingly. Profit or cash dividends pro rata distributed by the

invested Company are to minus book value of the relative long-term investment. Book value of long-term

investment is adjusted when changes occur other than net gains and losses other comprehensive income and

profit distribution of the invested Company and is to report in owners’ equity accordingly.The Company should recognized net profit of invested unit after adjustment based on fair value of vary

identifiable assets of invested unit while obtained investment while recognized net profit or net losses of invested

units that should be enjoy by investment enterprise. the un-realized transaction gains/losses attributable to

investment enterprise internally occurred between the Company affiliated units and joint-ventures should

calculated by proportion of shares-holding which should be offset than recognized investment gains/losses.When the Company is confirmed to share losses of the invested units the following order shall prevail for

disposal: first of all offset carrying value of long-term equity investment. Second for long-term equity investment

whose carrying value is not enough for offset investment loss should be continued to recognize within the limit of

carrying value of other long-term equity which substantially forms net investment to invested units to offset

carrying value of long-term items receivable. At last after the aforesaid treatment if enterprise still bears

additional duties according to investment contract or agreement projected liabilities are recognized in accordance

to the obligations which are expected to undertake and then recorded in current gains and losses.In the event that the invested unit realizes profit in later periods the Company will adopt disposal adverse to the

above order after deduction the unrecognized share of loss i.e. write off the carrying value of the recognized

projected liabilities recover carrying value of long-term equity which substantially forms net investment to

invested unit and long-term equity investment and recognize investment income at the same time.

3. Transfer of calculation for long term equity investment

1. Measure at fair value transfer to equity method

For the equity investment originally held by the Company in which it has no control common control or

significant influence over the investee and which is accounted for under recognition and measurement principle as

financial assets in case that the Company becomes able to exercise significant influence or common control upon

the investee due to additional investment while no control is reached the sum of fair value of the originally held

equity investment as determined under Business Accounting Principles No.22- Recognition and Measurement

Principle as Financial Assets plus cost of the new investment shall be deemed as the initial investment cost upon

calculation under equity method.If the originally held equity investment is classified as available for sale financial assets the difference between its

fair value and carrying value and the accumulated fair value movement which is originally included in other

comprehensive income shall be transferred to current period gains and losses under equity method.深圳市深宝实业股份有限公司 2018 年半年度报告全文

In case that the initial investment cost under equity method is lesser than share of fair value of the investee’s net

identifiable assets as of the date when additional investment is made as calculated based on the latest shareholding

proportion upon additional investment carrying value of the long term equity investment shall be adjusted against

such difference which is included in current period non-operating income.

2. Measure at fair value or calculation under equity method transfer to calculation under cost method

For the equity investment originally held by the Company in which it has no control common control or

significant influence over the investee and which is accounted for under recognition and measurement principle as

financial instrument or for long term equity investment originally held in associates or joint ventures in case that

the Company becomes able to exercise control over investee not under common control due to additional

investment the sum of fair value of the originally held equity investment plus cost of the new investment shall be

deemed as the initial investment cost upon calculation under cost method when preparing separate financial

statement.

For other comprehensive income as recognized under equity method in respect of equity investment held prior to

acquisition date when the Company disposes this investment the aforesaid income shall be accounted for on the

same basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities.

For equity investment held prior to acquisition date which is accounted for under Business Accounting Principles

No.22- Recognition and Measurement of Financial Assets the accumulated fair value movement which originally

included in other comprehensive income shall be transferred to current period gains and losses upon calculation

under cost method.

3. Calculation under equity method transfer to fair value measurement

In case that the Company lost common control or significant influence upon investee due to disposal of part equity

investment the remaining equity investment shall be calculated under Business Accounting Principles No.22-

Recognition and Measurement of Financial Assets and the difference between its fair value and carrying value as

of the date when the Company lost common control or significant influence shall be included in current period

gains and losses.

For other comprehensive income as recognized under equity method in respect of the original equity investment

when the Company ceases calculation under equity method the aforesaid income shall be accounted for on the

same basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities.

4. Cost method transfer to equity method

In case that the Company lost control upon investee due to disposal of part equity investment and if the remaining

equity investment can exercise common control or significant influence over the investee equity method shall be

adopted when preparing separate financial statement and the remaining equity investment shall be adjusted as if it

深圳市深宝实业股份有限公司 2018 年半年度报告全文

had been stated under equity method since the acquisition.

5. Cost method transfer to fair value measure

In case that the Company lost control upon investee due to disposal of part equity investment and if the remaining

equity investment cannot exercise common control or significant influence over the investee Business Accounting

Principles No.22- Recognition and Measurement of Financial Assets shall be adopted for accounting treatment

when preparing separate financial statement and the fair value and carrying value as of the date when control is

lost shall be included in current period gains and losses.

4. Disposal of long term equity investment

Difference between carrying value and actual acquisition price in respect of disposal of long term equity

investment shall be included in current period gains and losses. For long term equity investment under equity

method the Company shall adopt the same basis as the investee directly disposes relevant assets or liabilities

when disposing this investment and account for the part originally included in other comprehensive income under

appropriate proportion.If the terms conditions and economic impact of each transaction involved in the disposal by steps of investment

in subsidiaries fall into one or more of the following situations such transactions will be accounted for as a

package deal:

1. Such transactions are entered into simultaneously or in the case of considering the impact of each other;

2. Such transactions as a whole in order to reach complete commercial results;

3. The occurrence of one transaction is subject to that of at least one other transaction;

4. A transaction alone is not economic but otherwise when considered with other transactions.

Enterprises that lose control of their original subsidiaries due to the disposal of partial equity investment or

otherwise and therefore disqualify a package deal should prepare the relevant accounting treatment in

differentiation with individual financial statements and consolidated financial statement:

(1) In separate financial statement as for disposal of equity interest difference between carrying value and actual

acquisition price shall be included in current period gains and losses. In case that the remaining equity interests

can exercise common control or significant influence over investee it shall be stated under equity method in stead

and shall be adjusted as if the remaining equity interests had been stated under equity method since the acquisition.In case that the remaining equity interests cannot exercise common control or significant influence over investee

it shall be accounted for under Business Accounting Principles No.22- Recognition and Measurement Principle of

Financial Instruments and the difference between its fair value and carrying value as of the date then the

Company lost control shall be included in current period gains and losses.

(2) In consolidated financial statement for those transactions occurred before lost of control in subsidiaries the

difference between disposal price and share of net assets of subsidiaries since purchase date or combination date

深圳市深宝实业股份有限公司 2018 年半年度报告全文

shall be used to adjust capital reserve (equity premium) and if capital reserve is insufficient to offset then it shall

adjust retained earnings; when the Company lost control in a subsidiary the remaining equity interests would be

re-measured at the fair value as of the control-lost date. The sum of consideration gained from the disposal of

equity and the fair value of remaining equity minus the share of net assets of original subsidiaries since the day of

purchase and based on its original shareholding ratio is credited into investment gain for the current period and

off-set the goodwill at the same time. Other comprehensive income in relation to equity investments of original

subsidiaries should be transferred to investment gain for the period at the time of loss of control.

Each transaction involved in the disposal of equity investments of subsidiaries until loss of control falls into a

package deal carrying accounting treatment on transaction of losing control rights and disposing the Company

and should be accounted for accordingly in differentiation with individual financial statements and consolidated

financial statements:

(1) In consolidated financial statements difference between each payment from disposal of an equity and the book

value of such long-term equity investment before the loss of control should be recognized as other comprehensive

income and at the time of loss of control transferred to profit or loss for the current period.

(2) In consolidated financial statements difference between each payment from disposal of a subsidiary and the

share of its net assets through investment before the loss of control should be recognized as other comprehensive

income and at the time of loss of control transferred to profit or loss for the current period.

5. Criteria for common control and significant influence

Where the Company jointly controls an arrangement with other participators under agreed terms and decisions

which materially affect return of such arrangement can only exist when other participators unanimously agree on

the decisions the Company is deemed to jointly control this arrangement with other participators and the

arrangement belongs to joint venture arrangement.In case of a joint venture arrangement concluded through separate entity when the Company is judged to be

entitled to the net assets of the separate entity under relevant agreements the entity shall be viewed as a joint

venture under equity method. However when the Company is judged to be not entitled to the net assets of the

separate entity under relevant agreements the entity shall be viewed as a joint operation in which case the

Company recognizes items relating to its share of interests from the joint operation and accounts for according to

relevant business accounting rules.Significant influence refers to that investor has right to participate in making decisions relating to the financial and

operational policies of the investee while not able to control or jointly control (with others) establishment of these

policies. The following one or more conditions are based to judge whether the Company has significant influence

over investee with consideration of all facts and situations: (1)has delegate in the board of directors or similar

authority organs of investee; (2)participate in establishing financial and operational policies of the investee;

(3)occur material transactions with the investee; (4)delegate management to the investee; (5)provide key technical

深圳市深宝实业股份有限公司 2018 年半年度报告全文

data to the investee.

15. Investment real estate

Measurement

Measured by cost

Depreciation or amortization method

Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both

including the rented land use rights and the land use rights which are held and prepared for transfer after

appreciation the rented buildings. In addition for the vacant buildings that the Company holds for operating

leases if the board of directors makes written decisions and explicitly indicates to use for operating leases and the

purpose of management is not to change in the short term they are also reported as an investment real estate.The investment property of the Company is accounted at its cost. Cost of investment property purchased from the

external sources includes purchase payment related taxes and other expenditures which can be directly

attributable to such assets; Cost of investment property constructed by the Company comprise of the necessary

expenditure occurred during the construction for reaching the condition of planned use.The Company adopts cost method for subsequent measurement of investment property. As for the investment

property measured at cost method – buildings for lease are depreciated under the policies which are the same as

fixed assets and land use right for lease are amortized under the policies which are the same as intangible assets.When use of investment property changes to be used by the Company itself the Company shall transfer the

investment property to fixed assets or intangible assets since the change date. When use of the self-use real estate

changes for earning rental or capital appreciation the Company shall transfer the fixed assets or intangible assets

to investment property since the change date. For such transfer the carrying value prior to the transfer is deemed

to be the value accounted after the transfer.The Company would de-realize investment property when the same is disposed or out of use forever and no

economic benefit would be obtained from such disposal. The disposal income from sale transfer dump or destroy

of investment property less its carrying value and related taxes is recorded in current gains and losses.

16. Fixed asset

(1) Recognition of fixed assets

Fixed assets is defined as the tangible assets which are held for the purpose of producing goods providing

services lease or for operation & management and have more than one year of service life. Fixed assets should be

recognized for qualified the followed conditions at the same time: (1) It is probable that the economic benefits

associated with the assets will flow into the Company; (2) The cost of the assts can be measured reliably. (1) The

深圳市深宝实业股份有限公司 2018 年半年度报告全文

cost of outsourcing fixed assets includes the buying price import tariff and other related taxes and fees as well as

other expenses occurred before making the fixed assets reach the intended serviceable condition and can be

directly attributable to the assets. (2) The cost of self-constructed fixed assets consists of the necessary expenses

occurred before reaching the intended serviceable condition by the construction of the assets. (3) The fixed assets

invested by the investors take the value stipulated by investment contract or agreement as the entry value but it

should take the fair value as the entry value when the value stipulated by investment contract or agreement is not

fair. (4) When the cost of purchasing fixed assets has a delay in payment exceeding the normal credit terms and

substantially possesses financing the cost of fixed assets is determined on the basis of the present value of the

purchasing price. The balance between the actual paid cost and the present value of purchasing price is reckoned

in the current profits and losses in the credit period except for the capitalization. Subsequent measurement and

disposal of fixed assets (1) Depreciation of fixed assets is accrued within the estimated useful life after deducting

the estimated residual value from its entry value. For the fixed assets accrued with provision for impairment

determine the amount of depreciation by the book value deducting the provision for impairment and according to

the useful life. The Company determines the useful life and estimated net residual value of fixed assets according

to the nature and use of fixed assets and rechecks the useful life estimated net residual value and depreciation

method of fixed assets at the end of the year and makes corresponding adjustments if there is difference with the

original estimated number. (2) The follow-up expenses of fixed assets and the follow-up expenses related to fixed

assets are included in the cost of fixed assets if they meet the requirements for recognition of fixed assets; those

cannot meet the requirements for recognition of fixed assets should be included in the current profits and losses

when occur. (3) When the fixed assets are disposed or expected not to generate economic benefits through use or

disposal derecognize the fixed assets. The amount after deducting its book value and related taxes and dues from

the disposal income of the fixed assets sale transfer retirement or impairment is included in the current profits

and losses.

(2) Depreciation methods

Categories Method Years of depreciation Scrap value rate Yearly depreciation rate

Production buildings Straight-line depreciation 35 5% 2.71%

Production buildings Straight-line depreciation 40 5% 2.38%

Makeshift Straight-line depreciation 9 5% 10.56%

Mechanical equipment Straight-line depreciation 12 5% 7.92%

Transportation vehicle Straight-line depreciation 9 5% 10.56%

Other equipment Straight-line depreciation 6 5% 15.83%

(3) Recognition measurement and depreciation of fixed assets held under finance lease

A fixed asset leased by the Company is recognized as the fixed asset held under finance lease if one or more of the

following criteria are met: (1) Upon the expiry of the lease term the ownership is transferred to the Company. (2)

The Company has the option to purchase the asset at a predetermined price that is expected to be sufficiently

深圳市深宝实业股份有限公司 2018 年半年度报告全文

lower than the fair value at the date the option becomes exercisable and it is reasonably ascertained at the

inception of lease that the option will be exercised. (3) The lease term approximates the useful life of the relevant

asset even if the ownership is not transferred. (4) At the inception of the lease the present value of the minimum

lease payments is substantially equivalent to the fair value of the leased asset. (5) The leased assets are of such a

specialized nature that only the Company can use them without major modification. A fixed asset held under

finance lease is initially recognized at the lower of fair value of the leased asset and the present value of the

minimum lease payments while the amount of the minimum lease payments will be recognized as the entry value

of long-term account payable the difference between them will be recognized as unrecognized financing costs.The initial direct costs such as commissions attorney’s fees and travelling expenses stamp duties attributable to

the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be

recorded in the asset value. Unrealized finance costs will be amortized using actual interest rate method over each

period during the lease terms. The Company adopts depreciation policies for leased assets consistent with those of

self-owned fixed assets for the purpose of calculating the depreciation of a leased asset. If it is reasonable to be

certain that the lessee will obtain the ownership of the leased asset when the lease term expires the leased asset

shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the

ownership of the leased asset at the expiry of the lease term the leased asset shall be fully depreciated over the

shorter one of the lease term or its useful life.

17. Construction in process

1. Initial measurement of constructions under progress

Self-constructed constructions under progress of the Company are carried at actual costs. Actual costs include the

necessary expenses for constructing such asset to the expected useable condition including material costs for

project labor cost related taxes and fees paid borrowing expenses to be capitalized and indirect costs to be

amortized.

2. Standard and point of time for construction in process carrying forward to fixed assets

Fixed asset is booked with the entire expenditures occurred in the construction in process till it arrives at predicted

state for use. For those constructions in process of fixed assets which have already arrived at the predicted state

for use while still with absence of completion settlement they shall be carried forward to fixed assets at the

estimated value based on engineering budget construction cost or actual cost commencing from the date of arrival

of the predicted state for use. Meanwhile they shall be also subject to the depreciation policies applicable to fixed

assets of the Company for provision of depreciation. Once completion settlement is made the original temporary

estimated value shall be adjusted at the effective cost. However the original provision of depreciation remains

unchanged.

18. Borrowing expenses

1. Recognition of the borrowing expenses capitalization

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Borrowing expenses that attributed for purchasing or construction of assets that are complying start to be

capitalized and counted as relevant assts cost; other borrowing expenses reckoned into current gains and losses

after expenses recognized while occurred.

Assets satisfying the conditions of capitalization are those assets of fixed investment real estate etc. which need a

long period of time to purchase construct or manufacturing before becoming usable.

Capitalizing for borrowing expenses by satisfying the followed at same time:

(1) Assets expense occurred and paid as expenses in way of cash non-cash assets transfer or debt with interest

taken for purchasing constructing or manufacturing assets that complying with capitalizing condition;

(2) Borrowing expenses have occurred;

(3) Necessary activities occurred for reaching predicted usable statues or sale-able status for assets purchased

constructed or manufactured.

2. Period of capitalization

Capitalizing period was from the time star capitalizing until the time of suspended capitalization. The period for

borrowing expensed suspended excluded in the period.If purchasing construction or manufacturing process of an asset satisfying the conditions of capitalization

reached its predicted usable status or sale-able status capitalization suspended for borrowing expenses.If purchasing construction or manufacturing process of an asset satisfying the conditions of capitalization

completed projects and usable independently for part of the projects borrowing expenses for this kind of assts

shall suspended capitalization.If the assets have been completed in every part but can be reached the useful status or sale-able status while

completed entirely the borrowing expense shall be suspended for capitalization while the assets completely

finished in whole.

3. Period of suspended

If purchasing construction or manufacturing process of an asset satisfying the conditions of capitalization is

suspended abnormally for over 3 months capitalizing of borrowing expenses shall be suspended; the suspended

assets that satisfying the conditions of capitalization meets the necessary procedure of reaching predicted usable

status or sellable status capitalizing of borrowing expenses shall be resumed. The borrowing expenses occurred

during the period of suspended shall reckon into current gains and losses until the purchasing construction or

manufacturing process is resumed for capitalizing.

4. Calculation for capitalization amount

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Interest expenses practically occurred at the current term of a special borrowing are capitalized after deducting of

the bank saving interest of unused borrowed fund or provisional investment gains.

Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of

accumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common

borrowings adopted. Capitalization rates are decided by the weighted average of common borrowings.

For those expenses with discount or premium determined the amortizable discount or premium in every fiscal

year by effective interest method than adjusted interest amount in every period.

19. Biological assets

1. Classification of biological assets

Biological assets of the Company refer to the productive biological assets. Productive biological assets included

tea tree.

Biological assets are recognized when the following three conditions are fully satisfied:

(1) An enterprise owns or controls such biological assets due to the past transactions or events；

(2) It may result in the inflow of economic benefits or service potential in relation to such biological assets;

(3) Cost of such biological assets can be reliably measured.

2. Initial recognition of Biological assets

The biological assets will initially measured by cost while obtained. The cost of biological asset used for

production purchased from the outside includes the purchase price related taxes transportation expense

insurance premium and other charges directly attributable to the purchase of such asset. Biological asset used for

production input by investors is stated at its entry value which is calculated based on the value as stipulated in the

investment contract or agreement plus the related taxes payable. Where value stipulated in the contract or

agreement is not fair the actual cost is fixed at fair value.

3. Subsequent measurement of biological assets

(1) Follow-up expenses

The cost of productive biological assets constituted by the actual costs of self-cultivated and constructed

productive biological assets occurred before achieving the intended production and operation goals and the

follow-up expenses such as management and protection occurred after achieving the intended production goals are

included in the current profits and losses.

(2) Depreciation of productive biological assets

Biological assets of the Company refer to the tea plants. For those productive biological assts that reached its

predicted productive purpose withdrawal depreciation by average age method. The service life was determined by

深圳市深宝实业股份有限公司 2018 年半年度报告全文

the residual terms of the residual term of land use after deducting the un-maturity period (5-year) of the tea plants

with 5 percent salvage value calculated. Reviewing the service life predicted salvage vale and depreciation

method at year-end if there have difference between the predicted number and original estimated number or have

major changes on way of profit earning than adjusted the service life or predicted salvage value or depreciation

method as account estimation variation.

(3) Disposal of biological assets:

The cost of biological assets after the shift of use is stated at the carrying amount at the time of shift of use. When

sold destroyed and inventory losses occurred the disposal income of biological assets net of carrying amount and

related taxes shall be charged to profit or loss for the current period.

4. Biological assets impairment

The Company inspects the productive biological assets at least at the end of each year conclusive evidence

indicates that if the recoverable amount of productive biological assets are less than the book value due to natural

disasters insect pests animal diseases or changes in market demand the Company make the provision for

impairment of biological assets and include them in the current profits and losses according to the balance

between the recoverable amount and the book value.The balance lower than the book value shall be calculated and accrued to falling price reserves or provision for

impairment of biological assets and included in the current profits and losses.Once the provision for impairment of productive biological assets is made it cannot be reversed.

20. Intangible assets

(1) Measurement use of life and impairment testing

An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the

Company including land use right technical know-how forest tree use right trademark use right and software

use right.

1. Measurement of intangible assets

For those intangible assets purchased from outside the purchase value relevant taxes and other payments

attributable to predicted purpose obtained should recognized as cost for this assts. For those purchased amount

that paid overdue exceeded the normal credit condition owns financing natures actually the cost should be

recognized based on the current value while purchased.

As for the intangible assets acquired from the debtor in debt restructuring for the purpose of settlement of debt the

深圳市深宝实业股份有限公司 2018 年半年度报告全文

fair value of the intangible assets shall be based to determine the accounting value. The difference between the

carrying value of restructured debt and the fair value of the intangible assets use for settlement of debt shall be

recorded in current gains and losses.With the preceding conditions that non-monetary assets exchange has commerce nature and the fair value of the

assets exchanged in or out can be measured reliably the intangible assets exchanged in through non-monetary

assets exchange are accounted at the value based on the fair value of assets exchanged out unless there is obvious

evidence showing the fair value of assets exchanged in is more reliable; for non-monetary assets exchange not

qualifying for the preceding conditions the carrying value of assets exchanged out and related taxes payable shall

be viewed as the cost of intangible assets exchanged in without recognition of gains and losses.Intangible assets obtained by means of enterprise mergered under common control recognized book-keeping

value by the book value of mergered party; Intangible assets obtained by means of enterprise mergered under

different control recognized book-keeping value by the its fair value.

For those cost of intangible assets development internally including: the used materials labor cost and register

charge for development; amortization for other patent and concession used and interest expense satisfying the

capitalization condition during process of development; other directly expense before reached its predated useful

purpose.

2. Subsequent measurement

Analysis and determined the service life for intangible assts while obtained. And classified into intangible assets

with limited useful life and assets without certain service life.

1. Intangible assets with limited useful life

Those intangible assets with limited useful life are evenly amortized on straight basis from the date when they

become useable to the end of expected useful life. Particular about the estimation on intangible assets with limited

service life:

Item Predicted useful life Basis

Land use right

Amortized the actual rest of

life after certificate of land

use right obtained

Certificate of land use right

Proprietary technology 20-year Actual situation of the Company

Forest tree use right Service life arranged Protocol agreement

Trademark use right 10-year Actual situation of the Company

Software use right 5-8-year Protocol agreement

At end of report term revising will be performed on the useful life of intangible assets with limited useful life and

the methods of amortizing; if there is a differences been found with the original estimated number corresponding

adjustment shall prevail.深圳市深宝实业股份有限公司 2018 年半年度报告全文

Being revised the useful life of intangible assets and amortization method at period-end shows the same as

2. Intangible assets without certained service life

Intangible assets for which it is impossible to predict the term during which the assets can bring in economic

benefits are viewed as intangible assets with indefinite life.Intangible assets with indefinite life are not amortized during the holding period and useful life is re-reviewed at

the end of each accounting period. In case that it is still determined as indefinite after such re-review then

impairment test will be conducted continuously in every accounting period.The Company has no such intangible assets without certained service life after review.

(2) Internal accounting policies relating to research and development expenditures

1. Detail standard for classification on research stage and exploitation stage

Research stage: stage of the investigation and research activities exercising innovative-ness for new science or

technology knowledge obtained and understanding.

Exploitation stage: stage of the activities that produced new or material advance materials devices and products

that by research results or other knowledge adoption in certain plan or design before the commercial production or

usage.The expenditure of the research stage in R&D project internally shall reckon into current gains and losses while

occurred.

2. Standards for capitalization satisfaction of expenditure in exploitation state

Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time:

(1) Owes feasibility in technology and completed the intangible assets for useful or for sale;

(2) Owes the intention for completed the intangible assets and for sale purpose;

(3) Way of profit generated including: show evidence that the products generated from the intangible assets owes

a market or owes a market for itself; if the intangible assets will use internally than show evidence of useful-ness;

(4) Possess sufficient technique financial resources and other resources for the development of kind of intangible

assets and has the ability for used or for sale;

(5) The expenditure attributable to the exploitation stage for intangible assets could be measured reliably.

Expenditure happened in development phase not satisfying the above conditions is included in current period

gains and losses when occurs. Development expenditure previously included in gains and losses in previous

periods will not be re-recognized as assets in later periods. Capitalized development expenditure is stated in

深圳市深宝实业股份有限公司 2018 年半年度报告全文

balance sheet as development expenditure and is transferred to intangible assets when the project is ready for

planned use.

21. Impairment of long term assets

Long term asset is judged whether for which there is indication of impairment on balance sheet date. If there is

indication of impairment the Company would estimate its recoverable amount based on single asset; if it is

difficult to estimate the recoverable amount of single asset then the assets group which the single asset belongs to

is based to determine the recoverable amount of the assets group.Recoverable amount of an asset is determined at the higher of its fair value less disposal fee and present value of

its predicted future cash flow.If measurement of recoverable amount shows that the recoverable amount of long term asset is lower than

carrying value and then the carrying value shall be deducted to recoverable amount with the deducted amount

recognized as impairment loss which is included in current period gains and losses meanwhile asset impairment

provision shall be made accordingly. Once recognized asset impairment loss would not be reversed in future

accounting period.Once an asset is recognized for impairment loss its depreciation or amortization expense would be adjusted in

future periods so as to systematically allocate the adjusted asset carrying value (after deduction of predicted net

residual value) during the remaining useful life.Goodwill arising from business combination and intangible assets with indefinite useful life shall be tested

annually for impairment whether or not there is indication of impairment.When goodwill impairment testing comes book value of goodwill is allocated to asset group or combination

benefit from the synergies of the business combination. When conducting impairment test for relevant asset group

with inclusion of goodwill in case that there is indication of impairment for such asset group impairment test

would be firstly conducted in respect of the asset groups without inclusion of goodwill. Then it shall calculate the

recoverable amount and determine the corresponding impairment loss as compared to its carrying value. Second

asset group with inclusion of goodwill would be tested for impairment. If it is found after comparison between the

carrying value and recoverable amount of the asset group that the recoverable amount is less than carrying value

the Company would recognize impairment loss for goodwill.

22. Long term prepaid expense

Long term prepaid expense represents the expense which the Company has occurred and shall be amortized in the

current and later periods with amortization period exceeding one year. Long term prepaid expense is amortized

深圳市深宝实业股份有限公司 2018 年半年度报告全文

during the beneficial period under straight line method.

23. Staff remuneration

(1) Short term remuneration

Employee remuneration refers to the various forms of remuneration or compensation given by the Company to

obtain the services provided by the employees or to terminate the labor relations. Employee remuneration includes

short-term remuneration after-service benefits dismissal benefits and other long-term employee benefits.Short term remuneration refers to all the staff remuneration payable by the Company to its staff within 12 months

after the end of annual reporting period in which staff provides relevant services other than post office benefit and

dismissal benefits. The Company recognizes short term remuneration payables as liabilities during the accounting

period during which staff provides services and includes in cost and expense of relevant asset according to the

beneficial parties of such services.

(2) Post office benefits

Post office benefits refer to kinds of remuneration or benefits granted by the Company to staff for their provision

of service upon retirement or release of employment other than short term remuneration and dismissal benefits.Post benefit plan is categorized as defined withdraw plan.

Defined withdraw plan under post office benefit mainly represents participation into social basic pension

insurance and unemployment insurance operated by labor and social security authorities. During the accounting

period when employee provides services for the Company the contribution calculated under defined withdraw

plan would be recognized as liabilities and included in current gains and losses or relevant asset cost.Other than periodic payment of the aforesaid amounts in compliance with national standards the Company is not

obliged to make other payment.

(3) Dismissal benefit

Dismissal benefit represents compensation paid to employees for release of employment before expiration or as

compensation for their willing of cut Liabilities arising from dismiss benefit shall be included in current profit

and loss when the Company cannot unilaterally withdraw from the termination plan or take redundancy offer and

when reorganize the payment of termination benefits related to the cost.

(4) Other long term staff benefits

Other long term staff benefits refers to all the other staff benefits except for short term remuneration post office

深圳市深宝实业股份有限公司 2018 年半年度报告全文

benefit and dismissal benefit.

For other long term staff benefits satisfying conditions under defined withdraw plan the contribution payables

shall be recognized as liabilities and included in current gains and losses or relevant asset cost during the

accounting period in which the staff provides services to the Company.

24. Accrual liability

1. Recognition standards for accrual liability

Responsibilities connected to contingent issues and satisfied all of the following conditions are recognized as

accrual liabilities:

The responsibility is a current responsibility undertaken by the Company;

Fulfilling of the responsibility may lead to financial benefit outflow;

The responsibility can be measured reliably for its value.

2. Measurement

Accrual liabilities shall conduct initial measurement by best estimation of expenditures needed by fulfillment of

current responsibilities.While determined the best estimation take the risks uncertainty and periodic value of currency that connected to

the contingent issues into consideration. For major influence from periodic value of currency determined best

estimation after discount on future relevant cash out-flow.Treatment for best estimation:

If the expenditure has a continuous range and with similar possibility within the range the best estimation should

determined by the middle value within the range that is the average amount between the up and low limit.If the expenditure has no continuous range or has a continuous range but with different possibility within the

range the possibility amount shall determined as the best estimation while single events involved by contingency;

if many events were involved by contingency the best estimation shall be determined by various results and

relevant probability.If the expenses for clearing of predictive liability is fully or partially compensated by a third party and the

compensated amount can be definitely received it is recognized separated as asset. Though the compensated

amount shall not greater than the book value of the predictive liability

25. Revenue

Whether the Company needs to comply with the disclosure requirements of the particular industry

深圳市深宝实业股份有限公司 2018 年半年度报告全文

1. Recognition of the income from commodity sales

When main risks and rewards attached to the ownership of goods have been transferred to the buyer reserved

neither continuous management power nor effective control over the goods incoming payment can be measured

reliably relative financial benefit possibly inflow to the Company cost occurred or will occur can be reliably

measured sales income of goods is recognized.The product sales of the Company include domestic sales and export sales the sales revenue of domestic sales is

recognized after the goods is delivered and conforms to the relevant causes of the contract; the sales revenue of

export sales is recognized after the goods is sent out and declared and conforms to the relevant causes of the

contract.

2. Basis on use right income for transaction assets

Financial benefit attached to the contract is possibly inflow to the Company; Overall income of the contract can be

measured reliably. Determined the use right income for transaction assts respectively as followed:

(1) Amount of interest income: determined by the time and effective interest rate of the currency capital used by

other people.

(2) Amount of income from use: determined by the charge time and calculation method agreed in the relevant

contract or agreement.

26. Government Grants

(1) Determination basis and accounting for government grants related to assets

1.Type

Governments grants of the Company refer to the monetary and non-monetary assets obtained from government

for free and are divided into those related to assets and others related to revenues.Government subsidies related to assets refer to those obtained by the Company and used for purchase or

construction of or otherwise to form long-term assets. Government subsidies related to revenue refer to those other

than government subsidies related to assets.

2. Confirmation of government subsidy

At end of the period if there is evidence show that the Company qualified relevant condition of fiscal supporting

polices and such supporting funds are predicted to obtained than recognized the amount receivable as government

subsidy. After that government subsidy shall recognize while actually received.Government subsidies in the form of monetary assets are stated at the amount received or receivable. Government

subsidies in the form of non-monetary assets are measured at fair value; if fair value cannot be obtained a

深圳市深宝实业股份有限公司 2018 年半年度报告全文

nominal amount (RMB1) is used. Government subsidies measured at nominal amount is recognized immediately

in profit or loss for the current period.

3. Methods of accounting treatment

Government grants in relation to purchase of long-term assets such as fixed assets or intangible assets shall be

recognized as deferred income. And reckoned into gains/losses by installment with reasonable and systematic

approach according to the useful life of such asserts that purchased or constructed

(2) Determination basis and accounting for government grants related to income

As for the government grants with income concerned which has compensated relevant expenses and losses

occurred in later period than recognized as deferred income and reckoned into current gains/losses during the

period while relevant expenses or losses determined; for those government grants which has compensated relevant

expenses and losses that occurred reckoned into current gains/losses while acquired.Government grants relevant to daily activities of enterprises are included in other income; government grants

irrelevant to daily activities of enterprises are included in non-operating income and expenditure.The government subsidy relevant to discounted interest on policy concessional loans is used to offset the relevant

borrowing costs; the fair value of borrowings is used as the entry value of borrowings and the borrowing costs are

calculated according to the actual interest rate method the balance between the actual amount received and the

fair value of borrowings is recognized as deferred income. Deferred income is amortized to offset the related

borrowing costs by adopting the actual interest rate method in duration of borrowings.When a recognized government grant needs to be returned adjust the book value of assets if it is used to offset the

book value of underlying assets at initial recognition; if there is a related deferred income balance offset the book

balance of relevant deferred income and include the excess in current profit or loss; if there is no related deferred

income and directly include in the current profit or loss.

27. Deferred income tax assets and deferred income tax liabilities

Deferred income tax assets and liabilities are measured and recognized based on the difference (temporary

difference) between the taxation bases of the assets and liabilities and their carrying value. As of the balance sheet

date deferred income tax assets and liabilities are measured at the tax rate applicable during the period in which

the assets are recovered or liabilities are settled.

1. Reference for recognition of deferred income tax assets

Deferred income tax asset arising from deductible temporary difference is recognized to the extent of assessable

income which is likely to acquire to offset deductible temporary difference and for which deductible losses and

tax credit for subsequent years can be carried forward. However deferred income tax assets arising from initial

深圳市深宝实业股份有限公司 2018 年半年度报告全文

measurement of assets or liabilities in transactions with the following characteristics would not be recognized: (1)

the transaction is not business combination; (2)occurrence of the transaction would neither affect accounting profit

nor affect assessable income or deductible loss.

For deductible temporary difference relating to investment in associates the Company would recognize deferred

income tax assets accordingly if the following conditions are met: temporary difference is likely to be reversed in

foreseeable future and it is likely to acquire assessable income against which deductible temporary difference is

utilized.

2. Basis for determination of deferred income tax liabilities

Assessable temporary difference which should be paid while not paid yet for the current and previous periods is

recognized as deferred income tax liabilities excluding:

(1) Temporary difference arising from initial measurement of goodwill;

(2) Transaction or issue arising from non business combination and its occurrence would neither affect

accounting profit nor affect temporary difference arising from assessable income (or deductible loss);

(3) For assessable temporary difference relating to investments in subsidiary or associate timing for reversal of

the temporary difference can be controlled and it is likely that the difference would not be reversed in foreseeable

future.

3. Deferred tax assets and liabilities are offset if all the following conditions are met.

(1) An enterprise has the legal rights to settle the income tax assets and income tax liabilities for the current period

by net amount;

(2) They relate to income taxes levied by the same tax authority on either the taxable entity has a legally

enforceable right or set off current income tax assets against current income tax liabilities and different taxable

entities which either intend to settle the current income tax liabilities and assets on a net basis or to realize the

assets and settle the liabilities simultaneously in each future period in which significant amounts of deferred tax

liabilities or assets are expected to be settled or recovered.

28. Lease

(1) Accounting for operating lease

If the lease terms substantially transfer all risks and rewards related to the ownership of leased asset to the lessee

the lease is a finance lease and the other leases are operating leases.

1. Accounting for operating lease

(1) Assets lease-in by Operating:

The rental fee paid for renting the properties by the Company are amortized by the straight-line method and

reckoned in the current expenses throughout the lease term without deducting rent-free period. The initial direct

深圳市深宝实业股份有限公司 2018 年半年度报告全文

costs related to the lease transactions paid by the Company are reckoned in the current expenses.When the lessor undertakes the expenses related to the lease that should be undertaken by the Company the

Company shall deduct the expenses from the total rental costs share by the deducted rental costs during the lease

term and reckon in the current expenses.

(2) Operating leased assets:

Rental obtained from assets leasing during the whole leasing period without rent-free period excluded shall be

amortized by straight-line method and recognized as leasing revenue. The initial direct costs paid with leasing

transaction concerned are reckoned into current expenditure; the amount is larger is capitalized when incurred

and accounted for as profit or loss for the current period on the same basis as recognition of rental income over the

entire lease period.When the Company undertakes the expenses related to the lease that should be undertaken by the lessor the

Company shall deduct the expenses from the total rental income and distribute by the deducted rental costs during

the lease term.

(2) Accounting for financing lease

1. Accounting for financing lease

(1) Assets lease-in by financing: On the beginning date of the lease the entry value of leased asset shall be at the

lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date

of the lease. Minimum lease payment shall be the entry value of long-term accounts payable with difference

recognized as unrecognized financing expenses.The basis valuation and depreciation method of financing lease assets see Note IV-(XVI) Fixed Assets.Unrecognized financing expenses shall be reckoned in financial expenses and amortized and using effective

interest method during the leasing period.

(2) Finance leased assets: on the lease commencement date the Company affirms the balance among the finance

lease receivables the sum of unguaranteed residual value and its present value as the unrealized financing income

and recognizes it as the rental income during the period of receiving the rent. For the initial direct costs related to

the rental transaction the Company reckons in the initial measurement of the finance lease receivables and

reduces the amount of income confirmed in the lease term.深圳市深宝实业股份有限公司 2018 年半年度报告全文

29. Changes of important accounting policy and estimation

(1) Changes of major accounting policies

□ Applicable √ Not applicable

(2) Changes of important accounting estimate

□ Applicable √ Not applicable

VI. Taxes

1. Type of tax and rate for main applicable tax

Taxes Basis Rate

VAT

Service income from goods sales and

taxable sales

17% 11% 6% 5% 3%

Urban maintenance and construction tax Turnover tax payable 5% 7%

Educational surtax Turnover tax payable 5%

Rate of income tax for different taxpaying body:

Taxpaying body Rate of income tax

The Company 25%

Shenbao Huacheng 15%

Including: Shantou Branch of Shenbao Huacheng 25%

Wuyuan Ju Fang Yong 25%

Shenbao Sanjing 25%

Huizhou Shenbao Science & Technology 25%

Huizhou Shenbao Food 25%

Shenbao Properties 25%

Shenbao Industrial & Trading 25%

Hangzhou Ju Fang Yong 25%

Shenbao Technology Center 25%

Fuhaitang Ecological 25%

Chunshi Network 25%

Shenshenbao Investment 25%

Shenshenbao Tea Culture 25%

Yunnan Supply Chain 25%

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Jufangyong Trading 25%

Shenbao Rock Tea 25%

Pu’er Tea Trading Center 25%

Shenbao Tea-Shop 25%

Fuhaitang Restaurant 25%

2. Tax preferential and basis

Shenbao Huacheng a wholly-owned subsidiary of the Company has been granted High-tech Enterprise

Certification (No. GR201744203462) jointly promulgated by Shenzhen Commission on Innovation & Technology

Shenzhen Finance Committee Shenzhen Municipal Bureau of State Taxation and Shenzhen Municipal Bureau of

Local Taxation as at the date of 31 Oct. 2017 with a valid term of 3 years. With relevant preferential policies

adopted by the State in favor of high-tech enterprises all qualified high-tech enterprises are able to enjoy the

lower income tax rate of 15% for collection of enterprise income tax capable for 3 years commencing from the

year when they are deemed as qualified. Shenbao Huacheng has favored from this preferential policy from 2017

to 2019.

VII. Annotation to main items of consolidated financial statements

1. Monetary fund

In RMB

Item Closing balance Opening balance

Cash on hand 441516.36 194650.44

Cash in bank 222905150.08 255448120.29

Other monetary fund 318879.68

Total 223346666.44 255961650.41

Other note

The Company did not has account pledge freeze or has potential risks in collection ended as 30 June 2018.

2. Financial assets measured by fair value and with the variation recorded into current gains/losses

In RMB

Item Closing balance Opening balance

Tradable financial assets 1173950.05 1599668.20

Equity investment 1173950.05 1599668.20

Total 1173950.05 1599668.20

Other explanation:

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Closing balance refers to the 258011 shares of A-stock under the name of “Shen Zhonghua-A”

3. Account receivable

(1) Account receivable classified according to types

In RMB

Type

Closing balance Opening balance

Book balance Bad debt provision

Book

value

Book balance Bad debt provision

Book value

Amount Ratio Amount

Accrual

Ratio

Amount Ratio Amount

Accrual

Ratio

Account receivable

withdrawal bad debt

provision by group of

credit risk

characteristics

663427

42.62

76.61%

128561

5.57

1.94%

6505712

7.05

78480

035.29

79.49%

1286967

.26

1.64%

77193068.

Account receivable

with single minor

amount but

withdrawal bad debt

provision for single

item

202544

11.14

23.39%

202544

11.14

100.00%

20254

411.14

20.51%

2025441

1.14

100.00%

Total

865971

53.76

100.00%

215400

26.71

24.87%

6505712

7.05

98734

446.43

100.00%

2154137

8.40

21.82%

77193068.

Account receivable with single significant amount and withdrawal bad debt provision separately at period end:

□Applicable √ Not applicable

Account receivable with bad debt provision withdrawal by age analysis in group:

√ Applicable □ Not applicable

In RMB

Age

Closing balance

Account receivable Bad debt reserve Accrual ratio

Sub item of within one year

Within 1 year 55135762.09

1-2 years 2599241.28 129962.06 5.00%

2-3 years 2710147.67 271014.76 10.00%

Over 3 years 5897591.58 884638.75 15.00%

3-4years 3441293.53 516194.04 15.00%

4-5 years 122015.02 18302.25 15.00%

5years above 2334283.03 350142.46 15.00%

Total 66342742.62 1285615.57 1.94%

Explanation on combination determines:

In combination withdrawal proportion of bad debt provision based on balance proportion for account receivable

□ Applicable √ Not applicable

In combination withdrawal proportion of bad debt provision based on other methods for account receivable:

深圳市深宝实业股份有限公司 2018 年半年度报告全文

(2) Bad debt provision accrual collected or switch back

Bad debt provision accrual of RMB 0; collected or switch back bad debt provision of RMB 1351.69.

Major bad debt provision collected or switch back:

In RMB

Name Amount Method

(3) Top 5 receivables at ending balance by arrears party

Name Closing balance Proportion in total receivables at closing balance (%) Bad debt provision accrual

Customer 1 13202096.00 15.25 ---

Customer 2 4976292.86 5.75 ---

Customer 3 3472370.90 4.01 493436.36

Customer 4 3195254.93 3.69 ---

Customer 5 1958919.74 2.26 ---

Total 26804934.43 30.96 493436.36

4. Account paid in advance

(1) Aging analysis

In RMB

Age

Closing balance Opening balance

Amount Ratio Amount Ratio

Within 1 year 3780380.03 88.56% 11179178.48 94.84%

1-2years 81498.64 1.91% 128246.97 1.09%

2-3years 296638.61 6.95% 369435.97 3.13%

Over 3 years 110571.40 2.58% 110571.40 0.94%

Total 4269088.68 -- 11787432.82 --

Reasons for significant repayment with over one year age without settle:

Nil

(2) Top 5 accounts paid in advance at closing balance collected by objects

Name Closing amount

Ratio in total

account paid in

advance (%)

Time Unsettled reasons

Supplier 1 2303251.58 53.95 Within 1 year The contract is being carried

out

Supplier 2 611965.84 14.33 Within 1 year The contract is being carried

out

Supplier 3 273556.80 6.41 Within 1 year The contract is being carried

深圳市深宝实业股份有限公司 2018 年半年度报告全文

out

Supplier 4 219257.92 5.14 Within 1 year The contract is being carried

out

Supplier 5 163000.00 3.82 Within 1 year The contract is being carried

out

Total 3571032.14 83.65

Other note:

Nil

5. Other account receivable

(1) Other account receivable classified according to types:

In RMB

Type

Closing balance Opening balance

Book balance Bad debt provision

Book

value

Book balance Bad debt provision

Book value Amount Ratio Amount

Accrual

ratio

Amount Ratio Amount

Accrual

ratio

Other account

receivable with

single major amount

and withdrawal bad

debt provision for

single item

201820

46.51

39.73%

927591

2.22

45.96%

1090613

4.29

19977

283.01

39.50%

9071148

.72

45.41%

10906134.

Other account

receivable

withdrawal bad debt

provision by group of

credit risk

characteristics

128846

32.91

25.37%

463167.

3.59%

1242146

5.38

12872

295.52

25.45%

466830.1

3.63%

12405465.

Other account

receivable with

single minor amount

but withdrawal bad

debt provision for

single item

177234

55.12

34.90%

177234

55.12

100.00%

17723

455.12

35.05%

1772345

5.12

100.00%

Total

507901

34.54

100.00%

274625

34.87

54.07%

2332759

9.67

50573

033.65

100.00%

2726143

3.98

53.91%

23311599.

Other receivable with single significant amount and withdrawal bad debt provision separately at end of period:

√ Applicable □ Not applicable

In RMB

Account

receivable(units)

Closing balance

Account receivable Bad debt reserve Accrual ratio Reasons

Changzhou Shenbao

Chacang E-commence

Co. Ltd. (“ChangzhouShenbao Chacang

Company” for short)

20182046.51 9275912.22 45.96%

The difference between

the present value of

future cash flow and

book value will accrual

for bad debt provision

Total 20182046.51 9275912.22 -- --

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Other receivable with bad debt provision withdrawal by age analysis in group:

√ Applicable □ Not applicable

In RMB

Age

Closing balance

Other accounts receivable Bad debt provision Accrual ratio

Sub item of within one year

Within 1 year 7780249.90

1-2 years 2505896.54 125294.83 5.00%

2-3 years 1038005.19 103800.52 10.00%

Over 3 years 1560481.28 234072.18 15.00%

3-4 years 94896.77 14234.51 15.00%

4-5 years 748187.20 112228.08 15.00%

5 years above 717397.31 107609.59 15.00%

Total 12884632.91 463167.53 3.59%

Explanations on combination determine:

In combination withdrawal proportion of bad debt provision based on balance proportion for other account receivable:

□ Applicable √ Not applicable

In combination withdrawal proportion of bad debt provision based on other methods for other account receivable:

□ Applicable √ Not applicable

(2) Bad debt provision accrual collected or switch back

Bad debt provision accrual was 204763.50 Yuan; the amount collected or switches back amounting to 3662.61 Yuan

Major bad debt provision collected or switch back:

In RMB

Name Amount Method

(3) Nature classification for other receivables

In RMB

Item Closing book balance Opening book balance

Margin and deposit 5752273.11 4540242.47

VAT rebates receivables 339104.64 733709.16

Intercourse funds and other 44698756.79 45299082.02

Total 50790134.54 50573033.65

(4) Top five units in other account receivable at closing balance

In RMB

Name Amount nature Closing balance Age Ratio in total other Bad debt provision

深圳市深宝实业股份有限公司 2018 年半年度报告全文

account receivable at

closing balance

Closing balance

Changzhou Shenbao

Chacang Company

Intercourse funds 20182046.51

Within 1 year 1-3

year and above

39.73% 9275912.22

Shichu Mingmen

Company

Intercourse funds 1596491.82

Within 1 year and

1-2 year

3.14% 53585.30

Hangzhou Xiaoshan

International Airport

Co. Ltd.

Deposit 1344149.95

Within 1 year and

1-2 year

2.65% 22875.00

Sutingdian Rent 964365.25

Within 1 year and

1-2 year

1.90% 18460.20

Hangzhou Xiaoshan

International Airport

Zhejiang Brigade

Hotel Co. Ltd.

Deposit 729166.64

Within 1 year and

1-3 year

1.44% 4000.00

Total -- 24816220.17 -- 48.86% 9374832.72

6. Inventory

(1) Types

In RMB

Items

Closing balance Opening balance

Book balance Falling price reserves Book value Book balance

Falling price

reserves Book value

Raw materials 73044104.81 4281853.67 68762251.14 77403549.46 4385924.31 73017625.15

Goods in process 30662696.94 219554.80 30443142.14 28569954.36 264169.09 28305785.27

Finished goods 50835159.71 1166164.97 49668994.74 44089811.15 1184370.13 42905441.02

Goods in transit 6417149.54 6417149.54 5475723.52 5475723.52

Materials

processed on

commission

5456948.02 5290502.32 166445.70 5394430.47 5290502.32 103928.15

Wrappage 6662150.03 6662150.03 5497605.83 5497605.83

Total 173078209.05 10958075.76 162120133.29 166431074.79 11124965.85 155306108.94

Does the Company comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange

No.4 – Listed Companies Engaged in Seed Industry and Planting Business” or not

(2) Inventory falling price reserves

In RMB

Type Opening balance Current amount increased Current amount decreased Closing balance

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Accrual Other

Switch back/

Written off

Other

Raw materials 4385924.31 104070.64 4281853.67

Goods in process 264169.09 44614.29 219554.80

Finished goods 1184370.13 18205.16 1166164.97

Work in

process-outsourced 5290502.32 5290502.32

Total 11124965.85 166890.09 10958075.76

(3) Explanation on inventories with capitalization of borrowing costs included at ending balance

Nil

(4) Assets unsettled formed by construction contract which has completed at period-end

In RMB

Item Amount

Other note:

Nil

7. Other current assets

In RMB

Item Closing balance Opening balance

VAT input tax ready for deduction 2071685.68 2712300.53

Financial products held to maturity within

one year

30000000.00

Other 46194.46

Total 32071685.68 2758494.99

Other note:

Nil

8. Financial assets available for sale

(1) Financial assets available for sale

In RMB

Item

Closing balance Opening balance

Book balance Depreciation reserves Book balance

Depreciation

reserves Book balance

Depreciation

reserves

Instrument equity

available for sale:

17537500.00 17480000.00 57500.00 17537500.00 17480000.00 57500.00

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Measured by cost 17537500.00 17480000.00 57500.00 17537500.00 17480000.00 57500.00

Total 17537500.00 17480000.00 57500.00 17537500.00 17480000.00 57500.00

(2) Financial assets available for sale measured by cost at period-end

In RMB

Investee

unit

Book balance Depreciation reserves Ratio of

share-holdi

ng in

invested

entity

Current

cash

dividend

Opening

balance

Current

increased

Current

decreased

Closing

balance

Opening

balance

Current

increased

Current

decreased

Closing

balance

Shenzhen

Sanjiu

Weitai

Capsules

Co. Ltd.

2480000.

0.95%

Shenzhen

Tianji

Photoelect

ric

Industrial

Co. Ltd.

(Former

Shenzhen

Tianji

Photoelect

ric

Technolog

Industrial

Co. Ltd.）

15000000

.00

15000000

.00

15000000

.00

15000000

.00

3.77%

Beijing

Tiantan

Co. Ltd.

57500.00 57500.00

Total

17537500

.00

17537500

.00

17480000

.00

17480000

.00

(3) Change of financial assets depreciation for sale during reporting period

In RMB

Type

Instrument equity

available for sale

Instrument debt

available for sale

Total

Balance of accrual at

period-begin

17480000.00 17480000.00

Balance of accrual at

period-end

17480000.00 17480000.00

9. Long-term equity investment

In RMB

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Investee

unit

Opening

book

balance

-+ in the Period

Closing

book

balance

Ending

balance

impairme

provision

Additiona

investmen

Capital

reduction

Investme

nt gains

recognize

d under

equity

Other

comprehe

nsive

income

adjustmen

Other

equity

change

Cash

dividend

or profit

announce

d to

issued

Impairme

nt accrual

Other

I. Joint venture

II. Associated enterprise

Shenzhen

Shenbao

(Xinmin)

Foods

Co.

Ltd*1

2870000

.00

2870000

.00

2870000

.00

Changzho

Shenbao

Chacang

E-comme

nce Co.Ltd *2

Shenzhen

Shenbao

(Liaoyuan

)

Industrial

Co.

Ltd.*1

57628.53 57628.53 57628.53

Huizhou

Shenbao

Ma Nan

Bio-techn

ology

Co. Ltd.

1054948

.13

575.38

1055523

.51

Shenzhen

Shichumi

ngmen

Restauran

Managem

ent Co.Ltd. *2

Guangzho

Shenbao

Mendao

Tea Co.

4193681

.53

-185480.

4008201

.16

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Ltd.Subtotal

8176258

.19

-184904.

7991353

.20

2927628

.53

Total

8176258

.19

-184904.

7991353

.20

2927628

.53

Other explanation

*1: these two companies have been established for a long time. At the current stage their business licenses have been revoked.

Impairment provision is made in full due to absence of settlement.

*2: the long-term equity invesment for Changzhou Shenbao Chacang Company and Shichumingmen Company which is measured by

equity; the book balance counted as Zero for losses in the two abovementioned enterprises

10. Investment real estate

(1) Investment real estate measured at cost

√ Applicable □ Not applicable

In RMB

Item House and building Land use right Construction in process Total

I. Total original book

value

1. Opening balance 19834643.51 19834643.51

2. Current amount

increased

(1) Purchase

(2) Stock\fixed assets

\Transfer-in from

construction in process

(3) Increased by

combination

3. Current amount

decreased

(1) Disposal

(2) Other transfer-out

4. Closing balance 19834643.51 19834643.51

II. accumulated

depreciation and

accumulated

amortization

1. Opening balance 1433368.48 1433368.48

2. Current amount

increased 235795.16 235795.16

(1) Accrual or

amortization 235795.16 235795.16

深圳市深宝实业股份有限公司 2018 年半年度报告全文

3. Current amount

decreased

(1) Disposal

(2) Other transfer-out

4. Closing balance 1669163.64 1669163.64

III. Impairment provision

1. Opening balance

2. Current amount

increased

(1) Accrual

4. Current amount

decreased

(1) Disposal

(2) Other transfer-out

4. Closing balance

IV. Book value Total

1. Ending book value 18165479.87 18165479.87

2.Openingbook value 18401275.03 18401275.03

(2) Investment real estate measured by fair value

□ Applicable √ Not applicable

11. Fixed assets

(1) Fixed assets

In RMB

Item House & buildings Machinery equipment

Transportation

facilities Other equipment Total

I. Total original book

value

1. Opening balance 256254642.80 234122882.07 7116373.26 17085662.59 514579560.72

2. Current amount

increased 256230.99 3200.00 164721.86 424152.85

(1) Purchase 256230.99 3200.00 164721.86 424152.85

(2) Transfer-in from

construction in

process

(3) Increased by

combination

深圳市深宝实业股份有限公司 2018 年半年度报告全文

3. Current amount

decreased 7855.55 151460.79 159316.34

(1) Disposal or scrap 7855.55 151460.79 159316.34

4. Closing balance 256254642.80 234371257.51 7119573.26 17098923.66 514844397.23

II. accumulated

depreciation

1. Opening balance 36187842.08 144793412.44 4614980.16 9596679.77 195192914.45

2. Current amount

increased 3636294.36 5420921.95 274055.32 1047855.24 10379126.87

(1) Accrual 3636294.36 5420921.95 274055.32 1047855.24 10379126.87

3. Current amount

decreased 1895.92 45718.77 47614.69

(1) Disposal or scrap 1895.92 45718.77 47614.69

4. Closing balance 39824136.44 150212438.47 4889035.48 10598816.24 205524426.63

III. Impairment

provision

1. Opening balance 1355290.18 4288951.37 5644241.55

2. Current amount

increased

(1) Accrual

3. Current amount

decreased

(1) Disposal or scrap

4. Closing balance 1355290.18 4288951.37 5644241.55

IV. Book value Total

1. Ending book

value 215075216.18 79869867.67 2230537.78 6500107.42 303675729.05

2.Openingbook

value 218711510.54 85040518.26 2501393.10 7488982.82 313742404.72

(2) Certificate of title un-completed

In RMB

Item Book value Reasons

House and building 1679436.07 In progress

Other note

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

12. Construction in process

(1) Construction in process

In RMB

Item

Closing balance Opening balance

Book balance Depreciation reserves Book value Book balance

Depreciation

reserves Book value

Shenbao Plaza

project

3842333.64 3842333.64 3842333.64 3842333.64

Other 1767365.07 903189.74 864175.33 1038108.65 903189.74 134918.91

Total 5609698.71 4745523.38 864175.33 4880442.29 4745523.38 134918.91

13. Productive biological assets

(1) Productive biological assets measured by cost

√ applicable □ not applicable

In RMB

Item Plant Livestock Forestry Fisheries Total

Tea tree

I. Total original book

value

1. Opening balance 436156.00 436156.00

2. Current amount

increased

(1) Purchase

(2) Self-cultivate

3. Current amount

decreased

(1) Disposal

(2) Other

4. Closing balance 436156.00 436156.00

II. accumulated

depreciation

1. Opening balance 19384.72 19384.72

2. Current amount

increased 4846.18 4846.18

(1) Accrual 4846.18 4846.18

3. Current amount

decreased

(1) Disposal

深圳市深宝实业股份有限公司 2018 年半年度报告全文

(2) Other

4. Closing balance 24230.90 24230.90

III. impairment

provision

1. Opening balance

2. Current amount

increased

(1) Accrual

3. Current amount

decreased

(1) Disposal

(2) Other

4. Closing balance

IV. Book value Total

1. Ending book

value 411925.10 411925.10

2.Openingbook

value 416771.28 416771.28

(2) Productive biological assets measured by fair value

□ Applicable √ Not applicable

14. Intangible assets

(1) Intangible assets

In RMB

Item Land using right Patent Un-patent tech Other Total

I. Total original book

value

1. Opening balance 172549352.87 46264718.89 5159737.87 22871704.98 246845514.61

2. Current amount

increased 1200.00 23931.62 25131.62

(1) Purchase 1200.00 23931.62 25131.62

(2) Internal R&D

(3) Increased by

combination

3. Current amount

decreased

(1) Disposal

深圳市深宝实业股份有限公司 2018 年半年度报告全文

4. Closing balance 172549352.87 46265918.89 5183669.49 22871704.98 246870646.23

II. accumulated

depreciation

1. Opening balance 28710317.15 22367888.26 1591147.47 3855071.41 56524424.29

2. Current amount

increased 1752219.66 1266361.14 279199.92 192540.11 3490320.83

(1) Accrual 1752219.66 1266361.14 279199.92 192540.11 3490320.83

3. Current amount

decreased 5793.60 5793.60

(1) Disposal 5793.60 5793.60

4. Closing balance 30462536.81 23628455.80 1870347.39 4047611.52 60008951.52

III. impairment

provision

1. Opening balance 1869502.01 1130341.88 2999843.89

2. Current amount

increased

(1) Accrual

3. Current amount

decreased

(1) Accrual

4. Closing balance 1869502.01 1130341.88 2999843.89

IV. Book value Total

1. Ending book

value 142086816.06 20767961.08 2182980.22 18824093.46 183861850.82

2.Openingbook

value 143839035.72 22027328.62 2438248.52 19016633.57 187321246.43

Ratio of the intangible assets from internal R&D in balance of intangible assets at period-end was 0.00%.

15. Development expenditure

In RMB

Item

Opening

balance

Increase during the year Decreased during the year

Closing

balance

Project I 368238.39 368238.39

Project II 196789.45 196789.45

Project III 217102.93 217102.93

Project IV 308331.96 308331.96

Project V 183925.29 183925.29

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Project VI 231112.80 231112.80

Total 1505500.82 196789.45 1308711.37

Other note

Nil

16. Goodwill

(1) Original book value of goodwill

In RMB

The invested

entity or items

Opening balance Increase during the year Decreased during the year Closing balance

Pu’er Tea Trading

Center

673940.32 673940.32

Total 673940.32 673940.32

(2) Goodwill depreciation reserves

In RMB

The invested

entity or items

Opening balance Increase during the year Decreased during the year Closing balance

Pu’er Tea Trading

Center

673940.32 673940.32

Total 673940.32 673940.32

Explain process of impairment test index and determination:

Nil

Other note

Hangzhou Ju Fang Yong a subsidiary of the Company funded and purchased 15.00% stake of Yunnan Pu’er Tea

Exchange held by Yunnan Heng Feng Xiang Investment Co. Ltd. in May 2016. After the completion of the

purchase the Company got command of Yunnan Pu’er Tea Exchange. The balance between the combined cost

and the fair value of net assets on the combining date formed goodwill of RMB 673940.32.

17. Long-term deferred expense

In RMB

Item Opening balance Current increased Current amortization Other decreased Closing balance

Decoration charge 5630658.92 456245.49 1174977.32 4911927.09

Affiliated project of

resident area in

Jufangyong Wuyuan

389956.00 158292.65 231663.35

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Reform of tea park

in Wuyuan 6666.66 6666.66

Reform project of

warehouse 1054663.93 324849.18 729814.75

Lease of workshop

and office building 733479.20 191342.40 542136.80

Other 3321343.09 1440.00 243373.20 3079409.89

Total 11136767.80 457685.49 2099501.41 9494951.88

Other note

Nil

18. Deferred income tax assets and deferred income tax liability

(1) Deferred income tax assets without offset

In RMB

Item

Closing balance Opening balance

Deductible temporary

differences

Deferred income tax

assets

Deductible temporary

differences

Deferred income tax

assets

Impairment provision for

assets

19343409.96 4835852.49 19149097.09 4784661.61

Unrealized profits in

internal transactions

2132533.20 533133.30 2518115.62 629528.91

Deferred income 441538.48 110384.62 441538.48 110384.62

Total 21917481.64 5479370.41 22108751.19 5524575.14

(2) Deferred income tax liability without offset

In RMB

Item

Closing balance Opening balance

Taxable temporary

differences

Deferred income tax

liability

Taxable temporary

differences

Deferred income tax

liability

Asset evaluation

increment of enterprise

combine under different

control

4308645.52 1077161.38 4460386.00 1115096.50

Change of fair value for

the financial assets

available for sale

92883.96 23220.99 518602.11 129650.53

Total 4401529.48 1100382.37 4978988.11 1244747.03

(3) Deferred income tax assets and deferred income tax liabilities listed after off-set

In RMB

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Item

Trade-off between the

deferred income tax

assets and liabilities

Ending balance of

deferred income tax

assets or liabilities after

off-set

Trade-off between the

deferred income tax

assets and liabilities at

period-begin

Opening balance of

deferred income tax

assets or liabilities after

off-set

Deferred income tax

assets

5479370.41 5524575.14

Deferred income tax

liabilities

1100382.37 1244747.03

(4) Details of uncertain deferred income tax assets

In RMB

Item Closing balance Opening balance

Losses deductible 149227820.13 125382554.44

Asset impairment provision 74775667.69 74575918.49

Total 224003487.82 199958472.93

19. Other non-current assets

In RMB

Item Closing balance Opening balance

Prepaid for equipment 734465.84 484108.52

total 734465.84 484108.52

Other explanation:

Nil

20. Short-term loans

(1) Short-term loans

In RMB

Type Closing balance Opening balance

Guarantee loan 10000000.00

Total 10000000.00

Note:

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

21. Account payables

(1) Account payables

In RMB

Item Closing balance Opening balance

Material payable 24706768.38 21674392.61

Trade accounts payable 1988272.30 1494694.23

Other 185679.60 376987.31

Total 26880720.28 23546074.15

(2) Major accounts payable with age over 1 year

In RMB

Name Closing balance Reasons of outstanding or carry-over

Supplier 1 518655.52 Uncertain whether need to be paid

Supplier 2 515892.30 Uncertain whether need to be paid

Total 1034547.82 --

Other note:

Nil

22. Account received in advance

(1) Account received in advance

In RMB

Item Closing balance Opening balance

Within 1 year 2838341.06 1949897.16

1-2 years 156956.35 132674.36

2-3 years 29964.92 7378.31

Over 3 years 737657.68 776338.78

Total 3762920.01 2866288.61

23. Wages payable

(1) Wages payable

In RMB

Item Opening balance Current increased Current decreased Closing balance

深圳市深宝实业股份有限公司 2018 年半年度报告全文

I. Short-term

compensation 14132550.31 33207212.36 37906886.29 9432876.38

II. After-service

welfare-defined

contribution plans

252782.59 2834705.82 2834053.28 253435.13

Total 14385332.90 36041918.18 40740939.57 9686311.51

(2) Short-term compensation

In RMB

Item Opening balance Current increased Current decreased Closing balance

1. Wage bonus

allowance and subsidy 11704362.95 25527889.26 30635172.79 6597079.42

2. Employees’ welfare 3733726.42 3733726.42

3. Social insurance

charges 19189.70 1328425.12 1328442.43 19172.39

Including: basic medical

insurance premium 16419.98 1155345.54 1155564.03 16201.49

Industrial injury

insurance

premiums

802.47 85621.72 85612.73 811.46

Maternity

insurance

premiums

1967.25 87457.86 87265.67 2159.44

4. Housing public reserve 1774508.75 1774508.75

5. Trade union fee and

education fee 2408997.66 842662.81 435035.90 2816624.57

Total 14132550.31 33207212.36 37906886.29 9432876.38

(3) Defined contribution plans

In RMB

Item Opening balance Current increased Current decreased Closing balance

1. Basic endowment

insurance premiums 250987.15 2769772.20 2769142.16 251617.19

2. Unemployment

insurance premiums 1795.44 64933.62 64911.12 1817.94

Total 252782.59 2834705.82 2834053.28 253435.13

Other note:

Nil

24. Tax payable

In RMB

Item Closing balance Opening balance

VAT 1035163.80 1504443.80

Enterprise income tax 4153556.44 3486792.17

Personal income tax 45905.74 466035.81

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Urban maintenance and construction tax 40487.62 65591.62

House property tax 757882.64 332637.65

Surtax for education expenses 33823.36 54877.18

Use tax of land 385407.85 615768.07

Other tax fee 121260.63 79040.14

Total 6573488.08 6605186.44

Other note:

Nil

25. Dividend payable

In RMB

Name Closing balance Opening balance

Other 2909182.74 2909182.74

Total 2909182.74 2909182.74

Other note including payable dividend unpaid with over one year disclosure reasons:

Nil

26. Other account payables

(1) Listed by age

In RMB

Item Closing balance Opening balance

Deposit and margin 2582816.84 618257.53

Engineering quality retention money and

fund of tail 1335256.49 1121662.69

Intercourse funds and other 19976370.84 19592619.66

Fund lending 10024009.82 11480398.73

Total 33918453.99 32812938.61

(2) Significant other payable with over one year age

In RMB

Item Closing balance Reasons of un-paid or carry-over

Shenzhen Investment Management

Company

3510297.20 Historical payment

Total 3510297.20 --

Other note

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

27. Deferred income

In RMB

Item Opening balance

Increase during the

year

Decreased during the

year

Closing balance Causes

Government grants 12863139.81 1137975.20 11725164.61

Total 12863139.81 1137975.20 11725164.61 --

Items involving governance grants:

In RMB

Liability

Opening

balance

Grants

increased in

the Period

Amount

reckoned into

non-operating

revenue

Amount

reckoned into

other revenue

Amount with

costs

reduction in

the period

Other

changes

Ending

balance

Assets-relate

d/income-rela

ted

Subsidy for tea

seeding of

New Tea

Garden in

Wangkou

47239.24 554.64 46684.60

Assets-relate

(Construction

amount for 50

tons for clearly

processing for

Mingyou tea

625000.00 625000.00

Assets-relate

industrializatio

n project of

instant tea

power

2280582.54 98222.94 2182359.60

Assets-relate

Base of

further

processing for

tea and nature

plants

1375000.00 137500.00 1237500.00

Assets-relate

Enterprise

technology

center is a

municipal

R&D center.

Subsidies for

industrial

technological

advancement

2191325.64 102012.30 2089313.34

Assets-relate

Subsidies for

key technology 167256.22 7122.51 160133.71

Assets-relate

深圳市深宝实业股份有限公司 2018 年半年度报告全文

research and

industrializatio

n of instant tea

powder

Special funds

for Shenzhen

strategic

emerging

industrial

development

3890101.98 175604.54 3714497.44

Assets-relate

Project grants

for years for

agricultural

district Xihu

Zone

441538.48 441538.48

Assets-relate

Key

technology

research and

development

for the

preparation

high-quality

aroma

extracts

based on the

use of tea

aroma

precursors

250000.00 250000.00

Assets-relate

Key

technology

research and

development

for the

preparation

high-quality

aroma

extracts

based on the

use of tea

aroma

precursors

524800.00 65968.11 458831.89

Income-relate

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Finance

Discount

1070295.71 550990.16 519305.55

Income-relate

Total 12863139.8

1137975.20

11725164.6

Other note:

Nil

28. Share capital

In RMB

Opening

balance

Increased (decreased) in this year +-

Closing

balance New shares issued Bonus shares

converted from

public reserve

Other Sub-total

Total shares 496782303.00 496782303.00

Other note:

Nil

29. Capital reserves

In RMB

Item Opening balance Current increased Current decreased Closing balance

Capital premium (Share

capital premium)

358180412.46 358180412.46

Other capital reserve 818943.82 818943.82

Total 358999356.28 358999356.28

Other instructions including changes in the current period reasons for the change:

Nil

30. Surplus reserves

In RMB

Item Opening balance Current increased Current decreased Closing balance

Statutory surplus

reserves 54736482.14 54736482.14

Total 54736482.14 54736482.14

Other explanation including changes and reasons for changes:

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

31. Retained profit

In RMB

Item This period Last period

Retained profit at the end of the previous year

before adjustment 36402435.91 158239612.94

Total retained profit at the beginning of the

previous year before adjustment 36402435.91 158239612.94

Add: net profit attributable to shareholder of

parent Company -18246639.07 -54094136.23

Dividend for common shares payable 22581013.80

Dividend of common shares transferred 45162027.00

Retained profit at the begin of the year after

adjustment

18155796.84 36402435.91

Details about adjusting the retained profits at the beginning of the period:

1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the retained

profits at the beginning of the period amounting to 0 Yuan.

2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 0 Yuan.

3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0 Yuan

4) Merge scope changes caused by the same control affect the retained profits at the beginning of the period amounting to 0 Yuan.

5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan

32. Operating income and Operating cost

In RMB

Items

Current Period Last Period

Income Cost Income Cost

Main operating 132834925.50 95903674.12 136473406.96 103182564.29

Other operating 3886289.90 2238763.29 1684975.99 1218275.03

Total 136721215.40 98142437.41 138158382.95 104400839.32

32. Tax and surcharges

In RMB

Item Current Period Last Period

City maintenance and construction tax 440674.22 570241.97

Educational fee and extra 345778.29 437060.65

Property tax 1015210.12 748577.58

Land use tax 836053.33 653330.76

Stamp tax 62257.12 45522.53

Total 2699973.08 2454733.49

Other note:

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Nil

34. Sales expenses

In RMB

Item Current Period Last Period

Employee compensation and employee

costs 6692965.66 8415437.33

Rental and utilities 4605741.44 4486810.13

Depreciation and amortization expenses 1017306.02 1306854.39

Goods transport miscellaneous expenses 3840171.84 3571058.05

Sales discounts promotion fee and

advertising expenses

525870.52 1016356.24

Daily office expenses 1487899.73 1894181.18

Others 305468.73 483709.99

Total 18475423.94 21174407.31

Other note:

Nil

35. Management expenses

In RMB

Item Current Period Last Period

Employee compensation and employee

costs 19321018.52 18059573.89

Rental and utilities 1133244.77 1253438.85

Depreciation and amortization expenses 6904588.01 6715698.24

Intermediary and disclosure expenses 4505049.04 1408462.38

Daily office expenses 3736281.59 4376421.31

Others 1456872.14 1269189.09

Total 37057054.07 33082783.76

Other note:

Nil

36. Financial expenses

In RMB

Category Current Period Last Period

Interest expense 44563.57 -57803.94

Less: interest income 1750417.09 1951838.54

Exchange loss -35969.90 213930.71

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Others 193927.10 262314.75

Total -1547896.32 -1533397.02

Other note:

Nil

37. Asset impairment loss

In RMB

Item Current Period Last Period

I. Bad debt losses 199749.20 190677.29

Total 199749.20 190677.29

Other note:

Nil

38. Gains /losses from change of fair value

In RMB

Source of gains from change of fair value Current Period Last Period

Financial assets measured by fair value and

with its variation reckoned into current

gains/losses

-425718.15 -990762.24

Total -425718.15 -990762.24

Other note:

Nil

39. Investment gains

In RMB

Item Current Period Last Period

Long-term equity investment gains recognized

under equity method -184904.99 -159244.04

Earnings from financing products 1252661.10

Total -184904.99 1093417.06

Other note:

Nil

40. Asset disposal income

In RMB

Source of asset disposal income Current Period Last Period

Profit or loss for the disposal of fixed -1339.93 -21015.26

深圳市深宝实业股份有限公司 2018 年半年度报告全文

assets

41. Other income

In RMB

Source of other income Current Period Last Period

Government subsidies 826872.02

42. Non-operating income

In RMB

Item Current Period Last Period Amount included in the current non-recurring profit and loss

Government grants 618962.22

Other 69507.48 66816.28 69507.48

Performance compensation 325918.95

Total 69507.48 1011697.45

Government subsidy reckoned into current gains/losses:

In RMB

Item

Issuing

subject

Issuing cause Property type

Whether the

impact of

subsidies on

the current

profit and

loss

Whether

special

subsidies

Amount of

this period

Amount of

last period

Assets

related/Incom

e related

Deferred

income

transfer-in

No No 582962.22 Assets relatedThe “Threeproducts onestandard”

award from

Agricultural

Bureau

Tea bureau of

Wuyuan

County

Award

Subsidy for

industries the

country

encourage

and support

(according to

national

policy)

No No 30000.00

Income

Market

Supervision

Bureau -

Patent funded

subsidies

Shenzhen

Market

Supervisory

Authority

Subsidy

Subsidy for

industries the

country

encourage

and support

(according to

No No 6000.00

深圳市深宝实业股份有限公司 2018 年半年度报告全文

national

policy)

Total -- -- -- -- -- 618962.22 --

Other note:

Nil

43. Non-operating expenditure

In RMB

Item Current Period Last Period Amount reckoned into current non-recurring gains/losses

Donation expenditure 10000.00 20916.00 10000.00

Losses on disposal of assets 69625.01 69625.01

Other 56.74 1206.68 56.74

Total 79681.75 22122.68 79681.75

Other note:

Nil

44. Income tax expense

(1) Statement of income tax expenses

In RMB

Item Current Period Last Period

Current income tax expenses 1186252.16 335468.02

Deferred income tax expenses -61224.81 -298881.44

Total 1125027.35 36586.58

(2) Adjustment process of accounting profit and income tax expenses

In RMB

Item Current Period

Total profit -18100791.30

Income tax expenses calculated by statutory tax rate -4525197.83

Impact from different tax rate apply with the subsidiary 103048.34

Impact on deductible temporary differences or losses deductible

which was un-recognized as deferred income tax assets

5547176.84

Income tax expense 1125027.35

Other note

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

45. Annotation of cash flow statement

(1) Cash received with other operating activities concerned

In RMB

Item This Period Last Period

Interest income 1480581.08 1723814.05

Government grants 256948.58 419100.00

Intercourse funds and other 3253817.60 4205388.32

Total 4991347.26 6348302.37

Note of cash received with other operating activities concerned:

Nil

(2) Cash paid with other operating activities concerned

In RMB

Item This Period Last Period

Expenses 17017291.45 14640748.15

Intercourse funds and other 5090549.48 5939319.21

Total 22107840.93 20580067.36

Note of cash paid with other operating activities concerned:

Nil

46. Supplementary information to statement of cash flow

(1) Supplementary information to statement of cash flow

In RMB

Item This Period Last Period

1.Net profit adjusted to cash flow of

operation activities:

-- --

Net profit -19225818.65 -20577033.45

Add: Impairment provision for assets 199968.89 190677.29

Depreciation of fixed assets consumption of

oil assets and depreciation of productive

biology assets

10619768.21 10965845.80

Amortization of intangible assets 3490320.83 3525894.04

Amortization of long-term deferred expenses 2099501.41 2797203.36

Loss from disposal of fixed assets intangible

assets and other long-term assets (income is 1339.93 33547.35

深圳市深宝实业股份有限公司 2018 年半年度报告全文

listed with “-”)

Losses on scrapping of fixed assets (incomeis listed with “-“)

69625.01

Loss from change of fair value (income islisted with “-“)

425718.15 990762.24

Financial expenses (income is listed with

“-”)

610098.89 539226.77

Investment loss (income is listed with “-”) 184904.99 -1093417.06

Decrease of deferred income tax assets

(increase is listed with “-”) 45204.73 -51190.88

Increase of deferred income tax liability

(decrease is listed with “-”) -144364.66 -285625.68

Decrease of inventory (increase is listed with

“-”)

-6814024.36 -8524247.90

Decrease of operating receivable

accounts(increase is listed with “-”)

11223309.58 -14650942.01

Increase of operating payable

accounts(decrease is listed with “-”)

7009917.12 -24293348.02

Net cash flow arising from operating

activities

9795470.07 -50432648.15

2.Material investment and financing not

involved in cash flow:

-- --

3.Net change of cash and cash equivalents -- --

Balance of cash at period end 223346666.44 205487872.79

Less: Balance of cash at year-begin 255961650.41 358564242.83

Net increasing of cash and cash equivalents -32614983.97 -153076370.04

(4) Constitution of cash and cash equivalent

In RMB

Item Closing balance Opening balance

I. Cash 223346666.44 255961650.41

Including: Cash on hand 441516.36 194650.44

Bank deposit available for payment at any

time

222905150.08 255448120.29

Other monetary funds available for payment

at any time

318879.68

III. Balance of cash and cash equivalent at

year-end

223346666.44 255961650.41

Other note:

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

47. Foreign currency monetary items

(1) Foreign currency monetary items

In RMB

Item Ending foreign currency balance Exchange rate convert

Ending balance of RMB

converted

Including: USD 1713857.17 6.6166 11339907.35

HKD 206694.34 0.8431 174264.00

Including: USD 127695.30 6.6166 844908.72

Other note:

Nil

(2) Explanation on foreign operational entity including as for the major foreign operational entity

disclosed main operation place book-keeping currency and basis for selection; if the book-keeping

currency changed explain reasons

□ Applicable √ Not applicable

VIII. Equity in other entity

1. Equity in subsidiary

(1) Constitute of enterprise group

Subsidiary

Main operation

place

Registered place Business nature

Share-holding ratio

Acquired way

Directly Indirectly

Shenbao

Huacheng

Shenzhen Shenzhen Manufacturing 100.00% Establishment

Wuyuan Ju Fang

Yong

Shangrao Shangrao Manufacturing 100.00% Establishment

Shenbao Sanjing Huizhou Shenzhen Manufacturing 100.00% Establishment

Huizhou Shenbao

Science &

Technology

Huizhou Huizhou Comprehensive 100.00% Establishment

Shenbao

Properties

Shenzhen Shenzhen

Property

management

100.00% Establishment

Shenbao

Industrial &

Trading

Huizhou Shenzhen

Trade and

Commerce

wholesale

100.00% Establishment

Hangzhou Ju

Fang Yong

Hangzhou Hangzhou Comprehensive 100.00% Establishment

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Shenbao

Technology

Center

Shenzhen Shenzhen

Technology

development

consulting and

transfer

100.00% Establishment

Fuhaitang

Ecological

Hangzhou Hangzhou

Planting

production and

sales of tea

100.00% Purchased

Chunshi Network Hangzhou Hangzhou

Trade and

Commerce

wholesale

100.00% Establishment

Shenshenbao

Investment

Shenzhen Shenzhen

Investment

management

100.00% Establishment

Shenshenbao Tea

Culture

Shenzhen Shenzhen

Trade and

Commerce

100.00% Establishment

Jufangyong

Trading

Hangzhou Hangzhou

Trade and

Commerce

wholesale

60.00% Establishment

Yunnan Supply

Chain

Pu’er Pu’er

Trade and

Commerce

wholesale

100.00% Establishment

Huizhou Shenbao

Food

Shenzhen Shenzhen

Trade and

Commerce

wholesale

100.00% Establishment

Shenbao Rock

Tea

Wuyishan City Wuyishan City Manufacturing 100.00% Establishment

Pu’er Tea Trading

Center

Pu’er Pu’er Service 55.00% Establishment

Shenbao

Tea-Shop

Shenzhen Shenzhen

Trade and

Commerce

100.00% Establishment

Fuhaitang

Restaurant

Hangzhou Hangzhou Catering 100.00% Establishment

Explanation on share-holding ratio in subsidiary different from ratio of voting right:

Nil

Basis of the invested unit control by the Company though holds half or below voting rights; and the invested unit without controls by

the Company but with over half voting rights hold:

Nil

Major structured entity included in consolidates statement:

Nil

Basis of termination of agent or consigner:

Nil

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Other note:

Nil

(2) Important non-wholly-owned subsidiary

In RMB

Subsidiary

Share-holding ratio of

minority

Gains/losses attributable

to minority in the Period

Dividend distribute for

minority in the Period

Accumulated equity of

minority at period-end

Pu’er Tea Trading Center 45.00% -973881.94 15565732.56

Explanation on holding ratio different from the voting right ratio for minority shareholders:

Nil

Other note:

Nil

(3) Main finance of the important non-wholly-owned subsidiary

In RMB

Subsidia

Closing balance Opening balance

Current

assets

Non-curr

ent

assets

Total

assets

Current

liability

Non-curr

ent

liability

Total

liability

Current

assets

Non-curr

ent

assets

Total

assets

Current

liability

Non-curr

ent

liability

Total

liability

Pu’er

Tea

Trading

Center

340832

84.09

113238

18.07

454071

02.16

102972

79.80

519305.

108165

85.35

368213

07.26

120288

90.18

488501

97.44

110252

02.83

107029

5.71

120954

98.54

In RMB

Subsidiary

Current Period Last Period

Operation

Income

Net profit

Total

comprehensi

ve income

Cash flow

from

operation

activity

Operation

Income

Net profit

Total

comprehensi

ve income

Cash flow

from

operation

activity

Pu’er Tea

Trading

Center

76410.93 -2164182.09 -2164182.09 -2565380.12 556614.78 -2089534.90 -2089534.90

-31729663.8

Other note:

Nil

2. Equity in joint venture and cooperative enterprise

(1) Important joint venture and cooperative enterprise

Name Main operation Registered place Business nature Share-holding ratio Accounting

深圳市深宝实业股份有限公司 2018 年半年度报告全文

place

Directly Indirectly

treatment on

investment for

joint venture and

cooperative

enterprise

Changzhou

Shenbao Chacang

E-commence Co.

Ltd.

Changzhou City Changzhou City

Manufacturing

industry

33.00% Equity method

Shenzhen

Shenbao Ma Nan

Bio-technology

Co. Ltd.

Huizhou City Huizhou City

Manufacturing

industry

51.00% Equity method

Shenzhen

Shichumingmen

Restaurant

Management Co.Ltd.Shenzhen City Shenzhen City Catering 51.00% Equity method

Guangzhou

Mendao Tea Co.Ltd.Guangzhou Guangzhou Retail industry 45.00% Equity method

Holding shares ratio different from the voting right ratio:

Nil

Has major influence with less 20% voting rights hold or has minor influence with over 20% (20% included) voting rights hold:

Nil

(2) Financial summary for un-important joint venture or cooperative enterprise

In RMB

Closing balance /Amount of this period Opening balance /Amount of last period

Joint venture: -- --

Total numbers measured by share-holding

ratio

-- --

Cooperative enterprise: -- --

Total book value of investments 5063724.67 5248629.66

Total numbers measured by share-holding

ratio

-- --

-- Net profit -531031.57 -159244.04

-- Total comprehensive income -531031.57 -159244.04

Other note

深圳市深宝实业股份有限公司 2018 年半年度报告全文

Nil

(3) Excess losses from joint venture or cooperative enterprise

In RMB

Name

Cumulative un-confirmed

losses

Un-confirmed losses not

recognized in the Period (or net

profit enjoyed in the Period)

Cumulative un-confirmed

losses at period-end

Changzhou Shenbao Chacang

E-commence Co. Ltd

8115908.90 258535.11 8374444.01

Shenzhen Shichumingmen

Restaurant Management Co.Ltd.

2939544.23 355975.69 3295519.92

Other note

Nil

IX. Disclosure of risks relating to financial instruments

Our business operation makes the Company exposed to various financial risks: credit risk liquidity risk and

market risk (mainly refers to exchange risk and interest risk). The general risk management policy of the

Company is to minimize potential negative effects on our financial performance in view of the unforeseeable

financial market.

(1) Credit risk

The credit risk mainly arises from monetary capital trade receivables and other receivables. The management has

established adequate credit policies and continues to monitor exposure of these credit risks.The monetary funds held by the Company are mainly deposited in state-controlled banks and other large and

medium-sized commercial banks and other financial institutions. The management believes that these commercial

banks have high reputation and asset status and have no major credit risk and won't create any major losses

caused by the breach of contract of the opposite side.

For trade receivables and other receivables the Company establishes relevant policies to control exposure of

credit risk. The Company appraises customers’ credit quality based on their financial position possibility to

obtain guarantee from third parties credit history and other factors such as prevailing market conditions and set

corresponding credit terms. Customers’ credit history would be regularly monitored by the Company. For those

customers who have bad credit history the Company will call collection in written form shorten credit term or

cancel credit term to ensure its overall credit risk is under control.Up to 30 June 2018 the top five client’s account receivable takes 30.96% in total account receivable of the

Company (2017: 40.08%)

深圳市深宝实业股份有限公司 2018 年半年度报告全文

The maximum credit risk exposure equals to the carrying value of each financial asset in balance sheet (including

derivative financial instrument). The Company has not provided any guarantee which would otherwise make the

Company exposed to credit risk.

(2) Liquidity risk

Liquidity risk represents the possibility that the Company is not able to acquire sufficient fund to satisfy business

requirement settle debt when it is due and perform other obligation of payment.The finance department continues to monitor capital requirement for short and long term to ensure adequate cash

reserve. In addition it continues to monitor whether borrowing agreement is complied with and seeks for

commitment from major financial institutions for provision of sufficient back-up fund so as to satisfy capital

requirement in a short and long term.

(3) Market risk

1. Exchange risk

The major operation of the Company is located in the PRC and its major operation is settled in Renminbi.However there is also exchange risk in respect of the recognized foreign currency assets and liabilities and future

foreign currency transactions which are mainly denominated in US dollar. Our finance department is responsible

for monitoring scale of foreign currency assets and liabilities and foreign currency transactions to minimize its

exposure to exchange risks. In 2017 and Jan. to Jun. of 2018 the Company did not sign any forward exchange

contract or monetary exchange contract.

2. Interest risk

Our interest risk mainly arises from bank borrowings. Financial liabilities at floating rate expose the Company to

cash flow interest risk and financial liabilities at fixed rate expose the Company to fair value interest risk. The

Company determines the respective proportion of contracts at fixed rate and floating rate based on prevailing

market conditions.The financial department of the Company continuously monitors the interest rate of the Company. The rise in

interest rates will increase the cost of new interest-bearing debts and the interest expense of the Company’s unpaid

interest-bearing debts with floating interest rates management will make timely adjustments based on the latest

market conditions.

3. Price risk

The Company purchases and sells products at market prices therefore it is affected by fluctuation of these prices.深圳市深宝实业股份有限公司 2018 年半年度报告全文

X. Disclosure of fair value

1. Ending fair value of the assets and liabilities measured by fair value

In RMB

Items

Ending fair value

First-order Second-order Third-order Total

I. Sustaining measured by

fair value

-- -- -- --

(I)Financial assets measured

by fair value and with

variation reckoned into

current gains/losses

1173950.05 1173950.05

(2) Equity instruments

investment

1173950.05 1173950.05

II. Non-persistent measure -- -- -- --

2. Recognized basis for the market price sustaining and non-persistent measured by fair value on

first-order

The Company listed the book value of financial assets instruments measured at fair value on December 31 2017 at three levels of

fair value. When the fair value ranks three levels as a whole it is based on the lowest level of the three levels that each important

input value used in the fair value measurement. The three levels are defined as follows:

Level 1: It is the quoted price that has not been adjusted in the active market for the same assets or liabilities that can be obtained on

the measurement date;

Level 2: It is the input value that is directly or indirectly observable for the relevant assets or liabilities except the input value of the

first level;

Input value of level 2 includes: 1) quoted price for similar assets or liabilities in active markets; 2) quoted price for the same or

similar assets or liabilities in inactive markets; 3) other observable input value except quoted price including the observable interest

rates and yield curves implied volatility and credit spreads during the interval in normal quoted price; 4) input value for market

verification etc.Level 3: It is the unobservable input value of related assets or liabilities.XI. Related party and related transactions

1. Parent Company

Parent Company Registration place Business nature Registered capital Ratio of shareholding on the Company

Ratio of voting right

on the Company

Shenzhen

Agricultural

Products Co. Ltd.Shenzhen

Development

established operated

and management the

agricultural

wholesale market

1696964100 19.09% 19.09%

深圳市深宝实业股份有限公司 2018 年半年度报告全文

operates marketing

leasing business etc.

Explanation on parent Company of the enterprise

Nil

Ultimate controller of the Company is Shenzhen Municipal People’s Government State-Owned Assets Supervision and

Administration Commission

Other note:

Nil

2. Subsidiary

Subsidiary of the Company found more in Note VIII-(I) equity in subsidiary

3. Cooperative enterprise and joint venture

Joint Venture of the Company found more in Note VIII-(II) equity in joint Venture

Other cooperative enterprise and joint venture that have related transaction with the Company in the Period or occurred in previous

period

Name Relationship

Shenzhen Shichumingmen Restaurant Management Co. Ltd. Cooperative enterprise

Changzhou Shenbao Chacang E-commence Co. Ltd Cooperative enterprise

Other note:

Nil

4. Other related party

Other related party Relationship with the Enterprise

Shenzhen Investment Management Company Former first largest shareholder of the Company

Shenzhen Investment Holding Co. Ltd. Second largest shareholder of the Company

Shenzhen Nongmei Investment Management Co. Ltd. Former minority shareholder of the second-subsidiary

Other note

Nil

5. Related transaction

(1) Goods purchased and labor service received

Goods purchasing labor service providing and receiving

In RMB

行情