SHENZHEN TELLUS HOLDING CO. LTD
Financial Report
Semi-Annual Report 2019（Un-audited）
August 2019
Financial statements
1. Consolidated balance sheet
2019-06-30
In RMB
Item 2019-6-30 2018-12-31
Current assets:
Monetary funds 225905191.16 169512260.69
Settlement provisions
Capital lent
Trading financial assets 229405600.93
Financial assets measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial assets
Note receivable
Account receivable 113548299.77 86104660.51
Receivable financing
Accounts paid in advance 12493208.24 9112473.27
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Other account receivable 94480706.00 14483208.41
Including: Interest receivable 1031521.11 723407.50
Dividend receivable 81600548.07 232683.74
Buying back the sale of financial
assets
Inventories 16798362.97 12342854.40
Contractual assets
Assets held for sale 85017251.77 85017251.77
Non-current asset due within one
year
Other current assets 42208745.54 332432494.44
Total current assets 819857366.38 709005203.49
Non-current assets:
Loans and payments on behalf
Creditors’ investment
Available-for-sale financial assets 10176617.20
Other Creditors’ investment
Held-to-maturity investment
Long-term account receivable 0.00
Long-term equity investment 153819742.68 224644766.21
Investment in other equity
instrument
10176617.20
Other non-current financial assets
Investment real estate 494163460.21 503922413.70
Fixed assets 109620846.65 112674017.53
Construction in progress 22707214.36 12843571.97
Productive biological asset
Oil and gas asset
Right-of-use assets
Intangible assets 50432780.11 51012282.25
Expense on Research and
Development
Goodwill
Long-term expenses to be
apportioned
7605860.90 6304607.22
Deferred income tax asset 24335615.61 24355086.71
Other non-current asset 18852284.37 3356964.72
Total non-current asset 891714422.09 949290327.51
Total assets 1711571788.47 1658295531.00
Current liabilities:
Short-term loans 143000000.00 143000000.00
Loan from central bank
Capital borrowed
Trading financial liability
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Note payable
Account payable 65355485.14 73365876.09
Accounts received in advance 18558535.20 15897763.97
Selling financial asset of
repurchase
Absorbing deposit and interbank
deposit
Security trading of agency
Security sales of agency
Wage payable 27705350.51 25802670.36
Taxes payable 14942982.03 9377393.57
Other account payable 271599091.34 250489094.47
Including: Interest payable 172792.00 290215.78
Dividend payable
Commission charge and
commission payable
Reinsurance payable
Contractual liability
Liability held for sale
Non-current liabilities due within
one year
Other current liabilities
Total current liabilities 541161444.22 517932798.46
Non-current liabilities:
Insurance contract reserve
Long-term loans 34934887.55
Bonds payable
Including: Preferred stock
Perpetual capital
securities
Lease liability
Long-term account payable 3920160.36 3920160.36
Long-term wages payable
Accrual liability 2225468.76 2225468.76
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities 6145629.12 41080516.67
Total liabilities 547307073.34 559013315.13
Owner’s equity:
Share capital 431058320.00 297281600.00
Other equity instrument
Including: Preferred stock
Perpetual capital
securities
Capital public reserve 431449554.51 565226274.51
Less: Inventory shares
Other comprehensive income 26422.00 26422.00
Reasonable reserve
Surplus public reserve 3139918.14 3139918.14
Provision of general risk
Retained profit 229315271.30 184535322.70
Total owner’ s equity attributable to
parent company
1094989485.95 1050209537.35
Minority interests 69275229.18 49072678.52
Total owner’ s equity 1164264715.13 1099282215.87
Total liabilities and owner’ s equity 1711571788.47 1658295531.00
Legal representative: Fu Chunlong
Accounting Principal: Lou Hong
Accounting Firm’s Principal: Liu Yuhong
2. Balance Sheet of Parent Company
In RMB
Item 2019-6-30 2018-12-31
Current assets:
Monetary funds 112937304.70 88836626.14
Trading financial assets 130000000.00
Financial assets measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial assets
Note receivable
Account receivable 2835572.40 38274.00
Receivable financing
Accounts paid in advance 1075400.00 604800.00
Other account receivable 142618299.45 115782944.37
Including: Interest receivable 1031521.11 723407.50
Dividend receivable 17500000.00 232683.74
Inventories
Contractual assets
Assets held for sale 85017251.77 85017251.77
Non-current assets maturing within
one year
Other current assets 40672891.36 195506958.35
Total current assets 515156719.68 485786854.63
Non-current assets:
Creditors’ investment
Available-for-sale financial assets 10176617.20
Other Creditors’ investment
Held-to-maturity investments
Long-term receivables
Long-term equity investments 839159963.05 836283491.38
Investment in other equity
instrument
10176617.20
Other non-current financial assets
Investment real estate 41069068.40 44820151.69
Fixed assets 14343268.33 14824845.14
Construction in progress 22707214.36 12843571.97
Productive biological assets
Oil and natural gas assets
Right-of-use assets
Intangible assets 244903.90 249731.94
Research and development costs
Goodwill
Long-term deferred expenses 2817811.81 2958817.65
Deferred income tax assets 13810898.54 13830369.64
Other non-current assets
Total non-current assets 944329745.59 935987596.61
Total assets 1459486465.27 1421774451.24
Current liabilities
Short-term borrowings 143000000.00 143000000.00
Trading financial liability
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes payable
Account payable 14000.00 19800.00
Accounts received in advance 1362.52 4742.51
Contractual liability
Wage payable 5678506.73 4858788.51
Taxes payable 1900930.87 331909.65
Other accounts payable 411592996.32 392558990.89
Including: Interest payable 172792.00 232810.41
Dividend payable
Liability held for sale
Non-current liabilities due within
one year
Other current liabilities
Total current liabilities 562187796.44 540774231.56
Non-current liabilities:
Long-term loans
Bonds payable
Including: preferred stock
Perpetual capital
securities
Lease liability
Long-term account payable
Long term employee compensation
payable
Accrued liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 562187796.44 540774231.56
Owners’ equity:
Share capital 431058320.00 297281600.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 428256131.23 562032851.23
Less: Inventory shares
Other comprehensive income
Special reserve
Surplus reserve 3139918.14 3139918.14
Retained profit 34844299.46 18545850.31
Total owner’s equity 897298668.83 881000219.68
Total liabilities and owner’s equity 1459486465.27 1421774451.24
3. Consolidated Profit Statement
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Total operating income 278268739.33 197955081.73
Including: Operating income 278268739.33 197955081.73
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 243457096.79 186909446.32
Including: Operating cost 210494012.42 153739952.11
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
Tax and extras 2968165.06 2922621.92
Sales expense 9358514.29 8337907.27
Administrative expense 16878629.26 19137092.41
R&D expense
Financial expense 3757775.76 2771872.61
Including: Interest
expenses
4765937.06 3682093.53
Interest income 1152054.69 1053302.07
Add: other income 6611.29
Investment income (Loss is
listed with “-”)
16711450.93 17866022.25
Including: Investment income
on associated enterprise and joint venture
10775524.54 12795300.82
The termination of income
recognition for financial assets measured
by amortized cost(Loss is listed with “-”)
Exchange income (Loss is
listed with “-”)
Net exposure hedging income
(Loss is listed with “-”)
Income from change of fair
value (Loss is listed with “-”)
Loss of credit impairment
(Loss is listed with “-”)
101666.14
Losses of devaluation of asset
(Loss is listed with “-”)
-392040.25
Income from assets disposal
(Loss is listed with “-”)
103159.68
III. Operating profit (Loss is listed with
“-”)
51734530.58 28519617.41
Add: Non-operating income 119625.44 34394.39
Less: Non-operating expense 833400.00 99688.31
IV. Total profit (Loss is listed with “-”) 51020756.02 28454323.49
Less: Income tax expense 6038256.76 1887473.77
V. Net profit (Net loss is listed with “-”) 44982499.26 26566849.72
(i) Classify by business continuity
1.continuous operating net profit(net loss listed with ‘-”)
44982499.26 26566849.72
2.termination of net profit (net losslisted with ‘-”)
(ii) Classify by ownership
1.Net profit attributable to owner’s
of parent company
44779948.60 26920279.86
2.Minority shareholders’ gains and
losses
202550.66 -353430.14
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
subsequently to profit of loss
1.Changes of the defined
benefit plans that re-measured
2.Other comprehensive
income under equity method that cannot
be transfer to gain/loss
3.Change of fair value of
investment in other equity instrument
4.Fair value change of
enterprise's credit risk
5. Other
(ii) Other comprehensive income
items which will be reclassified
subsequently to profit or loss
1.Other comprehensive
income under equity method that can
transfer to gain/loss
2.Change of fair value of
other Creditors’ investment
3.gain/loss of fair value
changes for available-for-sale financial
assets
4.Amount of financial assets
re-classify to other comprehensive
income
5.Gain/loss of
held-to-maturity investments that
re-classify to available-for-sale financial
asset
6.Credit impairment
provision for other Creditors’ investment
7.Cash flow hedging reserve
8.Translation differences
arising on translation of foreign currency
financial statements
9.Other
Net after-tax of other comprehensive
income attributable to minority
shareholders
VII. Total comprehensive income 44982499.26 26566849.72
Total comprehensive income
attributable to owners of parent Company
44779948.60 26920279.86
Total comprehensive income
attributable to minority shareholders
202550.66 -353430.14
VIII. Earnings per share:
(i) Basic earnings per share 0.1039 0.0906
(ii) Diluted earnings per share 0.1039 0.0906
Legal representative: Fu Chunlong
Accounting Principal: Lou Hong
Accounting Firm’s Principal: Liu Yuhong
4. Profit Statement of Parent Company
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Operating income 19112054.55 20083496.42
Less: Operating cost 1774557.00 1842326.22
Taxes and surcharge 786231.07 818654.42
Sales expenses
Administration expenses 8507495.18 7986244.31
R&D expenses
Financial expenses 2775796.55 2215649.63
Including: interest
expenses
3610643.70 3031952.64
Interest income 851734.70 840898.34
Add: other income
Investment income (Loss is
listed with “-”)
11794465.45 14956569.69
Including: Investment income
on affiliated Company and joint venture
8376471.67 12154498.47
The termination of
income recognition for financial assets
measured by amortized cost (Loss is
listed with “-”)
Net exposure hedging income
(Loss is listed with “-”)
Changing income of fair
value (Loss is listed with “-”)
Loss of credit impairment
(Loss is listed with “-”)
-18945.66
Losses of devaluation of asset
(Loss is listed with “-”)
-69500.70
Income on disposal of assets
(Loss is listed with “-”)
II. Operating profit (Loss is listed with
“-”)
17043494.54 22107690.83
Add: Non-operating income 19425.71 3130.97
Less: Non-operating expense
III. Total Profit (Loss is listed with “-”) 17062920.25 22110821.80
Less: Income tax 764471.10 19471.10
IV. Net profit (Net loss is listed with
“-”)
16298449.15 22091350.70
(i)continuous operating net profit(net loss listed with ‘-”)
(ii) termination of net profit (netloss 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 of the defined
benefit plans that re-measured
2.Other comprehensive
income under equity method that cannot
be transfer to gain/loss
3.Change of fair value of
investment in other equity instrument
4.Fair value change of
enterprise's credit risk
5. Other
(II) Other comprehensive income
items which will be reclassified
subsequently to profit or loss
1.Other comprehensive
income under equity method that can
transfer to gain/loss
2.Change of fair value of
other Creditors’ investment
3.gain/loss of fair value
changes for available-for-sale financial
assets
4.Amount of financial
assets re-classify to other
comprehensive income
5.Gain/loss of
held-to-maturity investments that
re-classify to available-for-sale financial
asset
6.Credit impairment
provision for other Creditors’
investment
7.Cash flow hedging
reserve
8.Translation differences
arising on translation of foreign
currency financial statements
9.Other
VI. Total comprehensive income 16298449.15 22091350.70
VII. Earnings per share:
(i) Basic earnings per share 0.0378 0.0743
(ii) Diluted earnings per share 0.0378 0.0743
5. Consolidated Cash Flow Statement
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor
services
275395004.65 190354252.94
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
Cash received from interest
commission charge and commission
Net increase of capital borrowed
Net increase of returned business
capital
Net cash received by agents in sale
and purchase of securities
Write-back of tax received
Other cash received concerning
operating activities
30288007.02 14796131.60
Subtotal of cash inflow arising from
operating activities
305683011.67 205150384.54
Cash paid for purchasing
commodities and receiving labor
service
212542573.51 156589699.73
Net increase of customer loans and
advances
Net increase of deposits in central
bank and interbank
Cash paid for original insurance
contract compensation
Net increase of financial assets
held for transaction purposes
Net increase of capital lent
Cash paid for interest commission
charge and commission
Cash paid for bonus of guarantee
slip
Cash paid to/for staff and workers 26091445.73 25206855.48
Taxes paid 9452428.27 10795455.49
Other cash paid concerning
operating activities
30162504.86 40628841.95
Subtotal of cash outflow arising from
operating activities
278248952.37 233220852.65
Net cash flows arising from operating
activities
27434059.30 -28070468.11
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
965735585.20 454400000.00
Cash received from investment
income
5967222.92 4153597.07
Net cash received from disposal of
fixed intangible and other long-term
assets
78500.00
Net cash received from disposal of
subsidiaries and other units
1504125.26
Other cash received concerning
investing activities
20870000.00 46001000.00
Subtotal of cash inflow from investing
activities
992651308.12 506058722.33
Cash paid for purchasing fixed
intangible and other long-term assets
34041146.15 14848244.60
Cash paid for investment 904100000.00 357030000.00
Net increase of mortgaged loans
Net cash received from
subsidiaries and other units obtained
Other cash paid concerning
investing activities
5733400.00
Subtotal of cash outflow from investing
activities
938141146.15 377611644.60
Net cash flows arising from investing
activities
54510161.97 128447077.73
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
20000000.00 9000000.00
Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries
20000000.00 9000000.00
Cash received from loans 158020000.00 25082000.00
Cash received from issuing bonds
Other cash received concerning
financing activities
Subtotal of cash inflow from financing
activities
178020000.00 34082000.00
Cash paid for settling debts 198814887.55 8665112.45
Cash paid for dividend and profit
distributing or interest paying
4756413.09 10030329.79
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
financing activities
Subtotal of cash outflow from financing
activities
203571300.64 18695442.24
Net cash flows arising from financing
activities
-25551300.64 15386557.76
IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate
9.84 70.53
V. Net increase of cash and cash
equivalents
56392930.47 115763237.91
Add: Balance of cash and cash
equivalents at the period -begin
142848120.69 161793218.56
VI. Balance of cash and cash
equivalents at the period -end
199241051.16 277556456.47
6. Cash Flow Statement of Parent Company
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor
services
14820726.01 26539659.00
Write-back of tax received
Other cash received concerning
operating activities
6580839.48 10135679.87
Subtotal of cash inflow arising from
operating activities
21401565.49 36675338.87
Cash paid for purchasing
commodities and receiving labor
service
Cash paid to/for staff and workers 7850812.96 8333154.63
Taxes paid 1157332.91 1125249.42
Other cash paid concerning
operating activities
14812259.31 31499877.17
Subtotal of cash outflow arising from
operating activities
23820405.18 40958281.22
Net cash flows arising from operating
activities
-2418839.69 -4282942.35
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
500000000.00 344000000.00
Cash received from investment
income
3996094.69 3180515.85
Net cash received from disposal of
fixed intangible and other long-term
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
20870000.00 46001000.00
Subtotal of cash inflow from investing
activities
524866094.69 393181515.85
Cash paid for purchasing fixed
intangible and other long-term assets
7675914.33 2710314.68
Cash paid for investment 487000000.00 339971900.00
Net cash received from
subsidiaries and other units obtained
Other cash paid concerning
investing activities
5733400.00
Subtotal of cash outflow from investing
activities
494675914.33 348415614.68
Net cash flows arising from investing
activities
30190180.36 44765901.17
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Cash received from loans 143000000.00 23000000.00
Cash received from issuing bonds
Other cash received concerning
financing activities
Subtotal of cash inflow from financing
activities
143000000.00 23000000.00
Cash paid for settling debts 143000000.00
Cash paid for dividend and profit
distributing or interest paying
3670662.11 9086253.58
Other cash paid concerning
financing activities
Subtotal of cash outflow from financing
activities
146670662.11 9086253.58
Net cash flows arising from financing
activities
-3670662.11 13913746.42
IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate
V. Net increase of cash and cash
equivalents
24100678.56 54396705.24
Add: Balance of cash and cash
equivalents at the period -begin
62172486.14 97991738.05
VI. Balance of cash and cash
equivalents at the period -end
86273164.70 152388443.29
7. Statement of Changes in Owners’ Equity (Consolidated)
Current period
In RMB
Item
Semi-annual of 2019
Owners’ equity attributable to the parent Company
Minori
ty
interes
ts
Total
owners
’
equity
Share
capita
l
Other
equity instrument
Capital
reserve
Less:
Invent
ory
shares
Other
compr
ehensi
ve
incom
e
Reaso
nable
reserve
Surplu
s
reserve
Provisi
on of
genera
l risk
Retain
ed
profit
other
Subtot
al
Prefe
rred
stock
Perpe
tual
capit
al
secur
ities
Other
I. Balance at the
end of the last
year
2972
8160
0.00
56522
6274.
51
26422
.00
3139
918.14
18453
5322.
70
1050
20953
7.35
49072
678.5
2
1099
28221
5.87
Add:
Changes of
accounting
policy
Error
correction of the
last period
Enterprise
combine under
the same
control
Other
II. Balance at
the beginning of
this year
2972
8160
0.00
56522
6274.
51
26422
.00
3139
918.14
18453
5322.
70
1050
20953
7.35
49072
678.5
2
1099
28221
5.87
III. Increase/
Decrease in this
year (Decrease
is listed with
“-”)
1337
7672
0.00
-1337
76720
.00
44779
948.6
0
44779
948.6
0
20202
550.6
6
64982
499.2
6
(i) Total
comprehensive
income
44779
948.6
0
44779
948.6
0
20255
0.66
44982
499.2
6
(ii) Owners’
devoted and
decreased
capital
20000
000.0
0
20000
000.0
0
1.Common
shares invested
by shareholders
20000
000.0
0
20000
000.0
0
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
1337
7672
0.00
-1337
76720
.00
1. Capital
reserves
conversed to
capital (share
capital)
1337
7672
0.00
-1337
76720
.00
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with
surplus reserve
4．Carry-over
retained
earnings from
the defined
benefit plans
5．Carry-over
retained
earnings from
other
comprehensive
income
6. 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
4310
5832
0.00
43144
9554.
51
26422
.00
3139
918.14
22931
5271.
30
1094
98948
5.95
69275
229.1
8
1164
26471
5.13
Last period
In RMB
Item
Semi-annual of 2018
Owners’ equity attributable to the parent Company
Minorit
y
interest
s
Total
owners’
equity
Share
capita
l
Other
equity instrument
Capital
reserve
Less:
Invent
ory
shares
Other
compr
ehensi
ve
incom
Reaso
nable
reserve
Surplu
s
reserve
Provisi
on of
genera
l risk
Retain
ed
profit
other
Subtot
al
Prefe
rred
stock
Perp
etual
capit
Other
al
secur
ities
e
I. Balance at
the end of the
last year
2972
8160
0.00
56522
6274.
51
2952
586.32
97798
595.8
0
96325
9056.
63
34764
517.26
998023
573.89
Add:
Changes of
accounting
policy
Error
correction of
the last period
Enterprise
combine
under the
same control
Other
II. Balance at
the beginning
of this year
2972
8160
0.00
56522
6274.
51
2952
586.32
97798
595.8
0
96325
9056.
63
34764
517.26
998023
573.89
III. Increase/
Decrease in this
year (Decrease
is listed with
“-”)
26920
279.8
6
26920
279.8
6
87388
10.49
35659
090.35
(i) Total
comprehensive
income
26920
279.8
6
26920
279.8
6
-35343
0.14
26566
849.72
(ii) Owners’
devoted and
decreased
capital
90922
40.63
90922
40.63
1.Common
shares invested
by shareholders
90000
00.00
90000
00.00
2. Capital
invested by
holders of other
equity
instruments
3. Amount
reckoned into
owners equity
with
share-based
payment
4. Other
92240.
63
92240.
63
(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
conversed to
capital (share
capital)
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with
surplus reserve
4．Carry-over
retained
earnings
from the
defined
benefit plans
5．Carry-over
retained
earnings from
other
comprehensive
income
6. Other
(V) Reasonable
reserve
1. Withdrawal
in the report
period
2. Usage in the
report period
(VI)Others
IV. Balance at 2972 56522 2952 12471 99017 43503 10336
the end of the
report period
8160
0.00
6274.
51
586.32 8875.
66
9336.
49
327.75 82664.
8. Statement of Changes in Owners’ Equity (Parent Company)
Current period
In RMB
Item
Semi-annual of 2019
Share
capital
Other
equity instrument
Capital
reserve
Less:
Inventor
y shares
Other
compreh
ensive
income
Reasona
ble
reserve
Surplus
reserve
Provisi
on of
general
risk
Other
Total
owners’
equity
Preferr
ed
stock
Perpet
ual
capital
securiti
es
Other
I. Balance at the
end of the last
year
29728
1600.0
0
562032
851.23
313991
8.14
18545
850.31
8810002
19.68
Add:
Changes of
accounting
policy
Error
correction of the
last period
Other
II. Balance at the
beginning of this
year
29728
1600.0
0
562032
851.23
313991
8.14
18545
850.31
8810002
19.68
III. Increase/
Decrease in this
year (Decrease is
listed with “-”)
13377
6720.0
0
-133776
720.00
16298
449.15
1629844
9.15
(i) Total
comprehensive
income
16298
449.15
1629844
9.15
(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
24
owners equity
with share-based
payment
4. Other
(III) Profit
distribution
1. Withdrawal of
surplus reserves
2. Distribution
for owners (or
shareholders)
3. Other
(IV) Carrying
forward internal
owners’ equity
13377
6720.0
0
-133776
720.00
1. Capital
reserves
conversed to
capital (share
capital)
13377
6720.0
0
-133776
720.00
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with surplus
reserve
4．Carry-over
retained earnings
from the defined
benefit plans
5．Carry-over
retained earnings
from other
comprehensive
income
6. 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
43105
8320.0
0
428256
131.23
313991
8.14
34844
299.46
8972986
68.83
Last period
In RMB
Item
Semi-annual of 2018
Share
capital
Other
equity instrument
Capital
reserve
Less:
Inventor
y shares
Other
compre
hensive
income
Reasonab
le reserve
Surplus
reserve
Provision
of general
risk
Other
Total
owners’
equity
Preferr
ed
stock
Perpet
ual
capital
securit
ies
Other
I. Balance at the
end of the last
year
29728
1600.
00
562032
851.23
29525
86.32
-137286
2.05
86089417
5.50
Add:
Changes of
accounting
policy
Error
correction of
the last period
Other
II. Balance at
the beginning
of this year
29728
1600.
00
562032
851.23
29525
86.32
-137286
2.05
86089417
5.50
III. Increase/
Decrease in this
year (Decrease
is listed with
“-”)
2209135
0.70
22091350.
70
(i) Total
comprehensive
income
2209135
0.70
22091350.
70
(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. 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．Carry-over
retained
earnings from
the defined
benefit plans
5．Carry-over
retained
earnings from
other
comprehensive
income
6. 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
29728
1600.
00
562032
851.23
29525
86.32
2071848
8.65
88298552
6.20
Shenzhen Tellus Holding Co. Ltd.Notes to Financial Statements (Jan.-Jun. 2019)
(The unit is RMB unless otherwise specified)
I. Company profiles
1. Company profile
Chinese name of the Company:深圳市特力(集团)股份有限公司
Foreign name of the Company: ShenZhen Tellus Holding Co.Ltd
Registered address of the Company: 3/F Tellus Building Shuibei 2
nd
Road Luohu District Shenzhen
Guangdong Province.Office address of the Company: 15/F Zhonghe Building Shennan Middle Road Futian District Shenzhen
Stock exchange for listing: Shenzhen Stock Exchange
Short form of the stock and Stock code: Tellus-A(000025)Tellus-B(200025)
Registered capital: RMB 297281600
Legal representative: Fu Chunlong
Unified social credit code: 91440300192192210U
2. Business nature operating scope and major products and services of the Company
Business nature: wholesale industry of energy materials and machinery electronic equipment.
Operating scope: Investment in industries (a separate application would be made for specific project);
domestic commerce supply and distribution of materials (excluding those commodities subject to
exclusive operation control and sale); rental and management of independently-owned properties.Operation of the products produced by the Company and its subsidiaries productive materials used by us
and import and export of metal proceeding machinery and general components. The import and export
business is subject to the foreign trade review certificate No.098 (SMGZZDi).Major products and services: sales detection and maintenance of autos and sales of jewelry property
leasing and service.
3. The history of the Company
Shenzhen Testrite Group Co. Ltd. (hereinafter referred to as the Company) previously known as
Shenzhen Machinery Industry Company was incorporated on 10 November 1986. In 1992 as authorized
by the reply relating to Shenzhen Machinery Industry Company transforming to Shenzhen Testrite
Machinery Co. Ltd.(SFBF[1991]1012) issued by the Office of Shenzhen People Government Shenzhen
Machinery Industry Company was transformed to Shenzhen Testrite Machinery Co. Ltd. in 1993 as
authorized by the reply relating to Shenzhen Testrite Machinery Co. Ltd. transforming to a public
company (SFBF[1992]1850) issued by the Office of Shenzhen People Government and the reply relating
to issuance of stocks by Shenzhen Testrite Machinery and Electric Co. Ltd. (SRYFZ[1993]092) issued by
Shenzhen branch of People’s Bank of China Shenzhen Testrite Machinery Co. Ltd. changed to be a
public company and made the initial public offering. The name of the Company changed to Shenzhen
Testrite Machinery and Electric Co. Ltd. with a total share capital of 166880000 shares among which
120900000 shares were converted from the original assets and 45980000 shares were newly issued. The
newly issued shares comprises of 25980000 RMB ordinary shares (A shares) and 20000000 RMB
special shares (B shares). In June 1993 as approved by the reply relating to listing of Shenzhen Testrite
Machinery and Electric Co. Ltd. (SZBF[1993]34) issued by Shenzhen Securities Management Office and
the Listing Grant issued by Shenzhen Stock Exchange(SZSZ[1993]22) Shenzhen Testrite Machinery and
Electric Co. Ltd. was listed on Shenzhen Stock Exchange. On 15 March 1993 being approved by branch
of Shenzhen Special Economic Zone of People’s Bank of China “Shen Ren Yin Fu Zi (1993) No.: 092”
the Company released 25.98 million registered common A shares with RMB 1.00 par value as well as 20
million B shares. And the Company renamed as Shenzhen Tellus Holding Co. Ltd. instead of Shenzhen
Testrite Machinery Co. Ltd. dated 30 June 1994 after approval from the Shenzhen Administration for
Industry and commerce.
Capital structure of the Company while initial public offering:
Type of shares Amount (Share) Ratio (%)
I. Non-tradable shares
Including: State shares 120900000 72.45
Total non-tradable shares 120900000 72.45
II. Outstanding shares
1. Tradable A-Share 25980000 15.57
2. Tradable B-Share 20000000 11.98
Total tradable shares 45980000 27.55
Total 166880000 100.00
All previous changes in the share capital after the public issue of the Company:
(1) Bonus shares in 1993
The Company held the resolution of annual shareholders' general meeting of 1993 distribute dividend of
0.5 Yuan in cash for every 10 shares and 2 more bonus shares to all shareholders based on the Company’s
total share capital of 166880000 shares on 31
st
Dec. 1993 and the Company’s total share capital
changed to 200256000 shares.
On 22
nd
April 1994 Shenzhen Securities Regulatory Office approved the stock dividend scheme of the
Company. After the implementation of the stock dividend program the ownership structure of the
Company became as follows:
Type of shares Amount (Share) Ratio (%)
State-owned corporate shares 145080000 72.45
Domestic public shares 31176000 15.57
RMB special stock (B-Share) 24000000 11.98
Total 200256000 100.00
(2) Bonus shares and capitalization in 1994
On 28
th
May 1995 the shareholders' general meeting of the Group approved the bonus share and
capitalization program proposed by the board of directors. The Company distributes 0.5 bonus shares to
every 10 shares with 0.5 more shares increased for 0.5 Yuan dividend in cash to all shareholders based on
the Company’s total share capital of 200256000 shares on 31
st
Dec. 1994 and the Company’s total share
capital changed to 220281600 shares.
Equity structure of the Company after bonus scheme implemented:
Type of shares Amount (Share) Ratio (%)
State-owned corporate shares 159588000 72.45
Domestic public shares 34293600 15.57
RMB special stock (B-Share) 26400000 11.98
Total 220281600 100.00
(3) The changes of controlling shareholders in 1997
On 31
st
March 1997 in accordance with the approval of “Shenfuhan [1997] No.19” and “Zhengjianhan
[1997] No.5” the People's Government of SZ Municipality and China Securities Regulatory Commission
agreed Shenzhen Investment and Management Company to transfer its 159588000 shares of State shares
to “Shenzhen Special Development Group Co. Ltd” (hereinafter referred to as “SDG”) which took
proportion of 72.45% in the total share capital.
(4) Reform of non-tradable shares in 2006
In December 2005 Shenzhen State-owned Assets Supervision and Administration Commission approved
the non-tradable shares reform program of Shenzhen Tellus (Group) Ltd. which reported by the
Company’s non-tradable shareholders - Shenzhen Special Development Group Co. Ltd.
On 4
th
January 2006 SDG paid 13717440 shares of stock to the shareholders of A shares in circulation as
the consideration of the non-tradable shares reform and SDG held 66.22% of the Company’s total share
capital after the non-tradable shares reform. After the implementation of the non-tradable shares reform
program the ownership structure of the company became as follows:
Type of shares Amount (Share) Ratio (%)
State-owned corporate shares 145870560 66.22
Domestic public shares 48011040 21.80
RMB special stock (B-Share) 26400000 11.98
Total 220281600 100.00
(5) Non-public RMB common stock offer in 2015
In accordance with the provisions of the Company’s 19
th
extraordinary meeting of the 7
th
session of board
of directors on April 21 2014 and the resolutions of the fourth extraordinary general meeting of 2014 on
June 3 2014 the non-public offering of RMB ordinary shares (A shares) that the Company issues to
Shenzhen SDG Co. Ltd. and Shenzhen CMAF Jewelry Industry Investment Company (limited partnership)
should not exceed 77000000 shares of which the par value is 1 Yuan per share the total raised funds are
no more than RMB 646800000.00 Yuan the issuance objects are all subscribed in cash.On May 19 2014 State-owned Assets Supervision and Administration Commission of the People'sGovernment of Shenzhen Municipality issued “Reply to issues related to non-public offering of shares ofShenzhen Test Rite (Group) Co. Ltd. from SASAC of Shenzhen Municipality” (SGZWH No. [2014]237)
which agreed the Company’s plan for non-public offering of shares. The Company’s non-public offering
has obtained the “Approval for non-public offering of shares of Shenzhen Test Rite (Group) Co. Ltd.”
(CSRC License No. [2015]173) approved by China Securities Regulatory Commission which agrees the
Company to issue the non-public offering of RMB ordinary shares (A shares) not exceeding 77000000
new shares. The registered capital is RMB 297281600.00 after change and the company’s ownership
structure is as follows:
Type of shares Amount (Share) Ratio (%)
State-owned corporate shares 151870560 51.09
Domestic public shares 119011040 40.03
RMB special stock (B-Share) 26400000 8.88
Total 297281600 100.00
(6) Reducing stock by controlling shareholder in 2016
In accordance with the Announcement on Reducing Share Holding of Controlling Shareholder the
company disclosed on June 1 2016 from May 4 2016 to May 31 2016 Shenzhen SDG Co. Ltd. totally
reduced 2972537 shares of the company’s unrestricted outstanding shares by concentrated bidding
accounting for 1% of the company’s total share capital. On September 30 2016 the company received a
Letter About Reducing Test Rite A Shares and Completing the Share Holding Reducing Plan from SDG
from September 29 2016 to September 29 2016 SDG totally reduced 2972767 shares of the company’s
unrestricted outstanding shares by concentrated bidding accounting for 1% of the company’s total share
capital. Up to September 29 2016 SDG completed the share holding reducing plan. The company's equity
structure was as follows:
Type of shares Amount (Share) Ratio (%)
State-owned corporate shares 145925256 49.09
Domestic public shares 124956344 42.03
RMB special stock (B-Share) 26400000 8.88
Total 297281600 100.00
(7) Conversion of capital reserve to equity in 2018
On 23
rd
April 2019 the conversion of capital reserve to equity plan proposed by the Board was agreed by
the shareholders general meeting: 4.5 additional shares for each 10 shares held by all shareholders are
being converted by the capital reserve based on total 297281600 shares on 31
st
December 2018 and
share capital of the Company comes to 431058320 in total.The company's equity structure was as follows after completion of the plan:
Type of shares Amount (Share) Ratio (%)
State-owned corporate shares 211591621 49.09
Domestic public shares 181186699 42.03
RMB special stock (B-Share) 38280000 8.88
Total 431058320 100.00
As of 30 June 2019 the Company have 431058300 shares offered in total found more in 29 of Note VI.
4. Consolidation scope of the Company in the year
Totally 15 companies included in the consolidation scope for the first half Year of 2019 found more in
“Equity in other entity” in the Note VIII.
5. Relevant party offering approval reporting of financial statements and date thereof
This financial statement is approved for disclosure by resolution from the Board dated 29 August 2019.II. Basis Preparation of the Financial Statements
1.Preparation base
The financial statements of the Group is prepared based on the going-concern assumption in accordancewith the actually occurred transactions and events the “Accounting standards for Business
Enterprise-Basic rules” (ministry of finance order No. 33 issued ministry of finance No.76 revised) the
“Accounting Standards for Business Enterprises – Basic Standards” and 42 specific accounting standards
promulgated by the ministry of finance on 15
th
Feb. 2006 the subsequently promulgated application
guide and interpretation of the accounting standards for business enterprises and other relevant provisions
(hereinafter collectively referred to as “ASBE”) and China Securities Regulatory Commission“information disclosure regulations No.15 for the companies publicly issuing securities - generalprovisions of financial reports” (2014 Revision).
According to the relevant requirements under the Accounting Standards for Business Enterprises the
Company has adopted the accrual basis as its basis of accounting. Except for certain financial instruments
historical costs have been adopted as the basis of measurement in these Financial Statements. Non-current
assets held for sale are recorded at the lower of fair value less predicted expenses and the original carrying
value when the assets satisfy such conditions for sale. Provisions of corresponding impairment losses are
recognized in respect of any impairment of assets.III. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Groups meet the requirements of the Accounting Standards for
Business Enterprises truthfully and completely reflect the financial situation of the Company on 30
th
June
2019 and the business performance and cash flow in January to June of 2019. In addition the financialstatements of the Company and the Group meet the disclosure requirements of “Preparation Regulation ofInformation Disclosure for Enterprise with Security Issued Publicly No.15—General Rules of FinancialReport” revised by China Securities Regulatory Commission in all significant aspects in 2014.IV. Main accounting policy and estimate
The Company and its subsidiaries determine specific accounting policies and accounting estimation based
on their actual production characteristics according to the relevant requirements under the Accounting
Standards for Business Enterprises. Details relating to significant accounting judgment and estimation
made by the management please refer to note IV(31) “Significant accounting judgment and estimation”.
1. Fiscal period
The accounting period of the Group includes annual and interim accounting interim refers to the reporting
period shorter than a complete fiscal year. The fiscal year of the Group adopts the Gregorian calendar i.e.from 1 January to 31 December for each year.
2. Business cycle
Normal business cycle is the period from purchasing assets used for process by the Company to the cash
and cash equivalent achieved. The Company’s normal business cycle was one-year (12 months) and as the
determining criterion of the liquidity for assets and liabilities.
3. Book-keeping currency
RMB is the currency in the major economic environment of the Company and its sub-company which take
RMB as the book-keeping currency. The Group adopts RMB as the currency when preparing this financial
statement.
4. The accounting treatment of business merger under the common control and the different control.
Business merger refers to the transactions or matters that two or more than two individual enterprises form
a reporting entity. Business merger includes the business merger under the common control and the
different control.
(1) Business merger under the common control
Business merger under the common control means the enterprises participated in the merger are subject to
the ultimate control of the same party or the same multi-party before and after the merger and the control
is not temporary. For the business merger under the same control the party obtains the control rights of
other enterprises participated in the merger on the merger date is the merging party and other enterprises
participated in the merger are the merged party. The merger date refers to the date that the merging party
obtains the control rights of the merged party.The assets and liabilities of the merging party should be measured in accordance with the book value of
the combined party on the combining date. The balance between the book value of the net asset obtained
by the merging party and the book value of the merger consideration (or the total face value of the issued
shares) paid by the merging party and adjust the capital reserve (share premium); for the capital reserve
(share premium) insufficient to reduce adjust the retained earnings.
All direct expenses the merging party spent for the business merger are included in the current profit and
loss when the business merger occurred.
(2) Business merger under the different control
Business merger under the different control means the enterprises participated in the merger are not subject
to the ultimate control of the same party or the same multi-party before and after the merger. For the
business merger under the different control the party obtains the control rights of other enterprises
participated in the merger on the acquisition date is the acquirer and other enterprises participated in the
merger are the acquiree. The acquisition date refers to the date that the acquirer obtains the control rights
of the acquiree.
As for the business merger under the different control the merger costs contain the assets paid by the
acquirer for obtaining the control rights of the acquiree on the acquisition date the liabilities incurred or
assumed and the fair value of the issued equity securities. The intermediary fees such as auditing legal
services and consulting services costs and other administrative costs incurred by the business merger are
charged to the current profit and loss. The transaction costs of the equity securities or debt securities issued
as the combination consideration by the acquirer are reckoned in the initially recognized amount of the
equity securities or debt securities. As for the involved or existing consideration reckoned in the merger
costs in accordance with the fair value on the acquisition date correspondingly adjust the consolidated
goodwill for these needs to be adjusted or possess consideration because new or further evidence appears
for the situations existing on the acquisition date within 12 months after the acquisition date The merger
costs of the acquirer and the net identifiable assets obtained in the merger are reckoned in accordance with
the fair value on the acquisition date. The balance of which the merger costs are more than the net
identifiable assets’ fair value share of the acquiree obtained in the merger on the acquisition date is
recognized as goodwill. For those whose merger costs are less than the net identifiable assets’ fair value
share of the acquiree obtained in the merger recheck the obtained identifiable assets liabilities and the
fair value with contingent liability of the acquiree and the measurement of the merger costs at first while
for those whose merger costs are still less than the net identifiable assets’ fair value share of the acquiree
obtained in the merge after rechecking reckon its the balance in the current profit and loss.
For the deductable temporary difference obtained by the acquirer from the acquiree that is not confirmed
because of not meeting the assets confirmation requirements of the deferred income taxes on the
acquisition date if there is new or further information states that the relevant conditions on the acquisition
date has already existed and the economic interests on the acquisition date brought by the deductable
temporary difference can be realized by the acquiree within 12 months after the acquisition date then
confirm the relevant deferred income tax assets and decrease the goodwill as for the goodwill insufficient
for reducing confirm the difference to be the current profit and loss; except for the above-mentioned cases
reckon those deferred income tax assets related to the business merger in the current profit and loss.
For a business combination not involving enterprises under common control and achieved in stages the
company shall determine whether the business combination shall be regarded as “a bundle of transactions”
in accordance with “Interpretation 5 on Accounting Standards for Business Enterprises” (Cai Kuai 2012No. 19) and clause 51 of ASBE 33- Consolidated Financial Statements relating to judgment standard for “abundle of transactions”(please refer to this Note IV 5(2)). When the business combination is regarded as “abundle of transactions” the accounting treatment for the business combination shall be in accordance with
the previous paragraphs and Note IV 13 “long term equity investment”; when the business combination is
not regarded as “a bundle of transactions” the accounting treatment should be different when comes to
individual financial report and consolidated financial report.In the individual financial statements the initial cost of the investment shall be the sum of the carrying
amount of its previously-held equity interest in the acquiree prior to the acquisition date and the amount of
additional investment made to the acquiree at the acquisition date. Other comprehensive income involved
in the previously-held equity interest of the acquiree prior to the acquisition date shall be subject to
accounting treatment on the same basis adopted by the acquiree in its direct disposal of related assets or
liabilities (which are reclassified as investment income during the period net of the audited changing
corresponding shares resulted from the net liability and net assets re-measured and set by acquiree
according to equity method ).In the consolidate financial statements the previously-held equity interest of the acquire is re-measured
according to the fair value at the acquisition date; the difference between the fair value and the carrying
amount is recognized as investment income for the current period; the amount recognized in other
comprehensive income relating to the previously-held equity interest in the acquire shall be subject to
accounting treatment on the same basis adopted by the acquire in its direct disposal of related assets or
liabilities (which are reclassified as investment income during the period net of the audited changing
corresponding shares resulted from the net liability and net assets re-measured and set by acquire
according to equity method).
5. Preparing method of consolidated financial statements
(1) Determinate principles of range for consolidation financial statement
The scope of consolidated financial statements is determined based on control. Control is the power to
govern the investees so as to obtain benefits from their operating activities by the involvement in the
relevant activities of the investee. The scope of consolidation comprises the Company and all of its
subsidiaries. Subsidiaries are the entities controlled by the Company.Once relevant elements involved in the above definition of control change due to alteration of relevant
facts or situations the Company will make evaluation again.
(2) Preparing method of consolidated financial statements
Since the date of gaining the net assets and the actual control rights of the production and operation
decision-making of the subsidiaries the Group has started to bring it into the consolidation scope; stop to
bring into the consolidation scope since the date of losing the actual control rights. As for the disposed
subsidiaries the business performance and cash flow before the disposal have been suitably included in
the consolidated income statement and the consolidated cash flow statement; as for the subsidiaries
currently disposed; don’t adjust the opening balance of the consolidated balance sheet. For the subsidiaries
increased by the business merger under the different control the business performance and cash flow after
its acquisition date have been suitably included in the consolidated income statement and the consolidated
cash flow statement and don’t adjust the opening balance and correlation date of the combined financial
statement. For the subsidiaries increased by the business merger under the common control the business
performance and cash flow from the beginning period of the merger to its merger date have been suitably
included in the consolidated income statement and the consolidated cash flow statement and adjust the
correlation date of the combined financial statement at the same time.When preparing the consolidated financial statements for the accounting policies adopted by the
subsidiaries and the Company being inconsistent during the accounting time period adjust in accordance
with the accounting policies of the Company and the financial statements of the subsidiaries during the
accounting time period. As for the subsidiaries obtained by the business merger under the different control
adjust the financial statements based on the fair value of the net identifiable assets on the acquisition date.
All significant intra-group current account balances transactions and unrealized profits are offset in the
preparation of consolidated financial statements.The stockholders' equity of the subsidiaries and the shares not belong to the Company in the current net
profit or loss are respectively served as the separate presentation in the stockholders' equity and net profits
of the minority interest and minority interest income in the consolidated financial statements. The shares
of the current net profit or loss of the subsidiaries that belong to the minority interest are listed under net
profit item in the consolidated profit statement as “minority interest income” item. Reduce the minority
interest for those that the subsidiaries’ losses shared by the minority shareholders exceed the shares that
the minority shareholders gained from the owner's equity at the beginning period of this subsidiary.When losing the control rights of the original sub companies because of disposing some equity investment
or other reasons re-measure the residual equity in accordance with its fair value on the date of losing the
control rights. Use the sum of the consideration obtained by disposing the stock rights and the fair value of
the residual equity to minus the balance among the net assets’ shares of the original sub companies
continuously calculated since the acquisition date in accordance with the original shareholding ratio and
then reckon in the current investment income when losing the control rights. The other consolidated
incomes related to the equity investment of the original sub companies It shall be subject to accounting
treatment on the same basis adopted by the acquiree in its direct disposal of related assets or liabilities
during the period when the control ceases (which are reclassified as investment income for the current
period other than changes resulting from re-measuring net liability or net assets under defined benefit plan
of the original subsidiary). Thereafter do the follow-up measurement for this part’s residual equity inaccordance with the relevant provisions of “Accounting Standards for Business Enterprises No.2 -long-term equity investment” or “Accounting Standards for Business Enterprises No.22 - financialinstruments recognition and measure’ refer to the Note IV 13 “long-term equity investment” or the Note
IV 9 “financial instruments” for details.
The company shall determine whether loss of control arising from disposal in a series of transactions
should be regarded as a bundle of transactions. When the economic effects and terms and conditions of the
disposal transactions met one or more of the following situations the transactions shall normally be
accounted for as a bundle of transactions: (i) The transactions are entered into after considering the mutual
consequences of each individual transaction; (ii) The transactions need to be considered as a whole in
order to achieve a deal in commercial sense; (iii) The occurrence of an individual transaction depends on
the occurrence of one or more individual transactions in the series; (iv) The result of an individual
transaction is not economical but it would be economical after taking into account of other transactions in
the series. When the transactions are not regarded as a bundle of transactions the individual transactionsshall be accounted as “disposal of a portion of an interest in a subsidiary which does not lead to loss ofcontrol”) (for details please refer to Note IV 13(2)④) and “disposal of a portion of an interest in asubsidiary which lead to loss of control” (details are set out in previous paragraph). When the transactions
are regarded as a bundle of transactions the transactions shall be accounted as a single disposal transaction;
however the difference between the consideration received from disposal and the share of net assets
disposed in each individual transactions before loss of control shall be recognized as other comprehensive
income and reclassified as profit or loss arising from the loss of control when control is lost.6. Classification of joint arrangement and accounting for joint operations
A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance with
the Company’s rights and obligations under a joint arrangement the Company classifies joint
arrangements into: joint ventures and joint operations. Joint operations refer to a joint arrangement during
which the Company is entitled to relevant assets and obligations of this arrangement. Joint ventures refer
to a joint arrangement during which the Company only is entitled to net assets of this arrangement.Investment in joint venture is accounted for using the equity method accounting to the accounting policies
referred to Note IV 13(2)②“Long-term equity investment accounted for using the equity method”.The Company shall as a joint venture recognize the assets held and obligations assumed solely by the
Company and recognize assets held and obligations assumed jointly by the Company in appropriation to
the share of the Company; recognize revenue from disposal of the share of joint operations of the
Company; recognize fees solely occurred by Company and recognize fees from joint operations in
appropriation to the share of the Company.When the Company as a joint venture invests or sells assets to or purchase assets (the assets dose not
constitute a business the same below) from joint operations the Company shall only recognize the part of
profit or lost from this transaction attributable to other parties of joint operations before these assets are
sold to a third party. In case of an impairment loss incurred on these assets which meets the requirements
as set out in “Accounting Standards for Business Enterprises No. 8 – Asset Impairment” the Company
shall recognize the full amount of this loss in relation to its investment in or sale of assets to joint
operations or recognize the loss according to the Company’s share of commitment in relation to the its
purchase of assets from joint operations.
7. Determination criteria of cash and cash equivalent
Cash and cash equivalent of the Company including stock cash deposits available for payment at any time
and the investment held by the Company with the follow characters obtained at the same time: short term
(expire within 3 months commencing from purchase day) active liquidity easy to convert to
already-known cash and small value change risks.
8. Foreign Currency Operations and translation of foreign currency statements
(1) Basis for translation of foreign currency transactions
The foreign currency transactions of the Company when initially recognized are translated into functional
currency at the prevailing spot exchange rate on the date of exchange (usually refers to the middle rate of
the exchange rate for the day as quoted by the People’s Bank of China the same below) while the
Company’s foreign currency exchange operations and transactions in connection with foreign currency
exchange shall be translated into functional currency at the exchange rate actually adopted.
(2) Basis for translation of foreign currency monetary items and foreign currency non-monetary items
On the balance sheet date foreign currency monetary items shall be translated at the spot exchange rate on
the balance sheet date. All differences are included in the consolidated income statement except for: ①
the differences arising from foreign currency borrowings related to the acquisition or construction of fixed
assets which are qualified for capitalization; and ② except for other carrying amounts of the amortization
costs the differences arising from changes of the foreign currency items available for sale.When preparing consolidated financial statement involving overseas operation in case there is foreign
currency monetary items which substantially constitute net investment in overseas operation the exchange
difference arising from exchange rate fluctuation shall be included in other comprehensive income; and
shall transfer to gains and losses from disposal for the current period when the overseas operation is
disposed of.The foreign currency non-monetary items measured at historical cost shall still be measured by the
functional currency translated at the spot exchange rate on the date of the transaction. Foreign currency
non-monetary items measured at fair value are translated at the spot exchange rate on the date of
determination of the fair value. The difference between the amounts of reporting currency before and after
the translation will be treated as changes in fair value (including changes in foreign exchange rates) and
recognized in profit or loss for the period or recognized as other consolidated income.
(3) Translation of foreign currency financial statement
When preparing consolidated financial statement involving overseas operation in case there is foreign
currency monetary items which substantially constitute net investment in overseas operation the exchange
difference arising from exchange rate fluctuation shall be included in other comprehensive income as
“translation difference of foreign currency statement”; and shall transfer to gains and losses from disposal
for the current period when the overseas operation is disposed of.
Foreign currency financial statement for overseas operation is translated into RMB statement by the
following means: assets and liabilities in balance sheet are translated at the spot rate as of balance sheet
date; owner’s equity items (other than undistributed profit) are translated at the spot rate prevailing on the
date of occurrence. Income and expense items in profit statement are translated at the spot rate prevailing
on the date of transactions. Beginning undistributed profit represents the translated ending undistributed
profit of previous year; ending undistributed profit is allocated and stated as several items upon translation.Upon translation difference between assets liabilities and shareholders’ equity items shall be recorded as
foreign currency financial statement translation difference and recognized as other comprehensive income.In case of disposal of overseas operation where control is lost foreign currency financial statement
translation difference relating to the overseas operation as stated under shareholders’ equity in balance
sheet shall be transferred to current gains and losses of disposal in full or under the proportion it disposes.
Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rate prevailing
on the date of occurrence of cash flow. Influence over cash from exchange rate fluctuation is taken as
adjustment items to separately stated in cash flow statement.The beginning figure and previous year actual figures are stated at the translated figures in previous year
financial statement.If the Company loses control over overseas operation due to disposal of all the owners’ equity or part
equity investment in the overseas operation or other reasons foreign currency financial statement
translation difference relating to the overseas operation attributable to owners’ equity of parent company as
stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of
disposal in full.If the Company reduces equity proportion while not loses control over overseas operation due to disposal
of part equity investment in the overseas operation or other reasons foreign currency financial statement
translation difference relating to the disposed part will be vested to minority interests and will not transfer
to current gains and losses. When disposing part equity interests of overseas operation which is associate
or joint venture foreign currency financial statement translation difference relating to the overseas
operation shall transfer to current disposal gains and losses according to the disposed proportion.
9. Financial instruments
Financial asset or financial liability is recognized when the Company becomes a party to financial
instrument contract.
(1) Classification recognition and measurement of financial assets
According to the business model of managing financial assets and the contractual cash flow characteristics
of financial assets the Company classifies the financial assets into the financial assets measured at
amortized cost the financial assets measured at fair value and whose changes are included in other
comprehensive income and the financial assets measured at fair value and whose changes are included in
current profit or loss.
Financial assets are measured at fair value on initial recognition. For financial assets measured at fair value
and whose changes are included in current profit or loss the related transaction expenses are directly
included in current profit or loss. For other types of financial assets the related transaction costs are
included in the initial recognition amount. For the accounts receivable or notes receivable arising from the
sale of products or the provision of labor services that do not contain or consider the significant financing
components the Company uses the consideration amount that is expected to be received as the initial
recognition amount.
①Financial assets measured at amortized cost
The Company's business model for managing financial assets measured at amortized cost is to collect
contractual cash flows and the contractual cash flow characteristics of such financial assets are consistent
with the basic borrowing and lending arrangements i.e. the cash flows generated on a specific date are
only the payment for the principal and the interest based on the outstanding principal amount. The
Company adopts effective interest method for this type of financial assets which are subsequently
measured at amortized cost the gains or losses arising from amortization or impairment are included in
current profit or loss.
② Financial assets measured at fair value and whose changes are included in other comprehensive income
The Company's business model for managing such financial assets is to target at both the collection of
contractual cash flows and the sale and the contractual cash flow characteristics of such financial assets
are consistent with the basic borrowing and lending arrangements. The Company adopts the fair value
measurement for such financial assets and whose changes are included in the current profit and loss but
the impairment losses or gains exchange gains and losses and interest income calculated by using the
effective interest method are included in current profit or loss.In addition the Company designates part of non-trading equity instrument investments as financial assets
measured at fair value and whose changes are included in other comprehensive income. The Company's
related dividend income of such financial assets is included in the current profit and loss and the changes
in fair value are included in other comprehensive income. When the financial assets are derecognized the
accumulated gains or losses previously included in other comprehensive income are transferred from other
comprehensive income to retained earnings which are not included in current profit or loss.
③Financial assets carried at fair value through profit or loss for the current period
The Company classifies the financial assets except the above financial assets measured at amortized cost
and the above financial assets measured at fair value and whose changes are included in other
comprehensive income into the financial assets measured at fair value and whose changes are included in
current profit or loss. In addition at the time of initial recognition the Company designates part of
financial assets as financial assets measured at fair value and whose changes are included in current profit
or loss in order to eliminate or significantly reduce accounting mismatch. For such financial assets the
Company adopts fair value for subsequent measurement and changes in fair value are included in current
profit and loss.
(2) Classification recognition and measurement of financial liabilities
At initial recognition financial liabilities are classified into financial liabilities measured by fair value with
changes counted into current gains/losses and other financial liabilities. For financial liabilities classified
as fair value through profit or loss relevant transaction costs are directly recognized in profit or loss for
the period. For financial liabilities classified as other categories relevant transaction costs are included in
the amount initially recognized.
① Financial liabilities at fair value through profit or loss for the period
Financial liabilities measured at fair value and whose changes are included in current profits or losses
include the trading financial liabilities (including derivatives belong to financial liabilities) and the
financial liabilities that are designated as fair value in the initial recognition and whose changes are
included in current profit or loss.Trading financial liabilities (including derivatives belong to financial liabilities) are subsequently
measured at fair value in addition to those related to hedge accounting the changes in fair value are
included in current profit or loss.
A financial liability designated to be measured at fair value and whose changes are included in current
profit or loss and of which the changes in fair value arising from changes in the Company's own credit
risk are included in other comprehensive income when the liability is derecognized its accumulated
amount of changes in fair value included in other comprehensive income and the changes arising from its
own credit risk are transferred to retained earnings. The remaining changes in fair value are included in the
current profit and loss. If the effects of changes in the own credit risk of these financial liabilities are
handled as described above but the handling causes or expands the accounting mismatch in the profit or
loss the Company will include all gains or losses of the financial liabilities (including the amount affected
by changes in the credit risk of the enterprise itself) in the current profit and loss.② Other financial liabilities
Other financial liabilities except for the financial liabilities whose transfer of financial assets doesn’t fit
the derecognition condition or continue to be involved in the transferred financial assets and the financial
guarantee contract are classified as financial liabilities measured at amortized cost which takes follow-up
measurement by amortized cost the gains or losses arising from derecognition or amortization are
included in current profit or loss.
(3) Recognition basis and measurement method for transfer of financial assets
As for the financial assets up to the following conditions the recognition termination is available:
①Termination of the contract right to take the cash flow of the financial assets; ② transferred to the
transferring-in part nearly all risk and compensation; ③ all risk and compensation neither transferred nor
retained and with the give-up of the control over the financial assets.
As for financial assets of almost all risk and compensation neither transferred nor retained and without the
give-up of the control over the financial assets it was recognized according to the extension of the
continual entry into the transferred financial assets and relevant liabilities are correspondingly recognized.The continual entry into the transferred financial assets is risk level which the enterprise faces up to due to
the assets changes.
As for the whole transfer of the financial assets up to the recognition termination conditions the book
value of the transferred assets together with the difference between the consideration value and the
accumulative total of the fair value change of the other consolidated income is reckoned into the current
gain/loss.
As for the partial transfer of the financial assets up to the recognition termination conditions the book
value of the transferred assets is diluted on the relative fair value between the terminated part and the
un-terminated part; and reckoned into the current loss/gain is the difference between the sum of the
consideration value and the accumulative sum of the valuation change ought to be diluted into the
recognition termination part but into the other consolidated income and the above diluted book value is
reckoned into the current loss/gain.
For financial assets that are transferred with recourse or endorsement the Group needs to determine
whether the risk and rewards of ownership of the financial asset have been substantially transferred. If the
risk and rewards of ownership of the financial asset have been substantially transferred the financial assets
shall be derecognized. If the risk and rewards of ownership of the financial asset have been retained the
financial assets shall not be derecognized. If the Group neither transfers nor retains substantially all the
risks and rewards of ownership of the financial asset the Group shall assess whether the control over the
financial asset is retained and the financial assets shall be accounted for according to the above
paragraphs.
(4) Termination recognition of financial liabilities
Only is released the whole (or part) of the current duties the termination of the liabilities (or part of it) is
available. The Group (the debtor) signed the agreement with the lender: the original liabilities are replaced
by the bearing of the new liabilities; and the contract terms are fundamentally different of the new
liabilities and the original ones; the termination of the recognition of the original ones is available; and the
recognition of new ones is available.If the Company makes substantial changes to the contractual terms of the original financial liabilities (or a
part thereof) derecognize the original financial liabilities and recognize a new financial liability in
accordance with the revised terms.If the financial liability (or a part thereof) is derecognized the Company includes the difference between
the book value and the consideration paid (including the transferred non-cash assets or liabilities assumed)
in current profit or loss.
(5) Balance-out between the financial assets and liabilities
As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the
financial assets the balance-out sum between the financial assets and liabilities is listed in the balance
sheet. In addition the financial assets and liabilities are listed in the balance sheet without being balanced
out.
(6) Method for determining the fair value of financial assets and financial liabilities
Fair value refers to the price that a market participant can get by selling an asset or has to pay for
transferring a liability in an orderly transaction that occurs on the measurement date. For a financial
instrument having an active market the Company uses the quoted prices in the active market to determine
its fair value. Quotations in an active market refer to prices that are readily available from exchanges
brokers industry associations pricing services etc. and represent the prices of market transactions that
actually occur in an arm's length transaction. If there is no active market for a financial instrument the
Company uses valuation techniques to determine its fair value. Valuation techniques include reference to
prices used in recent market transactions by parties familiar with the situation and through voluntary trade
and reference to current fair values of other financial instruments that are substantially identical
discounted cash flow methods and option pricing models. At the time of valuation the company adopts
valuation techniques that are applicable in the current circumstances and that are sufficiently supported by
data and other information selects the input value with characteristics consistent with the characteristics of
assets or liabilities to be considered in the transactions of the relevant assets or liabilities of the market
participants and uses the relevant observable input values as much as possible. Use unallowable input
values if the relevant observable input values are not available or are not practicable.
(7) Equity instrument
The equity instrument is the contract to prove the holding of the surplus stock of the assets with the
deduction of all liabilities in the Group. The Company issues (including refinancing) repurchases sells or
cancels equity instruments as movement of equity transaction fees relating to equity transactions are
deducted from equity. No fair value change of equity instrument would be recognized by the Company.The Company's equity instruments that distribute dividends during the existence period (including
“interests” generated by instruments classified as equity instruments) are treated as profit distribution.
10. Impairment of financial assets
The financial assets that the Company needs to recognize impairment loss are financial assets measured at
amortized cost debt instruments investment that are measured at fair value and whose changes are
included in other comprehensive income and lease receivables mainly including bills receivable account
receivables other receivables debt investment other debt investments long-term receivables etc. In
addition for contract assets and some financial guarantee contracts the impairment provision is also made
and credit impairment losses are recognized in accordance with the accounting policies described in this
section.
(1) Confirmation method of impairment provision
On the basis of expected credit losses the Company makes provision for impairment and confirms credit
impairment losses for each of the above items in accordance with its applicable expected credit loss
measurement method.
Credit loss refers to the difference between all contractual cash flows that the Company discounts at the
original actual interest rate and are receivable in accordance with contract and all cash flows expected to
be received that is the present value of all cash shortages. Among them for the purchase or source of
financial assets that have suffered credit impairment the Company discounts the financial assets at the
actual interest rate adjusted by credit.The general method for measuring the estimated credit loss is that the Company assesses whether the
credit risk of the financial assets (including other applicable items such as contract assets the same below)
has been significantly increased since the initial recognition on each balance sheet date if the credit risk
has increased significantly after the initial recognition the Company shall measure the loss preparation
according to the amount of expected credit loss in the whole duration; if the credit risk has not increased
significantly since the initial recognition the Company shall measure the loss preparation according to the
amount equivalent to the expected credit loss in the next 12 months. The Company considers all
reasonable and evidenced information including forward-looking information when evaluating expected
credit losses.
For the financial instrument with lower credit risk on the balance sheet date the Company assumes that its
credit risk has not increased significantly since the initial recognition and measures the loss provisions
according to the expected credit losses in the next 12 months.(2) Judging criteria for whether credit risk has increased significantly since initial recognition
If the probability of default of a financial asset within the estimated duration recognized on the balance
sheet is significantly higher than the probability of default within the estimated duration decided at the
initial recognition it indicates that the credit risk of the financial asset is significantly increased. Except
for special circumstances the Company uses the change in default risk occurring within the next 12
months as a reasonable estimate of the change in default risk throughout the duration to determine whether
the credit risk has increased significantly since the initial recognition.
(3) A combined approach to assessing expected credit risk on a portfolio basis
The Company evaluates credit risk individually for financial assets with significantly different credit risks.That is: Account receivable from related party; receivables that are in dispute with counter party or involve
litigation and arbitration; the receivable has a clear indication that the debtor is likely to be unable to meet
the repayment obligations etc.In addition to financial assets that assess credit risk individually the Company classifies financial assets
into different groups based on common risk characteristics and evaluates credit risk on a portfolio basis.
(4) Accounting treatment of financial assets impairment
At the end of the period the Company calculates the estimated credit losses of various financial assets. If
the estimated credit loss is greater than the carrying amount of its current impairment provision the
difference is recognized as the impairment loss; if it is less than the carrying amount of the current
impairment provision the difference is recognized as an impairment gain.
(5) Methods for determining the credit losses of various financial assets
①Notes receivable
The Company measures the losses for the notes receivable in accordance with the expected credit loss
amount for the entire duration of the period. Notes receivable are classified into different combinations
based on their credit risk characteristics:
Item Basis for determining the combination
Bank acceptance The acceptor is the banks with less credit risk
Trade acceptance According to the acceptor’s credit risk division
② Accounts receivable and contract assets
For receivables and contract assets that do not contain significant financing components the Company
measures the loss provision based on the amount of expected credit losses equivalent to the entire duration
of the period.
For receivables contract assets and lease receivables that contain significant financing components the
Company chooses to always measure the loss provisions based on the amount of expected credit losses
during the duration. In addition to accounts receivable and contract assets whose credit risk is assessed
individually they are classified into different combinations based on their credit risk characteristics:
Item Basis for determining the combination
Account age Taking the account age as the characteristic of credit risk
③Other account receivable
The Company measures the impairment loss based on the amount of expected credit losses in the next 12
months or the entire duration based on whether the credit risk of other receivables has increased
significantly since the initial recognition. In addition to the single assessment of credit risk of other
receivable we classified into different combinations based on their credit risk characteristics:
Item Basis for determining the combination
Account age Taking the account age as the characteristic of credit risk
④Long-term account receivable(including the receivables with major financing components contained
and except for the lease receivable)
The Company measures the impairment loss of long-term account receivable based on the amount of
expected credit losses in the next 12 months or the entire duration based on whether the credit risk of other
receivables has increased significantly since the initial recognition. In addition to the single assessment of
credit risk of long-term account receivable we classified into different combinations based on their credit
risk characteristics:
Item Basis for determining the combination
Account age Taking the account age as the characteristic of credit risk
11. Inventories
(1) Classification of inventories
Inventory including raw materials stock commodity and low value consumables etc.
(2) Pricing for inventories delivered and obtained
Inventories are priced at actual costs when acquired. Inventory cost includes procurement cost processing
cost and other costs. Raw materials and inventory commodities are measured under weighted average
method when applied for use and delivered.
(3) Recognition for net realizable value of inventories and withdrawal method for inventory impairment
provision
Net realizable value refers to the amount resulted by inventory’s estimated sale price minor the cost which
is going to occurred till end of the completion estimated sales expenses and relevant taxes in daily
activities. At the time of recognizing the net realizable value for inventory on basis of unambiguous
evidence take the purpose of inventory held and influence of events after the balance sheet date into
account at the same time.On balance sheet date measure of the inventory is made as the lower of their cost and or net realizable values.Provision for inventory depreciation reserve are made while the net realizable values below the cost.Inventory falling price reserves withdrawal usually base on the difference of the cost of single inventory
which over the net realizable value. As for inventories with numerous quantity and low unit price
inventory depreciation provision is made based on categories of inventories.
After inventory impairment provision if any factor rendering write-downs of the inventories has been
eliminated as net realizable value higher than its book value resulted the amounts written down are
recovered and reversed from the inventory depreciation reserve which has been provided for. The reversed
amounts are included into the current profit and loss.
(4) Inventory system was the perpetual inventory system.
(5) Low value consumptions and packing materials are amortized under amortization method when
applied for use.
12. Held-for-sale assets and disposal group
The Company shall classify a non-current asset or disposal group as held for sale if its carrying amount
will be recovered principally through a sale transaction (including a non-monetary asset exchange of
commercial substance the same below) rather than through continuous use and when all of the following
conditions are met: according to the practice of disposing of this type of assets or disposal groups in a
similar transaction a non-current asset or disposal group is available for immediate sale in its present
condition; the Company has made a resolution in respect of a disposal plan and obtained a firm purchase
commitment from a buyer; and the sale is probable to be completed within one year. A disposal group is a
group of assets to be disposed of by sale or otherwise together as a group in a single transaction and
liabilities directly associated with those assets that will be transferred in the transaction. Where goodwill
acquired in a business combination has been allocated to the asset group or groups to which a disposal
group belongs in accordance with the Accounting Standard for Business Enterprises No. 8 - Impairment of
Assets the disposal group shall include the goodwill allocated to it.
When the Company measures initially or remeasures the non-current assets and disposal group classified
as held for sale on the balance sheet date its carrying amount is written down to its fair value less selling
costs if its carrying amount is higher than its fair value less costs to sell. The reduced amount is recognized
as asset impairment loss and charged to current profit or loss with provision made for the impairment of
the held-for-sale assets. With regard to the disposal group the asset impairment loss recognized is offset
by the carrying amount of the goodwill in the disposal group first and then by the carrying amount of each
of the non-current assets in the disposal group which are applicable to the measure requirements under the
Accounting Standard for Business Enterprises No. 42 - Non-current Assets Held For Sale Disposal
Groups and Discontinued Operations (hereinafter referred to as “Held-For-Sale Standard”) pro rata. If on a
subsequent balance sheet date the net amount of the fair value of a held-for-sale disposal group less its
costs to sell increases the amount reduced previously shall be recovered and reversed in the asset
impairment loss recognized on the non-current asset which is applicable to the measurement requirements
of the Held-For-Sale Standard after the non-current asset is classified as held for sale. The reversed amount
is credited to current profit or loss and the carrying amount of each non-current asset (other than goodwill)
which is applicable to the measurement requirements of the Held-For-Sale Standard is increased pro rata
according to the percentage of each non-current asset’s carrying amount. Neither the carrying amount of
goodwill which has been offset nor the asset impairment loss recognized before the non-current asset to
which the measurement requirements of the Held For-Sale Standard is applicable is classified as held for
sale can be reversed.No depreciation or amortization is provided for a non-current asset in the non-current assets or disposal
groups held for sale. Interest and other expenses attributable to the liabilities of a disposal group held for
sale shall continue to be recognized.When a non-current asset or a disposal group does not meet the condition to be classified as held for sale
the Company ceases to classify it as held for sale or removes the non-current asset from the disposal group
held for sale and measures it at the lower of: (1) the carrying amount before it was classified as held for
sale adjusted for any depreciation (or amortization) or impairment that would have been recognized had it
not been classified as held for sale and (2) its recoverable amount.
13. Long term equity investment
Long-term equity investments under this section refer to long-term equity investments in which the
Company has control joint control or significant influence over the investee. Long-term equity investment
without control or joint control or significant influence of the Group is accounted for as available-for-sale
financial assets or financial assets measured at fair value with any change in fair value charged to profit or
loss. Details on its accounting policy please refer to Note 9. “Financial instruments” under section IV.Joint control is the Company’s contractually agreed sharing of control over an arrangement which
relevant activities of such arrangement must be decided by unanimously agreement from parties who share
control. Significant influence is the power of the Company to participate in the financial and operating
policy decisions of an investee but to fail to control or joint control the formulation of such policies
together with other parties.
(1) Determination of investment cost
For a long-term equity investment acquired through a business combination involving enterprises under
common control the initial investment cost of the long-term equity investment shall be the absorbing
party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of
the ultimate controlling party on the date of combination. The difference between the initial cost of the
long-term equity investment and the cash paid non-cash assets transferred as well as the book value of the
debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve is
insufficient to offset the retained earnings shall be adjusted. If the consideration of the merger is satisfied
by issue of equity securities the initial investment cost of the long-term equity investment shall be the
absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial
statements of the ultimate controlling party on the date of combination. With the total face value of the
shares issued as share capital the difference between the initial cost of the long-term equity investment
and total face value of the shares issued shall be used to offset against the capital reserve. If the capital
reserve is insufficient to offset the retained earnings shall be adjusted. For business combination resulted
in an enterprise under common control by acquiring equity of the absorbing party under common control
through a stage-up approach with several transactions these transactions will be judged whether they shall
be treat as “transactions in a basket”. If they belong to “transactions in a basket” these transactions will be
accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket” the
initial investment cost of the long-term equity investment shall be the absorbing party’s share of the
carrying amount of the owner’s equity under the consolidated financial statements of the ultimate
controlling party on the date of combination. The difference between the initial cost of the long-term
equity investment and the aggregate of the carrying amount of the long-term equity investment before
merging and the carrying amount the additional consideration paid for further share acquisition on the date
of combination shall offset against the capital reserve. If the capital reserve is insufficient to offset the
retained earnings shall be adjusted. Other comprehensive income recognized as a result of the previously
held equity investment accounted for using equity method on the date of combination or recognized for
available-for-sale financial assets will not be accounted for.
For a long-term equity investment acquired through a business combination involving enterprises not
under common control the initial investment cost of the long-term equity investment shall be the cost of
combination on the date of acquisition. Cost of combination includes the aggregate fair value of assets
paid by the acquirer liabilities incurred or borne and equity securities issued. For business combination
resulted in an enterprise not under common control by acquiring equity of the acquiree under common
control through a stage-up approach with several transactions these transactions will be judged whether
they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket” thesetransactions will be accounted for a transaction in obtaining control. If they are not belong to “transactionsin a basket” the initial investment cost of the long-term equity investment accounted for using cost
method shall be the aggregate of the carrying amount of equity investment previously held by the acquiree
and the additional investment cost. For previously held equity accounted for using equity method relevant
other comprehensive income will not be accounted for. For previously held equity investment classified as
available-for-sale financial asset the difference between its fair value and carrying amount as well as the
accumulated movement in fair value previously included in the other comprehensive income shall be
transferred to profit or loss for the current period.
Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit legal service and
valuation and consultation fees and other related administration expenses are charged to profit or loss in
the current period at the time such expenses incurred.The long-term equity investment acquired through means other than a business combination shall be
initially measured at its cost. Such cost is depended upon the acquired means of long-term equity
investments which is recognized based on the purchase cost actually paid by the Company in cash the fair
value of equity securities issued by the Group the agreed value of investment contract or agreement the
fair value or original carrying amounts of the non-monetary asset exchange transaction which the asset
will be transferred out of the Company and the fair value of long-term equity investment itself. The costs
taxes and other necessary expenses that are directly attributable to the acquisition of the long-term equity
investments are also included in the investment cost. For additional equity investment made in order to
obtain significant influence or common control over investee without resulted in control the relevant cost
for long-term equity investment shall be the aggregate of fair value of previously held equity investmentand additional investment cost determined according to “Accounting Standard for Business Enterprises No.
22 – Recognition and measurement of Financial Instruments”.
(2) Subsequent measurement and income recognition method
Long term equity investment by which the Company has common control (other than that constituting
joint operation) or significant influence in investee is measured under equity method. In addition long
term equity investment by which the Company is able to exercise control in investee is measured under
cost method in financial statements.①Long term equity investment measured under cost method
Under cost method long term equity investment is measured at initial investment cost and cost of long
term equity investment shall be adjusted in case of adding or recovering investment. Other than the price
actually paid when obtaining investment or cash dividends or distribution declared but not paid in
consideration investment income for the period would be recognized based on the cash dividend or
distribution declared by the investee.② Long-term equity investments accounted for using the equity method
Under the equity method where the initial investment cost of a long-term equity investment exceeds the
investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date no
adjustment shall be made to the initial investment cost. Where the initial investment cost is less than the
investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date the
difference shall be charged to profit or loss for the current period and the cost of the long term equity
investment shall be adjusted accordingly.Under the equity method investment gain and other comprehensive income shall be recognized based on
the Group’s share of the net profits or losses and other comprehensive income made by the investee
respectively. Meanwhile the carrying amount of long-term equity investment shall be adjusted. The
carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or
cash dividend distributed by the investee. In respect of the other movement of net profit or loss other
comprehensive income and profit distribution of investee the carrying value of long-term equity
investment shall be adjusted and included in the capital reserves. The Group shall recognize its share of
the investee’s net profits or losses based on the fair values of the investee’s individual separately
identifiable assets at the time of acquisition after making appropriate adjustments thereto. In the event of
inconformity between the accounting policies and accounting periods of the investee and the Company
the financial statements of the investee shall be adjusted in conformity with the accounting policies and
accounting periods of the Company. Investment gain and other comprehensive income shall be recognized
accordingly. In respect of the transactions between the Group and its associates and joint ventures in which
the assets disposed of or sold are not classified as operation the share of unrealized gain or loss arising
from inter-group transactions shall be eliminated by the portion attributable to the Company. Investment
gain shall be recognized accordingly. However any unrealized loss arising from inter-group transactions
between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the
transferred assets. In the event that the Group disposed of an asset classified as operation to its joint
ventures or associates which resulted in acquisition of long-term equity investment by the investor
without obtaining control the initial investment cost of additional long-term equity investment shall be the
fair value of disposed operation. The difference between initial investment cost and the carrying value of
disposed operation will be fully included in profit or loss for the current period. In the event that the Group
sold an asset classified as operation to its associates or joint ventures the difference between the carrying
value of consideration received and operation shall be fully included in profit or loss for the current period.In the event that the Company acquired an asset which formed an operation from its associates or jointventures relevant transaction shall be accounted for in accordance with “Accounting Standards for
Business Enterprises No. 20 “Business combination”. All profit or loss related to the transaction shall be
accounted for.The Group’s share of net losses of the investee shall be recognized to the extent that the carrying amount
of the long-term equity investment together with any long-term interests that in substance form part of the
investor’s net investment in the investee are reduced to zero. If the Group has to assume additional
obligations the estimated obligation assumed shall be provided for and charged to the profit or loss as
investment loss for the period. Where the investee is making profits in subsequent periods the Group shall
resume recognizing its share of profits after setting off against the share of unrecognized losses.If there is debit variation in relation to the long-term equity investments in associates and joint venture
held prior to first adoption of the Accounting Standards for Business Enterprises by the Group on 1
January 2007 the amounts amortized over the original residual term using the straight-line method is
included in the profit or loss for the period.
③Acquisition of minority interests
Upon the preparation of the consolidated financial statements since acquisition of minority interests
increased of long-term equity investment which was compared to fair value of identifiable net assets
recognized which are measured based on the continuous measurement since the acquisition date (or
combination date) of subsidiaries attributable to the Group calculated according to the proportion of newly
acquired shares the difference of which recognized as adjusted capital surplus capital surplus insufficient
to set off impairment and adjusted retained earnings.
④Disposal of long-term equity investments
In these consolidated financial statements where the parent company disposes of a portion of the long
term equity investments in a subsidiary without a change in control the difference between disposal cost
and disposal of long-term equity investments relative to the net assets of the subsidiary is charged to the
shareholders’ equity. As for the disposal of a portion of the long term equity investments in a subsidiary by
the parent company leading to lose of control over such subsidiary it shall be accounted for under therelevant accounting policies described in Note IV.5-(2) Headed “preparation methods for consolidatedfinancial statements”.On disposal of a long-term equity investment otherwise the difference between the carrying amount of the
investment and the actual consideration paid is recognized through profit or loss in the current period.In respect of long-term equity investment at equity with the remaining equity interest after disposal also
accounted for using equity method other comprehensive income previously under owners’ equity shall be
accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or
liability by investee on pro rata basis at the time of disposal. The owners’ equity recognized for the
movement of other owners’ equity (excluding net profit or loss other comprehensive income and profit
distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis.In respect of long-term equity investment at cost with the remaining equity interest after disposal is also
accounted for at cost other comprehensive income recognized due to measurement at equity or
recognition and measurement for financial instruments prior to obtaining control over investee shall be
accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or
liability by investee and carried forward to current gains and losses on pro rata basis. The movement of
other owners’ equity (excluding net profit or loss other comprehensive income and profit distribution of
investee) shall be transferred to profit or loss for the current period on pro rata basis.In the event of loss of control over investee due to partial disposal of equity investment by the Group in
preparing separate financial statements the remaining equity interest which can apply common control or
impose significant influence over the investee after disposal shall be accounted for using equity method.Such remaining equity interest shall be treated as accounting for using equity method since it is obtained
and adjustment was made accordingly. For remaining equity interest which cannot apply common control
or impose significant influence over the investee after disposal it shall be accounted for using the
recognition and measurement standard of financial instruments. The difference between its fair value and
carrying amount as at the date of losing control shall be included in profit or loss for the current period. In
respect of other comprehensive income recognized using equity method or the recognition and
measurement standard of financial instruments before the Group obtained control over the investee it shall
be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or
liability by investee at the time when the control over investee is lost. Movement of other owners’ equity
(excluding net profit or loss other comprehensive income and profit distribution under net asset of
investee accounted for and recognized using equity method) shall be transferred to profit or loss for the
current period at the time when the control over investee is lost. Of which for the remaining equity
interest after disposal accounted for using equity method other comprehensive income and other owners’
equity shall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for
using the recognition and measurement standard of financial instruments other comprehensive income and
other owners’ equity shall be fully transferred.In the event of loss of common control or significant influence over investee due to partial disposal of
equity investment by the Group the remaining equity interest after disposal shall be accounted for using
the recognition and measurement standard of financial instruments. The difference between its fair value
and carrying amount as at the date of losing common control or significant influence shall be included in
profit or loss for the current period. In respect of other comprehensive income recognized under previous
equity investment using equity method it shall be accounted for in accordance with the same accounting
treatment for direct disposal of relevant asset or liability by investee at the time when equity method was
ceased to be used. Movement of other owners’ equity (excluding net profit or loss other comprehensive
income and profit distribution under net asset of investee accounted for and recognized using equity
method) shall be transferred to profit or loss for the current period at the time when equity method was
ceased to be used.The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions
until the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”
each transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary
and loss of control. The difference between the disposal consideration for each transaction and the
carrying amount of the corresponding long-term equity investment of disposed equity interest before loss
of control shall initially recognized as other comprehensive income and subsequently transferred to profit
or loss arising from loss of control for the current period upon loss of control.
14. Investment real estate
Investment real estate is the real estate that held by the Company for purpose of obtaining rent or capital
appreciation or both purpose received. Investment real estate including rented land use right land use right
held ready for transfer after appreciation and rented buildings etc. In addition for the vacant buildings held
by the Company for the purpose of operating lease if the board of directors (or similar institution) has a
written resolution which clearly states to use them for operating leases and the intention to hold shall no
longer change in the short term they will be reported as investment real estate.The investment real estate shall be measured initially at the cost. The subsequent spending related to the
investment real estate if it is very likely for the related economic interest to flow in and its cost can be
reliably measured shall be included in the cost for the investment real estate. Other subsequent spending
shall be included in the current profit or loss when occurring.The Company applies the cost model for subsequent measurement of investment real estate and
depreciates and amortizes it as per the policy consistent to those for the houses and buildings and land use
right.
For details about the methods for impairment testing of the investment real estate and for accrual of
impairment provision see Note IV 20 “Impairment of long term assets”.Where property for own use or inventory transfers to investment property or investment property transfers
to property for own use carrying value before such transfer shall be taken as book value after such
transfer.In the event that an investment property is converted to an owner-occupied property such property shall
become fixed assets or intangible assets since the date of its conversion. In the event that an
owner-occupied property is converted to real estate held to earn rentals or for capital appreciation such
fixed assets or intangible assets shall become an investment property since the date of its conversion. Upon
the conversion investment property which is measured at cost is accounted for with the carrying value
prior to conversion and investment property which is measured at fair value is accounted for with the fair
value as of the conversion date.If an investment property is disposed of or if it withdraws permanently from use and no economic benefit
will be obtained from the disposal the recognition of it as an investment property shall be terminated.When an investment property is sold transferred retired or damaged the amount of proceeds on disposal
of the property net of the carrying amount and related tax and surcharges is recognized in profit or loss for
the current period.
15. Fixed assets
(1) Recognition criteria of fixed assets
Fixed assets refer to the tangible assets held for the purpose of producing commodities rendering services
renting or business management with useful lives exceeding one fiscal year. Fixed assets are only
recognized when the relevant economic benefits are likely to inflow to the Company and their cost can be
measured reliably. Fixed assets are initially measured at cost taking into account predicted disposal
expenses.
(2) Depreciation method of fixed assets
Accrual depreciation of fixed assets shall be made based on straight-line depreciation within the service
life since the second month when the fixed assets reached its expected condition for use. Service life
estimated net residual value and annual depreciation rate for vary fixed assets are as:
Category Depreciation method
Depreciation term
(year)
Residual rate
(%)
Annual
depreciation rate
(%)
House and buildings Straight-line method 35-40 3 2.43-2.77
Machinery equipment Straight-line method 12 3 8.08
Transportation equipment Straight-line method 7 3 13.86
Electronic equipment Straight-line method 5-7 3 13.86-19.4
Office and other equipment Straight-line method 7 3 13.86
Decoration charge for Straight-line method 10 0 10.00
Category Depreciation method
Depreciation term
(year)
Residual rate
(%)
Annual
depreciation rate
(%)
self-owned houses
Estimated net residual value is the amount obtained from disposal of such fixed assets after estimated
disposal expense deducted on assumption basis of the fixed assets has full estimated service life and in an
anticipating condition of service life terminated.
(3) Impairment test method and accrual of depreciation reserves for fixed assetImpairment test method and accrual of depreciation reserves for fixed asset please found in “20.Impairment of long-term assets” in Note IV.
(4)Recognition and accounting method of fixed assets acquired under finance leases
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
and rewards of asset ownership to the lessee and titles to the assets may or may not eventually be
transferred. For fixed assets acquired under finance leases the basis for provision of leased assets
depreciation is the same as that of self-owned fixed assets. When it can be reasonably determined that the
ownership of a leased asset will be transferred at the end of the lease term it is depreciated over the period
of expected use; otherwise the lease asset is depreciated over the shorter period of the lease term and the
period of expected use.
(5) Others
As for the subsequent expenditure related to fixed assets if the economic benefits related to the fixed
assets is probable to flow into the Company and its cost could be measured reliably then the expenditure
shall be included in costs of the fixed assets and the carrying value of the replaced portion shall be
derecognized. Other subsequent expenditures other than this shall be included in profits or losses of the
period when occurred.
Fixed assets are derecognized when there is no economic benefit arising from disposal or expected use or
disposal of fixed assets. The disposal income from disposal transfer dumping or damage of fixed assets
less its carrying value and related tax expenses shall be recorded in profits or losses of the period.The Company at least re-reviews the use of life projected net residual value and depreciation method of
fixed assets at the end of year. For any change of the above factor it shall be dealt as change of accounting
estimation.
16. Construction-in-progress
Cost of construction-in-progress should recognized by the actual construction costs including vary
construction costs during the period of construction the capitalized borrowing costs prior to the expected
conditions for use and other relevant expenses etc. The construction-in-progress should carry forward as
fixed assets after reached the expected conditions for use.Impairment test method and impairment provision method for the construction-in-progress found in
“20.impairment of long-term assets” in Note IV.
17. Borrowing costs
Borrowing costs include interest amortization of discounts or premiums related to borrowings ancillary
costs incurred in connection with the arrangement of borrowings and exchange differences arising from
foreign currency borrowings. For borrowing costs that are directly attributable to the acquisition
construction or production of a qualifying asset when expenditures for the asset and borrowing costs are
being incurred activities relating to the acquisition construction or production of the asset that are
necessary to prepare the asset for its intended use or sale have commenced such borrowing costs shall be
capitalized as part of the cost of that asset; and capitalization shall discontinue when the qualifying asset is
ready for its intended use or sale. Other borrowing costs shall be recognized as expense in the period in
which they are incurred.Where funds are borrowed for a specific purpose the amount of interest to be capitalized shall be the
actual interest expense incurred on that borrowing for the period less any bank interest earned from
depositing the borrowed funds before being used into banks or any investment income on the temporary
investment of those funds. Where funds are borrowed for general purpose the Group shall determine the
amount of interest to be capitalized on such borrowings by applying a capitalization rate to the weighted
average of the excess amounts of cumulative expenditures on the asset over and above the amounts of
specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest rates
applicable to the general-purpose borrowings.
During the capitalization period exchange differences related to the principal and interest on a specific
purpose borrowing denominated in foreign currency shall be capitalized as part of the cost of the
qualifying asset. Exchange differences related to general-purpose borrowings denominated in foreign
currency shall be included in profit or loss for the current period.Qualifying assets are assets (fixed assets investment property inventories etc) that necessarily take a
substantial period of time for acquisition construction or production to get ready for their intended use or
sale.
Capitalization of borrowing costs shall be suspended during periods in which the acquisition construction
or production of a qualifying asset is interrupted abnormally when the interruption is for a continuous
period of more than 3 months until the acquisition construction or production of the qualifying asset is
resumed.
18. Intangible assets
(1) Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled
by the Group.
An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset
shall be recognized as cost of the intangible asset only if it is probable that economic benefits associated
with the asset will flow to the Group and the cost of the asset can be measured reliably. Other expenditures
on an item asset shall be charged to profit or loss when incurred.Land use right acquired shall normally be recognized as an intangible asset. Self-constructed buildings (e.g.plants) related land use right and the buildings shall be separately accounted for as an intangible asset and
fixed asset. For buildings and structures purchased the purchase consideration shall be allocated among
the land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable
allocation the consideration shall be recognized in full as fixed assets.
An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any
accumulated impairment loss provision and amortized using the straight-line method over its useful life
when the asset is available for use. Intangible assets with indefinite life are not amortized.The Group shall review the useful life of intangible asset with an infinite useful life and the amortization
method applied at period-end. A change in the useful life or amortization method used shall be accounted
for as a change in accounting estimate. For an intangible asset with an indefinite useful life the Group
shall review the useful life of the asset. If there is evidence indicating that the period during which the
intangible assets brings in economic benefits to the Group can be predicted the Group shall estimate the
useful life of that asset and make amortization under the amortization policies applicable to intangible
assets with finite useful life.
(2) Research and development expenditures
Research and development expenditure of the Group was divided into expenses incurred during the
research phase and expenses incurred during the development phase.
Expenses incurred during the research phase are recognized as profit or loss in the current period.
Expenses incurred during the development phase that satisfy the following conditions are recognized as
intangible assets while those that do not satisfy the following conditions are accounted for in the profit or
loss for the current period:
①it is technically feasible that the intangible asset can be used or sold upon completion;
②there is intention to complete the intangible asset for use or sale;
③the intangible asset can produce economic benefits including there is evidence that the products
produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible
asset is for internal use there is evidence that there exists usage for the intangible asset;
④there is sufficient support in terms of technology financial resources and other resources in order to
complete the development of the intangible asset and there is capability to use or sell the intangible asset;
⑤the expenses attributable to the development phase of the intangible asset can be measured reliably.If the expenses incurred during the research phase and the development phase cannot be distinguished
separately all development expenses incurred are accounted for in the profit or loss for the current period.
(3) Intangible assets impairment test method and their impairment provision
The method for impairment test and impairment provision of intangible assets is detailed in Note IV. 20
“Impairment of long-term asset”.
19. Long-term prepaid expenses
Long-term prepaid expenses refer to the general expenses that occurred but shall be amortized over one
year in reporting period and later period. Long-term prepaid expenses shall amortized by straight-line
method in expected benefit period.
20. Impairment of long term assets
The Group will judge if there is any indication of impairment as at the balance sheet date in respect of
long-term investments such as fixed assets construction in progress intangible assets with a finite useful
life investment properties measured at cost and long-term equity investments in subsidiaries joint
controlled entities and associates. If there is any evidence indicating that an asset may be impaired
recoverable amount shall be estimated for impairment test. Goodwill intangible assets with an indefinite
useful life and intangible assets beyond working conditions will be tested for impairment annually
regardless of whether there is any indication of impairment.If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount
the impairment provision will be made according to the difference and recognized as an impairment loss.The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present
value of the future cash flows expected to be derived from the asset. An asset’s fair value is the price in a
sale agreement in an arm’s length transaction. If there is no sale agreement but the asset is traded in an
active market fair value shall be determined based on the bid price. If there is neither sale agreement nor
active market for an asset fair value shall be based on the best available information. Costs of disposal are
expenses attributable to disposal of the asset including legal fee relevant tax and surcharges
transportation fee and direct expenses incurred to prepare the asset for its intended sale. The present value
of the future cash flows expected to be derived from the asset over the course of continued use and final
disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions
for assets impairment shall be made and recognized for the individual asset. If it is not possible to estimate
the recoverable amount of the individual asset the Group shall determine the recoverable amount of the
asset group to which the asset belongs. The asset group is the smallest group of assets capable of
generating cash flows independently.
For the purpose of impairment testing the carrying amount of goodwill presented separately in the
financial statements shall be allocated to the asset groups or group of assets benefiting from synergy of
business combination. If the recoverable amount is less than the carrying amount the Group shall
recognize an impairment loss. The amount of impairment loss shall first reduce the carrying amount of any
goodwill allocated to the asset group or set of asset groups and then reduce the carrying amount of other
assets (other than goodwill) within the asset group or set of asset groups pro rata on the basis of the
carrying amount of each asset.
An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in
respect of the restorable value.
21. Staff remuneration
Staff remuneration includes short term staff remuneration post office benefit dismissal benefit and other
long-term employee benefits among which:
Short term staff remuneration mainly consists of salary bonus allowance and subsidy staff benefits
medical insurance maternity insurance work related injury insurance housing funds labor unit fee and
education fee non-monetary benefits etc. short term staff remuneration actually happened during the
accounting period in which staff provides services to the Company is recognized as liability and shall be
included in current gains and losses or relevant asset cost. Non-monetary benefits are measured at fair
value.Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Defined withdraw
plan mainly includes basic pension insurance unemployment insurance and annuity and the contribution
payable is included in relevant asset cost or current gains and losses when occurs. Our defined benefit plan
mainly relates to retirement benefits. The Company engaged independent actuary to make estimation on
demographic variables and financial variables under predicted accumulative benefits unit method with
unbiased and consistent actuary assumption measure liabilities arising from defined benefit plan and
determine vesting periods of various liabilities. On balance sheet date the Company presented liabilities
arising from defined benefit plan at present value and recorded service costs as profit or loss for the
period.When the Company terminates the employment relationship with employees before the end of the
employment contracts or provides compensation as an offer to encourage employees to accept voluntary
redundancy the Company shall recognize employee compensation liabilities arising from compensation
for staff dismissal and included in profit or loss for the current period when the Company cannot revoke
unilaterally compensation for dismissal due to the cancellation of labor relationship plans and employee
redundant proposals; and the Company recognize cost and expenses related to payment of compensation
for dismissal and restructuring whichever is earlier. However if the compensation for termination of
employment is not expected to be fully paid within 12 months from the reporting period it shall be
accounted for other long-term staff remuneration.
Employee internal retirement plans is to use the same principle to deal with termination benefits. The
group will pay staff salary social insurance and others from the date they stop providing service to their
retire-day. This amount shall be included in the current profits and losses (termination benefits) only when
it meets the projected liabilities confirmation conditions.
For other long-term employee benefits provided by the Company to its employees if satisfy with the
established withdraw plan then the benefits are accounted for under the established withdraw plan
otherwise accounted for under defined benefit scheme.
22. Accrual liability
The obligation pertinent to contingencies shall be recognized as accrual liability when the following
conditions are satisfied simultaneously: (1) That obligation is a current obligation of the Group; (2) It is
likely to cause any economic benefit to flow out of the enterprise as a result of performance of the
obligation; and (3) The amount of the obligation can be measured in a reliable way.
At the balance sheet date considering matters related to risks uncertainties and time value of money and
other factors the expected liabilities are measured in accordance with the best estimate of the necessary
expenses for the performance of the current obligation.If the expenditure required paying all or part of the expected liabilities was compensated by the third party
and the amount of compensation basically can be sure when received it could be recognized as a separate
asset. But the amount of compensation confirmed couldn’t be more than the book value of the estimated
debts.
(1)Contract in loss
Contract in loss is identified when the inevitable cost for performance of the contractual obligation
exceeds the inflow of expected economic benefits. When a contract in loss is identified and the obligations
thereunder are qualified by the aforesaid recognition criterion for contingent liability the difference of
estimated loss under contract over the recognized impairment loss (if any) of the subject matter of the
contract is recognized as projected liability.
(2)Restructuring obligations
For detailed official and publicly announced restructuring plan the direct expenses attributable to the
restructuring are recognized as contingent liabilities provided that the aforesaid recognition criterion for
contingent liability is met. In respect of restructuring obligations which involve disposal of partial business
such obligations may be recognized in relation to restructuring only when the Company undertakes to
dispose partial business namely its execution of binding disposal agreement.
23. Share-based payment
(1) Accounting treatment
A share-based payment is a transaction that grants an equity instrument or assumes a liability determined
on the basis of an equity instrument in order to obtain employees or services from other parties.Share-based payments are divided into equity-settled share-based payments and cash-settled share-based
payments.
① Equity-settled share-based payment
The equity-settled share-based payment in exchange for the services provided by the employees is
measured at the fair value on the date of granting equity instrument to employees. When the amount of the
fair value can only be vested with rights after completing the services in the waiting period or reaching the
stipulated performance based on the optimal estimate of the number of vesting equity instruments in the
waiting period it is calculated by the straight-line method and included in the relevant costs or expenses/ it
is included in the relevant costs or expenses on the grant date when the vesting right is granted
immediately after the grant and the capital reserve is increased accordingly.On each balance sheet date during the waiting period the Company makes the best estimate based on the
follow-up information such as the latest changes in the number of employees with vesting rights and
corrects the number of equity instruments that are expected to be vested. The impact of the above
estimates is included in the current related costs or expenses and the capital reserve is adjusted
accordingly.
For an equity-settled share-based payment in exchange for other parties' services if the fair value of other
parties' services can be reliably measured it is measured at the fair value of other parties' services on the
grant date; if the fair value of other parties' services cannot be reliably measured but the fair value of
equity instrument can be measured reliably it is measured at the fair value of the equity instrument on the
grant date and is included in the relevant cost or expense and increases the shareholders' equity
accordingly.When the fair value of the granted equity instrument cannot be measured reliably it is measured at the
intrinsic value of the equity instrument on the grant date of services each subsequent balance sheet date
and the settlement date and the changes in intrinsic value are included in current profit and loss.
② Cash-settled share-based payment
The cash-settled share-based payment is measured at the fair value of the liabilities determined based on
shares or other equity instruments assumed by the Company. If the vesting right is granted immediately
after the grant it is included in the relevant costs or expenses on the grant date and the liabilities are
increased accordingly;
If the vesting right is available only after completing the services in the waiting period or reaching the
stipulated performance on each balance sheet date of the waiting period based on the optimal estimate of
the vesting right include the services obtained in the current period in costs and expenses according to the
amount of the fair value of the liabilities assumed by the Company and the liabilities are increased
accordingly.The fair value of the liability is re-measured at each balance sheet date and settlement date before the
settlement of related liabilities and its changes are included in current profit and loss.
(2) Relevant accounting treatment of modifying and terminating the share-based payment plan
When the Company modifies the share-based payment plan if the modification increases the fair value of
the equity instruments granted the increase in obtained services is recognized accordingly based on the
increase in the fair value of equity instruments. The increase in the fair value of equity instruments refers
to the difference between the fair value of the equity instruments on the modification date before and after
the modification. If the modification reduces the total fair value of the share-based payment or adopts
other methods that are not conducive to the employees the services obtained will continue to be accounted
for as if the change has never occurred unless the Company cancels some or all of the granted equity
instruments
During the waiting period if the granted equity instrument is cancelled the Company will cancel the
granted equity instrument as an accelerated exercise and the amount to be recognized in the remaining
waiting period will be immediately included in the current profit and loss and the capital reserve will be
recognized. If the employee or other party can choose to meet the non-vesting conditions but fails to meet
during the waiting period the Company will treat it as a cancellation of the granted equity instrument.
(3) Accounting treatment involving share-based payment transactions between the Company and the
shareholders or actual controllers of the Company
In respect of the share-based payment transaction between the Company and the shareholders or actual
controllers of the Company if one of the settlement enterprise and the service receiving enterprise is
within the consolidation scope of the Company and the other is outside the consolidation scope of the
Company the following rules are used for accounting treatment in the consolidated financial statements of
the Company:
① If the settlement enterprise settles by its own equity instrument the share-based payment transaction
shall be treated as the equity-settled share-based payment; otherwise it shall be treated as a cash-settled
share-based payment.If the settlement enterprise is an investor of the service receiving enterprise it shall be recognized as the
long-term equity investment of the service receiving enterprise according to the fair value of the equity
instrument at the grant date or the fair value of the liability to be assumed and the capital reserve (other
capital reserve) or liabilities shall be recognized at the same time.② If the service receiving enterprise has no settlement obligation or grants its own equity instruments to
its employees the share-based payment transaction shall be treated as equity-settled share-based payment;
if the service receiving enterprise has settlement obligation and the equity instrument it grants to the
employees is not its own equity instrument the share-based payment transaction shall be treated as a
cash-settled share-based payment.
For an share-based payment transaction between the enterprises within the consolidation scope of the
Company if the service receiving enterprise and the settlement enterprise are not the same enterprise the
share-based payment transaction shall be respectively recognized and measured in the individual financial
statements of the service receiving enterprise and the settlement enterprise which is handled according to
above principles.
24. Other financial instruments such as preferred stocks and perpetual bonds
(1) Distinction between perpetual bonds and preferred stocks
Financial instruments such as perpetual bonds and preferred stocks issued by the Company are used as
equity instruments when meet the following conditions at the same time:
①The financial instrument does not include contractual obligations to deliver cash or other financial assets
to other parties or to exchange financial assets or financial liabilities with other parties under potentially
adverse conditions;
② If the financial instrument has to use or can use the enterprise’s own equity instruments for settlement
and if the financial instrument is a non-derivative instrument it does not include the contractual obligation
to deliver its own equity instruments with variable amount for settlement; if the financial instrument is a
derivative instrument then the Company can only settle the financial instrument by exchanging a fixed
amount of cash or other financial assets with a fixed amount of its own equity instruments.
Except for financial instruments that can be classified as equity instruments under the above conditions
other financial instruments issued by the Company should be classified as financial liabilities.If the financial instruments issued by the Company are compound financial instruments they are
recognized as a liability based on the fair value of the liability component and are recognized as “otherequity instruments” based on the amount actually received after deducting the fair value of the liability
component. The transaction costs incurred in issuing a compound financial instrument are apportioned
between the liability component and the equity component in proportion to their respective total issue
price.
(2) Accounting treatment methods of perpetual bonds and preferred stocks
Financial instruments such as perpetual bonds and preferred stocks classified as financial liabilities their
related interest dividends gains or losses and gains or losses arising from redemption or refinancing are
included in the current profit and loss except for borrowing costs eligible for capitalization (see Note IV
17 “Borrowing Costs”).
When financial instruments such as perpetual bonds and preferred stocks classified as equity instruments
are issued (including refinancing) repurchased sold or cancelled the Company shall treat as a change in
equity and related transaction costs are also deducted from equity. The Company treats the allocation to
the holders of equity instruments as a profit distribution.The Company does not recognize changes in the fair value of equity instruments.
25. Income
(1) Income of commodities sales
When the transfer of significant risks and rewards of ownership of the goods to the buyer is done when
the right of management usually associated with ownership is not reserved when we didn’t effectively
control the goods sold the amount of revenue can be measured reliably. The associated economic benefits
are likely to flow into the enterprise. And the related costs incurred or to be incurred can be measured in a
reliable way. Thus we realize sales income.The company engages in sales of cars confirming income after the vehicle delivery to customers
according to agreement payment received or the rights to receive payment.Revenue from sale of jewelry of the Company is classified into retail revenue and wholesale revenue
based on way of sales. Retail revenue is recognized upon the commodity is delivered to consumers with
receipt of goods payment. Wholesale revenue is recognized when the commodity is delivered to customers
signed by the customers for receipt of the goods and the Company receives goods payment or the voucher
to ask for the goods payment.
(2) Income from providing labor
On condition that provision of services trade results can be reliably estimated we confirm income from
providing labor on the balance sheet date according to the percentage of completion. The completion
progress of a labor transaction is determined by the measurement of the work done/ the proportion of the
provided labor service in the total labor service to be provided/ the proportion of the labor cost incurred in
the estimated total cost.The results of labor transaction provided can be estimated reliably only when simultaneously: ①the
amount of revenue can be measured reliably; ②the economic interests are likely to flow into the enterprise;
③the degree of completion can be reliably determined; ④cost occurred and to be occurred can be reliably
measured.If the service transaction results couldn’t be able to reliably estimated labor income will be calculated
according to according to amount of labor costs which has occurred and is expected to be t compensated
and labor costs occurred would be included as expenses of the current period. Labor cost occurred which
cannot be compensated will not be included as revenue labor cost incurred are reckoned into current
gain/loss.When the contract or agreement signed by the Company with other enterprises includes the sale of goods
and the provision of labor services if the sale of goods and the provision of labor services can be
distinguished and separately measured the sales of goods and the provision of labor services are handled
separately; If the sale of goods and the provision of labor services cannot be distinguished or if they can
be distinguished but cannot be separately measured the contract is all treated as a sales item.
(3) Use fee income
According to the relevant contract or agreement revenue is recognized in accordance with the accrual
basis.
(4) Interest income
Interest income is confirmed in accordance with time and actual interest others make use of the monetary
capital of the group
26. Government subsidy
A government subsidy means the monetary or non-monetary assets obtained free by the Group from the
government not including the capital and owners’ equity shares invested by government as a investor.Government subsidies consist of the government subsidies pertinent to assets and government subsidies
pertinent to income. Government grant obtained by the Company for the purpose of constructing or
otherwise forming long term assets is recognized as government grant related to assets and other
government grants are recognized as those related to income. If government document fails to identify
specific grantee government grants will be categorized into government grants related to income or assets
respectively under the below method: (1) in case government document indicates the specific project
applicable to the grant such categorization shall be made based on the respective proportion of
expenditures to form assets or be recorded as expenses in budget for the specific project. The allocation
proportion will be reviewed on each balance sheet date and is subject to necessary alteration; (2) in case
government document only indicate general purpose of such grant instead of specific project the grant
shall be viewed as government grant related to income. The government subsidy with monetary assets
concerned should be measured by the actual received or receivable amount while non-monetary assets
government subsidy measured by fair value; if without realizable fair value obtained measured by
nominal amount instead. The government subsidy with nominal amount measured should reckon into
current gains and losses.Government grants are generally recognized when received and measured at the amount actually received
but are measured at the amount likely to be received when there is conclusive evidence at the end of the
accounting period that the Group will meet related requirements of such grants and will be able to receive
the grants. The government grants so measured should also satisfy the following conditions: (1) the
amount of the grants be confirmed with competent authorities in written form or reasonably deduced from
related requirements under financial fund management measures officially released without material
uncertainties; (2) the grants be given based on financial support projects and fund management policies
officially published and voluntarily disclosed by local financial authorities in accordance with the
requirements under disclosure of government information where such policies should be open to any
company satisfying conditions required and not specifically for certain companies; (3) the date of payment
be specified in related documents and the payment thereof be covered by corresponding budget to ensure
such grants will be paid on time as specified; and (4)other relevant conditions which shall be met based on
the specific situations of the Company and the subject matter.
Asset-related government subsidies are recognized as deferred income and accounted into the current
gains/losses equally within service life for the relevant assets. The government subsidies pertinent to
incomes which are used for compensating the related future expenses or losses of the enterprise shall be
recognized as deferred income and should reckoned into current gains/losses in period of when relevant
expenses are recognized; if used for compensating the occurred relevant expenses and losses reckoned
into current gains/losses directly.Government subsidies related to assets and revenue is included at the same time which are classified into
different sections and respectively for accounting treatment; for the other indistinguishable sections they
are all classified into the government subsidies related to revenue as a whole.The government subsidies related to daily activities of the company is classified into other revenue
according to the economic business substance; the government subsidies not related to daily activities is
classified into nonbusiness revenue.
As for the recognized government subsidy needs to return if there has relevant balance of deferred
incomes relevant book balance of the deferred income should be written down and the exceeded part
should included in the current gains/losses; if they belongs to other conditions reckoned into current
gains/losses directly.
27. Deferred income tax assets and deferred income tax liabilities
(1) The current income tax
At the balance sheet date for the current income tax liabilities (or assets) arising during the current and
previous periods current income tax should be calculated in line with expected payable (or return) income
tax amount in accordance with the provisions of the tax law. Calculation of the current income tax
expenses on the basis of the computation of taxable income is adjusted to the pre-tax accounting profit
according to the relevant provisions of the tax law.
(2) The deferred income tax assets and deferred income tax liabilities
As for the balance between the book value of some assets and liabilities and the tax base and those
temporary difference arisen from balance which is not recognized as an asset or liability but whose
difference between the book value and tax base could be calculable in accordance with the provisions of
the tax law we adopt debt method of balance sheet to recognize deferred income tax assets and deferred
income tax liabilities.
As for taxable temporary differences which is arisen from initial recognition of goodwill and those related
to initial recognition of assets or liabilities arisen during trade with neither merging nor those which won’t
affect the accounting profit and taxable income (or deductible loss) related deferred tax liabilities will not
be confirmed. In addition as for temporary differences taxable related to subsidiary companies associated
enterprises and joint venture investment if the group is able to control the reversal time of the temporary
difference and the temporary differences in the foreseeable future probably will not be reversed we also
could not confirm the deferred income tax liabilities. In addition to the above condition the group could
confirm all the other deferred income tax liabilities arising from taxable temporary differences.
As for deductible temporary differences related to initial reorganization of asset or liability arising from
trades with neither merge nor those which won’t affect the accounting profit and taxable income (or
deductible loss) we’ll not recognize relevant deferred income tax assets. In addition as for deductible
temporary differences related to subsidiary companies associated enterprises and joint venture investment
if the temporary differences in the foreseeable future probably will not be reversed we also could not
confirm the deferred income tax assets. In addition to the above condition the group could confirm all the
other deferred income tax assets arising from deductible temporary differences within benchmark of
income of taxable deductible temporary differences.
As for deductible loss or tax deduction which to be reversed in the following years we confirm the
corresponding deferred income tax assets within benchmark of future taxable income to be likely deducted
for deductible loss and tax deduction.On the balance sheet date the deferred income tax assets and liabilities are measured according to the
provisions of the tax law in accordance with the applicable tax rate during related assets to be expected
recovery or related liabilities to be paid off.
At the balance sheet date we recheck the book value of deferred income tax assets. If in future it is
unlikely to obtain adequate taxable income to offset the benefit of the deferred income tax asset then we
write down the book value of deferred income tax assets. When it is probable to obtain adequate taxable
income amount written down shall be reversed.
(3) The income tax expenses
The income tax expense included the current income tax and deferred income tax.In addition to trades and current income tax and deferred income tax related to projects which are included
in other comprehensive income or directly included in owners’ interest as well as the book value whose
goodwill arranged in line with deferred income tax arising from enterprises combination all the other
current income tax and deferred income tax expenses or income will be included in current profit and loss.
(4) Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to
realize the assets and settle the liabilities simultaneously current tax assets and current tax liabilities are
offset and presented on a net basis.When the Group has a legal right to settle current tax assets and liabilities on a net basis and deferred tax
assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the
same taxable entity or different taxable entities which intend either to settle current tax assets and
liabilities on a net basis or to realize the assets and liabilities simultaneously in each future period in
which significant amounts of deferred tax assets or liabilities are expected to be reversed deferred tax
assets and deferred tax liabilities are offset and presented on a net basis.
28. Leasing
Finance lease transfers substantially all the risks and rewards related to the ownership of an asset. Its
ownership may eventually transfer also may not. While all the other leases are classified as operating
leases.
(1) The Company keeps record of lease business as lessee
Rental expense of operating lease is included in the relevant asset costs or current profits and losses
through the straight-line method during every period. Initial direct costs shall be included in profit or loss
for the current period. Or rent to the actual shall be included in the current profits and losses.
(2) The Company keeps record of lease business as lessor
Rental income of operating lease is included in the relevant asset costs or current profits and losses
through the straight-line method during every period. The larger amount of initial direct costs shall be
capitalized when it is created and shall be included in the current profits and losses during the lease period
in accordance with same basic as the confirmed amount by stages. The other small amount of initial direct
costs shall be included in the current profits and losses when it’s created. Or rent to the actual shall be
included in the current profits and losses.
(3) Financing lease business with the Group recorded as lessee
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. In addition initial direct costs attributable to leased items
incurred during the process of lease negotiation and signing of lease agreement shall be included in the
value of leased assets. The balance of minimum lease payment after deducting unrecognized financing
expenses shall be accounted for long-term liability and long-term liability due within one year.Unrecognized financing expenses shall be recognized as financing expenses for the current period using
effective interest method during the leasing period. Contingent rent shall be included in profit or loss for
the current period at the time it incurred.
(4) Financing lease business with the Group recorded as lessor
On the beginning date of the lease the entry value of lease receivable shall be the aggregate of minimum
lease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall be
recorded. The aggregate of minimum lease receivable initial direct costs and unsecured balance and the
different between their present value shall be recognized as unrealized financing income. The balance of
lease receivable after deducting unrecognized financing income shall be accounted for long-term debt and
long-term debt due within one year.Unrecognized financing income shall be recognized as financing income for the current period using
effective interest method during the leasing period. Contingent rent shall be included in profit or loss for
the current period at the time it incurred.
29. Other significant accounting policies and accounting estimation
(1) Discontinued operation
Discontinued operation refers to the operation disposed or classified as held-for-sale by the Company and
presented separately under operation segments and financial statements which has fulfilled one of the
following criteria: ① it represents an independent key operation or key operating region; ② it is part of
the proposed disposal plan on an independent key operation or proposed disposal in key operating region;
or ③ it only establishes for acquisition of subsidiary through disposal.
Accounting for discontinued operation is set out in note IV 12 “classified as assets or assets group held forsale”.
30. Changes of major accounting policies and accounting estimation
(1) Changes of accounting policy
①Changes in accounting policies for execution of the new financial instrument standards
On March 31 2017 the Ministry of Finance issued the Accounting Standards for Business Enterprises No.
22 - Recognition and Measurement of Financial Instruments (Revised in 2017) (CK [2017] No. 7) and
Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets (Revised in 2017)
(CK [2017] No. 8) Accounting Standards for Business Enterprises No. 24 - Hedge Accounting (Revised in
2017) (CK [2017] No. 9) respectively and issued Accounting Standards for Business Enterprises No. 37 –
Financial Instruments Presentation (Revised in 2017) (CK [2017] No. 14) on May 2 2017 (the
above-mentioned standards are collectively referred to as the “New Financial Instruments Standards”)
domestic listed companies are required to implement the new financial instrument standards since 1 Jan.
2019.
Approved by the resolution of 2
nd
session of 9
th
BOD dated 1 April 2019 the Company will implement the
above mentioned new financial instrument standards since 1 Jan. 2019.All recognized financial assets under the new financial instrument standard are subsequently measured at
amortized cost or fair value. On the implementation date of the new financial instrument standard the
business model of managing financial assets is evaluated based on the facts and circumstances of the
Company on the day and the contractual cash flow characteristics of the financial assets are evaluated
based on the facts and circumstances at the initial recognition of the financial assets. Financial assets are
classified into three categories: those measured at amortized cost those measured at fair value and the
changes are included in other comprehensive income and those measured at fair value and the changes are
included in current profit or loss. Among them for the equity instrument investment measured at fair value
and whose changes are included in other comprehensive income when the financial asset is derecognized
the accumulated gain or loss previously included in other comprehensive income shall be transferred from
other comprehensive income to retained earnings but not included in the current profit and loss.Under the new financial instrument standard the Company makes the impairment provision and confirms
the credit impairment losses for financial assets measured at amortized cost debt instrument investments
measured at fair value and whose changes are included in other comprehensive income lease receivables
contract assets and the financial guarantee contracts based on expected credit losses.The Company traces the application of the new financial instrument standards but the Company chooses
not to restate the classification and measurement (including impairment) involving the inconsistency
between the previous comparative financial statement data and the new financial instrument standards.Therefore for the cumulative impact of the implementation of the standard for the first time the Company
adjusted the retained earnings or other comprehensive income at the beginning of 2019 and the amount of
other related items in the financial statements and the financial statements for 2018 didn’t restate it.The main changes and impacts of the implementation of the new financial instruments standards on the
Company are as follows:
Some non-trading equity investments held by the Company on or after January 1 2019 are designated as
financial assets measured at fair value and whose changes are included in other comprehensive income
and are presented as other equity instrument investments.
A- Category and measuring contrast of the financial instrument after/before the date when initially
implementation
a- impact on consolidate financial statement
2018-12-31(before change) 2019-1-1(after change)
Item Measurement
category
Book value Item Measurement
category
Book value
Available-for-sale Measured by 10176617.20 Other equity Measured by fair 10176617.20
2018-12-31(before change) 2019-1-1(after change)
Item Measurement
category
Book value Item Measurement
category
Book value
financial assets cost (equity
instrument)
instrument
investment
value and with its
variation reckoned
into other
comprehensive
income
Other current
assets
Measured by
fair value and
with its
variation
reckoned into
current
gain/loss
330400000.00
Trading
financial assets
Measured by fair
value and with its
variation reckoned
into current
gain/loss
330400000.00
b-impact on financial statement of the Company
2018-12-31(before change) 2019-1-1(after change)
Item Measurement
category
Book value Item Measurement
category
Book value
Available-for-sale
financial assets
Measured by
cost (equity
instrument)
10176617.20
Other equity
instrument
investment
Measured by fair
value and with its
variation
reckoned into
other
comprehensive
income
10176617.20
Other current
assets
Measured by
fair value and
with its
variation
reckoned into
current
gain/loss
195000000.00
Trading
financial assets
Measured by fair
value and with its
variation
reckoned into
current gain/loss
195000000.00
B- On first implementation day adjustment statement of the category and measurement for former
financial instrument and those adjusted with new financial instrument standards
a- impact on consolidate statement
Item
2018-12-31(befor
e change)
Re-classified Re-measured
2019-1-1(after
change)
Measured by fair value and with its
Item
2018-12-31(befor
e change)
Re-classified Re-measured
2019-1-1(after
change)
variation reckoned into other
comprehensive income:
Available-for-sale financial assets
(former standard)
10176617.20
Less: transfer to other equity
instrument investment
10176617.20
Balance under new financial instrument
standard
Other equity instrument investment ——
Add: transfer in from available-for-sale
financial assets (former standard)
10176617.20 10176617.20
Balance under new financial instrument
standard
10176617.20
Measured by fair value and with its
variation reckoned into current
gain/loss:
Other current assets 332432494.44
Less: transfer to trading financial assets 330400000.00
Balance under new financial instrument
standard
2032494.44
Trading financial assets ——
Add: transfer-in from other current
assets
330400000.00
Balance under new financial instrument
standard
330400000.00
b-impact on financial statement of the Company
Item
2018-12-31(befor
e change)
Re-classified Re-measured
2019-1-1(after
change)
Measured by fair value and with its
variation reckoned into other
comprehensive income:
Available-for-sale financial assets
(former standard)
10176617.20
Less: transfer to other equity
instrument investment
10176617.20
Balance under new financial instrument
standard
Other equity instrument investment ——
Add: transfer in from available-for-sale
financial assets (former standard)
10176617.20 10176617.20
Balance under new financial instrument
standard
10176617.20
Measured by fair value and with its
variation reckoned into current
gain/loss:
Other current assets 195506958.35
Less: transfer to trading financial assets 195000000.00
Balance under new financial instrument
standard
506958.35
Trading financial assets ——
Add: transfer-in from other current
assets
195000000.00
Item
2018-12-31(befor
e change)
Re-classified Re-measured
2019-1-1(after
change)
Balance under new financial instrument
standard
195000000.00
C- On first implementation day adjustment on the impairment provision for financial assets
a- impact on consolidate statement
Measurement category
2018-12-31(before
change)
Re-classified Re-measured
2019-1-1(after
change)
Amortized cost:
Impairment of
held-to-maturity investment
20000.00 20000.00
Measured by fair value and
with its variation reckoned
into other comprehensive
income(equity instrument) :
Impairment provision for
other creditors’ investment
—— 20000.00 20000.00
(2) Changes of accounting estimate
Contents causes and applicable time points of
accounting estimation change
Approval
procedure
Items impact Amount impact
The Company considers the architectural design and
construction standards of newly completed buildings
and the accelerating update speed of computer
equipment in order to make the company's
accounting estimates better conform to the actual use
of assets more accurately reflect the period during
which assets provide economic benefits to enterprises
and the actual assets consumption of every term and
more objectively and truthfully reflect the company's
financial status and operating results the resolution
of the second meeting of the 9th Board of Directors of
the Company on April 1 2019 passed that the
Company would change the service life of buildings
from 35 years to 35-40 years and change the
Internal
procedures
Fixed assets Investment real
estate main business cost
administrative expenses
337023.38
Contents causes and applicable time points of
accounting estimation change
Approval
procedure
Items impact Amount impact
depreciable life of computer equipment in electronic
equipment from 7 years to 5 years on the date of the
resolution.
(3) Adjust relevant items of financial statements at beginning of the year of fist execution when first
implemented the new financial instrument standards new income standards and new leasing standards
√Applicable □ Not applicable
Consolidate balance sheet
In RMB
Item 2018-12-31 2019-01-01 Adjustment
Current assets:
Monetary fund 169512260.69 169512260.69
Settlement provisions
Capital lent
Trading financial assets 330400000.00 330400000.00
Financial assets
measured by fair value and
with variation reckoned into
current gains/losses
Derivative financial
assets
Notes receivable
Accounts receivable 86104660.51 86104660.51
Receivables financing
Accounts paid in
advance
9112473.27 9112473.27
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Other account
receivable
14483208.41 14483208.41
Including: interest
receivable
723407.50 723407.50
Dividend
receivable
232683.74 232683.74
Buying back the sale of
financial assets
Inventories 12342854.40 12342854.40
Contract assets
Assets held for sale 85017251.77 85017251.77
Non-current asset due
within one year
Other current assets 332432494.44 2032494.44 -330400000.00
Total current assets 709005203.49 709005203.49
Non-current assets:
Loans and payments on
behalf
Creditors’ investment
Available-for-sale
financial assets
10176617.20 -10176617.20
Other creditors’
investment
Held-to-maturity
investment
Long-term account
receivable
0.00
Long term equity
investment
224644766.21 224644766.21
Other equity instrument
investment
10176617.20 10176617.20
Other non-current
financial assets
Investment real estate 503922413.70 503922413.70
Fixed assets 112674017.53 112674017.53
Construction-in-progress
12843571.97 12843571.97
Productive biological
asset
Oil and gas asset
Right-of-use asset
Intangible assets 51012282.25 51012282.25
Expense on Research
and Development
Goodwill
Long-term prepaid
expenses
6304607.22 6304607.22
Deferred income tax
asset
24355086.71 24355086.71
Other non-current asset 3356964.72 3356964.72
Total non-current asset 949290327.51 949290327.51
Total assets 1658295531.00 1658295531.00
Current liabilities:
Short-term loans 143000000.00 143000000.00
Loan from central bank
Capital borrowed
Trading financial
liability
Financial liability
measured by fair value and
with variation reckoned into
current gains/losses
Derivative financial
liability
Notes payable
Accounts payable 73365876.09 73365876.09
Accounts received in
advance
15897763.97 15897763.97
Selling financial asset of
repurchase
Absorbing deposit and
interbank deposit
Security trading of
agency
Security sales of agency
Wage payable 25802670.36 25802670.36
Taxes payable 9377393.57 9377393.57
Other accounts payable 250489094.47 250489094.47
Including: interest
payable
290215.78 290215.78
Dividend
payable
Commission charge and
commission payable
Reinsurance payable
Contract liability
Liability held for sale
Non-current liabilities
due within one year
Other current liabilities
Total current liabilities 517932798.46 517932798.46
Non-current liabilities:
Insurance contract
reserve
Long-term loans 34934887.55 34934887.55
Bonds payable
Including: preferred
stock
Perpetual
capital securities
Lease liability
Long-term account
payable
3920160.36 3920160.36
Long-term wages
payable
Accrual liability 2225468.76 2225468.76
Deferred income
Deferred income tax
liabilities
Other non-current
liabilities
Total non-current liabilities 41080516.67 41080516.67
Total liabilities 559013315.13 559013315.13
Owners’ equity:
Share capital 297281600.00 297281600.00
Other equity instrument
Including: preferred
stock
Perpetual
capital securities
Capital reserve 565226274.51 565226274.51
Less: Inventory shares
Other comprehensive
income
26422.00 26422.00
Reasonable reserve
Surplus reserve 3139918.14 3139918.14
Provision of general risk
Retained profit 184535322.70 184535322.70
Total owner’s equity
attributable to parent
company
1050209537.35 1050209537.35
Minority interests 49072678.52 49072678.52
Total owner’s equity 1099282215.87 1099282215.87
Total liabilities and owner’s
equity
1658295531.00 1658295531.00
Explanation
The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 22 - Recognition
and Measurement of Financial Instruments the Accounting Standards for Business Enterprises No. 23 -
Transfer of Financial Assets Accounting Standards for Business Enterprises No. 24 - Hedge Accounting
and Accounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation on 31
March 2017 and shall be effective for enterprise listed in China separately since 1 Jan. 2019
According to the new financial standards the “Available-for-sale financial assets ” is re-classified to
“Financial assets measured by fair value and with its variation reckoned into other comprehensive income”
and adjusted the amount of “Available-for-sale financial assets ” at beginning of 2019 in balance sheet in
line with the presentation requirement.
According to the new financial standards the financial product without principal-guaranteed was
re-classified to “Trading financial assets” from “Other current assets” and adjusted the amount of “Othercurrent assets ” at beginning of 2019 in balance sheet in line with the presentation requirement.
Balance sheet of parent company
In RMB
Item 2018-12-31 2019-01-01 Adjustment
Current assets:
Monetary fund 88836626.14 88836626.14
Trading financial assets 195000000.00 195000000.00
Financial assets
measured by fair value and
with variation reckoned into
current gains/losses
Derivative financial
liability
Notes receivable
Accounts receivable 38274.00 38274.00
Receivables financing
Accounts paid in 604800.00 604800.00
advance
Other account
receivable
115782944.37 115782944.37
Including: interest
receivable
723407.50 723407.50
Dividend
receivable
232683.74 232683.74
Inventories
Contract assets
Assets held for sale 85017251.77 85017251.77
Non-current asset due
within one year
Other current assets 195506958.35 506958.35 -195000000.00
Total current assets 485786854.63 485786854.63
Non-current assets:
Creditors’ investment
Available-for-sale
financial assets
10176617.20 -10176617.20
Other creditors’
investment
Held-to-maturity
investment
Long-term account
receivable
Long term equity
investment
836283491.38 836283491.38
Other equity instrument
investment
10176617.20 10176617.20
Other non-current
financial assets
Investment real estate 44820151.69 44820151.69
Fixed assets 14824845.14 14824845.14
Construction-in-progress
12843571.97 12843571.97
Productive biological
asset
Oil and gas asset
Right-of-use asset
Intangible assets 249731.94 249731.94
Expense on Research
and Development
Goodwill
Long-term prepaid
expenses
2958817.65 2958817.65
Deferred income tax
asset
13830369.64 13830369.64
Other non-current asset
Total non-current asset 935987596.61 935987596.61
Total assets 1421774451.24 1421774451.24
Current liabilities:
Short-term loans 143000000.00 143000000.00
Trading financial
liability
Financial liability
measured by fair value and
with variation reckoned into
current gains/losses
Derivative financial
liability
Notes payable
Accounts payable 19800.00 19800.00
Accounts received in
advance
4742.51 4742.51
Contract liability
Wage payable 4858788.51 4858788.51
Taxes payable 331909.65 331909.65
Other accounts payable 392558990.89 392558990.89
Including: interest
payable
232810.41 232810.41
Dividend
payable
Liability held for sale
Non-current liabilities
due within one year
Other current liabilities
Total current liabilities 540774231.56 540774231.56
Non-current liabilities:
Long-term loans
Bonds payable
Including: preferred
stock
Perpetual
capital securities
Lease liability
Long-term account
payable
Long-term wages
payable
Accrual liability
Deferred income
Deferred income tax
liabilities
Other non-current
liabilities
Total non-current liabilities
Total liabilities 540774231.56 540774231.56
Owners’ equity:
Share capital 297281600.00 297281600.00
Other equity instrument
Including: preferred
stock
Perpetual
capital securities
Capital reserve 562032851.23 562032851.23
Less: Inventory shares
Other comprehensive
income
Reasonable reserve
Surplus reserve 3139918.14 3139918.14
Retained profit 18545850.31 18545850.31
Total owner’s equity 881000219.68 881000219.68
Total liabilities and owner’s
equity
1421774451.24 1421774451.24
Explanation
The Ministry of Finance revised the Accounting Standards for Business Enterprises No. 22 - Recognition
and Measurement of Financial Instruments the Accounting Standards for Business Enterprises No. 23 -
Transfer of Financial Assets Accounting Standards for Business Enterprises No. 24 - Hedge Accounting
and Accounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation on 31
March 2017 and shall be effective for enterprise listed in China separately since 1 Jan. 2019
According to the new financial standards the “Available-for-sale financial assets ” is re-classified to
“Financial assets measured by fair value and with its variation reckoned into other comprehensive income”
and adjusted the amount of “Available-for-sale financial assets ” at beginning of 2019 in balance sheet in
line with the presentation requirement.
According to the new financial standards the financial product without principal-guaranteed was
re-classified to “Trading financial assets” from “Other current assets” and adjusted the amount of “Othercurrent assets ” at beginning of 2019 in balance sheet in line with the presentation requirement.
(4) Retrospective adjustment of early comparative data for the first implementation of new financial
standards and new lease standards
□Applicable √ Not applicable
31. Significant accounting judgment and estimation
The Company need make judgment estimation and hypothesis to book value of those unaccountable items
in sheet due to inner uncertainties of operating activities in the process of using accounting policies. These
judgments estimates and assumptions are made in line with the Company's past management experience
and in consideration of other relevant factors. These judgments estimates and assumptions will affect
disclosure of amount of income expenses assets and liabilities as well as contingent liability on the
balance sheet day. However the uncertainties in these estimates may cause significant adjustments to book
value of those asset or liability affected in the future.The Company rechecks regularly the judgment estimation and hypothesis based on sustainable
management. As for a change affecting only the current period the amount shall be confirmed only in the
current period; for those not only affecting the current but the future the amount shall be confirmed in the
current and future period.
At the balance sheet date the Company needs to determine amount of items of the financial statements
estimation and hypothesis shown as the following important areas:
(1)Classification of leasesThe Company classifies its leases as operating lease and financing lease in accordance with “AccountingStandard for Business Enterprises No. 21 - Leases”. When classifying leases the management needs to
analyse and judge whether all risks and returns relating to the ownership of leased out assets have
transferred to the leasee or whether the Company has obliged to all risks and returns relating to the
ownership of leased assets.
(2) Impairment of financial assets
The Company uses the expected credit loss model to assess the impairment of financial instruments. The
application of the expected credit loss model requires significant judgment and estimation and all
reasonable and evidenced information including forward-looking information needs to be considered.When making such judgments and estimates the Company infers the expected changes in the debtor's
credit risk based on historical data and combined with economic policies macroeconomic indicators
industry risks external market environment technological environment changes in customer
circumstances and so on.
(3) Provision of inventory devaluation
According to the inventory accounting policies the Company shall accrue inventory devaluation provision
as for inventory whose cost is higher than net realizable and those obsolete or unmarketable in accordance
with the lower one in cost and net realizable value. Write-down of inventories to net realizable value is to
assess the salability and net amount of prospect realization. Identification of inventory impairment requires
management’s judgment and estimation after their obtaining conclusive evidence and consideration of the
purpose for holding inventories events effects occurring after balance sheet date. The difference between
actual results and original estimates will affect the reversal of book value and devaluation provision of
inventories during the estimation was changing.
(4) Fair value of financial instruments
For a financial instrument that does not have an active trading market the Company determines its fair
value through various valuation methods. These valuation methods include discounted cash flow model
analysis and so on. At the time of valuation the Company needs to estimate future cash flow credit risk
market volatility and correlation and choose an appropriate discount rate. These related assumptions are
uncertain and their changes will have an impact on the fair value of the financial instrument. If an equity
instrument investment or contract has a public offer the Company does not use the cost as the best
estimate of its fair value.
(5) Impairment of long term assets provision
The Company has checked if there is any sign that the long-term asset except for the financial assets may
have the impairment at the balance sheet date. For the intangible assets with uncertain service life in
addition to the annual impairment test make the impairment test when it has signs of impairment. Proceed
with the impairment test when there is any sign indicates that the book amounts of other long-term assets
except for the financial assets are uncollectible
When the book value of the asset or group of assets exceeds its recoverable amount i.e. the higher one
between the net amount after subtracting the disposal costs from the fair value and the present value of the
future cash flow it indicates impairment occurs.The net amount after subtracting the disposal costs from the fair value is determined by subtracting the
incremental costs directly attributable to this disposal of assets from the sales agreement price similar to
assets in fair dealing or the observable market price.When predicting the present value of future cash flows it is required to make significant judgments to the
output selling price and related operating expenses of this asset or group of assets and the discount rate
used for calculating the present value. The Company shall adopt all available related data when predicting
the recoverable amounts including making predictions about the relevant output selling price and related
operating expenses based on reasonable and supportable assumptions.The Company determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating
the value in use requires the Group to make an estimate of the expected future cash flows from the
cash-generating units and also to choose a suitable discount rate in order to calculate the present value of
those cash flows.
(6) Depreciation and amortization
For the investment real estate fixed assets and intangible assets the Company takes a straight-line
depreciation and amortization within service life in consideration of its residual value. The Company
regularly review service life thus determine the depreciation and amortization amount in each reporting
period. Life is determined based on past experience of similar assets and technology update is expected. If
the previous estimate changes we will adjust depreciation and amortization expense in future periods.
(7) The deferred income tax assets
Within the limits that it is very likely to have sufficient taxable profits to offset losses the Company
confirms deferred income tax assets using all unused tax losses. This requires the management to use a lot
of judgment to estimate the time and amount of future taxable profits combined with the tax planning
strategy thus confirm the amount of deferred income tax assets.
(8) The income tax
During ordinary course of business uncertainty exists in final tax treatment and calculation of a part of
trading. Whether part of the project is in pre tax expenses requires approval of tax authorities. If the final
confirmation of these tax matters differs from an initial estimate the difference will affect current income
tax and deferred income tax during the final period.
(9) Accrual liability
The Company estimates and accrues corresponding provision for product quality guarantee expected
contract loss penalty for late delivery and others in accordance with terms of the contract existing
knowledge and experience. When such contingencies has formed a present obligation and the
performance of the current obligation is likely to lead to the outflow of economic benefits of the Company
the Company recognizes the best estimate of required expense when performing current obligation as
accrual liability. The recognition and measurement of debt is largely dependent on the judgment of
management. In the process of judgment the Company needs to assess the contingent risks uncertainties
and money and the time value and other factors.
Among them the Company estimates liabilities of the sale maintenance and modification of after-sales
quality maintenance commitments to customers for the products sold. The Company's recent maintenance
experience data has been taken into account when estimating liabilities but recent maintenance experience
may not be able to reflect the future maintenance. Any increase or decrease in this preparation may affect
the profit and loss of the future year.V. Taxation
1. Main tax and tax rate
Type Tax rate
VAT
The value-added tax for rental and water utilities income is levied at 5% and 3%
respectively; the output tax for jewelry retail and wholesale sale of auto and
components auto repair and maintenance electricity utilities and property
management fee are levied at 13% and 6%. Value-added tax is computed on the
difference after deduction of the deductible input tax for the period.
City maintaining & construction tax Calculated and paid on 7% of the turnover tax actually paid
Education surcharge Calculated and paid on 3% of the turnover tax actually paid
Local education surcharge Calculated and paid on 2% of the turnover tax actually paid
Corporation income tax Calculated and paid on 25% of the taxable income amount
VI. Enterprise consolidation and consolidated financial statements
Unless otherwise stated the follow notes (including the items of financial statement of the Company)
year-begin refers to 1
st
January 2019 while period-end refers to 30
th
June 2019; End of last year refers to
31
st
December 2018 and Current Period refers to Jan.-Jun. 2019 Same period of last year refers to Jan.-Jun.
2018
1. Monetary fund
Item Balance at period-end Balance at year-begin
Stock cash 89247.55 84099.49
Bank deposits 225815943.61 169428161.20
Total 225905191.16 169512260.69
Up to 30
th
June 2019 the Company’s right to use of currency funds under restrictions is RMB
26664140.00 which is the supervision fund paid by the Company to Luohu District Urban Renewal
Bureau of Shenzhen for the land plot 03 project of the upgrading project of Tellus-Jimeng Gold Jewelry
Industrial Park. The currency funds with restricted use rights at the end of last year were RMB
26664140.00.
2. Trading financial assets
Item Balance at period-end Balance at year-begin
Financial assets measured by fair value and with variation
reckoned into current gains/losses
Including: Derivative financial liability 139405600.93 330400000.00
Financial assets designated to be measured by fair value and
with variation reckoned into current gains/losses
Item Balance at period-end Balance at year-begin
Including: Other 90000000.00
Total 229405600.93 330400000.00
Including: Parts that re-classified to other non-current financial
assets
3. Accounts receivable
(1) By account age
Account age Balance at period-end
Within one year 114598195.81
Including: within 6 months 114598195.81
7-12 months
Subtotal of within one year 114598195.81
1-2 years
2-3 years
3-4 years
4-5 years
Over 5 years 49125862.29
Subtotal 163724058.10
Less: bad debt provision 50175758.33
Total 113548299.77
(2) According to accrual method for bad debts
Category
Balance at period-end
Book balance Bad debt provision
Book value
Amount Ratio (%) Amount Accrual ratio (%)
Account receivable with single significant
amount and withdrawal bad debt provision
separately
127492018.45 77.87 23552310.56 18.47 103939707.89
Receivables with bad debt provision 9608591.88 5.87 -- -- 9608591.88
Category
Balance at period-end
Book balance Bad debt provision
Book value
Amount Ratio (%) Amount Accrual ratio (%)
accrual by credit portfolio
Accounts with single minor amount but
with bad debts provision accrued
individually
26623447.77 16.26 26623447.77 100.00
Total 163724058.10 100.00 50175758.33 —— 113548299.77
(Continued)
Category
Balance at year-begin
Book balance Bad debt provision
Book value
Amount Ratio (%) Amount Accrual ratio (%)
Account receivable with single significant
amount and withdrawal bad debt
provision separately
109050086.55 80.13 23367891.24 21.43 85682195.31
Receivables with bad debt provision
accrual by credit portfolio
422465.20 0.31 -- -- 422465.20
Accounts with single minor amount but
with bad debts provision accrued
individually
26623447.77 19.56 26623447.77 100.00 --
Total 136095999.52 100.00 49991339.01 36.73 86104660.51
①Account receivable with single significant amount and withdrawal bad debt provision separately at
period-end
Accounts receivable(units)
Balance at period-end
Book balance Bad debt provision Accrual ratio Accrual reasons
Shenzhen Jinlu Industry and Trade Co.Ltd.
9846607.00 9846607.00 100.00
Has greater uncertainty in
collection
Guangdong Zhanjiang Sanxing Auto
Service Co. Ltd.
4060329.44 4060329.44 100.00
Not expected to collected due to
long account age
Wang Changlong 2370760.40 2370760.40 100.00 Not expected to collected due to
Accounts receivable(units)
Balance at period-end
Book balance Bad debt provision Accrual ratio Accrual reasons
long account age
Huizhou Jiandacheng Daoqiao
Engineering Company
2021657.70 2021657.70 100.00 Less likely to collection
Jiangling Automobile Factory 1191059.98 1191059.98 100.00
Not expected to collected due to
long account age
Yangjiang Auto Trade Co. Ltd. 1150000.00 1150000.00 100.00
Not expected to collected due to
long account age
Guangdong Materials Group Corp 1862000.00 1862000.00 100.00
Not expected to collected due to
long account age
Xiao Yueliang and other persons
104989603.93 1049896.04
1.00
Sales of jewelry on credit and in
the credit terms
Total 127492018.45 23552310.56 —— ——
②Account receivable provided for bad debt reserve under aging analysis method in the groups
Item
Balance at period-end
Book balance Bad debt provision Accrual ratio (%)
Within one year 9608591.88 -- --
Total 9608591.88 -- --
(3) Bad debt provision
Category
Balance at
year-beginning
Current changes Balance at
period-end
Accrual Collected
or switch
back
Write
off or
charge
off
Account receivable with single
significant amount and
withdrawal bad debt provision
separately
23367891.24 184419.32 23552310.56
Category
Balance at
year-beginning
Current changes Balance at
period-end
Accrual Collected
or switch
back
Write
off or
charge
off
Accounts with single minor
amount but with bad debts
provision accrued individually
26623447.77 26623447.77
Total 49991339.01 184419.32 50175758.33
(4) Account receivable actually written-off in the period
No account receivable actually written-off in the period
(5) Top 5 account receivables at ending balance by arrears party
Name of the company
Relationship with the
Company
Amount
Account
age
Proportion in total
account
receivables (%)
Shenzhen Jinlu Industry and
Trade Co. Ltd.Non-related party 9846607.00
Over 3
years
6.01
Guangdong Zhanjiang Sanxing
Auto Service Co. Ltd.
Non-related party 4060329.44
Over 3
years
2.48
Xu Zhenhua Non-related party 3307876.43
Within one
year
2.02
Mao Haitao Non-related party 3257484.74
Within one
year
1.99
Chen Guocan Non-related party 3255999.74
Within one
year
1.99
Total —— 23728297.35 —— 14.49
(6) Account receivable derecognition due to financial assets transfer
The Company has no account receivable derecognition due to financial assets transfer in the Period.
(7) Assets and liabilities resulted by account receivable transfer and continues involvement
The Company has no assets and liabilities resulted by account receivable transfer and continues
involvement in the Period.
4. Accounts paid in advance
(1) By account age
Account age
Balance at period-end Balance at year-begin
Amount Ratio (%) Amount Ratio (%)
Within one year 12472954.30 99.84 9092219.33 99.78
1-2 years -- -- -- --
2-3 years -- -- -- --
Over 3 years 20253.94 0.16 20253.94 0.22
Total 12493208.24 100.00 9112473.27 100.00
(2) Top 5 advance payment at ending balance by prepayment object
The top 5 advance payment at ending balance by prepayment object amounted to 11650411.19 Yuan
takes 93.25% in total advance payment at end of the period
5. Other account receivable
Item Balance at period-end Balance at year-begin
Interest receivable 1031521.11 723407.50
Dividend receivable 81600548.07 232683.74
Other account receivable 11848636.82 13527117.17
Total 94480706.00 14483208.41
(1) Interest receivable
①By category
Item Balance at period-end Balance at year-begin
Time deposit 1031521.11 723407.50
Total 1031521.11 723407.50
(2) Dividend receivable
①Dividend receivable
Item (or invested unit) Balance at period-end Balance at year-begin
Shenzhen SDG Tellus Property Management
Co. Ltd.
232683.74
Item (or invested unit) Balance at period-end Balance at year-begin
Shenzhen Zung Fu Tellus Auto Service Co.Ltd.
17500000.00
Shenzhen Dongfeng Automobile Co. Ltd 64100548.07
Total 81600548.07 232683.74
(3) Other account receivable
①By account age
Account age Balance at period-end
Within one year 5427474.66
Including: within 6 months 5427474.66
7-12 months
Subtotal of within one year 5427474.66
1-2 years 2911720.87
2-3 years 222017.41
3-4 years 317737.67
4-5 years 77841.64
Over 5 years 56502983.51
Subtotal 65459775.76
Less: bad debt provision 53611138.94
Total 11848636.82
②By nature
Nature Ending book balance Opening book balance
Intercourse funds receivable from related party 3361660.81 5005511.88
Other intercourse funds 62098114.95 62418829.69
Subtotal 65459775.76 67424341.57
Less: bad debt provision 53611138.94 53897224.40
Total 11848636.82 13527117.17
③Accrual of bad debt provision
Bad debt provision
Phase I Phase II Phase III
Total
Expected credit
losses over next 12
months
Expected credit
losses for the entire
duration (without
credit impairment
occurred)
Expected credit losses
for the entire duration
(with credit
impairment occurred)
Balance on Jan. 1 2019 4001456.73 49895767.67 53897224.40
Book balance of other
account receivable of Jan. 1
2019 in the period
——Turn to phase II
——Turn to phase III
——Return to Phase II
——Return to Phase I
Current accrual 21907.69
Current switch back 307993.15
Rewrite in the period
Write-off in the period
Other changes
Balance on Jun. 30 2019 3715371.27 49895767.67 53611138.94
④Bad debt provision
Category
Balance at
year-beginning
Current changes Balance at
period-end
Accrual Collected or
switch back
Write off
or charge
off
Other account receivable with
single significant amount and
withdrawal bad debt provision
separately
39207653.44 39207653.44
Other receivables with bad debt 4001456.73 21907.69 307993.15 3715371.27
provision accrual by credit
portfolio
Other Accounts with single
minor amount but with bad debts
provision accrued individually
10688114.23 10688114.23
Total 53897224.40 21907.69 307993.15 53611138.94
Including: important amount of bad debt provision that switch back or collected in the period
Name of the company
Amount switch back or collected
Collection by
Chow Tai Fook Jewelry (Shenzhen) Co. Ltd 307993.15
Collection of monetary fund
Total 307993.15 ——
⑤ Other account receivable actually written-off in the period
No other account receivable actually written-off in the period
⑥Top 5 other account receivables at ending balance by arrears party
Name of the company Nature
Balance at
period-end
Account age
Ratio in total ending
balance of other
receivables
Bad debt
provision
Balance at
period-end
Zhongqi South China Auto Sales
Company
Intercou
rse
funds
9832956.37 Over 3 years
15.02
9832956.37
South Industry & TRADE Shenzhen
Industrial Company
Intercou
rse
funds
7359060.75 Over 3 years
11.24
7359060.75
Shenzhen Zhonghao (Group) Co. Ltd
Intercou
rse
funds
5000000.00 Over 3 years
7.64
5000000.00
Shenzhen Dongchang Yongtong Intercou 3538614.54 Within one 5.41
Name of the company Nature
Balance at
period-end
Account age
Ratio in total ending
balance of other
receivables
Bad debt
provision
Balance at
period-end
Automobile Inspection Co. Ltd. rse
funds
year
Chow Tai Fook Jewelry (Shenzhen) Co.
Ltd
Intercou
rse
funds
2759100.00 1-2 years
4.21
137955.00
Total —— 28489731.66 —— 43.52 22329972.12
⑧Other account receivable derecognition due to financial assets transfer in the Period
The Company has no other account receivable derecognition due to financial assets transfer in the
Period.
⑨Assets and liabilities resulted by other account receivable transfer and continues involvement in the
Period
The Company has no assets and liabilities resulted by other account receivable transfer and
continues involvement in the Period.
6. Inventories
(1) Category
Item
Balance at period-end
Book balance Depreciation reserve Book value
Raw materials 15041573.00 14771812.17 269760.83
Stock products 30631625.42 14103023.28 16528602.14
Total 45673198.42 28874835.45 16798362.97
(Continued)
Item
Balance at year-begin
Book balance Depreciation reserve Book value
Raw materials 15047710.72 14771812.17 275898.55
Stock products 26169979.13 14103023.28 12066955.85
Total 41217689.85 28874835.45 12342854.40
(2) Depreciation reserve
Item
Balance at
year-beginning
Current increased Current decreased
Balance at
period-end
Accrual Other
Switch back or
write-off
Other
Raw materials 14771812.17 14771812.17
Stock products 14103023.28 14103023.28
Total 28874835.45 28874835.45
7. Assets held for sale
(1)non-current assets held for sale and disposal group
Item Ending book value Fair value
Estimated
selling cost
Selling
cause
method
Estimated
time of sale
Subordinate
branch
Non-current assets held for
sale
—— —— —— ——
——
——
Including: Long term equity
investment
85017251.77
Transfer
2019.8.14
Leasing and
service
Total 85017251.77
On December 12 2017 the 13
th
temporary meeting of the 8
th
Board of Directors and the 3
rd
Extraordinary
General Meeting of 2017 reviewed and approved the Proposal on Disposal of 43% Equity of Shenzhen
Xinglong Machinery Mould Co. Ltd. and agreed the company to sell all 43% equity of Xinglong
Company by public listing. On June 15 2018 the company signed the "Agreement on Transfer of
State-owned Property Rights of Enterprise" with the listing transferee Shenzhen Runhe United Investment
Development Co. Ltd. (hereinafter referred to as "Runhe") and transferred 43% equity of Xinglong
Company at 286.67 million Yuan. As of December 31 2018 the company has received the total payment
of 146201700 Yuan for the first and second phases of equity transfer under the aforementioned equity
transfer contract and received the interest of 1309400 Yuan. On June 14 2019 the company received
equity transfer payment of 20 million Yuan and interest of 870000 Yuan from Runhe. As of June 30 2019
the company received the total equity transfer payment of 166201700 Yuan and interest of 2179400
Yuan.
According to the "Accounting Standards for Business Enterprises No. 42 - Non-current assets held for sale
disposal groups and termination of operations" the company divides the balance of RMB 85017200 of
long-term equity investment of Xinglong Company as of June 30 2018 as the assets held for sale and no
equity method is accounted for after June 30 2018. As of the date of approval of this report the company
has received the total equity transfer payment of 286670000 Yuan and the interest of 9028100 Yuan in
accordance with the "Agreement on Transfer of State-owned Property Rights of Enterprise" and the
supplementary agreement.
(2) Impairment of assets held for sale
The assets held for sale has no sign of impairment.
8. Other current assets
Item Balance at period-end Balance at year-begin
Input tax ready for deducted 2208745.54 2032494.44
Financial products 40000000.00
Total 42208745.54 2032494.44
9. Other creditors’ investment
(1) Accrual of impairment provision
Impairment provision
Phase I Phase II Phase III
Total
Expected credit
losses over next
12 months
Expected credit
losses for the entire
duration (without
credit impairment
occurred)
Expected credit losses
for the entire duration
(with credit
impairment occurred)
Balance on Jan. 1 2019 20000.00 20000.00
Book balance of other
creditors’ investment of Jan. 1
2019 in the period:
——Turn to phase II
——Turn to phase III
——Return to Phase II
——Return to Phase I
Current accrual
Current switch back
Rewrite in the period
Impairment provision
Phase I Phase II Phase III
Total
Expected credit
losses over next
12 months
Expected credit
losses for the entire
duration (without
credit impairment
occurred)
Expected credit losses
for the entire duration
(with credit
impairment occurred)
Write-off in the period
Other changes
Balance on Jun. 30 2019 20000.00 20000.00
10. Long-term account receivable
(1) Long-term account receivable
Item
Balance at period-end Balance at year-begin
Discount
rate
interval
Book balance
Impairment
provision
Book
value
Book balance
Impairment
provision
Book
value
Other:
Essentially constitute a
long-term equity for net
investment of invested
company
2179203.68 2179203.68 -- 2179203.68 2179203.68 --
Including: Shenzhen Tellus
Auto Service Chain Co. Ltd.
*
2179203.68 2179203.68 -- 2179203.68 2179203.68 --
Total 2179203.68 2179203.68 -- 2179203.68 2179203.68 -- ——
(2) Accrual of impairment provision
Bad debt provision
Phase I Phase II Phase III
Total
Expected credit
losses over next
12 months
Expected credit
losses for the entire
duration (without
credit impairment
occurred)
Expected credit losses
for the entire duration
(with credit
impairment occurred)
Balance on Jan. 1 2019 2179203.68 2179203.68
Bad debt provision
Phase I Phase II Phase III
Total
Expected credit
losses over next
12 months
Expected credit
losses for the entire
duration (without
credit impairment
occurred)
Expected credit losses
for the entire duration
(with credit
impairment occurred)
Book balance of long-term
account receivable of Jan. 1
2019 in the period:
——Turn to phase II
——Turn to phase III
——Return to Phase II
——Return to Phase I
Current accrual
Current switch back
Rewrite in the period
Write-off in the period
Other changes
Balance on Jun. 30 2019 2179203.68 2179203.68
* Note: The Company is an associated enterprise of the Company and the Company substantially
constitutes a net investment in the investee to its non-operating receivables. As of the end of the reporting
period the total liabilities of the company have exceeded the total assets and the owner's equity was
negative. The book value of the Company's long-term equity investment in the company has been reduced
to zero. The company has ceased operations during the reporting period. In view of the actual situation of
the company the Company has drawn off the bad debt provisions for the long-term receivables in full.
(3) Long-term account receivable derecognition due to financial assets transfer
The Company has no long-term account receivable derecognition due to financial assets transfer.
(4) Assets and liabilities resulted by long-term account receivable transfer and continues involvement
The Company has no assets and liabilities resulted by long-term account receivable transfer and
continues involvement.
11. Long term equity investment
The invested entity
Balance at
year-beginning
Changes in the period (+-)
Additi
onal
invest
ment
Capita
l
reducti
on
Investment gains
recognized under
equity
Other
comprehensi
ve income
adjustment
Other
equity
change
I. Joint venture
Shenzhen Tellus Gman Investment Co. Ltd
62039013.62 3652191.24
Shenzhen Tellus Hang Investment Co. Ltd.
11253581.63 363981.77
Subtotal 73292595.25 4016173.01
II. Associated enterprise
Shenzhen Tellus Auto Service Chain Co. Ltd.--
Shenzhen Zung Fu Tellus Auto Service Co. Ltd.
40203423.40 4360298.66
Shenzhen Auto Industry Imp& Exp Co. Ltd.
7482170.28 -409250.15
Shenzhen Dongfeng Automobile Co. Ltd
103666577.28 2808303.02
Shenzhen Xinyongtong Oil Pump Environment
Protection Co. Ltd.
127836.59
Shenzhen Xinyongtong Consultant Co. Ltd.
41556.83
Shenzhen Xinyongtong Auto Service Co. Ltd.--
Shenzhen Xinyongtong Dongxiao Auto Parts
Sales Co. Ltd.--
Shenzhen Yongtong Xinda Inspection Equipment
Co. Ltd.
--
Hunan Changyang Industrial Co. Ltd*①
1810540.70
Shenzhen Jiecheng Electronic Co. Ltd*①
3225000.00
Shenzhen Xiandao New Materials Company*①
4751621.62
China Auto Industrial Shenzhen Trading
Company*① 400000.00
Shenzhen General Standard Co. Ltd*①
500000.00
Shenzhen Huoju Spark Plug Industry Co. Ltd.
17849.20
Zhongqi South China Auto Sales Company*①
2250000.00
Shenzhen Bailiyuan Power Supply Co. Ltd*①
1320000.00
The invested entity
Balance at
year-beginning
Changes in the period (+-)
Additi
onal
invest
ment
Capita
l
reducti
on
Investment gains
recognized under
equity
Other
comprehensi
ve income
adjustment
Other
equity
change
Shenzhen Yimin Auto Trading Co. Ltd*①
200001.10
Subtotal 165996577.00 6759351.53
III. Other equity investment
Shenzhen Hanligao Technology Ceramics Co.Ltd*②
1956000.00
Shenzhen South Auto Maintenance Center*② 6700000.00
Subtotal 8656000.00
Total 247945172.25 10775524.54
(Continued)
The invested entity
Changes in the period (+-)
Balance at period-end
Ending balance of
impairment
provision
Cash dividend or
profit announced
to issued
Accrual
Impairmen
t provision
Other
I. Joint venture
Shenzhen Tellus Gman Investment Co. Ltd
65691204.86 --
Shenzhen Tellus Hang Investment Co. Ltd.
11617563.40 --
Subtotal 77308768.26 --
II. Associated enterprise
Shenzhen Tellus Auto Service Chain Co. Ltd.--
Shenzhen Zung Fu Tellus Auto Service Co. Ltd.
17500000.00 27063722.06 --
Shenzhen Auto Industry Imp& Exp Co. Ltd.
7072920.13 --
Shenzhen Dongfeng Automobile Co. Ltd
64100548.07 42374332.23 --
Shenzhen Xinyongtong Oil Pump Environment
Protection Co. Ltd.
127836.59 127836.59
Shenzhen Xinyongtong Consultant Co. Ltd.
41556.83 41556.83
The invested entity
Changes in the period (+-)
Balance at period-end
Ending balance of
impairment
provision
Cash dividend or
profit announced
to issued
Accrual
Impairmen
t provision
Other
Shenzhen Xinyongtong Auto Service Co. Ltd.--
Shenzhen Xinyongtong Dongxiao Auto Parts
Sales Co. Ltd.--
Shenzhen Yongtong Xinda Inspection Equipment
Co. Ltd.
--
Hunan Changyang Industrial Co. Ltd*①
1810540.70 1810540.70
Shenzhen Jiecheng Electronic Co. Ltd*①
3225000.00 3225000.00
Shenzhen Xiandao New Materials Company*①
4751621.62 4751621.62
China Auto Industrial Shenzhen Trading
Company*①
400000.00 400000.00
Shenzhen General Standard Co. Ltd*①
500000.00 500000.00
Shenzhen Huoju Spark Plug Industry Co. Ltd.
17849.20 17849.20
Zhongqi South China Auto Sales Company*①
2250000.00 2250000.00
Shenzhen Bailiyuan Power Supply Co. Ltd*①
1320000.00 1320000.00
Shenzhen Yimin Auto Trading Co. Ltd*①
200001.10 200001.10
Subtotal 91155380.46 14644406.04
III. Other equity investment
Shenzhen Hanligao Technology Ceramics Co.Ltd*②
1956000.00 1956000.00
Shenzhen South Auto Maintenance Center*②
6700000.00 6700000.00
Subtotal 8656000.00 8656000.00
Total 177120148.72 23300406.04
12. Other equity instrument investment
Other equity instrument investment
Item Balance at period-end Balance at year-begin
Equity instrument available
for sale originally measured
10176617.20
10176617.20
Item Balance at period-end Balance at year-begin
by cost
Total 10176617.20 10176617.20
13. Investment real estate
(1) Measured at cost
Item House and building Total
I. Original book value
1. Balance at year-beginning 602025611.05 602025611.05
2. Current increased -- --
(1) Outsourcing -- --
3. Current decreased 9546631.74 9546631.74
(1) Other transfer-out 9546631.74 9546631.74
4. Balance at period-end 592478979.31 592478979.31
II. Accumulated depreciation and
accumulated amortization
1. Balance at year-beginning 98103197.35 98103197.35
2. Current increased 7526757.87 7526757.87
(1) Accrual or amortization 7526757.87 7526757.87
3. Current decreased 7314436.12 7314436.12
(1) Other transfer-out 7314436.12 7314436.12
4. Balance at period-end 98315519.10 98315519.10
III. Impairment provision -- --
IV. Book value
1. Ending book value 494163460.21 494163460.21
2. Book value at year-beginning 503922413.70 503922413.70
(2) Investment real estate with ownership restricted
Up to 30 June 2019 the Company had no investment real estate with ownership restricted.
(3) Amount and cause for the investment real estate without ownership certificate
Item Book value Cause of without the ownership certificate
Tellus Shuibei Jewelry Building
428727924.01
Uncompleted settlement failure to handle the
ownership certificate
Buxin workshop corridor #5 #6 #7
15985.26
Failure to handle the ownership certificate
for historical reasons
12 buildings in Sungang 18719.33
Failure to handle the ownership certificate
for historical reasons
12 building shops in Sungang 58608.27
Failure to handle the ownership certificate
for historical reasons
Total 428821236.87
14. Fixed assets
①Fixed assets
Item House and buildings
Machinery
equipment
Transportation
equipment
Electronic
equipment
Office and other
equipment
Decoration charge for
self-owned houses
Total
I. Original book value
1. Balance at year-beginning 266262162.27 11674073.65 5086600.26 9657434.32 2852584.72 2697711.99 298230567.21
2. Increase in the current period -- 194910.65 671448.67 445618.32 68575.56 -- 1380553.20
(1) Purchase -- 194910.65 671448.67 445618.32 68575.56 -- 1380553.20
3. Decrease in the current
period
-- -- 580507.20 -- -- -- 580507.20
(1) Disposal or scrapping -- -- 580507.20 -- -- -- 580507.20
4. Year-end balance 266262162.27 11868984.30 5177541.73 10103052.64 2921160.28 2697711.99 299030613.21
II. Accumulated depreciation
1. Balance at year-beginning 156944286.41 8711585.77 3707548.67 7355334.20 2176012.31 2416329.26 181311096.62
2. Increase in the current period 3557840.34 163437.76 180580.37 297689.44 80199.89 -- 4279747.80
(1) Accrual 3557840.34 163437.76 180580.37 297689.44 80199.89 -- 4279747.80
3. Decrease in the current
period
-- -- 426530.92 -- --
--
426530.92
(1) Disposal or scrapping -- -- 426530.92 -- -- -- 426530.92
4. Year-end balance 160502126.75 8875023.53 3461598.12 7653023.64 2256212.20 2416329.26 185164313.50
Item House and buildings
Machinery
equipment
Transportation
equipment
Electronic
equipment
Office and other
equipment
Decoration charge for
self-owned houses
Total
III. Impairment provision
1. Balance at year-beginning 3555385.70 319675.11 6165.00 17984.71 64859.81 281382.73 4245453.06
2. Increase in the current period -- -- -- -- -- -- --
(1) Accrual -- -- -- -- -- -- --
3. Decrease in the current
period
-- -- -- -- -- -- --
(1) Disposal or scrapping -- -- -- -- -- -- --
4. Year-end balance 3555385.70 319675.11 6165.00 17984.71 64859.81 281382.73 4245453.06
IV. Book value
1. Book value at year-end 102204649.82 2674285.66 1709778.61 2432044.29 600088.27 -- 109620846.65
2. Book value at
year-beginning
105762490.16 2642812.77 1372886.59 2284115.41 611712.60 -- 112674017.53
②Temporary idle fixed asset
The Company had no temporary idle fixed asset end as 30 June 2019.
③Fixed assets without ownership certificate
Item Book value Cause of without the ownership certificate
Shuibei Zhongtian comprehensive
building
1025152.02
Failure to handle the ownership certificate for historical
reasons
Hostel of Renmin North Road
5902.41
Failure to handle the ownership certificate for historical
reasons
Songquan Apartment (mixed)
20524.10
Failure to handle the ownership certificate for historical
reasons
Tellus Building underground
parking
9761569.10
Parking lot is un-able to carried out the certificate
Tellus Building transformation
layer
1706392.88
Un-able to carried out the certificate
Trade department warehouse
82128.85
Failure to handle the ownership certificate for historical
reasons
Warehouse
905383.21
Failure to handle the ownership certificate for historical
reasons
1#2# and 3-5/F 3# plant of
Taoyuan Road
3906488.56
Failure to handle the ownership certificate for historical
reasons
Yongtong Building
35322911.41
Failure to handle the ownership certificate for historical
reasons
16# Taohua Garden
1558503.72
Failure to handle the ownership certificate for historical
reasons
Automotive building
16961952.19
Failure to handle the ownership certificate for historical
reasons
First floor of Bao’an
commercial-residence build
987597.33
Failure to handle the ownership certificate for historical
reasons
Nuclear Office build
4990692.75
Failure to handle the ownership certificate for historical
reasons
Total 77235198.53
15. Construction-in-progress
Item Balance at period-end Balance at year-begin
Construction-in-progress 22707214.36 12843571.97
Total 22707214.36 12843571.97
(1) Construction-in-progress
Item
Balance at period-end Balance at year-begin
Book balance
Impair
ment
provisi
on
Book value Book balance
Impair
ment
provisi
on
Book value
Shuibei Jewelry
Industrial Park
22707214.36 22707214.36 12843571.97 12843571.97
Total 22707214.36 22707214.36 12843571.97 12843571.97
16. Intangible assets
(1) Intangible assets
Item Land use right Trademark right Software Total
I. Original book value
1. Balance at
year-beginning
56252774.80 128500.00 1093185.00 57474459.80
2. Increase in the
current period
-- -- 90960.00 90960.00
(1) Purchase -- -- 90960.00 90960.00
3. Decrease in the
current period
-- -- -- --
(1) Disposal -- -- -- --
4. Year-end balance 56252774.80 128500.00 1184145.00 57565419.80
II. accumulated
amortization
1. Balance at
year-beginning
5490224.49 82674.35 889278.71 6462177.55
Item Land use right Trademark right Software Total
2. Increase in the
current period
609507.42 3081.65 57873.07 670462.14
(1) Accrual 609507.42 3081.65 57873.07 670462.14
3. Decrease in the
current period
-- -- -- --
(1) Disposal -- -- -- --
4. Year-end balance 6099731.91 85756.00 947151.78 7132639.69
III. Impairment
provision
-- -- -- --
IV. Book value
1. Book value at
year-end
50153042.89 42744.00 236993.22 50432780.11
2. Book value at
year-beginning
50762550.31 45825.65 203906.29 51012282.25
Note: The amount amortized in this period accounting as RMB 670462.14.
17. Long-term prepaid expenses
Item
Balance at
year-beginning
Current increased
Amortization during
this period
Other decrease
Balance at
period-end
Decoration charge 6304607.22 1828553.10 527299.42 7605860.90
Total 6304607.22 1828553.10 527299.42 7605860.90
18. Deferred income tax asset
(1) Deferred income tax asset recognized
Item
Balance at period-end Balance at year-begin
Deductible temporary
difference
Deferred income tax
asset
Deductible temporary
difference
Deferred income tax
asset
Assets impairment provision 78513371.59 19628342.90 78513371.56 19628342.90
Equity investment difference 14844139.31 3711034.83 14844139.31 3711034.83
Un-realized transaction profit
with affiliated companies
3984951.52 996237.88 4062835.92 1015708.98
Total 97342462.42 24335615.61 97420346.79 24355086.71
(2) Deferred income tax asset without recognized
Item Balance at period-end Balance at year-begin
Deductible temporary difference 92019663.92 92121330.08
Offset-able losses 32098735.18 44070344.23
Total 124118399.10 136191674.31
(3) Offset-able losses of the unrecognized deferred income tax assets will expire the following year
Year Balance at period-end Balance at end of last year Note
2019 14499089.58
2020 505851.30 505851.30
2021 2121146.48 2121146.48
2022 7146101.41 7146101.41
2023 19798155.46 19798155.46
2024 2527480.53
Total 32098735.18 44070344.23
19. Other non-current asset
Item Balance at period-end Balance at year-begin
Equipment account paid in advance 743261.62 573661.62
Project account paid in advance 18109022.75 2683303.10
Other 100000.00
Total 18852284.37 3356964.72
20. Short-term loans
(1) Category
Item Balance at period-end Balance at year-begin
Debt of honor 143000000.00 143000000.00
Total 143000000.00 143000000.00
21. Accounts payable
(1) Accounts payable
Item Balance at period-end Balance at year-begin
Item Balance at period-end Balance at year-begin
Accounts payable 65355485.14 73365876.09
Total 65355485.14 73365876.09
(2) Major account payable with over one year age
Item Balance at period-end Unsettled reasons
Shenzhen SDG Real Estate Co. Ltd 6054855.46 Unrepayment from related enterprise
Total 6054855.46 ——
22. Accounts received in advance
(1) Accounts received in advance
Item Balance at period-end Balance at year-begin
Within one year 17495261.19 10724147.61
1-2 years 1842649.14
2-3 years 8723.00 2276416.21
Over 3 years 1054551.01 1054551.01
Total 18558535.20 15897763.97
Note: Account received in advance over 3 years mainly represents the prepayment from the subsidiary Shenzhen
Xinyongtong Auto Inspection Equipment Co. Ltd. not carried forward since the customer has not reviewed and
accepted the equipment during the installment and commissioning stage.
23. Wage payable
(1) Wage payable
Item
Balance at
year-beginning
Increased in the
period
Decreased in the
period
Balance at
period-end
I. Short-term compensation 24800605.87 28613885.95 26821086.96 26593404.86
II. Post-office benefit- defined
contribution plans
1002064.49
2505366.30 2395485.14 1111945.65
III. Dismissal benefit -- 164910.00 164910.00 --
IV. Other welfare due within one year -- -- -- --
Total 25802670.36 31284162.25 29381482.10 27705350.51
(2) Short-term compensation
Item
Balance at
year-beginning
Increased in the
period
Decreased in the
period
Balance at
period-end
1. Wages bonuses allowances and
subsidies
22536844.79 25285370.87 23484599.42 24337616.24
2. Welfare for workers and staff -- 341147.61 341147.61 --
3. Social insurance 6433.95 1004899.52 1005634.37 5699.10
Including: Medical insurance
5247.87 907577.23 908312.08 4513.02
Work injury insurance
513.72 21893.57 21893.57 513.72
Maternity insurance
672.36 75428.72 75428.72 672.36
4. Housing accumulation fund
2031964.30 1450636.34 1442457.30 2040143.34
5. Labor union expenditure and
personnel education expense 225362.83 531831.61 547248.26 209946.18
Total 24800605.87 28613885.95 26821086.96 26593404.86
(3) Defined contribution plans
Item
Balance at
year-beginning
Increased in the
period
Decreased in the
period
Balance at
period-end
1. Basic endowment insurance 130114.53 2380182.77 2369627.43 140669.87
2. Unemployment insurance 1263.01 25933.53 25857.71 1338.83
3. Enterprise annuity 870686.95 99250.00 -- 969936.95
Total 1002064.49 2505366.30 2395485.14 1111945.65
24. Taxes payable
Item Balance at period-end Balance at year-begin
VAT 1634634.93 1372624.04
Corporation income tax 5411047.29 1914409.61
Individual income tax 313438.96 261135.13
City maintaining & construction tax 145853.67 151417.42
Property right tax 1686793.48 266.04
Land VAT 5362682.64 5362682.64
Land use tax 223813.86 26459.98
Item Balance at period-end Balance at year-begin
Education surcharge 145432.31 149406.46
Stamp duty 19284.89 93010.71
Other 45981.54
Total 14942982.03 9377393.57
25. Other accounts payable
Item Balance at period-end Balance at year-begin
Interest payable 172792.00 290215.78
Other accounts payable 271426299.34 250198878.69
Total 271599091.34 250489094.47
(1) Interest payable
Item Balance at period-end Balance at year-begin
Interest of long-term loans with interest-installment and
principal paid on due
57405.37
Interest payable of short-term loans 172792.00 232810.41
Total 172792.00 290215.78
No overdue interest unpaid.
(2) Other accounts payable
①By nature
Item Balance at period-end Balance at year-begin
Relevant contacts 24783476.50 37392791.77
Deposit and margin 28350746.47 22124264.01
Other 218292076.37 190681822.91
Total 271426299.34 250198878.69
26. Long-term loans
Item Balance at period-end Balance at year-begin
Mortgage loan 34934887.55
Total 34934887.55
On June 24 2014 Zhongtian Company and China Construction Bank Co. Ltd. Shenzhen Branch signed the
“Fixed Asset Loan Contract” for the construction of the first phase of the Jewelry Building the contract stipulated
a loan amount of 300 million Yuan and the loan period was from June 24 2014 to June 23 2024. As of March 31
2019 the loan still had outstanding of 4 million Yuan which was fully paid off in April 2019.
27. Long-term account payable
Item Balance at period-end Balance at year-begin
Long-term account payable 3920160.36 3920160.36
Special payable
Total 3920160.36 3920160.36
(1) Long-term account payable
Item Balance at period-end Balance at year-begin
Deposit of staff residence 3908848.40 3908848.40
Allocation for technology innovation projects 11311.96 11311.96
Total 3920160.36 3920160.36
28. Accrual liability
Item Balance at year-begin Balance at period-end Causes
Pending litigation 2225468.76 2225468.76
Total 2225468.76 2225468.76
Explanation on contingency③: In May 2014 Huarong Shenzhen Company sued Guangming Watch Industry
Company and Automobile Industry and Trade Company in Shenzhen Futian District People's Court requesting
the decree that Huarong Shenzhen Company obtain the ownership equity of Guangming Watch Industry Company
under Civil Judgment (1997) SFFJCZ No. 801 and requesting the decree that Automobile Industry and Trade
Company assumes joint liability for the above debts on the grounds that Guangming Watch Industry Company’s
not liquidating caused the shareholders to damage the creditor's interest of the company.Up to 29 May 2014 the debt principle of 350000.00 Yuan and interest 65200.08 Yuan are need to paid by the
Company. The court acceptance fee 12010.00 Yuan and debt interest 946697.54 Yuan during the delayed
performance period together with principle and interests amounted to 1361897.62 Yuan. At the bank borrowing
rate for the same period and counted to 29 May 2019 the principle and interest that the Company may need to
paid 1854557.30 Yuan in total. If Huarong Company propose the default interest of 20% and without the
objection from the court the highest possible loss is amounted to 2225468.76 Yuan in total (including principle
and interest) by the Company.
29. Share capital
Item
Balance at
year-beginning
Changes in the period (+-)(+ . -)
Balance at
period-end
New
shares
issued
Bonus
shares
Shares converted
from public
reserve
Other Subtotal
Total share
capital
297281600 133776720 133776720 431058320
30. Capital reserve
Item
Balance at
year-beginning
Increased in the
period
Decreased in the
period
Balance at period-end
Capital premium 559544773.35 133776720.00 425768053.35
Other capital reserve 5681501.16 5681501.16
Total 565226274.51 133776720.00 431449554.51
After the resolution of Shareholders general meeting on 23 April 2019 based on the total share capital of
297281600 dated 31
st
December 2018 the Company increase 4.5 shares for every 10 shares to all shareholders
with capital reserves 133776720 shares in total are being converted balance of capital reserves amounted to
431449554.51 Yuan after converted.
31. Other comprehensive income
Item Balance at year-begin
Balance at
year-beginni
ng
Current period
Ending balance
Account before
income tax in the
period
Less: written in
other comprehensive
income in previous
period and carried
forward to gains and
losses in current
period (or retained
earnings)
Less : income tax
expense
Belong to
parent
company after
tax
Belong to
minority
shareholders
after tax
I. Other comprehensive
income items which will
not be reclassified
subsequently to profit of
loss
Including: Changes of
the defined benefit plans
that re-measured
Other
comprehensive income
under equity method that
cannot be transfer to
gain/loss
？
II. Other comprehensive
income items which will
be reclassified
subsequently to profit or
loss
26422.00 26422.00
Item Balance at year-begin
Balance at
year-beginni
ng
Current period
Ending balance
Account before
income tax in the
period
Less: written in
other comprehensive
income in previous
period and carried
forward to gains and
losses in current
period (or retained
earnings)
Less : income tax
expense
Belong to
parent
company after
tax
Belong to
minority
shareholders
after tax
Including: Other
comprehensive income
under equity method that
can transfer to gain/loss
26422.00 26422.00
Gain/loss of fair
value changes for
available-for-sale
financial assets(Former
financial instrument
standard)
Gain/loss of
held-to-maturity
investments that
re-classify to
available-for-sale
financial asset(Former
financial instrument
standard)
Item Balance at year-begin
Balance at
year-beginni
ng
Current period
Ending balance
Account before
income tax in the
period
Less: written in
other comprehensive
income in previous
period and carried
forward to gains and
losses in current
period (or retained
earnings)
Less : income tax
expense
Belong to
parent
company after
tax
Belong to
minority
shareholders
after tax
Change of fair
value of other creditors’
investment
Amount of
financial assets
re-classify to other
comprehensive income
Credit
impairment provision for
other creditors’
investment
Cash flow
hedging reserve
Translation
differences arising on
translation of foreign
currency financial
statements
Item Balance at year-begin
Balance at
year-beginni
ng
Current period
Ending balance
Account before
income tax in the
period
Less: written in
other comprehensive
income in previous
period and carried
forward to gains and
losses in current
period (or retained
earnings)
Less : income tax
expense
Belong to
parent
company after
tax
Belong to
minority
shareholders
after tax
Total other
comprehensive income
26422.00 26422.00
32. Surplus reserve
Item
Balance at
year-begin
Balance at
year-beginning
Increased in the
period
Decreased in
the period
Balance at
period-end
Statutory surplus reserve 3139918.14 3139918.14 -- -- 3139918.14
Total 3139918.14 3139918.14 -- -- 3139918.14
33. Retained profit
Item Current period Last period
Retained profits at the end of last year before adjustment 184535322.70 97798595.80
Adjust the total Retained profits at the beginning of the year
(Increase + Decrease -)
--
--
Retained profits at the beginning of the year after adjustment 184535322.70 97798595.80
Add: The net profits belong to shareholders of patent
company of this period
44779948.60
26920279.86
Less: Withdraw statutory surplus reserves -- --
Withdraw free surplus reserves -- --
Withdrawal of general risk provisions -- --
Common stock dividends payable -- --
Common stock dividends transferred to capital stock -- --
Retained profits at end of the period 229315271.30 124718875.66
34. Operating income and cost
Item
Current period Same period last year
Income Cost Income Cost
Main business 274182882.36 209294422.75 194190757.18 152737808.48
Other business 4085856.97 1199589.67 3764324.55 1002143.63
Total 278268739.33 210494012.42 197955081.73 153739952.11
35. Tax and surcharges
Item Current period Same period last year
Consumption tax 228067.46 238345.22
City maintaining & construction tax 395934.29 364256.92
Item Current period Same period last year
Education surcharge 282810.15 258836.71
Land use tax 218743.88 209447.09
Property right tax 1686527.43 1729876.12
Stamp duty 152809.21 102522.31
Other taxes 3272.64 19337.55
Total 2968165.06 2922621.92
Note: tax paying standards found more in Note V. Taxes
36. Sales expenses
Item Current period Same period last year
Staff remuneration 6075124.02 5088693.99
Advertising and exhibition expenses 238736.65 337873.81
Depreciation and amortization 710671.25 578266.24
Office expenses 283392.38 302546.51
Utilities 141178.84 395335.70
Transportation and business trip cost 147134.39 177820.47
Other 1762276.76 1457370.55
Total 9358514.29 8337907.27
37.Administration expense
Item Current period Same period last year
Staff remuneration 13660961.91 14695652.80
Office expenses 631367.84 754044.43
Transportation and business trip cost 159511.67 322091.67
Business entertainment expenses 257293.90 441210.59
Depreciation and amortization 1027310.00 868746.73
Consulting and service expenses 528616.99 1382567.03
Other 613566.95 672779.16
Total 16878629.26 19137092.41
38. Financial expenses
Item Current period Same period last year
Interest expenses 4765937.06 4367283.44
Less: Interest income 1152054.69 1053302.07
Less: interest capitalized amount 685189.91
Exchange gains and losses 10717.33 14108.62
Other 133176.06 128972.53
Total 3757775.76 2771872.61
39. Other income
Item Current period Same period last year
Amount reckoned into
current non-recurring
gains/losses
VAT input tax deduction 6611.29 6611.29
Total 6611.29 6611.29
40. Investment income
Item Current period Same period last year
Income of long-term equity investment calculated based
on equity
10775524.54
12795300.82
Income of disposal of long-term equity investment 1308598.25
Investment income of financial products during the
holding period
5935926.39
3762123.18
Total 16711450.93 17866022.25
41. Credit impairment loss
Item Current period Same period last year
Bad debt loss of account receivable -184419.32 ——
Bad debt loss of other account receivable 286085.46 ——
Total 101666.14
42. Assets impairment loss
Item Current period Same period last year
Bad debt loss —— -383789.39
Loss from falling price of inventory -8250.86
Total -392040.25
43. Income from assets disposal
Item Current period Same period last year
Amount reckoned into
current non-recurring
gains/losses
Income from disposal of non-current
assets
103159.68
103159.68
Total 103159.68 103159.68
44. Non-operating income
Item Current period Same period last year
Amount reckoned into
current non-recurring
gains/losses
Gains from non-current assets
damaged/scrap
52583.13 52583.13
Including: Fixed assets 52583.13 52583.13
Intangible assets
Gains for account unable to paid 3131.97
Other 55157.55 31262.42 55157.55
Total 119625.44 34394.39 119625.44
45. Non-operating expenditure
Item Current period Same period last year
Amount reckoned into
current non-recurring
gains/losses
Loss of non-current assets scrap and
damage
99240.38
Including: Fixed assets 99240.38
Item Current period Same period last year
Amount reckoned into
current non-recurring
gains/losses
Intangible assets
Other 833400.00 447.93 833400.00
Total 833400.00 99688.31 833400.00
46. Income tax expense
(1) Income tax expense
Item Current period Same period last year
Current income tax expense 5997893.76 1671294.17
Deferred income tax expense 19471.10 19471.10
Adjustment for precious period 20891.90 196708.50
Total 6038256.76 1887473.77
(2) Adjustment on accounting profit and income tax expenses
Item Current period
Total profit
51020756.02
Income tax measured by statutory/applicable tax rate
12755189.01
Impact by different tax rate applied by subsidies
Adjusted the previous income tax
20891.90
Impact by non-taxable revenue
-2693881.14
Impact on cost expenses and losses that unable to deducted
Impact by the deductible losses of the un-recognized previous deferred income tax -1025624.21
The deductible temporary differences or deductible losses of the un-recognized deferred
income tax assets in the Period
-3018318.80
Change of the balance of deferred income tax assets/liabilities at period-begin resulted by
tax rate adjustment
Income tax expense 6038256.76
47. Notes to statement of cash flow
(1) Other cash received in relation to operation activities
Item Current period Same period last year
Intercourse funds 29623572.79 14445364.48
Interest income 664434.23 350767.12
Total 30288007.02 14796131.60
(2) Other cash paid in relation to operation activities
Item Current period Same period last year
Expenses of operation management cash paid 4770459.97 6238289.92
Intercourse funds and other 25392044.89 34390552.03
Total 30162504.86 40628841.95
(3) Other cash received in relation to investment activities
Item Current period Same period last year
Account received for equity transfer 20870000.00 46001000.00
Total 20870000.00 46001000.00
(4) Other cash paid in relation to investment activities
Item Current period Same period last year
Equity transfer fee 5733400.00
Total 5733400.00
48. Supplementary information to statement of cash flow
(1) Supplementary information to statement of cash flow
Supplementary information Current period Same period of last year
1. Net profit adjusted to cash flow of operation activities:
Net profit
44982499.26 26566849.72
Add: Assets impairment provision 392040.25
Credit impairment loss -101666.14 ——
Depreciation of fixed assets consumption of oil assets and
depreciation of productive biology assets
11806505.67
6155954.57
Amortization of intangible assets
670462.14 695499.23
Amortization of long-term deferred expenses
527299.42 379476.58
Supplementary information Current period Same period of last year
Loss from disposal of fixed assets intangible assets and other
long-term assets(gain is listed with “-”)
-101666.14
63707.05
Loss of disposing fixed assets(gain is listed with “-”)
-52583.13 35533.33
Loss from change of fair value(gain is listed with “-”)
Financial expenses (gain is listed with “-”)
4765937.06 3596467.06
Investment loss (gain is listed with “-”)
-16711450.93 -17866022.25
Decrease of deferred income tax asset( (increase is listed with “-”)
19471.10 19471.10
Increase of deferred income tax liability (decrease is listed with
“-”)
Decrease of inventory (increase is listed with “-”)
-4455508.57 5938424.27
Decrease of operating receivable accounts (increase is listed with
“-”)
-29044227.74 -23770419.43
Increase of operating payable accounts (decrease is listed with “-”)
15128987.30 -30277449.59
Other
Net cash flow arising from operating activities 27434059.30 -28070468.11
2. Material investment and financing not involved in cash flow
Debt transfer to capital
Convertible bonds due within one year
Fixed assets financing lease-in
3. Net change of cash and cash equivalents:
Balance of cash at period end
199241051.16 277556456.47
Less: Balance of cash equivalent at period-begin
142848120.69 161793218.56
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increasing of cash and cash equivalents
56392930.47 115763237.91
(2) Constitution of cash and cash equivalent
Item Balance at period-end Balance at year-beginning
I. Cash 199241051.16 277556456.47
Item Balance at period-end Balance at year-beginning
Including: Stock cash 89247.55 109592.35
Bank deposit available for payment at any time
199151803.61 277446864.12
Other monetary fund available for payment at any time
Account available for payment saved in central bank
Deposit in inter-bank
Call loans from banks
II. Cash equivalent
Including: bond investment matured within 3 months
……
II. Balance of cash and cash equivalent at period-end 199241051.16 277556456.47
Including: Cash and cash equivalent with restriction used by
parent company or subsidiary in the Group
Note: cash and cash equivalent excluding the cash and cash equivalent with use-restricted concerned of the parent
company or subsidiaries in the Group
49. Assets with ownership or use right restricted
Item Ending book value Reason
Monetary fund 26664140.00 1 Note VI-1
Long term equity investment 27063722.06 Note IX -4(5)
Assets held for sale 85017251.77 Note IX -4(5)
Total 138745113.83
50. Item of foreign currency
(1) Item of foreign currency
Item
Closing balance of foreign
currency
Rate of conversion
Ending RMB balance
converted
Monetary fund
Including: USD 856 6.8747 5884.74
VII. Changes of consolidation range
1.Enterprise merger under the different control
The Company had no enterprise merger under the different control in Period.
2.Enterprise merger under the same control
The Company had no enterprise merger under the same control in Period.
3.Reverse purchase
The Company had no reverse purchase in Period.
4.Disposal of subsidiaries
No disposal of subsidiary in the period
5. Change of consolidate scope for other causes
No change of consolidate scope for other causes in the period
VIII. Equity in other entity
1. Equity in subsidiary
(1) Constitute of enterprise group
Subsidiary
Main
operation
place
Register
ed place
Business nature
Share-holding ratio(%)
Acquired way
Directly Indirectly
Shenzhen Tellus
Xinyongtong Automobile
Development Co. Ltd.
Shenzhen
Shenzhe
n
Service industry 100.00
Obtained by
establishment or
investment
Shenzhen Dongchang
Yongtong Automobile
Inspection Co. Ltd.Shenzhen
Shenzhe
n
Service industry 95.00
Obtained by
establishment or
investment
Shenzhen Bao’an Shiquan
Industrial Co. Ltd.Shenzhen
Shenzhe
n
Commerce 100.00
Obtained by
establishment or
investment
Shenzhen SDG Tellus Real
Estate Co. Ltd.
Shenzhen
Shenzhe
n
Manufacture 100.00
Obtained by
establishment or
investment
Shenzhen Tellus
Chuangying Technology
Co. Ltd.*2
Shenzhen
Shenzhe
n
Service industry 100.00
Obtained by
establishment or
investment
Shenzhen Xinyongtong
Automobile Inspection
Shenzhen
Shenzhe
n
Service industry 51.00
Obtained by
establishment or
Subsidiary
Main
operation
place
Register
ed place
Business nature
Share-holding ratio(%)
Acquired way
Directly Indirectly
Equipment Co. Ltd. investment
Shenzhen Automobile
Industry Trading General
Company
Shenzhen
Shenzhe
n
Commerce 100.00
Obtained by
establishment or
investment
Shenzhen Automotive
Industry Supply Corporation
Shenzhen
Shenzhe
n
Service industry 100.00
Obtained by
establishment or
investment
Shenzhen SDG Huari
Automobile Enterprise
Co.Limited
Shenzhen
Shenzhe
n
Service industry 60.00
Obtained by
establishment or
investment
Shenzhen Huari Anxin
Automobile Inspection Ltd.
Shenzhen
Shenzhe
n
Service industry 100.00
Obtained by
establishment or
investment
Shenzhen Zhongtian
Industrial Co. Ltd.Shenzhen
Shenzhe
n
Service industry 100.00
Obtained by
establishment or
investment
Shenzhen Huari TOYOTA
Automobile Sales Service
Co. Ltd.
Shenzhen
Shenzhe
n
Commerce 60.00
Obtained by
establishment or
investment
Shenzhen Hanligao
Technology Ceramics Co.Ltd*1
Shenzhen
Shenzhe
n
Ceramic technology 80.00
Obtained by
establishment or
investment
Shenzhen South Auto
Maintenance Center*1
Shenzhen
Shenzhe
n
Vehicle maintenance 100.00
Obtained by
establishment or
investment
Anhui Tellus Starlight
Jewelry Investment Co. Ltd.Hefei Hefei Commerce 51.00
Obtained by
establishment or
investment
Anhui Tellus Starlight Hefei Hefei Commerce 60.00 Obtained by
Subsidiary
Main
operation
place
Register
ed place
Business nature
Share-holding ratio(%)
Acquired way
Directly Indirectly
Junzun Jewelry Co. Ltd. establishment or
investment
Sichuan Tellus Jewelry
Technology Co. Ltd.
Chengdu Chengdu Commerce 66.67
Obtained by
establishment or
investment
Note: *1. The operating period of Shenzhen Hanligao Technology Ceramics Co. Ltd was from September 21
1993 to September 21 1998 and the operation period of Shenzhen South Auto Maintenance Center was from July
12 1994 to July 11 2002 these companies have ceased operations for many years and their business registrations
have been revoked because they did not participate in the annual industrial and commercial inspection. The
Company has been unable to exercise effective control over these companies and these companies are not
included in the consolidation scope of the Company's consolidated financial statements the Company's
investment in these companies and the book value of the net investment in these companies is zero.
*2 Shenzhen Tellus Real Estate Trading Co. Ltd. was renamed as Shenzhen Tellus Chuangying Technology Co.
Ltd. on November 23 2018 it has completed the business registration changes and obtained the business license.
(2) Important non-wholly-owned subsidiary
Subsidiary
Share-holding
ratio of
minority(%)
Gains/losses
attributable to
minority in the
Period
Dividend announced
to distribute for
minority in the
Period
Ending equity of
minority
Shenzhen Huari Toyota Automobile
Sales Co. Ltd
40% 53409.02 -- 891946.07
Shenzhen SDG Huari Automobile
Enterprise Co.Limited
40% -23389.77 -- 10914287.57
(3) Main finance of the important non-wholly-owned subsidiary
Subsidiary
Balance at period-end
Current assets
Non-current
assets
Total assets
Current
liabilities
Non-current
liabilities
Total liabilities
Shenzhen Huari
Toyota Automobile
61440674.09 3741267.74 65181941.83 62952076.65 -- 62952076.65
Subsidiary Balance at period-end
Sales Co. Ltd
Shenzhen SDG Huari
Automobile
Enterprise Co.Limited
44972026.13 27154671.49 72126697.62 44840978.70 -- 44840978.70
(Continued)
Subsidiary
Balance at end of last year
Current assets
Non-current
assets
Total assets
Current
liabilities
Non-current
liabilities
Total liabilities
Shenzhen Huari
Toyota Automobile
Sales Co. Ltd
50501290.59 3303588.99 53804879.58 51708536.94 -- 51708536.94
Shenzhen SDG Huari
Automobile
Enterprise Co.Limited
42821429.72 27874888.18 70696317.90 43352124.56 -- 43352124.56
(Continued)
Subsidiary
Current period Same period last year
Business income Net profit
Total
comprehensi
ve income
Cash flow
from operating
activities
Business income Net profit
Total
comprehensiv
e income
Cash flow
from
operating
activities
Shenzhen
Huari Toyota
Automobile
Sales Co. Ltd
106372651.09 133522.54 133522.54 3616339.12 85879290.03 446069.13 446069.13 2611399.29
Shenzhen SDG
Huari
Automobile
Enterprise
Co.Limited
18957565.71 -58474.42 -58474.42 -3733976.75 17507428.39 -411922.09 -411922.09 -972706.87
(4) Material limits on using group assets or discharging group debts
There is no material limit on using group assets or discharging group debts by our subsidiaries.
2. Transactions leading to change of owner’s equity while not resulting in loss of control in subsidiary
There is no transaction by the Company leading to change of owner’s equity while not resulting in loss of control
in subsidiary.
3. Equity in joint venture and associated enterprise
(1) Important associated enterprise
Joint venture/ associated
enterprise
Main
operation
place
Registered
place
Business nature
Share-holding ratio(%) Accounting
treatment on
investment for Joint
venture or
associated enterprise
Directly Indirectly
Associated enterprise:
Shenzhen Zung Fu Tellus
Auto Service Co. Ltd.
Shenzhen Shenzhen
Sales and maintain of
Benz
35.00 Equity method
Shenzhen Dongfeng
Automobile Co. Ltd
Shenzhen Shenzhen
Auto manufacture and
maintain
25.00 Equity method
Joint venture:
Shenzhen Tellus Gman
Investment Co. Ltd
Shenzhen Shenzhen
Investment in industry
and property
management and leasing
50.00 Equity method
(2) Main financial information of the important joint venture
Item
Shenzhen Tellus Gman Investment Co. Ltd
Balance at period-end/Current period
Balance at end of last year/Same period
last year
Current assets 39509329.58 30578378.74
Including: Cash and cash equivalent 10531553.22 9055687.59
Non-current assets 358747463.90 362263866.80
Total assets 398256793.48 392842245.54
Current liabilities 20874384.38 12764218.35
Item
Shenzhen Tellus Gman Investment Co. Ltd
Balance at period-end/Current period
Balance at end of last year/Same period
last year
Non-current liabilities 246000000.00 256000000.00
Total liabilities 266874384.38 268764218.35
Minority interests --
Equity attributable to shareholder of parent
company
131382412.10
124078027.19
Share of net assets calculated by shareholding
ratio
65691206.05
62039013.62
Adjustment items
—Goodwill --
—Unrealized profit of internal trading --
—Other --
Book value of equity investment in joint ventures 65691204.86 62039013.62
Fair value of the equity investment of joint
venture with public offers concerned
Business income 41866318.34 33843551.10
Financial expenses 7181939.67 9221726.36
Income tax expenses 1685627.29
Net profit 7304384.91 6984356.55
Net profit of the termination of operation
Other comprehensive income
Total comprehensive income 7304384.91 6984356.55
Dividends received from joint venture in the year
(3) Main financial information of the important associated enterprise
Item Balance at period-end/Current period Balance at end of last year/Same period last year
Shenzhen Zung Fu
Tellus Auto Service Co.Ltd.Shenzhen Dongfeng
Automobile Co. Ltd
Shenzhen Zung Fu Tellus
Auto Service Co. Ltd.
Shenzhen Dongfeng
Automobile Co. Ltd
Current assets 257732411.19 499585517.51 257589051.00 617799827.49
Non-current assets 38933549.81 223302727.56 22136628.00 228248688.85
Total assets 296665961.00 722888245.07 279725679.00 846048516.34
Current liabilities 169147592.70 494334284.71 164858755.00 370192355.97
Non-current liabilities 50193449.01 69181983.79 -- 70203098.25
Total liabilities 219341041.71 563516268.50 164858755.00 440395454.22
Minority interests -- -- -- -9013246.97
Equity attributable to
shareholder of parent company
77324919.29 169497328.91 114866924.00 414666309.09
Share of net assets calculated
by shareholding ratio
27063721.75 42374332.23 40203423.40 103666577.28
Adjustment items
—Goodwill
—Unrealized profit of internal
trading
—Other
Book value of equity
investment in associated
enterprise
27063722.06 42374332.23 40203423.40 103666577.28
Fair value of the equity
Item Balance at period-end/Current period Balance at end of last year/Same period last year
Shenzhen Zung Fu
Tellus Auto Service Co.Ltd.Shenzhen Dongfeng
Automobile Co. Ltd
Shenzhen Zung Fu Tellus
Auto Service Co. Ltd.
Shenzhen Dongfeng
Automobile Co. Ltd
investment of associated
enterprise with public offers
concerned
Business income 568266810.59 219400462.98 625845433.53 206529913.61
Net profit 12457996.18 10121106.72 24457707.54 3918159.88
Net profit of the termination of
operation
-- -- -- --
Other comprehensive income -- -- -- --
Total comprehensive income 12457996.18 10121106.72 24457707.54 3918159.88
Dividends received from
associated enterprise in the
year
17500000.00 64100548.07 52500000.00 --
(4) Summary financial information of not important joint venture and associated enterprise
Item
Balance at period-end/Current
period
Balance at end of last year/Same
period last year
Joint venture:
Total book value of investment 11617563.40 11253581.63
Total amount of the follow items calculated by
share-holding ratio
—Net profit 363981.77 102122.54
—Other comprehensive income
—Total comprehensive income 363981.77 102122.54
Item
Balance at period-end/Current
period
Balance at end of last year/Same
period last year
Associated enterprise:
Total book value of investment 7072920.13 7482170.28
Total amount of the follow items calculated by
share-holding ratio
—Net profit -409250.15 -362624.06
—Other comprehensive income
—Total comprehensive income -409250.15 -362624.06
(5) Excess deficit from joint venture or associated business
Joint venture or associated enterprise
Cumulative losses
without
recognized at
beginning of the
year
Loss of net profit without
recognized in the period (or
the net profit shares in the
period)
Cumulative losses
without recognized at
end of current period
Shenzhen Tellus Auto Service Chain Co. Ltd. 98921.14 -33.44 98887.7
Shenzhen Xinyongtong Dongxiao Auto Parts Sales
Co. Ltd.
1498143.53 242952.17 1741095.7
Shenzhen Yongtong Xinda Inspection Equipment
Co. Ltd.
783412.71 123625.16 907037.87
4. Important co-management
No co-management in the Period.IX. Related party and related transactions
1. Parent company of the enterprise
Parent company
Registered
place
Business nature
Registered
capital
Share-holding
ratio on the
enterprise for
parent company
(%)
Voting right ratio
on the enterprise
(%)
Shenzhen SDG Co. Ltd. Shenzhen
Development and
operation of real estate
2582.82 million
Yuan
49.09 49.09
Parent company
Registered
place
Business nature
Registered
capital
Share-holding
ratio on the
enterprise for
parent company
(%)
Voting right ratio
on the enterprise
(%)
and domestic
commerce
Note: Ultimate controller of the Company is SASAC of Shenzhen.
2. Subsidiary of the Company
Found more in Note VIII-1.
3. Details of joint-venture and associated enterprise of the Company
Found more in Note VIII-3.
4. Particulars about other related parties
(1) purchase/sale of goods; providing/accepting labor service
①Purchasing goods/accepting labor service
Related party Content Current period Same period last year
Shenzhen SD Engineering Management Co.Ltd.
Cost of superintendence
504190.40 240000.00
Shenzhen SDG Tellus Property Management
Co. Ltd.
Property service charge
5816443.82 --
Sales of goods/providing labor service
Related party Content Current period Same period last year
Shenzhen SD Petty Loan Co. Ltd. Property service charge 95167.03 --
(2) related associated trusteeship management/ mandatory administration
No related associated trusteeship management/ mandatory administration in the period.
（3）Related contract
No related contract in the period.
(4) Related lease
①As a lessor for the Company
Lessee Assets type
Lease income recognized in
the period
Lease income recognized
at same period last year
Shenzhen Zung Fu Tellus Auto Service Co.Ltd.House leasing 2523809.60 2523809.60
Shenzhen Xinyongtong Auto Service Co. Ltd. House leasing 327782.86 308502.84
Shenzhen Xinyongtong Dongxiao Auto Parts
Sales Co. Ltd.House leasing 240428.57 226285.74
Shenzhen SD Petty Loan Co. Ltd. House leasing 704631.90 --
Shenzhen SDG Tellus Property Management
Co. Ltd.
House leasing 13288.57 70190.48
(5) Related guarantee
① The Company serves as guarantor
1. The Company entered into pledge contract with Zung Fu Auto Management (Shenzhen) Co. Ltd. (hereinafter
referred to as Zung Fu Shenzhen) pursuant to which during the period from establishment of our associate
company Shenzhen Zung Fu Tellus Auto Service Co. Ltd. (hereinafter referred to as Zung Fu Tellus) to the
expiration date of the joint venture contract between the Company and Zung Fu Shenzhen provided that Zung Fu
Shenzhen provides borrowings to Zung Fu Tellus under entrusted loan Zung Fu Tellus makes borrows from bank
or other financial institutions and guaranteed by Zung Fu Shenzhen and the total borrowings shall not exceed
RMB 100 million the Company bears 35% of the obligations arising from above borrowings according to its
shareholding proportion. It was agreed for the Company to pledge 35% equity interests held in Zung Fu Tellus to
Zung Fu Shenzhen as counter guarantee for the above borrowings.Shenzhen Xinglong Machinery Mould Co. Ltd. (hereinafter referred to as “Xinglong Company”) is a
shareholding subsidiary of the Company the Company holds a 43% equity interest in Xinglong Company. In
order to build the Xinglong Gold Jewelry Building Project Xinglong Company signed a fixed asset loan contract
with China Construction Bank Co. Ltd. Shenzhen Branch (hereinafter referred to as “China Construction Bank”)
with a loan amount of RMB 280 million and Xinglong Company used the land certificate of Xinglong Gold
Jewelry Building (Land Parcel No.H309-0024(1)) as the collateral. Now Xinglong Company intends to apply to
China Construction Bank for the cancellation of the land certificate mortgage for the real estate license of
Xinglong Gold Jewelry Building. During the period of handling the real estate license each shareholder of
Xinglong Company pledges the equity of Xinglong Company to China Construction Bank at the same time so as
to provide temporary pledge guarantees for the loans of Xinglong Company.Other than the above guarantee the Company’s provision of guarantees as guarantor all relates to such guarantees
provided to subsidiaries.②The Company as secured creditor
Chengdu HezhiYuan Jewelry Co. Ltd. the related enterprise of Chengdu CaizhiYuan Jewelry Co. Ltd. which is a
shareholder of the Company’s subsidiary Sichuan Tellus Jewelry Technology Co. Ltd. and the related individual
Xiong Yungui Chengdu Ruihang Jewelry Co. Ltd. a shareholder of Sichuan Tellus Jewelry Technology Co. Ltd.and the related individual Linhang Chengdu Zhongjin Guifu Jewelry Co. Ltd. a shareholder of Sichuan Tellus
Jewelry Technology Co. Ltd. and the related individual Lin Tonggui Chengdu Hengyue Trading Co. Ltd. a
shareholder of Sichuan Tellus Jewelry Technology Co. Ltd. and related company Chengdu Zhongcheng Shubao
Jewelry Co. Ltd. set the maximum guarantee by taking Sichuan Tellus Jewelry Technology Co. Ltd. as the
creditor the main creditor's right of guarantee is the accounts receivable of Sichuan Tellus Jewelry Technology
Co. Ltd. to the warrantees Lin Qin etc. the total amount of guarantees is 104.99 million Yuan.
(6) Currencies deposit between related parties
Related party Content Current year Last year
Borrow-in:
Shenzhen SDG Co. Ltd.
Fund occupation
expenses
139647.55 216794.15
Anhui Jinzun Jewelry Co. Ltd. Fund occupation
expenses
207543.00 18368.53
Starlight Jewelry Co. Ltd.
Fund occupation
expenses
117416.63 4411.18
Borrow-out:
Shenzhen Xinglong Machinery Mould Co. Ltd.
Fund occupation
expenses
37708.32 37708.32
(7) Remuneration of key manager
Item Current period Same period last year
Remuneration of key manager 3510000 Yuan 4000000 Yuan
5. Receivable/payable items of related parties
(1) Receivable item
Item
Balance at period-end Balance at end of last year
Book balance Bad debt
provision
Book balance Bad debt
provision
Item
Balance at period-end Balance at end of last year
Book balance Bad debt
provision
Book balance Bad debt
provision
Accounts receivable:
Shenzhen Zung Fu Tellus Auto Service Co. Ltd. 2776190.40 -- -- --
Shenzhen Xinyongtong Auto Service Co. Ltd. 984964.00 927602.00 927602.00 927602.00
Shenzhen Xinyongtong Dongxiao Auto Parts
Sales Co. Ltd.
722475.00 680400.00 680400.00 680400.00
Total 4483629.40 1608002.00 1608002.00 1608002.00
Other account receivable:
Shenzhen Tellus Auto Service Chain Co. Ltd. 1359297.00 1359297.00 1359297.00 1359297.00
Shenzhen Yongtong Xinda Inspection Equipment
Co. Ltd.
531882.24 531882.24 531882.24 531882.24
Shenzhen Xiandao New Material Co. Ltd. 660790.09 660790.09 660790.09 660790.09
Shenzhen Xinglong Machinery Mould Co. Ltd. 2376474.54 1093185.22 2338766.22 1074239.56
Shenzhen Tellus Xinyongtong Auto Service Co.Ltd.
114776.33 114776.33 114776.33 114776.33
Total 5043220.20 3759930.88 5005511.88 3740985.22
Dividend receivable:
Shenzhen SDG Tellus Property Management Co.Ltd.-- -- 232683.74 --
Total -- -- 232683.74 --
Long-term account receivable
Shenzhen Tellus Auto Service Chain Co. Ltd. 2179203.68 2179203.68 2179203.68 2179203.68
Total 2179203.68 2179203.68 2179203.68 2179203.68
(2) Payable item
Item Balance at period-end Balance at end of last year
Accounts payable:
Shenzhen SDG Real Estate Co. Ltd 6054855.46 6054855.46
Item Balance at period-end Balance at end of last year
Shenzhen Machinery Equipment Imp & Exp.
Company
45300.00 45300.00
Shenzhen Tellus Gman Investment Co. Ltd 200000.00 200000.00
Total 6300155.46 6300155.46
Other accounts payable:
Shenzhen SDG Real Estate Co. Ltd 335701.34 335701.34
Hong Kong Yujia Investment Co Ltd. 2126714.22 2116056.82
Shenzhen SDG Swan Industrial Co. Ltd. 20703.25 20703.25
Shenzhen Machinery Equipment Imp & Exp.
Company
1554196.80 1554196.80
Shenzhen SDG Co. Ltd. 20331808.32 23079380.77
Shenzhen Longgang Tellus Real Estate Co. Ltd. 1095742.50 1095742.50
Shenzhen Tellus Yangchun Real Estate Co. Ltd. 476217.49 476217.49
Shenzhen Xinyongtong Technology Co. Ltd. 139200.00 139200.00
Shenzhen Tellus Hang Investment Co. Ltd. 111129.00 192129.00
Shenzhen Yongtong Xinda Inspection Equipment Co.Ltd.
29940.00 28340.00
Anhui Jinzun Jewelry Co. Ltd. 2530000.00 5530000.00
Starlight Jewelry Co. Ltd. 886291.66 903458.30
Shenzhen SDG Tellus Property Management Co. Ltd. 2566284.00 1763953.00
Shenzhen Zung Fu Tellus Auto Service Co. Ltd. 833334.00 833334.00
Shenzhen SD Petty Loan Co. Ltd. 227836.80 227836.80
Total 33265099.38 38296250.07
X. Commitment or contingency
1. Important commitments
(1) Capital commitments
Item Balance at period-end Balance at end of last year
Signed without recognized in financial statement
—Purchase and construction of long-term assets
commitment
7888840.85 23314560.50
Total 7888840.85 23314560.50
2. Contingency
(1) Contingent liability and its financial influence formed by pending litigation or arbitration
① In October 2005 a lawsuit was brought before Shenzhen Luo Hu District People’s Court by the Company
which was the recognizer of Jintian Industrial (Group) Co. Ltd. (“Jintian”) to require Jintian to redress RMB
4081830 (principal: RMB 3000000 interest: RMB 1051380 legal fare: RMB 25160 and executive fare:
RMB 5290). Shenzhen Intermediate People’s Court had adjudged that the Company won the lawsuit and the
forcible execution had been applied by the Company. As for the deducted amount in previous years the Company
has counted as debt losses.
In April 2006 Shenzhen Development Bank brought an accusation against Jintian’s overdue loan two million U.S.
dollars and the Company who guaranteed for this loan. The company took on the principal and all interest. After
that the Company appealed to Shenzhen Luohu District People's Court asking Jintian to repay 2960490 U.S.dollars and interest. In 2008 it reached Shen Luo No.937 Civil Reconciliation Agreement (2008) after the
mediating action taken by Shenzhen Luohu District People's Court. The agreement is as follows: If Jintian repay
2960490 U.S. dollars before October 31 2008 the company will exempt all the interest. If Jintian can not settle
the amount on time it will pay the penalty in accordance with the People's Bank of China RMB benchmark
lending rate over the same period.Jintian Company in process of debt service for bankruptcy reorganization. On January 29 2016 Shenzhen
Intermediate People's Court ruled that the reorganization plan of Jintian Company was completed and the
bankruptcy proceedings were terminated Jintian Company was re-allocating to the creditors including the
Company according to the reorganization plan. Up to the approval date of this financial report the Company has
not yet received the allocated property.
After failed to communicate with Jintian Company about the cash and equity that should be allocated to our
company after Jintian Company’s bankruptcy and reorganization for more than once the Company filed a lawsuit
to the People's Court of the Qianhai Cooperation Zone requesting the court to order Jintian Company and its
shareholders to pay RMB 325000 in cash and 427604 shares of A shares and 163886 shares of B shares of
Jintian Company. The matter has been filed but has not been opened until June 30 2019.② In 2014 our subsidiary Shenzhen Automobile Industry Trading General Company (hereinafter referred to as
Automobile Industry Trading Company) was served with a summon from people’s court in Futian districtShenzhen pursuant to which Shenzhen branch of China Huarong Asset Management Co. Ltd. (“HuarongShenzhen”) sued Auto Industrial Trading Company for joint settlement responsibility in respect of the debt
disputes between Shenzhen Guangming Watch Co. Ltd. (“Guangming Watch”) and its creditors.Pursuant to the civil verdict (SFFJCZD No.801(1997)) issued by people’s court in Futian district Shenzhen on 24
November 1997 Guangming Watch shall repay RMB700000 and interests thereof to Shenzhen Futian branch of
China CITIC Bank. Guangming Watch failed to discharge debts after such verdict and Shenzhen Futian branch of
China CITIC Bank applied for compulsive execution and recovered an amount of RMB561398.30. later due to
that there was no property available for execution people’s court in Futian district of Shenzhen issued civil verdict
(SFFZZD No.102(1998)) to suspend execution on 10 December 1998. In July the original creditor Shenzhen
Futian branch of China CITIC Bank transferred the above creditor’s right (namely outstanding principal of
RMB350000 million and relevant interests) to Huarong Shenzhen.
Guangming Watch was an associate company of Auto Industrial Trading Company with a shareholding of 10% in
1990. Guangming Watch has been deregistered with Shenzhen Business and Commerce Bureau on 28 February
2002. Huarong Shenzhen sued Guangming Watch and Auto Industrial Trading Company at people’s court in
Futian district of Shenzhen in May 2014 requesting to obtain all the interests of Guangming Watch under the civil
verdict (SFFJCZD No.801(1997)) and request an order for Auto Industrial Trading Company to take joint
settlement responsibility for the above debts on the grounds that failure of Guangming Watch to settle debts
resulted in prejudice in creditors’ right by shareholders. On Jan 20
th
2018 Huarong Asset Shenzhen Branch
applied to withdraw its complaints to Shenzhen Futian District People’s Court and the court issued（2014）
SFFMECZ No.4712 -2 civic ruling paper on Jan. 30
th
2018 which granted to revoke the approval and ruled in
favor of Automobile Industry and Trading Co. Ltd. In June 2018 Huarong Asset Shenzhen Branch applied to the
Shenzhen Intermediate People’s Court for the bankruptcy liquidation of Guangming Watch. Up to 30
th
June 2019
no further legal instruments have been received.
③Bao'an District People's Court (1996) BFJZ No. 183 civil judgment judged that Guangming Watch Industry
Company should repay RMB 1.9 million and interest to CCB the final judgment of Shenzhen Intermediate
People's Court (1996) SZFJYZZ No. 563 civil judgment upheld the original verdict. After the judgment
Guangming Watch Industry Company failed to fulfill its obligations and CCB applied for enforcement and
executed 1.64 million Yuan. Afterwards as no property was available for execution Baoan District Court made
civil ruling (1997) SBFZZ No. 220 on May 20 2003 to rule the termination of execution. In June 2004 the
original creditor CCB transferred all of the above claims to the asset management company. After several transfers
Ezhou Liantai Investment Consulting Co. Ltd. proposed to obtain the claims in April 2008.
Guangming Watch Company has been revoked license by Shenzhen Industrial and Commercial Bureau on
February 28 2002. Ezhou Liantai Investment and Consulting Co. Ltd. submitted the case of Guangming Watch
Company and Automobile Industry and Trade Company to Shenzhen Futian District People's Court in May 2012
requesting to order Guangming Watch Company to pay off 3.607 million Yuan and the interests from May 11
2012 to the actual repayment date and requesting to order Automobile Industry and Trade Company to assume the
joint liability for above-mentioned debts by the reason of Automobile Industry and Trade Company being its last
shareholder not setting up a liquidation team for liquidation within the legal time limit and assuming the joint
liability for debts.In 2013 Shenzhen Futian District People's Court (2012) SFFMECZ No. 4328 paper of civil judgment determined
Automobile Industry and Trade Company to assume the joint liability for debts in (1996) SZFJYZZ No. 563 paper
of civil judgment to the accused Guangming Watch Company. Automobile Industry and Trade Company appealed
on December 12 2013 Shenzhen Intermediate People's Court (2013) SZFSZZ No. 1677 civil judgment’s final
judgment affirmed the original judgment. Automobile Industry and Trade Company accrued the payable joint
liability funds of 2130200 Yuan in 2013.Hua Rong District People's Court of Ezhou City (2008) HMCZ No. 57 civil judgment determined the accused
Ezhou Liantai Investment and Consulting Co. Ltd. to pay the accuser Huizhou Lamei Information Consulting Co.
Ltd. assignment of claims and liquidated damages and also bear the legal fare. In the executing process on April
14 2015 Hua Rong District People's Court of Ezhou City (2015) EHRZYZ No. 0005 execution ruling added
Automobile Industry and Trade Company as the person subject to enforcement and ordered Automobile Industry
and Trade Company to pay the object funds of 4170859.54 Yuan. Hua Rong District People's Court of Ezhou
City held that the object Guangming Watch Company should perform is the loan principal of 1.9 million Yuan and
the promissory loan interest of 331785.60 Yuan from November 21 1995 to January 22 1997 with a total of
2231785.60 Yuan. Shenzhen Bao’an District People's Court has executed 1641888.10 Yuan deducting the
litigation fee of 21700 Yuan and execution fee of 28500 Yuan up to March 25 2002 there were still object funds
of 1161725.65 Yuan and debt interest of 1274604.31 Yuan during the delay in performance calculated by the
principle of repayment of principal with interest and debt interest of 1734529.5 Yuan caused by delay in
performance from March 25 2002 to March 30 2009 principal and interest amounting to 4170859.54 Yuan.
Automobile Industry and Trade Company proposed an opposition to execution that Automobile Industry and
Trade Company should assume the joint liability for the debts of 258111.90 Yuan and the interest to be assumed
by Guangming Watch Company and (1996) BFJZ No. 183 litigation fee of 21700 Yuan and (1997) SBFZZ No.
220 case execution fee of 28500 Yuan.
Ezhou City Intermediate People's Court held that the surplus creditor's rights was non liquet after Shenzhen
Bao'an District People's Court’s execution of (1996) SZFJYZZ No. 563 civil judgment both parties had large
difference in opinion whether the executed 1.64 million Yuan was just principal or principal and interest which
was difficult to be determined therefore Ezhou City Intermediate People's Court (2015) EHRZYZ No. 00005
execution ruling was repealed and returned for re-examination.On November 30 2015 Ezhou Liantai Investment Consulting Co. Ltd. applied for execution to the Shenzhen
Futian District People's Court by taking Automobile Trade Company as the person subject to enforcement. On
December 10 2018 the Company received the execution ruling (2018) Yue 0304 Zhi Hui No. 1003 from
Shenzhen Futian District People's Court and the Company has paid RMB 1900000 to Ezhou Liantai on
November 26 2018 in accordance with the execution ruling the case has been executed and closed.④The Company’s subsidiary Shenzhen Automobile Industry and Trade Co. Ltd (hereinafter referred to as
"Automobile Industry and Trade Company") got shares in Shenzhen Guangming Watch Co. Ltd. (hereinafter
referred to as "Guangming Watch Company" Automobile Industry and Trade Company holds 10% of shares) in
1990 this company loaned RMB 2 million from China Construction Bank on December 12 1990 with time limit
of nine months Guangming Watch Company repaid RMB 100000 in October 1992 but the balance was still in
arrears. In December 2017 subsidiary of Tellus- Shenzhen Tellus Xinyongtong Automobile Development Co. Ltd.has filed a lawsuit to Luohu District People’s Court for its lease contract with a natural person Huang Wei because
of unreasonable long lease period and low rental price applying for terminating the lease contract and asking the
defendant Huang Wei to return the house back. For the reason that the defendant Huang Wei refused to accept the
court mediation the joint mediation before litigation ended on Jan. 22
nd
2018. Later the Court hearing the case in
court twice o 7
th
March 2018 and 29
th
March 2018. The first trial has been completed Shenzhen Tellus
Xinyongtong Automobile Development Co. Ltd. lose a lawsuit. No further legal instruments have been received
ended as 30
th
June 2019.⑤In March 2018 the natural person Huang Weiqiang has filed a lawsuit with Shenzhen Automobile Industry and
Trading General Company and Shenzhen SDG Co. Ltd. to Shenzhen Luohu District People’s Court asking them
to pay a total amount of 136 692.13 Yuan for the delinquent settlement allowance of state-owned enterprises
restructuring and the overdue interest.Huang Weiqiang is the shareholder and chairman of Shenzhen Automobile Import and Export Co. Ltd. Shenzhen
Automobile Import and Export Co. Ltd. was established in 1987 and it was the wholly owned subsidiary of
Shenzhen Automobile Industry and Trading General Company at the establishment period. After the enterprise
restructuring in 2002 the restructured Shenzhen Automobile Industry and Trading General Company has still held
35% share rights of Shenzhen Automobile Import and Export Co. Ltd.
In May 2018 Luohu District People’s Court issued a civic ruling paper and the judgment result said this case was
the dispute arising from applying for the payment of settlement allowance caused by the identity transformation of
employees during the process of enterprise restructuring which was put forward in line with the Shenzhen
government’s policies so the case did not fall within the scope of the court and the court dismissed the action.Huang Weiqiang has instated an appeal to Guangdong Provincial Intermediate People’s Court the second instance
court rejected Huang’s appeal. No further legal instruments have been received ended as 30
th
June 2019.⑥ In March 2019 Xie Jianguang submitted an arbitration application to the Shenzhen Labor and Personnel
Dispute Arbitration Commission on the grounds that he had changed his position without authorization and
illegally terminated the contract claiming compensation of 529389.55 Yuan. The Arbitration Commission held a
trial in June 2019 and later ruled that Shenzhen Automobile Industry Trading General Company lost the case. At
present Automobile Industry and Trade Company is preparing to file a first-instance complaint.⑦ In 2019 Ma Baohong took Shenzhen Tellus (Group) Co. Ltd. and Shenzhen Zhongtian Industrial Co. Ltd. as
the defendants and submitted an arbitration application to the Shenzhen Labor and Personnel Dispute Arbitration
Commission on the grounds of being forced to terminate the labor contract and that the bonus is not being paid in
full. The claimed amount of compensation is 472706.27 Yuan. In July 2019 the Arbitration Commission held a
trial and no ruling has yet been made.XI. Events after balance sheet date
1. Profit distribution
No profit distribution and capital reserve conversion in the period
2. Equity transfer
On July 30 2019 the Company and Shenzhen Runhe United Investment Development Co. Ltd. (hereinafter
referred to as “Runhe”) signed a supplementary agreement on the transfer of 43% equity of Shenzhen Xinglong
Machinery Mould Co. Ltd. and Runhe Committed to settle the entire equity transfer payment and interest with
the company before August 14 2019. At the same time it shall pay the interest penalty from July 15
th
2019 to the
date of repayment to the company which is calculated according to the standard of 0.005% of the daily interest. If
Runhe fails to settle all equity transfer payments and interest to the company before 24 o'clock on August 14 2019
Runhe shall trace back the transfer payment to the company every one day after June 15
th
2019 and pay the
penalty of 0.005% of the transfer payments to the company at the same time the company has the right to cancel
the “Agreement on Transfer of State-owned Property Rights of Enterprise” confiscate all the payments made by
Runhe and require Runhe to pay the punitive liquidated damages of RMB 30 million. As of the date of approval
of this report the company has received the total equity transfer payment of 286670000 Yuan and the interest of
9028100 Yuan in accordance with the "Agreement on Transfer of State-owned Property Rights of Enterprise" and
the supplementary agreement.XII. Other important events
1. Previous accounting errors collection
The Company had no previous accounting errors collection in Period.
2. Debt restructuring
The Company had no debt restructuring in Period.
3. Assets replacement
The Company had no non-monetary assets change in Period.
4. Segment
Financial information for reportable segment
Jan.- Jun.2019
Item Auto sales
Auto
maintenance and
inspection
Leasing and
services
Wholesale and
retail of jewelry Offset of segment Total
Main business income 79247600.74 41996759.09 73850131.87 97100722.64 -18012331.98 274182882.36
Main business cost 77917559.91 37364007.55 20803127.12 91148345.86 -17938617.69 209294422.75
Total assets 30493346.31 109116284.20 2549695423.99 168653088.69 -1146386354.72 1711571788.47
Item Auto sales
Auto
maintenance and
inspection
Leasing and
services
Wholesale and
retail of jewelry Offset of segment Total
Total liability 40336387.86 69757658.55 842394394.59 6717514.33 -411898881.99 547307073.34
Jan.- Jun.2018
Item Auto sales
Auto
maintenance and
inspection
Leasing and
services
Wholesale and
retail of jewelry Offset of segment Total
Main business income 61613402.01 37925019.21 40798989.10 71783625.94 -17930279.08 194190757.18
Main business cost 60137721.39 33796019.74 8471631.42 68272973.37 -17940537.44 152737808.48
Total assets 18348537.16 106059130.64 2312261181.48 101559791.25 -1059643995.17 1478584645.36
Total liability 29987929.63 66907715.97 718902933.48 6259924.48 -377156522.44 444901981.12
XIII. Principle notes of financial statements of the company
1. Accounts receivable
(1) By account age
Account age Balance at period-end
Within one year 2835572.40
Including: within 6 months 2835572.40
7-12 months --
Subtotal of within one year 2835572.40
1-2 years --
2-3 years --
3-4 years --
4-5 years --
Over 5 years --
Subtotal 3320375.48
Less: bad debt provision 484803.08
Total 2835572.40
(2) According to accrual method for bad debts
Category
Balance at period-end
Book balance Bad debt provision
Book value
Amount Ratio (%) Amount Accrual ratio (%)
Account receivable with single
significant amount and withdrawal bad
debt provision separately
-- -- -- -- --
Receivables with bad debt provision
accrual by credit portfolio
2835572.40 85.40 -- -- 2835572.40
Accounts with single minor amount but
with bad debts provision accrued
individually
484803.08 14.60 484803.08 100.00 --
Total 3320375.48 100.00 484803.08 92.68 2835572.40
(Continued)
Category
Balance at year-begin
Book balance Bad debt provision
Book value
Amount Ratio (%) Amount Accrual ratio (%)
Account receivable with single significant
amount and withdrawal bad debt
provision separately
-- -- -- -- --
Receivables with bad debt provision
accrual by credit portfolio
38274.00 7.32 -- -- 38274.00
Accounts with single minor amount but
with bad debts provision accrued
individually
484803.08 92.68 484803.08 100.00 --
Total 523077.08 100.00 484803.08 92.68 38274.00
①Accounts receivable with bad debt provision accrual individually at period-end
Accounts
receivable(units)
Balance at period-end
Book balance
Bad debt
provision
Accrual ratio Accrual reasons
Shenzhen Bijiashan
Entertainment Company
172000.00 172000.00 100.00
Not expected to collected due to long
account age
SEG outlets 97806.64 97806.64 100.00
Not expected to collected due to long
account age
Guangzhou Lemin
Computer Center
86940.00 86940.00 100.00
Not expected to collected due to long
account age
Other 128056.44 128056.44 100.00
Not expected to collected due to long
account age
Total 484803.08 484803.08 —— ——
②Account receivable provided for bad debt reserve under aging analysis method in the groups
Item
Balance at period-end
Book balance Bad debt provision Accrual ratio (%)
Within one year 2835572.40 -- --
Total 2835572.40 -- --
(3) Bad debt provision
Category
Balance at
year-beginnin
g
Current changes
Balance at
period-end
Accrual Collected or
switch back
Write off or
charge off
Accounts with single minor
amount but with bad debts
provision accrued individually
484803.08 -- -- -- 484803.08
Total 484803.08 -- -- -- 484803.08
(4) Account receivable actually written-off in the period
No account receivable actually written-off in the period
(5) Top 5 account receivables at ending balance by arrears party
Top 5 account receivables at ending balance by arrears party amounted to 3172685.04 Yuan a 95.55% in
total balance at end of the period bad debt provision accrual correspondingly at period amounted as
356746.64 Yuan.
Name of the company
Relationship with the
Company
Amount Term
Proportion in total
account
receivables (%)
Balance of bad
debt provision at
period-end
Shenzhen Zung Fu Tellus Auto
Service Co. Ltd.Non-related party 2776190.40
Within one
year
83.61%
Shenzhen Bijiashan
Entertainment Company
Non-related party 172000.00
Over 10
years
5.18% 172000.00
SEG outlets Non-related party 97806.64
Over 10
years
2.95% 97806.64
Guangzhou Lemin Computer
Center
Non-related party 86940.00
Over 10
years
2.62% 86940.00
Qiu Shiyu Non-related party 39748.00
Within one
year
1.20%
Total 3172685.04 95.55% 356746.64
(6) Account receivable derecognition due to financial assets transfer
The Company has no account receivable derecognition due to financial assets transfer in the Period.
(7) Assets and liabilities resulted by account receivable transfer and continues involvement
The Company has no assets and liabilities resulted by account receivable transfer and continues
involvement in the Period.
2. Other account receivable
Item Balance at period-end Balance at year-begin
Interest receivable 1031521.11 723407.50
Dividend receivable -- 232683.74
Other account receivable 124086778.34 114826853.13
Total 125118299.45 115782944.37
(1) Interest receivable
Item Balance at period-end Balance at year-begin
Time deposit 1031521.11 723407.50
Total 1031521.11 723407.50
(2) Dividend receivable
Item (or invested unit) Balance at period-end Balance at year-begin
Shenzhen SDG Tellus Property Management
Co. Ltd.
-- 232683.74
Shenzhen Zung Fu Tellus Auto Service Co.Ltd.
17500000.00
Item (or invested unit) Balance at period-end Balance at year-begin
Total 17500000.00 232683.74
(3) Other account receivable
①By account age
Account age Balance at period-end
Within one year 122774941.60
Including: within 6 months 122774941.60
7-12 months
Subtotal of within one year 122774941.60
1-2 years 76041.64
2-3 years 76041.64
3-4 years 285524.77
4-5 years 76041.64
Over 5 years 16108487.11
Subtotal 139397078.40
Less: bad debt provision 15310300.06
Total 124086778.34
②By nature
Nature Ending book balance Opening book balance
Intercourse funds receivable from internal units 122565595.03 113272049.06
Intercourse funds receivable from related party 3072702.05 2999556.31
Other 13758781.33 13846602.16
Total 139397078.41 130118207.53
③Accrual of bad debt provision
Bad debt provision Phase I Phase II Phase III Total
Expected credit
losses over next 12
months
Expected credit
losses for the entire
duration (without
credit impairment
occurred)
Expected credit losses
for the entire duration
(with credit
impairment occurred)
Balance on Jan. 1 2019 1197774.29 14112525.77 15310300.06
Book balance of other
account receivable of Jan. 1
2019 in the period
——Turn to phase II
——Turn to phase III
——Return to Phase II
——Return to Phase I
Current accrual
Current switch back
Rewrite in the period
Write-off in the period
Other changes
Balance on Jun. 30 2019 1197774.29 14112525.77 15310300.06
④Bad debt provision
Category
Balance at
year-beginning
Current changes Balance at
period-end
Accrual Collected or
switch back
Write off or
charge off
Other account receivable with
single significant amount and
withdrawal bad debt provision
separately
12259692.71
12259692.71
Other receivables with bad debt
provision accrual by credit
portfolio
1178828.63
1178828.63
Other account receivable with
single minor amount but
withdrawal bad debt provision
separately
1852833.06
1852833.06
Total 15291354.40 15291354.40
⑤ Other account receivable actually written-off in the period
No other account receivable actually written-off in the period
⑥Top 5 other account receivables at ending balance by arrears party
Name of the company Nature
Balance at
period-end
Account age
Ratio in total ending
balance of other
receivables
Bad debt
provision
Balance at
period-end
Shenzhen Zhonghao
(Group) Co. Ltd
Intercourse funds 5000000.00 Over 3 years 3.59 5000000.00
Gold Beili Electrical
Appliances Company
Intercourse funds 2706983.51 Over 3 years 1.94 2706983.51
Shenzhen Petrochemical
Group
Intercourse funds 1916479.74 Over 3 years 1.37 1916479.74
Huatong Package Co. Ltd. Intercourse funds 1212373.79 Over 3 years 0.87 1212373.79
Other_VAT(trading dept.) Intercourse funds 763481.79 Over 3 years 0.55 763481.79
Total 11599318.83 8.32 11599318.83
⑦Account receivable with government subsidy involved
No account receivable with government subsidy involved of the Company at period-end.⑧Other account receivable derecognition due to financial assets transfer in the Period
No other account receivable derecognition due to financial assets transfer of the Company in Period.
⑨Assets and liabilities resulted by other account receivable transfer and continues involvement in the Period
No assets or liabilities resulted by other account receivable transfer and continues involvement of the Company in
Period.
3. Long term equity investment
(1) Category
Item Balance at period-end Balance at year-begin
Book balance
Impairment
provision
Book value Book balance
Impairment
provision
Book value
Investment for subsidiary 736743472.73 1956000.00 734787472.73 724743472.73 1956000.00 722787472.73
Investment for associates
and joint venture
114159652.64 9787162.32 104372490.32 123283180.97 9787162.32 113496018.65
Total 850903125.37 11743162.32 839159963.05 848026653.70 11743162.32 836283491.38
(2) Investment for subsidiary
The invested entity
Balance at
year-beginning
Increased in the
period
Decreased
in the period
Balance at
period-end
Current
accrual
Impairm
ent
provisio
n
Ending
balance of
impairment
provision
Shenzhen SDG
Tellus Real Estate
Co. Ltd.
31152888.87 -- -- 31152888.87 -- --
Shenzhen Tellus
Chuangying
Technology Co. Ltd.
2000000.00 12000000.00 -- 14000000.00 -- --
Shenzhen Tellus
Xinyongtong
Automobile
Development Co.
Ltd.
57672885.22 -- -- 57672885.22 -- --
Shenzhen Zhongtian
Industrial Co. Ltd.
369680522.90 -- -- 369680522.90 -- --
Shenzhen
Automobile Industry
Trading General
Company
126251071.57 -- -- 126251071.57 -- --
Shenzhen SDG Huari
Automobile
19224692.65 -- -- 19224692.65 -- --
The invested entity
Balance at
year-beginning
Increased in the
period
Decreased
in the period
Balance at
period-end
Current
accrual
Impairm
ent
provisio
n
Ending
balance of
impairment
provision
Enterprise
Co.Limited
Shenzhen Huari
TOYOTA
Automobile Sales
Service Co. Ltd.
1807411.52 -- -- 1807411.52 -- --
Shenzhen
Xinyongtong
Automobile
Inspection Equipment
Co. Ltd.
10000000.00 -- -- 10000000.00 -- --
Shenzhen Hanligao
Technology Ceramics
Co. Ltd*
1956000.00 -- -- 1956000.00 -- 1956000.00
Anhui Tellus
Starlight Jewelry
Investment Co. Ltd.
4998000.00 -- -- 4998000.00 -- --
Sichuan Tellus
Jewelry Technology
Co. Ltd.
100000000.00 -- -- 100000000.00 -- --
Total 724743472.73 12000000.00 736743472.73 1956000.00
Note: * Shenzhen Hanligao Technology Ceramics Co. Ltd can be seen in Note VIII-1 “Equity of subsidiaries”.
(3) Investment for associates and joint venture
The invested entity Balance at Changes in the period (+-)
year-beginning
Additional
investment
Capital
reduction
Investment gains
recognized under
equity
Other
comprehensiv
e income
adjustment
Other equity
change
I. Joint venture
Shenzhen Tellus Gman
Investment Co. Ltd
62039013.62 -- -- 3652191.24 -- --
Shenzhen Tellus Hang
Investment Co. Ltd.
11253581.63 -- -- 363981.77 -- --
Subtotal 73292595.25 -- -- 4016173.01
II. Associated enterprise
Shenzhen Zung Fu
Tellus Auto Service Co.Ltd.
40203423.40 -- -- 4360298.66
Hunan Changyang
Industrial Co. Ltd
1810540.70
-- -- -- -- --
Shenzhen Jiecheng
Electronic Co. Ltd
3225000.00
-- -- -- -- --
Shenzhen Xiandao New
Materials Company
4751621.62
-- -- -- -- --
Subtotal 49990585.72 -- -- 4360298.66 -- --
Total 123283180.97 -- -- 8376471.67 -- --
(Continued)
The invested entity
Changes in the period (+-)
Balance at period-end
Ending balance of
impairment
provision
Cash dividend or
profit announced to
issued
Accrual Impairment
provision
Other
I. Joint venture
Shenzhen Tellus Gman
Investment Co. Ltd
-- -- -- 65691204.86 --
The invested entity
Changes in the period (+-)
Balance at period-end
Ending balance of
impairment
provision
Cash dividend or
profit announced to
issued
Accrual Impairment
provision
Other
Shenzhen Tellus Hang
Investment Co. Ltd.-- -- -- 11617563.40 --
Subtotal -- -- -- 77308768.26 --
II. Associated enterprise
Shenzhen Zung Fu
Tellus Auto Service Co.Ltd.
17500000.00 -- -- 27063722.06 --
Hunan Changyang
Industrial Co. Ltd
-- -- -- 1810540.70 1810540.70
Shenzhen Jiecheng
Electronic Co. Ltd
-- -- -- 3225000.00 3225000.00
Shenzhen Xiandao New
Materials Company
-- -- -- 4751621.62 4751621.62
Subtotal 17500000.00 -- -- 36850884.38 9787162.32
Total 17500000.00 -- -- 114159652.64 9787162.32
4. Operating income and operating cost
Item
Current period Same period last year
Income Cost Income Cost
Main business 19112054.55 1774557.00 20083496.42 1842326.22
Total 19112054.55 1774557.00 20083496.42 1842326.22
5. Investment income
Item Current period Same period last year
income from long-term equity investment measured by
equity
8376471.67 12154498.47
Investment income from financial products in holding
period
3417993.78 2802071.22
Item Current period Same period last year
Total 11794465.45 14956569.69
XIV. Supplementary Information
1. Details of non-recurring gains and losses in period
Item Amount Note
Gains/losses from disposal of non-current asset 103159.68
Income from fixed assets
disposal
Tax refund or mitigate due to examination-and-approval beyond
power or without official approval document or accident
Government subsidies included in current gains and loss (excluding
those closely in accordance with corporation business and enjoyed
according to fixed amount under national united standard)
6611.29 VAT input tax deduction
Capital occupancy expense collected from non-financial enterprises
and recorded in current gains and losses
37708.32
Capital occupation fee of
joint-stock enterprise
Income from the exceeding part between investment cost of the
Company paid for obtaining subsidiaries associates and
joint-ventures and recognizable net assets fair value attributable to
the Company when acquiring the investment
Gains and losses from exchange of non-monetary assets
Gains and losses from assets under trusted investment or
management
Various provision for impairment of assets withdrew due to act of
God such as natural disaster
Gains and losses from debt restructuring
Enterprise reorganization expense such as expenses from staffing
and integrated cost etc.Gains and losses of the part arising from transaction in which price
is not fair and exceeding fair value
Item Amount Note
Current net gains and losses occurred from period-begin to
combination day by subsidiaries resulting from business
combination under common control
Gains and losses arising from contingent proceedings irrelevant to
normal operation of the Company
Except for effective hedge business relevant to normal operation of
the Company gains and losses arising from fair value change of
tradable financial assets and tradable financial liabilities and
investment income from disposal of tradable financial assets tradable
financial liabilities and financial assets available for sale
5935926.39
Income from financial
products
Switch-back of provision of impairment of account receivable which
are treated with separate depreciation test 307993.15
Switch back of bad debt
provision
Gains and losses obtained from external trusted loans
Gains and losses arising from change of fair value of investment real
estate whose follow-up measurement are conducted according to fair
value pattern
Affect on current gains and losses after an one-time adjustment
according to requirements of laws and regulations regarding to
taxation and accounting
Trust fee obtained from trust operation
Other non-operating income and expenditure except for the
aforementioned ones
-713774.56
The liquidated damages
paid for early termination
of lease from Tellus
Starlight Jinzun Company
Other gains and losses items complying with definition for
non-current gains and losses
Subtotal 5677624.27
Affect on income tax
1436258.10
Affect on minority equity(after tax)
54777.29
Total 4186588.88
Note: as for the numbers of non-recurring gains/losses “+” stands for income or earnings”-“stands for losses or
expenses
The Company recognizes non-recurring profit or loss items according to Information Disclosure Explanatory
Document Announcement No.1 for Public Listed Issuer- Non-recurring Profit or Loss (ZJHGG[2008]43).
2. ROE and earnings per share
Profits during report period
Weighted average ROE
(%)
Earnings per share
Basic EPS Diluted EPS
Net profits belong to common stock stockholders of the
Company
4.1749
0.1039
0.1039
Net profits belong to common stock stockholders of the
Company after deducting nonrecurring gains and losses
3.7846
0.0942
0.0942
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