SHENZHEN TELLUS HOLDING CO. LTD
Financial Report
Semi-Annual Report 2018（Un-audited）
August 2018
Financial Report
Units in Notes of Financial Statements is RMB
1. Consolidated Balance Sheet
2018-06-30
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 277556456.47 161793218.56
Settlement provisions
Capital lent
Financial assets measured by
fair value and with variation
reckoned into current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 81270957.00 44215236.68
Accounts paid in advance 5002538.34 3737706.70
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Interest receivable 221232.88
Dividend receivable 52732683.74 779868.09
Other receivables 24823888.53 14819164.11
Purchase restituted finance
asset
Inventories 5858705.33 12646227.22
Assets held for sale
Non-current asset due within
one year
Other current assets 122022053.76 219582250.70
Total current assets 569267283.17 457794904.94
Non-current assets:
Loans and payments on
behalf
Finance asset available for
sales
10176617.20 10176617.20
Held-to-maturity investment
Long-term account
receivable
Long-term equity investment 244379388.10 284464749.15
Investment property 70972017.37 73223512.21
Fixed assets 116927224.82 120296822.84
Construction in progress 388384816.21 378160896.69
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 51677187.69 52349686.92
Expense on Research and
Development
Goodwill
Long-term expenses to be
apportioned
1751891.37 1779713.94
Deferred income tax asset 24374557.81 24394028.91
Other non-current asset 673661.62 673661.62
Total non-current asset 909317362.19 945519689.48
Total assets 1478584645.36 1403314594.42
Current liabilities:
Short-term loans 143000000.00 120000000.00
Loan from central bank
Absorbing deposit and
interbank deposit
Capital borrowed
Financial liability measured
by fair value and with variation
reckoned into current gains/losses
Derivative financial liability
Notes payable
Accounts payable 22940795.88 28032708.69
Accounts received in
advance
10891562.79 13790019.47
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 22622742.58 23171154.53
Taxes payable 9650704.98 9927572.27
Interest payable 235225.83 229494.72
Dividend payable
Other accounts payable 182185901.15 153099910.49
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Liability held for sale
Non-current liabilities due
within 1 year
Other current liabilities
Total current liabilities 391526933.21 348250860.17
Non-current liabilities:
Long-term loans 34934887.55 38600000.00
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable 3920160.36 3920160.36
Long-term wages payable
Special accounts payable
Accrual liabilities
Deferred income
Deferred income tax
liabilities
Other non-current liabilities 14520000.00 14520000.00
Total non-current liabilities 53375047.91 57040160.36
Total liabilities 444901981.12 405291020.53
Owner’s equity:
Share capital 297281600.00 297281600.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 565226274.51 565226274.51
Less: Inventory shares
Other comprehensive income
Reasonable reserve
Surplus public reserve 2952586.32 2952586.32
Provision of general risk
Retained profit 124718875.66 97798595.80
Total owner’s equity attributable
to parent company
990179336.49 963259056.63
Minority interests 43503327.75 34764517.26
Total owner’s equity 1033682664.24 998023573.89
Total liabilities and owner’s
equity
1478584645.36 1403314594.42
2. Balance Sheet of Parent Company
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 152388443.29 97991738.05
Financial assets measured by
fair value and with variation
reckoned into current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable
Account paid in advance 117736.22
Interest receivable 221232.88
Dividends receivable 52732683.74 779868.09
Other receivables 104505630.50 98321166.40
Inventories
Assets held for sale
Non-current assets maturing
within one year
Other current assets 70500000.00 203500000.00
Total current assets 380244493.75 400814005.42
Non-current assets:
Available-for-sale financial
assets
10176617.20 10176617.20
Held-to-maturity investments
Long-term receivables
Long-term equity
investments
878457157.13 789830758.66
Investment real estate 45200498.37 46749467.61
Fixed assets 15116889.20 15536781.07
Construction in progress 8075987.18 5554512.79
Project materials
Disposal of fixed assets
Productive biological assets
Oil and natural gas assets
Intangible assets 291629.96 341121.77
Research and development
costs
Goodwill
Long-term deferred expenses 236786.48 223715.66
Deferred income tax assets 13849840.74 13869311.84
Other non-current assets
Total non-current assets 971405406.26 882282286.60
Total assets 1351649900.01 1283096292.02
Current liabilities:
Short-term borrowings 143000000.00 120000000.00
Financial liability measured
by fair value and with variation
reckoned into current gains/losses
Derivative financial liability
Notes payable
Accounts payable 14000.00 14000.00
Accounts received in
advance
2523809.60 1511.00
Wage payable 4985150.49 5769360.88
Taxes payable 1139784.03 474977.89
Interest payable 183561.00 165604.16
Dividend payable
Other accounts payable 316818068.69 295776662.59
Liability held for sale
Non-current liabilities due
within 1 year
Other current liabilities
Total current liabilities 468664373.81 422202116.52
Non-current liabilities:
Long-term loans
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable
Long-term wages payable
Special accounts payable
Accrual liabilities
Deferred income
Deferred income tax
liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 468664373.81 422202116.52
Owners’ equity:
Share capita 297281600.00 297281600.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 562032851.23 562032851.23
Less: Inventory shares
Other comprehensive income
Reasonable reserve
Surplus reserve 2952586.32 2952586.32
Retained profit 20718488.65 -1372862.05
Total owner’s equity 882985526.20 860894175.50
Total liabilities and owner’s
equity
1351649900.01 1283096292.02
3. Consolidated Profit Statement
In RMB
Item Current Period Last Period
I. Total operating income 197955081.73 160984104.56
Including: Operating income 197955081.73 160984104.56
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost
Including: Operating cost 153739952.11 118024813.96
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 2922621.92 2810925.76
Sales expenses 8337907.27 6883605.25
Administration expenses 19137092.41 19352021.76
Financial expenses 2771872.61 26460.54
Losses of devaluation of asset 392040.25 -189620.97
Add: Changing income of fair
value(Loss is listed with “-”)
Investment income (Loss is
listed with “-”)
17866022.25 9636578.24
Including: Investment
income on affiliated company and
12795300.82 2929608.85
joint venture
Exchange income (Loss
is listed with “-”)
Assets disposal income
(Loss is listed with “-”)
Other income
III. Operating profit (Loss is
listed with “-”)
28519617.41 23712476.50
Add: Non-operating income 34394.39 319517.17
Less: Non-operating expense 99688.31 6919.80
IV. Total Profit (Loss is listed
with “-”)
28454323.49 24025073.87
Less: Income tax expense 1887473.77 623687.09
V. Net profit (Net loss is listed with
“-”)
26566849.72 23401386.78
(i) net profit from continuous
operation (Net loss is listed with
“-”)
26566849.72 23401386.78
(ii) net profit from
discontinued operation (Net loss is
listed with “-”)
Net profit attributable to
owner’s of parent company
26920279.86 24596905.09
Minority shareholders’ gains and
losses
-353430.14 -1195518.31
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 as a result
of re-measurement of net defined
benefit plan liability or asset
2. Share of the other
comprehensive income of the
investee accounted for using equity
method which will not be
reclassified subsequently to profit
and loss
(II) Other comprehensive
income items which will be
reclassified subsequently to profit
or loss
1. Share of the other
comprehensive income of the
investee accounted for using equity
method which will be reclassified
subsequently to profit or loss
2. Gains or losses arising
from changes in fair value of
available-for-sale financial assets
3. Gains or losses
arising from reclassification of
held-to-maturity investment as
available-for-sale financial assets
4. The effect hedging
portion of gains or losses arising
from cash flow hedging
instruments
5. Translation
differences arising on translation of
foreign currency financial
statements
6. Other
Net after-tax of other
comprehensive income attributable
to minority shareholders
VII. Total comprehensive income 26566849.72 23401386.78
Total comprehensive income
attributable to owners of parent
Company
26920279.86 24596905.09
Total comprehensive income
attributable to minority
shareholders
-353430.14 -1195518.31
VIII. Earnings per share:
(i) Basic earnings per share 0.0906 0.0827
(ii) Diluted earnings per
share
0.0906 0.0827
4. Profit Statement of Parent Company
In RMB
Item Current Period Last Period
I. Operating income 20083496.42 21455828.43
Less: Operating cost 1842326.22 1800520.02
Tax and extras 818654.42 852504.05
Sales expenses
Administration
expenses
7986244.31 8630924.30
Financial expenses 2215649.63 -315599.87
Losses of devaluation of
asset
69500.70 -189620.97
Add: Changing income of
fair value(Loss is listed with “-”)
Investment income (Loss
is listed with “-”)
14956569.69 14439969.08
Including: Investment 12154498.47 5721803.49
income on affiliated company and
joint venture
Assets disposal income
(Loss is listed with “-”)
Other income
II. Operating profit (Loss is
listed with “-”)
22107690.83 25117069.98
Add: Non-operating income 3130.97
Less: Non-operating expense
III. Total Profit (Loss is listed
with “-”)
22110821.80 25117069.98
Less: Income tax expense 19471.10 19471.10
IV. Net profit (Net loss is listed
with “-”)
22091350.70 25097598.88
(i) net profit from continuous
operation (Net loss is listed with
“-”)
22091350.70 25097598.88
(ii) net profit from
discontinued operation (Net loss
is listed with “-”)
V. Net after-tax of other
comprehensive income
(I) Other comprehensive
income items which will not be
reclassified subsequently to profit
of loss
1. Changes as a result
of re-measurement of net defined
benefit plan liability or asset
2. Share of the other
comprehensive income of the
investee accounted for using
equity method which will not be
reclassified subsequently to profit
and loss
(II) Other comprehensive
income items which will be
reclassified subsequently to profit
or loss
1. Share of the other
comprehensive income of the
investee accounted for using
equity method which will be
reclassified subsequently to profit
or loss
2. Gains or losses
arising from changes in fair value
of available-for-sale financial
assets
3. Gains or losses
arising from reclassification of
held-to-maturity investment as
available-for-sale financial assets
4. The effect hedging
portion of gains or losses arising
from cash flow hedging
instruments
5. Translation
differences arising on translation
of foreign currency financial
statements
6. Other
VI. Total comprehensive income 22091350.70 25097598.88
VII. Earnings per share:
(i) Basic earnings per share 0.0743 0.0844
(ii) Diluted earnings per
share
0.0743 0.0844
5. Consolidated Cash Flow Statement
In RMB
Item Current Period Last Period
I. Cash flows arising from
operating activities:
Cash received from selling
commodities and providing labor
services
190354252.94 172205464.81
Net increase of customer
deposit and interbank deposit
Net increase of loan from
central bank
Net increase of capital
borrowed from other financial
institution
Cash received from original
insurance contract fee
Net cash received from
reinsurance business
Net increase of insured
savings and investment
Net increase of amount from
disposal financial assets that
measured by fair value and with
variation reckoned into current
gains/losses
Cash received from interest
commission charge and
commission
Net increase of capital
borrowed
Net increase of returned
business capital
Write-back of tax received
Other cash received
concerning operating activities
14796131.60 17681721.14
Subtotal of cash inflow arising
from operating activities
205150384.54 189887185.95
Cash paid for purchasing
commodities and receiving labor
service
156589699.73 100485791.06
Net increase of customer
loans and advances
Net increase of deposits in
central bank and interbank
Cash paid for original
insurance contract compensation
Cash paid for interest
commission charge and
commission
Cash paid for bonus of
guarantee slip
Cash paid to/for staff and
workers
25206855.48 30466874.43
Taxes paid 10795455.49 12522480.67
Other cash paid concerning
operating activities
40628841.95 39031478.39
Subtotal of cash outflow arising
from operating activities
233220852.65 182506624.55
Net cash flows arising from
operating activities
-28070468.11 7380561.40
II. Cash flows arising from
investing activities:
Cash received from
recovering investment
454400000.00 237000000.00
Cash received from
investment income
4153597.07 10890968.34
Net cash received from
disposal of fixed intangible and
other long-term assets
272340.00
Net cash received from
disposal of subsidiaries and other
units
1504125.26 2343240.90
Other cash received
concerning investing activities
46001000.00
Subtotal of cash inflow from
investing activities
506058722.33 250506549.24
Cash paid for purchasing
fixed intangible and other
long-term assets
14848244.60 12861466.12
Cash paid for investment 357030000.00 322000000.00
Net increase of mortgaged
loans
Net cash received from
subsidiaries and other units
obtained
Other cash paid concerning 5733400.00
investing activities
Subtotal of cash outflow from
investing activities
377611644.60 334861466.12
Net cash flows arising from
investing activities
128447077.73 -84354916.88
III. Cash flows arising from
financing activities
Cash received from
absorbing investment
9000000.00 7672000.00
Including: Cash received
from absorbing minority
shareholders’ investment by
subsidiaries
9000000.00 7672000.00
Cash received from loans 25082000.00 15600000.00
Cash received from issuing
bonds
Other cash received
concerning financing activities
Subtotal of cash inflow from
financing activities
34082000.00 23272000.00
Cash paid for settling debts 8665112.45
Cash paid for dividend and
profit distributing or interest
paying
10030329.79 1562339.36
Including: Dividend and
profit of minority shareholder
paid by subsidiaries
Other cash paid concerning
financing activities
Subtotal of cash outflow from
financing activities
18695442.24 1562339.36
Net cash flows arising from
financing activities
15386557.76 21709660.64
IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate
70.53 -153.38
V. Net increase of cash and cash
equivalents
115763237.91 -55264848.22
Add: Balance of cash and
cash equivalents at the period
-begin
161793218.56 178497640.10
VI. Balance of cash and cash
equivalents at the period -end
277556456.47 123232791.88
6. Cash Flow Statement of Parent Company
In RMB
Item Current Period Last Period
I. Cash flows arising from
operating activities:
Cash received from selling
commodities and providing labor
services
26539659.00 32112173.50
Write-back of tax received
Other cash received 10135679.87 4567298.11
concerning operating activities
Subtotal of cash inflow arising
from operating activities
36675338.87 36679471.61
Cash paid for purchasing
commodities and receiving labor
service
Cash paid to/for staff and
workers
8333154.63 8371531.53
Taxes paid 1125249.42 1808421.17
Other cash paid concerning
operating activities
31499877.17 11123303.80
Subtotal of cash outflow arising
from operating activities
40958281.22 21303256.50
Net cash flows arising from
operating activities
-4282942.35 15376215.11
II. Cash flows arising from
investing activities:
Cash received from
recovering investment
344000000.00 220000000.00
Cash received from
investment income
3180515.85 10718165.59
Net cash received from
disposal of fixed intangible and
other long-term assets
Net cash received from
disposal of subsidiaries and other
units
14150000.00
Other cash received
concerning investing activities
46001000.00
Subtotal of cash inflow from
investing activities
393181515.85 244868165.59
Cash paid for purchasing
fixed intangible and other
long-term assets
2710314.68 250108.10
Cash paid for investment 339971900.00 293998000.00
Net cash received from
subsidiaries and other units
Other cash paid concerning
investing activities
5733400.00
Subtotal of cash outflow from
investing activities
348415614.68 294248108.10
Net cash flows arising from
investing activities
44765901.17 -49379942.51
III. Cash flows arising from
financing activities
Cash received from
absorbing investment
Cash received from loans 23000000.00
Cash received from issuing
bonds
Other cash received
concerning financing activities
Subtotal of cash inflow from
financing activities
23000000.00
Cash paid for settling debts
Cash paid for dividend and 9086253.58 1099583.35
profit distributing or interest
paying
Other cash paid concerning
financing activities
Subtotal of cash outflow from
financing activities
9086253.58 1099583.35
Net cash flows arising from
financing activities
13913746.42 -1099583.35
IV. Influence on cash and cash
equivalents due to fluctuation in
exchange rate
V. Net increase of cash and cash
equivalents
54396705.24 -35103310.75
Add: Balance of cash and
cash equivalents at the period
-begin
97991738.05 110800890.39
VI. Balance of cash and cash
equivalents at the period -end
152388443.29 75697579.64
. Statement of Changes in Owners’ Equity (Consolidated)
Current Period
In RMB
Item
Current Period
Owners’ equity attributable to parent company
Minori
ty
interes
ts
Total
owner
s’
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
Prefe
rred
stock
Perp
etual
capit
al
secur
ities
Othe
r
I. Balance at the
end of the last
year
2972
8160
0.00
56522
6274.
51
2952
586.32
97798
595.8
0
34764
517.2
6
99802
3573.
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
34764
517.2
6
99802
3573.
89
III. Increase/
Decrease in this
year (Decrease
is listed with
“-”)
26920
279.8
6
8738
810.49
35659
090.3
5
(i) Total
comprehensive
income
26920
279.8
6
-3534
30.14
26566
849.7
2
(ii) Owners’
devoted and
decreased
capital
9092
240.63
9092
240.63
1.Common
shares invested
by shareholders
9000
000.00
9000
000.00
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. 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
2972
8160
0.00
56522
6274.
51
2952
586.32
12471
8875.
66
43503
327.7
5
1033
68266
4.24
Last period
In RMB
Item
Last period
Owners’ equity attributable to parent company
Minori
ty
interes
ts
Total
owner
s’
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
Prefe
rred
stock
Perp
etual
capit
al
secur
ities
Othe
r
I. Balance at the
end of the last
year
2972
8160
0.00
56419
2605.
51
2952
586.32
30935
823.1
2
13173
721.2
3
90853
6336.
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
56419
2605.
51
2952
586.32
30935
823.1
2
13173
721.2
3
90853
6336.
18
III. Increase/
Decrease in this
year (Decrease
is listed with
“-”)
1033
669.00
24596
905.0
9
6476
481.69
32107
055.7
8
(i) Total
comprehensive
income
24596
905.0
9
-1195
518.31
23401
386.7
8
(ii) Owners’
devoted and
decreased
capital
7672
000.00
7672
000.00
1.Common
shares invested
by shareholders
7672
000.00
7672
000.00
2. Capital
invested by
holders of other
equity
instruments
3. Amount
reckoned into
owners equity
with
share-based
payment
4．Other
(III) Profit
distribution
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
provisions
3. Distribution
for owners (or
shareholders)
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital
reserves
conversed to
capital (share
capital)
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with
surplus reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal
in the report
period
2. Usage in the
report period
(VI)Others
1033
669.00
1033
669.00
IV. Balance at
the end of the
report period
2972
8160
0.00
56522
6274.
51
2952
586.32
55532
728.2
1
19650
202.9
2
94064
3391.
96
8. Statement of Changes in Owners’ Equity (Parent Company)
Current Period
In RMB
Item Current period
Share
capital
Other equity
instrument
Capital
reserve
Less:
Inventor
y shares
Other
compreh
ensive
income
Reasona
ble
reserve
Surplus
reserve
Retain
ed
profit
Total
owners’
equity
Preferr
ed
stock
Perpet
ual
capital
securit
ies
Other
I. Balance at the
end of the last
year
29728
1600.0
0
562032
851.23
295258
6.32
-1372
862.05
860894
175.50
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
295258
6.32
-1372
862.05
860894
175.50
III. Increase/
Decrease in this
year (Decrease
is listed with
“-”)
22091
350.7
0
22091
350.70
(i) Total
comprehensive
income
22091
350.7
0
22091
350.70
(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. 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
1600.0
0
562032
851.23
295258
6.32
20718
488.6
5
882985
526.20
Last period
In RMB
Item
Last period
Share
capital
Other equity
instrument
Capital
reserve
Less:
Inventor
y shares
Other
compreh
ensive
income
Reasona
ble
reserve
Surplus
reserve
Retain
ed
profit
Total
owners’
equity
Preferr
ed
stock
Perpet
ual
capital
securit
ies
Other
I. Balance at the
end of the last year
29728
1600.0
0
560999
182.23
295258
6.32
-5525
4452.
82
805978
915.73
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the
beginning of this
29728
1600.0
560999
182.23
295258
6.32
-5525
4452.
805978
915.73
year 0 82
III. Increase/
Decrease in this
year (Decrease is
listed with “-”)
103366
9.00
25097
598.8
8
26131
267.88
(i) Total
comprehensive
income
25097
598.8
8
25097
598.88
(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. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others 103366 10336
.00 69.00
IV. Balance at the
end of the report
period
29728
1600.0
0
562032
851.23
295258
6.32
-3015
6853.
94
832110
183.61
Shenzhen Tellus Holding Co. Ltd.Notes to Financial Statements of Semi-annual Report 2018
(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 297280000.00
Legal representative: Lv Hang
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 equipments.
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 jwerly 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 bybranch 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 Amount (Share) Ratio (%)
I. Non-tradable share
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 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 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 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 by 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 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 Amount (Share) Ratio (%)
State-owned corporate
shares 145925256 49.09
Domestic public shares 124956344 42.03
RMB special stock 26400000 8.88
Type Amount (Share) Ratio (%)
(B-Share)
Total 297281600 100.00
As of 30 June 2018 the Company have 297281600 shares offered in total found more in 32 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 2018 found more in
“Equity in other entity” in the Note VIII. One company deducted in consolidation range in the Year.
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 22 August 2018.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 2018 and the business performance and cash flow in January to June of 2018. In addition thefinancial statements of the Company and the Group meet the disclosure requirements of “PreparationRegulation of Information Disclosure for Enterprise with Security Issued Publicly No.15—General Rules
of Financial Report” revised by China Securities Regulatory Commission in all significant aspects in
4.
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 andestimation made by the management please refer to note IV(29) “Significant accounting judgment andestimation”.
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 thecompany shall determine whether the business combination shall be regarded as “a bundle oftransactions” in accordance with “Interpretation 5 on Accounting Standards for Business Enterprises”
(Cai Kuai 2012 No. 19) and clause 51 of ASBE 33- Consolidated Financial Statements relating to
judgment standard for “a bundle of transactions”(please refer to this Note IV 5(2)). When the business
combination is regarded as “a bundle of transactions” the accounting treatment for the businesscombination shall be in accordance with the previous paragraphs and Note IV 13 “long term equityinvestment”; when the business combination is not regarded as “a bundle of transactions” the accountingtreatment 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 residualequity in accordance 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 theindividual transactions shall be accounted as “disposal of a portion of an interest in a subsidiary whichdoes not lead to loss of control”) (for details please refer to Note IV 13(2)④) and “disposal of a portionof an interest in a subsidiary 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 accountingpolicies referred to Note IV 13(2)②“Long-term equity investment accounted for using the equitymethod”.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. Financial assets and liabilities are initially measured at fair value. For financial assets
and 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 assets and financial liabilities classified
as other categories relevant transaction costs are included in the amount initially recognized.(1) Method of determination of the fair value for financial assets and financial liabilities
Fair value represents the price that market participator can receive for disposal of an asset or he should
pay for transfer of a liability in an orderly transaction happened on the measurement date. Financial
instruments exist in an active market. Fair value is determined based on the quoted price in such market.
An active market refers to where pricing is easily and regularly obtained from exchanges brokers
industrial organizations and price-fixing service organizations representing the actual price of a market
transaction that takes place in a fair deal. While financial instruments do not exist in an active market the
fair value is determined using valuation techniques. Valuation technologies include reference to be
familiar with situation and prices reached in recent market transactions entered into by both willing
parties reference to present fair values of similar other financial instruments cash flow discounting
method and option pricing models.
(2) Classification recognition and measurement of the financial assets
Financial assets traded in a regular way shall be accounted for recognition and derecognition based on the
trading date. Financial assets are classified into financial assets through profit or loss at fair value
held-to-maturity investment loans and receivables and financial assets available for sale upon initial
recognition.
①Financial assets carried at fair value through profit or loss for the current period
They include financial assets held for trading and financial assets designated as at fair value through
profit or loss for the current period.
Financial assets may be classified as financial assets held for trading if one of the following conditions is
met: A. the financial assets is acquired or incurred principally for the purpose of selling it in the near term;
B. the financial assets is part of a portfolio of identified financial instruments that are managed together
and for which there is objective evidence of a recent pattern of short-term profit taking; or C. the
financial assets is a derivative excluding the derivatives designated as effective hedging instruments the
derivatives classified as financial guarantee contract and the derivatives linked to an equity instrument
investment which has no quoted price in an active market nor a reliably measured fair value and are
required to be settled through that equity instrument.
A financial asset may be designated as at FVTPL upon initial recognition only when one of the following
conditions is satisfied: A. Such designation eliminates or significantly reduces a measurement or
recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or
losses on them on different bases; or B. The financial asset forms part of a group of financial assets or a
group of financial assets and financial liabilities which is managed and its performance is evaluated on a
fair value basis in accordance with the Group’s documented risk management or investment strategy
and information about the grouping is reported to key management personnel on that basis.Financial assets carried at fair value through profit or loss for the current period is subsequently measured
at fair value. The gain or loss arising from changes in fair value and dividends and interest income related
to such financial assets are charged to profit or loss for the current period.②Held-to-maturity investments
They are non-derivative financial assets with fixed maturity dates and fixed or determinable payments
that the Group has positive intent and ability to hold to maturity.Held-to-maturity investments are subsequently measured at amortized cost using the effective interest
method. Gain or loss on derecognition impairment or amortization is recognized through profit or loss
for the current period.The effective interest method is a method of calculating the amortized cost of a financial asset and of
allocating interest income or expense over each period based on the effective interest of a financial asset
or a financial liability (including a group of financial assets or financial liabilities). The effective interest
is the rate that discounts future cash flows from the financial asset or financial liability over its expected
life or (where appropriate) a shorter period to the carrying amount of the financial asset or financial
liability.In calculating the effective interest rate the Group will estimate the future cash flows (excluding future
credit losses) by taking into account all contract terms relating to the financial assets or financial
liabilities whilst considering various fees transaction costs and discounts or premiums which are part of
the effective interest rate paid or received between the parties to the financial assets or financial liabilities
contracts.③ Loans and receivable
They are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market. Financial assets including bills receivable accounts receivable interest receivable
dividends receivable and other receivables are classified as loans and receivables by the Group.Loans and receivables are subsequently measured at amortized cost using the effective interest method.Gain or loss arising from derecognition impairment or amortization is recognized in current profit or
loss.
④Available-for-sale financial assets
They include non-derivative financial assets that are designated in this category on initial recognition
and the financial assets other than the financial assets at fair value through profit and loss loans and
receivables and held-to-maturity investments.The closing cost of available-for-sale debt instruments are determined based on amortized cost method
which means the amount of initial recognition less the amount of principle already repaid add or less the
accumulated amortized amount arising from the difference between the amount due on maturity and the
amount initially recognized using effective interest rate method and less the amount of impairment losses
recognized. The closing cost of available-for-sale equity instruments is equal to its initial acquisition cost.
Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change in
fair value are recognized as other comprehensive income except for impairment loss and exchange
differences arising from foreign monetary financial assets and amortized cost which are accounted for
through profit or loss for the current period. The financial assets will be transferred out of the financial
assets on derecognition and accounted for through profit or loss for the current period.However equity instrument investment which is not quoted in active market and whose fair value cannot
be measured reliably and derivative financial asset which is linked to the equity instrument and whose
settlement is conditional upon delivery of the equity instrument shall be subsequently measured at cost.Interests received from available-for-sale financial assets held and the cash dividends declared by the
investee are recognized as investment income.
(3) Impairment of financial assets
In addition to financial assets at fair value through profit or loss for the current period the Group reviews
the book value of other financial assets at each balance sheet date and provide for impairment where
there is objective evidence that financial assets are impaired.
For a financial asset that is individually significant the Group assesses the asset individually for
impairment. For a financial asset that is not individually significant the Group assess the asset
individually for impairment or include the asset in a group of financial assets with similar credit risk
characteristics and collectively assess them for impairment. If it is determined that no objective evidence
of impairment exists for an individually assessed financial asset whether the financial asset is
individually significant or not the financial asset is included in a group of financial assets with similar
credit risk characteristics and collectively assessed for impairment. Financial assets for which an
impairment loss is individually recognized are not included in the collective assessment for impairment.①Impairment of held-to-maturity investments loans and receivables
The carrying amount of financial assets measured at costs or amortized costs are subsequently reduced to
the present value discounted from its projected future cash flow. The reduced amount is recognized as
impairment loss and recorded as profit or loss for the period. After recognition of the impairment loss
from financial assets if there is objective evidence showing recovery in value of such financial assets
impaired and which is related to any event occurring after such recognition the impairment loss
originally recognized shall be reversed to the extent that the carrying value of the financial assets upon
reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for
impairment.②Impairment of available-for-sale financial assets
In the event that decline in fair value of the available-for-sale equity instrument investment is regarded as
“severe decline” or “non-temporary decline” on the basis of comprehensive related factors it indicates
that there is impairment loss of the available-for-sale equity instrument investment.The company’s standards to judge if the fair value of available for sale equity instruments investment has
a “severe” depreciation is that if the fair value of a single available for sale financial asset has a sharp fall
which exceeds 50% of its holding cost then this available for sale financial asset is affirmed to have a
severe decrease in value and should have the provision for asset impairment to confirm the impairment
loss.The company’s standards to judge if the fair value of available for sale equity instruments investment hasa “non-temporary" depreciation is that if the fair value of a single available for sale financial asset has asharp fall and this downtrend is predicted to be non-temporary with the duration over a year that cannot
be fundamentally changed in the whole holding period then this available for sale financial asset is
affirmed to have a non-temporary decrease in value and should have the provision for asset impairment to
confirm the impairment loss.When the available-for-sale financial assets impair the accumulated loss originally included in the capital
reserve arising from the decrease in fair value was transferred out from the capital reserve and included in
the profit or loss for the period. The accumulated loss that transferred out from the capital reserve is the
balance of the acquired initial cost of asset after deduction of the principal recovered amortized amounts
current fair value and the impairment loss originally included in the profit or loss.
After recognition of the impairment loss if there is objective evidence showing recovery in value of such
financial assets impaired and which is related to any event occurring after such recognition in subsequent
periods the impairment loss originally recognized shall be reversed. The impairment loss reversal of the
available-for-sale equity instrument will be recognized as other consolidated income and the impairment
loss reversal of the available-for-sale debt instrument will be included in the profit or loss for the period.When an equity investment that is not quoted in an active market and the fair value of which cannot be
measured reliably or the impairment loss of a derivative financial asset linked to the equity instrument
that shall be settled by delivery of that equity instrument then it will not be reversed.
(4) Recognition and measurement of transfers of financial asset
Financial asset that satisfied any of the following criteria shall be derecognized: ①the contract right to
recover the cash flows of the financial asset has terminated; ② the financial asset along with
substantially all the risk and return arising from the ownership of the financial asset has been transferred
to the transferee; and ③ the financial asset has been transferred to the transferee and the transferor has
given up the control on such financial asset though it does not assign maintain substantially all the risk
and return arising from the ownership of the financial asset.When the entity does not either assign or maintain substantially all the risk and return arising from the
ownership of the financial asset and does not give up the control on such financial asset to the extent of
its continuous involvement in the financial asset the entity recognizes it as a related financial asset and
recognizes the relevant liability accordingly. The extent of the continuous involvement is the extent to
which the entity exposes to changes in the value of such financial assets.On derecognition of a financial asset the difference between the following amounts is recognized in
profit or loss for the current period: the carrying amount and the sum of the consideration received and
any accumulated gain or loss that had been recognized directly in equity.If a part of the financial assets qualifies for derecognition the carrying amount of the financial asset is
allocated between the part that continues to be recognized and the part that qualifies for derecognition
based on the fair values of the respective parts. The difference between the following amounts is
recognized in profit or loss for the period: the sum of the consideration received and the carrying amount
of the part that qualifies for derecognition and the aforementioned carrying amount.
For financial assets that are transferred with recourse or endorsement the Company 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 assets have been
retained the financial assets shall not be derecognized. If the Company neither transfers nor retains
substantially all the risks and rewards of ownership of the financial assets the Company shall assess
whether the control over the financial assets is retained and the financial assets shall be accounted for
according to the above paragraphs.
(5) Classification and measurement of financial liabilities
At initial recognition financial liabilities are classified either as “financial liabilities at fair value throughprofit or loss” or “other financial liabilities”. Financial liabilities are initially recognized at fair value. Forfinancial 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
The criteria for a financial liability to be classified as held for trading and designated as at financial
liabilities at fair value through profit or loss are the same as those for a financial asset to be classified as
held for trading and designated as at financial assets at fair value through profit or loss.
Financial liabilities at fair value through profit or loss for the period are subsequently measured at fair
value. The gain or loss arising from changes in fair value and dividends and interest income related to
such financial liabilities are included into the current profit or loss.② Other financial liabilities
Derivative financial liabilities which are linked to equity instruments that are not quoted in an active
market and the fair value of which cannot be measured reliably measured and which shall be settled by
delivery of equity instruments are subsequently measured at cost. Other financial liabilities are
subsequently measured at amortized cost using the effective interest method. Gains or losses arising from
derecognition or amortization is recognized in profit or loss for the current period.
③Financial guarantee contract
Financial guarantee contract in respect of financial liabilities not designed at fair value through profit or
loss shall be initially measured at fair value and subsequently measured at the lower between the amount
determined under Accounting Standards for Enterprises No.13-Contingent issues and its initial
measurement amount less accumulative amortization determined under Accounting Standards for
Enterprises No.14-Revenue.
(6) Derecognition of financial liabilities
Financial liabilities are derecognized in full or in part only when the present obligation is discharged in
full or in part. An agreement is entered between the Group (debtor) and a creditor to replace the original
financial liabilities with new financial liabilities with substantially different terms derecognize the
original financial liabilities as well as recognize the new financial liabilities.When financial liabilities is derecognized in full or in part the difference between the
carrying amount of the financial liabilities derecognized and the consideration paid
(including transferred non-cash assets or new financial liability) is recognized in profit or
loss for the current period.
(7) Derivatives and embedded derivatives
Derivatives are initially measured at fair value as of the execution date of relevant contract and
subsequently measured at fair value. Change of fair value of derivatives is recorded in profit or loss for
the period.In respect of mixed instruments containing embedded derivatives if they are financial assets or financial
liabilities not designated at fair value through profit or loss and there is no close relation between
embedded derivatives and such main contract in terms of economic characteristics and risk separate
instrument shares the same conditions with embedded derivatives and meets definition of derivatives the
embedded derivatives are split off from the mixed instruments and accounted for as separate derivative
financial instrument. If an embedded derivative instrument cannot be measured separately upon
acquisition or at subsequent balance sheet date the mixed instruments shall be taken in its entirety as
financial assets or financial liabilities designated at fair value through profit or loss.
(8) Offset of Financial Assets and Financial Liabilities
If the Group owns the legitimate rights of offsetting the recognized financial assets and financial
liabilities which are enforceable currently and the Group plans to realize the financial assets or to clear
off the financial liabilities by net amount method the amount of the offsetting financial assets and
financial liabilities shall be reported in the balance sheep. Otherwise financial assets and financial
liabilities are presented separately in the balance sheet without offsetting.
(9) Equity instruments
Equity instruments are any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. The Company issues (including refinancing) repurchases sells or cancels
equity instruments as movement of equity. No fair value change of equity instrument would be
recognized by the Company. Transaction fees relating to equity transactions are deducted from equity.The distribution (excluding the dividends) to the equity instrument holders by the Group shall reduce the
shareholder’s equity. The Group shall not recognize the changes of the equity instruments’ fair value.
10. Account receivable
Account receivable including receivables and other account receivables etc.
(1) Recognition standards for bad debt provision
On balance sheet date the Company examined book value of the account receivable if the followed
objective evidence has been show for impairment occurred impairment provision shall withdrawal: ①the
debtor has serious financial difficulties; ②debtor violated the terms of the contract (such as interest or
principal payment default or overdue etc.); ③debtor probably close down or exercise other financial
restructuring; and ④other objective evidence showing impairment occurred on receivables.
(2) Withdrawal method for bad debt provision
①Recognition criteria and depreciation method for account receivable with large single amount and
accrued for provision of bad debt on a single basis
Account receivable with over RMB one million and other account receivable with over RMB 500000 are
recognized as account receivable with large single amount.The Company exercise impairment test separately on account receivable with large single amount if no
impairment been found in financial assets after separate testing they shall be included in portfolios of
accounts receivable with similar credit risk features for impairment tests.
For accounts receivable with confirmed impairment losses after separate tests they shall not be included
in portfolios of accounts receivable with similar credit risk features for impairment tests.②Recognition criteria and depreciation method for account receivable with accrued for provision of bad
debt on credit risk portfolio basis
A. Recognition basis for credit risk characteristics portfolio
As for the account receivable with minor single amount and those with major amount without impairment
had been found after testing on a single basis the Company grouping the financial assets according to
similarity and relativity of the credit risk characteristics. The credit risk characteristics usually reflect the
repaying capability for all due amount from debtors in line with the terms of the contract and related
with the measurement of future cash flow on assets which has been examined.Recognition basis for different portfolio:
Item Basis
Age portfolio
Divide the portfolio on the age of account receivable as a credit risk
characteristics
B. Depreciation method for bad debt provision recognized by credit risk characteristics portfolio
At the time of impairment testing the bad debt amount will recognized by the estimated losses according
to historical losses experience which has been occurred in account receivable portfolio and current
economic status as well as portfolio structure and similar credit risk characteristics (debt paying
capability for debtor based on terms of the contract).
Depreciation method of bad debt provision in different portfolio:
Item Depreciation method
Age portfolio Accrual bad debt provision by aging of accounts
a. Depreciation method of bad debt provision by aging of accounts in portfolio
Age
Accrual ratio of account receivable
(%)
Accrual ratio of other receivables
(%)
Within 1 year (including one
year the same below) No accrual No accrual
1-2 years 5 5
2-3 years 20 20
Over 3 years 50 50
③Accounts receivable that are individually insignificant but with bad debt provision provided on an
individual basis:
Account receivable with RMB one million at most and other account receivable with RMB 500000 at
most are recognized as account receivable with insignificant single amount.
As for the account receivable with insignificant single amount but with followed features exercise
impairment separately if there has evidence of impairment provision for bad debts shall be made at the
difference of present value of estimated future cash flows in short of their book values and shall be
recognized as impairment losses: account receivable with dispute and arbitration involved or exist with
the counter party; receivables which has obvious evidence that the debtor probably unable to performed
payment obligations etc.
(3) Reversal of bad debt provisions
If there is evidence showing that the value of the account receivable has been recovered and that the
recovery is objectively related to events after recognition of the loss the originally recognized
impairment loss should be reversed and included in current profit and loss. However the book values
after such reversal shall not exceed the amortized costs of the account receivable on the reversal date
assuming there is no provision for impairment.
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
recognised 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
recognised 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 recognised 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 recognised 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 amortisation 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 recognised.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 amortisation) or impairment that would have been
recognised had it not been classified as held for sale and (2) its recoverable amount.
13. Long-term equity investments
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 transactionswill be accounted for a transaction in obtaining control. If they are not belong to “transactions in abasket” 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” 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 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 heldequity investment and 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 joint ventures 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.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
The initial measurement of a fixed assets shall be made at its cost and consider expected discard expenses
factors alternatives. 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:
Type
Depreciation term
(year)
Residual rate (%)
Annual depreciation
rate (%)
House and buildings 35 3 2.77
Machinery equipment 12 3 8.08
Transportation
equipment
7 3
13.86
Electronic equipment 7 3 13.86
Office and other
equipment
7 3
13.86
Decoration charge for
self-owned houses
10 0 10.00
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 non-current and non-financial 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 derecognised 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 non-current/non-financial assets” in Note IV.
. 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 non-current non-monetary financial asset”.. 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. Long-term assets impairment
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.. Staff remuneration
Staff remuneration includes short term staff remuneration post office benefit dismissal benefit 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. 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 recognised 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 Company
calculates the completion schedule through the ratio of the costs incurred taking up of 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.The Company engages in car repair services confirming income after the car repair service is delivered
to customers according to agreement payment received or the rights to receive payment.
(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
24. Government subsidy
A government subsidy means the monetary or non-monetary assets obtained free by the Group from the
government but excluding the capital invested by the government as the owner of the enterprise.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 there has no relevant balance of deferred incomes reckoned
into current gains/losses directly.. 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.
26. 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.
27. 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 heldfor sale”.
28. Changes of major accounting policies and accounting estimation
(1) Changes of accounting policy
No accounting policy changed in reporting period.
(2) Changes of accounting estimate
No accounting estimate changed in reporting period.
29. Major accounting judgment and estimate
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) Provision for bad debts
The Company accounts for the allowance for bad debt losses according to the receivable accounting
policies. Accounts receivable is the valuation of accounts receivable can be recovered based on.Identification of devaluation of accounts receivable needs judgments and estimates of management level.
Difference between actual results and the original estimates impact reversal of the book value accounts
receivable and accounts receivable for provision for bad debts during the estimation was changing.
(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) Financial assets available for sale
In respect of impairment of available-for-sale financial assets whether impairment loss shall be
recognized in income statement significantly depends on the judgments and assumptions of the
management. While making judgments and assumptions the Company shall assess the excess of cost of
the investee’s identifiable net assets attributable to the investment over fair value and the duration and
financial condition and short term business outlook of the investee including industry situation technical
reform credit rating default rate and risks from counterparties.
(5) Long-term provision for asset impairment
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.
(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 liabilities
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.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 17% (adjusted to
16% since 1 May 2018) and 6%. Value-added tax is computed on the
difference after deduction of the deductible input tax for the period.
Consumption duty 5% of the sales revenue of jewelry taxable consumer goods
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 and tax by
the levy rate
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 2018 while period-end refers to 30
th
June 2018.
1. Monetary fund
Item Period-end balance Balance at year-begin
Stock cash 109592.35 119576.83
Bank deposits: 277446864.12 161673641.73
Total 277556456.47 161793218.56
The Company has no monetary fund with use of right restricted up to 30 June 2018. At end
of last year the restricted use of right amount as 20000000.00 Yuan in monetary fund
which refers to the bank structured deposits purchased by the Company with 6-month terms
. Accounts receivable
(1) Accounts receivable by category
Category
Period-end balance
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount
Accrual ratio
(%)
Account receivable with single
significant amount and
withdrawal bad debt provision
separately
97387917.64 74.45 23251269.45 23.87
74136648.
19
Receivables with bad debt
provision accrual by credit
portfolio
7134308.81 5.46
7134308.8
1
Accounts with single significant
amount and bad debts provision
accrued individually
26279070.64 20.09 26279070.64 100.00
Total
130801297.0
9
100.00 49530340.09 37.87
81270957.
00
(Cont.)
Category
Balance at year-begin
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount
Accrual ratio
(%)
Account receivable with single
significant amount and
withdrawal bad debt provision
separately
65959038.60 70.59 22936980.76 34.77 43022057.84
Receivables with bad debt
provision accrual by credit
portfolio
1193178.84 1.28 1193178.84
Accounts with single significant
amount and bad debts provision
accrued individually
26282070.64 28.13 26282070.64 100.00
Total 93434288.08 100.00 49219051.40 52.68 44215236.68
① Account receivable with single significant amount and withdrawal bad debt provision
separately at year end
Account receivable(units)
Period-end balance
Account
receivable
Bad debt
reserve
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 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
Deng Debing etc.
74885503.12 748854.93 1.00
Sales of jewely on credit and
in the credit terms
Total 97387917.64 23251269.45 23.87
② Account receivable provided for bad debt reserve under aging analysis method in the
groups
A/C age
Period-end balance
Account receivable Bad debt reserve Accrual ratio (%)
Within 1 year 7134308.81
Total 7134308.81
(2) Bad debt provision accrual collected or switch back
Amount of 748854.93 Yuan accrual for bad debt provision in the period bad debt provision
has 434566.24 Yuan switch-back and bad debt provision has 3000.00 Yuan declined for
change of the consolidation scope
(3) Top 5 account receivables at ending balance by arrears party
Name of the company
Relationship
with the
Amount Terms
Proportio
n in total
Company account
receivabl
es (%)
Shenzhen Jinlu Industry and Trade Co. Ltd.Non-related
party
9846607.0
0
Over 3
years
7.53
Guangdong Zhanjiang Sanxing Auto Service
Co. Ltd.
Non-related
party
4060329.4
4
Over 3
years
3.10
Deng Debing
Non-related
party
4695771.5
0
within 1
year
3.59
Wei Tingyun
Non-related
party
3174350.0
0
within 1
year
2.43
Xiao Yueliang
Non-related
party
3165466.6
6
within 1
year
2.42
Total
24942524.
60
19.07
(4) Account receivable derecognition due to financial assets transfer
The Company has no account receivable derecognition due to financial assets transfer in
the Period.
(5) 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.
3. Advance payment
(1) Advance payment by age
A/C age
Period-end balance Balance at year-begin
Amount Ratio (%) Amount Ratio (%)
Within 1 year 4909812.67 98.15 3717452.76 99.46
1-2 years 72471.73 1.45
2-3 years 20253.94 0.54
Over 3 years 20253.94 0.40
Total 5002538.34 100.00 3737706.70 100.00
(2) Top 5 advance payment at ending balance by prepayment object
Name of the company
Relationship
with the
Company
Amount Terms
Proportion in
total account
receivables (%)
FAW TOYOTA Motor Sales Co. Non-related 4278869.08 within 1 85.53
Ltd. party year
Hefei Jinshi Investment Co. Ltd.Non-related
party 399542.08
within 1
year
7.99
Xi'an Xidian Asset Management
Co. Ltd.
Non-related
party
117736.22
within 1
year
2.35
Chow Tai Fook Jewellery
(Shenzhen) Co. Ltd.Non-related
party 88993.79
within 1
year
1.78
Shenzhen Tellus Jilin Investment
Co. Ltd.
Non-related
party 72471.73
within 1
year
1.45
Total 4957612.90 99.10
4. Interest receivable
(1) Interest receivable by category
Item Period-end balance Balance at year-begin
Structured deposit 221232.88
Total 221232.88
5. Dividends receivable
(1) Dividends receivable
Item (or invested unit) Period-end balance Balance at year-begin
Shenzhen Zung Fu Tellus Auto Service
Co. Ltd.
52500000.00
China Pudong Development Machinery
Industry Co. Ltd.
547184.35
Shenzhen SDG Tellus Property
Management Co. Ltd.
232683.74 232683.74
Total 52732683.74 779868.09
6. Other accounts receivable
(1) Other accounts receivable by category
Category
Period-end balance
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount
Accrual ratio
(%)
Other account receivable with
single significant amount and
withdrawal bad debt provision
39195957.36 50.13 39195957.36 100.00
Category
Period-end balance
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount
Accrual ratio
(%)
separately
Other receivables with bad debt
provision accrual by credit
portfolio
28321626.31 36.22 3497737.78 12.35 24823888.53
Other accounts with single
significant amount and bad debts
provision accrued individually
10669248.95 13.65 10669248.95 100.00
Total 78186832.62 100.00 53362944.09 68.25 24823888.53
(Cont.)
Category
Balance at year-begin
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount
Accrual ratio
(%)
Other account receivable with
single significant amount and
withdrawal bad debt provision
separately
39192975.09 57.37 39192975.09 100.00
Other receivables with bad debt
provision accrual by credit
portfolio
18393888.57 26.92 3574724.46 19.43 14819164.11
Other accounts with single
significant amount and bad debts
provision accrued individually
10735208.95 15.71 10735208.95 100.00
Total 68322072.61 100.00 53502908.50 78.31 14819164.11
① Other receivable with single significant amount and withdrawal bad debt provision
separately at end of period
Account receivable(units)
Period-end balance
Account
receivable
Bad debt
reserve
Accr
ual
ratio
Accrual reasons
Zhongqi South China Auto Sales
Company
9832956.37 9832956.37 100.00
The Company has revoked
and estimated of uncollectible
amount
South Industry & TRADE Shenzhen
Industrial Company
7359060.75 7359060.75 100.00
The Company has revoked
and estimated of uncollectible
amount
Shenzhen Zhonghao (Group) Co. Ltd. 5000000.00 5000000.00 100.00
Win a lawsuit no executable
assets from adversary
Gold Beili Electrical Appliances
Company
2706983.51 2706983.51 100.00
Not expected to collected due
to long account age
Shenzhen Xinxingtai Trade Co. Ltd. 2418512.90 2418512.90 100.00
The Company has revoked
and estimated of uncollectible
amount
Shenzhen Petrochemical Group 1907138.45 1907138.45 100.00 Less likely to collection
Shenzhen SDG Huatong Industrial
Package Co. Ltd.
1212373.79 1212373.79 100.00
The Company has revoked
and estimated of uncollectible
amount
Shenzhen Jinhe Standard Mould Co.ltd.
1023560.00 1023560.00 100.00
The Company has revoked
and estimated of uncollectible
amount
Heyuan Dongfeng Technology
Service station
930000.00 930000.00 100.00
The company has revoked and
estimated of uncollectible
amount
Shenzhen Nuoer Electrical Co. Ltd. 906024.60 906024.60 100.00
Not expected to collected due
to long account age
Shenzhen South Great Wall
Investment Holding Co. Ltd.
819460.91 819460.91 100.00
Has greater uncertainty in
collection
Shenzhen Xiandao New Materials
Company
660790.09 660790.09 100.00
The Company has revoked
and estimated of uncollectible
amount
Shenzhen Baodong Property
Development Company
609773.00 609773.00 100.00
Not expected to collected due
to long account age
Others 3809322.99 3809322.99 100.00
Not expected to collected due
to long account age
Total 39195957.36 39195957.36 100.00
② In combination other accounts receivable whose bad debts provision was accrued by age
analysis
A/C age
Period-end balance
Other accounts receivable Bad debt reserve Accrual ratio (%)
Within 1 year 21070698.07
1-2 years 222017.41 11100.88 5.00
2-3 years 92728.40 18545.68 20.00
Over 3 years 6936182.43 3468091.22 50.00
Total 28321626.31 3497737.78 12.35
(2) Bad debt provision accrual collected or switch back
Amount of 69500.70 Yuan are accrual for bad debt provision in the period the bad debt
provision has 209465.11 Yuan decreased for change of the consolidation scope
(3) Classification of other receivables by nature
Nature Closing book balance Book balance at year-begin
Intercourse accounts of related units
receivable
6432951.98 5043179.46
Other intercourse 71753880.64 63278893.15
Total 78186832.62 68322072.61
(4) Top 5 other receivables at ending balance by arrears party
Name of the company Nature
Period-end
balance
A/C
age
Ratio in total ending
balance of other
receivables(%)
Period-end
balance of
bad debt
reserves
Zhongqi South China Auto Sales
Company
Intercourse
funds
9832956.37
Over 3
years
12.58
9832956.37
Chow Tai Fook Jewellery
(Shenzhen) Co. Ltd.Intercourse
funds
8830754.82
within
1 year
11.29
South Industry & TRADE
Shenzhen Industrial Company
Intercourse
funds
7359060.75
Over 3
years
9.41
7359060.75
Shenzhen Zhonghao (Group)
Co. Ltd.
Intercourse
funds
5000000.00
Over 3
years
6.39
5000000.00
Shenzhen Kaifeng Special
Vehicles Industry Co. Ltd.Intercourse
funds
4413728.50
Over 3
years
5.65
2206864.25
Name of the company Nature
Period-end
balance
A/C
age
Ratio in total ending
balance of other
receivables(%)
Period-end
balance of
bad debt
reserves
Total 35436500.44 45.32 24398881.37
7. Inventory
(1) Inventory classification
Item
Period-end balance
Book balance Depreciation reserve Book value
Raw materials 15208749.62 14771812.17 436937.45
Low value consumable
Stock products 19527394.38 14105626.50 5421767.88
Total 34736144.00 28877438.67 5858705.33
(Cont.)
Item
Balance at year-begin
Book balance Depreciation reserve Book value
Raw materials 15289604.77 14771812.17 517792.60
Low value consumable
Stock products 26225810.26 14097375.64 12128434.62
Total 41515415.03 28869187.81 12646227.22
(2) Inventory depreciation reserve
Item
Balance at
year-begin
Increase in the
current period
Decrease in the current
period Period-end
balance
Accrual
Othe
r
Switch back or
write-off
Other
Raw materials 14771812.17 14771812.17
Stock
products
14097375.64 8250.86 14105626.50
Total 28869187.81
8250.86
28877438.67
(3) Accrual basis for inventory depreciation reserve and reason of switch back or write-off
in the period
Item
Accrual basis for inventory
impairment provision
Reasons of
switch-back for
inventory falling
price reserves
Reasons of write-off for
inventory falling price
reserves
Stock products
Its net realizable value is
lower than cost of inventory
8. Other current assets
Item Period-end balance Balance at year-begin
Input tax ready for deducted 892053.76 1082250.70
Financial products 121130000.00 218500000.00
Total 122022053.76 219582250.70
9. Financial assets available for sale
(1) Particular about financial assets available for sale
Item
Period-end balance Balance at year-begin
Book balance
Depreciatio
n reserves
Book value Book balance
Depreciatio
n reserves
Book value
Equity instrument
available for sale
18302857.20
8126240.0
0
10176617.2
0
18302857.20
8126240.0
0
10176617.2
0
Including: measured
by fair value
Measured by
cost
18302857.20
8126240.0
0
10176617.2
0
18302857.20
8126240.0
0
10176617.2
0
Total 18302857.20
8126240.0
0
10176617.2
0
18302857.20
8126240.0
0
10176617.2
0
(2) Financial assets available for sale measured by cost at period-end
The invested entity
Book balance Depreciation reserves Ratio of
share-hold
ing in
invested
entity (%)
At year-begin
Increa
sed in
the
year
Decreased
in the year
At period-end At year-begin
Increa
sed in
the
year
Decre
ased
in the
year
At period-end
China Pudong Development Machinery
Industry Co. Ltd.
10176617.20
10176617.2
0
4.94
Shenzhen Jingwei Industrial Co. Ltd. 4000000.00 4000000.00 4000000.00 4000000.00 12.50
Shenzhen (Masco) Co. Ltd. 825000.00 825000.00 825000.00 825000.00 7.00
Wuhan Weite Hotel 640000.00 640000.00 640000.00 640000.00
Shenzhen Petrochemical Group
700000.00 700000.00 700000.00 700000.00
100000 s
hares
Shenzhen Shuntian Electro car
Technology Development Co. Ltd.
600000.00 600000.00 600000.00 600000.00 11.10
Shenzhen Jinhe Standard Mould Co. ltd. 453440.00 453440.00 453440.00 453440.00 15.00
Shenzhen China Auto Training Center 600000.00 600000.00 600000.00 600000.00 6.25
Dratini 162000.00 162000.00 162000.00 162000.00 6.25
Rishen International Co. Ltd. 145800.00 145800.00 145800.00 145800.00 7.50
Total
18302857.20
18302857.2
0
8126240.00 8126240.00
(3) Changes of impairment in period
Type
Equity instrument
available for sale
Debt instrument
available for sale
Total
Balance of impairment accrual at
year-begin 8126240.00 8126240.00
Accrual in the period
Including: transfer-in from other
comprehensive income
Decreased in the period
Including: switch back due to fair
value rebound at period-end
Balance of impairment accrual at
period-end 8126240.00 8126240.00
10. Held-to-maturity investment
(1) Held-to-maturity investment
Item
Period-end balance Balance at year-begin
Book balance
Depreciation
reserves
Book value Book balance
Depreciation
reserves
Book value
Treasury 20000.00 20000.00 20000.00 20000.00
Total 20000.00 20000.00 20000.00 20000.00
11. Long-term account receivable
(1) Long-term account receivable
Item
Period-end balance Balance at year-begin Rang
e of
disco
unt
rate
Book balance
Depreciatio
n reserves
Book
value
Book balance
Depreciation
reserves
Book
value
Other:
Essentially constitute a
long-term equity for net
investment of invested
company
2179203.68
2179203.6
8
2179203.68 2179203.68
Including: Shenzhen
Tellus Auto Service
Chain Co. Ltd. *
2179203.68
2179203.6
8
2179203.68 2179203.68
Total 2179203.68
2179203.6
8
2179203.68 2179203.68
* Notes: the Company is an associate of the Company thus the non-operating receivables by
the Company substantially constitute net investments in investee. Till the end of this
reporting period the total liabilities exceeded total assets and owners’ equity was negative.
Carrying value of the long term equity investment in the company has been less to nil. This
company ceased operation in this reporting period. Considering the actual conditions of this
company the Company made bad debt provision in full for this long term receivables.
12. Long-term equity investment
The invested entity
Balance at
year-begin
+-
Additional
investment
Capit
al
reduc
tion
Investment
gains
recognized
under equity
Other
compreh
ensive
income
adjustme
nt
Other
equity
change
I. Joint venture
Shenzhen Tellus Gman Investment Co.Ltd
56244276.84
3492178.30
Shenzhen Tellus Hang Investment Co.Ltd.
10863393.76
102122.54
Subtotal 67107670.60 3594300.84
II. Associated enterprise
Shenzhen Xinglong Machinery Mould Co.Ltd.
84792998.83
Shenzhen Tellus Auto Service Chain Co.Ltd.Shenzhen Zung Fu Tellus Auto Service
Co. Ltd.
84114516.50
8560197.63
Shenzhen Auto Industry Imp& Exp Co.Ltd.
8140473.84
-362624.06
Shenzhen Dongfeng Auto Co. Ltd. 39928427.51 1003426.41
Shenzhen New Yongtong Technology Co.Ltd.
380661.87
3806
61.87
Shenzhen New Yongtong Oil Pump
Environment Protection Co. Ltd.
127836.59
Shenzhen New Yongtong Consultant Co.Ltd.
41556.83
Shenzhen New Yongtong Auto Service
Co. Ltd.
The invested entity
Balance at
year-begin
+-
Additional
investment
Capit
al
reduc
tion
Investment
gains
recognized
under equity
Other
compreh
ensive
income
adjustme
nt
Other
equity
change
Shenzhen New Yongtong 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
Shenzhen Yimin Auto Trading Co.Ltd*①
200001.10
Subtotal
232001484.5
9
3806
61.87
9200999.98
III. Other equity investment
Shenzhen Hanli Hi-Tech Ceramics Co.Ltd.*②
1956000.00
Shenzhen South Auto Maintenance
Center*②
6700000.00
Subtotal 8656000.00
Total
307765155.1
9
3806
61.87
12795300.82
(Cont.)
The invested entity
+-
Period-end
balance
Period-end
balance
depreciation
reserves
Cash dividend
or profit
announced to
issued
Accrua
l
provisi
on
Oth
er
I. Joint venture
Shenzhen Tellus Gman Investment Co. Ltd 59736455.14
Shenzhen Tellus Hang Investment Co. Ltd. 10965516.30
Subtotal 70701971.44
II. Associated enterprise
Shenzhen Xinglong Machinery Mould Co. Ltd. 84792998.83
Shenzhen Tellus Auto Service Chain Co. Ltd.Shenzhen Zung Fu Tellus Auto Service Co. Ltd. 52500000.00 40174714.13
Shenzhen Auto Industry Imp& Exp Co. Ltd.
7777849.78
Shenzhen Dongfeng Auto Co. Ltd.
40931853.92
Shenzhen New Yongtong Technology Co. Ltd.Shenzhen New Yongtong Oil Pump
Environment Protection Co. Ltd.
127836.59 127836.59
Shenzhen New Yongtong Consultant Co. Ltd. 41556.83 41556.83
Shenzhen New Yongtong 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
Shenzhen 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 52500000.00 188321822.70 14644406.04
III. Other equity investment
Shenzhen Hanli Hi-Tech Ceramics Co. Ltd.*② 1956000.00 1956000.00
Shenzhen South Auto Maintenance Center*② 6700000.00 6700000.00
Subtotal 8656000.00 8656000.00
Total 52500000.00 267679794.14 23300406.04
Note: *①Industry and commerce registration of the enterprise have been revoked the
long-term equity investment for the above mentioned enterprise have accrual for depreciation
reserves in total.Note: more details of *②Other equity investment can be seen in Note VIII-1 “Equity ofsubsidiaries”.
13. Investment real estate
(1) Investment real estate measured at cost
Item House and building Total
I. Original book value
1、Balance at year-begin 161317125.12 161317125.12
2、Increase in the current period
(1) Newly increased
3、Decrease in the current period
(1) Disposal
4、Period-end balance 161317125.12 161317125.12
II. Accumulated depreciation and accumulated amortization
1、Balance at year-begin 88093612.91 88093612.91
2、Increase in the current period 2251494.84 2251494.84
(1) Accrual or amortization 2251494.84 2251494.84
3、Decrease in the current period
(1) Disposal
4、Period-end balance 90345107.75 90345107.75
III.Depreciation reserves
IV. Book value
1. Ending book value 70972017.37 70972017.37
2. Book value at year-begin 73223512.21 73223512.21
(2) Investment real estate with ownership restricted
Up to 30 June 2018 the Company had no investment real estate with ownership restricted.
(3) Investment real estate with certificate of title im-completed
There are no investment real estate with certificate of title im-completed up to 30 June 2018
. Fixed assets
(1) Fixed assets
Item House and buildings
Machinery
equipment
Transportation
equipment Electronic equipment
Office and other
equipment
Renovation costs
of self-owned
housing
Total
I. Original book value
1. Balance at year-begin 271013453.39
17133707.07
5543208.41 10793798.87 4142044.95 2697711.99 311323924.68
2.Increase in the current period 581102.20 47863.25 185943.98 104195.24 919104.67
(1) Purchase 581102.20 47863.25 185943.98 104195.24 919104.67
3. Decrease in the current period 2972262.88 335000.00 873146.98 1397636.02 5578045.88
(1) Disposal or scrapping 2972262.88 335000.00 873146.98 1397636.02 5578045.88
4. Period-end balance 271013453.39 14742546.39 5256071.66 10106595.87 2848604.17 2697711.99 306664983.47
II. Accumulated depreciation
1. .Balance at year-begin 153917272.35
13084301.89
3946918.48 8687439.96 3491998.99 2416329.26 185544260.93
2. Increase in the current period 3021632.68 163340.26
479230.62
202704.02 37552.15 3904459.73
(1) Accrual 3021632.68 163340.26 479230.62 202704.02 37552.15 3904459.73
3. Decrease in the current period 1736178.76 858904.98 1361331.33 3956415.07
(1) Disposal or scrapping 1736178.76 858904.98 1361331.33 3956415.07
Item House and buildings
Machinery
equipment
Transportation
equipment Electronic equipment
Office and other
equipment
Renovation costs
of self-owned
housing
Total
4. Period-end balance 156938905.03 11511463.39 4426149.10 8031239.00 2168219.81 2416329.26 185492305.59
III.Depreciation reserves
1. Balance at year-begin 3555385.70 1552359.79 6165.00 17984.71 69562.98 281382.73 5482840.91
2. Increase in the current period
(1) Accrual
3. Decrease in the current period 1232684.68 4703.17 1237387.85
(1) Disposal or scrapping 1232684.68 4703.17 1237387.85
4. Period-end balance 3555385.70 319675.11 6165.00 17984.71 64859.81 281382.73 4245453.06
IV. Book value
1. Ending book value 110519162.66 2911407.89 823757.56 2057372.16 615524.55 116927224.82
2. Book value at year-begin 113540795.34 2497045.39 1590124.93 2088374.20 580482.98 120296822.84
Note: Depreciation in this period amounting to RMB 3904459.73. Transfer from construction in progress to fixed assets amounting as RMB 0.00 in this period.In reporting period the provision amount for scrapped fixed assets decreased 650147.31 Yuan the provision for consolidate scope changed decreased 587240.54 Yuan
(2) Temporary idle fixed asset
The Company had no temporary idle fixed asset end as 30 June 2018.
(3) Certificate of title un-completed
Item Book value Reasons
Shuibei Zhongtian Comprehensive
Build
1115500.50
A failure to carry out the property
certificate is caused by issues rooted
in history
Hostel of People North Road
5902.41
A failure to carry out the property
certificate is caused by issues rooted
in history
Songquan Apartment (mixed)
29844.26
A failure to carry out the property
certificate is caused by issues rooted
in history
Tellus Building underground parking
10275006.26
Parking lot is un-able to carried out
the certificate
Tellus Building transformation layer 1818333.44 Un-able to carried out the certificate
Trade department warehouse
89458.93
A failure to carry out the property
certificate is caused by issues rooted
in history
Warehouse
949420.09
A failure to carry out the property
certificate is caused by issues rooted
in history
1#2# and 3-5/F 3# plant of Taoyuan
Road
4162434.16
A failure to carry out the property
certificate is caused by issues rooted
in history
Yongtong Building 38188870.57
A failure to carry out the property
certificate is caused by issues rooted
in history
16# Taohua Garden
1681060.44
A failure to carry out the property
certificate is caused by issues rooted
in history
Automotive building
17896313.59
A failure to carry out the property
certificate is caused by issues rooted
in history
Item Book value Reasons
First floor of Bao’an
commercial-residence build 1055720.37
A failure to carry out the property
certificate is caused by issues rooted
in history
Nuclear Office build 5221111.83
A failure to carry out the property
certificate is caused by issues rooted
in history
Total 82488976.85
(4) Fixed assets with restriction in ownership
Up to 30 June 2018 the Company had no fixed assets with restriction in ownership.
15. Construction in process
(1) Basic situation of construction in process
Item
Period-end balance Balance at year-begin
Book
balance
Depreciation
reserves
Book
value
Book
balance
Depreciation
reserves
Book
value
Shuibei Jewelry Industrial
Park
8075987
.18
8075987
.18
5554512
.79
5554512
.79
Phase I of the Tellus Shuibei
Jewelry Building
3803088
29.03
3803088
29.03
3726063
83.90
3726063
83.90
Total
3883848
16.21
3883848
16.21
3781608
96.69
3781608
96.69
(2) Changes of major projects under construction
Item Budget
Balance at
year-begin
Increased in
the period
Transfer to
fixed assets in
the period
Other
decrease in
the period
Period-end
balance
Phase I of the
Tellus Shuibei
Jewelry
Building
433620000 372606383.90 7702445.13 380308829.03
Total 372606383.90 7702445.13 380308829.03
(Cont.)
Item
Proportion of
project
investment in
budget (%)
Progress
Accumulated
amount of
interest
capitalization
Including:
interest
capitalized
amount of the
period
Interest
capitalization
rate of the
period (%)
Capital
source
Phase I of the
Tellus Shuibei
Jewelry
Building
87.71 87.71 17208030.29 685189.91 0.36
Raise funds
+Self-raised
Total 87.71 87.71 17208030.29 685189.91 0.36
(3) Accrual of depreciation reserves of construction in process in the period
Up to 30 June 2018 the construction in process of the Company has no impairment
evidence
16. Intangible assets
(1) Particular about intangible assets
Item Land use right Trademark right Software Total
I. Original book value
1. Balance at year-begin 56252774.80 95800.00 1070185.00 57418759.80
2. Increase in the year 23000.00 23000.00
(1) Purchase 23000.00 23000.00
3. Decrease in the current period
(1) Disposal
4. Period-end balance 56252774.80 95800.00 1093185.00 57441759.80
II. accumulated amortization
1. Balance at year-begin 4271209.65 75304.83 722558.40 5069072.88
2. Increase in the current period 609507.42 3589.98 82401.83 695499.23
(1) Accrual 609507.42 3589.98 82401.83 695499.23
3. Decrease in the current period
(1) Disposal
4. Period-end balance 4880717.07 78894.81 804960.23 5764572.11
III.Depreciation reserves
IV. Book value
1. Ending book value 51372057.73 16905.19 288224.77 51677187.69
Item Land use right Trademark right Software Total
2. Book value at year-begin 51981565.15 20495.17 347626.60 52349686.92
Note: The amount amortized in this period accounting as RMB 695499.23.
(2) Up to 30 June 2018 details of intangible assets restricted in aspect of ownership or use
of rights can be seen in Note VI-47.
(3) Up to 30 June 2018 the Company has no intangible assets with un-confirmed service
life
17. Long-term deferred expense
Item
Balance at
year-begin
Increase in the
current period
Amortization
during this period
Other decrease Closing amount
Decoration charge 1779713.94 358218.53 379476.58 6564.52 1751891.37
Total 1779713.94 358218.53 379476.58 6564.52 1751891.37
18. Deferred income tax assets/ deferred income tax liabilities
(1) Details of recognized deferred income tax assets
Item
Period-end balance Balance at year-begin
Deductible
temporary
difference
Deferred income
tax assets
Deductible
temporary
difference
Deferred income
tax assets
Provision of assets impairment 78513371.56 19628342.90 78513371.56 19628342.90
Equity investment difference 14844139.31 3711034.83 14844139.31 3711034.83
Un-realized transaction profit with
affiliated companies 4140720.32 1035180.08
4218604.72
1054651.18
Total 97498231.19 24374557.81 97576115.59 24394028.91
(2) Details of unrecognized deferred income tax assets
Item Period-end balance Balance at year-begin
Deductible temporary difference 91128654.07 92186466.78
Offset-able losses 27011412.35 34548078.47
Total 118140066.42 126734545.25
(3) Offset-able losses of the unrecognized deferred income tax assets will expire the
following year
Year Period-end balance
Balance at
year-begin
Note
8 14595474.27
2019 12533828.34 14499089.58
2020 505862.23 505862.23
2021 2121161.25 1842637.49
2022 7475385.50 3105014.90
2023 4375175.03
Total 27011412.35 34548078.47
19. Other non current assets
Item Period-end balance Balance at year-begin
Project account paid in advance 573661.62 573661.62
Other 100000.00 100000.00
Total 673661.62 673661.62
20. Details of asset impairment provision
Item
Amount at
year-begin
Provision
in the
period
Decreased in the period
Closing
amount
Written
back
Write off Other
I. Bad debt reserve 104901163.58 818355.63 434566.24 212465.11 105072487.86
II. Held-to-maturity
investment
impairment provision
20000.00
20000.00
III. Inventory impairment
provision
28869187.81
8250.86 28877438.67
IV.Long-term equity
investment impairment
provision
23300406.04
23300406.04
V. Fixed assets
impairment provision
5482840.91
650147.31 587240.54 4245453.06
VI. Financial assets
depreciation reserves
available for sale
8126240.00
8126240.00
Total 170699838.34 826606.49 434566.24 650147.31 799705.65 169642025.63
Note: decreased in the period in “other” refers to the consolidate scope declined
21. Short-term loans
(1) Category
Item Period-end balance Balance at year-begin
Debt of honor 143000000.00 120000000.00
Total 143000000.00 120000000.00
(2) No un-settlement short-term loans due in the period
22. Account payable
(1) Account payable
Item Period-end balance Balance at year-begin
Account payables 22940795.88 28032708.69
Total 22940795.88 28032708.69
(2) Major account payable with over one year age
Item Period-end balance Unsettled reasons
Shenzhen SDG Real Estate Co. Ltd. 6054855.46 Intercourse funds of related company unpaid
Total 6054855.46
23. Account received in advance
(1) Account received in advance
Item Period-end balance Balance at year-begin
Within 1 year 9828288.78 10035943.26
1-2 years 2699525.20
2-3 years 8723.00 345811.38
Over 3 years 1054551.01 708739.63
Total 10891562.79 13790019.47
Note: prepayment 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) and the prepayment from Huari Company for components acquisition.
24. Wages payable
(1) Wages payable
Item Balance at year-begin
Increased in the period
Decreased in
the period Period-end balance
I. Short-term
compensation
21442246.57 24756977.57 24410975.90 21788248.24
II. Post-employment
welfare- defined
contribution plans
1728907.96 2671268.89 3565682.51 834494.34
III. Compensation from
176030.00 176030.00
Item Balance at year-begin
Increased in the period
Decreased in
the period Period-end balance
labor relationship
dismissed
IV. Other welfare due
within one year
Total 23171154.53 27604276.46 28152688.41 22622742.58
(2) Short-term compensation
Item Balance at year-begin
Increased in the period
Decreased in
the period Period-end balance
1. Wages bonuses
allowances and subsidies
19225690.87 21515586.71 21098120.23 19643157.35
2. Welfare for workers
and staff
376841.00 376841.00 -
3. Social insurance
10365.82 1172131.54 1175817.39 6679.97
Including:
Medical insurance
9179.74 1055635.18 1059321.03 5493.89
Work
injury insurance
513.72 43426.52 43426.52 513.72
Maternity insurance
672.36 73069.84 73069.84 672.36
4. Housing
accumulation fund
2035280.61 1229218.18 1235111.80 2029386.99
5. Labor union
expenditure and
personnel education
expense
170909.27 463200.14 525085.48 109023.93
6. Short-term
compensated absences
7. Short-term profit
sharing plan
8. Other
Total 21442246.57 24756977.57 24410975.90 21788248.24
(3) Defined contribution plans
Item Balance at year-begin Increased in the period
Decreased in
the period
Period-end balance
1. Basic endowment
insurance
133161.62 2340971.27 2343514.76 130618.13
Item Balance at year-begin Increased in the period
Decreased in
the period
Period-end balance
2. Unemployment
insurance
1268.72 37233.62 37392.08 1110.26
3. Enterprise annuity 1594477.62 293064.00 1184775.67 702765.95
Total 1728907.96 2671268.89 3565682.51 834494.34
24. Tax payable
Item Period-end balance Balance at year-begin
Value-added tax 562137.80 502040.39
Enterprise income tax 1395184.91 2319674.83
Individual income tax 557263.42 286741.01
Urban maintenance and construction tax 107208.61 155053.76
Property right tax 1263800.29 897951.76
land VAT 5362682.64 5362682.64
Land use tax 233161.63 123484.44
Educational surtax 117829.47 152004.54
Stamp duty 18242.02 62434.50
Other 33194.19 65504.40
Total 9650704.98 9927572.27
26. Interest payable
Item Period-end balance Balance at year-begin
Interest payable of short-term loans 183561.00 165604.16
Interest of long-term loans with
interest-installment and principal
paid on due
51664.83 63890.56
Total 235225.83 229494.72
27. Other payable
(1) Classification of other payable according to nature of account
Item Period-end balance Balance at year-begin
Relevance contact borrowings and interests 33084552.95 58367438.13
Deposit and margin 20910521.82 16365292.81
Other 128190826.38 78367179.55
Total 182185901.15 153099910.49
(2) Significant other payable with over one year age
Item
Period-end
balance
Reasons of un-paid or carry-over
Shenzhen SDG Co.Ltd.
22962986.08
Term of repayment has not been regulated by parent
company
Total 22962986.08
28. Long-term loans
Item Period-end balance Balance at year-begin
Mortgage loan 34934887.55 38600000.00
Total 34934887.55 38600000.00
29. Long-term account payable
Item Period-end balance 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
30. Other non-current liability
Item Closing amount Amount at year-begin
Rental received in advance 14520000.00 14520000.00
Total 14520000.00 14520000.00
Notes: other non-current liability refers to the rental received in advance from Shuibei
Jewelry Building the income was subsequently measured at amortized cost at effective rate.
31. Share capital
Item
Balance at
year-begin
Increased/decreased (+-) in the Period
Period-end balance New
shares
issued
Bonus
shares
Shares
converted
from
public
reserve
Other Subtotal
I. Restricted
shares
1. State-owned
shares
2. State-owned
legal person’s
shares
6000000 -6000000 -6000000 0
3.Other domestic
shares
71000000 -71000000 -71000000 0
Including:
Domestic legal
person’s shares
71000000 -71000000 -71000000 0
Item
Balance at
year-begin
Increased/decreased (+-) in the Period
Period-end balance New
shares
issued
Bonus
shares
Shares
converted
from
public
reserve
Other Subtotal
Domestic natural
person’s shares
4. Foreign shares
Including:
Foreign legal
person’s shares
Foreign natural
person’s shares
Total restricted
shares
77000000 -77000000 -77000000 0
II. Unrestricted
shares
1. RMB Ordinary
shares
193881600 +77000000 +77000000 270881600
2. Domestically
listed foreign
shares
26400000
26400000
3. Overseas listed
foreign shares
4. Others
Total unrestricted
shares
220281600 +77000000 +77000000 297281600
III. Total shares 297281600 0 0 297281600
32. Capital reserves
Item
Balance at
year-begin
Increased in the
period
Decreased in the
period
Period-end
balance
Capital premium 559544773.35 559544773.35
Other capital
reserve
5681501.16 5681501.16
Total 565226274.51 565226274.51
33. Surplus reserves
Item Balance at year-begin Increased in the period Decreased in the period Period-end balance
Statutory
surplus
reserves
2952586.32 2952586.32
Total 2952586.32 2952586.32
. Retained profits
Item The period Last year
Undistributed profits at the end of last year before
adjustment
97798595.80 30935823.12
Adjust the total undistributed profits at the
beginning of the year (Increase + Decrease -)
Undistributed profits at the beginning of the year
after adjustment
97798595.80 30935823.12
Add: The net profits belong to shareholders of
patent company of this period
26920279.86 24596905.09
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 124718875.66 55532728.21
35. Operating income and cost
Item
Jan.- Jun.2018 Jan.- Jun.2017
Income Cost Income Cost
Main operating 194190757.18 152737808.48 158321271.67 117170941.78
Other operating 3764324.55 1002143.63 2662832.89 853872.18
Total 197955081.73 153739952.11 160984104.56 118024813.96
36. Tax and surcharges
Item Jan.- Jun.2018 Jan.- Jun.2017
Consumption tax 238345.22 21580.86
City maintenance and construction tax 364256.92 368816.45
Education surcharge 258836.71 254567.79
Land use right 209447.09 312379.03
Property tax 1729876.12 1792852.09
Stamp duty 102522.31 57109.97
Other taxes 19337.55 3619.57
Total 2922621.92 2810925.76
37. Sales expenses
Item Jan.- Jun.2018 Jan.- Jun.2017
Employee compensation 5088693.99 4628353.86
Advertising and exhibition expenses 337873.81 110070.26
Item Jan.- Jun.2018 Jan.- Jun.2017
Depreciation and amortization 578266.24 451080.13
Office expenses 302546.51 411090.60
Utilities 395335.70 150135.43
Transportation and business trip cost 177820.47 189297.19
Other 1457370.55 943577.78
Total 8337907.27 6883605.25
38. Administration expense
Item Jan.- Jun.2018 Jan.- Jun.2017
Employee compensation 14695652.80 14072858.71
Office expenses 754044.43 1384396.56
Transportation and business trip cost 322091.67 626527.69
Business entertainment expenses 441210.59 376655.28
Depreciation and amortization 868746.73 959488.65
Consulting and service expenses 1382567.03 898254.97
Other 672779.16 1033839.90
Total 19137092.41 19352021.76
39. Financial expenses
Item Jan.- Jun.2018 Jan.- Jun.2017
Interest expenses 4367283.44 2069420.04
Less: Interest income 1053302.07 1396595.43
Less: interest capitalized amount 685189.91 720020.72
Exchange gains and losses 14108.62 -81475.00
Other 128972.53 155131.65
Total 2771872.61 26460.54
40. Assets impairment loss
Item Jan.- Jun.2018 Jan.- Jun.2017
Bad debt loss 383789.39 -189620.97
Loss on inventory 8250.86
Total 392040.25 -189620.97
41. Investment income
Item Jan.- Jun.2018 Jan.- Jun.2017
Income of long-term equity 12795300.82 2929608.85
Item Jan.- Jun.2018 Jan.- Jun.2017
investment calculated based on equity
Income of disposal of long-term
equity investment
1308598.25 4916001.05
Investment income of financial
products during the holding period
3762123.18 1790968.34
Total 17866022.25 9636578.24
42. Non-operating income
Item Jan.- Jun.2018 Jan.- Jun.2017
Amount reckoned into current
non-recurring gains/losses
Gains from non-current assets scrap 58186.00
Gains for account unable to paid 3131.97 225926.22 3131.97
Other 31262.42 35404.95 31262.42
Total 34394.39 319517.17 34394.39
43. Non-operating expenditure
Item
Jan.-
Jun.2018
Jan.- Jun.2017
Amount reckoned into current
non-recurring gains/losses
Loss of non-current assets scrap and damage 99240.38 6919.80 99240.38
Other 447.93 447.93
Total 99688.31 6919.80 99688.31
44. Income tax expense
(1) Statement of income tax expense
Item Jan.- Jun.2018 Jan.- Jun.2017
Current income tax expense 1671294.17 1077177.35
Deferred income tax expense 19471.10 -103215.92
Adjustment for precious period 196708.50 -350274.34
Total 1887473.77 623687.09
(2) Adjustment on accounting profit and income tax expenses
Item Jan.- Jun.2018
Total profit
28454323.49
Income tax measured by statutory/applicable tax rate
7113580.88
Impact by different tax rate applied by subsidies
Adjusted the previous income tax
196708.50
Impact by non-taxable revenue
Impact on cost expenses and losses that unable to deducted
-3157937.97
Impact by the deductible losses of the un-recognized previous deferred
income tax
The deductible temporary differences or deductible losses of the
un-recognized deferred income tax assets in the Period
-2264877.64
Change of the balance of deferred income tax assets/liabilities at
period-begin resulted by tax rate adjustment
Income tax expense 1887473.77
45. Notes to statement of cash flow
(1) Other cash received in relation to operation activities
Item Jan.- Jun.2018 Jan.- Jun.2017
Intercourse funds 14445364.48 16403125.71
Interest income 350767.12 1278595.43
Total 14796131.60 17681721.14
(2) Other cash paid in relation to operation activities
Item Jan.- Jun.2018 Jan.- Jun.2017
Expenses of operation management cash paid 6238289.92 6123845.66
Intercourse funds and other 34390552.03 32907632.73
Total 40628841.95 39031478.39
(3) Other cash received in relation to investment activities
Item Jan.- Jun.2018 Jan.- Jun.2017
Down-payment for equity transfer
received
46001000.00
Total 46001000.00
(4) Other cash paid in relation to investment activities
Item Jan.- Jun.2018 Jan.- Jun.2017
Equity transfer fee 5733400.00
Total 5733400.00
46. Supplementary information to statement of cash flow
(1) Supplementary information to statement of cash flow
Supplementary information Jan.- Jun.2018 Jan.- Jun.2017
1. Net profit adjusted to cash flow of operation activities:
Net profit
26566849.72 23401386.78
Add: Provision of assets impairment
392040.25 -189620.97
Depreciation of fixed assets consumption of oil assets and
6155954.57 6493475.89
Supplementary information Jan.- Jun.2018 Jan.- Jun.2017
depreciation of productive biology assets
Amortization of intangible assets
695499.23 696315.90
Amortization of long-term deferred expenses
379476.58 381828.78
Loss from disposal of fixed assets intangible assets and
other long-term assets(gain is listed with “-”)
63707.05 -57116.20
Loss of disposing fixed assets(gain is listed with “-”)
35533.33 5850.00
Loss from change of fair value(gain is listed with “-”)
Financial expenses (gain is listed with “-”)
3596467.06 1267924.32
Investment loss (gain is listed with “-”)
-17866022.25 -9636578.24
Decrease of deferred income tax asset( (increase is listed with
“-”) 19471.10
35297.85
Increase of deferred income tax liability (decrease is listed
with “-”)
-122687.02
Decrease of inventory (increase is listed with “-”)
5938424.27 3049116.56
Decrease of operating receivable accounts (increase is listed
with “-”)
-23770419.43 -3111248.97
Increase of operating payable accounts (decrease is listed with
“-”)
-30277449.59 -14833383.28
Other
Net cash flow arising from operating activities
-28070468.11 7380561.40
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
277556456.47 123232791.88
Less: Balance of cash equivalent at period-begin
161793218.56 178497640.10
Add: Closing balance of cash equivalents
Less: Opening balance of cash equivalents
Net increasing of cash and cash equivalents
115763237.91 -55264848.22
(2) Constitution of cash and cash equivalent
Item
Period-end
balance
Balance at
year-begin
Item
Period-end
balance
Balance at
year-begin
I.Cash
27755645
6.47
14179321
8.56
Including: stock cash
109592.35 119576.83
Bank deposit available for payment at any time
27744686
4.12
14167364
1.73
Other monetary fund available for payment at any time
II. Cash equivalent
Including: bond investment matured within 3 months
II.Balance of cash and cash equivalent at year-end
27755645
6.47
14179321
8.56
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
47. Assets with ownership or use right restricted
Item Book value at Period-end Reason
Intangible assets 49637241.84
Long-term equity investment 40174714.13 See Note IX-5-(2)
Total 89811955.97
(1)The land of this project (SFDZ No. 2000609764) needs to be mortgaged in order to
satisfy the requirements for the implementation of Testrite Shuibei Jewelry Building project
the Company’s subsidiary Shenzhen Zhongtian Industry Co. Ltd. signed the loan contract
(Mortgage & Loan 2014 Gu 250 Tianbei) with borrowing amount of 0.3 billion Yuan and
loan term from June 24 2014 to June 23 2024 with China Construction Bank Shuibei
Branch on June 24 2014 and the Company providing the joint liability guaranty (Guarantee
and loan 2014 Gu 250 Tianbei). Up to June 30 2018 loans of 34934887.55 Yuan from the
bank under the name of Shenzhen Zhongtian Industrial Co. Ltd.
48. 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 856.00 6.6166 5663.81
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
(1) Loss controlling right by disposing subsidiary investment by single time
Name of
subsidiary
Share
disposal price
Share
disposal
ratio (%)
Disposal
ways
Time for losing
controlling rights
Basis for
determination
of timing of
losing control
Difference between
share of the net
assets of the
subsidiary based on
disposal price and
disposal investment
in the consolidated
financial statements
Shenzhen Tellus
New Yongtong
Automobile
Development
Co. Ltd*1
848065.00
95 Transfer 2018-1-16
Equity
transfer
amount has
been received
in full and
the control
right on the
target
company has
been
transferred to
the acquiree.
1072860.12
(Cont.)
Name of
subsidiary
Proportion
of the
remaining
equity
interest on
the date of
losing
control (%)
Carrying
value of
the
remaining
equity
interest on
the date of
losing
control
Fair value
of the
remaining
equity
interest on
the date of
losing
control
Profit or loss
arising from
remeasuring
the remaining
equity
interest at fair
value
Basis of
determination
and major
assumption for
fair value of the
remaining equity
interest on the
date of losing
control
Amount of
other
comprehensive
income
transferred to
investment
profit or loss
relating to
equity
investment by
the original
subsidiary
Shenzhen Tellus
New Yongtong
Automobile
Development Co.
Ltd*1
VIII. Equity in other entity
1. Equity in subsidiary
(1) Constitute of enterprise group
Subsidiary
Main
operation
place
Registered
place
Business
nature
Share-holding
ratio (%)
Acquired
way
Directly Indirectly
Shenzhen Tellus New Yongtong
Automobile Development Co. Ltd.
Shenzhen Shenzhen
Service
industry
100.00
Obtained by
establishment
or investment
Shenzhen Dongchang Yongtong
Motor Vehicle Detection Co. Ltd.Shenzhen Shenzhen
Service
industry
95.00
Obtained by
establishment
or investment
Shenzhen Bao’an Shiquan Industrial
Co. Ltd.
Shenzhen Shenzhen Commerce 100.00
Obtained by
establishment
or investment
Shenzhen SDG Tellus Real Estate
Co. Ltd.
Shenzhen Shenzhen Manufacture 100.00
Obtained by
establishment
or investment
Shenzhen Tellus Real Estate Shenzhen Shenzhen Service 100.00 Obtained by
Subsidiary
Main
operation
place
Registered
place
Business
nature
Share-holding
ratio (%)
Acquired
way
Directly Indirectly
Exchange Co. Ltd. industry establishment
or investment
Shenzhen New Yongtong
Automobile Inspection Equipment
Co. Ltd.
Shenzhen Shenzhen
Service
industry
51.00
Obtained by
establishment
or investment
Shenzhen Automobile Industry
Trading General Company
Shenzhen Shenzhen Commerce 100.00
Obtained by
establishment
or investment
Shenzhen Automotive Industry
Supply Corporation
Shenzhen Shenzhen
Service
industry
100.00
Obtained by
establishment
or investment
Shenzhen SDG Huari Automobile
Enterprise Co.Limited
Shenzhen Shenzhen
Service
industry
60.00
Obtained by
establishment
or investment
Shenzhen Huari Anxin Automobile
Inspection Ltd.Shenzhen Shenzhen
Service
industry
100.00
Obtained by
establishment
or investment
Shenzhen Zhongtian Industrial Co.Ltd.Shenzhen Shenzhen
Service
industry
100.00
Obtained by
establishment
or investment
Shenzhen Huari TOYOTA
Automobile Sales Service Co. Ltd.
Shenzhen Shenzhen Commerce 60.00
Obtained by
establishment
or investment
Shenzhen Hanli Hi-Tech Ceramics
Co. Ltd.*1
Shenzhen Shenzhen
Ceramic
technology
80.00
Obtained by
establishment
or investment
Shenzhen South Auto Maintenance
Center*1
Shenzhen Shenzhen
Vehicle
maintenance
100.00
Obtained by
establishment
or investment
Anhui Tellus Starlight Jewelry
Investment Co. Ltd.Hefei Hefei Commerce 51.00
Obtained by
establishment
Subsidiary
Main
operation
place
Registered
place
Business
nature
Share-holding
ratio (%)
Acquired
way
Directly Indirectly
or investment
Anhui Tellus Starlight Junzun
Jewelry Co. Ltd.Hefei Hefei Commerce 60.00
Obtained by
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 Hanli Hi-Tech Ceramics Co. Ltd. was from
September 21 1993 to September 21 1998 and the operating period of Shenzhen South
Auto Maintenance Center was from July 12 1994 to July 2002 11 these companies have
ceased to operate for many years and have been revoked the industrial and commercial
registration because they did not participate in the annual inspection of industry and
commerce. The Company has not been able to exercise effective control over such
companies which should not be included in the consolidated scope of the consolidated
financial statements of the Company and the book value of the Company's investment in
such companies and the net value of the net investment in these companies was zero.
(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
Co. Ltd
40% 178427.65 -383764.20
Shenzhen SDG Huari Automobile
Enterprise Co.Limited
40% -164768.84 11388573.08
(3) Main finance of the important non-wholly-owned subsidiary
Subsidiary
Period-end balance
Current assets
Non-current
assets
Total assets
Current
liability
Non-current
liability
Total liability
Shenzhen Huari
Toyota
49311422.47 1126789.34 50438211.81 51397622.30 51397622.30
Subsidiary Period-end balance
Automobile Co.
Ltd
Shenzhen SDG
Huari
Automobile
Enterprise
Co.Limited
44108876.78 29581702.43 73690579.21 45219146.52 45219146.52
(Cont.)
Subsidiary
Balance at year-begin
Current assets
Non-current
assets
Total assets
Current
liability
Non-current
liability
Total liability
Shenzhen Huari
Toyota
Automobile Co.
Ltd
48902736.46 1164059.81 50066796.27 51472275.89 51472275.89
Shenzhen SDG
Huari
Automobile
Enterprise
Co.Limited
46281176.84 29886773.06 76167949.90 47284595.12 47284595.12
Subsidi
ary
Jan.- Jun.2018 Jan.- Jun.2017
Business
income
Net profit
Total
comprehe
nsive
income
Cash flow
from
operating
activities
Business
income
Net profit
Total
comprehen
sive
income
Cash flow
from
operating
activities
Shenzh
en
Huari
Toyota
Autom
obile
Co. Ltd
85879290.0
3
446069.
13
446069.1
3
2611399.29
97707246.2
3
204462.5
9
204462.5
9
967416.91
Subsidi
ary
Jan.- Jun.2018 Jan.- Jun.2017
Shenzh
en SDG
Huari
Autom
obile
Enterpr
ise
Co.Lim
ited
17507428.3
9
-411922.
09
-411922.
09
-972706.87
17870512.3
0
146386.1
4
146386.1
4
-2957442.18
(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 cooperative enterprise
(1) Important cooperative enterprise
Name
Main
operation
place
Registered
place
Business nature
Share-holding
ratio (%)
Accounting
treatment on
investment for
joint venture
and cooperative
enterprise
Directly Indirectly
Affiliation:
Shenzhen Zung Fu Tellus
Auto Service Co. Ltd.
Shenzhen Shenzhen
Sales and
maintain of Benz 35.00 Equity method
Shenzhen Dongfeng Auto
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
50.00 Equity method
Name
Main
operation
place
Registered
place
Business nature Share-holding
ratio (%)
Accounting
treatment on
investment for
joint venture
and cooperative
enterprise
management and
leasing
(2) Main financial information of the important joint venture
Item
2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017
Shenzhen Zung Fu
Tellus Auto Service
Co. Ltd.
Shenzhen
Dongfeng Auto
Co. Ltd.
Shenzhen Zung Fu
Tellus Auto Service
Co. Ltd.
Shenzhen
Dongfeng Auto
Co. Ltd.
Current assets
377072861.88 615374679.81 390613571.00 685184923.52
Non -current assets
19399274.80 238233604.05 23214032.00 241719824.00
Total assets 396472136.68 853608283.86 413827603.00 926904747.52
Current liabilities 285413217.64 633219931.93 173500413.00 708700096.37
Non –current liabilities
58701889.00 60436348.10
Total liabilities
285413217.64 691921820.93 173500413.00 769136444.47
Minority shareholders’
equity -2040952.77 -1945407.03
Attributable to parent
company shareholders’
equity
111058919.04 163727415.70 240327190.00 159713710.08
Share of net assets
calculated by
shareholding ratio
38870621.66 40931853.92 84114516.50 39928427.51
Adjustment items
--Goodwill
--Unrealized profit of
internal trading
—Other
1304092.47
Book value of equity
investment in joint
ventures
40174714.13 40931853.92 84114516.50 39928427.51
Item
2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017
Shenzhen Zung Fu
Tellus Auto Service
Co. Ltd.
Shenzhen
Dongfeng Auto
Co. Ltd.
Shenzhen Zung Fu
Tellus Auto Service
Co. Ltd.
Shenzhen
Dongfeng Auto
Co. Ltd.
Fair value of the equity
investment of affiliation
with public offers
concerned
Operation income
625845433.53 206529913.61 602080907.00 249209515.73
Net profit
24457707.54 3918159.88 24584092.96 -9138940.53
Net profit of the
termination of operation
Other comprehensive
income
Total comprehensive
income 24457707.54 3918159.88 24584092.96 -9138940.53
Dividends received from
affiliation in the year
52500000.00 9100000.00
(3) Main financial information of the important cooperative enterprise
Item
Shenzhen Tellus Gman Investment Co. Ltd
2018-6-30 / Jan.- Jun.2018
2017-12-31/ Jan.-
Jun.2017
Current assets
27302262.00 45981179.66
Including: cash and cash equivalents
13284634.82 14656470.18
Non -current assets
387762141.96 388901782.46
Total assets
415064403.96 434882962.12
Current liabilities
25591493.77 38394408.48
Non –current liabilities
270000000.00 284000000.00
Total liabilities
295591493.77 322394408.48
Minority shareholders’ equity
Attributable to parent company shareholders’
equity 119472910.19
112488553.64
Item
Shenzhen Tellus Gman Investment Co. Ltd
2018-6-30 / Jan.- Jun.2018
2017-12-31/ Jan.-
Jun.2017
Share of net assets calculated by shareholding
ratio 59736455.14
56244276.84
Adjustment items
--Goodwill
--Unrealized profit of internal trading
—Other
Book value of equity investment in joint ventures
59736455.14 56244276.84
Fair value of the equity investment of joint
ventures with public offers concerned
Operation income 33843551.10 19777905.85
Financial expense
9221726.36 10275774.46
Income tax expense
Net profit
6984356.55 -6609390.37
Net profit of the termination of operation
Other comprehensive income
Total comprehensive income
6984356.55 -6609390.37
Dividends received from joint venture in the year
(4) Summary financial information of not important joint venture and cooperative enterprise
Item 2018-6-30 / Jan.- Jun.2018
2017-12-31/ Jan.-
Jun.2017
Joint ventures:
Total investment of book value 10965516.30 10863393.76
Total amount of the follow items calculated by
share-holding ratio
—net profit 102122.54 140991.04
—Other comprehensive income
—Total comprehensive income 102122.54 140991.04
affiliation:
Item 2018-6-30 / Jan.- Jun.2018
2017-12-31/ Jan.-
Jun.2017
Total investment of book value 92570848.61 93314134.54
Total amount of the follow items calculated by
share-holding ratio
—net profit -362624.06 1007637.49
—Other comprehensive income
—Total comprehensive income -362624.06 1007637.49
(5) Excess deficit from joint venture or affiliated business
Name
Cumulative
losses
un-recognized
in the end of
last year
Losses of current
period-end
un-recognized (or net
profit shares in the
period)
Cumulative losses
un-recognized at
current period-end
Shenzhen Tellus Auto Service Chain Co.Ltd.
98104.52
759.21 98863.73
Shenzhen Xinyongtong Dongxiao Auto
Parts Sales Co. LTd.
1057579.35
273881.84 1331461.18
Shenzhen New Yongtong Auto Service
Co. Ltd. 79046.58 472747.73 551794.31
Shenzhen Yongtong Xinda Inspection
Equipment Co. Ltd.
221136.79
592499.80 813636.59
4. Important co-management
No co-management in the Period.IX. Related party and related transactions
1. Parent company of the enterprise
Parent company
Registration
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
and domestic
commerce
25828200
00 Yuan
49.09 49.09
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 affiliated enterprise of the Company
Found more in Note VIII-3.
4. Particulars about other related parties
Other related parties Relationship with the Company
Shenzhen SDG Swan Industrial Company Ltd. Subsidiary of parent company
Shenzhen Machinery Equipment Imp & Exp.
Company
Subsidiary of parent company
Shenzhen SDG Real Estate Co. Ltd. Subsidiary of parent company
Hong Kong Yujia Investment Co Ltd. Subsidiary of parent company
Shenzhen Tellus Real Estate Yueyang Co. Subsidiary of parent company
Shenzhen SDG Development Center Construction
Supervision Co. Ltd.Subsidiary of parent company
Shenzhen Tellus Yangchun Real Estate Co. Ltd. Subsidiary of parent company
Shenzhen Longgang Tellus Real Estate Co. Ltd. Subsidiary of parent company
Shenzhen SDG Property Management Co. Ltd. Subsidiary of parent company
Chengdu RuihangJewelry Co. Ltd. – Lin Hang Shareholder of subsidiary and related individual
Chengdu Zhongjin Guifu Jewelry Co. Ltd. – Lin
Tonggui
Shareholder of subsidiary and related individual
Chengdu Hezhiyuan Jewelry Co. Ltd. – Xiong
Yungui
Affiliated enterprise and related individual of the
subsidiary’s shareholder
Anhui Jinzun Jewerly Co. Ltd. Shareholder of subsidiary
5. Related transaction
(1) Related lease
①As a lessor for the Company
Lessee Assets type
Lease
income in
recognized
in Jan.- Jun.
2018
Lease income
in recognized
in Jan.- Jun.
2017
Shenzhen Zung Fu Tellus Auto Service Co. Ltd. House leasing 2523809.60 2523809.60
Shenzhen SDG Tellus Property Management Co. Ltd. House leasing 70190.48
Shenzhen New Yongtong Auto Service Co. Ltd. House leasing 308502.84 134586.67
Shenzhen Xinyongtong Dongxiao Auto Parts Sales Co. Ltd. House leasing 226285.74 95190.49
(2) Related guarantee
① The Company serves as guarantor
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 Renhu Tellus Auto Service Co. Ltd.(hereinafter referred to as Renhu Tellus) to the expiration date of the joint venture contract
between the Company and Renhe 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 RMB100 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.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 Ruihang Jewelry Co.Ltd. the shareholder of Sichuan Test Rite Jewelry
Technology Co.Ltd. which is the subsidiary of the Company jointly with the affiliated
individual Lin Hang set Sichuan Test Rite Jewelry Technology Co.Ltd. as the secured
creditor with a ceiling amount of secured guarantee and the principal creditor’s right
secured is the receivables of RMB13810000 from Sichuan Test Rite Jewelry Technology
Co.Ltd. to the guaranteed Zhang Hongcheng and others; Chengdu He Zhiyuan Jewelry
Co.Ltd. as an affiliated corporation of Chengdu Cai Zhiyuan Jewelry Co.Ltd. the
shareholder of Sichuan Test Rite Jewelry Technology Co.Ltd. which is the subsidiary of
the Company jointly with affiliated individual Xiong Yungui set Sichuan Test Rite Jewelry
Technology Co.Ltd. as the secured creditor with a ceiling amount of secured guarantee and
the principal creditor’s right secured is the receivables of RMB52940000 from Sichuan
Test Rite Jewelry Technology Co.Ltd to the guaranteed Xiao Yueliang and others; Chengdu
Zhongjin Guifu Jewelry Co.Ltd. as the shareholder of Sichuan Test Rite Jewelry
Technology Co.Ltd. which is the subsidiary of the Company and the affiliated individual
Lin Tonggui set Sichuan Test Rite Jewelry Technology Co.Ltd as the secured creditor with
a ceiling amount of secured guarantee and the principal creditor’s right secured is the
receivables of RMB9640000 from Sichuan Test Rite Jewelry Technology Co.Ltd. to the
guaranteed Zhen Ruijin and others;
（3）Hiring the affiliated parties to provide labor services
①Center Enterprise opted for the engineering supervision organization of Test Rite Shuibei
project through a public tender. In May 2013 Center Enterprise has signed a contract on the
Engineering Supervision of Test Rite Shuibei Jewelry Building with Shenzhen Tefa
Development Center Construction Supervision Co. Ltd. which was commissioned by
Center Enterprise to implement supervision on the Test Rite Shuibei Project with a total of
RMB5 041900 as commissioned supervision expenses among which RMB240 000 has
been paid from Jan. to Jun. 2018 and total amount of RMB4 997200 has been paid by Jun.
30
th
2018.
②Center Enterprise has signed a property management service contract with Shenzhen Tefa
Teli Property Management Co. Ltd. which shall provide property management (including
early intervention) service for Center Enterprise paying RMB 1403196.03 for various
types of management expenses from Jan.to Jun. 2018.
(4) Related fund occupation expenses
Related party Content
Jan.-
Jun.2018
Jan.- Jun.2017
Borrow-in:
Shenzhen SDG Co. Ltd. Fund occupation expenses 216.794.15 261953.30
Anhui Jinzun Jewerly Co. Ltd. Fund occupation expenses 18368.53
Starlight Jewerly Co. Ltd. Fund occupation expenses 4411.18
Borrow-out:
Shenzhen Xinglong Machinery Mould Co. Ltd. Fund occupation expenses 37708.32 37708.32
(5) Remuneration of key manager
Item Jan.- Jun.2018 Jan.- Jun.2017
Remuneration of key manager 5.35 million Yuan 4.19 million Yuan
6. Receivable/payable items of related parties
(1) Receivable item
Item
Period-end balance Balance at year-begin
Book balance Bad debt
reserve
Book balance Bad debt
reserve
Account receivable:
Shenzhen New Yongtong Auto Service 1089566.00 927602.00 1359506.00 927602.00
Item
Period-end balance Balance at year-begin
Book balance Bad debt
reserve
Book balance Bad debt
reserve
Co. Ltd.
Shenzhen Xinyongtong Dongxiao Auto
Parts Sales Co. LTd.
799200.00 680400.00
997200.00 680400.00
Total 1888766.00 1608002.00 2356706.00 1608002.00
Other account receivable:
Shenzhen Tellus Auto Service Chain Co.Ltd.
1359297.00 1359297.00
1359297.00 1359297.00
Shenzhen New Yongtong Technology
Co. Ltd.
116480.22 58240.11
Shenzhen Yongtong Xinda Inspection
Equipment Co. Ltd.
530506.24 529111.24
529111.24 529111.24
Shenzhen Xiandao New Material Co. Ltd. 660790.09 660790.09 660790.09 660790.09
Shenzhen Xinglong Machinery Mould
Co. Ltd.
2300432.90 1055072.90
2262724.58 1036172.99
Shenzhen Tellus New Yongtong Auto
Service Co. ltd.
114776.33 114776.33
114776.33 114776.33
Total 4965802.56 3719047.56 5043179.46 3758387.76
Dividends receivable:
Shenzhen Zung Fu Tellus Auto Service
Co. Ltd.
52500000.00
Shenzhen SDG Tellus Property Management
Co. Ltd*
232683.74 232683.74
Total 52732683.74 232683.74
Long-term receivables
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 Period-end balance
Balance at
year-begin
Account payable:
Item Period-end balance
Balance at
year-begin
Shenzhen SDG Real Estate Co. Ltd. 6054855.46 6054855.46
Shenzhen Machinery Equipment Imp & Exp. Company 45300.00 45300.00
Shenzhen SDG Tellus Property Management Co. Ltd. 279793.26
Total 6100155.46 6379948.72
Other account payable:
Shenzhen SDG Real Estate Co. Ltd. 335701.34 335701.34
Hong Kong Yujia Investment Co Ltd. 2026287.81 2009360.35
Shenzhen SDG Swan Industrial Company Ltd. 20703.25 20703.25
Shenzhen Machinery Equipment Imp & Exp. Company 1554196.80 1554196.80
Shenzhen SDG Co. Ltd. 22962986.08 51122660.84
Shenzhen Longgang Tellus Real Estate Co. Ltd. 1095742.50 1095742.50
Shenzhen Tellus Yangchun Real Estate Co. Ltd. 476217.49 476217.49
Shenzhen Xinglong Machinery Mould Co. Ltd. 78515.56 78515.56
Shenzhen New Yongtong Technology Co. Ltd. 320000.00
Shenzhen Yongtong Xinda Inspection Equipment Co. Ltd. 24340.00 24340.00
Anhui Jinzun Jewerly Co. Ltd. 2530000.00 1330000.00
Starlight Jewerly Co. Ltd. 882000.00
Total 31986690.83 58367438.13
X. Commitment or contingency
1. Important commitments
(1) Capital commitments
Item Period-end balance Balance at year-begin
Signed without recognized in financial
statement
—Purchase and construction of long-term
assets commitment
62287414.67 100505887.53
Total 62287414.67 100505887.53
2. Contingency
(1) Contingent liability and its financial influence formed by un-settle lawsuits 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
1380 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.② Subsidiary of the Company Shenzhen SD Tellus Real Estate Company (“Tellus Real
Estate Company”) entered into the “Contract of Liyehui Food Street Co-operation in BujiTown” with Shenzhen Jinlu Industrial & Trading Company (“Jinlu Company”) on 29November 1994. In accordance with the Contract on the foundation of “Cooperative
Development Contract of Liyehui Food Street in Buji Town” signed between the Jinlu
Company and land providers -- Shenzhen Real Estate Management Branch Bureau of
Guangzhou Military Region (“Real Estate Management Branch Bureau”) and People’s
Liberation Army Unit 75731 (“ Unit 75731”) construction funds 10 million Yuan invested
by Tellus Real Estate received fixed floor area of 6000 M
2
property and Jinlu Company
promise to delivered the completed building and ancillary facility at the end of November
1995. Tellus Real Estate Company have invested a total of 9822500.00 Yuan in cooperative
development up to 31 December 1996 however Tellus Real Estate Company failed to get
the property should enjoy on the agreed date for property hand over. Tellus Real Estate
Company institute an action at law to the Court requesting Jinlu Company pay back the 9.8
million Yuan investment and interests immediately and shoulder all the Court Costs Real
Estate Management Branch Bureau and Unit 75731 were sentence to be the defendant
pursuant to the law in trial. On 18 March 2003 in line with the Written Judgment (2000)
Shen Zhong Fa Fang Chu Zi No. 101 by Shenzhen Intermediate People’s Court the above
mentioned “Cooperative Contract” is valid identified as nature of cooperative housing the
two parties continue to perform the contract and legitimate mechanism should be follow if
any disputes arising from executing the Contract by parties in the Contract.In March 2005 as a joint plaintiff Tellus Real Estate Company and Jinlu Company start a
suit to Real Estate Management Branch Bureau and Unit 75731(Communication Equipment
Repair Institute of Guangzhou Military Region) requesting two defendants performing
cooperative contract and delivered 11845 M
2
(approximately 11851357 Yuan in value)
property of Liyehui Food Street to two plaintiff moreover pay for the rental income
5034664.94 Yuan in total due to two plaintiff since 1998. Meanwhile Tellus Real Estate
Company and Jinlu Company entered into an agreement that is due to the self-executing or
mandatory enforcement by the Court concerning the Liyehui Food Street property taken
back in lawsuit Tellus Real Estate Company received a fixed property of 6000 M
2
rests of
the property belongs to Jinlu Company and Tellus Real Estate Company owns all property
while less than 6000 M
2
; the income deserved in the lawsuit should be allocated
according to 5:5 ratio by two parties and as for this lawsuit which have its first trial in
Shenzhen Intermediate People’s Court in August 2010 because details of a case is complex
the case did not judge in court.
In 2011 Tellus Real Estate Company received a civil ruling paper (2005) Shen Zhong FaMin Chu Zi No. 82 from Shenzhen Intermediate People’s Court that is “People’s Court hasno right to judged how to allocate the building and its working interest” because Liyehui
Food Street property “is part of the illegal building” reject the Tellus Real Estate Company
and Jinlu Company’s claim in aspect of the property delivery and rental allocation of
Liyehui Food Street. The cooperative development fund invested for Tellus Real Estate
Company has been provision for bad debts in total in previous year by the Company.
③ In 2014 our subsidiary Shenzhen Auto Industrial Trading General Company (hereinafter
referred to as Auto Industrial Trading Company) was served with a summon from people’s
court in Futian district Shenzhen pursuant to which Shenzhen branch of China Huarong
Asset Management Co. Ltd. (“Huarong Shenzhen”) 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.④ The 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. Shenzhen Bao'an District People's Court (1996)
BFJZ No. 183 paper of civil judgment determined Guangming Watch Company to repay the
loan of RMB 1.9 million and the interests to China Construction Bank Shenzhen
Intermediate People's Court (1996) SZFJYZZ No. 563 paper of civil judgment’ final
judgment affirmed the original judgment. After the judgment Guangming Watch Company
didn’t perform the obligations so China Construction Bank applied for compulsory
execution and got repayment of 1.64 million Yuan but later due to no property for execution
Bao'an District People's Court (1997) SBFZZ No. 220 civil ruling paper had the verdict for
termination of execution on May 20 2003. In June 2004 the original creditor CCB
transferred the above-mentioned creditor's rights to Assets Management Company after
several transfers Ezhou Liantai Investment and Consulting Co. Ltd. put forward the
creditor's rights 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
0859.54 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.
In Dec. 2017 Shenzhen Test Rite Xin Yongtong Automobile Development Co. Ltd the
subsidiary of Test Rite Group 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. So
far the court has opened twice court sessions respectively on Mar. 7
th
2018 and Mar. 29
th
2018. Now the verdict is being awaited.
⑥In Mar. 2018 the natural person Huang Weiqiang has filed a lawsuit with Shenzhen
Automobile Industry and Trading General Company and Shenzhen Tefa Group Co. Ltd. to
Shenzhen Luohu District People’s Court asking them to pay a total amount of RMB136
692.13 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 and we haven’t received any court summons from Guangdong Province
Intermediate People’s Court yet.XI. Events occurring after the balance sheet date
1. Profit distribution
The Company has no plan of cash dividends carried out and capitalizing of common
reserves either
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.2018
Item Auto sales
Auto
maintenance
and repair
Leasing and
services
Jewelry
operation
Offset of
segment Total
Main operating
revenue
61613402.
01
37925019.
21
40798989.10
71783625.
94
-17930279.08
194190757.1
8
Item Auto sales
Auto
maintenance
and repair
Leasing and
services
Jewelry
operation
Offset of
segment Total
Main operating
cost
60137721.
39
33796019.
74
8471631.42
68272973.
37
-17940537.44
152737808.4
8
Total assets
18348537.
16
106059130
.64
2312261181
.48
101559791
.25
-1059643995
.17
1478584645
.36
Total liabilities
29987929.
63
66907715.
97
718902933.4
8
6259924.4
8
-377156522.4
4
444901981.1
2
Jan.- Jun.2017
Item
Auto sales
Auto
maintenance
and repair
Leasing and
services
Wholesale
and retail of
jewelry
Offset of
segment
Total
Main
operating
revenue
81828629.57 30933280.83 59669477.32 432616.24 -14542732.29 158321271.67
Main
operating
cost
80552582.86 25502996.33 23195618.35 2538282.27 -14618538.03 117170941.78
Total
assets
32917126.16 98657932.40 1983022242.18 14455973.67 -911054418.73 1217998855.68
Total
liabilities
46119475.69 60693706.80 556102721.70 1978405.53 -387538846.00 277355463.72
5. Other matters
On Jul. 20
th
2017 the Company signed a contract with Shenzhen Runhe Joint Investment and Development
Co.Ltd. (hereinafter referred to as Runhe Company) Shenzhen Xinglong Machinery Molding Co.Ltd.
(hereinafter referred to as Xinglong Company) and Shenzhen Yayu Investment and Development Co.Ltd.Runhe Company made a commitment to attend the open bidding and offer a bidding of RMB200000000
on the condition that the Company sells 30% share rights of Xinglong Company by means of listing or
agreement or buy the above share rights at the price of RMB200000000 and be willing to pay
RMB40000000 as the security deposit. Meanwhile Runhe Company made a commitment that if the
Company transfers the share rights of Xinglong Company held by Harbin No. One Machinery Group Co.
Ltd for the Company to increase the share rights of Xinglong Company Runhe Company will take the
price of per share of the transferred 30% share rights as the procurement price for the increased share rights.
All the parties of the agreement agreed that the Company only accepted the stock transfer invitation of
Runhe Company it still hasn’t made a decision on whether to transfer the share rights of Xinglong
Company and therefore the signature of this agreement does not necessarily lead to the result of the
Company selling the share rights of Xinglong Company. By Dec.31
st
2017 the Company has received RMB
40000000 of security deposit as stated above.
In Sep. 2017 after completing the share rights transfer of Xinglong Company held by Harbin No. One
Machinery Group Co. Ltd. the Company has held 43% share rights of Xinglong Company. On Dec. 12
th
2017 the board of the directors of the Company has deliberated and passed a Proposal on Selling the 43%
Share Rights of Shenzhen Xinglong Machinery Molding Co. Ltd the Company intended to sell the 43%
share rights of Shenzhen Xinglong Machinery Molding Co. Ltd which is the stock-sharing subsidiary of
the Company through public listing and the Company will no longer hold the share rights of Xinglong
Company after transaction.
By the issuance date of this report the listing results of this share rights transfer is as below: the Company
has transferred the 43% share rights of Xinglong Company by listing in Shenzhen United Property and
Share Rights Exchange on Mar. 26th 2018. By the expired date of listing according to the transaction
results from Shenzhen United Property and Share Rights Exchange Shenzhen Runhe United Investment
and Development Company (hereinafter referred as Runhe) was the final transferee of this asset transfer
with transfer the price of RMB 286670000. Runhe has paid RMB30 000000 to Shenzhen United Property
and Share Rights Exchange as the guarantee deposit. On Jun.15
th
2018 the Company has signed an
agreement with Runhe on the Transfer of Enterprise State-owned Property transferring 43% of share rights
of Xinglong Company at the price of RMB 286670000. In line with the agreement on Jun. 25
th
2018 the
Company has received the initial payment of RMB86 001000 for the transfer of 30% of share rights.
XIII. Principle notes of financial statements of parent company
1. Account receivable
(1) Accounts receivable by category
Category
Period-end balance
Book balance Bad debt reserve Book
value Amount Ratio (%) Amount Ratio (%)
Account receivable with single significant amount
and withdrawal bad debt provision separately
Receivables with bad debt provision accrual by
credit portfolio
Accounts with single significant amount and bad
debts provision accrued individually
484803.0
8
100.00 484803.0
8
100.00
Total
484803.0
8
100.00 484803.0
8
100.00
(Cont.)
Category Balance at year-begin
Book balance Bad debt reserve Book
value Amount Ratio (%) Amount Ratio (%)
Account receivable with single significant amount
and withdrawal bad debt provision separately
Receivables with bad debt provision accrual by
credit portfolio
Accounts with single significant amount and bad
debts provision accrued individually
484803.08 100.00 484803.08 100.00
Total 484803.08 100.00 484803.08 100.00
2. Other accounts receivable
(1) Classification
Category
Period-end balance
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount Ratio (%)
Other account receivable with
single significant amount and
withdrawal bad debt provision
separately
12250767.63 10.23 12250767.63 100.00
Other receivables with bad debt
provision accrual by credit
portfolio
105663886.02 88.24 1158255.52 1.10 104505630.50
Other accounts with single
significant amount and bad debts
provision accrued individually
1833967.78 1.53 1833967.78 100.00
Total 119748621.43 100.00 15242990.93 12.73 104505630.50
(Cont.)
Category
Balance at year-begin
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount Ratio (%)
Other account receivable with
single significant amount and
withdrawal bad debt provision
separately
12247785.36 10.79 12247785.36 100.00
Other receivables with bad debt 99412903.49 87.59 1091737.09 1.10 98321166.40
Category
Balance at year-begin
Book balance Bad debt reserve
Book value
Amount Ratio (%) Amount Ratio (%)
provision accrual by credit
portfolio
Other accounts with single
significant amount and bad debts
provision accrued individually
1833967.78 1.62 1833967.78 100.00
Total 113494656.63 100.00 15173490.23 13.37 98321166.40
① Other receivable with single significant amount and withdrawal bad debt provision
separately at end of period
Other receivable (By unit)
Period-end balance
Other
receivable
Bad debt
reserve
Accrual ratio
(%)
Accrual reasons
Shenzhen Zhonghao (Group) Co.Ltd.
5000000.00 5000000.00 100.00 Win a lawsuit no
executable assets from
adversary
Gold Beili Electrical Appliances
Company
2706983.51 2706983.51 100.00 Not expected to collected
due to long account age
Shenzhen Petrochemical Group 1907138.45 1907138.45 100.00 Less likely to collection
Huatong Package Co. Ltd.
1212373.79 1212373.79 100.00
Not expected to collected
due to long account age
Shenzhen Xiandao New
Materials Company
660790.09 660790.09 100.00
Not expected to collected
due to long account age
Other_VAT(trade department)
763481.79 763481.79 100.00
Not expected to collected
due to long account age
Total 12250767.63 12250767.63
② In combination other accounts receivable whose bad debts provision was accrued by age
analysis
A/C age
Period-end balance
Other receivable Bad debt reserve Accrual ratio
Within 1 year 103228316.63
1-2 years 76041.64 3802.08 5.00
A/C age
Period-end balance
Other receivable Bad debt reserve Accrual ratio
2-3 years 84368.14 16873.63 20.00
Over 3 years 2275159.61 1137579.81 50.00
Total 105663886.02 1158255.52 1.10
(2) Bad debt provision accrual collected or switch back
Bad debt provision amounted as 69500.70 Yuan in the period
(3) Classification of other receivables by nature
Nature Closing book balance Book balance at year-begin
Intercourse funds receivable
between inner units
97263924.18 96526430.14
Intercourse accounts of related
units receivable
2996660.41 2958952.09
Other 19488036.84 14009274.40
Total 119748621.43 113494656.63
(4) Top 5 other receivables at ending balance by arrears party
Name of the company Nature
Period-end
balance
A/C age
Ratio in total ending
balance of other
receivables (%)
Bad debt
reserve
year-end
balance
SEHK
Suspens
e debits
5733400.0
0
Within 1
year
4.79
Shenzhen Zhonghao (Group) Co.Ltd.Intercou
rse
funds
5000000.0
0
Over 3
years
4.18
5000000.0
0
Gold Beili Electrical Appliances
Company
Intercou
rse
funds
2706983.5
1
Over 3
years
2.26
2706983.5
1
Shenzhen Petrochemical Group
Intercou
rse
funds
1907138.4
5
Over 3
years
1.59
1907138.4
5
Huatong Package Co. Ltd.Intercou
rse
funds
1212373.7
9
Over 3
years
1.01
1212373.7
9
Name of the company Nature
Period-end
balance
A/C age
Ratio in total ending
balance of other
receivables (%)
Bad debt
reserve
year-end
balance
Total
16559895.
75
13.83
10826495.
75
(5) Account receivable with government grand involved
No account receivable with government grand involved of the Company at year-end.
(6) Other account receivable derecognition due to financial assets transfer
No other account receivable derecognition due to financial assets transfer of the Company in
Period.
(7) Assets and liabilities resulted by other account receivable transfer and continues
involvement
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 of Long-term equity investment
Item
Period-end balance Balance at year-begin
Book
balance
Depreci
ation
reserves
Book
value
Book
balance
Depreciation
reserves
Book
value
Investment for subsidiary
6847434
72.73
1956000
.00
6827874
72.73
5557715
72.73
1956000.00
5538155
72.73
Investment for associates
and joint venture
2054568
46.72
9787162
.32
1956696
84.40
2458023
48.25
9787162.32
2360151
85.93
Total
8902003
19.45
1174316
2.32
8784571
57.13
8015739
20.98
11743162.32
7898307
58.66
(2) Investment for subsidiary
The invested entity
Balance at
year-begin
Increased in
the period
Decreased in
the period
Period-end
balance
Depreci
ation
reserves
accrual
in the
period
Period-end
balance of
depreciation
reserves
Shenzhen SDG 31152888.8 31152888.8
The invested entity
Balance at
year-begin
Increased in
the period
Decreased in
the period
Period-end
balance
Depreci
ation
reserves
accrual
in the
period
Period-end
balance of
depreciation
reserves
Tellus Real Estate
Co. Ltd.
7 7
Shenzhen Tellus
Real Estate
Exchange Co. Ltd.
2000000.00 2000000.00
Shenzhen SDG
Tellus Property
Management Co.Ltd.
57672885.2
2
57672885.2
2
Shenzhen Zhongtian
Industrial Co. Ltd.
270708622.
90
98971900.
00
369680522.
90
Shenzhen
Automobile Industry
Trading General
Company
126251071.
57
126251071.
57
Shenzhen SDG
Huari Automobile
Enterprise
Co.Limited
19224692.6
5
19224692.6
5
Shenzhen Huari
TOYOTA
Automobile Sales
Service Co. Ltd.
1807411.52 1807411.52
Shenzhen New
Yongtong
Automobile
Inspection
Equipment Co. Ltd
10000000.0
0
10000000.0
0
The invested entity
Balance at
year-begin
Increased in
the period
Decreased in
the period
Period-end
balance
Depreci
ation
reserves
accrual
in the
period
Period-end
balance of
depreciation
reserves
Shenzhen Hanli
Hi-Tech Ceramics
Co. Ltd.*
1956000.00 1956000.00
1956000.0
0
Anhui Tellus
Starlight Jewelry
Investment Co. Ltd.
4998000.00 4998000.00
Sichuan Tellus
Jewelry Technology
Co. Ltd.
30000000.0
0
30000000.
00
60000000.0
0
Total 555771572.
73
128971900
.00
684743472.
73
1956000.0
0
Note: more details of * Shenzhen Hanli Hi-Tech 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
year-begin
+-
Additional
investment
Capit
al
reduc
tion
Investment
gains
recognized
under equity
Other
compreh
ensive
income
adjustme
nt
Other
equity
change
I. Joint venture
Shenzhen Tellus Gman Investment
Co. Ltd
56244276.84
3492178.30
Shenzhen Tellus Hang Investment
Co. Ltd.
10863393.76
102122.54
Subtotal 67107670.60 3594300.84
II. Associated enterprise
Shenzhen Xinglong Machinery
Mould Co. Ltd.
84792998.83
The invested entity
Balance at
year-begin
+-
Additional
investment
Capit
al
reduc
tion
Investment
gains
recognized
under equity
Other
compreh
ensive
income
adjustme
nt
Other
equity
change
Shenzhen Tellus Auto Service Chain
Co. Ltd.
Shenzhen Zung Fu Tellus Auto
Service Co. Ltd.
84114516.50 8560197.63
Hunan Changyang Industrial Co.Ltd.*
1810540.70
Shenzhen Jiecheng Electronic Co.Ltd*
3225000.00
Shenzhen Xiandao New Materials
Company*
4751621.62
Subtotal 178694677.6
5
8560197.63
Total
245802348.2
5
12154498.47
(Cont.)
The invested entity
+-
Period-end
balance
Period-end
balance of
depreciation
reserves
Cash dividend
or profit
announced to
issued
Impairment accrual Other
I. Joint venture
Shenzhen Tellus
Gman Investment Co.Ltd
59736455.14
Shenzhen Tellus Hang
Investment Co. Ltd.
10965516.30
Subtotal 70701971.44
II. Associated
enterprise
Shenzhen Xinglong
Machinery Mould Co.
84792998.83
The invested entity
+-
Period-end
balance
Period-end
balance of
depreciation
reserves
Cash dividend
or profit
announced to
issued
Impairment accrual Other
Ltd.Shenzhen Tellus Auto
Service Chain Co.Ltd.Shenzhen Zung Fu
Tellus Auto Service
Co. Ltd.
52500000.00
40174714.13
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 52500000.00 134754875.28 9787162.32
Total 52500000.00 205456846.72 9787162.32
4. Operating income and operating cost
Item
Jan.- Jun.2018 Jan.- Jun.2017
Income Cost Income Cost
Main business 20083496.42 1842326.22 21455828.43 1800520.02
Total 20083496.42 1842326.22 21455828.43 1800520.02
5. Investment income
Item Jan.- Jun.2018 Jan.- Jun.2017
Long-term equity investment
measured by equity
12154498.47
5721803.49
Investment income from disposal of
long-term equity investment
7100000.00
Investment income of financial
products during the holding period
2802071.22
1618165.59
Total 14956569.69 14439969.08
XIV. Supplementary Information
1. Details of non-recurring gains and losses in Year
Item Amount Note
Gains/losses from disposal of non-current asset 1308598.25
Income from eq
uity transfer
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)
Capital occupancy expense collected from non-financial enterprises
and recorded in current gains and losses 37708.32
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
3762123.18
Income from
financial
products
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
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
Item Amount Note
and financial assets available for sale
Switch-back of provision of impairment of account receivable which are
treated with separate depreciation test 434566.24
Bad debt provis
ion switch-back
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 -65293.92
Other gains and losses items complying with definition for non-current
gains and losses
Subtotal 5477702.07
Affect on income tax
382490.63
Affect on minority equity(after tax)
273587.26
Total 4821624.18
Note: as for the numbers of non-recurring gains/losses “+” stands for income orearnings”-“stands for losses or expensesThe 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. REO 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
2.7562 0.0906 0.0906
Net profits belong to common stock stockholders of
the Company after deducting nonrecurring gains and
losses
2.2625 0.0743 0.0743
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