Shandong Zhonglu Oceanic Fisheries Co., Ltd.
Annual Report for Year of 2016
March 2017
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shandong Zhonglu Oceanic Fisheries Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents.
Chi Weizhen, Principal of the Company, Yue Juan, person in charge of accounting works and Lei Lixin, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2016 Annual Report is authentic, accurate and complete.
All directors are attended the Board Meeting for report deliberation.
China Securities Journal, Hong Kong Commercial Daily and Juchao Website (www.cninfo.com.cn) are the media for information disclosure appointed by the Company, all information under the name of the Company disclosed on the above said media shall prevail, and Investors are advised to exercise caution of investment risks.
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either.
Note: The Report is prepared in bilingual versions of Chinese and English respectively, in the event of any discrepancy in understanding the two aforementioned versions, the Chinese version shall prevail.
Contents
Section I Important Notice, Contents and Paraphrase ................................................................. 2 Section II Company Profile and Main Finnaical Indexes ............................................................. 5 Section III Summary of Company Business .................................................................................. 9 Section IV Discussion and Analysis of Business .......................................................................... 12 Section V Important Events .......................................................................................................... 26 Section VI Changes in shares and particular about shareholders ............................................... 33 Section VII PreferredStock……………………………………………………………………….40 Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 41 Section IX Corporate Governance ................................................................................................. 49 Section X Corporate Bond .............................................................................................................. 55 Section XI Financial Report ............................................................................................................ 56 Section XII Documents available for reference ........................................................................... 131
Paraphrase
||||
|-|-|-|
|Items|Refers to|Contents|
|“The Company” or “Company”|Refers to|Shandong Zhonglu Oceanic Fisheries Co., Ltd.|
|“Shandong State-owned Assets Investment”|Refers to|Shandong State-owned Assets Investment Holding Company Limited|
|”Luxin Group”|Refers to|Shandong Luxin Investment Holding Company Limited|
|||State-owned Assets Supervision and Administration Commission of|
|“SASACP”|Refers to||
|||Shandong Provincial Government|
|“CSRC”|Refers to|China Securities Regulatory Commission|
|“The report”|Refers to|Annual Report for 2016 compiled by the Company|

Section II Company Profile and Main Finnaical Indexes
I. Company information
|||||
|-|-|-|-|
|Short form of the stock|Zhonglu-B|Stock code|200992|
|Stock exchange for listing|Shenzhen Stock Exchange|||
|Name of the Company (in|山东省中鲁远洋渔业股份有限公司|||
|Chinese)||||
|Short form of the Company||||
||中鲁远洋|||
|(in Chinese)||||
|Foreign name of the Company||||
||Shandong Zhonglu Oceanic Fisheries Company Limited|||
|(if applicable)||||
|Short form of foreign name of||||
||ZLYY|||
|the Company (if applicable)||||
|Legal representative|Chi Weizhen|||
|Registrations add.|No. 29 Miaoling Rd. Laoshan District, Qingdao City, Shandong Province|||
|Code for registrations add|266061|||
|Offices add.|No. 43 Heping Rd. Jinan City, Shandong Province|||
|Codes for office add.|250014|||
|Company website|http://www.zofco.cn/|||
|Email|zlzqb@163.com|||

II. Person/Way to contact
||||
|-|-|-|
||Secretary of the Board|Rep. of security affairs|
|Name|Li Ming|Li Ying|
||No. 43 Heping Rd. Jinan City, Shandong|No. 43 Heping Rd. Jinan City, Shandong|
|Contacts add.|||
||Province|Province|
|Tel.|0531-86553278|0531-86553276|
|Fax.|0531-86552906|0531-86552906|
|Email|zlzqb@163.com|zlzqb@163.com|

III. Information disclosure and preparation place
|||
|-|-|
||In China: China Securities Journal; overseas: Hong Kong Commercial|
|Newspaper appointed for information disclosure||
||Daily|

|||
|-|-|
|Website for annual report publish appointed by CSRC|http//www.cninfo.com.cn|
|Preparation place for annual report|Office of the Board、Shenzhen Stock Exchange|

IV. Registration changes of the Company
|||
|-|-|
|Organization code|91370000863043102Y|
|Changes of main business since listing (if||
||No change.|
|applicable)||
|Previous changes for controlling||
||No change.|
|shareholders (if applicable)||

V. Other relevant information
CPA engaged by the Company
|||
|-|-|
|Name of CPA|PKF Daxin Certified Public Accountants LLP|
|Offices add. for CPA|15/F College International Building, No.1 Zhichun Rd., Haidian District, Beijing|
|Signing Accountants|Zhang Lifa; Wu Zhixing|

Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not
□Yes√ No
||||||
|-|-|-|-|-|
||2016|2015|Changes over last year|2014|
|Operating income (RMB)|845,877,519.52|723,723,003.05|16.88%|598,380,696.80|
|Net profit attributable to|52,585,070.74|12,141,360.21|||
|shareholders of the listed company|||333.11%|15,367,992.51|
|(RMB)|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||47,095,370.03|14,060,740.19|234.94%|10,460,455.75|
|after deducting non-recurring gains|||||
|and losses (RMB)|||||
|Net cash flow arising from|87,435,723.19|55,443,390.22|||
||||57.70%|65,320,481.37|
|operating activities (RMB)|||||
|Basic earnings per share|0.20|0.05|300.00%|0.06|

||||||
|-|-|-|-|-|
|(RMB/Share)|||||
|Diluted earnings per share|0.20|0.05|||
||||300.00%|0.06|
|(RMB/Share)|||||
|Weighted average ROE|8.88%|2.16%|6.72%|2.81%|
||||Changes over end of||
||End of 2016|End of 2015||End of 2014|
||||last year||
|Total assets (RMB)|835,239,699.07|798,232,793.11|4.64%|797,490,171.48|
|Net assets attributable to|617,662,263.72|565,708,222.79|||
|shareholder of listed company|||9.18%|554,900,782.17|
|(RMB)|||||

VII. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable√ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable√ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
VIII. Quarterly main financial index
In RMB
||||||
|-|-|-|-|-|
||First quarter|Second quarter|Third quarter|Fourth quarter|
|Operating income|202,905,282.77|204,985,511.01|214,890,752.05|223,095,973.69|
|Net profit attributable to|||||
||4,544,723.07|7,015,647.51|8,938,008.08|32,086,692.08|
|shareholders of the listed company|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||3,977,964.50|4,165,848.77|8,358,560.18|30,592,996.58|
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|||||
||18,594,382.21|-2,360,800.63|11,750,750.94|59,451,390.67|
|operating activities|||||

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in thecompany’s quarterly report and semi-annual report
□Yes√ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable□Not applicable
In RMB
||||||
|-|-|-|-|-|
|Item|Amount in 2016|Amount in 2015|Amount in 2014|Note|
|Gains/losses from the disposal of|2,552,387.02||||
|non-current asset (including the write-off||-4,260,148.37|-303,324.40||
|that accrued for impairment of assets)|||||
|Governmental subsidy reckoned into current|4,123,881.73||||
|gains/losses (not including the subsidy|||||
|enjoyed in quota or ration according to||2,021,471.48|2,566,585.48||
|national standards, which are closely|||||
|relevant to enterprise’s business)|||||
|Other non-operating income and expenditure|-4,353.25||||
|||82,182.68|2,787,770.58||
|except for the aforementioned items|||||
|Less: impact on income tax|194,279.09||130,889.73||
|Impact on minority’s equity (after-tax)|987,935.70|-237,114.23|12,605.17||
|Total|5,489,700.71|-1,919,379.98|4,907,536.76|--|

Concerning the extraordinary profit (gain)/loss defined byQ&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss inQ&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons
√Applicable□Not applicable
||||
|-|-|-|
|Item|Amount (RMB)|Reason|
|Fuel subsidies reckoned into|||
|||The subsidy enjoyed in quota or ration according to national standards,|
|current gains/losses listed in|39,041,300.00||
|||which are closely relevant to enterprise’s business|
|recurrent gains/losses|||

Section III Summary of Company Business
I Main businesses of the company in the reporting period
Whether the company needs to comply with the disclosure requirements of the particular industry
No
Shandong Zhonglu Oceanic Fisheries Co., Ltd. is a comprehensive fishery enterprise integrated with ocean-going fishing, ocean refrigerated transport, and refrigeration, processing and trading of aquatic products, its main businesses involve all major aspects of the industry chain.
(I) Business introduction
1. Ocean-going fishing
During the reporting period, the company has owned a total of 18 vessels for ocean-going fishing, including 2 large-scale tuna seiners, 14 large ultra-low temperature tuna long liners, and 2 medium-sized trawlers, which have been respectively working in the western-central Pacific Ocean, Indian Ocean, and Ghana sea area in the Atlantic Ocean. During the reporting period, the pattern of world's tuna resources have been changing, some fishery resources decline sharply, the company has adhered to the principle of combining deploying and retracting, operated scientifically, deployed reasonably, and positively implemented offshore production based on the fishing characteristics and the actual situation of offshore production. As for the long-line fishing, the company became more familiar with the distribution of the fishing waters along with the continuous exploration and in-depth development to the Indian Ocean, and maintained rather good production and management efficiency
As for the purse seine fishing, according to the industry environment and development situation, the company decisively took the measure that is to transfer the fishery to Ghana waters in Atlantic which has got supports from the Ministry of Agriculture, at present, two seines have reached the target fishing ground, one of which has started working, another is handling the pre-operation procedures;the transfer of fishery is expected to improve the company's tuna seine business situation. The fishing production of Ghana trawl project has reduced compared with the previous reporting period, mainly caused by the reduction of resources and aging of ships.
2. Refrigerated transport
During the reporting period, the company has 8 ocean cold-storage boats for operation service and has taken various measures to complete the annual economic indicators. Firstly, actively adapt to the demands for international refrigerated shipping market, implement the measure of “Change the flag and transfer the native place” for the existing transport ships, which ensured the voyage, accepted by WCPF organization, eliminated the obstacles such as health permits of cargo transport in Europe, and further improved the competitiveness. Secondly, strictly control the cost accounting, and ensure all expenses, especially the overwhelming expenses are under surveillance all the time. Thirdly, take account of the non-operating income, especially focus on the exchange rate trend of US dollar against RMB, so as to make foreign exchange settlement at the appropriate time and greatly increase financial exchange gains. Fourthly, strengthen the risk management and control, and minimize the risk factor of uncertainty.
3. Refrigeration processing trade
During the reporting period, the company refrigeration processing trade has been adhering to the policy of "mobilize the market", constantly improving the product forms, and expanding the sales channels.The first is to insist on internal absorption and external introduction, give full play to advantages of industrial clusters, resist the
risks and face the market development together with fishing industry, strengthen efforts to the return shipping and deep processing of tuna, form a processing industry chain by centering on Zhonglu food, and give a real play to the distributing centre as the deep-processing of deep-sea fishing products and cold-chain logistics base in Shandong Province and the tuna trading center of China, and have far-reaching significance to refine and strengthen the tuna industry chain. The second is to develop intensive processing and comprehensive utilization, improve theproducts’ added value, and approach to the medium and low end consumer groups in the new product development and market development, etc. The third is to actively cultivate its own brand, enhance product promotion efforts with the help of relevant exhibition platform, and attract domestic and foreign high-quality customers to discuss cooperation.
(II) Industry development
Overall, in 2016, the international and domestic economic situation was severe, and there was no big change compared with the previous year.Under the adverse economic and industry environment at home and abroad, the company decisively adjusted the purse seine business, transferred two seines to Ghana fishery in Atlantic, other business maintained steady growth or slightly declined, in general, joy is greater than sorrow. At present, compared with most enterprises in the same industry,especially with those enterprises having relatively simple business and incomplete industry chain, it is right that the company has been adhering to the policy of "evenly develop industrial chain and optimize asset structure", thecompany’s relatively complete industrial chain and the reciprocity and complementation among each sector have played a huge role when the development of current offshore fishing industry is in a downturn.
II. Major changes in main assets
1. Major changes in main assets
|||
|-|-|
|Major assets|Note of major changes|
|Equity assets|No major change.|
|Fixed assets|No major change.|
|Intangible assets|No major change.|
|Construction in progress|No major change.|
||Increased 54.33 million Yuan from a year earlier, that is received 39.04 million Yuan for|
|Current assets||
||oil subsidy of 2016 at period-end|

2. Main overseas assets
□ Applicable√ Not applicable
III. Core competitive-ness analysis
Whether or not the Company complies with disclosure requirement of the special industry
No
Shandong Zhonglu Oceanic Fisheries Company Limited is an outgoing comprehensive oceanic fishery enterprise, established in July 1999 with the approval fromPeople’s Government of Shandong province. We have completed industry chain and we are the leading enterprise of oceanic fishery for the Shandong Province.
As a comprehensive fishery enterprise, the company's core competitiveness is mainly reflected in the following aspects: Firstly, the company is a comprehensive fishery enterprise integrating deep-sea fishing, refrigerated transport, and refrigeration and processing and trading of aquatic products, its main business involves all key links of industry chain, and the businesses among all operating entities are highly related, possess the conditions for overall collaborative operation, and provides guarantee for strengthening and extending the industrial chain strategy; secondly, as one of the enterprises engaged in deep-sea fishing business at the earliest in China, the company starts the production and operation early with high starting point, and high-quality talents and assets. After more than ten years of professional management, the company has accumulated a large number of professional talents covering all fields of deep-sea fishing. For both vessel numbers, gross tonnage and profitability of current refrigerated transport fleet, the Company occupies the national leading level. We owns biggest super-low temperature cold storage and raw food processing factory in China. The advantage of tuna processing and trading ability are being strengthen by the Tuna Trading Center and new Tuna E-Trading Platform System; the 30000 tons variable-temperature cold storage and supporting facilities in tide refrigerated logistic center adopted many new technology, initiate cold storage establishment in China, and it will be the major growth point of profit in on-land business for the Company in future; Thirdly, deep-sea fishing, as the company's main business, is a constituent part ofChina’s ocean strategy and the blue economic zone plan of Shandong Province to which the central government and governments at all levels pay high attention, and policy advantages are the important strategic resource for anenterprise’s development and expansion. Our country implements a number of preferential policies for the development of deep-sea fishing for a long term, as the leading enterprise of deep-sea fishing in Shandong Province, the company will surely usher in new development opportunities under the strong support of various national and provincial supportive policies. Forthly, we opening a new purse net project in Ghana, the WCPFC of the western central pacific ocean and ICCAT of the Atlantic, management of the projects are improved day by day. Conform to th changes of management policies from organizations, continuses adjusted business stategy of the Company, including fishing ground, the tuna seine will be growth in a favorable way. The above mentioned factors were provided a powerful strategic support for the development of the Company; the Company will make good use of these strategic resources, creating innovative to accelerate the strategic transformation, and vigorously implement the industrial chain extension projects to upgrade the influence and completive in deep-sea fishing market in and out of China.
Section IV Discussion and Analysis of Business
I. Introduction
2016 is the first year of "13th Five Year Plan", during the reporting period, the company from top to bottom has been closely focusing on all tasks and objects determined at the beginning of the year in a very difficult situation, tenaciously struggling, striving to overcome the shortage of funds, lack of talents and other difficulties, and has achieved the time and task synchronization and successfully completed all budget targets.
(i) Review of thecompany’s operation in the report period
1. Refrigerated transport leasing section: took "safety is efficiency, promote development by safety" as the guiding ideology, strengthened the inspection, guidance and assessment efforts to ships, avoided and reduced the occurrence of ship accident, guaranteed theships’ navigation days, while increased the self repair of ships, which not only saved costs, but also built up, trained and improved the technical level of the company's professionals, achieved operating income of 91,513,100 Yuan, a decrease of1.2% on a year-on-year basis; achieved net profits of 19,121,600 Yuan, a decrease of6% on a year-on-year basis.
2. Ocean-going fishing section: due to the sharp decline in the price of purse seine fish in 2015, in the situation of the longer the operation the greater the loss, the company adopted the temporary fishing-off measure, refurbished the two seines in 2016, realized the transitions from the Pacific to the Atlantic, achieved net profit of -9,731,600 Yuan, reduced losses of 31.67 million Yuan compared with the same period of last year. By strengthening cost management, reasonably arranging for production, and scientifically scheduling fishery, Tuna longline business achieved net profit of 34.67 million Yuan, an increase of 14.44 million Yuan on a year-on-year basis.
3. Aquatic products refrigeration processing trade section: committed to the development of new products, increased exports, and established destocking group to strengthen the inventory management and speed up inventory turnover, achieved operating income of 676 million Yuan during the reporting period, an increase of17.36% on a year-on-year basis, net profit of 23.46 million Yuan, an increase of28.13% on a year-on-year basis. (II) General operation
In reporting period, the Company achieved business revenue of 845.8775 million Yuan, increased16.88% compared lastyear’s 723.723 million Yuan; total profit achieved 58.8482 million Yuan, increased 43.3298 million Yuan over that of 15.5184 million Yuan in last period with growth of279.22%; net profit attributable to parent company amounted as 52.5851 million Yuan, an333.11% growth over that of 40.4437 million Yuan at last year. Total assets amounted as 835.2397 million Yuan with4.64% growht over that of period-begin. The total profit growth dramatically mainy because tuna purse seine reduce losses in the Period, and fish processing and cold storage business have a more growth in net profit from a year earlier.
II. Main business analysis
1. Introduction
See “I. Introduction” in “Discussion and Analysis of Business”.
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
|||||||
|-|-|-|-|-|-|
||2016||2015|||
||||||Increase/decrease|
|||Ratio in operation||Ratio in operation||
||Amount||Amount||y-o-y|
|||revenue||revenue||
|Total of operation|845,877,519.52||723,723,003.05|||
|||100%||100%|16.88%|
|revenue||||||
|According to industries||||||
|Seine tuna fishing|5,180,247.30|0.61%|16,648,918.64|2.30%|-68.89%|
|Longlines tuna||||||
||68,475,554.71|8.10%|34,820,140.60|4.81%|96.66%|
|fishing||||||
|Boat rental|91,513,054.10|10.82%|92,625,139.80|12.80%|-1.20%|
|Other deep-sea||||||
||10,304,142.94|1.22%|15,188,831.26|2.10%|-32.16%|
|fishing||||||
|Aquatic products||||||
|refrigerated|661,507,107.61|78.20%|555,309,774.28|76.73%|19.12%|
|processing trade||||||
|House rental|4,691,924.05|0.55%|5,070,648.88|0.70%|-12.87%|
|Waste income and||||||
||4,205,488.81|0.50%|4,059,549.59|0.56%|10.35%|
|others||||||
|According to products||||||
|Seine tuna fishing|5,180,247.30|0.61%|16,648,918.64|2.30%|-68.89%|
|Longlines tuna||||||
||68,475,554.71|8.10%|34,820,140.60|4.81%|96.66%|
|fishing||||||
|Boat rental|91,513,054.10|10.82%|92,625,139.80|12.80%|-1.20%|
|Other deep-sea||||||
||10,304,142.94|1.22%|15,188,831.26|2.10%|-32.16%|
|fishing||||||
|Aquatic products||||||
|refrigerated|661,507,107.61|78.20%|555,309,774.28|76.73%|19.12%|
|processing trade||||||
|House rental|4,691,924.05|0.55%|5,070,648.88|0.70%|-7.47%|
|Waste income and||||||
||4,205,488.81|0.50%|4,059,549.59|0.56%|3.59%|
|others||||||
|According to region||||||
|Japan|285,073,795.29|33.70%|247,103,891.96|34.14%|15.37%|

|||||||
|-|-|-|-|-|-|
|China|300,038,378.94|35.47%|145,850,932.92|20.15%|105.72%|
|South Korea|32,022,697.43|3.79%|48,493,068.93|6.70%|-33.96%|
|Singapore|13,237,412.63|1.56%|13,451,408.35|1.86%|-1.59%|
|Taiwan|102,493,887.61|12.12%|198,229,835.18|27.39%|-48.30%|
|Ghana|14,347,425.72|1.70%|15,188,831.26|2.10%|-5.54%|
|Other|98,663,921.90|11.66%|55,405,034.45|7.66%|78.08%|

 (2) About the industries, products, or regions accounting for over10% of thecompany’s operating income or operating profit
√Applicable□Not applicable
Whether or not the Company complies with disclosure requirements of special industry
No
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrease|Increase/decrease|
||Operating||||||
|||Operating cost|Gross profit ratio|of operating|of operating cost|of gross profit|
||revenue||||||
|||||revenue y-o-y|y-o-y|ratio y-o-y|
|According to industries|||||||
|Boat rental|91,513,054.10|69,062,513.50|24.53%|-1.20%|5.50%|-4.80%|
|Aquatic products|||||||
|refrigerated|661,507,107.61|630,454,488.58|4.69%|19.12%|19.56%|-0.35%|
|processing trade|||||||
|According to products|||||||
|Boat rental|91,513,054.10|69,062,513.50|24.53%|-1.20%|5.50%|-4.80%|
|Aquatic products|||||||
|refrigerated|661,507,107.61|630,454,488.58|4.69%|19.12%|19.56%|-0.35%|
|processing trade|||||||
|According to region|||||||
|China|300,038,378.94|191,472,550.43|36.18%|48.74%|2.21%|29.05%|
|Japan|285,073,795.29|257,933,715.72|9.52%|15.37%|8.78%|5.48%|
|Taiwan|102,493,887.61|74,984,039.46|26.84%|-28.01%|-46.91%|26.04%|

 Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest oneyear’s scope of period-end
□ Applicable√ Not applicable
(3) Whether income from physical sales larger than income from labors or not
√ Yes□ No
|||||||
|-|-|-|-|-|-|
||||||Increase/decrease|
|Industries|Item|Unit|2016|2015||
||||||y-o-y|

|||||||
|-|-|-|-|-|-|
||Sales volume|Ton|5,814|10,739|-45.86%|
|Deep-sea fishing and||||||
||Production|Ton|5,825|10,066|-42.13%|
|re-processing||||||
||Inventory|Ton|1,534|2,157|-28.88%|
|Aquatic products|Sales volume|Ton|18,469|12,975|42.34%|
|processing,|Production|Ton|23,367|15,450|51.24%|
|refrigerator and||||||
||Inventory|Ton|4,371|1,196|265.47%|
|others sales volume||||||

Reasons for y-o-y relevant data with over30% changes
√Applicable□Not applicable
The main reason why the sales volume and production of ocean-going fishing and its re-processing industry are lower than the same period of last year is because thecompany’s two seines temporarily took fishing off season, the production months in 2016 are less than 2015, and the production has significantly decreased, in general, there is no comparability; the sales volume, inventory and production of aquatic product processing, refrigeration and other sections are higher than the same period of last year, mainly because thecompany’s subsidiary Zhonglu Foods Co., Ltd. Has increased the purchase amount in 2016 so that the amount of processing has greatly increased and the inventory has doubled.
(4) Fulfillment of thecompany’s signed significant sales contracts up to this reporting period
□ Applicable√ Not applicable
(5) Constitute of operation cost
Industry classification
Industry classification
In RMB
||||||||
|-|-|-|-|-|-|-|
|||2016||2015|||
|Industry|||||||
||Item||Ratio in operation||Ratio in operation|Y-o-y changes|
|classification||Amount||Amount|||
||||cost||cost||
||Access fishing||||||
|Seine tuna fishing||32,847.88|0.71%|20,856,578.32|42.44%|-99.84%|
||fee||||||
|Seine tuna fishing|Raw material|284,557.19|6.17%|4,855,099.85|9.88%|-94.14%|
|Seine tuna fishing|Fuel power|887,587.30|19.24%|10,470,056.65|21.30%|-91.52%|
||Employee||||||
|Seine tuna fishing||1,599,487.30|34.67%|6,033,513.68|12.28%|-73.49%|
||compensation||||||
||Depreciation||||||
|Seine tuna fishing||1,318,059.63|28.57%|5,224,397.12|10.63%|-74.77%|
||charge||||||
|Seine tuna fishing|Other|490,559.19|10.63%|1,705,716.68|3.47%|-71.24%|
|Seine tuna fishing|Total|4,613,098.49|100.00%|49,145,362.30|100.00%|-90.61%|
|Longlines tuna|Access fishing|1,605,983.95|2.94%|726,897.47|2.65%|120.94%|

||||||||
|-|-|-|-|-|-|-|
|fishing|fee||||||
|Longlines tuna|||||||
||Raw material|15,523,773.54|28.42%|6,918,634.71|25.20%|124.38%|
|fishing|||||||
|Longlines tuna|||||||
||Fuel power|14,626,043.32|26.78%|9,670,281.46|35.23%|51.25%|
|fishing|||||||
|Longlines tuna|Employee||||||
|||9,225,406.84|16.89%|5,425,074.90|19.76%|70.05%|
|fishing|compensation||||||
|Longlines tuna|Depreciation||||||
|||3,918,851.37|7.17%|2,143,601.95|7.81%|82.82%|
|fishing|charge||||||
|Longlines tuna|||||||
||Other|9,718,908.55|17.79%|2,568,286.75|9.36%|278.42%|
|fishing|||||||
|Longlines tuna|||||||
||Total|54,618,967.57|100.00%|27,452,777.24|100.01%|98.96%|
|fishing|||||||
||Employee||||||
|Boat rental||27,452,639.89|39.75%|26,416,951.95|40.36%|3.92%|
||compensation||||||
||Depreciation||||||
|Boat rental||9,995,678.65|14.47%|11,282,316.84|17.24%|-11.40%|
||charge||||||
|Boat rental|Material|12,890,662.42|18.67%|9,579,036.06|14.63%|34.57%|
|Boat rental|Other|5,565,061.56|8.06%|5,698,212.12|8.70%|-2.34%|
||Insurance||||||
|Boat rental||4,232,481.15|6.13%|3,973,497.81|6.07%|6.52%|
||premium||||||
|Boat rental|Fuel|5,247,961.59|7.60%|3,816,461.99|5.83%|37.51%|
|Boat rental|Repairs fee|1,592,330.61|2.31%|3,332,575.32|5.09%|-52.22%|
|Boat rental|Inspection fee|2,085,697.63|3.02%|1,361,709.54|2.08%|53.17%|
|Boat rental|Total|69,062,513.50|100.00%|65,460,761.63|100.00%|5.50%|
|Other deep-sea|||||||
||Fuel power|3,396,209.80|36.22%|6,343,893.43|45.94%|-46.46%|
|fishing|||||||
|Other deep-sea|||||||
||Raw material|1,607,813.42|17.15%|1,527,842.47|11.06%|5.23%|
|fishing|||||||
|Other deep-sea|||||||
||Labor charges|1,092,601.29|11.65%|2,490,827.59|18.04%|-56.14%|
|fishing|||||||
|Other deep-sea|Depreciation||||||
|||634,964.98|6.77%|663,819.70|4.81%|-4.35%|
|fishing|charge||||||
|Other deep-sea|||||||
||Other|2,644,837.84|28.21%|2,781,875.08|20.15%|-4.93%|
|fishing|||||||
|Other deep-sea|||||||
||Total|9,376,427.33|100.00%|13,808,258.27|100.00%|-32.10%|
|fishing|||||||
|Aquatic product|Direct materials|558,440,160.95|88.58%|463,471,303.38|87.89%|20.49%|

||||||||
|-|-|-|-|-|-|-|
|processing|||||||
|Aquatic product|||||||
||Packaging|11,737,782.79|1.86%|10,598,701.65|2.01%|10.75%|
|processing|||||||
|Aquatic product|||||||
||Labor wage|24,005,569.26|3.81%|23,106,692.07|4.38%|3.89%|
|processing|||||||
|Aquatic product|||||||
||Depreciation|4,636,574.72|0.74%|4,524,829.00|0.86%|2.47%|
|processing|||||||
|Aquatic product|||||||
||Other|31,634,400.86|5.02%|25,623,237.78|4.86%|23.46%|
|processing|||||||
|Aquatic product|||||||
||Total|630,454,488.60|100.00%|527,324,763.88|100.00%|19.56%|
|processing|||||||
|House rental|Labor charges|64,800.00|3.60%|64,800.00|3.43%|0.00%|
||Out-of –pocket||||||
|House rental||26,647.10|1.48%|26,743.40|1.41%|-0.36%|
||expenses||||||
||Depreciation||||||
|House rental||1,218,665.52|67.71%|1,218,665.52|64.42%|0.00%|
||charge||||||
|House rental|Electric charge|216,953.47|12.05%|269,248.31|14.23%|-19.42%|
|House rental|Repairs fee etc.|97,853.83|5.44%|132,332.71|7.00%|-26.05%|
|House rental|Heating fee|175,030.45|9.72%|179,814.10|9.51%|-2.66%|
|House rental|Total|1,799,950.37|100.00%|1,891,604.04|100.00%|-4.85%|

 Note
(6) Whether the changes in the scope of consolidation in Reporting Period
□Yes√ No
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period□ Applicable√ Not applicable
(8) Major sales and main suppliers
Major sales of the Company
|||
|-|-|
|Total top five clients in sales (RMB)|405,481,241.02|
|Proportion in total annual sales volume for top five clients|47.94%|
|Ratio of related parties in annual total sales among the top||
||0.00%|
|five clients||

Information of top five clients of the Company
|||||
|-|-|-|-|
|Serial|Name|Sales (RMB)|Proportion in total annual sales|

|||||
|-|-|-|-|
|1|Hongkong Liantai Seafood|134,581,972.51|15.91%|
|2|F.C.F Fishery Co., Ltd.|91,513,054.10|10.82%|
|3|Japan Itochu|67,525,051.37|7.98%|
|4|Japan Daoshui|62,823,106.27|7.43%|
|5|Japan Wiki|49,038,056.77|5.80%|
|Total|--|405,481,241.02|47.94%|

 Other situation of main clients
□ Applicable√ Not applicable
Main suppliers of the Company
|||
|-|-|
|Total purchase amount from top five suppliers (RMB)|298,072,193.13|
|Proportion in total annual purchase amount for top five||
||48.49%|
|suppliers||
|Ratio of related parties in annual total sales among the top||
||0.00%|
|five suppliers||

Information of top five suppliers of the Company
|||||
|-|-|-|-|
|Serial|Name|Purchases (RMB)|Proportion in total annual purchase|
|1|Yantai Beijing Ocean Fishery Co., Ltd.|146,754,337.78|23.88%|
|2|CNFC Overseas Fishery Co., Ltd.|54,925,050.54|8.94%|
|3|Shenzhen South Fishery Co., Ltd.|45,595,194.91|7.42%|
|4|Rongcheng Ocean Fishery Co., Ltd.|27,192,452.34|4.42%|
||Shenzhen Shengang Ocean Industry Co.,|||
|5||23,605,157.56|3.84%|
||Ltd.|||
|Total|--|298,072,193.13|48.49%|

 Other notes of main suppliers of the Company
□ Applicable√ Not applicable
3. Expense
In RMB
||||||
|-|-|-|-|-|
||2016|2015|Y-o-y changes|Note|
|Sales expense|6,016,283.26|6,056,111.86|-0.66%||
|Management expense|57,369,652.49|51,671,846.22|11.03%||
|Financial expense|-6,330,453.36|433,236.30|-1,561.20%|More exchange earnings in the Period|

 4.R&D investment
□ Applicable√ Not applicable
5. Cash flow
In RMB
|||||
|-|-|-|-|
|Item|2016|2015|Y-o-y changes|
|Subtotal of cash in-flow from|945,613,387.44|856,059,135.23||
||||10.46%|
|operation activity||||
|Subtotal of cash out-flow from|858,177,664.25|800,615,745.01||
||||7.19%|
|operation activity||||
|Net cash flow from operation|87,435,723.19|55,443,390.22||
||||57.70%|
|activity||||
|Subtotal of cash in-flow from|5,930,806.81|444,766.87||
||||1,233.46%|
|investment activity||||
|Subtotal of cash out-flow from|32,045,019.74|18,051,688.49||
||||77.52%|
|investment activity||||
|Net cash flow from investment|-26,114,212.93|-17,606,921.62||
||||-48.32%|
|activity||||
|Subtotal of cash in-flow from|69,109,844.43|101,754,637.69||
||||-32.08%|
|financing activity||||
|Subtotal of cash out-flow from|80,873,244.26|118,798,599.90||
||||-31.92%|
|financing activity||||
|Net cash flow from financing|-11,763,399.83|-17,043,962.21||
||||30.98%|
|activity||||
|Net increased amount of cash|57,273,291.78|27,272,912.98||
||||110.00%|
|and cash equivalent||||

Main factors of relateddata’s significant changes on a year-on-year basis
√Applicable□Not applicable
1. The main reason why the net cash flow from operating activities increased over the last year is because the sales revenue of the current period is higher than the same period of last year;
2. The reason why the proportion of investing cash inflow is larger compared with that of last year is because the subsidiary shipping company has disposed of F / R vessel for refrigerated transport and received many cashes. The large proportion of investing cash outflow is due to the overhaul to seines Tailong 1 and Tailong 2, and the project funds of previous years paid by Yantai subsidiary.
3. The reason why the financing cash inflow and outflow is rather large is because the company has transacted a foreign exchange pledged loan with100% cash deposit last year, paid and recovered cash deposit of 20,725,000 Yuan, and no such business occurred in this year.
The reasons for the significant difference between the net cash flow from the company's operating activities and
the net profit of current year during the reporting period
√ Applicable□ Not applicable
1. Asset impairment loss, depreciation and amortization of fixed assets and intangible assets and financial expenses affect the net profits but not affect the operating cash flow project 30,688,276.34 Yuan, which makes the net profit is 30,688,276.34 Yuan less than the operating cash flow;
2. The inventory balance of 2016 has decreased by 31,943,609.43 Yuan compared with the inventory balance of 2015, resulting in an increase of operating cash flow of 31,943,609.43 Yuan;
3. The operating receivables of 2016 has increased by 32,385,780.43 Yuan compared to 2015, resulting in a decrease of operating cash flow of 32,385,780.43 Yuan; the above caused the differences between net profit and operating cash flow.
III. Analysis of the non-main business
√Applicable□Not applicable
In RMB
||||||
|-|-|-|-|-|
||Amount|Ratio in total profit|Note|Whether be sustainable|
||||The inventory decline was||
||||RMB 2,505,500, and bad||
|Asset impairment|3,236,092.07|5.50%||No sustainable.|
||||debt reserves was RMB||
||||730,600.||
|||||Fuel subsidy will be|
|||||sustainable if the fishing|
||||The fuel subsidies was RMB||
|||||vessels only can operate|
||||39,041,300, fisheries||
|||||normally at sea and the|
|Non-operating|||development assistance was||
||46,495,585.42|79.01%||national oil subsidy policy|
|income|||RMB 3,197,500, and the||
|||||doesn’t change, the deferred|
||||other was government grand||
|||||income remains unchanged|
||||for deferred income etc.||
|||||every year in the amortization|
|||||period.|
|Non-operating|||||
||782,369.92|1.33%||No sustainable.|
|expense|||||

IV. Assets and liability
1. Major changes of assets composition
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of 2016||End of 2015||||
||||||Ratio||
|||Ratio in total||Ratio in total||Notes of major changes|
||Amount||Amount||changes||
|||assets||assets|||
||129,521,203.29||72,428,421.94||||
|Monetary fund||15.51%||9.07%|6.44%||

|||||||
|-|-|-|-|-|-|
|Account|42,679,066.65||26,746,955.58|||
|||5.11%||3.35%|1.76%|
|receivable||||||
||154,636,414.05||189,084,316.91|||
|Inventory||18.51%||23.69%|-5.18%|
|Investment real|32,338,392.18||33,557,057.70|||
|||3.87%||4.20%|-0.33%|
|estate||||||
|Long term equity||||||
||||||0.00%|
|investment||||||
||415,683,489.86||429,846,758.41|||
|Fixed assets||49.77%||53.85%|-4.08%|
|Construction in|4,066,989.68||5,901,575.16|||
|||0.49%||0.74%|-0.25%|
|progress||||||
|Short-term|54,961,454.59||46,321,773.62|||
|||6.58%||5.80%|0.78%|
|borrowing||||||

2. Assets and liability measure by fair value
□ Applicable√ Not applicable
3. Assets right restriction till end of reporting period
The Company has no assets restricted till end of the Period
V. Investment
1. Overall situation
□ Applicable√ Not applicable
2. The major equity investment obtained in Reporting Period
□ Applicable√ Not applicable
3. The major non-equity investment doing in Reporting Period
□ Applicable√ Not applicable
4. Financial assets investment
(1) Securities investment
□ Applicable√ Not applicable
The company had no securities investment in the reporting period.
(2) Derivative investment
□ Applicable√ Not applicable
The company had no derivative investment in the reporting period.
5. Application of raised proceeds
□ Applicable√ Not applicable
The company had no application of raised proceeds in the reporting period.
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable√ Not applicable
The Company had no sales of major assets in the reporting period.
2. Sales of major equity
□ Applicable√ Not applicable
VII. Analysis of main holding company and stock-jointly companies
√Applicable□Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over10%
In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Company||Main|Register|||Operating|Operating||
||Type|||Total assets|Net Assets|||Net profit|
|name||business|capital|||revenue|profit||
|Shandong|||||||||
|Zhonglu|||||||||
|||Food||313,414,892.|163,289,869.|665,712,596.|22,673,428.9|22,258,892.3|
|Oceanic|Subsidiary||75,593,300||||||
|||processing||72|38|42|9|5|
|(Yantai) Food|||||||||
|Co., Ltd.|||||||||
|Shandong|||||||||
|Zhonglu|||||||||
|Haiyan||Marine||189,260,677.|176,538,387.|106,758,242.||26,975,448.8|
||Subsidiary||138,731,900||||7,747,382.89||
|Oceanic||fishing||99|15|33||3|
|Fishery Co.,|||||||||
|Ltd.|||||||||
|HABITAT|||||||||
|INTERNATI||Refrigerated||193,412,132.|184,782,749.|59,316,295.7|15,946,017.6|18,084,681.7|
||Subsidiary||12,476,146||||||
|ONAL||shipment||19|26|1|1|5|
|CORPORAT|||||||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|ION|||||||||
|Shandong|||||||||
|Zhonglu|||||||||
|||Refrigerated||34,536,793.5||32,196,758.3|||
|Fishery|Subsidiary||22,505,600||1,880,762.17||1,053,202.91|1,036,955.77|
|||shipment||0||9|||
|Shipping Co.,|||||||||
|Ltd.|||||||||

Particular about subsidiaries obtained or disposed in report period
□ Applicable√ Not applicable
Notes of main holding company and stock-jointly companies
VIII. Structured vehicle controlled by the Company
□ Applicable√ Not applicable
IX. Prospect for future development of the Company
The company will adhere to the policy of "Based on itself, give overall consideration, give full play to superiority, seek improvement in stability", give full play to its own advantages, insist on reforming and innovation, further improve quality and efficiency, actively cultivate new profit growth point, and promoteenterprise’s sustainable and rapid development. Focus on doing the followings:
(I) Production and management. Continue to adhere to the management concept of "One Body Two Wings", and strengthen safety production management. Further optimize and expand the ocean-going fishing, stably develop ocean-going refrigerated transport, consolidate market shares, optimize and strengthen processing trade, remove the products with high consumption, high cost, and low profit, focus on the development of high quality and high profit products, stabilize the international market, expand the domestic market, and further improve the domestic market shares.
(II) Scale construction. Strengthen the construction of the Atlantic purse seine project, comprehensively promote the implementation of tuna longline fishing boat construction, establish the detailed work plan for specific jobs, including the report of phased materials, shipyard inspection, and construction starting, etc., strengthen communication with shareholders, do everything possible to broaden the financing channels, comprehensively promote the relevant work, and further improve the scale and quality of the company's assets.
(III) Construction of talent. Further expand the channels of talent introduction, intensify the various talent training, introduce outstanding talent incentives, create a good atmosphere for innovation and entrepreneurship of a variety of talents, do a good job to keep people, focus on the training and selection of senior and middle management, and make thecompany’s management younger and more professional.
(IV) Corporate culture construction. Further innovate thinking, organize relevant departments to systematically carry out the corporate culture construction, unify thestaff’s thoughts and values, intensify the work style, gather the staff strength, and enhance thestaff’s sense of identity, sense of pride and sense of belonging to the enterprise. (V) Management system construction. Continue to promote the construction of internal control system, strictly follow the "corporate governance of listed companies", comprehensively improve the basic management level, strengthen management innovation, strive for development by refining the internal strength, and ask for efficiency
to the management.
(VI) Strengthen the party organization building. Continue to strengthen two constructions. We must continue to
strengthen the foundation party organization construction. Strengthen the leadership construction of grassroots
organizations, enhance the quality of members, and promote mutual unity. Strengthen the construction of grassroots party organizations, and build advanced models. Continue to promote the construction of the party conduct and of an honest and clean government. Implement accountability.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable□Not applicable
|||||
|-|-|-|-|
|Time|Way|Type|Basic situation index of investigation|
||||Operation of the Company and no|
|2016-01-08|Telephone communication|Individual||
||||material required|
||||The Activity Review Record of IR on 24|
|2016-03-24|Field investigation|Individual|March 2013 released on|
||||http://www.cninfo.com.cn|
||||Operation of the Company and no|
|2016-08-04|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-08-18|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-08-19|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-09-08|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-09-19|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-10-09|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-10-17|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-11-07|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-11-11|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-11-12|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-11-14|Telephone communication|Individual||
||||material required|
||||Operation of the Company and no|
|2016-11-16|Telephone communication|Individual||
||||material required|
|2016-11-22|Telephone communication|Individual|Operation of the Company and no|

||||||
|-|-|-|-|-|
|||||material required|
|||||Operation of the Company and no|
|2016-12-01|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2016-12-05|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2016-12-06|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2016-12-09|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2016-12-16|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2016-12-28|Telephone communication||Individual||
|||||material required|
|Reception (times)||21|||
|Number of hospitality||0|||
|Number of individual reception||21|||
|Number of other reception||0|||
|Disclosed, released or let out major undisclosed|||||
|||No|||
|information|||||

Section V. Iimportant Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during the Reporting Period
□ Applicable√ Not applicable
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years (including the reporting period)
In latest three years, after cover the deficit of previous years, the retained profit at period-end still negative; being deliberated and approved by the Board andShareholders’ General Meeting, no profit distributed either. The Company has no plan of cash dividend distribution, no bonus distributed and capitalizing of common reserves either for year of 2016.
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
|||||||
|-|-|-|-|-|-|
|||Net profit|Ratio in net profit|||
|||attributable to|attributable to|||
|||common stock|common stock|||
|Year for bonus|Amount for cash|shareholders of|shareholders of|Amount for cash|Proportion for cash|
|shares|bonus (tax included)|listed company in|listed company|bonus by other ways|bonus by other ways|
|||consolidation|contained in|||
|||statement for bonus|consolidation|||
|||year|statement|||
|2016|0.00|52,585,070.74|0.00%|0.00|0.00%|
|2015|0.00|12,141,360.21|0.00%|0.00|0.00%|
|2014|0.00|15,367,992.51|0.00%|0.00|0.00%|

 The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is positive but no plan of cash dividend proposed of common stock
□ Applicable√ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable√ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the year
III. Implementation of commitment
1. Commitments completed in Period and those without completed till end of the Period from actual
controller, shareholders, related parties, purchaser and companies
□ Applicable√ Not applicable
The Company has no commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies
2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in forecasting period, explain reasons of reaching the original profit forecast
□ Applicable√ Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party□ Applicable√ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable√ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with the financial report of last year
□ Applicable√ Not applicable
No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.
VII. Major accounting errors within reporting period that needs retrospective restatement□ Applicable√ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with lastyear’s financial report; explain changes in consolidationstatement’s scope
□ Applicable√ Not applicable
No changes in consolidationstatement’s scope for the Company in the period.
IX. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
|||
|-|-|
|Name of domestic accounting firm|PKF Daxin Certified Public Accountants LLP|
|Remuneration for domestic accounting firm (in 10||
||40|
|thousand Yuan)||
|Continuous life of auditing service for domestic||
||14|
|accounting firm||

|||
|-|-|
|Name of domestic CPA|Zhang Lifa; Wu Zhixing|

Whether re-appointed accounting firms in this period or not
□ Yes√ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable□Not applicable
Being approved by the AnnualShareholders’ Meeting of 2015, PKF Daxin Certified Public Accountants LLP was engaged by the Company for auditing CPA of internal control for 2016, RMB 100,000 of remuneration being paid in the period.
X. Particular about suspended and delisting after annual report disclosed
□ Applicable√ Not applicable
XI. Bankruptcy reorganization
□ Applicable√ Not applicable
No bankruptcy reorganization for the Company in reporting period.
XII. Significant lawsuits and arbitrations of the Company
□Applicable √Not applicable
No significant lawsuits and arbitrations occurred in the reporting period.
XIII. Penalty and rectification
□ Applicable√ Not applicable
No penalty and rectification for the Company in reporting period.
XIV Integrity of the company and its controlling shareholders and actual controllers
√Applicable□Not applicable
The company and its controlling shareholders and actual controllers do not have a relatively large amount of due existing debt with court's effective judgments.
XV Implementation of thecompany’s stock incentive plan, employee stock ownership plan or other employee incentives
□ Applicable√ Not applicable
During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives that have not been implemented.
XVI. Material related transactions
1. Related transaction with daily operation concerned
□ Applicable√ Not applicable
No related transaction with daily operation concerned for the Company in reporting period.
2. Related transactions by assets acquisition and sold
□ Applicable√ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period.
3. Main related transactions of mutual investment outside
□ Applicable√ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period
4. Contact of related credit and debt
□ Applicable√ Not applicable
No contact of related credit and debt for the Company in reporting period
5. Other material related transactions
□ Applicable√ Not applicable
No other material related transactions for the Company in reporting period
XVII. Major contract and implantation
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable√ Not applicable
No trusteeship for the Company in reporting period
(2) Contract
□ Applicable√ Not applicable
No contract for the Company in reporting period
(3) Leasing
□ Applicable√ Not applicable
No leasing for the Company in reporting period
2. Major guarantee
□ Applicable√ Not applicable
No guarantee for the Company in reporting period
3. Entrust others to cash asset management
(1) Trust financing
√Applicable□Not applicable
In ten thousand Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Impairme||||
||||||||||||Gains/l|
||||||||||||osses|
||Is a||Amount|||Determin|Principal|nt||Actual||
||||||||||||actuall|
||related||for trust|||e way for|actually|provision|Anticipat|gains/loss||
|Trustee||Kinds||Start Date|Expiry||||||y|
||transactio||financing|||remunerat|recover in|(if|ed income|es in||
|||||||||applicable|||recover|
||n or not|||||ion|the period|||Period||
||||||||||||in|
|||||||||)||||
||||||||||||Period|
|||||||Accordin||||||
|||Run Ze||2016-06-|2016-09-|g to the||||||
|CMB|No||700||||700||7.51|8.12|8.12|
|||124||23|23|agreemen||||||
|||||||t||||||
|Total|||700|--|--|--|700||7.51|8.12|--|
|Capital resources|||Owned fund of the Company|||||||||
|Accumulated overdue||||||||||||
||||0|||||||||
|uncollected principal and interest||||||||||||
|Lawsuit involved (if applicable)|||N/A|||||||||
|Disclosure date for the notice of||||||||||||
|approval by the Board (if||||||||||||
|applicable)||||||||||||
|Disclosure date for the notice of||||||||||||
|approval by Shareholders’||||||||||||
|General Meeting (if applicable)||||||||||||
|Whether there is the trust||||||||||||
||||Yes|||||||||
|financing in the future||||||||||||

(2) Entrusted loans
□ Applicable√ Not applicable
The company had no entrusted loans in the reporting period.
4. Other material contracts
□ Applicable√ Not applicable
No other material contracts for the Company in reporting period
XVIII. Social responsibility
1. Execution of social responsibility of targeted poverty alleviation
□ Applicable√ Not applicable
2. Execution of other social responsibility
The Company always puts socially responsible and public welfare undertakings as one of the core value for the enterprise, and exercise corporate social responsibility through respectingemployees’ rights, prevent and control pollution, promoting sustainable use of resources, focusing and participating public welfare.
Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection No
Whether the social responsibility report released
□Yes√ No
XIX. Explanation on other significant events
√Applicable□Not applicable
||||
|-|-|-|
|Name|Date of disclosed|Internet website and retrievalpath for disclosed information|
|Resolution Notice of 14th Meeting of 5th Session of the|2016-3-5|http//www.cninfo.com.cn|
|Board|||
|Resolution Notice of 12th Meeting of 5th Session of the|2016-3-5|http//www.cninfo.com.cn|
|Board of supervisors|||
|Summary of Annual Report for year of 2015|2016-3-5|http//www.cninfo.com.cn|
|Notice of CFO Resignation|2016-3-5|http//www.cninfo.com.cn|
|Notices of Annual Report 2015 Correcting|2016-4-1|http//www.cninfo.com.cn|
|Performance pre-notice of Third Quarterly for year of|2016-4-13|http//www.cninfo.com.cn|
|2016|||
|Resolution Notice of 15th Meeting of 5th Session of the|2016-4-29|http//www.cninfo.com.cn|
|Board|||
|Resolution Notice of 13th Meeting of 5th Session of the|2016-4-29|http//www.cninfo.com.cn|
|Board of supervisors|||
|Summary of First Quarterly Report for year of 2016|2016-4-29|http//www.cninfo.com.cn|

||||
|-|-|-|
|Declaration of the Independent Director Nominator (Jiang|2016-4-29|http//www.cninfo.com.cn|
|Lu)|||
|Declaration of the Independent Director Nominator (Song|2016-4-29|http//www.cninfo.com.cn|
|Xiliang)|||
|Declaration of the Independent Director Candidate (Jiang|2016-4-29|http//www.cninfo.com.cn|
|Lu)|||
|Declaration of the Independent Director Candidate (Song|2016-4-29|http//www.cninfo.com.cn|
|Xiliang)|||
|Announcement of Holding the AGM of 2015|2016-4-29|http//www.cninfo.com.cn|
|Prompted Notice of Holding the AGM of 2015|2016-5-13|http//www.cninfo.com.cn|
|Resolution of the AGM of 2015|2016-5-20|http//www.cninfo.com.cn|
|Resolution Notice of 1st Meeting of 6th Session of the|2016-5-20|http//www.cninfo.com.cn|
|Board|||
|Resolution Notice of 1st Meeting of 6th Session of the|2016-5-20|http//www.cninfo.com.cn|
|Board of supervisors|||
|Performance pre-notice of half year of 2016|2016-7-14|http//www.cninfo.com.cn|
|Summary of Semi-annual Report for year of 2016|2016-8-27|http//www.cninfo.com.cn|
|Resolution Notice of 3rd Meeting of 6th Session of the|2016-10-29|http//www.cninfo.com.cn|
|Board|||
|Summary of Third Quarterly Report for year of 2016|2016-10-29|http//www.cninfo.com.cn|
|Change of Residence and Article of Associal Amendemnt|2016-10-29|http//www.cninfo.com.cn|
|Convening the First Extarordinary Shareholders General|2016-10-29|http//www.cninfo.com.cn|
|meeting of 2016|||
|Prompted Bulleting of Convening the First Extarordinary|2016-11-12|http//www.cninfo.com.cn|
|Shareholders General meeting of 2016|||
|Resolution Notice of First Extarordinary Shareholders|2016-11-18|http//www.cninfo.com.cn|
|General meeting of 2016|||
|Resignation of Senior Executives|2016-12-16|http//www.cninfo.com.cn|
|Completed Change of Residence in Industrial and|2016-12-31|http//www.cninfo.com.cn|
|Commerce Bureau|||
|Resolution Notice of 4th Meeting of 6th Session of the|2016-12-31|http//www.cninfo.com.cn|
|Board|||

XX. Significant event of subsidiary of the Company
√Applicable□Not applicable
In reporting period, the Proposal of Purchasing Tuna Purse Seiner has being deliberated and approved by the 4th meeting of 6th session of the Board. The controlling subsidiary Shandong Zhonglu Haiyan Oceanic Fishery Co., Ltd. purchased 5 tuna purse seiners (owns ICCAT registration for fishing license). Found more in relevant notices released on http//www.cninfo.com.cn dated 31
December 2016
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in shares
1. Changes in shares
In Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before changes||(+,-)|||||After changes||
||||||Capitaliza|||||
||||||tion of|||||
||Amount|Ratio|New issue|Bonus||Other|Subtotal|Amount|Ratio|
||||||public|||||
||||||reserve|||||
||128,071,3|||||||128,071,3||
|I. Unlisted shares||48.13%|||||||48.13%|
||20|||||||20||
||128,071,3|||||||128,071,3||
|1. Sponsor shares||48.13%|||||||48.13%|
||20|||||||20||
|Including: State-owned|127,811,3|||||||127,811,3||
|||48.04%|||||||48.04%|
|shares|20|||||||20||
|Domestic corporate||||||||||
||260,000|0.10%||||||260,000|0.10%|
|shares||||||||||
||138,000,0|||||||138,000,0||
|II. Listed shares||51.87%|||||||51.87%|
||00|||||||00||
|2. Domestically listed|138,000,0|||||||138,000,0||
|||51.87%|||||||51.87%|
|foreign shares|00|||||||00||
||266,071,3|||||||266,071,3||
|III. Total shares||100.00%|||||||100.00%|
||20|||||||20||

Reasons for share changed
□ Applicable√ Not applicable
Approval of share changed
□ Applicable√ Not applicable
Ownership transfer of share changed
□ Applicable√ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period
□ Applicable√ Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable√ Not applicable
2. Changes of restricted shares
□ Applicable√ Not applicable
II. Securities issue and listing
1. Security offering (without preferred stock) in Reporting Period
□ Applicable√ Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and liability structure
□ Applicable√ Not applicable
3. Existing internal staff shares
□ Applicable√ Not applicable
III. Shareholders and actual controller
1. Number of shareholders of the Company and share-holding
In Share
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||12,082||||||Total preference|||
||||||||Total preference||||shareholders|||
|||Total common|||||shareholders||||with voting|||
|Total common||||||||||||||
|||stock|||||with voting||||rights recovered|||
|stock||||||||||||||
|||shareholders at|||||rights recovered||||at end of last|||
|shareholders in|12,042||||||||0||||0|
|||end of last month|||||at end of||||month before|||
|reporting||||||||||||||
|||before annual|||||reporting period||||annual report|||
|period-end||||||||||||||
|||report disclosed|||||(if applicable)||||disclosed (if|||
||||||||(found in note8)||||applicable)|||
||||||||||||(found in note8)|||
|Particulars about shares held above 5% by shareholders or top ten shareholders||||||||||||||
|||||Total|||Amount|||Number of shares pledged/frozen||||
|||||||||Amount||||||
|||||sharehol|||of|||||||
||||Proportio|||Changes||of listed||||||
|||||ders at|||unlisted|||||||
|Full name of|Nature of||n of|||in report||outstandi||||||
|Shareholders|shareholder||shares|the end|||outstandi|||State of share||Amount||
||||held|||period||ng shares||||||
|||||of report|||ng shares|||||||
|||||||||held||||||
|||||period|||held|||||||
|ShandongState-owned|State-ownedlegal person||33.07%|88,000,000|||88,000,000|||||||

|||||||
|-|-|-|-|-|-|
|Assets InvestmentHolding Co., Ltd||||||
|Shandong LuxinInvestmentHolding GroupCo., Ltd|State-ownedlegal person|14.18%|37,731,320|37,731,320||
|ShenwanHongYuan (H.K.)Limited|Foreign legalperson|3.46%|9,200,990||9,200,990|
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|Foreign legalperson|2.51%|6,665,689||6,665,689|
|Chen Tianming|Foreign natureperson|2.16%|5,760,427||5,760,427|
|HaitongInternationalSecuritiesCompanyLimited-AccountClient|Foreign legalperson|0.82%|2,180,900||2,180,900|
|China EverbrightSecurities (H.K.)Co., Ltd.|Foreign legalperson|0.78%|2,072,000||2,072,000|
|China NationalHeavy DutyTruck GroupJinan Truck LLC|State-ownedlegal person|0.73%|1,950,000|1,950,000||
|Wang Dongsheng|Foreign natureperson|0.45%|1,209,502||1,209,502|
|Qin Jun|Domestic natureperson|0.41%|1,083,220||1,083,220|
|Strategy investors or general legal||||||
|person becomes top 10 shareholders||||||
|||Not applicable||||
|due to rights issued (if applicable)||||||
|(see note3)||||||
|||Shandong State-owned Assets Investment Holding Co., Ltd and Shandong Luxin Investment||||
|Explanation on associated||Holding Group Co., Ltd are provincial state-owned enterprises under the same stock controlling of||||
|relationship among the aforesaid||Shandong Provincial Commission; China National Heavy Duty Truck Group Jinan Truck LLC||||
|shareholders||is the sponsor shareholder of the Company and the above mentioned shareholders have no||||
|||associated relationships or not belong to consistent actors regulated by Management||||

|||||
|-|-|-|-|
||Regulation of Information Disclosure on Change of Shareholding for Listed Companies.|||
||Rests of the shareholders are the domestically listed foreign shareholders, and t he Company|||
||is unknown whether there exists associated relationship or belongs to consistent actor|||
||regulated by “management method for acquisition of listed company” among the above said|||
||shareholders.|||
|Shareholding of top 10 circulated shareholders||||
|||Type of shares||
|Shareholders|Amount of listed shares held at end of the Period|||
|||Type|Amount|
|Shenwan HongYuan (H.K.) Limited|9,200,990|Domestically||
|||listed foreign|9,200,990|
|||shares||
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|6,665,689|Domestically||
|||listed foreign|6,665,689|
|||shares||
|Chen Tianming|5,760,427|Domestically||
|||listed foreign|5,760,427|
|||shares||
|Haitong International SecuritiesCompany Limited-Account Client|2,180,900|Domestically||
|||listed foreign|2,180,900|
|||shares||
|China Everbright Securities (H.K.)Co., Ltd.|2,072,000|Domestically||
|||listed foreign|2,072,000|
|||shares||
|Wang Dongsheng|1,209,502|Domestically||
|||listed foreign|1,209,502|
|||shares||
|Qin Jun|1,083,220|Domestically||
|||listed foreign|1,083,220|
|||shares||
|Yi Ying|1,078,200|Domestically||
|||listed foreign|1,078,200|
|||shares||
|Huang Jiayi|1,048,687|Domestically||
|||listed foreign|1,048,687|
|||shares||
|Zhang Xiufang|1,039,500|Domestically||
|||listed foreign|1,039,500|
|||shares||
|Expiation on associated relationship|The Company is unknown whether there exists associated relationship or belongs to|||
|or consistent actors within the top 10|consistent actor regulated by “management method for acquisition of listed company” among|||

|||
|-|-|
|un-restrict shareholders and between|the above said shareholders.|
|top 10 un-restrict shareholders and||
|top 10 shareholders||
|Explanation on shareholders||
|involving margin business about top||
|ten common stock shareholders with|Not applicable|
|un-restrict shares held(if applicable)||
|(see note4)||

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period
□ Yes√ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period.
2. Controlling shareholders
Nature of controlling shareholders: local state-owned holding
Type of controlling shareholders: legal person
||||||
|-|-|-|-|-|
||Legal person/person||||
|Controlling shareholders||Date of foundation|Organization code|Main operation business|
||in charge of the unit||||
|||||Management of|
|||||state-owned property right|
|||||and disposal of|
|||||non-performing assets that|
|||||authorized by SDGZK;|
|Shandong State-owned Assets|||||
||Li Guangqing|1994-03-25|91370000163073167C|investment and|
|Investment Holding Co., Ltd|||||
|||||management of industry|
|||||projects; assets|
|||||management and assets|
|||||operation; entrust operation|
|||||and investment consultant|
|Equity of other|||||
|foreign/domestic listed|||||
||0.78% of China Merchants Bank; 0.94% of China United Network Communication Limited; 1.49%||||
|company that controlled by|||||
||of Guangzhou Pubang Landscape Architecture Co., LTD; 1.03% of By-health Co., LTD; 18.96% of||||
|and have joint-stock from|||||
||Zhongtong Bus Co., LTD; 2.25% of Luzheng Futures Co., LTD.||||
|controlling shareholder in|||||
|reporting period|||||

Changes of controlling shareholder in reporting period
□ Applicable√ Not applicable
No changes of controlling shareholder for the Company in reporting period.
3. Actual controller
Nature of actual controller: local state-owned assets management
Type of actual controller: legal person
||||||
|-|-|-|-|-|
||Legal||||
|Actual controller|person/person in|Date of foundation|Organization code|Main operation business|
||charge of the unit||||
|State-owned Assets Supervision||||Performing responsibilities of|
|and Administration Commission||||investors, monitoring the|
|of Shandong Provincial|Zhang Bin|2004-06-18|N/A|preserve and increase value for|
|Government||||state-owned assets that|
|||||supervised etc.|
|Equity of other|||||
|foreign/domestic listed|||||
|company that controlled by|Not applicable||||
|actual controller in reporting|||||
|period|||||

Changes of actual controllers reporting period
□ Applicable√ Not applicable
No changes of actual controllers for the Company in reporting period
Property right and controlling relationship between the actual controller and the Company is as follow:
State-owned Assets Supervision and Administration
Commission of Shandong Provincial Government
70%
Shandong State-owned Assets Investment Holding
Co., Ltd
33.07%
Shandong Zhonglu Oceanic Fisheries Co., Ltd
Actual controller controlling the Company by entrust or other assets management
□ Applicable√ Not applicable
4. Particulars about other legal person shareholders with over10% shares held
√Applicable□Not applicable
||||||
|-|-|-|-|-|
||Legal person/person in|Date of||Main operation business or|
|Legal person shareholder|||Register capital||
||charge of the unit|foundation||management activities|
|||||Foreign investment|
|||||(restricted industries by|
|||||laws and regulations|
|||||excluding) and|
|||||management, investment|
|||||consultant (securities and|
|Shandong Luxin Investment|||||
||Ji Binchang|2002-01-31|3,000 million Yuan|futures consultant|
|Holding Group Co., Ltd|||||
|||||excluding), assets|
|||||management, trust|
|||||operation, capital operation;|
|||||guarantee; hotel|
|||||management; leasing house|
|||||and property management|

 5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers, restructuring side and other commitment subjects
□ Applicable√ Not applicable
Section VII. Preferred Stock
□ Applicable√ Not applicable
The Company had no preferred stock in the reporting.
Section VIII. Particulars about Directors, Supervisors and Senior Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Increasin|Decreasin|||
||||||||Shares|||||
|||||||||g shares|g shares||Shares|
||||||Start||held at|||Other||
|||Working||||End date||held in|held in||held at|
||Title||Sex|Age|dated of|of office|period-be|||changes||
|Name||status|||office|||this|this||period-en|
||||||term|term|gin|||(Share)||
|||||||||period|period||d(Share)|
||||||||(Share)|||||
|||||||||(Share)|(Share)|||
|Chi|Chairman|Currently|||2016-05-|2019-05-||||||
||||M|50|||0|0|0|0|0|
|Weizhen|, GM|in office|||19|18||||||
|Lu||Currently|||2016-05-|2019-05-||||||
||Director||M|43|||0|0|0|0|0|
|Xiaonan||in office|||19|18||||||
|Zhao||Currently|||2016-05-|2019-05-||||||
||Director||M|53|||0|0|0|0|0|
|Zhiguo||in office|||19|18||||||
||Independ|||||||||||
|||Currently|||2016-05-|2019-05-||||||
|Jiang Lu|ent||M|57|||0|0|0|0|0|
|||in office|||19|18||||||
||director|||||||||||
||Independ|||||||||||
|Song||Currently|||2016-05-|2019-05-||||||
||ent||M|51|||0|0|0|0|0|
|Xiliang||in office|||19|18||||||
||director|||||||||||
||Chairman|||||||||||
||of|||||||||||
|Zhang|Superviso|Currently|||2016-05-|2019-05-||||||
||||F|51|||0|0|0|0|0|
|Liqing|ry|in office|||19|18||||||
||Committe|||||||||||
||e|||||||||||
|Hou|Superviso|Currently|||2016-05-|2019-05-||||||
||||M|34|||0|0|0|0|0|
|Zhenkai|r|in office|||19|18||||||
|Shang|Superviso|Currently|||2003-10-|2019-05-||||||
||||F|46|||0|0|0|0|0|
|Qinghua|r|in office|||23|18||||||
||Deputy|||||||||||
||GM,|||||||||||
|||Currently|||2015-04-|2019-05-||||||
|Li Ming|Secretary||M|51|||0|0|0|0|0|
|||in office|||28|18||||||
||of the|||||||||||
||Board|||||||||||
|Wang|Deputy|Currently|M|48|2016-03-|2019-05-|0|0|0|0|0|

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Huan|GM|in office|||03|18||||||
|||Currently|||2016-03-|2019-05-||||||
|Yue Juan|CFO||F|41|||0|0|0|0|0|
|||in office|||03|18||||||
|||Demissio|||2012-09-|2016-05-||||||
|Li Wenyi|Chairman||M|60|||0|0|0|0|0|
|||n|||18|19||||||
||Director,|||||||||||
|Song||Demissio|||2007-04-|2016-05-||||||
||deputy||M|60|||0|0|0|0|0|
|Wenjian||n|||26|19||||||
||GM|||||||||||
|Zhang||Demissio|||2011-08-|2016-05-||||||
||Director||M|49|||0|0|0|0|0|
|Chunxing||n|||26|19||||||
||Independ|||||||||||
|Wang||Demissio|||2015-05-|2016-05-||||||
||ent||M|56|||0|0|0|0|0|
|Hanmin||n|||20|19||||||
||director|||||||||||
||Independ|||||||||||
|Zhong||Demissio|||2010-06-|2016-05-||||||
||ent||M|49|||0|0|0|0|0|
|Zhigang||n|||10|19||||||
||director|||||||||||
||Chairman|||||||||||
||of|||||||||||
|Liu|Superviso|Demissio|||2013-06-|2016-05-||||||
||||M|51|||0|0|0|0|0|
|Zhihui|ry|n|||28|19||||||
||Committe|||||||||||
||e|||||||||||
|Yang||||||||||||
||Superviso|Demissio|||2010-06-|2016-05-||||||
|Gongmin|||M|58|||0|0|0|0|0|
||r|n|||10|19||||||
|Zhang||Demissio|||2011-08-|2016-03-||||||
||CFO||M|60|||0|0|0|0|0|
|Weiping||n|||26|03||||||
|Zhao|Deputy|Demissio|||2016-05-|2016-12-||||||
||||M|53|||0|0|0|0|0|
|Zhiguo|GM|n|||19|14||||||
|Total|--|--|--|--|--|--|0|0|0|0|0|

 II. Changes of directors, supervisors and senior executives
||||||
|-|-|-|-|-|
|Name|Title|Type|Date|Reasons|
|||Departure on his|||
|Li Wenyi|Chairman||2016-05-19|Departure on his term|
|||term|||
||Director, deputy|Departure on his|||
|Song Wenjian|||2016-05-19|Departure on his term|
||GM|term|||
|||Departure on his|||
|Zhang Chunxing|Director||2016-05-19|Departure on his term|
|||term|||

||||||
|-|-|-|-|-|
||Independent|Departure on his|||
|Wang Hanmin|||2016-05-19|Departure on his term|
||director|term|||
||Independent|Departure on his|||
|Zhong Zhigang|||2016-05-19|Departure on his term|
||director|term|||
||Chairman of||||
|||Departure on his|||
|Liu Zhihui|Supervisory||2016-05-19|Departure on his term|
|||term|||
||Committee||||
|||Departure on his|||
|Yang Gongmin|Supervisor||2016-05-19|Departure on his term|
|||term|||
|Zhang Weiping|CFO|Dismissal|2016-03-03|Retirement|
|Zhao Zhiguo|Deputy GM|Dismissal|2016-12-14|Demission for work change|

III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors, supervisors and senior executive at the present in latest five years
1. Directors
Chi Weizhen,Master’s degree, an engineer, was member of the CPC. He once served as GM of Haiyan Branch and the Company, and chairman of Shandong Zhonglu Haiyan Oceanic Co., Ltd. He serves as chairman, secretary of the PC and GM of the Company since 19 May 2016.
Lu Xiaonan, a MBA, master of economics and a member of the CPC. He was a deputy chief of resource
environment audit office of the Auditing Office Nantepai Office, deputy GM of Shandong Dongyin Investment Co., Ltd., the deputy director of assets management department, director of risk management department and director of disciplinary inspection and supervision office of Shandong State-Owned Assets Holding Co., Ltd; now he serves as GM of the assets operation center of Shandong State-Owned Assets Holding Co., Ltd. He serves as director of the Company since 19 May 2016.
Zhao Zhiguo, senior economist, and a member of the CPC, he was took director of the comprehensive office and HR department of Shandong Development and Reform Commission; senior business manager of RD department, investment banks department and infrastructure fund management department of the Shandong International Trust Investment Co., Ltd.; the senior business manager of RD department of Shandong Luxin Investment Holding Co., Ltd.; senior business manager of infrastructure fund management office of Shandong International Trust Holding Co., LTd; and expatriate deputy GM of Jiaoji Railway Passenger Dedicated Line Co., Ltd. he serves as director of the Company since 19 May 2016.
Jiang Lu, Bachelor of Laws and a senior lawyer. He was served as independent directors in Shandong Hengtong Chemical Co., Ltd. and Shandong Shanda WIT Science and Technology Co., Ltd; lawyer of Jinan Jingji Laws
Firm, Shandong Yuanxin Law Firm and Partner of Jinan Jun Yi Da Law Firm; he currently works as a partner of
Grandall Law Firm (Jinan). And serves as independent director of the Company since 19 May 2016.
Song Xiliang, a PHD, Prof. of Accountancy. He works as accounting professor in Shandong University of Finance and Economics, member of a council in Chinese Institute of Finance and Cost for Young and mid-career
Professionals and Shandong Chamber of Accounting. He also works as independent directors in two listed companies- SACRED SUN (code: 002580) and Weihai Huadong Automation Co., Ltd. (code: 002248); he act as independent director of the Company since 19 May 2016.
2. Supervisor
Zhang Liqing, MBA, member of PC. She served as CFO in Shandong Gezhi Thermal Co., Ltd., CFO of Jinan Ginza Shopping Mall Co., Ltd, and Silver Plaza Group Co., Ltd., a director of auditing department of Shandong Commercial Group Corporation, the chief of information HQ of the Shandong Ginza Mall Co., Ltd., CFO of Shandong Freda Medicine Corporation and Shandong Pharmaceutical Academy of Sciences, a supervisor of Langchao Group Ltd, director of auditing department (discipline inspection dept.) in Shandong State-Owned Assets Investment Holding Co., Ltd; now she acts director of auditing dept. of Shandong State-Owned Assets Investment Holding Co., Ltd. she serves as chairman of supervisory committee of the Company since 19 May 2016.
Hou Zhenkai, master degree candidate, a lawyer. He worked as attorney of security business in Jindu Law Firm, staff of Risk Compliance Dept. (Legal Affairs Dept.)in Shandong Luxin Investment Holdings Group Co., Ltd. he serves as supervisor of the Company since 19 May 2016.
Shang Qinghua, member of the CPC with university degree, She served as deputy director of financial dept. of the Company for the last five years; now she serves as director of finance dept. of the Company and act as employee supervisor of the Company since October 2003.
3. Senior executive
Chi Weizhen,Master’s degree, an engineer, was member of the CPC and member of the party committee of the Company. He once served as GM of the Company and Haiyan Branch; currently he serves as chairman of Shandong Zhonglu Haiyan Oceanic Co., Ltd. and serves as chairman, secretary of PC and GM of the Company since 19 May 2016.
Li Ming, an economist, member of the CPC with university degree and member of the party committee of the Company. He serves as deputy general manager of the Company since April 2007. And he served as deputy general manager and secretary of the board of director of the Company since April 2015.
Wang Huan, bachelor of economics with university degree. He worked as deputy GM of oceanic management dept. in Shandong Zhonglu Oceanic Fisheries Co., Ltd., business chief of the fishery in Ghana, chief of fishery in Gambia and GM of Shandong Zhonglu Aquatic Shipping Co., Ltd. now he work as chairman of Shandong Zhonglu Aquatic Shipping Co., Ltd and deputy GM of the Company since 3 March 2016.
Yue Juan, senior accountant with university degree, she worked as accountant and project manager of Shandong Luxin Industrial Group Co., Ltd.; accountant and project manager of Shandong International Trust Investment Co.,
Ltd.; project manager, GM of financial dept, and deputy GM of financial dept. of Shandong Luxin Culture Media Investment Group Co., Ltd.; she serves as CFO of the Company since 3 March 2016.
Post-holding inshareholder’s unit
√Applicable□Not applicable
|||||||
|-|-|-|-|-|-|
|||||End date of|Whether receiving|
||||||remuneration from|
|Name|Name of shareholder’s units|Position|Start dated of|||
||||office term|office term|shareholder’s units|
||||||or not|
|||GM of capital||||
|Lu Xiaonan|Shandong State-owned Assets Investment|operation|||Y|
|||center||||
|||Director of||||
|Zhang Liqing|Shandong State-owned Assets Investment||||Y|
|||audit dept.||||
|||Deputy||||
|||director of||||
|||risk of||||
|Hou Zhenkai|Luxin Group||||Y|
|||compliance||||
|||dept. (legal||||
|||dept.)||||

Post-holding in other unit
√Applicable□Not applicable
|||||||
|-|-|-|-|-|-|
||||||Whetherreceiving|
|Name|Name of other units|Position|Start dated ofoffice term|End date of office|remuneration|
|||||term||
||||||from other unitsor not|
|Jiang Lu|Grandall (Jinan) Law Firm|Partner|||Y|
|||Professor ofAccounting||||
|Song Xiliang|Shandong University of Finance||||Y|

Punishment of securities regulatory authority in recent three years to thecompany’s current and outgoing directors, supervisors and senior management during the reporting period
□ Applicable√ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
In accordance with relevant requirement and regulation of “Code of Corporate Governance for Listed Companies” from CSRC, the remuneration plan for directors, supervisors and senior executives of the Company was proposed by remuneration and appraisal
committee of the Board, and being deliberated by 7th meeting of 3rd session of the Board held on 14 February 2008 and approved in
AnnualShareholders’ General Meeting of 2007 held on 18 March 2008.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
||||||||
|-|-|-|-|-|-|-|
|||||||Whether|
||||||Total||
|||||||remuneration|
|||||Post-holding|remuneration||
|Name|Title|Sex|Age|||obtained from|
|||||status|obtained from the||
|||||||related party of|
||||||Company||
|||||||the Company|
|||||Currently in|||
|Chi Weizhen|Chairman, GM|M|50||30.7|N|
|||||office|||
|||||Currently in|||
|Lu Xiaonan|Director|M|43||0|Y|
|||||office|||
|||||Currently in|||
|Zhao Zhiguo|Director|M|53||0|N|
|||||office|||
||Independent|||Currently in|||
|Jiang Lu||M|57||0|N|
||director|||office|||
||Independent|||Currently in|||
|Song Xiliang||M|51||0|N|
||director|||office|||
||Chairman of||||||
|||||Currently in|||
|Zhang Liqing|supervisory|F|51||0|Y|
|||||office|||
||committee||||||
|||||Currently in|||
|Hou Zhenkai|Supervisor|M|34||0|Y|
|||||office|||
|||||Currently in|||
|Shang Qinghua|Staff supervisor|F|46||16.87|N|
|||||office|||
||Deputy GM,||||||
|||||Currently in|||
|Li Ming|secretary of the|M|51||27.73|N|
|||||office|||
||Board||||||
|||||Currently in|||
|Wang Huan|Deputy GM|M|48||40.68|N|
|||||office|||
|||||Currently in|||
|Yue Juan|CFO|女|41||10.88|N|
|||||office|||
|Li Wenyi|Chairman|M|60|Demission|31.14|N|
||Director, deputy||||||
|Song Wenjian||M|60|Demission|20.11|N|
||GM||||||
|Zhang Chunxing|Director|M|49|Demission|0|Y|
||Independent||||||
|Wang Hanmin||M|56|Demission|4|N|
||director||||||
||Independent||||||
|Zhong Zhigang||M|49|Demission|4|N|
||director||||||
|Liu Zhihui|Chairman of|M|52|Demission|0|Y|

||||||||
|-|-|-|-|-|-|-|
||supervisory||||||
||committee||||||
|Yang Gongmin|Supervisor|M|59|Demission|0|Y|
|Zhang Weiping|CFO|M|61|Demission|16.85|N|
|Zhao Zhiguo|Deputy GM|M|53|Demission|7.62|N|
|Total|--|--|--|--|210.58|--|

 Delegated equity incentive for directors, supervisors and senior executives in reporting period
□ Applicable√ Not applicable
V. Employees of the Company
1. numbers of the employee, professional constitution and education background
|||
|-|-|
|Serving staff in parent company (person)|167|
|Serving staff in main subsidiaries (person)|1,036|
|Total serving staff (person)|1,203|
|Total staff in payroll in current period (person)|1,203|
|Retired staff with charges paid by the parent company and main||
||270|
|subsidiaries (person)||
|Professional constitution||
|Type|Number|
|Production personnel|1,050|
|Sales man|14|
|Technicians|16|
|Fianncial personnel|20|
|Administrative personnel|103|
|Total|1,203|
|Education background||
|Type|Number|
|Master’s degree|6|
|Bachelor degree|56|
|Junior college|153|
|Technical secondary school|141|
|High school or below|847|
|Total|1,203|

2. Remuneration policy
The Company formulated a management mechanism of remunerations, and paying salaries to employees on time. 3. Training plan
Exercising multi-style training for senior executives, financial staff and technicians according to their own situation and working demands as well as pre-job training
4. Labor outsourcing
□ Applicable√ Not applicable
Section IX. Corporate Governance
I. Basic state of corporate governance
In reporting period, by strictly followed requirement of relevant laws and regulations of “Company Law”, “Securities Laws”, “Rules of Corporate Governance for Listed Company”, “Standard Operation Guide of Stock Listing in Main Board of Shenzhen Stock Exchange” and related normative documents, the Company constantly improve structure of the corporate governance, and further to regulated company operation as well as enhancing corporate governance. General Meeting, the Board Meeting and Supervisory Meeting are convening under the regulations, directors and supervisors are earnestly perform their duties and carry out due diligence. The Company believes that in the reporting period, there are no difference between actual condition of corporate governance and relevant requirements of CSRC and “Company Law”.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC?
□Yes√ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC.
II. Independency of the Company relative to controllingshareholders’ in aspect of businesses, personnel, assets, institution and finance
TheCompany’s business, personnel, assets, institution and finance are separated with itsshareholders’ and owe independent self-operation ability.
1. Business independence: production and administrative management are totally separated with controlling shareholders, and no horizontal competition being found with controlling shareholders;
2. Personnel independence: the Company has an independent HR system and completed system of salary management, and has a self-governed staff team. Senior executives of GM, deputy GM, financial principal and secretary of the Board are not serves in controllingshareholders’ unit and other enterprise controlled byshareholders’ unit except for office-holding as director, supervisor, and all of them are receiving remuneration from the Company. Financial staffs are not taking a part-time in controllingshareholders’ unit and other enterprise controlled byshareholders’ unit.
3. Assets integrity: the Company has completed and separated assets with clear-defined property relations. There are no capital occupations by controlling shareholders being found and assts of the Company are totally independent of its controlling shareholders. 4. Institutional independence: the Company owes a completed organization structure and separated totally with controlling shareholders in institution;shareholders’ general meeting, the Board and supervisory committee running independently and has an independent decision-making ability.
5. Financial independent: the Company owes independent financial department and personnel, has completed and independent financial calculation system, qualified standardized financial accounting mechanism and has ability to making decisions in aspect of finance. Open a bank account and levy a tax independently.
III. Horizontal Competition
□ Applicable√ Not applicable
IV. In the report period, the Company held annualshareholders’ general meeting and extraordinaryshareholders’ general meeting
1. AnnualShareholders’ General Meeting in the report period
|||||||
|-|-|-|-|-|-|
|||Ratio of investor||||
|Session of meeting|Type||Date|Date of disclosure|Index of disclosure|
|||participation||||
||||||“Annual General|
||||||Meeting of 2015”|
||||||(No.: 2016-016)|
|Annual General|Annual General||||published on China|
|||48.30%|2016-05-19|2016-05-20||
|Meeting of 2015|Meeting||||Securities Journal,|
||||||Hong Kong|
||||||Commercial Daily|
||||||and Juchao Website|
||||||“Resolution Notice|
||||||of First|
||||||Extraordinary|
||||||Shareholders|
|First Extraordinary|||||Meeting of 2016”|
||Extraordinary|||||
|Shareholders||47.48%|2016-11-17|2016-11-18|(No.: 2016-026)|
||shareholders meeting|||||
|Meeting of 2016|||||published on China|
||||||Securities Journal,|
||||||Hong Kong|
||||||Commercial Daily|
||||||and Juchao Website|

 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore□ Applicable√ Not applicable
V. Responsibility performance of independent directors in report period
1. The attending of independent directors to Board meetings andshareholders’ general meeting
||||||||
|-|-|-|-|-|-|-|
|The attending of independent directors|||||||
||Times of Board||||||
|||||||Whether absent|
||meeting||Times of|Times of|||
|Name of independent||Times of present|||Times of|the Meeting for|
||supposed to||attending by|entrusted|||
|director||in person|||Absence|the second time|
||attend in the||communication|presence|||
|||||||in a row or not|
||report period||||||
|Wang Hanmin|2|1|1|0|0|N|
|Zhong Zhigang|2|1|1|0|0|N|
|Jiang Lu|4|2|1|1|0|N|
|Song Xiliang|4|3|1|0|0|N|
|Times presented in shareholders’|||||||
|general meeting by independent||2|||||
|directors|||||||

Explanation of absent the Board Meeting for the second time in a row
2. Objection for relevant events from independent directors
Whether independent directors come up with objection aboutcompany’s relevant matters or not
□ Yes√ No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
Whether the opinions from independent directors have been adopted or not
√ Yes□ No
Explanation on advice that accepted/not accepted from independent directors
In accordance with relevant rules and requirements from “Company Law”, “Guiding Opinions for Establishment of Independent Director Mechanism for Listed Company” and “Article of Association”, independent directors of the Company is serious to performing the duties given by laws, regulations, article of associations and mechanism of independent directors; they proactively present the Board Meeting andshareholders’ general meeting, examine and guild the operation of the Company, kept eyes on normalization of the operation, independently performed duties with all efforts, propose several professional advice in aspect of the mechanism perfection and routine operation decisions, furthermore, carried out independent opinions for significant events which plays a necessary role in perfecting supervisory system and protecting legal interest of the Company and whole shareholders. VI. Responsibility performance of subordinate special committee of the Board in report period
(I) Auditing Committee:
1. Conduct a regular meeting
In reporting period, totally four meetings are held by audit committee of the Board, and discuss “Annual Report 2015”, “1Q Report of 2016”, “Semi-Annual Report of 2016”, “3Q Report of 2016”and relevant events respectively.
2. Final report of the auditing works for year of 2016 from PKF Daxin Certified Public Accountants
Auditing committee took an all-around review on auditing works for year of 2016 and after standard unqualified auditors report and relevant documents issued by Daxin CPA while all auditing procedures completed, auditing committee held the first meeting of 2017 and they believes that the Daxin is able to exercise relevant auditing procedures and quality controlling system of the CPA in line with new auditing rules, the CPA owns good business qualities and fulfill their duties to complete vary auditing works. Therefore, auditing committee submit to the Board for Daxin CPA re-engagement as the auditing body for year of 2017 and auditing organization for internal control as well.
(II) Nomination Committee
During the reporting period, the nominations committee of the board of directors has convened a meeting which seriously reviewed the aspiring candidates of the independent directors in accordance with the requirements of "Nomination Committee Implementing Rules"
(III) Strategy Committee
During the reporting period, the strategy committee of the Board has convened a meeting which seriously
reviewed the proposal of purchasing tuna purse seiner in accordance with requirement of “Strategy Committee Implementing Rules”
VII. Works from Supervisory Committee
Whether the Company has risks or not in reporting period that found in supervisory activity from supervisory committee
□ Yes√ No
Supervisory committee has no objection about supervision events in reporting period
VIII. Appraisal and incentive mechanism for senior executives
Check on senior employees by the Board based on the Measure of Operation Evaluation that approved inShareholders’ General Meeting.
IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes√ No
2. Appraisal Report of Internal Control
||||
|-|-|-|
|Disclosure date of full internal control|||
||2017-03-04||
|evaluation report|||
|Disclosure index of full internal control|||
||www.cninfo.com.cn||
|evaluation report|||
|The ratio of the total assets of units|||
|included in the scope of evaluation|||
|accounting for the total assets on the|98.85%||
|company's consolidated financial|||
|statements|||
|The ratio of the operating income of units|||
|included in the scope of evaluation|||
|accounting for the operating income on the|98.78%||
|company's consolidated financial|||
|statements|||
|Defects Evaluation Standards|||
|Category|Financial Reports|Non-financial Reports|
||Major deficiencies: a. fraud of directors,|Major deficiencies: a) violation of state|
||supervisors and senior management; b.|laws and regulations, such as|
||Material misstatements found in current|environmental pollution; b) project|
||financial statements by the external audit|decision-making process is not scientific,|
|Qualitative criteria|||
||which are not found in the process of|wrong decision-making caused by lack|
||internal control; c. the supervision of audit|of democratic decision-making process;|
||committee and internal audit service to|c) brain drain of managers or|
||internal control is invalid. Significant|technicians; d) frequent negative news on|

||||
|-|-|-|
||deficiencies: The misstatements caused by|media; e ) the results of internal control|
||single deficiency or together with other|evaluation especially major deficiencies|
||deficiencies that cannot be timely prevented|and significant deficiencies have not|
||or found and corrected in the financial report|been rectified and reformed; f)|
||and has not reached or has exceed the major|significant business is lack of system|
||deficiencies but still should be taken into|control or systematicness is invalid.|
||account by the management; other|Significant deficiencies: The deficiencies|
||circumstances determined by the degree of|caused by single deficiency or together|
||influence. Common deficiencies: other|with other deficiencies of which the|
||internal control deficiencies do not constitute|severity, direct or potential negative|
||major or significant deficiencies.|impact have not reached or has exceed|
|||the major deficiencies but still should be|
|||taken into account by the management;|
|||other circumstances determined by the|
|||degree of influence. Common|
|||deficiencies: other internal control|
|||deficiencies do not constitute major or|
|||significant deficiencies.|
||Compare the misstatements and missing||
||reports (i.e. amount affected by internal||
||control deficiencies) of some subjects in the|Compare the amount of direct property|
||financial reports that may cause or have|loss with certain ratio of total profits in|
||caused by internal control deficiencies with|the company’s current consolidated|
||certain ratio of total profits in the company’s|financial statements, and determine the|
||current consolidated financial statements,|type of deficiencies in internal control as|
||and determine the type of deficiencies in|follows: it should be judged to be major|
||internal control as follows: it should be|deficiency if the amount of direct|
||judged to be major deficiency if the amount|property loss is more than 5% of total|
|Quantitative criteria|affected by internal control deficiencies is|profits; it should be judged to be|
||more than 5% of total profits; it should be|significant deficiency if the amount of|
||judged to be significant deficiency if the|direct property loss is more than 3% but|
||amount affected by internal control|less than 5% (including 5%) of total|
||deficiencies is more than 3% but less than|profits; it should be judged to be|
||5% (including 5%) of total profits; it should|common deficiency if the amount of|
||be judged to be common deficiency if the|direct property loss is less than 3%|
||amount affected by internal control|(including 3%) of total profits;|
||deficiencies is less than 3% (including 3%)||
||of total profits;||
|Amount of significant defects in financial|||
||0||
|reports|||
|Amount of significant defects in|||
||0||
|non-financial reports|||

|||
|-|-|
|Amount of important defects in financial||
||0|
|reports||
|Amount of important defects in||
||0|
|non-financial reports||

X. Auditing report of internal control
√Applicable□Not applicable
|||
|-|-|
|Deliberation section of auditing report of IC||
|In our opinion, the Company, in line with Basic Norms of Enterprises Internal Control and relevant regulations, shows an||
|effectiveness internal control of financial report in all major aspects.||
|Disclosure details of audit report of||
||Disclosed|
|internal control||
|Disclosure date of audit report of||
||2017-03-04|
|internal control (full-text)||
|Index of audit report of internal||
||www.cninfo.com.cn|
|control (full-text)||
|Opinion type of auditing report of||
||Standard unqualified|
|IC||
|whether the non-financial report||
||No|
|had major defects||

Issued a modified audit opinions for internal control
□Yes√ No
Auditing report of internal control issued by CPA shows the same opinion as self-evaluation report issued by the Board
√ Yes□ No
Section X. Corporation bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at maturity on the approval date for annual report disclosed
No
Section XI. Financial Report
DAXIN SHEN ZI[2017] No.3-00032 To the Shareholders of Shandong Zhonglu Oceanic Fisheries Co., Ltd.:
We have audited the accompanying financial statements of Shandong Zhonglu Oceanic Fisheries Co., Ltd. (hereafter referred to as “the Company”), which comprise the consolidated and the Company's balance sheets as at December 31, 2016, the consolidated and the Company's statements of income, the consolidated and the Company's statements of cash flows and the consolidated and the Company's statements of changes in equity for the year then ended, and notes to the financial statements.
I.Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with Accounting Standards for Business Enterprises, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
II.Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Chinese Certified Public Accountants Auditing Standards. Those standards require that we comply with the Code of Ethics for Chinese Certified Public Accountants and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to theCompany’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company and its subsidiariies as at December 31, 2016, and their financial performance and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.
WUYIGE CERTIFIED PUBLIC ACCOUNTANTS LLP.
Certified Public Accountant of China Wu Zhixing
Certified Public Accountant of China Zhang Lifa
Beijing . China
Date: March 2, 2017
Consolidated Balance Sheet
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31, 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2016|As at 1/1/2016|
|Current assets:||||
|Cash at bank and on hand|5.1|129,521,203.29|72,428,421.94|
|Financial assets measured at fair value through profit or lossfor the current period||||
|Derivative financial assets||||
|Notes receivable||||
|Accounts receivable|5.2|42,679,066.65|26,746,955.58|
|Prepayments|5.3|7,787,603.40|6,195,816.18|
|Interest receivable||||
|Dividends receivable||||
|Other receivables|5.4|9,384,672.16|4,567,617.49|
|Inventories|5.5|154,636,414.05|189,084,316.91|
|Held-for-sale assets||||
|Non-current assets due within one year||||
|Other current assets|5.6|23,748,949.31|14,405,410.05|
|Total current assets||367,757,908.86|313,428,538.15|
|Non-current assets:||||
|Available-for-sale financial assets|5.7|||
|Held-to-maturity investments||||
|Long-term receivables||||
|Long-term equity investments||||
|Investment property|5.8|32,338,392.18|33,557,057.70|
|Property, plant and equipment|5.9|415,683,489.86|429,846,758.41|
|Construction in process|5.1|4,066,989.68|5,901,575.16|
|Construction materials||||
|Disposal of property, plant and equipment||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets|5.11|13,107,393.57|13,498,863.69|
|Development expenditures||||
|Goodwill||||

|||||
|-|-|-|-|
|Deferred tax assets|5.12|||
|Other non-current assets|5.13|2,285,524.92|2,000,000.00|
|Total of non-current assets||467,481,790.21|484,804,254.96|
|Total of assets||835,239,699.07|798,232,793.11|

 LegalrepresentativeLegal： Person in charge of accounting function: Person in charge of accounting department: Consolidated BalanceSheet（Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31, 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2016|As at 1/1/2016|
|Current liabilities:||||
|Short-term loans|5.14|54,961,454.59|46,321,773.62|
|Financial liabilities measured at fair value through profit orloss for the current period||||
|Derivative financial liabilities||||
|Notes payable||||
|Accounts payable|5.15|59,173,732.88|81,770,298.61|
|Advances from customers|5.16|19,940,900.11|18,691,305.28|
|Employee benefits payable|5.17|30,612,403.76|17,624,638.23|
|Taxes and surcharges payable|5.18|1,344,879.85|3,044,646.00|
|Interest payable|5.19|86,747.10|655,581.11|
|Dividends payable||||
|Other payables|5.20|5,221,040.82|5,630,290.48|
|Held-for-sale liabilities||||
|Non-current liabilities due within one year|5.21|866,585.48|17,396,585.48|
|Other current liabilities||||
|Total of current liabilities||172,207,744.59|191,135,118.81|
|Non-current liabilities:||||
|Long-term loans||||
|Bonds payable||||
|Including: Preference shares||||
|Perpetual loans||||
|Other long-term payables||||
|Long-term employee benefits payable|5.22|1,699,751.84|1,908,126.22|
|Specific payables||||

|||||
|-|-|-|-|
|Deferred income|5.23|10,572,454.62|11,439,040.10|
|Deferred tax liabilities||||
|Other non-current liabilities||||
|Total of non-current liabilities||12,272,206.46|13,347,166.32|
|Total of liabilities||184,479,951.05|204,482,285.13|
|Equity:||||
|Paid-in capital（or Share capital)|5.24|266,071,320.00|266,071,320.00|
|Other equity instruments||||
|Including: Preference shares||||
|Perpetual loans||||
|Capital reserve|5.25|279,998,206.82|279,998,206.82|
|Less:treasury shares||||
|Other comprehensive income|5.26|-665,059.07|-34,029.26|
|Special reserve||||
|Surplus reserve|5.27|21,908,064.19|21,908,064.19|
|Retained earnings|5.28|50,349,731.78|-2,235,338.96|
|Equity attributable to parent company||617,662,263.72|565,708,222.79|
|Minority interests||33,097,484.30|28,042,285.19|
|Total equity||650,759,748.02|593,750,507.98|
|Total liabilities and equity||835,239,699.07|798,232,793.11|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Balance Sheet
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31, 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2016|As at 1/1/2016|
|Current assets：||||
|Cash at bank and on hand||43,007,956.89|40,612,855.17|
|Financial assets measured at fair value through profit or lossfor the current period||||
|Derivative financial assets||||
|Notes receivable||||
|Accounts receivable|13.1|13,062,916.00|748,287.00|
|Prepayments||734,980.49|2,205,564.37|

|||||
|-|-|-|-|
|Dividends receivable||||
|Other receivables|13.2|39,910,882.35|36,250,522.61|
|Inventories||35,431,052.28|34,878,804.73|
|Held-for-sale assets||||
|Non-current assets due within one year||||
|Other current assets||848,434.74|128,193.05|
|Total current assets||132,996,222.75|114,824,226.93|
|Non-current assets:||||
|Available-for-sale financial assets||||
|Held-to-maturity investments||||
|Long-term receivables||6,078,056.38|5,831,546.05|
|Long-term equity investments|13.3|204,189,455.23|204,189,455.23|
|Investment property||32,338,392.18|33,557,057.70|
|Property, plant and equipment||89,752,865.40|87,079,353.98|
|Construction in process|||1,452,019.07|
|Construction materials||||
|Disposal of property, plant and equipment||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets||22,566.74|30,166.70|
|Development expenditures||||
|Goodwill||||
|Long-term deferred expenses||||
|Deferred tax assets||||
|Other non-current assets||285,524.92||
|Total of non-current assets||332,666,860.85|332,139,598.73|
|Total of assets||465,663,083.60|446,963,825.66|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Balance Sheet (Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31, 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2016|As at 1/1/2016|

||||
|-|-|-|
|Short-term loans|||
|Financial liabilities measured at fair value through profit or lossfor the current period|||
|Derivative financial liabilities|||
|Notes payable|||
|Accounts payable|10,161,960.89|15,700,096.10|
|Advances from customers|2,530,163.00|5,858,514.14|
|Employee benefits payable|15,154,703.75|7,031,556.30|
|Taxes and surcharges payable|242,626.86|2,131,532.55|
|Interest payable||2,757.64|
|Dividends payable|||
|Other payables|81,881,163.31|48,122,404.66|
|Held-for-sale liabilities|||
|Non-current liabilities due within one year||1,900,000.00|
|Other current liabilities|||
|Total of current liabilities|109,970,617.81|80,746,861.39|
|Non-current liabilities:|||
|Long-term loans|||
|Bonds payable|||
|Including: Preference shares|||
|Perpetual loans|||
|Other long-term payables|||
|Long-term employee benefits payable|1,188,790.98|1,333,709.44|
|Specific payables|||
|Provisions|||
|Deferred income|||
|Deferred tax liabilities|||
|Other non-current liabilities|||
|Total of non-current liabilities|1,188,790.98|1,333,709.44|
|Total of liabilities|111,159,408.79|82,080,570.83|
|Equity:|||
|Paid-in capital（or Share capital)|266,071,320.00|266,071,320.00|
|Other equity instruments|||
|Including: Preference shares|||

||||
|-|-|-|
|Capital reserve|279,115,900.17|279,115,900.17|
|Less:treasury shares|||
|Other comprehensive income|||
|Special reserve|||
|Surplus reserve|19,184,672.34|19,184,672.34|
|Retained earnings|-209,868,217.70|-199,488,637.68|
|Total equity|354,503,674.81|364,883,254.83|
|Total liabilities and equity|465,663,083.60|446,963,825.66|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Consolidated Statement of Income
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended31/12/2016|Year ended31/12/2015|
|1.Operating income|5.29|845,877,519.52|723,723,003.05|
|Less: Operating cost|5.29|769,925,445.84|685,083,527.36|
|Taxes and surcharges|5.30|2,525,544.74|1,231,694.81|
|Selling and distribution expenses|5.31|6,016,283.26|6,056,111.86|
|General and administrative expenses|5.32|57,369,652.49|51,671,846.22|
|Finance expenses|5.33|-6,330,453.36|433,236.30|
|Impairment on assets|5.34|3,236,092.07|2,428,525.98|
|Add: Gain from fair value changes||||
|Investment income||||
|Including: Investment income fromassociates and joint ventures||||
|2.Operating profits("-" for loss)||13,134,954.48|-23,181,939.48|
|Add: Non-operating income|5.35|46,495,585.42|43,531,014.39|
|Including: Gain from disposal ofnon-current assets||2,657,141.63|12,530.62|
|Less: Non-operating expenses|5.36|782,369.92|4,830,708.60|
|Including: Loss on disposal of non-currentassets||104,754.61|4,170,048.32|
|3.Profit before tax("-" for loss)||58,848,169.98|15,518,366.31|

|||||
|-|-|-|-|
||5.37|1,207,900.13||
|4.Net profit("-" for net loss)||57,640,269.85|14,381,438.40|
|Including: Net profit attributable to parentcompany||52,585,070.74|12,141,360.21|
|Profit/loss attributable to minorityshare-holders||5,055,199.11|2,240,078.19|
|5.Other comprehensive income, net of tax||-631,029.81|-86,910.45|
|Total other comprehensive income attributable to parentcompany||-631,029.81|-86,910.45|
|(1) Comprehensive income not to be reclassified as profitor loss||||
|1) Changes in remeasured defined benefit obligations ornet assets||||
|2) Portion of comprehensive income not to be reclassifiedas profit or loss under equity method||||
|(2) Comprehensive income to be reclassified as profit orloss||-631,029.81|-86,910.45|
|1) Portion of comprehensive income to be reclassified asprofit or loss under equity method||||
|2) Gain or loss from fair value changes ofavailable-for-sale financial assets||||
|3) Gain or loss from reclassification of held-to-maturityinvestments as available-for-sale financial assets||||
|4) Gain or loss on effective cash flow hedging||||
|5) Currency translation difference||-631,029.81|-86,910.45|
|6) Others||||
|Other comprehensive income attributable to minorityshare-holders, net of tax||||
|6. Total comprehensive income||57,009,240.04|14,294,527.95|
|Total comprehensive income attributable to share-holdersof parent company||51,954,040.93|12,054,449.76|
|Total comprehensive income attributable to minorityshare-holders||5,055,199.11|2,240,078.19|
|7. Earnings per share||||
|(1) Basic earnings per share||0.20|0.05|
|(2) Diluted earnings per share||0.20|0.05|

Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department:
Statement of Income
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended31/12/2016|Year ended31/12/2015|
|1.Operating income|13.4|70,580,279.73|125,758,001.95|
|Less: Operating cost|13.4|64,033,624.56|162,311,720.67|
|Taxes and surcharges||576,726.24|894,410.32|
|Selling and distribution expenses||437,044.09|434,522.60|
|General and administrative expenses||39,535,683.20|35,318,160.44|
|Finance expenses||-953,222.95|213,736.41|
|Impairment on assets||899,373.68|1,066,571.17|
|Add: Gain from fair value changes||||
|Investment income||||
|Including: Investment income fromassociates and joint ventures||||
|2.Operating profits("-" for loss)||-33,948,949.09|-74,481,119.66|
|Add: Non-operating income||23,576,885.98|37,123,646.29|
|Including:gain from disposal of non-currentassets||||
|Less: Non-operating expenses||7,516.91|6,191,355.60|
|Including:Loss on disposal of non-currentassets|||5,876,267.32|
|3.Profit before tax("-" for loss)||-10,379,580.02|-43,548,828.97|
|Less: Income tax expenses||||
|4.Net profit("-" for net loss)||-10,379,580.02|-43,548,828.97|
|5.Other comprehensive income net of tax||||
|(1) Comprehensive income not to be reclassified as profitor loss||||
|1)Changes in remeasured defined benefit obligations ornet assets||||
|2)Portion of comprehensive income not to be reclassifiedas profit or loss under equity method||||
|(2) Comprehensive income to be reclassified as profit orloss||||
|1) Portion of comprehensive income to be reclassified asprofit or loss under equity method||||

||||
|-|-|-|
|3) Gain or loss from reclassification of held-to-maturityinvestments as available-for-sale financial assets|||
|4) Gain or loss on effective cash flow hedging|||
|5) Currency translation difference|||
|6) Others|||
|6. Total comprehensive income|-10,379,580.02|-43,548,828.97|
|7. Earnings per share|||
|(1) Basic earnings per share|||
|(2) Diluted earnings per share|||

Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Consolidated Statement of Cash Flows
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended31/12/2016|Year ended31/12/2015|
|1.Cash flows from operating activities||||
|Cash received from sales and services||849,958,354.36|737,100,850.94|
|Taxes and surcharges refunds||48,100,549.00|52,461,561.62|
|Cash received related to other operating activities|5.38|47,554,484.08|66,496,722.67|
|Total cash inflows from operating activities||945,613,387.44|856,059,135.23|
|Cash paid for goods and services||710,308,874.30|632,345,401.27|
|Cash paid to and for employees||110,895,303.01|111,285,426.90|
|Taxes and surcharges cash payments||8,766,120.05|5,229,994.94|
|Cash paid related to other operating activities|5.38|28,207,366.89|51,754,921.90|
|Total cash outflows from operating activities||858,177,664.25|800,615,745.01|
|Net cash flows from operating activities||87,435,723.19|55,443,390.22|
|2.Cash flows from investing activities：||||
|Cash received from withdraw of investments||||
|Cash received from investment income||||
|Net cash received from disposal of \property, plant||5,282,538.12|58,431.91|

|||||
|-|-|-|-|
|Net cash received from disposal of subsidiaries andother business units||||
|Cash received related to other investing activities|5.38|648,268.69|386,334.96|
|Total cash inflows from investing activities||5,930,806.81|444,766.87|
|Cash paid for property, plant andequipement,intangible assets and other long-term assets||32,045,019.74|18,051,688.49|
|Cash payments for investments||||
|Net cash paid for acquiring subsidiaries and otherbusiness units||||
|Cash paid related to other investing activities||||
|Total cash outflows from investing activities||32,045,019.74|18,051,688.49|
|Net cash flows from investing activities||-26,114,212.93|-17,606,921.62|
|3.Cash flows from financing activities:||||
|Cash received from investments by others||||
|Including: Cash received by subsidiaries fromminority shareholders' investments||||
|Cash received from borrowings||69,109,844.43|101,754,637.69|
|Cash received related to other financing activities||||
|Total cash inflows from financing activities||69,109,844.43|101,754,637.69|
|Cash repayments for debts||62,359,333.28|113,933,828.76|
|Cash payments for distribution of dividends, profitand interest expenses||3,883,910.98|4,864,771.14|
|Including: Dividends or profit paid bysubsidiaries to minority shareholders||||
|Cash paid related to other financing activities|5.38|14,630,000.00||
|Total cash outflows from financing activities||80,873,244.26|118,798,599.90|
|Net cash flows from financing activities||-11,763,399.83|-17,043,962.21|
|4.Effect of foreign exchange rate changes on cash andcash equivalents||7,715,181.35|6,480,406.59|
|5.Net increase in cash and cash equivalents||57,273,291.78|27,272,912.98|
|Add:beginning balance of cash and cash equivalents||71,464,370.00|44,191,457.02|
|6.Ending balance of cash and cash equivalents||128,737,661.78|71,464,370.00|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department:
Statement of Cash Flows
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2016 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended31/12/2016|Year ended31/12/2015|
|1.Cash flows from operating activities||||
|Cash received from sales and services||55,717,739.89|138,448,990.90|
|Taxes and surcharges refunds||||
|Cash received related to other operating activities||39,215,516.79|56,459,132.46|
|Total cash inflows from operating activities||94,933,256.68|194,908,123.36|
|Cash paid for goods and services||46,522,451.03|101,067,184.59|
|Cash paid to and for employees||25,152,151.66|35,697,054.84|
|Taxes and surcharges cash payments||3,323,847.61|1,464,312.30|
|Cash paid related to other operating activities||14,803,988.31|17,618,547.86|
|Total cash outflows from operating activities||89,802,438.61|155,847,099.59|
|Net cash flows from operating activities||5,130,818.07|39,061,023.77|
|2.Cash flows from investing activities：||||
|Cash received from withdraw of investments||||
|Cash received from investment income||||
|Net cash received from disposal of property, plant andequipement,intangible assets and other long-term assets||||
|Net cash received from disposal of subsidiaries and otherbusiness units||||
|Cash received related to other investing activities||648,268.69|386,334.96|
|Total cash inflows from investing activities||648,268.69|386,334.96|
|Cash paid for property, plant and equipement,intangibleassets and other long-term assets||16,105,162.79|1,829,544.07|
|Cash payments for investments||||
|Net cash paid for acquiring subsidiaries and other businessunits||||
|Cash paid related to other investing activities||||
|Total cash outflows from investing activities||16,105,162.79|1,829,544.07|
|Net cash flows from investing activities||-15,456,894.10|-1,443,209.11|
|3.Cash flows from financing activities:||||
|Cash received from investments by others||||
|Cash received from borrowings||||
|Cash received related to other financing activities||14,000,000.00||

||||
|-|-|-|
||14,000,000.00||
|Cash repayments for debts|1,900,000.00|25,346,666.66|
|Cash payments for distribution of dividends, profit andinterest expenses|250,237.72|932,894.07|
|Cash paid related to other financing activities||1,028,388.09|
|Total cash outflows from financing activities|2,150,237.72|27,307,948.82|
|Net cash flows from financing activities|11,849,762.28|-27,307,948.82|
|4. Effect of foreign exchange rate changes on cash and cashequivalents|871,415.47|87,504.70|
|5. Net increase in cash and cash equivalents|2,395,101.72|10,397,370.54|
|Add:beginning balance of cash and cash equivalents|40,612,855.17|30,215,484.63|
|6. Ending balance of cash and cash equivalents|43,007,956.89|40,612,855.17|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department:
Consolidated Statement of Changes in Equity
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2016 Unit:RMB Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2016|||||||||||||
||Equity attributable to shareholders of parent company|||||||||||Minorityinterests|Total equity|
||Share capital|Other equity instruments|||Capitalreserve|Less:treasury shares|Othercomprehensive income|Specialreserve|Surplusreserve|Retainedearnings|Sub-total|||
|||Preference shares|Perpetual loans|Others||||||||||
|1.Ending balance of last year|266,071,320.00||||279,998,206.82||-34,029.26||21,908,064.19|-2,235,338.96|565,708,222.79|28,042,285.19|593,750,507.98|
|Add: Impact from changes inaccounting policies||||||||||||||
|Impact fromcorrections of errors in priorperiod||||||||||||||
|Businesscombination under commoncontrol||||||||||||||
|Others||||||||||||||
|2.Beginning balance ofcurrent year|266,071,320.00||||279,998,206.82||-34,029.26||21,908,064.19|-2,235,338.96|565,708,222.79|28,042,285.19|593,750,507.98|
|3.Movement for currentyear("-" for decrease）|||||||-631,029.81|||52,585,070.74|51,954,040.93|5,055,199.11|57,009,240.04|
|(1) Total comprehensiveincome|||||||-631,029.81|||52,585,070.74|51,954,040.93|5,055,199.11|57,009,240.04|

||
|-|
|1) Common stock contributedby shareholders|
|2) Capital contributed byother equity instrumentsholders|
|3) Share-based paymentrecorded in shareholder'sequity|
|4) Others|
|(3) Profits distribution|
|1) Appropriation of surplusreserve|
|2) Distribution toshareholders|
|3) Others|
|(4) Internal transfer withinshareholder's equity|
|1) Conversion of capitalreserve into share capital|
|2) Conversion of surplusreserve into share capital|
|3) Recover of loss by surplusreserve|

||||||||||
|-|-|-|-|-|-|-|-|-|
|(5) Special reserve|||||||||
|1) Accrual of special reserve|||||||||
|2) Utilization of specialreserve|||||||||
|(6) Others|||||||||
|4. Ending balance of currentyear|266,071,320.00|279,998,206.82|-665,059.07|21,908,064.19|50,349,731.78|617,662,263.72|33,097,484.30|650,759,748.02|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accountingdepartment： Consolidated Statement of Changes in Equity (Continued)
For the year ended 31 December
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. Unit:RMB Yuan 2016
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2015|||||||||||||
||Equity attributable to shareholders of parent company|||||||||||Minorityinterests|Total equity|
||Sharecapital|Other equity instruments|||Capital reserve|Less:treasury shares|Othercomprehensive income|Specialreserve|Surplusreserve|Retainedearnings|Sub-total|||
|||Preference shares|Perpetual loans|Others||||||||||
|1.Ending balance of last year|266,071,320.00||||281,245,215.96||52,881.19||21,908,064.19|-14,376,699.17|554,900,782.17|24,555,197.86|579,455,980.03|
|Add: Impact from changesin accounting policies||||||||||||||
|Impact fromcorrections of errors in prior||||||||||||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|Businesscombination under commoncontrol|||||||||
|Others|||||||||
|2.Beginning balance ofcurrent year|266,071,320.00|281,245,215.96|52,881.19|21,908,064.19|-14,376,699.17|554,900,782.17|24,555,197.86|579,455,980.03|
|3.Movement for currentyear("-" for decrease）||-1,247,009.14|-86,910.45||12,141,360.21|10,807,440.62|3,487,087.33|14,294,527.95|
|(1) Total comprehensiveincome|||-86,910.45||12,141,360.21|12,054,449.76|2,240,078.19|14,294,527.95|
|(2) Shareholder'scontributions andwithdrawals of captial|||||||||
|1) Common stockcontributed by shareholders|||||||||
|2) Capital contributed byother equity instrumentsholders|||||||||
|3) Share-based paymentrecorded in shareholder'sequity|||||||||
|4) Others|||||||||
|(3) Profits distribution|||||||||
|1) Appropriation of surplusreserve|||||||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|3) Others|||||||||
|(4) Internal transfer withinshareholder's equity||-1,247,009.14||||-1,247,009.14|1,247,009.14||
|1) Conversion of capitalreserve into share capital|||||||||
|2) Conversion of surplusreserve into share capital|||||||||
|3) Recover of loss bysurplus reserve|||||||||
|4) Others||-1,247,009.14||||-1,247,009.14|1,247,009.14||
|(5) Special reserve|||||||||
|1) Accrual of special reserve|||||||||
|2) Utilization of specialreserve|||||||||
|(6) Others|||||||||
|4. Ending balance of currentyear|266,071,320.00|279,998,206.82|-34,029.26|21,908,064.19|-2,235,338.96|565,708,222.79|28,042,285.19|593,750,507.98|

 Person in charge of accounting
Legalrepresentative： Person in charge of accounting function:
department：
Statement of Changes in Equity
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2016 Unit: RMB
Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2016|||||||||||
||Share capital|Other equity instruments|||Capitalreserve|Less:treasury shares|Othercomprehensive income|Specialreserve|Surplusreserve|Retainedearnings|Total equity|
|||Preference shares|Perpetualloans|Others||||||||
|1. Ending balance of last year|266,071,320.00||||279,115,900.17||||19,184,672.34|-199,488,637.68|364,883,254.83|
|Add: Impact from changes in accountingpolicies||||||||||||
|Impact from corrections oferrors in prior period||||||||||||
|Others||||||||||||
|2. Beginning balance of current year|266,071,320.00||||279,115,900.17||||19,184,672.34|-199,488,637.68|364,883,254.83|
|3. Movement for current year("-" fordecrease）||||||||||-10,379,580.02|-10,379,580.02|
|(1) Total comprehensive income||||||||||-10,379,580.02|-10,379,580.02|
|(2) Shareholder's contributions andwithdrawals of captial||||||||||||
|1) Common stock contributed byshareholders||||||||||||
|2) Capital contributed by other equityinstruments holders||||||||||||
|3) Share-based payment recorded inshareholder's equity||||||||||||
|4) Others||||||||||||

|||||||
|-|-|-|-|-|-|
|1) Appropriation of surplus reserve||||||
|2) Distribution to shareholders||||||
|3) Others||||||
|(4) Internal transfer within shareholder'sequity||||||
|1) Conversion of capital reserve into sharecapital||||||
|2) Conversion of surplus reserve into sharecapital||||||
|3) Recover of loss by surplus reserve||||||
|4) Others||||||
|(5) Special reserve||||||
|1) Accrual of special reserve||||||
|2) Utilization of special reserve||||||
|(6) Others||||||
|4. Ending balance of current year|266,071,320.00|279,115,900.17|19,184,672.34|-209,868,217.70|354,503,674.81|

Person in charge of accounting Person in charge of accounting
Legalrepresentative：
function: department：
Statement of Changes in Equity (Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries
For the year ended 31 December 2016 Unit: RMB Yuan Co., Ltd.
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2015|||||||||||
||Sharecapital|Other equity instruments|||Capitalreserve|Less:treasury shares|Othercomprehensive income|Specialreserve|Surplusreserve|Retainedearnings|Total equity|
|||Preference shares|Perpetualloans|Others||||||||
|1. Ending balance of last year|266,071,320.00||||279,115,900.17||||19,184,672.34|-155,939,808.71|408,432,083.80|
|Add: Impact from changes in accounting policies||||||||||||
|Impact from corrections of errors in priorperiod||||||||||||
|Others||||||||||||
|2. Beginning balance of current year|266,071,320.00||||279,115,900.17||||19,184,672.34|-155,939,808.71|408,432,083.80|
|3. Movement for current year("-" for decrease）||||||||||-43,548,828.97|-43,548,828.97|
|(1) Total comprehensive income||||||||||-43,548,828.97|-43,548,828.97|
|(2) Shareholder's contributions and withdrawals ofcaptial||||||||||||
|1) Common stock contributed by shareholders||||||||||||
|2) Capital contributed by other equity instrumentsholders||||||||||||
|3) Share-based payment recorded in shareholder'sequity||||||||||||
|4) Others||||||||||||
|(3) Profits distribution||||||||||||

|||||||
|-|-|-|-|-|-|
|2) Distribution to shareholders||||||
|3) Others||||||
|(4) Internal transfer within shareholder's equity||||||
|1) Conversion of capital reserve into share capital||||||
|2) Conversion of surplus reserve into share capital||||||
|3) Recover of loss by surplus reserve||||||
|4) Others||||||
|(5) Special reserve||||||
|1) Accrual of special reserve||||||
|2) Utilization of special reserve||||||
|(6) Others||||||
|4. Ending balance of current year|266,071,320.00|279,115,900.17|19,184,672.34|-199,488,637.68|364,883,254.83|

 Person in charge of accounting Person in charge of accounting
Legalrepresentative：
function: department：
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
1. Company profile
1.1 The Company's registered place, organization structure and the address of head quarter.
Shandong Zhonglu Oceanic Fisheries Co., Ltd. (the “Company”), whose registered address is No.29, Miaoling Road, Qingdao, Shandong. The headquarters address is No.43, Heping Road, Jinan, Shandong,, was incorporated as a liability limited company in thePeople’s Republic of China on July 30, 1999 according to the document of Lu Ti Gai Zi[1999] No.85 issued by Shandong Development and Reform Commission, and the holding company of the Company is Shandong Fisheries Enterprise Group General Corporation.
On June 26, 2000, the Company issued 120 million domestic listed foreign shares (B shares) to foreign investors with face value of 1 Yuan per share according to the document of Zheng Jian Fa Xing Zi[2000] No.82 issued by the China Securities Regulatory Commission. The B shares, Zhonglu B with stock code of 200992, have been listed on the Shenzhen Stock Exchange since July 24, 2000. On August 22, 2000.
The basic structure of the company: shareholders committee, board of directors, board of supervisors, the board of directors office, human resources, finance department, administration department, audit department, general department.
1.2 The Company's business nature and main operation activities
Operating activity: ocean fisheries
Main product: tuna and its products.
Operating scope: aquatic products breeding, processing and sale; goods import and export business within approved scope; ice machine manufacture and sale; refrigeration equipment manufacture, installation, maintenance; refrigeration; load and unload services; housing lease.
Advance licensed operating scope: marine and oceanic fishing;
1.3 The approver and approval date of the financial reporting.
The financial statement is predetermined and authorized by the board of company on 2th March, 2017.
1.4 The consolidation scope of financial year 2016 consolidated financial statements includes the Company and its subsidiaries (hereafter referred to as "the Company").
Consolidation scope of financial statement includes: 4 wholly-owned subsidiaries: Shandong Zhonglu Oceanic Fisheries
Transportation Co., Ltd.; Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd.; HABITAT INTERNATIONAL CORP; Shandong
zhonglu Haiyan Oceanic Fisheries Co., Ltd. ; 2 sub-subsidiaries: LAIF FISHERIES COMPANY LIMITED, Shandong Zhonglu Oceanic Fisheries Refrigeraton Co., Ltd; 1 operational entity through control over operating leases: YAW ADDO FISHERIES COMPANY LIMITED. More information is disclosed in Note.6 “ Equity disclosure in other entities”.
2. Basis of preparation of financial statements
2.1 Basis of preparation
On the basis of going concern and transactions and events actually occurred, the Company prepares its financial statements with the following accounting policies and accounting estimates in accordance with the Accounting Standards for Business Enterprises– basic Standards, specific accounting standards and other relevant provisions (hereinafter collectively known as "Accounting Standards for Business Enterprises" or "CAS")
2.2 Going concern
Within at least 12 months of this report, the company should maintain its operational capacity without matters that have potential impact on ability of the continuing operations.
3. Significant accounting policies and accounting estimates
The Company has made specific accounting policies of recognition of income and other items based on its own operating characteristic under relevant regulations in Accounting Standard for Business Enterprise:
3.1 Declaration on compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared in compliance with the Accounting Standards for Business Enterprises to truly and completely reflect theCompany’s financial position as of 31 December 2016 and its operating results, cash flows and other relevant information for the year ended 31 December 2016.
3.2 Accounting period
The financial year of the Company is from January 1 to December 31 of each calendar year.
3.3 Operating cycle
TheCompany’s operating cycle is 12 months in each calendar year and it classifies the assets and liabilities' liquidity by operating cycle.
3.4 Functional currency
The Company's functional currency is Chinese Renminbi (hereafter referred to as "RMB").
3.5 Business combination
3.5.1 Business combinations involving enterprises under common control
In a business combination involving enterprises under common control, if the acquirer pays for the business combination in cash, by
transferring of non-cash assets or assuming liabilities, net assets in the ultimate controlling party's consolidated financial statements are measured at their carrying amounts of the acquiree at the acquisition date. If the acquirer issues equity instruments for the business combination, the acquirer measures the share capital by the par value of the shares issued. The difference between the original investment costs and the carrying amounts (or the total par value of shares issued) will be adjusted to the capital reserves. If the capital reserves is insufficient to absorb the difference, the remaining amount shall be deducted from retained earnings.
3.5.2 Business combinations involving enterprises not under uncommon control
In a business combination involving enterprises not under common control, the combination costs are the aggregate of the fair values of the assets paid, the liabilities incurred or assumed and the equity instruments issued by the acquirer in exchange for control over the acquiree at the acquisition date. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree that meet the recognition criteria are measured at their fair value. The Company shall recognize the difference of the combination costs in excess of its interest portion in the fair value of the net identifiable assets acquired from the acquiree as goodwill. The Company shall recognize the difference of the combination costs less than its interest portion in the fair value of the net identifiable assets acquired from the acquiree in the non-operating income for current period after reassessment.
3.6 Preparation of consolidated financial statements
3.6.1 The scope of consolidated financial statements
The Company incorporates all its subsidiaries (including individual entities under its control) into the scope of the consolidated financial statements, including the enterprises controlled by the Company, divisible part in the investees and structured entities.
3.6.2 Uniform accounting policies, balance sheet date and accounting period
If the subsidiaries adopt different accounting policies or accounting period compared with the Company, the Company shall make necessary adjustments on the subsidiaries' financial statements according to its accounting policies or accounting period.
3.6.3 The elimination in the preparation of consolidated financial statements
The consolidated financial statements are prepared based on the individual financial statements of the Company and its subsidiaries, after elimination of the transactions incurred among the Company and the subsidiaries. The portion of asubsidiary’s equity that is not attributable to the Company is treated as minority interests and presented in the consolidated balance sheet within equity. The equity investment of the Company held by one subsidiary shall be treated as the Company's treasury shares and a deduction of the shareholders' equity which is presented as "less: treasury shares" in the consolidated balance sheet within equity.
3.6.4 The accounting treatment for obtaining subsidiaries through a business combination
Where a subsidiary or business has been acquired through a business combination involving enterprises under common control in the reporting period, the obtained subsidiary or business is deemed to be included in the consolidated financial statements from the date they are controlled by the ultimate controlling party. Their assets, liabilities, operating results and cash flows are included in the consolidated financial statements from the beginning of the accounting period in which the acquisition occurred. Where a subsidiary or business has been acquired through a business combination not involving enterprises under common control, their individual financial statements are adjusted based on the fair value of identifiable net assets at the acquisition date when preparing the consolidated financial statements.
3.7 Joint arrangement classification and accounting treatments
3.7.1 The classification of joint arrangement
Joint arrangements are classified as joint operations or joint ventures. A joint arrangement will be classified as joint operation when the joint arrangement achieves not through an individual entity. Individual entity is an entity with individual identifiable finance structure, including single legal entity and entity unqualified as legal entity but qualified as lawful entity. A joint arrangement is usually be classified as joint venture when the joint arrangement achieves through incorporating an individual entity. When changes arising from relevant events or environment cause changes of the cooperative parties' rights and obligations in the joint arrangements, the cooperative parties shall reassess the classification of the joint arrangements.
3.7.2 The accounting treatment of joint operations
The party participating in joint operations shall recognize the following items relating to its interests in the joint operations and account for them in accordance with related requirements of Accounting Standards for Business Enterprises: a) Its solely-held assets and solely-assumed liabilities, and b) Its share of any assets and liabilities
held jointly; c) Its revenue from the sale of its share of the output arising from the joint operation; d) Its share of the revenue from the sale of the output by the joint operation; e) Its own expenses; and f) Its share of any expenses incurred jointly.
The other parties involving in joint operations without common control power shall account for their investments referring to the treatment method of joint operation participants if they are entitled to relevant assets and undertake relevant liabilities of the joint operations, otherwise, they shall account for their investments according to related requirements of Accounting Standards for Business Enterprises.
3.7.3 The accounting treatment of joint ventures
The parties participating in a joint venture account for its investment in accordance with Accounting Standards for Business Enterprises No.2 - Long-term Equity Investment. And the other parties involving in joint ventures without common control power shall account for their investments according to their influence extent on the joint ventures.
3.8 Cash and cash equivalents
The cash in the Company's statement of cash flows is cash on hand and deposits that can be readily drawn on demand. Cash equivalents in the statement of cash flows are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
3.9 Foreign currency transactions and translation of financial statements denominated in foreign currency
3.9.1 Translation of foreign currency transactions
The Company recordconverts foreign currency into RMB for accounting purpose using the approximate rate of the spot exchange rate prevailing on the date when the transactions occurs. At the balance sheet date, monetary items denominated in foreign currency are converted translated to RMB by adopting the prevailing exchange rate on that date. Foreign exchange difference between the prevailing exchange rate on that date and the prevailing exchange rate on initial recognition or on the previous balance sheet date are recognized in profit or loss for the current period, except the foreign exchange arising from specific loan denominated in foreign currency qualified as capital expenditure and included in the cost of related assets. Non-monetary items denominated in foreign currency that are measured at historical cost are still measured at amount denominated in reporting currency exchanged at the prevailing exchange rate at the transaction date. Non-monetary items denominated in foreign
currency that are measured at fair value are converted translated using the exchange rate at the date when fair value was determined and the difference between the converted translated functional currency amount and the prior converted translated amount on initial recognition or on the previous balance sheet date are recorded in profit or loss for the current period or other comprehensive income.
3.9.2 The translation of financial statements denominated in foreign currency
If the Company's controlled subsidiaries, joint ventures and associates etc. adopt different reporting currency, their financial statements denominated in foreign currency shall be translated to financial statements in RMB when preparing consolidated financial statements. The assets and liabilities are translated to RMB amounts using the spot exchange rate at the balance sheet date. Items of the equity, except for "retained earnings ", are translated at the approximate rate of the spot exchange rate at the dates on which such items occured. The revenue and expenditures in the statement of income are translated using the spot exchange rate at the transaction date. The difference arising from foreign currency financial statements translation is presented in other comprehensive income at the consolidated balance sheet within equity. Items of the statement of cash flows are determined by systemic method and translated using the approximate rate of the spot exchange rate when they incurred. Effect arising from changes of exchange rates on cash and cash equivalents is presented separately in the statement of cash flows. When disposing of foreign operations, exchange differences of foreign currency financial statements attributable to the foreign operations are transferred to profit or loss for the current period entirely or in proportion with the disposal portion of the foreign operations.
3.10 Financial instruments
3.10.1 Recognition and classification of financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments. A financial asset, financial liability or equity instrument is recognized when the Company becomes one party of financial instrument contracts.
The financial assets are classified into the following four categories upon initial recognition: financial assets at fair value through profit or loss (“FVTPL” financial assets), held-to-maturity investments, receivables, and available-for-sale financial assets (“AFS” financial assets). The classification of financial assets depends on the holding intention and capability of the Company except for receivables. The financial liabilities are classified into financial liabilities at fair value through profit or loss (“FVTPL” financial liabilities) and other financial
liabilities upon initial recognition.
Financial assets at fair value through profit or loss include financial assets held for trading in the short term and those upon initial recognition designated as at fair value through profit or loss. Receivables are non-derivative financial assets with fixed or determinable amounts that are not quoted in an active market. AFS financial assets are those non-derivative financial assets that are designated as available for sale and financial assets other than those above mentioned. Held-to-maturity investments are non-derivative financial assets with fixed or determinable amounts and fixed maturity dates that the Company has the positive intention and capability to hold to maturity.
3.10.2 Measurement of financial instruments
The Company measures the financial instruments at fair value upon initial recognition. The subsequent measurement includes: a) FVTPL financial assets, AFS financial assets and FVTPL financial liabilities are measured at fair value; b) Held-to-maturity investments, receivables, and other financial liabilities are subsequently measured at amortized cost; c) Equity instruments that are not quoted in an active market and whose fair value cannot be reliably measured, and derivative financial assets or derivative financial liabilities linked to the equity instruments that will be settled by delivering the equity instruments are subsequently measured at cost. The gains or losses of fair value changes arising from subsequent measurement of financial assets and liabilities shall be accounted for according to the following methods except hedging instrument involving in: a) The gains or losses arising from fair value changes of FVTPL financial assets and FVTPL financial liabilities are recognized in the profit or loss for current period; b) The gains or losses arising from fair value changes of AFS financial assets are recognized in other comprehensive income.
3.10.3 Recognition method of financial instruments' fair value
For financial assets or financial liabilities in active markets, the Company uses the quoted prices in active markets to determine their fair value. If there is no active market, the Company uses valuation techniques to determine their fair value. The valuation techniques mainly include market approach, income approach and cost approach.
3.10.4 Recognition and measurement of transfer of financial assets
The Company derecognizes a financial asset if it transfers substantially all the risks and rewards of the financial
asset or it does not transfer or maitain substantially all the risks and rewards of ownership of the financial asset, but surrender control on the financial asset. If a financial asset meets the derecognition criteria, the difference between the transfer consideration received and the sum of transferred financial asset's carrying amount and the accumulated change amount on fair value which has been recognized in other comprehensive income shall be charged to profit or loss for current period. If the partial transfer of financial asset meets the derecognition criteria, the entire carrying amount of the transferred financial asset shall be split into the derecognized portion and retained portion according to their respective fair value.
A financial liability shall be entirely or partially derecognized if its present obligations are wholly or partly dissolved.
3.10.5 Impairment of financial assets
If the financial assets measured at amortized costs are impaired, the impairment provision shall be recognized at the difference of the carrying amount of financial assets and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence of a recovery in value of the financial asset which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss for current period.
If the financial assets measured at cost are impaired, the impairment provision shall be recognized by the difference between the equity instrument investments and the present value of book value of similar derivative financial assets that are determined by market discount rate. And the impairment loss shall not be reversed after recognition.
If there is objective evidence that AFS financial assets are impaired, accumulated losses due to decreases in fair value previously recognized directly in the shareholders' equity are transferred to profit or loss for the current period. In the subsequent periods, if the fair value of AFS debt instruments increases and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment losses are reversed and charged to profit or loss for the current period. For AFS equity instruments, the increase of fair value in the subsequent periods shall be accounted for in the shareholders' equity. For investments of equity instruments, the Company determines the following specific criteria for their fair value decline "seriously" or "non-temporarily", calculation of cost, fair value determination at period end and continuous decline periods: Specific quantitative criteria for fair value decline " Decrease in closing fair value relative to the cost has reached
seriously" or exceeded50%
Specific quantitative criteria for fair value decline
Fall for 12 consecutive months
"non-temporarily"
Consideration of payment at acquisition (net of cash
dividends declared but not yet paid or due but unpaid
Calculation of cost interest on bonds) and the relevant transaction cost are
recognized as the investment cost.
As for a financial instrument for which there is an active
market, the quoted prices in the active market shall be used
to recognize the fair values thereof. Where there is no active
Fair value determination at period end
market for a financial instrument, the enterprise concerned
shall adopt value appraisal techniques to determine its fair
value.
The rebound in the continuous fall or the period with the
tread of fall is less than20% margin. Rebound duration not
Definition of continuous decline periods
more than six months is treated as continuous decrease
period.
3.11 Receivables
Receivables include accounts receivable, long-term receivables and other receivables. If there are objective evidence that the receivables are impaired, the Company recognizes the doubtful debts allowance on the shortfall between the present value of future cash flows and the carrying amount of the receivables.
3.11.1 Provision of doubtful debts allowance for individually significant receivables
Amount above 1 million Yuan (including 1 million) of
Criteria of individually significant receivables
the accounts receivable
Method of provision for doubtful debts allowance of Recognized according to the difference of book value
individually significant receivables and present value of estimated future cash flows
3.11.2 Receivables that are provided for doubtful debts allowance on portfolio basis
Basis for determining portfolios Payment properties and risk characteristics
Single significant amount without provision for bad debt, single Aging combination less-significant ,less-risky amount
Accounts receivable within consolidation scope and amounts Riskless combination without default risk within the next 12 months
Calculation method of doubtful debts allowance on portfolio
basis
Aging combination Aging accounting method
Riskless combination No provision for bad debts
Portfolios that aging analysis is used for calculation of the doubtful debts allowance:
||
|-|
|Allowance percentage for accountsreceivable (%)|
|5|
|10|
|30|
|50|
|100|

3.11.3 Provision of doubtful debts allowance for individually insignificant receivables
Accounts receivable with Aging more than 3 years of
Criteria of individually insignificant receivables
and objective evidence that the impairment has occurred
Method of provision for doubtful debts allowance of According to the difference of book value and present
individually insignificant receivables value of estimated future cash flows to recognize
3.12 Inventories
3.12.1 Categories of inventories
Inventories are the finished goods or commodities that the Company holds to sell, the work in progress in production process, and the material and goods consumed during the production process or service rendering process in daily operation. Inventories include raw materials, revolving materials, consigned processing materials, packaging materials, low-value consumables, work in progress, self-manufactured semifinished product and finished goods (commodities) etc.
3.12.2 Measurement of inventories upon delivery
Weighted average method is used to measure the actual costs of inventories upon delivery.
3.12.3 Provision for diminution in value of inventories
At each balance sheet date, inventories are measured at the lower of cost and net realisable value. When the cost of inventory exceeds its net realizable value, provision for diminution in value of inventories is recognized. The Company usually recognizes provision for diminution in value of inventories by a single inventory item. For the inventory items of large quantity and low price, the Company recognizes provision for diminution in value of inventories based on inventory categories.
The basis of determining inventory net realizable value:
(1) Finishedgoods’net realizable value is the amount of an estimated price minus the estimated cost of sales and relevant taxes,company’s finished goods is mainly long-line tuna which price is determined by the price Japan Qingshui fishery market that is most close to the balance sheet date less related expense.
(2) Materials held for production are based on cost measurement when the finishedproducts’ net realizable value is higher than cost; the material price decline shows that the finishedproducts’ net realizable value is lower than cost, net realizable value is calculated as an estimated sales price minus the estimated cost, the cost of
sales and the relevant taxes amount.
(3) the materials held for sale may use the market price as net realizable value.
3.12.4 Inventory count system
The Company adopts the perpetual inventory system.
3.12.5 Amortization methods of low-value consumables and packaging materials
Equal-split amortization method.
3.13 Long-term equity investment
3.13.1 Determination of initial investment cost
Long-term equity investment acquired through a business combination: For a business combination involving enterprises under common control, the initial investment cost of a long-term equity investment is the acquirer's share of the carrying amount of the owners' equity in the acquiree at the acquisition date. For a business combination not involving enterprises under common control, the initial investment cost of a long-term equity investment is the cost of acquisition determined at the date of acquisition. For a long-term equity investment acquired in cash, the initial investment cost is the amount of cash paid. For a long-term equity investment acquired by issuing equity securities, the initial investment cost is the fair value of the equity securities issued. For a long-term equity investment acquired by debt restructuring, the initial investment cost is determined according to related requirements of Accounting Standards for Business Enterprises No. 12- Debt Restructuring. For a long-term equity investment acquired by exchange of non-cash assets, the initial investment cost shall be determined according to related accounting standards.
3.13.2 Subsequent measurement and recognition of profit or loss
Where the Company is able to exercise control over an investee, the long-term equity investment is accounted for using the cost method. Where the Company has investment in associates and joint ventures, the long-term equity investment is accounted for using the equity method. Where portion of the long-term equity investment in an associate is indirectly held through venture capital organizations, mutual funds, trust companies or similar entities including investment-linked insurance funds, regardless whether these entities can exercise significant influence on the investments, the Company shall measure the indirectly held portion at fair value through profit
or loss and accounted for the remaining portion using the equity method according to Accounting Standards for Business Enterprises No. 22- Financial Instrument Recognition and Measurement.
3.13.3 Basis for recognition of joint control or significant influence over an investee
Joint control of an investee is that the decision of activities that can significantly affect the arrangement's return must require the unanimous consent of the parties sharing control, including sale and purchase of goods or services, financial assets management, purchase and disposal of assets, research and development activity and financing activities etc. The Company holding of20%-50% voting capital of the investee presents it can exercise significant influence over the investee. The Company usually can exercise significant influence over the investee even its voting capital less than20% if it can meet one of the following situations: a) Appointing representatives in the board of directors or similar governing body of the investee; b) Participating in the strategy and policy decision process; c) Delegating management personnel; d) The investee relying on the Company's technique or technical material; e) Significant transactions occur between the Company and the investee.
3.14 Investment property
Investment property of the Company includes land use rights and buildings leased to other party, and land use rights held for resale after appreciation. Investment property is initially measured at acquisition cost, and is subsequently measured using the cost method.
The buildings leased to third party are depreciated using the straight line method according to the same depreciation policy for fixed assets. The land use rights leased to third party and land use rights held for resale after appreciation are amortized using the straight line method according to the same amortization policy for intangible assets.
3.15 Fixed assets
3.15.1 Recognition criteria for fixed assets
Fixed assets refers to tangible assets held for the purpose of producing commodities, services rendering, renting or business administration with useful lives exceeding one accounting year. Fixed assets can be recognized when the following criteria are met: a) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and b) The costs of the fixed assets can be measured reliably.
3.15.2 Classification and depreciation method of fixed assets
The categories of fixed assets mainly include: buildings, boats& nets, machinery& equipment, transportation equipment, furniture and office equipment. The Company adopts the straight line method for depreciation. The useful life and residual value of an asset is assessed based on its nature and the manner of use. At the end of each financial year, the useful lives, residual values and the depreciation method are reviewed, and adjusted if there are variances with the original estimates. Other than fully depreciated assets which are still in use and land individually measured and recorded, depreciation is provided for all fixed assets.
|||
|-|-|
|Depreciation period (years)|Residual rate (%)|
|20—40|3—5|
|5—30|3—5|
|8—20|3—5|
|5|3—5|
|5|3—5|

 3.15.3 Recognition and measurement of fixed assets leased in under finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. At the commencement of the lease term, the Company, as the lessees, shall recognize finance leases as assets at amounts equal to the lower of the fair value of the leased property or the present value of the minimum lease payments, each determined at the inception of the lease. Subsequent measurement of fixed assets under finance lease should be in accordance with the accounting policies adopted for self-owned fixed assets in respect of provision of depreciation and impairment.
3.16 Construction in progress
The construction in progress of the Company includes self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when it has reached the working condition for its intended use. The recognition criteria of intended use include any of the followings: a) The tangible work of fixed assets (including installation) have been entirely or substantively completed; b) Trial production or trial operation has occurred whose outcome indicates the asset can be operated properly or manufacture quality product steadily; c) No expenditure or insignificant expenditure occur subsequently for the constructed asset; d) The constructed asset has achieved or substantively achieved the requirement of design or contract.
The majority of the projects of construction in progress of the Company are ships. When the ships are tested
qualified and accepted and meet the criteria of sea sailing, the company determines that project of construction in
progress has reached the expectations for use.
3.17 Borrowing costs
3.17.1 Recognition criteria for capitalization of borrowing costs
Borrowing costs are capitalized when they are directly attributable to the acquisition, construction or production of a qualifying asset and included in the cost of related assets. Other borrowing costs are recognized as expenses and recorded in profit or loss for the current period when incurred. Qualifying assets that meet conditions for capitalization are fixed assets, investment property, inventory or other assets that take a substantial period of time for construction or production in order to get ready for their intended use or sale.
3.17.2 Calculation of capitalization cost
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its termination. The period during which capitalization is suspended is excluded. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months.
For designated borrowings, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing less any bank interest earned from unused funds of the designated borrowings or any investment income on the temporary investment of those funds. For funds borrowed for general purpose, the amount of interest to be capitalized on such borrowings is calculated 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 designated borrowings. Capitalization rate is determined by calculating weighted average interest rate of general borrowings. If there is any premium or discount of the borrowings, the interest cost shall be adjusted in every accounting period by the amortized amount of premium or discount calculating by effective interest method.
Effective interest method is the method to calculate the amortization amount of premium or discount or interest expenses by the effective interest rate of the borrowings. The effective interest rate is the interest rate to discount the future cash flow of the borrowing during its expected duration to the present carrying amount of the borrowing.
3.18 Intangible assets
3.18.1 The measurement of intangible assets
The intangible assets shall be initially measured according to its cost. Acquisition costs of intangible assets include purchase price and relevant expenditures. The invested cost of intangible assets contributed by investors shall be determined according to the conventional value in the investment contract or agreement, except for those of unfair value in the contract or agreement. If the conventional value in the investment contract or agreement is unfair, the costs of intangible assets shall be their fair value. The costs of internally generated intangible assets include the total development expenditures to bring the asset to its intended use.
The subsequent measurements for intangible assets are as follows: a) The intangible assets with definite useful life are amortized by straight line method and reviewed the useful life and amortization method at the end of each year. Any discrepancy between the review and initial estimates shall be adjusted accordingly. b) The intangible assets with indefinite useful life are not amortized, and reviewed for the useful life at the end of each year. If there are objective evidence indicating their useful life is definite, the Company shall estimate the useful life of the intangible assets and amortize them by straight line method.
3.18.2 The assessment basis for indefinite useful life
Intangible assets without foreseeable period to bring economic benefits to the Company or with uncertain useful life are classified as intangible assets of indefinite life. The judgment basis for indefinite life includes: a) The legal rights are derived from contractual rights or other legal rights, however there is no explicit useful life indicated in the contracts or regulations; b) Although considering the industry practice or demonstration from related professionals comprehensively, the benefit period of the intangible assets still can't be decided.
At the end of each year, the Company reviews the intangible assets with indefinite useful life mainly using bottom-to-top approach. The related departments who use the intangible assets will perform a basic review and evaluate whether there are changes on the basis to determine indefinite useful life.
3.19 Impairment of long-term assets
At each balance sheet date, if there are impairment indications for the long-term assets including long-term equity investments, investment property subsequently measured at cost model, fixed assets, construction in progress, productive biological assets measured at cost, oil and gas assets, intangible assets, goodwill, etc., the Company shall perform impairment test. If the outcome of impairment test indicates the recoverable amount of the asset is lower than its carrying amount, the Company shall recognize the provision for impairment based on the amount of the shortfall.
The recoverable amount of an asset is determined by the higher of the net amount after deducting the disposal costs from the asset's fair value and the present value of the asset's estimated future cash flow. The provision for impairment of asset is estimated and recognized on individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the minimum portfolio of assets that could generate cash inflow independently.
Impairment tests are conducted for goodwill presented in the financial statements separately at least at the end of every accounting year regardless whether there are impairment indications or not. The carrying amount of goodwill arising from business combinations is allocated to relevant asset groups or asset group portfolio. The related impairment loss shall be recognized if the impairment test indicates the recoverable amount of the asset groups or asset group portfolio embodied the goodwill is lower than their carrying amounts. The amount of impairment loss shall firstly be deducted from the carrying amount of goodwill embodied in the asset groups or asset group portfolio, then be deducted from the carrying amounts of other assets' based on the proportions of their carrying amounts in the asset group or asset groups portfolio.
The impairment losses of assets will not be reversed in subsequent periods once they are recognized.
3.20 Long-term deferred expenses
Long-term deferred expenses refer to expenses that have been paid but their benefit period is more than one year (excluding one year). Long-term deferred expenses will be amortized in the benefit periods. If one long-term deferred expense can't benefit the Company in the subsequent periods, the remaining balance of the long-term deferred expense shall be recognized as expense in profit or loss for the current period.
3.21 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits.
3.21.1 Short-time employee benefits
In the accounting period in which employees have rendered services, the Company recognizes the employee
benefits as liability, and charges to profit or loss for the current period, or includes in the cost of relevant assets in accordance with other accounting standards. Welfare benefit are charged to profit or loss for the current period or included in the cost of relevant assets when incurred. Welfare benefit in non-monetary forms is measured at fair value. In the accounting period in which employees have rendered services, the Company recognizes the social security contributions as liability according to regulations such as medical insurance, work injury insurance and maternity insurance as well as housing funds, and charges to profit or loss for the current period or includes in the cost of relevant assets.
3.21.2 Post-employment benefits
During the accounting period in which employees provide the service, the Company calculates the defined contribution plans payable according to the basis and percentage required by local government, recognized as the liability and charges to profit and loss for current period or includes in the cost of related assets. The Company attributes the obligation incurred by defined benefits plans using the projected accumulated benefit unit credit method to periods in which the employees rendered services and charges the obligation to profit and loss for the current period or includes in the cost of related assets.
3.21.3 Termination benefits
Termination benefits provided by the Company to employees are recognized as an employee benefit liability and charged to profit or loss for the current period at the earlier of the following dates: a) The Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; and B) When the Company recognizes costs or expenses related to the restructuring that involves the payment of termination benefits.
3.21.4 Other long-term employee benefits
If other long-term employee benefits provided by the Company to the employees meet the conditions for classifying as a defined contributions plan, those benefits are accounted for in accordance with the above requirements relating to defined contribution plan. Besides, net obligations or net assets of other long-term employee benefits are recognized and measured in accordance with the above requirements relating to defined benefits plan.
3.22 Revenues
3.22.1 Revenue from sales goods
Revenue from sales goods is recognized according to the price stipulated in the contract or agreement, only when all of the following conditions are satisfied:(1) The group has transferred to the buyer the significant risks and rewards of ownership of the goods; (2) The group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (3) The amount of revenue can be measured reliably; (4) It is probable that the associated economic benefits will flow in the group; (5) The associated costs incurred or to be incurred can be measured reliably.
TheCompany’s seine fishery sales occurs mainly at sea. When the ship is fully loaded, the captain will contact with our sales department, sales department contacting transporting ship, cargo transferred to transporting ship (mate receipt signed by both parties). Then sales department will sign sales agreement according to the tonnage showed on the mate receipt. Finally, financial department confirm the revenue on the basis of mate receipt, sales agreement, and sales invoice.
The Company long-line fishery is transported back and sold domestically. Sales department make sales price referring to Japan's Shimizu transaction prices, and both sides confirm the change of thefreight’s ownership according to sales contract and decision tables based on values. Financial department confirm the revenue on the basis of sales contract, decision tables, and sales invoices .
The process of thecompany’s aquatic products domestic sales: Domestic Sales Department (tuna sales center) ,according to domesticcustomers’ fax or mail orders, issue delivery confirmation and sales department staff will arrange warehouse to stock and to ship by air, bus transportation, etc. According to the dispatch list, with warehouse department signature and issued by sales department, the finance department will issue sales invoice and confirm revenue.
The oversea sales of theCompany’s aquatic products processing: After obtaining purchase orders from foreign customers, the International Trade Sector will issue export shipment orders and arrange Transportation Department to prepare stocking. After the export goods be packed and transported out, Warehousing Sector will sign on the dispatch list issued by International Trade Department. After the cargo exported, export documents issued by transport department will be delivered, such as packing lists, bills of lading, etc. and Warehousing Sector will get the export declaration issued by Customs Department. Finance Department issue sales invoice and confirm sales revenue under the dispatch list, packing slips documents, declarations, etc.
Deferred method should be employed in the charge of the price of contract or agreement. The sales of goods should be determined according to fair value in receivable contract or agreement that in financing nature.
3.22.2 Revenue from providing sevices
If the outcome of a transaction involving the rendering of services can be estimated reliably, at the balance sheet date, revenue associated with the transaction is recognized using the percentage of completion method. When the outcome of a transaction involving the rendering of services cannot be estimated reliably on balance sheet date, different accounting treatments shall be adopted depending on the circumstances:
a. when the costs incurred are expected to be recoverable, revenue shall be recognized to the extent of costs incurred that are expected to be recoverable and an equivalent amount shall be charged to profit or loss as service costs.
b. when the costs incurred are not expected to be recoverable, the costs incurred shall be recognized in profit or loss for the current period and no service revenue shall be recognized.
3.22.3 Revenue from abalienating of right to use assets
Revenue arising from the use by others of enterprise assets shall be recognized only when both of the following conditions are satisfied:
(1) It is probable that the associated economic benefits will flow to the enterprise; and
(2) The amount of the revenue can be measured reliably.
3.23 Government grants
3.23.1 Accounting treatment for government grants related to assets
Government grants obtained by the Company for purchase, construction or formation of long-term assets are recognized as the government grants related to assets. The government grants related to assets are recognized as deferred income which are evenly amortized in profit and loss for each period over the asset's estimated useful period from the assets are available for use.
3.23.2 Accounting treatment of government grants related to income
The government grants other than the government grants related to assets are classified as government grants
related to income. Government grant related to income is treated as follows: a) If the grant is a compensation for related expenses or losses to be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized.; b) if the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the current period.
The detailed criteria to distinguish government grants related to assets and government grants related to income: If the subsidy object does no specify in the government documents, the criteria of distinguish the assets-related or income-related are as follow: a) It is recognized as asset-related government grants if the government document has indicated the specific project in subsidy object. The amount that formed from the budget of this specific project and the amount that counted into expenses shall be divided proportionally. The division proportion is to be revised at each balance-sheet date and corrected when necessary. b) It is recognized as income-related government grants if there is only generally described function and no indication of specific project in subsidy object in the government document.
3.24 Deferred tax asset and deferred tax liability
3.24.1 Temporary differences arising from the difference between the carrying amount of an asset or liability (asset or liability not recognized in balance sheet but the tax base is ascertained by the current tax laws and regulation, the tax base is the temporary difference) and its tax base are recognized as deferred tax calculating by the effective tax rate in the expected period to receive the asset or discharge the liability.
3.24.2 Deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized and should be recognized for deductible loss or tax reduction that could be carried forward in subsequent periods to the extent that it is probable that taxable income will be available against which deductible loss or tax reduction can be utilized. If it is probable that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be utilized, the carrying amount of the deferred tax asset is reduced.
3.24.3 The taxable temporary differences associated with investments in subsidiaries and associates shall be recognized deferred tax liability; except the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The deductible temporary differences associated with investments in subsidiaries, associates, the corresponding
deferred tax asset is recognized when it is probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable profits will be available in the future against which the temporary difference can be utilized.
3.25 Leases
3.25.1 The accounting treatment for operating lease: rental payment for operating leases is recognized in profit or loss for current period or the cost of related assets on a straight-line basis over the lease term.
3.25.2 The accounting treatment for financing lease: the Company will recognize the lower of the fair value of leased asset or the present value of minimum lease payments as the initial book value of the leased asset. The difference between carrying amount of leased asset and the present value of minimum lease payments is recognized as future finance charge which is amortized over the lease period by effective interest method. Minimum lease payments deducted unrecognized finance charge is presented as long-term payables.
3.26 Main changes of accounting policies and accounting estimates
None
4. Taxes
4.1 Main taxes categories and tax rates
||
|-|
|Tax base|
|Output tax deducted input tax that can becredited against the output tax|
|Rent revenue|
|Turnover taxes already paid|
|Taxable income|

Name of tax enterprise Tax rate of income tax
Shandong zhonglu Haiyan Oceanic Fisheries Co., Ltd. Tax exemption
Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd. The fishery product processing part is tax exemption 4.2 Significant tax incentives and approval documents
4.2.1 Value added tax preferences
According to the government document Cai Shui Zi (1997) No.64<Notice of pelagic fishery enterprises taxation
about import fishing equipment and shipped back self trapping aquaticproducts>, self trapping aquatic products
shipped back for domestic sale are regarded as the domestic products that are free from tariff and import value added tax. Corresponding, the domestic sale business belongs to primary agricultural products sale business are free from value added tax accoriding to the rules of value added tax. So, thecompany’ revenue from the pelagic fishery is free value added tax.
4.2.2 Enterprise income tax preferences
On the basis of relevant policies in the following documents: Cai Shui Zi (1994) No. 001< Notice of income tax preferential policies of theCompany>, Cai Shui Zi (1997) No.114< Notice of income tax of domestic-funded fishery companies engaged in fishingbusiness>, finance and agriculture document of Ministry of Finance (2000) No.104< Document of suggestions on development acceleration of pelagic fishery industry in ourcountry>, Order of the Chairman of thePeople’s Republic of China (2007) No.63<People’s Republic of China Enterprise Income TaxLaw>, Decree of the State Council of thePeople’s Republic of China No.512< Enforcement regulations ofPeople’s Republic of China Enterprise Income TaxLaw>. Income from activities of pelagic fishery and preliminary production of agricultural products in which the Company is engaged is exempt from income tax. Income from activities other than pelagic fishery and preliminary production of agriculture products that the Company is engaged in is taxed25%.
5. Notes to the consolidated financial statements
5.1 Cash at bank and on hand
||
|-|
|Balance as at 31/12/2016|
|1,741,848.59|
|126,995,290.36|
|784,064.34|
|129,521,203.29|
|1,840,479.27|

 Note: Among other monetary funds, RMB783,541.51 is marginal deposit. The balance deposited overseas is the cash at bank of the foreign subsidiaries.
5.2 Accounts receivable
5.2.1 Accounts receivable by category
Item As at 31/12/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|50,739,789.74|100.00|8,060,723.09|
|50,739,789.74|100.00|8,060,723.09|

 As at 1/1/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|33,905,178.71|100.00|7,158,223.13|
|33,905,178.71|100.00|7,158,223.13|

 Allowance for doubtful debts on portfolio
Accounts receivable whose allowance for doubtful debts is using aging analysis method:
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowancerate (%)|Allowance fordoubtful debts|Balance|Allowancerate (%)|
|44,125,508.62|5.00|2,206,275.44|27,686,028.99|5.00|
|598,001.95|10.00|59,800.20|370,679.31|10.00|
|290,005.66|30.00|87,001.70|159,452.40|30.00|
|37,255.50|50.00|18,627.74|||
|5,689,018.01|100.00|5,689,018.01|5,689,018.01|100.00|
|50,739,789.74||8,060,723.09|33,905,178.71||

 5.2.2 Provision, recovery or reversal of allowance for doubtful debts during the year
Provision of allowance for doubtful debts within this year is RMB 902,499.96 and no recovery or reversal of provision during the year.
5.5.3 Accounts receivable due from the top five debtors of the Company are as follows:
|||
|-|-|
|Balance as at31/12/2016|Percentage in total accountsreceivable (%)|
|15,664,832.13|30.87|

|||
|-|-|
|Balance as at31/12/2016|Percentage in total accountsreceivable (%)|
|6,786,398.81|13.37|
|3,600,962.12|7.10|
|2,365,075.00|4.66|
|1,828,915.70|3.60|
|30,246,183.76|59.60|

 5.3 Prepayments
5.3.1 Aging analysis of prepayments
||||
|-|-|-|
|As at 31/12/2016|||
|Balance|PCT (%)|Balance|
|7,773,914.94|99.82|6,195,816.18|
|13,688.46|0.18||
|7,787,603.40|100.00|6,195,816.18|

 5.3.2 The top five prepayments are as follows:
||
|-|
|Balance as at 31/12/2016|
|2,551,678.54|
|1,938,875.54|
|532,761.60|
|491,000.00|
|333,851.18|
|5,848,166.86|

 5.4 Other receivables
5.4.1 Other receivables
As at 31/12/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|13,943,479.12|100.00|4,558,806.96|
|7,350,421.70|52.72|4,558,806.96|
|6,593,057.42|47.28||
|13,943,479.12|100.00|4,558,806.96|

As at 1/1/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|9,297,125.77|100.00|4,729,508.28|
|8,297,125.77|89.24|4,729,508.28|
|1,000,000.00|10.76||
|9,297,125.77|100.00|4,729,508.28|

 Allowance for doubtful debts on portfolio
① Other receivables whose allowance for doubtful debts is using aging analysis method
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowance rate(%)|Allowance fordoubtful debts|Balance|Allowance rate(%)|
|2,355,970.40|5.00|117,798.52|2,511,310.09|5.00|
|359,240.66|10.00|35,924.07|794,951.66|10.00|
|264,584.44|30.00|79,375.34|651,340.48|30.00|
|89,834.35|50.00|44,917.18|20,956.19|50.00|
|4,280,791.85|100.00|4,280,791.85|4,318,567.35|100.00|
|7,350,421.70||4,558,806.96|8,297,125.77||

② Other receivables whose doubtful debts is made by riskless method:
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowancerate (%)|Allowance fordoubtful debts|Balance|Allowancerate (%)|
|5,593,057.42|||||
|1,000,000.00|||1,000,000.00||
|6,593,057.42|||1,000,000.00||

 5.4.2 Provision, recovery or reversal of allowance for doubtful debts during the year
Provision of allowance for doubtful debts within this year is RMB -170,701.32 and there is no recovery or reversal of provision during the year.
5.4.3 Other receivables by nature
||
|-|
|Balance as at 31/12/2016|
|5,593,057.42|

||
|-|
|Balance as at 31/12/2016|
|1,021,836.03|
|220,450.00|
|7,108,135.67|
|13,943,479.12|

 5.4.4 Other receivables due from the top five debtors of the Company are as follows:
|||||
|-|-|-|-|
|Nature ofbalance|Balance as at31/12/2016|Aging|Percentage in totalother receivables(%)|
|Export taxrefund|5,593,057.42|Within 6months|40.11|
|Guaranteedeposit|1,000,000.00|More than 3years|7.17|
|Medicalexpenses ofstaff|312,200.00|Within 6months|2.24|
|Currentaccount|288,896.39|More than 3years|2.07|
|Currentaccount|220,450.00|Within 6months|1.58|
||7,414,603.81||53.17|

 5.5 Inventories
5.5.1 Inventories by categories
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Book balance|Provision fordiminution invalue|Carrying amount|Book balance|Provision fordiminution invalue|
|71,541,108.42|32,811.83|71,508,296.59|105,508,981.73|51,082.91|
|813,924.17||813,924.17|154,798.51||
|84,023,702.28|2,472,715.03|81,550,987.25|84,281,728.09|2,059,961.21|
|763,206.04||763,206.04|1,382,851.00|132,998.30|
|157,141,940.91|2,505,526.86|154,636,414.05|191,328,359.33|2,244,042.42|

 5.5.2 Provision for diminution in value of inventories
|||||
|-|-|-|-|
|As at1/1/2016|Provisionfor the year|Reductions during the year||
|||Reversal|Write-down|
|51,082.91|32,811.83||51,082.91|

|||||
|-|-|-|-|
|As at1/1/2016|Provisionfor the year|Reductions during the year||
|||Reversal|Write-down|
|2,059,961.21|2,472,715.03||2,059,961.21|
|132,998.30|||132,998.30|
|2,244,042.42|2,505,526.86||2,244,042.42|

 Note: The reversal of provision for diminution is induced by the raw materials, revolving materials and packaging materials which were used for production and finished goods which were sold.
5.6 Other current assets
||
|-|
|Balance as at 31/12/2016|
|23,616,544.28|
|88,480.55|
|43,924.48|
|23,748,949.31|

 5.7 Available-for-sale financial assets
5.7.1 Available-for-sale financial assets
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Book balance|Provision forimpairment|Carryingamount|Book balance|Provision forimpairment|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|

 5.7.2 Available-for-sale financial assets measured at cost
||||||||
|-|-|-|-|-|-|-|
|As at 31/12/2016|||As at 1/1/2016|||Shareholdingpercentage(%)|
|Book balance|Provision forimpairment|Bookvalue|Book balance|Provision forimpairment|Bookvalue||
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|-|0.87|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|-|0.87|

Note: On 29th April, 2005, China Southern Securities received its administrative penalty, and its security business license was cancelled by China Securities Regulatory Commission. On 16th August, 2006, Shenzhen IntermediatePeople’s court announced its bankruptcy. The Company has full provision of overall holding shares of China Southern Securities.
5.8 Investment property
Investment property measured by cost
||
|-|
|Buildings|
|47,120,794.80|
|47,120,794.80|
|12,677,225.04|
|1,218,665.52|
|1,218,665.52|
|13,895,890.56|
|886,512.06|
|886,512.06|
|32,338,392.18|
|33,557,057.70|

5.9 Fixed assets
Movement of fixed assets
||||||
|-|-|-|-|-|
|Buildings|Boats & nets|Machinery &equipment|Transportation equipment|Furniture andofficeequipment|
|117,186,308.68|455,454,212.38|38,320,612.10|6,895,361.96|10,187,382.78|
|651,287.66|16,990,833.73|2,256,630.03|453,253.55|1,452,442.04|
|651,287.66|8,911,625.36|2,256,630.03|453,253.55|1,452,442.04|
||8,079,208.37||||

||||||
|-|-|-|-|-|
|380,000.00|12,565,466.55||206,218.46|499,933.99|
|380,000.00|12,565,466.55||206,218.46|499,933.99|
|117,457,596.34|459,879,579.56|40,577,242.13|7,142,397.05|11,139,890.83|
|19,394,248.56|153,378,897.34|13,455,533.21|4,324,525.29|7,486,341.59|
|3,174,876.78|26,553,985.87|2,260,988.02|862,816.28|539,066.44|
|3,174,876.78|26,553,985.87|2,260,988.02|862,816.28|539,066.44|
||10,479,141.90||195,579.16|400,915.77|
||10,479,141.90||195,579.16|400,915.77|
|22,569,125.34|169,453,741.31|15,716,521.23|4,991,762.41|7,624,492.26|
||157,573.50||||
||157,573.50||||
|94,888,471.00|290,268,264.75|24,860,720.90|2,150,634.64|3,515,398.57|
|97,792,060.11|301,917,741.55|24,865,078.89|2,570,836.67|2,701,041.19|

Note1: The initial value of fixed asset in continuity of usage that has withdrawn depreciation is RMB 66,892,535.59.
Note2: HABITAT INTERNATIONAL CORPORATION disposed an oceanic transport ship.
Note3:According to the Debt Repayment Advice signed between the Company and Shandong Fishery Group Corporation in April 2006, and Civil Ruling Li Zhi Zi No.1299 published by Lixia District People's Court of Jinan in 2005, the building of Shandong Fishery Group Corporation located at Heping road No.43 Lixia District of Jinan with the value of 54,221,197.05 Yuan was used to repay debt. The transfer procedure of the property right certificate is not yet accomplished; The board of management coordinates actively relevant parties and the property right certificate is still in process.
5.10 Construction in process
5.10.1 Construction in process
||||||
|-|-|-|-|-|
|Balance as at 31/12/2016|||||
|Book balance|Provision forimpairment|Carrying amount|Book balance|Provision forimpairment|
|4,066,989.68||4,066,989.68|4,449,556.09||

||||||
|-|-|-|-|-|
|Balance as at 31/12/2016|||||
|Book balance|Provision forimpairment|Carrying amount|Book balance|Provision forimpairment|
||||1,452,019.07||
|4,066,989.68||4,066,989.68|5,901,575.16||

 5.10.2 Movement of significant construction in progress
||||||
|-|-|-|-|-|
|Budget|As at 1/1/2016|Additions|Transfer to fixedassets|Other reductions|
|8,079,208.37|1,452,019.07|3,279,084.00|4,731,103.07||
|3,348,105.30||3,348,105.30|3,348,105.30||
|43,840,000.00|4,449,556.09|||382,566.41|
|55,267,313.67|5,901,575.16|6,627,189.30|8,079,208.37|382,566.41|

 (Continued)
||||||
|-|-|-|-|-|
|Percentage ofcurrent inputover budget (%)|Constructionprogress|Accumulatedcapitalizedinterest|Including:currentcapitalizedinterest|Capitalizationrate(%)|
|100.00|100.00||||
|100.00|100.00||||
|9.28|9.28||||

5.11 Intangible assets
|||
|-|-|
|Land use rights|Computer software|
|17,154,729.00|197,000.00|
|17,154,729.00|197,000.00|
|3,686,032.01|166,833.30|
|383,870.16|7,599.96|
|383,870.16|7,599.96|
|4,069,902.17|174,433.26|

|||
|-|-|
|Land use rights|Computer software|
|13,084,826.83|22,566.74|
|13,468,696.99|30,166.70|

 5.12 Deferred tax assets and deferred tax liabilities
5.12.1 The items not recognized deferred tax assets
||||
|-|-|-|
|Balance as at 31/12/2016|||
|Deferred tax assetsor liabilities|Deductable ortaxable temporarydifferences|Deferred tax assetsor liabilities|
|12,619,530.05|11,887,731.41|12,619,530.05|
|2,505,526.86|2,244,042.42|2,505,526.86|
|78,385,077.11|76,122,159.09|78,385,077.11|
|93,510,134.02|90,253,932.92|93,510,134.02|

 5.12.2 Expiry years of deductible losses not yet recognized deferred tax assets are as follows:
|||
|-|-|
|Balance as at 31/12/2016|Balance as at 1/1/2016|
||16,843,152.08|
|11,888,745.27|11,888,745.27|
|4,490,106.62|4,490,106.62|
|356,646.41|356,646.41|
|42,543,508.71|42,543,508.71|
|19,106,070.10||
|78,385,077.11|76,122,159.09|

5.13 Other non-current assets
||
|-|
|Balance as at 31/12/2016|
|2,000,000.00|
|285,524.92|
|2,285,524.92|

 5.14 Short-term loans
Short-term loans by categories:
||
|-|
|Balance as at 31/12/2016|
|28,000,000.00|

||
|-|
|Balance as at 31/12/2016|
|26,961,454.59|
|54,961,454.59|

 5.15 Accounts payable
||
|-|
|Balance as at 31/12/2016|
|52,427,574.40|
|6,746,158.48|
|59,173,732.88|

 Significant accounts payable with aging over 1 year
||
|-|
|Balance as at 31/12/2016|
|2,223,158.97|
|2,223,158.97|

5.16 Advances from customers
||
|-|
|Balance as at 31/12/2016|
|19,591,036.39|
|349,863.72|
|19,940,900.11|

 5.17 Employee benefits payable
5.17.1 Movement of employee benefits payable
||||
|-|-|-|
|As at 1/1/2016|Increase|Decrease|
|17,445,184.30|116,438,377.96|103,562,634.62|
||6,258,780.41|6,258,780.41|
|140,081.62|1,249,720.58|1,136,111.22|
|39,372.31|39,099.81|40,686.98|
|17,624,638.23|123,985,978.76|110,998,213.23|

 5.17.2 Details of the short-term employee benefits
||||
|-|-|-|
|As at 1/1/2016|Accrued|Paid|
|15,856,088.12|105,773,442.77|92,725,773.31|
||4,200,221.29|4,200,221.29|
||3,304,337.93|3,304,337.93|
||2,694,967.28|2,694,967.28|

||||
|-|-|-|
||330,994.90|330,994.90|
||278,375.75|278,375.75|
|219,252.00|2,605,108.80|2,824,360.80|
|1,369,844.18|555,267.17|507,941.29|
|17,445,184.30|116,438,377.96|103,562,634.62|

5.17.3 Defined contribution plans
|||||||
|-|-|-|-|-|-|
|Item|As at 1/1/2016|Accrued||Paid|As at|
||||||31/12/2016|
|1. Primary endowment insurance|||5,751,588.55|5,751,588.55|-|
|2. Unemployment insurance|||313,800.54|313,800.54|-|
|3. Pension insurance|||193,391.32|193,391.32|-|
|Total|||6,258,780.41|6,258,780.41|-|

5.18 Taxes and surcharges payable
||
|-|
|Balance as at 31/12/2016|
|147,692.07|
|701,435.86|
|2,068.39|
|211,836.25|
|154,055.30|
|120,112.87|
|886.45|
|6,792.66|
|1,344,879.85|

 5.19 Interest payable
||
|-|
|Balance as at 31/12/2016|
|86,747.10|
|86,747.10|

 5.20 Other payables
||
|-|
|Balance as at 31/12/2016|
|13,573.83|
|150,000.00|

||
|-|
|Balance as at 31/12/2016|
|622,365.00|
|4,435,101.99|
|5,221,040.82|

 5.21 Non-current liabilities due within one year
||
|-|
|Balance as at 31/12/2016|
|866,585.48|
|866,585.48|

 5.22 Long-term employee benefits payable
Long-term employee benefits payable
||
|-|
|Balance as at 31/12/2016|
|648,548.88|
|1,051,202.96|
|1,699,751.84|

 5.23 Deferred income
5.23.1 Deferred income by category
|||||
|-|-|-|-|
|Balance as at1/1/2016|Increase|Decrease|Balance as at31/12/2016|
|11,439,040.10||866,585.48|10,572,454.62|
|11,439,040.10||866,585.48|10,572,454.62|

5.23.2 Deferred income– government grants
||||||
|-|-|-|-|-|
|Balance as at1/1/2016|Increase|Recorded incurrentnon-operatingincome|Other movement|Balance as at31/12/2016|
|10,705,991.46||838,209.48||9,867,781.98|
|733,048.64||28,376.00||704,672.64|
|11,439,040.10||866,585.48||10,572,454.62|

5.24 Share capital
|||
|-|-|
|Balance as at|Movement|

|||||||
|-|-|-|-|-|-|
|1/1/2016|Issuanceof newshare|Bonusshares|Capitalreservetransferin|Others|sub-total|
|266,071,320.00||||||

 5.25 Capital reserve
||||
|-|-|-|
|Balance as at1/1/2016|Increase|Decrease|
|185,036,701.86|||
|94,961,504.96|||
|279,998,206.82|||

 5.26 Other comprehensive income
|||||||
|-|-|-|-|-|-|
|As at1/1/2016|Movement in the year|||||
||Amountbefore tax|Less: othercomprehensiveincome in priorperiods transfer inprofit or loss for thecurrent period|Less:income tax|Amountafter taxattributableto theCompany|Amount aftertaxattributable tominorityinterests|
|-34,029.26|-631,029.81|||-631,029.81||
|-34,029.26|-631,029.81|||-631,029.81||
|-34,029.26|-631,029.81|||-631,029.81||

5.27 Surplus reserve
||||
|-|-|-|
|Balance as at 1/1/2016|Increase|Decrease|
|21,908,064.19|||
|21,908,064.19|||

 5.28 Retained earnings
As at 31/12/2016
Item
||
|-|
|Amount|
|-2,235,338.96|

||
|-|
|-2,235,338.96|
|52,585,070.74|
|50,349,731.78|

5.29 Operating income and operating cost
||||
|-|-|-|
|Year ended 31/12/2016|||
|Income|Cost|Income|
|836,980,106.66|768,125,495.47|714,592,804.58|
|5,180,247.30|4,613,098.49|16,648,918.64|
|68,475,554.71|54,618,967.57|34,820,140.60|
|91,513,054.10|69,062,513.50|92,625,139.80|
|10,304,142.94|9,376,427.33|15,188,831.26|
|661,507,107.61|630,454,488.58|555,309,774.28|
|8,897,412.86|1,799,950.37|9,130,198.47|
|4,691,924.05|1,799,950.37|5,070,648.88|
|4,205,488.81||4,059,549.59|
|845,877,519.52|769,925,445.84|723,723,003.05|

 5.30 Taxes and surcharges
||
|-|
|Year ended 31/12/2016|
|68,150.00|
|491,531.65|
|210,639.92|
|140,426.61|
|70,213.31|
|905,104.22|
|444,314.17|
|170,564.87|
|24,599.99|
|2,525,544.74|

 Note: According to the ministry of finance document caikuai 2016 No.22<Notice of printing and distributing the
accounting regulation of value added tax>, after May 1,2016, the property tax, land use tax, stamp duty and
other expense tax should be accounted in taxes and surcharges, which were accounted in administrative
expenses.
5.31 Selling and distribution expenses
||
|-|
|Year ended 31/12/2016|
|3,227,450.31|
|1,228,416.33|
|1,211,535.22|
|201,854.99|
|60,209.90|
|36,429.27|
|18,446.42|
|12,092.23|
|8,987.42|
|424.53|
|10,436.64|
|6,016,283.26|

 5.32 General and administrative expenses
||
|-|
|Year ended 31/12/2016|
|28,513,903.94|
|1,850,906.41|
|1,656,384.91|
|1,294,251.61|
|841,798.70|
|1,103,660.98|
|1,275,426.21|
|1,040,067.47|
|371,236.49|
|16,480,868.46|
|2,941,147.31|
|57,369,652.49|

 Note: For two fishing vessel of the company take a temporary fishing moratorium for several months in this year,
the relating costs during the outrage was listed in the administrative expenses. The cost of fishing moratorium is
mainlyinclude：fuel cost is RMB 1,506,803.04, employee compensation expenditure is RMB5,773,754.68,
depreciation charge is RMB 6,312,398.39, material and repair cost is RMB 1,948,255.23, fuel cost for shift the ocean is RMB 939,657.12.
5.33 Finance expenses
||
|-|
|Year ended 31/12/2016|
|3,348,913.42|
|703,520.24|
|779,863.88|
|10,275,724.43|
|401,709.10|
|118,304.91|
|-6,330,453.36|

 5.34 Impairment on assets
||
|-|
|Year ended 31/12/2016|
|730,565.21|
|2,505,526.86|
|3,236,092.07|

 5.35 Non-operating income
5.35.1 Non-operating income by category
|||
|-|-|
|Year ended 31/12/2016|Year ended 31/12/2015|
|2,657,141.63|12,530.62|
|2,657,141.63|12,530.62|
|43,165,181.73|42,878,271.48|
|673,262.06|640,212.29|
|46,495,585.42|43,531,014.39|

 5.35.2 Government grants included in profit and loss for the current period:
|||
|-|-|
|Year ended 31/12/2016|Year ended31/12/2015|
|39,041,300.00|40,856,800.00|
|3,197,500.00||

|||
|-|-|
|Year ended 31/12/2016|Year ended31/12/2015|
||1,100,000.00|
|838,209.48|838,209.48|
|28,376.00|28,376.00|
|59,796.25|54,886.00|
|43,165,181.73|42,878,271.48|

Note1: According to< Notice of subsidies distribution to pelagic enterprises for renovation and exploitation and utilization of international fishery resources in 2016> (Nong Ban Yu[2016] No.57), the Company has received RMB22,916,700.00 for fuel subsidy of pelagic fisheries this year. According to the Qingdao Municipal Ocean and Fisheries Administrationdocument-< Notice of subsidies distribution to pelagic enterprises for renovation and exploitation and utilization of international fishery resources in 2016> (Qing Ban Yu[2016] No.109), the Company has received RMB 16,124,600.00 for fuel subsidy of pelagic fisheries this year.
Note2: According to< Management mesures of special fund for Ocean and Fisheries development established by Finance Bureau of Qingdao>(Qing CaiNong[2013] No.17), the Company has received RMB 3,197,500.00 this year.
Note3: According toNo.464[2011] document of<Notice of distribution of second installment of special project fund of 8,000 million Yuan of construction of Shandong peninsula Blue Economy Zone and Yellow River Delta efficient ecologicalzone> issued by Yantai development and reform committee and Yantai Bureau of Finance, and the notice of 2011 unit budget index(Yan Kai CaiYu[2011] NO.514), issued by YanTai Economic and Technological Development of Finance Bureau, specific indicators of blue economic zone construction 13,600,000.00 Yuan was allocated. The company received RMB 6,800,000.00 in year 2012, and RMB 6,800,000.00 in year 2013. Related fund had be recognized as deferred income when received, and amortized equally over the expected average underlyingassets’ remaining useful life, the amount included in operating income in 2016 is RMB 838,209.48.
Note4: According to<Notice of budget of subsidy to provincial pelagic enterprises in2013> (Lu Cai Zhi[2013] No.32) issued by Shandong Bureau of Finance on 25th June, 2013, the Company has received ship construction subsidy of RMB 830,000.00 and counted under deferred income in current period and amortized equally over the expected average underlyingassets’ remaining useful life. The amount counted under non-operating income in
2016 is RMB 28,376.00.
5.36 Non-operating expenses
|||
|-|-|
|Year ended31/12/2016|Year ended31/12/2015|
|104,754.61|4,170,048.32|
|104,754.61|4,170,048.32|
||1,000.00|
|490,642.50||
|186,972.81|659,660.28|
|782,369.92|4,830,708.60|

 5.37 Income tax expenses
5.37.1 Details of income tax expenses
||
|-|
|Year ended 31/12/2016|
|1,207,900.13|
|1,207,900.13|

 5.37.2 Reconciliation between income tax expenses and accounting profit is as follows:
Item Amount Profit before tax 58,848,169.98 Income tax expenses calculated at statutory/applicable tax rates 14,712,042.50 Effect of different tax rate -11,181,000.44 Effect of income not subject to income tax -5,332,598.92 Effect of expenses undeductible for tax purposes 339,209.49 Effect of utilization of tax losses in prior years which haven't been recognized deferred tax assets -259,238.94 Effect of unrecognized deductible temporary differences and deductible losses in current period 2,929,486.44 Income tax expenses 1,207,900.13 5.38 Notes to statement of cash flows
5.38.1 Cash received or paid relating to other operating activities
||
|-|
|Year ended 31/12/2016|
|47,554,484.08|
|703,520.24|
|42,323,589.62|
|2,465,396.97|
|2,061,977.25|

||
|-|
|Year ended 31/12/2016|
|28,207,366.89|
|4,751,437.66|
|19,973,413.37|
|2,284,886.54|
|1,197,629.32|

 5.38.2 Cash received or paid related to other investing activities
||
|-|
|Year ended 31/12/2016|
|648,268.69|
|648,268.69|

 5.38.3 Cash received or paid related to other financing activities
||
|-|
|Year ended 31/12/2016|
|14,630,000.00|
|14,630,000.00|

5.39 Supplement to statement of cash flows
5.39.1 Supplement to statement of cash flows
||
|-|
|Year ended 31/12/2016|
|57,640,269.85|
|3,236,092.07|
|34,610,398.91|
|391,470.12|
|-2,552,387.02|
|-4,997,297.74|
|31,943,609.43|
|-32,385,780.43|
|-450,652.00|
|87,435,723.19|

||
|-|
|Year ended 31/12/2016|
|128,737,661.78|
|71,464,370.00|
|57,273,291.78|

 5.39.2 Cash and cash equivalents
||
|-|
|Balance as at 31/12/2016|
|128,737,661.78|
|1,741,848.59|
|126,995,290.36|
|522.83|
|128,737,661.78|

 5.40 Ownership or using rights of assets subject to restriction
||||
|-|-|-|
|Item|||
||Carrying amount as at 31/12/2016|Restriction reason|
|Cash at bank and on hand|783,541.51|Marginal deposit|
|Fixed assets|20,197,883.84|Pledge loans|
|Intangible assets|6,215,971.24|Pledge loans|
|Total|27,197,396.59|--|

5.41 Monetary items denominated in foreign currency
5.41.1 Monetary items denominated in foreign currency
||||||
|-|-|-|-|-|
|Item|Balance in foreigncurrency as at 31/12/2016|Exchange rate||Balance translated into|
|||||RMB as at 31/12/2016|
|Cash at hand||||1,355,052.16|
|Including: USD|111,527.32||6.937|773,664.95|
|Euro|1,205.00||7.3068|8,804.69|
|XAF|185,000.00||0.013|2,405.00|
|GHS|345,229.02||1.6516|570,180.25|
|Cash in banks||||59,825,159.47|

|||||
|-|-|-|-|
|Including: USD|6,607,932.37|6.9370|45,839,226.85|
|Euro|35,612.90|7.3068|260,216.34|
|JPY|230,332,035.00|0.0596|13,727,789.29|
|Accounts receivable|||27,404,261.00|
|Including: USD|2,643,765.72|6.9370|18,339,802.80|
|JPY|152,111,194.71|0.0596|9,065,827.20|
|Other receivables|||647,102.85|
|Including: USD|93,282.81|6.9370|647,102.85|

5.41.2 Reporting currencies of significant foreign operating entities
|||
|-|-|
|Overseas location of primary operation|Reportingcurrency|
|The Republic of Panama|RMB|
|The Republic of Ghana|USD|
|The Republic of Ghana|USD|

 6. Changes in consolidation scope
None
7. Interest in other entities
7.1 Interest in subsidiaries
7.1.1 Constitution of the Company
|||||
|-|-|-|-|
|Registrationplace|Principal place ofbusiness|Business nature|Shareholding(%)|
|ShandongQingdao|ShandongQingdao|Refrigerationtransportation|100.00|
|Shandong Yantai|Shandong Yantai|Foodprocessing|100.00|
|ShandongQingdao|ShandongQingdao|Oceanic fishing|81.26|
|The Republic ofPanama|The Republic ofPanama|Refrigerationtransportation|100.00|
|The Republic ofGhana|The Republic ofGhana|Oceanic fishing||

7.1.2 Significant non-wholly owned subsidiary
|||||
|-|-|-|-|
|Company name|Minorityshareholding(%)|Profit or lossattributable to theminority for thecurrent period|Dividends announcedto distribute to theminority|
|Shandong zhonglu HaiyanOceanic Fisheries Co., Ltd.|18.74%|5,055,199.11||

7.1.3 Main financial information of significant non-wholly owned subsidiary
As at 31/12/2016
||||||
|-|-|-|-|-|
|Current assets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|
|96,844,105.24|92,416,572.75|189,260,677.99|12,017,618.20|704,672.64|

(Continued)
As at 1/1/2016
||||||
|-|-|-|-|-|
|Current assets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|
|61,746,373.60|95,320,935.48|157,067,309.08|6,698,258.40|733,048.64|

|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Subsidiary name|||Year ended 31/12/2016|||||||
||||Operating|Net profit||Total comprehensiv|e||Cash flows from|
||||income|||income|||operating activities|
||Shandong zhonglu Haiyan|106,758,242.33||26,975,448.83|26,902,385.11|||37,561,642.89||
||Oceanic Fisheries Co., Ltd.|||||||||

(Continued)
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Subsidiary name|||Year ended 31/12/2015|||||||
||||Operating|Net profit||Total comprehensiv|e||Cash flows from|
||||income|||income|||operating activities|
||Shandong zhonglu Haiyan|49,745,349.17||13,202,476.97|13,244,820.54|||-4,262,398.67||
||Oceanic Fisheries Co., Ltd.|||||||||

8. Related risks of financial instruments
The financial assets of the Company include notes receivable, account receivable and other receivables, the
financial liabilities include notes payable, account payable, other payables and long-term loan, for details see Notes V. Company is faced with Various risks in operating activities, including credit risk, liquidity risk and market risk, board of directors establish and supervisecompany’s ERM architecture, establish and supervisecompany’s risk management policy with full authority.
The goals of Company engaged in the risk management is to achieve the proper balance between the risks and benefits, reduced the negative impact to the Company operating performance risk to a minimum, maximized the profits of shareholders and other equity investors.
1. Credit risk
Credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the obligations and causes loss of theCompany‘s financial assets. Credit risk is mainly from thecustomers’ receivables. The book value of account receivable, note receivable and other account receivable are the biggest credit risk of thecompany’s financial assets.
2. Liquidity Risk
Liquidity risk is the risk that the company is in short of capital when fulfilling its obligations related to financial liabilities. In the capital normal and stressful situation, the company ensures that there is sufficient liquidity to fulfill the due debt, and consult with the financial institutions to maintain a certain level of reserve credit line to reduce liquidity risk.
3. Market risk
(1) Foreign exchange risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. The company's foreign exchange risk is mainly derived from the dollar denominated financial assets. The amount of foreign currency denominated financial assets to be converted into RMB is as V.42 the foreign currency monetary items stated.
(2) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flow of the financial instruments fluctuate due to the fluctuation of market interest rate. The company's interest rate risk is mainly derived from long-term bank
borrowings, the company's borrowing are floating interest rates, there is a risk of RMB benchmark interest rate changes.
9. Related parties and transactions
9.1 The parent company of the Company
|||||
|-|-|-|-|
|Registrationplace|Type of business|Registeredcapital|Shareholdingratio of theCompany(%)|
|ShandongJinan|Investment and management,asset management and capitaloperation, entrustmentmanagement, investmentconsulting|450,000|33.07|

Note: Shandong State-owned assets investment Co. Ltd is the ultimate controller of the Company.
9.2 Subsidiaries of the Company
Details of subsidiaries refer to Note 7 Interest in other entities.
9.3 Other related parties
Name Relationship
Shandong Luxin Investment Holdings Ltd. Shareholder(≥5%)
9.4 Remuneration of key management
||
|-|
|Year ended 31/12/2016|
|2,025,800.00|

10. Commitments and contingencies
10.1 Commitments
None
10.2 Contingencies
None
11. Post balance sheet events
The company held the fourth meeting of sixth session board of directors in December 30,2016. The meeting passed the bill of Shandong zhonglu Haiyan Oceanic Fisheries Co., Ltd. will buy five tuna seiner fishing ships
which have ICCAT registered fishing licences. The project can get the Atlantic tuna fishing quota, and conforms
to the national ocean fishery industry policy. The project will play an important role in promoting the adjustment
of thecompany’s industrial structure, strengthening thecompany’s main business, increasing thecompany’s core competitiveness, and will accelerating the development of pelagic fisheries.
12. Other significant events
12.1 Segment reporting
12.1.1 Determination basis of segment reporting and related accounting policy
Thecompany’s mainly business are oceanic fishing, aquatic products processing, vessels leasing and others. The company disclosure the branches reports by the character and plate of its main bussiness.
12.1.2 Financial information of segment reporting
|||||
|-|-|-|-|
|Oceanic fishing|Vessels leasing|Aquaticproductsprocessing|Others|
|172,646,598.01|87,833,173.75|671,880,784.61|15,188,831.26|
|158,222,862.06|67,771,969.45|640,828,165.58|13,808,258.27|
|1,801,481.77|-61,134.29|1,456,011.08|39,733.51|
|15,636,272.41|10,323,763.97|6,048,360.17|2,993,472.48|
|24,116,313.65|19,121,637.52|23,466,792.48|-7,856,573.67|
|||1,207,900.13||
|24,116,313.65|19,121,637.52|22,258,892.35|-7,856,573.67|
|399,374,192.57|227,948,925.69|359,490,129.66|440,440,245.84|
|104,505,390.00|41,285,414.26|181,200,260.28|214,119,772.31|

 12.2 Other significant transactions and events which may be important to the investors' decision
In addition to the above matters, the companydoesn’t have other important matters to disclosure.
13. Notes to the financial statements of the Company
13.1 Accounts receivable
13.1.1 Accounts receivable by category
As at 31/12/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|18,751,934.01|100.00|5,689,018.01|
|5,689,018.01|30.34|5,689,018.01|

As at 31/12/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|13,062,916.00|69.66||
|18,751,934.01|100.00|5,689,018.01|

 As at 1/1/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|6,437,305.01|100.00|5,689,018.01|
|5,689,018.01|88.38|5,689,018.01|
|748,287.00|11.62||
|6,437,305.01|100.00|5,689,018.01|

 13.1.1.1 Allowance for doubtful debts on portfolio
①Accounts receivable whose allowance for doubtful debts is using aging analysis method:
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowancerate(%)|Allowancefor doubtfuldebts|Balance|Allowancerate(%)|
|5,689,018.01|100.00|5,689,018.01|5,689,018.01|100.00|
|5,689,018.01||5,689,018.01|5,689,018.01||

②Accounts receivable whose doubtful debts is made by riskless method:
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowancerate(%)|Allowancefor doubtfuldebts|Balance|Allowancerate(%)|
|13,062,916.00||-|748,287.00||
|13,062,916.00|||748,287.00||

13.1.2 Accounts receivable due from the top five debtors of the Company are as follows:
|||
|-|-|
|Balance as at31/12/2016|Percentage in total accountsreceivable (%)|

|||
|-|-|
|Balance as at31/12/2016|Percentage in total accountsreceivable (%)|
|13,062,916.00|69.66|
|3,600,962.12|19.20|
|430,625.10|2.30|
|158,154.98|0.84|
|156,875.50|0.84|
|17,409,533.70|92.84|

 13.2 Other receivables
13.2.1 Other receivables
As at 31/12/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|43,482,072.02|100.00|3,571,189.67|
|4,462,341.05|10.26|3,571,189.67|
|39,019,730.97|89.74||
|43,482,072.02|100.00|3,571,189.67|

 As at 1/1/2016
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|39,960,282.54|100.00|3,709,759.93|
|5,596,767.41|14.01|3,709,759.93|
|34,363,515.13|85.99||
|39,960,282.54|100.00|3,709,759.93|

① Other receivables whose allowance for doubtful debts is using aging analysis method:
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowance rate(%)|Allowance fordoubtful debts|Balance|Allowance rate(%)|

||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowance rate(%)|Allowance fordoubtful debts|Balance|Allowance rate(%)|
|551,508.88|5.00|27,575.44|1,135,287.32|5.00|
|211,193.41|10.00|21,119.35|436,775.86|10.00|
|210,636.11|30.00|63,190.84|585,285.82|30.00|
|59,397.23|50.00|29,698.62|11,372.39|50.00|
|3,429,605.42|100.00|3,429,605.42|3,428,046.02|100.00|
|4,462,341.05||3,571,189.67|5,596,767.41||

② Other receivables whose doubtful debts is made by riskless method:
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Allowancerate (%)|Allowance fordoubtful debts|Balance|Allowancerate (%)|
|39,019,730.97|||34,363,515.13||
|39,019,730.97|||34,363,515.13||

13.2.2 Other receivables by nature
||
|-|
|Balance as at 31/12/2016|
|39,019,730.97|
|4,462,341.05|
|43,482,072.02|

 13.2.3 Other receivables due from the top five debtors of the Company are as follows:
|||||
|-|-|-|-|
|Nature ofreceivable|Balance as at31/12/2016|Aging|Percentage in totalother receivables(%)|
|Internalcurrentaccount|24,714,718.67|More than 2 years|56.84|
|Internalcurrentaccount|11,357,764.72|Within 1 year,More than 1 year|26.12|
|Internalcurrentaccount|2,947,247.58|1-3 years|6.78|
|Currentaccount|288,896.39|More than 3 years|0.66|
|Currentaccount|207,072.50|More than 3 years|0.48|

山东省中鲁远洋渔业股份有限公司2016年年度报告全文
|||||
|-|-|-|-|
|Nature ofreceivable|Balance as at31/12/2016|Aging|Percentage in totalother receivables(%)|
||39,515,699.86||90.88|

 13.3 Long-term equity investments
||||||
|-|-|-|-|-|
|As at 31/12/2016|||||
|Balance|Provisionforimpairment|Carryingamount|Balance|Provisionforimpairment|
|204,189,455.23||204,189,455.23|204,189,455.23||
|204,189,455.23||204,189,455.23|204,189,455.23||

13.3.1 Investment to subsidiaries
||||||||||
|-|-|-|-|-|-|-|-|-|
|Investee||As at1/1/2016||Additions|Reductions|As at31/12/2016|Provision|Provision|
||||||||for impairment in|for impairment|
||||||||current period|as at 31/12/2016|
||HABITAT|12,476,145.60||||12,476,145.60|||
||INTERNATIONAL CORP.||||||||
||Shandong Zhonglu Oceanic|22,869,513.38||||22,869,513.38|||
||Fisheries Transportation||||||||
||Co., Ltd.||||||||
||Shandong Zhonglu Oceanic|55,448,185.24||||55,448,185.24|||
||(Yantai) Food Co., Ltd.||||||||
||Shandong zhonglu Haiyan|113,395,611.01||||113,395,611.01|||
||Oceanic Fisheries Co., Ltd.||||||||
||Total||204,189,455.23|||204,189,455.23|||

13.4 Operating income and operating cost
||||
|-|-|-|
|Year ended 31/12/2016|||
|Income|Cost|Income|
|65,888,355.68|62,233,674.19|120,687,353.07|
|5,180,247.30|4,613,098.49|21,726,959.64|
|60,708,108.38|57,620,575.70|98,960,393.43|
|4,691,924.05|1,799,950.37|5,070,648.88|
|4,691,924.05|1,799,950.37|5,070,648.88|
|70,580,279.73|64,033,624.56|125,758,001.95|

14. Supplementary information
14.1 Details of non-recurring gain or loss for the year
||
|-|
|Amount|
|2,552,387.02|
|4,123,881.73|
|-4,353.25|
|-194,279.09|
|-987,935.70|
|5,489,700.71|

The Company identifies the following items as "other items qualified the definition of non-recurring gain or loss" or classifies the following "non-recurring gain or loss items" as "recurring gain or loss items":
||
|-|
|Amount|
|39,041,300.00|

14.2 Return on equity and earnings per share
||||||
|-|-|-|-|-|
|Weighted average return onequity (%)|||||
|||Basic earnings per share|||
|Year ended31/12/2016|Year ended31/12/2015|Year ended31/12/2016|Year ended31/12/2015|Year ended31/12/2016|
|8.88|2.16|0.1976|0.0456|8.88|
|7.96|2.51|0.1770|0.0528|7.96|

Section XII. Documents available for reference
I. Accounting statement of the Company with signature and seal from the person in charge of the Company, person in charge of the accounting works and person in charge of accounting;
II. Original auditing report carrying the seal of CPA and autography and seal of the accountants;
III. Original text of all documents of the Company as well as manuscript of the announcement that disclosed on website appointed by CSRC.
Shandong Zhonglu Oceanic Fisheries Co., Ltd.
Chairman: Chi Weizhen
4 March 2017