Section X Financial Report
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Financial Report and Financial Statement
Semi-Annual 2017
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Financial Report and Financial Statement
（Jan. 1, 2017- Jun. 30,2017）
Content Page
I. Financial Statement
Balance Sheet 1-2 Profit Statement 3 Statement of Cash Flow 4 Statement of Changes inOwners’ Equity 5-6 II. Notes to Financial Statement 1-48
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Balance Sheet
June 30, 2017
(Expressed in Renminbi unless otherwise stated)
|||||||||
|-|-|-|-|-|-|-|-|
||Assets||Note V||Ending balance||Beginning balance|
|Current assets:||||||||
|Monetary funds||(I)||10,108,175.91||27,210,248.01||
|Financial assets measured at fair value through rofit orloss for the current period||||||||
|Derivative financial assets||||||||
|Notes receivable||||||||
|Accounts receivable||(II)||337,187.05||690,444.72||
|Prepayments||(III)||38,660.36||58,783.23||
|Interests receivable||||||||
|Dividends receivable||||||||
|Other receivables||(IV)||316,384.24||174,103.52||
|Inventories||(V)||253,215.05||219,179.72||
|Assets classified as held for sale||||||||
|Non-current assets maturing within one year||(VI)||292,184.72||584,369.42||
|Other current assets||(VII)||11,020,867.76||1,876,449.22||
||Total current assets||||22,366,675.09||30,813,577.84|
|Non-current assets:||||||||
|Available-for-sale financial assets||(VIII)||||||
|Held-to-maturity investments||||||||
|Long-term receivables||||||||
|Long-term equity investments||(IX)||||||
|Investment property||(X)|||9,096,265.77|9,333,527.55||
|Fixed assets||(XI)|||39,264,470.61|40,395,680.91||
|Construction in progress||(XII)|||978,211.64|||
|Project materials||||||||
|Disposal of fixed assets||||||||
|Productive biological assets||||||||
|Oil and gas assets||||||||
|Intangible assets||(XIII)||23,423,829.78||23,830,023.36||
|Development expenses||||||||
|Goodwill||||||||
|Long-term deferred expenses||(XIV)||1,071,343.97||1,071,343.97||
|Deferred income tax assets||||||||

报表第1页
|||||
|-|-|-|-|
|Other non-current assets||||
||Total non-current assets|73,834,121.77|74,630,575.79|
||Total assets|96,200,796.86|105,444,153.63|

 The accompanying notes to the financial statements are an integral part of the financial statements.
Legal Representative: Accounting Principal: The AccountingFirm’s Principal:
报表第2页
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Balance Sheet (continued)
June 30, 2017
(Expressed in Renminbi unless otherwise stated)
|||||||||
|-|-|-|-|-|-|-|-|
||Liabilities and owners 'equity||Note V||Ending balance||Beginning balance|
|Current liabilities:||||||||
|Short-term borrowings||||||||
|Financial liabilities measured at fair value through profitor loss for the current period||||||||
|Derivative financial liabilities||||||||
|Notes payable||||||||
|Accounts payable||(XVI)|||2,042,988.73|1,967,565.51||
|Accounts received in advance||(XVII)|||1,246,924.32|1,894,524.28||
|Employee benefits payable||(XVIII)|||1,799,762.38|2,148,514.36||
|Taxes and surcharges payable||(XIX)|||539,524.00|582,944.27||
|Interests payable||||||||
|Dividends payable||||||||
|Other payables||(XX)||13,086,243.15||23,084,504.73||
|Liabilities classified as held for sale||||||||
|Non-current liabilities maturing within one year||||||||
|Other current liabilities||||||||
||Total current liabilities||||18,715,442.58||29,678,053.15|
|Non-current liabilities:||||||||
|Long-term borrowings||||||||
|Bonds payable||||||||
|Including: preferred shares||||||||
|Perpetual capital securities||||||||
|Long-term payables||||||||
|Long-term employee benefits payable||||||||
|Special payables||||||||
|Estimated liabilities||(XXI)||1,489,685.04||1,489,685.04||
|Provisions||||||||
|Deferred income tax liabilities||||||||
|Other non-current liabilities||||||||
||Total non-current liabilities||||1,489,685.04||1,489,685.04|
||Total liabilities||||20,205,127.62||31,167,738.19|
|Owners 'equity:||||||||
|Share capital||(XXII)||364,100,000.00||364,100,000.00||
|Other equity instruments||||||||
|Including: preferred shares||||||||
|Perpetual capital securities||||||||
|Capital reserves||(XXIII)||||54,142,850.01||

报表第3页
||||||||
|-|-|-|-|-|-|-|
||||54,142,850.01||||
|Less: treasury stock|||||||
|Other comprehensive income|||||||
|Special reserves|||||||
|Surplus reserves|||||||
|General risk reserves|||||||
|Undistributed profit||(XXIV)||-342,247,180.77|-343,966,434.57||
||Total owners 'equity|||75,995,669.24||74,276,415.44|
||Total liabilities and owners 'equity|||96,200,796.86||105,444,153.63|

 The accompanying notes to the financial statements are an integral part of the financial statements.
Legal Representative: Accounting Principal: The AccountingFirm’s Principal:
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Profit Statement
Semi-Annual 2017
(Expressed in Renminbi unless otherwise stated)
|||||||||
|-|-|-|-|-|-|-|-|
||Item||Note V||Current period||Last period|
|I. Operating income||(XXV)||15,096,273.42||12,062,797.60||
|Less: operating cost||(XXV)||5,256,112.51||4,460,023.31||
|Business taxes and surcharges||(XXVI)|||754,244.27|566,956.63||
|Selling expenses||(XXVII)|||2,458,144.93|2,099,035.74||
|Administrative expenses||(XXVIII)|||5,089,450.57|4,989,443.77||
|Financial expenses||(XXIX)|||-180,672.66|-204,752.54||
|Losses from asset impairment||(XXX)||||||
|Plus: gains from changes in fair value ("-" for losses)||||||||
|Investment income ("- " for loss)||||||||
|Including: income from investments in associates andjoint ventures||||||||
||II. Operating profits ("-" for losses)||||1,718,993.80||152,090.69|
|Plus: non-operating income||(XXXI)|||260.00|77,406.00||
|Including: Gains from disposal of non-current assets||||||||
|Less: non-operating expenses||||||||
|Including: Loss on disposal of non-current assets||||||||
|III. Total profits ("-" for total losses)|||||1,719,253.80|229,496.69||
|Less: income tax expenses||||||57,374.17||
||IV. Net profit ("-" for net loss)||||1,719,253.80||172,122.52|
|V. Net after-tax of other comprehensive income||||||||
|(I) Other comprehensive income items which will not bereclassified subsequently to profit of loss||||||||
|1. Changes as a result of remeasurement of netdefined benefit plan liability or asset||||||||
|2. Share of the other comprehensive income of||||||||

报表第4页
||||||||
|-|-|-|-|-|-|-|
|the investee accounted for using equity methodwhich will not be reclassified subsequently toprofit and loss|||||||
|(II) Other comprehensive income items which will bereclassified subsequently to profit or loss|||||||
|1. Share of the other comprehensive income ofthe investee accounted for using equity methodwhich will be reclassified subsequently toprofit or loss|||||||
|2. Gains or losses arising from changes in fairvalue of available-for-sale financial assets|||||||
|3. Gains or losses arising from reclassification ofheld-to-maturity investment asavailable-for-sale financial assets|||||||
|4. The effect hedging portion of gains or lossesarising from cash flow hedging instruments|||||||
|5. Translation differences arising on translation offoreign currency financial statements|||||||
|6. Others|||||||
||VI. Total comprehensive income|||1,719,253.80||172,122.52|
|VII. Earnings per share:||X. (II)|||||
|(I) Basic earnings per share|||0.0047||0.0005||
|(II) Diluted earnings per share|||0.0047||0.0005||

 Legal Representative: Accounting Principal: The AccountingFirm’s Principal:
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Statement of Cash Flow
Semi-Annual 2017
(Expressed in Renminbi unless otherwise stated)
|||||||||
|-|-|-|-|-|-|-|-|
||Item||Note V||Current period||Last period|
|I. Cash flows from operating activities||||||||
|Cash received from sale of goods and rendering of services||||15,736,183.76||12,211,146.88||
|Refunds of taxes and surcharges||||||4,801.73||
|Cash received from other operating activities||(XXXII)|||677,415.38|545,761.73||
|Sub-total of cash inflows from operating activities|||||16,413,599.14|12,761,710.34||
|Cash paid for goods purchased and services received|||||3,826,391.38|3,278,812.89||
|Cash paid to and on behalf of employees|||||5,608,808.99|4,775,931.92||
|Cash paid for taxes and surcharges|||||1,610,025.50|1,706,387.86||
|Cash paid for other operating activities||(XXXII)|||2,137,300.17|1,546,880.23||
|Sub-total of cash outflows from operating activities|||||13,182,526.04|11,308,012.90||
||Net cash flows from operating activities||||3,231,073.10||1,453,697.44|
|II. Cash flows from investing activities||||||||
|Cash received from disposal of investments||||||||

报表第5页
|||||||
|-|-|-|-|-|-|
|Cash received from returns on investments||||||
|Net cash received from disposal of fixed assets, intangible assetsand other long-term assets||||||
|Net cash received from disposal of subsidiaries and other businessunits||||||
|Cash received from other investing activities||||||
|Sub-total of cash inflows from investing activities||||||
|Cash paid to acquire and construct fixed assets, intangible assetsand other long-term assets||||410,799.00||
||||1,333,145.20|||
|Cash paid for investments|||9,000,000.00|9,000,000.00||
|Net cash paid to acquire subsidiaries and other business units||||||
|Cash paid for other investing activities||||||
|Sub-total of cash outflows from investing activities|||10,333,145.20|9,410,799.00||
||Net cash flows from investing activities||-10,333,145.20||-9,410,799.00|
|III. Cash flows from financing activities||||||
|Cash from absorption of investments||||||
|Cash received from borrowings||||||
|Cash received from bonds issue||||||
|Cash received from other financing activities||(XXXII)|19,810,000.00|||
|Sub-total of cash inflows from financing activities|||19,810,000.00|||
|Cash paid for debt repayments||||||
|Cash paid for distribution of dividends and profits or payment ofinterests||||||
|Cash paid for other financing activities|||29,810,000.00|||
|Sub-total of cash outflows from financing activities||(XXXII)|29,810,000.00|||
||Net cash flows from financing activities||-10,000,000.00|||
|IV. Effect of fluctuation on exchange rate on cash and cashequivalents||||||
|V. Net increase in cash and cash equivalents|||-17,102,072.10|-7,957,101.56||
|Plus: balance of cash and cash equivalents at the beginning of theperiod||||19,782,392.26||
||||27,210,248.01|||
||VI. Balance of cash and cash equivalents at the end of the period||10,108,175.91||11,825,290.70|

 The accompanying notes to the financial statements are an integral part of the financial statements.
Legal Representative: Accounting Principal: The AccountingFirm’s Principal:
报表第6页
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Statement of Changes in Owners' Equity
Semi-Annual 2017
(Expressed in Renminbi unless otherwise stated)
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||Current period|||||||||||
||||Other|||||Other|||||
||||equity instrument|||||compreh|Speci||||
||||||||Less:||||||
|Item||||Perpetua||Capital||ensive|al|Surplus|Undistributed|Total owner's|
||Share capital||||||treasury|income|||||
||||Preferre|l capital||reserve|||reser|reserves|profit|equity|
||||d stock|securitie|Other||stock||ve||||
|||||s|||||||||
|I. Balance as at the end of last year||364,100,000.00||||54,142,850.01|||||-343,966,434.57|74,276,415.44|
|Plus: Changes in accounting policies|||||||||||||
|Correction of accounting errors in prior|||||||||||||
|periods|||||||||||||
|Others|||||||||||||
|II. Balance as at the beginning of year||364,100,000.00||||54,142,850.01|||||-343,966,434.57|74,276,415.44|
|III. Increases/decreases in the period (“-” for|||||||||||||
||||||||||||1,719,253.80|1,719,253.80|
|decreases)|||||||||||||
|(I) Total comprehensive income|||||||||||1,719,253.80|1,719,253.80|
|(II) Capital contributed or reduced by owners|||||||||||||
|1. Ordinary shares contributed by owners|||||||||||||
|2. Contributions from holders of other equity|||||||||||||
|instruments|||||||||||||
|3.Amounts of share-based payments|||||||||||||
|recognized in owners’ equity|||||||||||||
|4.Others|||||||||||||
|(III) Profit distribution|||||||||||||
|1. Withdrawal of surplus reserves|||||||||||||
|2. Profit distributed to owners (or|||||||||||||
|shareholders)|||||||||||||
|3. Others|||||||||||||
|(IV) Internal carry-forward of owners' equity|||||||||||||

报表第7页
||||||
|-|-|-|-|-|
|1. Conversion of capital reserves into paid-in|||||
|capital (or share capital)|||||
|2. Conversion of surplus reserves into paid-in|||||
|capital (or share capital)|||||
|3. Making up losses with surplus reserves|||||
|4. Others|||||
|(V) Special reserves|||||
|1. Withdrawal in the period|||||
|2. Use in the period|||||
|(VI) Others|||||
|IV. Balance as at the end of the period|364,100,000.00|54,142,850.01|-342,247,180.77|75,995,669.24|

 The accompanying notes to the financial statements are an integral part of the financial statements.
Legal representative: Accounting Principal: The AccountingFirm’s Principal:
报表第8页
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
Statement of Changes in Owners' Equity (continued)
Semi-Annual 2017
(Expressed in Renminbi unless otherwise stated)
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Last period|||||||||||
|||Other|||||Other|||||
|||equity instrument|||||compreh|||||
||||||||ensive|Specia|Surplu|||
||||Perpet|||Less:treasury stock||||||
|Item|||||||income|l|s|Undistributed|Total owner's|
||Share capital||ual||Capital reserve|||||||
|||Preferre||||||reserv|reserv|profit|equity|
||||capital|Other||||||||
|||d stock||||||e|es|||
||||securiti|||||||||
||||es|||||||||
|I. Balance as at the end of last year|364,100,000.00||||54,142,850.01|||||-341,305,382.08|76,937,467.93|
|Plus: Changes in accounting policies||||||||||||
|Correction of accounting errors in prior||||||||||||
|periods||||||||||||
|Others||||||||||||
|II. Balance as at the beginning of year|364,100,000.00||||54,142,850.01|||||-341,305,382.08|76,937,467.93|
|III. Increases/decreases in the period (“-” for||||||||||172,122.52|172,122.52|
|decreases)||||||||||||
|(I) Total comprehensive income||||||||||172,122.52|172,122.52|
|(II) Capital contributed or reduced by owners||||||||||||
|1. Ordinary shares contributed by owners||||||||||||
|2. Contributions from holders of other equity||||||||||||
|instruments||||||||||||
|3.Amounts of share-based payments||||||||||||
|recognized in owners’ equity||||||||||||
|4.Others||||||||||||
|(III) Profit distribution||||||||||||
|1. Withdrawal of surplus reserves||||||||||||
|2. Profit distributed to owners (or||||||||||||
|shareholders)||||||||||||

||||||
|-|-|-|-|-|
|3. Others|||||
|(IV) Internal carry-forward of owners' equity|||||
|1. Conversion of capital reserves into paid-in|||||
|capital (or share capital)|||||
|2. Conversion of surplus reserves into paid-in|||||
|capital (or share capital)|||||
|3. Making up losses with surplus reserves|||||
|4. Others|||||
|(V) Special reserves|||||
|1. Withdrawal in the period|||||
|2. Use in the period|||||
|(VI) Others|||||
|IV. Balance as at the end of the period|364,100,000.00|54,142,850.01|-341,133,259.56|77,109,590.45|

 The accompanying notes to the financial statements are an integral part of the financial statements.
Legal representative: Accounting Principal: The AccountingFirm’s Principal:
报表第10页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO.,
LTD
NOTES TO FINANCIAL STATEMENT
SEMI-ANNUAL 2017
1. Company basic information
1.1 Company profile
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd. (hereinafter referred to as “the Company”), was founded as a standardized LLC on April 26, 1993, reorganized and incorporated on the basis of the former Hainan Sanya Dadonghai Tourism Center Development Ltd. and approved by the Hainan Provincial Stock System Experimentation Leading Team Office with a document of Qiong Gu Ban Zi[1993] No. 11. On May 6, 1996, the Company underwent a restructuring and a corresponding division under the approval of the Hainan Provincial Securities Administration Office with a document of Qiong Zheng Ban[1996] No. 58. On October 8, 1996 and January 28, 1997, the Company, with duly approval, went public by issuing 80 million shares of B stock and 14 million shares of A stock respectively on Shenzhen Security Exchange. On June 20, 2007, the Company experienced a reform of non-tradable shares, through which non-tradable share holders of the Company got circulating right of their shares by paying shares to tradable share holders, and tradable share holders got paid three shares for every ten of their shares. The Company operates business in the industry of tourism and catering services.
As of June 30, 2017, theCompany’s total capital stock is 364,100,000 shares. TheCompany’s registered capital is RMB 364.1 million. The legal representative is Li Yuanbin. The registration number of its Business License for Enterprise Legal Person (Duplicate) is 4600001003983. The legal registerred residence is Dadonghai, Hedong District, Sanya. Its scope of business includes: accommodation and catering industry (limited to those operated by branches); photography; operation of ornamental plant bonsai, knitwear and textiles, general merchandise, hardware and electrical equipment, chemical products (excluding those require specialized licenses), daily necessities, industrial means of production (excluding those require specialized licenses), metal materials and machinery equipment; commission sale of plane, bus, train and ship tickets (items in require of administrative permission shall be
财务报表附注第1页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
operated under license). TheCompany’s largest shareholder is the Hainan Luoniushan (Holdings) Co., Ltd.
These financial statements have been approved by all directors of the Company on August 17, 2017 for disclosure.
1.2 Scope of consolidation (aggregation) of financial statements
Until June 30, 2017, the scope of consolidation (aggregation) of financial statements as below: Company Name Relationship
South China Grand Hotel of Hainan Dadonghai Tourism Center
(Holdings) Co., Ltd (hereinafter referred to as “South China Subsidiary
Grand Hotel”)
The consolidate (Summarize) financial statement range in the period and its changes found more in the “VI Change of Consolidate Range” in Note
2 Basis of preparation for financial statements
2.1 Basis of preparation
Based on going concern, according to actually occurred transactions and events, the Company prepares its financial statements in accordance with the Accounting Standards for Business Enterprises– Basic Standards and concrete accounting standards, Accounting Standards for Business Enterprises– Application Guidelines, Accounting Standards for Business Enterprises– Interpretations and other relevant provisions (collectively known as “Accounting Standards for Business Enterprises”), as well as the disclosure requirements of Regulation on the Preparation of Information Disclosure of Companies Issuing Public Shares No.15 - General Requirements for Financial Reports (as revised in 2014) by the China Securities Regulatory Commission.
2.2 Going concern
The Company is currently operating normal, net cash flows from operating activities is positive, the Company is expected to continue operate as going concern in the next twelve months.
3 Principal accounting policies and estimates
财务报表附注第2页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
3.1 Statement on compliance with Accounting Standards for Business
Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect theCompany’s financial position, and its operating results, cash flows and other related information.
3.2 Accounting period
The accounting year is from January 1 to December 31 in calendar year.
3.3 Operating cycle
The operating cycle of the Company is twelve months.
3.4 Functional currency
RMB is adopted as the functional currency.
3.5 Recognition criteria of cash and cash equivalents
For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash on hand and the unrestricted deposit. The term “cash equivalents” refers to short-term (maturing within three months from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
3.6 Foreign currency transactions
Foreign currency transactions are converted into RMB for recording purpose at the spot exchange rate on the date when the transaction occurs.
Balances of foreign currency monetary items are measured at the spot exchange rate on the balance sheet date. The exchange difference arising therefrom shall be included in the current profit and loss, except that those exchange differences arising from the special borrowings of foreign currency related to the acquired and constructed assets qualified for capitalization shall be dealt with according to the principle of borrowing cost capitalization. Foreign currency non-monetary items measured at historical costs shall
财务报表附注第3页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
still be converted at the spot exchange rates on the date when the transactions occur, and the amount in functional currency shall remain unchanged. Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rates on the date when the fair value is determined. The exchange difference arising therefrom shall be included in the current profit and loss or capital reserves.
3.7 Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments. 3.7.1 Classification of financial instruments
Financial assets and liabilities are classified into the following categories according to the purpose of acquisition: financial assets or financial liabilities measured at fair value and whose variation is included in the current profit and loss, including financial assets or financial liabilities held for trading and financial assets or financial liabilities directly designated to be measured at fair value through current profit and loss, held-to-maturity investments, accounts receivables, available-for-sale financial assets and other financial liabilities, etc.
3.7.2 Recognition basis and measurement method of financial instruments
(1) Financial assets (financial liabilities) measured at fair value and whose variation is included in the current profit and loss
Financial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn). Relevant transaction expenses are included in the current profit and loss.
The interests or cash dividends to be received during the holding period are recognized as investment income. Change in fair values is included in the current profit and loss at the end of the period.
Difference between the fair value and initial book-entry value is recognized as investment income upon disposal; meanwhile, adjustment is made to gains or
财务报表附注第4页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
losses from changes in fair values.
(2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at fair values plus the related trade expenses when acquired (deducting bond interests that have matured but not been drawn).
The interest revenue calculated at amortization cost and effective interest rate (nominal interest rate is adopted when the difference between the actual interest rate and the nominal interest rate is minor) during the holding period is recognized as investment income. Effective interest is recognized when obtained, and remains unchanged in the predictable holding period or applicable shorter period.
The difference between the amount received and the book value of the investment is included in the investment profit and loss upon disposal.
(3) Accounts receivable
Forcreditor’s rights receivable arising from external sales of goods or rendering of service by the Company and other creditor's rights of other enterprises (excluding liability instruments quoted in an active market) held by the Company, including accounts receivable, other receivables, notes receivable and prepayments, etc., the initial recognition amount shall be the contract price or agreement price receivable from purchasing party. Accounts receivable with financing nature are initially recognized at their present values. The difference between the amount received and the book value of the accounts receivable is included in the current profit and loss upon recovery or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at fair values plus the related trade expenses when acquired (deducting cash dividends that have been declared but not been paid or bond interests that have matured but not been
财务报表附注第5页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
drawn).
The interests or cash dividends to be received during the holding period are recognized as investment income. It is measured in fair value at the end of the period and change in fair values is included in other comprehensive income at the end of the period. However, the equity instrument investments unquoted in an active market and whose fair value cannot be measured reliably, and the derivative financial assets which are connected with the said equity instrument and must be settled by delivering the said equity instrument shall be measured on the costs basis.
The difference between the amount received and the book value of the financial asset is included in the investment profit and loss upon disposal. Meanwhile, the corresponding part of fair value accumulated change accounted as other comprehensive income is transferred into investment profit or loss.
(5) Other financial liabilities
Other financial liabilities are initially recognized at the sum of fair value and transaction expenses and subsequently measured at amortized costs.
3.7.3 Recognition basis and measurement method of transfer of financial assets When transfer of financial assets occurs, if nearly all of the risks and rewards of ownership of the financial assets have been transferred to the transferee, the Company derecognizes the financial assets; if nearly all of the risks and rewards of ownership of the financial assets are retained, the Company shall not derecognize the financial assets.
The principle of substance over form is adopted to determine whether the transfer of a financial asset satisfies the criteria as described above for derecognition of a financial asset. The Company shall classify the transfer of a financial asset into the entire transfer and the partial transfer of financial asset. If the entire transfer of financial asset satisfies the criteria for derecognition, the difference between the amounts of the following two items shall be included in the current profit and loss:
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(1) The book value of the transferred financial asset;
(2) The sum of the consideration received from the transfer and the accumulated amount of the changes in fair value originally and directly included inowners’ equity (the situation where the financial asset transferred is an available-for-sale financial asset is involved in)
If the partial transfer of financial asset satisfies the criteria for derecognition, the entire book value of the transferred financial asset shall be split into the derecognized and recognized part according to their respective fair value and the difference between the amounts of the following two items shall be included in the current profit and loss:
(1) The book value of derecognized part;
(2) The sum of the consideration for the derecognized part and the portion of derecognition corresponding to the accumulated amount of the changes in fair value originally and directly included inowners’ equity (the situation where the financial asset transferred is an available-for-sale financial asset is involved in).
If the transfer of financial assets does not meet the derecognition criteria, the financial assets shall continue to be recognized, and the consideration received will be recognized as a financial liability.
3.7.4 Derecognition criteria of financial liabilities
A financial liability shall be totally or partly derecognized if its present obligations are totally or partly dissolved. Where the Company enters into an agreement with a creditor so as to substitute the existing financial liabilities with any new financial liability, and the new financial liability is substantially different from the contractual stipulations regarding the existing financial liability, it shall derecognize the existing financial liability, and shall at the same time recognize a new financial liability.
Where substantial revisions are made to some or all of the contractual stipulations
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of the existing financial liability, the Company shall derecognize the existing financial liability totally or partly, and at the same time recognize the financial liability with revised contractual stipulations as a new financial liability.
Upon total or partial derecognition of financial liabilities, the difference between the book value of the financial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new financial liabilities assumed) shall be included in the current profit and loss.
Where the Company redeems part of its financial liabilities, it shall, on the redemption date, allocate the entire book value of whole financial liabilities according to the comparative fair value of the part that continues to be recognized and the de-recognized part. The difference between the book value allocated to the derecognized part and the considerations paid (including non-cash assets surrendered and the new financial liabilities assumed) shall be included in the current profit and loss.
3.7.5 Method of determining the fair value of financial assets and financial liabilities
For financial instruments with active market, their fair values are determined with quoted market price. For financial instruments without active market, their fair values are determined by using valuation technique. During the valuation, the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value, select inputs that are consistent with the characteristics of the asset or liability that market participants would take into account in a transaction for the asset or liability, and give priority to the use of relevant observable inputs. Unobservable inputs are only adopted when relevant observable inputs cannot be obtained or are impracticable to obtain.
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3.7.6 Providing of impairment provision on financial assets (exclude receivable accounts)
The Company performs inspection on the book value of financial assets apart from those financial assets measured at fair value through current profit and loss on the balance sheet date. Impairment provision is required if objective evidences of impairment occurs to the financial assets.
(1) Impairment provision of available-for-sale financial assets:
If there is a serious decline in fair value of the available-for-sale financial assets at the end of the period, or such decline is not temporary after considering various factors, the impairment shall be confirmed, the accumulated losses due to decreases in fair value previously included inowner’s equity shall be reversed, and the impairment loss shall be recognized.
If, in a subsequent period, the carrying amount of available-for-sale debt instruments investments increases and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment losses are reversed, included in current profit or loss.
The impairment losses of available-for-sale equity instruments cannot be reversed through profit or loss.
(2) Impairment provision of held-to-maturity investment:
Measurement of held-to-maturity investment impairment loss is governed by measurement of account receivables impairment loss.
3.8 Provision for bad debts of receivables
3.8.1 Provision for bad debts of account receivables that are individually significant: Assessment basis or standard of amount individually significant: top five accounts receivable and other receivables in terms of individual amount at the end of the year.
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Method of provision for bad debts of accounts receivable that are individually significant: after separate impairment test, provision for bad debts shall be made at the difference of present value of estimated future cash flows in short of their book values, and shall be include in current profit and loss. For accounts receivable with no impairment found after separate tests, they shall be included in corresponding portfolios for provisions for bad debts. For accounts receivable with confirmed impairment losses after separate tests, they shall not be included in portfolios of accounts receivable with similar credit risk features for impairment tests.
3.8.2 Provision for bad debts of accounts receivable made on the basis of portfolio:
Basis of determining portfolio
Aging portfolio Length of the aging
Method of making provision for bad debts on the basis of portfolio
Aging portfolio Aging analysis method
Proportions of provision for bad debts on the basis of aging analysis in portfolios are as follows:
Proportion of provision for Proportion of provision for other Aging
account receivable(%) receivables(%) Within 1 year (including 1 year)
1-2 years 5 5
2-3 years 15 15
3-4 years 25 25
4-5 years 50 50
More than five years 100 100
3.8.3 Accounts receivable that are individually insignificant but with bad debt provision provided on an individual basis:
Reason for bad debt provision provided on an individual basis: For account
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receivable with an individual balance lower than the top five at the end of the year and with objective evidence showing it may be impaired, and for uncollectible accounts receivable arising from repeal and liquidation of debtor after taking legal clearance procedures, their provision for bad debts shall be provided on an individual basis.
Method of provision for bad debt: For accounts receivable with objective evidence showing they may be impaired, they shall be separate from relevant portfolios and separately tested for impairment to recognize the impairment losses.
Other remarks: provision for impairment of accounts receivable, excluding debts receivable and other receivables, shall be made at the specific identification method.
3.8.4 Reversal of bad debt provisions
If there is evidence showing that the value of the account receivable has been recovered, and that the recovery is objectively related to events after recognition of the loss, the originally recognized impairment loss should be reversed and included in current profit and loss. However, the book values after such reversal shall not exceed the amortized costs of the account receivable on the reversal date, assuming there is no provision for impairment.
3.9 Inventories
3.9.1 Classification of inventories
Inventories are classified into raw materials, stock commodities, low-cost consumables, food materials, fuels, etc.
3.9.2 Measurement method of dispatched inventories
Stock commodities are measured at selling price and their purchase and sale price differential are amortized over every month at the method of comprehensive differential. The purchasing and storage of stock materials are measured at actual
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cost, and at the first-in-first-out method when fetched for use. Low-cost consumables are amortized in full when fetched for use.
3.9.3 Determination basis of net realizable values of inventories and provision method of inventory depreciation reserve
After the comprehensive inventory count at the end of the period, provisions for inventory depreciation reserve are made or adjusted at the lower of their costs or net realizable values.
In normal operation process, for merchandise inventories for direct sale, including stock commodities and materials for sale, their net realizable values are determined at the estimated selling prices minus the estimated selling expenses and relevant taxes and surcharges; for inventories held to execute sales contract or service contract, their net realizable values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the Company, the net realizable value of the excess portion of inventories shall be based on general selling prices.
At the end of the period, provisions for inventory depreciation reserve are made on an individual basis. For inventories with large quantity and low unit price, the provisions for inventory depreciation reserve are made on a category basis. For inventories related to the product portfolios manufactured and sold in the same area, and of which the final usage or purpose is identical or similar thereto, and which is difficult to separate from other items for measurement purposes, the provisions for inventory depreciation reserve shall be made on a portfolio basis.
If any factor rendering write-downs of the inventories has been eliminated, the amounts written down are recovered and reversed from the inventory depreciation reserve, which has been provided for. The reversed amounts are included into the current profit and loss.
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3.9.4 Inventory system
Perpetual inventory system is adopted.
3.9.5 Amortization method of low-cost consumables and packaging materials
(1) Low-cost consumables are amortized at lump-sum method;
(2) Packaging materials are amortized at lump-sum method.
3.10 Long-term equity investments
3.10.1 Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement, and the arranged relevant activity must be decided under unanimous consent of the parties sharing control. When the Company and other joint parties do joint control and have rights to the net assets over an investee, the investee shall be theCompany’s joint venture.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those polices (such as has a representative in the Board or similar authority organ under the name of the invested unit). When an investing enterprise is able to have significant influences on an investee, the investee shall be its associate.
3.10.2 Determination of investment cost
(1) Long-term equity investments acquired from business combinations
For business combination under common control: if the Company makes payment in cash, transfer non-cash assets or bear debts and issues equity securities as the consideration for the business combination, the book value of theowners’ equity of the combinee obtained is recognized as the initial cost of the long-term equity investment on the combination date. The difference between the initial investment cost and the carrying amount of cash paid,
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non-cash assets transferred, liabilities assumed and par value of share issued shall be adjusted to the stock premium in the capital reserved; if there is no sufficient premium in the capital reserve for write-downs, the retained earnings are adjusted.
When exercising control over an investee under common control due to additional investment or other reasons, the initial investment cost of the long-term equity investment shall be determined by the absorbingparty’s share of the net assets of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. The difference between the initial investment cost of the long-term equity investment at combination date and the sum of the total of the carrying amount of equity investment held by the acquirer before the combination date and the newly increased investment on the combination date shall be adjusted to share premium. If the balance of share premium is not sufficient, any excess shall be adjusted to retained earnings.
For business combination not under common control, the Company recognizes the combination cost determined on the combination date as the initial cost of long-term equity investment. When exercising control over an investee not under common control due to additional investment or other reasons, in stand-alone financial statements, the investor shall change to the cost method and use the carrying amount of the previously-held equity investment, together with the additional investment cost, as the initial investment cost under the cost method. The audit, legal, valuation and consulting fees, other intermediary fees, and related administrative fees paid by the absorbing party or acquirer for the business combination, shall be recognized in profit or loss as incurred; the cost of issuing equity securities or debt securities as the combination consideration shall be included in the initial cost of the equity securities or debt securities.
(2) Long-term equity investments acquired by other means
For long-term equity investments acquired from making payments in cash, the initial cost is the actually paid purchase cost.
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For long-term equity investments acquired from issuance of equity securities, the initial cost is the fair value of the issued equity securities.
If the exchange of non-monetary assets has commercial substance, and the fair values of assets traded out and traded in can be measured reliably, the initial cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded out together with relevant taxes unless there is any conclusive evidence that the fair values of the assets traded in are more reliable. If the exchange of non-monetary assets does not meet the above criteria, the book value of the assets traded out and relevant taxes are recognized as the initial cost of long-term equity investment traded in. For long-term equity investment acquired from debt restructuring, the initial cost is determined based on the fair value.
3.10.3 Subsequent measurement and recognition of profit or loss
(1) Long-term equity investment adopting cost method
Long-term equity investments of the Company in its subsidiaries are accounted for at cost method, except for the actual price paid for acquisition of investment or the cash dividends or profits contained in the consideration which have been declared but not yet distributed, the Company recognizes the proportion it shall enjoy in the cash dividends or profits declared by the investee as current investment income.
(2) Long-term equity investment adopting equity method
A long-term equity investment in an associate or a joint venture shall be accounted for using the equity method. If the cost of initial investment is in excess of the proportion of the fair value of the net identifiable assets in the investee when the investment is made, the difference will not be adjusted to the initial cost of long-term equity investment; if the cost of initial investment is in short of the proportion of the fair value of the net identifiable assets in the
investee when the investment is made, the difference will be included in the
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current profit and loss.
The Company recognizes the share of theinvestee’s net profits or losses, as well as its share of theinvestee’s other comprehensive income, as investment income or losses and other comprehensive income, and adjusts the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributable to the investor. Theinvestor’s share of theinvestee’sowners’ equity changes, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution, would be recognized in theinvestor’s equity, and the carrying amount of the long-term equity investment shall be adjusted accordingly.
The Company recognizes its share of theinvestee’s net profits or losses after making appropriate adjustments based on the fair values of theinvestee’s identifiable net assets at the acquisition date according to theCompany’s accounting policies and accounting period. When holding the investment, if the investee is capable of providing consolidated financial statements, the profit or loss shall be measured based on the net profit, other comprehensive income and other changes inowners’ equity attributed to the Company recorded in the consolidated financial statements.
The unrealized profits or losses resulting from transactions between the Company and its associate or joint venture are eliminated in proportion to theCompany’s equity interest in the investee, based on which investment income or losses shall be recognised. Any losses resulting from transactions between the investor and the investee, which are attributable to asset impairment shall be recognized in full. The transactions of investing or selling assets between the Company and its associate or joint venture are accounted for under relevant accounting policies when the asset constitutes a business.
When the Company confirms that it should share losses of the investee, treatment shall be done in following sequence: firstly, the book value of the long-term equity investment shall be reduced; secondly, where the book value is insufficient to cover the share of losses, investment losses are recognized to
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the extent of book value of long-term equity which form net investment in the investee in substance and the book value of long-term equity shall be reduced; finally, after all the above treatments, if the Company is still responsible for any additional liabilities in accordance with the provisions stipulated in the investment contracts or agreements, estimated liabilities are recognized and included into current investment loss according to the obligations estimated to undertake. If the investee achieves profit in subsequent periods, the treatment is in the reversed sequence described above, i.e. after deduct any unrecognized investment losses, reduce book value of estimated liabilities recognized, restore book values of other long-term equity which form net investment in the investee in substance, and of long-term equity investment, and recognize investment income at the same time.
(3) Disposal of long-term equity investment
On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount shall be recognized in profit or loss for the current period.
For a long-term equity investment accounted for using the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities on a por-rata basis upon the disposal of the equity investment. Theowners’ equity recognised due to theinvestor’s share of theinvestee’sowners’ equity changes, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution, is included in current profit or loss on a pro-rata basis.
When the Company can no longer exercise joint control of or significant influence over an investee due to partial disposal of equity investment or other reasons, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial Instruments: Recognition and Measurement”. The difference between the fair value and the carrying amount at the date of the loss of joint control or
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significant influence shall be charged to profit or loss for the current period. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method. Theowners’ equity recognised due to theinvestor’s share of theinvestee’sowners’ equity changes, other than those arising from theinvestee’s net profit or loss, other comprehensive income or profit distribution, is transferred to current profit or loss upon discontinuation of the equity method.
When no longer exercise control over an investee due to partial disposal of equity investment or other reasons, and with the retained interest, still has joint control of , or significant influence over, the investee, when preparing the individual financial statements, the Company shall change to the equity method and adjust the remaining equity investment as if the equity method had been applied from the date of the first acquisition. If the Company can not exercise joint control of or significant influence over the investee after partial disposal of equity investment, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial Instruments: Recognition and Measurement”, and the difference between the fair value and carrying amount at the date of the loss of control shall be charged to profit or loss for the current period.
The equity investment disposed was obtained over additional investment or other reasons through business combination, when preparing the individual financial statements, and the remaining equity investment accounted on cost method or equity method, the other comprehensive income and otherowner’s equity recognized due to the equity investment held before acquisition date was accounted for under the equity method are carried forward on a pro-rata basis; when the remaining equity investment is accounted for in accordance with “Accounting Standard for Business Enterprises No. 22– Financial Instruments: Recognition and Measurement”, the other comprehensive income and other
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owner’s equity are totally carried forward.
3.11 Investment property
Investment property refers to possessing real estate for gaining rent or capital appreciation, or both, including the rental of the land use right, possession and prepare to value-added after the transfer of the land use rights and the rental of buildings leased (Including rental buildings after completion of construction or development activities or in the development processing).
Investment property is measured at their actual cost in the Company. Due to the method of determining is actual cost model for investment property-its method of provision for depreciation policy is same with fixedassets’ when the investment properties are constructions or buildings, its method of provision for amortization policy is same with Intangibleassets’ when the investment property is land usage right.
3.12 Fixed assets
3.12.1 Recognition criteria of fixed assets
Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services, renting or business management with useful lives exceeding one year. Fixed assets will only be recognized when all the following criteria are satisfied:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company;
(2) The costs of the fixed assets can be measured reliably.
3.12.2 Classification of fixed assets
Fixed assets are classified into buildings and constructions, machinery equipment, transportation equipment, electronic entertainment equipment, other equipment and Improvement.
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3.12.3 Initial measurement of fixed assets
Fixed assets are initially measured at their actual cost when acquired.
The costs of a purchased fixed asset are determined at the purchase price, the relevant taxes, and the traffic expenses, loading and unloading fees, installation fees and professional service fees arising from preparing the fixed asset for its intended use.
If the payment for a fixed asset is delayed beyond the normal credit conditions and it is of financing nature in effect, the costs of the fixed asset shall be determined based on the present value of the purchase price.
The cost of a self-constructed fixed asset shall be formed by the necessary expenses incurred for preparing the asset for its intended use.
The fixed assets which the debtor uses to pay back the debt in debt restructuring should be recognized at the fair value of the fixed assets. The difference between the book value of restructured debts and the fair value of fixed assets used to pay back the debt should be recorded into current profit and loss;
On the premise that non-monetary asset trade is of commercial nature and the fair value of the asset traded in or out can be measured reliably, the fixed asset traded in with non-monetary asset should be recognized at the fair value of the asset traded out, unless any unambiguous evidence indicates that the fair value of the asset traded in is more reliable; as to the non-monetary asset trade not meeting the aforesaid premise, the book value of the asset traded out and related taxes and surcharges payable should be recognized as the cost of the fixed asset, with gains or losses not recognized.
As for the book-entry value, the fixed assets acquired from the absorption and merger of an enterprise under common control are recognized at the book value of the merged enterprise; the fixed assets acquired from the absorption and merger of an enterprise not under common control are recognized at the fair value.
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The book-entry value of a fixed asset acquired under financing lease is measured at theasset’s fair value on the commencement date of the lease or the present value of the minimum lease payment, whichever is lower.
3.12.4 Method of provision for impairment of fixed assets
The fixed assets are depreciated at straight-line-method, and the depreciation rates are determined as follows based on the category, estimated economic useful lives and estimated residual values(5% of original values):
Estimated net residual Annual depreciation Estimated useful life
Category rate rate (Year)
(%) (%) Buildings and
20-40 5 4.75-2.37 constructions
Machinery equipment 8-20 5 11.87-4.75 Electronic
entertainment 5-16 5 19-5.93 equipment
Transportation
7-12 5 13.57-7.91 equipment
Other equipment 8 5 11.87 Improvement 5 19
3.13 Construction in progress
The initial book values of the fixed assets are stated at total expenditures incurred before construction in progress reaches the working condition for their intended use. For construction in progress that has reached working conditions for its intended use but for which the completion of settlement has not been handled, it shall be transferred into fixed assets at the estimated value according to the project budget, construction price or actual cost, etc. from the date when it reaches the working conditions for its intended use. And
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the fixed assets shall be depreciated in accordance with theCompany’s policy on fixed asset depreciation. Adjustment shall be made to the originally and provisionally estimated value based on the actual cost after the completion of settlement is handled, but depreciation already provided will not be adjusted.
3.14 Borrowing costs
3.14.1 Recognition principles of capitalization of borrowing costs
Borrowing costs include the interest of borrowings, the amortization of discount or premium, auxiliary expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction or production of assets eligible for capitalization should be capitalized and recorded into asset costs; other borrowing costs should be recognized as costs according to the amount incurred and be included into current profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets which may reach their intended use or sale status only after long-time acquisition and construction or production activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
(1) Asset disbursements, which include those incurred by cash payment, the transfer of non-cash assets or the undertaking of interest-bearing debts for acquiring and constructing or producing assets eligible for capitalization, have already been incurred;
(2) Borrowing costs have already been incurred;
(3) The acquisition and construction or production activities which are necessary to prepare the assets for their intended use or sale have already been started.
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3.14.2 Capitalization period of borrowing costs
Capitalization period refers to the period from the beginning of capitalization to the cease of capitalization, excluding the period of capitalization suspension of borrowing costs.
Capitalization of borrowing costs should be ceased when the acquired and constructed or produced assets eligible for capitalization have reached their intended use or sale condition.
When some projects among the acquired and constructed or produced assets eligible for capitalization are completed and can be used separately, the capitalization of borrowing costs of such projects should be ceased.
If all parts of the acquired and constructed or produced assets are completed but the assets cannot be used or sold externally until overall completion, the capitalization of borrowing costs should be ceased at the time of overall completion of the said assets.
3.14.3 Period of capitalization suspension
If the acquisition and construction or production activities of assets eligible for capitalization are interrupted abnormally and this condition lasts for more than three months, the capitalization of borrowing costs should be suspended; if the interruption is necessary for the acquisition and construction or production to prepare the assets for their intended use or sale, the capitalization of borrowing costs should continue. The borrowing costs incurred during interruption are recognized in the current profit and loss, and the capitalization of borrowing costs continues after the restart of the acquisition and construction or production activities of the assets.
3.14.4 Calculation method of capitalization amount of borrowing costs
As for special borrowings borrowed for acquiring and constructing or producing
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assets eligible for capitalization, borrowing costs of special borrowing actually incurred in the current period less the interest income of the loans unused and deposited in bank or return on temporary investment should be recognized as the capitalization amount of borrowing costs.
As for general borrowings used for acquiring and constructing or producing assets eligible for capitalization, the interest of general borrowings to be capitalized should be calculated by multiplying the weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special borrowings at the end of every month by the capitalization rate of used general borrowings. The capitalization rate is calculated by weighted average interest rate of general loans.
As for borrowings with discount or premium, the to-be-amortized discount or premium in each accounting period should be recognized by effective interest rate method, and the interest for each period should be adjusted.
3.15 Intangible assets
3.15.1 Measurement method of intangible assets
(1) The Company initially measures intangible assets at cost on acquisition;
The cost of an externally acquired intangible asset comprises its purchase price, related taxes and surcharges and any other directly attributable expenditure of preparing the asset for its intended use. If the deferred payment of purchase price of intangible assets exceeding normal credit terms is substantially of financial nature, the cost of intangible assets should be recognized at the present value of the purchase price.
The intangible assets which the debtor uses to pay back the debt in debt restructuring should be recognized at the fair value of the intangible assets. The difference between the book value of restructured debts and the fair value of intangible assets used to pay back the debt should be recorded into the current profit and loss;
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On the premise that non-monetary assets trade is of commercial nature and the fair value of the assets traded in or out can be measured reliably, the intangible assets traded in by the trade of non-monetary assets should be recognized at the fair value of the assets traded out, unless any unambiguous evidence indicates that the fair value of the assets traded in is more reliable; as to the non-monetary assets trade not meeting the aforesaid premise, the book value of the assets traded out and related taxes payable should be recognized as the cost of the intangible assets traded in, with gains or losses not recognized.
The intangible assets obtained by the absorption and merger of an enterprise under common control are recognized at the book value of the merged enterprise; the intangible assets obtained by the absorption and merger of an enterprise not under common control are recognized at the fair value.
Costs of intangible assets developed internally and independently include: the costs of materials and labor services used to develop the intangible assets, the registration fee, the amortization of other patents and franchise used in the process of development, the interest of capitalization, and other direct expenses for preparing the intangible assets for their intended use.
(2) Subsequent measurement
The useful life of intangible asset is analyzed on acquisition.
As for intangible assets with limited useful lives, straight-line amortization method is adopted in the period when the intangible assets generate economic benefit for enterprise; if the period when the intangible assets generate economic benefit for enterprise cannot be forecasted, the intangible assets should be deemed as those with indefinite useful lives and should not be amortized.
3.15.2 Estimation of useful life of intangible assets with limited useful life
Item Estimated useful life Basis
Land use right 50 years Validity term of land use certificate
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The useful lives and amortization method of intangible assets with limited useful lives are reviewed at the end of each period.
Upon review, the useful lives and amortization method of the intangible assets as at the end of the year are not different from those estimated before.
3.15.3 Determination basis of intangible assets with indefinite useful lives
As at the balance sheet date, the Company has no intangible assets with indefinite useful lives.
3.16 Impairment of long-term assets
If there is any indication that the long-term assets such as long-term equity investment, investment properties accounted through cost pattern, fixed assets, construction in progress, intangible assets etc. may be impaired at the balance sheet date, an impairment test would be implemented. If the result of impairment test indicates the recoverable amounts of the long-term assets are lower than their book values, the difference between the recoverable amounts and book values is recognized as impairment loss, provisions for impairment of the long-term assets are made. The recoverable amounts of the long-term assets are the higher of their fair values less costs to disposal and the present values of the estimated future cash flows of the long-term assets. The provision for impairment is recognized and calculated on the individual basis. If it is difficult to estimate the recoverable amount of the individual asset, the Company estimates the recoverable amount of the asset group that the individual asset belongs to. The asset group is the minimum asset group which can generate cash flows independently.
The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognized.
3.17 Long-term deferred expenses
Long-term deferred expenses are various expenses already incurred, which shall be amortized over current and subsequent periods with the amortization period exceeding one year.
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3.17.1 Amortization method
Long-term deferred expenses are evenly amortized over the beneficial period.
3.17.2 Amortization period
Item Amortization period
Hotel exterior wall decoration 4 years 3.18 Employee compensation
3.18.1 Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service, actually occurred short-term employee benefits as a liability, with a corresponding charge to current profit or loss or relevant cost of assets.
Payments made by the Company of social security contributions for employees, and union running costs and employee education costs provided in accordance with relevant requirements, in the accounting period in which employees provide services, is calculated according to prescribed bases and percentages of provision in determining the amount of employee benefits.
Employee benefits which are non-monetary benefits are measured at fair value.
3.18.2 Termination benefits
When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal, or when the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits (the earlier is adopted), the employee benefits liabilities caused by termination benefits are recognized and included in current profit or loss.
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3.18.3 Post-employment benefits
Payments made by the Company of basic endowment insurance and unemployment insurance in accordance with relevant requirements of local government, in the accounting period in which employees provide services, is calculated according to prescribed bases and percentages of provision of local requirements in determining the amount payable, is recognized as a liability, with a corresponding charge to current profit or loss or relevant cost of assets.
3.19 Estimated liabilities
When the Company is involved in proceedings, debt guarantees, onerous contracts and reorganization events, if such events may require delivery of assets or rendering of services in the future and the amounts of such events can be reliably measured, estimated liabilities are recognized.
3.19.1 Recognition criteria of estimated liabilities
The Company recognizes the estimated liabilities when obligations related to contingencies satisfy all the following conditions:
(1) The obligation is a present obligation of the Company;
(2) The performance of the obligation is likely to result in outflow of economic benefits from the Company; and
(3) The amount of the obligation can be measured reliably.
3.19.2 Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required for the performance of relevant present obligations.
The Company, when determining the best estimate, has had a comprehensive
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consideration of risks with respect to contingencies, uncertainties and the time value of money. If the time value of money is significant, the best estimate shall be determined after discounting the relevant future outflow of cash.
The best estimate shall be accounted as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all the outcomes within this range are equal, the best estimate shall be determined at the average amount of upper and lower limits within the range.
If there is no continuous range (or interval) for the necessary expenses, or probabilities of occurrence of all the outcomes within this range are unequal despite such a range exists, the outcomes within this range are unequally likely to occur, in case that the contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the contingency involves two or more items, the best estimate should be determined according to all the possible outcomes with their relevant probabilities.
When all or part of the expenses necessary for the settlement of an estimated liability of the Company is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the compensation will be received. The amount recognized for the compensation should not exceed the book value of the estimated liability.
3.20 Revenue
3.20.1 Recognition and measurement principles of revenue from sales of goods
(1) Overall recognition and measurement principles of revenue from sales of goods
When the Company has transferred significant risks and rewards of ownership of the goods to the buyer; the Company retains neither continuous management rights associated with ownership of the goods sold nor effective control over
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the goods sold; the relevant amount of revenue can be measured reliably; it is highly likely that the economic benefits associated with the transaction will flow into the enterprise, and the relevant amount of cost incurred or to be incurred can be measured reliably, revenue from sales of goods shall be recognized.
(2) Recognition criteria of revenue from selling goods and specific recognition timing criteria of revenue of the Company
The Company provides hotel accommodation service as well as goods. After the recognition of both housekeeping department and hotel reception desk, the daily business report is established. The accounting department makes sure the significant risks and rewards of ownership of the goods have been transferred to the client, the selling revenue is recognized.
3.20.2 Recognition and measurement principles of revenue from providing labor services
(1) The hotel room service, catering (breakfast) service etc. of the Company, after the hotel room service, catering (breakfast) service etc. had provided, and each consumption department had checked with the receptionist, the daily business report and detailed report of account receivables are established, and the reports are submitted to accounting department, which recognizes the revenue after examining the daily reports.
(2) Revenue from outsourced restaurant and site rental is recognized according to contract or agreement time period and time of collecting.
3.20.3 Recognition basis of revenue from transferring the use right of assets
The economic benefits related to the transaction may flow into entities and the amount of revenue can be reliably measured. The amount of revenue from transferring use right of assets is recognized as follows in different circumstances:
(1) The amount of interest income is determined by the time and effective interest rate for others to use the monetary fund of the Company.
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(2) The amount of revenue from usage is determined according to the charging time and method as agreed in relevant contract or agreement.
3.21 Government subsidies
3.21.1 Types
Government subsidies are monetary assets and non-monetary assets acquired free of charge by the Company from the government. Government subsidies are classified into government subsidies related to assets and government subsidies related to income.
3.21.2 Accounting treatment
Government subsidies related to acquisition and construction of fixed assets, intangible assets and other long-term assets are recognized as deferred income, and included in non-operating income by stages within the useful life of the assets acquired and constructed;
If government subsidies related to income are used to compensate theenterprise’s relevant expenses or losses in future periods, such government subsidies should be recognized as deferred income on acquisition and be included into the current non-operating income in the period of recognizing relevant expenses; if government subsidies related to income are used to compensate theenterprise’s relevant expenses or losses incurred, such government subsidies are directly included into the current non-operating income on acquisition.
3.22 Deferred income tax assets and deferred income tax liabilities
Deductible temporary differences are recognized as deferred income tax assets to the extent that it shall not exceed future taxable income possibly available to be against the deductible temporary difference.
Deductible temporary differences are recognized as deferred income tax liabilities except in special circumstances.
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Special circumstances in which deferred income tax assets or deferred income tax liabilities shall not be recognized include: the initial recognition of goodwill; other transactions or matters excluding business combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when occurred.
If the Company has the legal right of netting and intends to settle in net amount or to obtain assets and discharge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for the current period shall be presented based on the net amount after offset.
When the Company has the legal rights to balance income tax assets and income tax liabilities in current period with net settlement, and deferred income tax assets and deferred income tax liabilities are related to the income tax which imposed on the same taxpaying subject by the same tax collection authority or to different taxpaying subjects, but, in each important future period in connection with the reverse of deferred income tax assets and liabilities, the involved taxpaying subject intends to balance income tax assets and liabilities in current period with net settlement at the time of obtaining assets and discharging liabilities, deferred income tax assets and deferred income tax liabilities of the Company shall be presented based on the net amount after offset.
3.23 Operating lease
3.22.1 Accounting of leased assets
Lease fees paid by the Company for leased asset shall be amortized at straight-line method over the whole lease period (including rent-free period) and shall be included in the current expenses. Initial direct costs related to lease transactions paid by the Company shall be included in the current expenses.
If the expense related to the lease which shall be paid by the Company is assumed by the lessor of the asset, such expenses shall be deducted from total lease fees, and residual lease fees shall be amortized over the lease period and included in the current expenses.
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3.23.2 Accounting of leasing assets
Lease fees received by the Company from leasing assets shall be amortized at straight-line method over the whole lease period (including rent-free period), and shall be recognized as lease income. Initial direct costs related to lease transactions paid by the Company shall be included in the current expenses; if the amount is large, it shall be capitalized, and shall be included in the current income by stages within the whole lease period on same basis for recognition of lease income.
If the expenses related to the lease which shall be paid by the lessee are borne by the Company, such expenses shall be deducted from total lease income by the Company, and residual lease fees shall be amortized over the lease period.
3.24 Adjustments for changes in principal accounting policies and
estimates
3.24.1 Adjustments for changes in accounting policies
There are no changes in principal accounting policies for the Company during the reporting period.
3.24.2 Adjustments for changes in accounting estimates
There are no changes in principal accounting estimates for the Company during the reporting period.
4 Taxation
Major tax types and tax rates applicable to the Company
Taxation type Basis of tax assessment Tax rate
Differential section of VAT calculated on
revenue from sale of goods and service
5%,6%,11%,17% Value added tax (VAT) deduct VAT paid in current period in
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accordance with tax law
Levy by taxable business revenue
Business tax 5%
Urban maintenance and
Levy by the taxable business tax and VAT
7%
construction tax
Levy by the taxable business tax and VAT
Education surcharge 3%
Levy by the taxable business tax and VAT
Local education surcharge 2%
Remaining value after deducting30% of
the original value of houses (including
Property tax
1.2%,12% land price), Rental income
Land use tax Land area 18yuan/㎡ Levy by taxable income
Enterprise income tax 25%
Other explanation: In accordance with the “Fully Implementation of the Pilot Proposals for the Change from Business Tax to Value-Added Tax” (Cai Shui[2016] No.36) issued by Ministry of Finance and SAT, the proposals for the change from business tax to VAT will carry out since 1 May 2016, the Company pay the VAT with rate of5%,6%,11% and17% respectively for different business revenue.
5 Notes to the main items of financial statements
5.1 Monetary funds
||||
|-|-|-|
|Item|Ending balance|Beginning balance|
||329,071.51|273,523.86|
||9,779,104.40|26,936,724.15|
|Total|||
||10,108,175.91|27,210,248.01|

The main reason for the decrease in bank deposits is to pay RMB 10 million to Luoniushan Group Co., Ltd. and pay RMB 9 million to Wuhan Aierjia Technology Development Co., Ltd. for thecreditors’ investment.
Other notes: The closing balance is unsecured, unfrozen ordoesn’t have other restrictions on realization or the funds deposit in the overseas, or have potential recovery risks.
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5.2 Accounts receivable
5.2.1 Accounts receivable by type
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for bad debts|||Book balance||Provision for bad debts|||
|Type|||||Book|||||Book|
|||Proporti||Proporti|||Proporti||Proporti||
||Amount||Amount||Value|Amount||Amount||Value|
|||on||on|||on||on||
||1,466,400.49|57.13%|1,466,400.49|100.00%||1,466,400.49|50.22%|1,466,400.49|100.00%||
||1,100,308.71|42.87%|763,121.66|69.36%|337,187.05|1,453,566.38|49.78%|763,121.66|52.50%|690,444.72|

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||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for bad debts|||Book balance||Provision for bad debts|||
|Type|||||Book|||||Book|
|||Proporti||Proporti|||Proporti||Proporti||
||Amount||Amount||Value|Amount||Amount||Value|
|||on||on|||on||on||
|Total|||||||||||
||2,566,709.20|100.00%|2,229,522.15|86.86%|337,187.05|2,919,966.87|100.00%|2,229,522.15|76.35%|690,444.72|

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(1) Accounts receivable with large single amount and accrued for provision of bad debt on a single basis as at June 30, 2017
||||||
|-|-|-|-|-|
||Ending balance||||
|Content of accounts|||||
|||Provision for|Proportion ofprovision (%)||
|receivable (By Company)|Book balance|||Reason for provision|
|||bad debts|||

Over five years, the bill Sanya Power Supply signing expenses was 775,304.98 775,304.98 100.00%
Company un-collectable for personnel changes Over five years, the bill Hainan Hong Kong& Macao signing expenses was 464,563.21 464,563.21 100.00%
International Tourism Ltd. un-collectable for bills un-recognized Over five years, the bill signing expenses was 101,652.32 101,652.32 100.00%
Sanya City Council reception
un-collectable for personnel changes LLC SOUTH CROSS
124,879.98 124,879.98 100.00%
TRAVELINN Had declared bankruptcy
||||
|-|-|-|
|Total|||
||1,466,400.49|1,466,400.49|

(2) Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio:
|||||
|-|-|-|-|
||Ending balance|||
|Aging||||
||Accounts receivable|Provision for bad debts|Proportion of provision|

 298,461.50
Within 1 year
18,633.00 931.65 5.00%
1-2 years
2-3 years
5,262.00 789.30 15.00%
6,942.00 1,735.50 25.00%
3-4 years
22,690.00 11,345.00 50.00%
4-5 years
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More than five
748,320.21 748,320.21 100.00%
years
1,100,308.71 763,121.66 69.36%
Total
5.2.2 Situation of withdrawing or write-off for bad debts provision of accounts receivable in current period
No situation of withdrawing or write-off for bad debts provision of accounts receivable in current period.
5.2.3 Top five accounts receivable
||||||
|-|-|-|-|-|
||Relationship||||
|||||Proportion in total|
|Name|with the|Book balance|Aging|accounts receivable|
||Company|||(%)|

Sanya Power Supply Non related
More than five
775,304.98 30.21%
Company
party years
Hainan Hong Kong&
Non related
Macao International More than five
464,563.21 18.10%
Tourism Ltd.
party
years
LLC SOUTH CROSS Non related
124,879.98 2-3 years 4.87%
TRAVELINN
party
Reception centre of
Non related
Sanya Municipal
101,652.32
More than five
3.96%
party
Committee years
Hainan Baoping Travel Non related
More than five
46,798.32 1.82%
Agency
party years
||||
|-|-|-|
|Total|1,513,198.81|58.95%|

5. 3 Prepayments
5.3.1 Aging analysis of repayment
||||||
|-|-|-|-|-|
||Ending balance||Beginning balance||
|Aging|Book balance|Proportion|Book balance|Proportion|

 Within 1 year
38,660.36 100.00% 58,783.23 100.00%
||||||
|-|-|-|-|-|
|Total|38,660.36|100.00%|58,783.23|100.00%|

Other explanation: prepayment including the insurance expenses, fuel costs and
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book allowance etc.
5.3.2 Top five prepayment collected by objects at ending balance
||||
|-|-|-|
|||Proportion in total|
|Name|Book balance||
|||prepayment (%)|

Sunshine Property Insurance Co., LTD Hainan
19,445.29 50.30% Branch
China Petrochemical Marketing Co. Ltd Sanya
9,036.31 23.37% Branch
China Post Group Corporation Sanya Branch
5,400.00 13.97% Sanya Daily Office
4,778.76 12.36%
||||
|-|-|-|
|Total|38,660.36|100.00%|

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5.4 Other receivables
5.4.1 Other receivables by type:
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Ending balance|||||Beginning balance|||||
||Book balance||Provision for bad debts|||Book balance||Provision for bad debts|||
|Type|||||Book|||||Book|
|||||Proportio|||Proporti||Proportio||
||Amount|Proportion|Amount||Value|Amount||Amount||Value|
|||||n|||on||n||

Other receivables with large
single amount and accrued 77,363,143.3
77,363,143.31 98.67% 77,363,143.31 100.00% 98.85% 77,363,143.31100.00% 1
for provision of bad debt on a
single basis
Other receivables accrued for
174,103.5 provision of bad debt by
1,045,483.05 1.33% 729,098.81 69.74% 316,384.24 903,202.33 1.15% 729,098.81 80.72% 2 portfolio
Other receivables with
insignificant single amount
but accrued for provision of
bad debt on a single basis
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|Total||||||78,266,345.6|100.00|||174,103.5|
||78,408,626.36|100.00%|78,092,242.12|99.60%|316,384.24|||78,092,242.12|99.78%||
|||||||4|%|||2|

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(1) Other receivables with large single amount and accrued for provision of bad debt on a single basis as at period-end
||||||
|-|-|-|-|-|
|Other|Ending balance||||
|receivables (By||Provision for|Proportion of||
||Book balance|||Reason for provision|
|Company)||bad debts|provision||

Hainan Over five years account age, Dadonghai 54,767,945.15 54,767,945.15 100.00% un-collectable for debtor has Hotel Co., Ltd. abnormal operation
Cash dividends
distributed in
16,899,000.00 16,899,000.00 100.00% un-collectable
1994-1996
Hainan Hong
Over five years account age, Kong& Macao
4,145,704.16 4,145,704.16 100.00% un-collectable for mis-listing the International
Tourism Ltd. contract income on account Guangdong The bonus money before 1996, Jinma Tourism 1,200,494.00 1,200,494.00 100.00% un-collectable for equity change with Ltd. Shenzhen Difu
un-collectable for the trustee fee paid Shareholder 350,000.00 350,000.00 100.00% on behalf of other shareholders while custody fee listing
||||
|-|-|-|
|Total|77,363,143.31|77,363,143.31|

(2) Other receivables accrued for provision of bad debt by aging analysis method in portfolio:
|||||
|-|-|-|-|
||Beginning balance|||
|Aging|||Proportion of provision|
||Accounts receivable|Provision for bad debts||
||||(%)|
|Within 1 year|298,329.64|||
|1-2 years|18,468.00|923.40|5.00|
|2-3 years|600.00|90.00|15.00|

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|||||
|-|-|-|-|
||Beginning balance|||
|Aging|||Proportion of provision|
||Accounts receivable|Provision for bad debts||
||||(%)|
|More than five years|728,085.41|728,085.41|100.00|
|Total|1,045,483.05|729,098.81||

5.4.2 Provision for bad debts accrued, regain or switch back in the Period
No provision for bad debts accrued, regain or switch back in the Period.
5.4.3 Other receivables by fund quality
||||
|-|-|-|
|Fund quality|Ending book balance|Beginning book balance|

 Original relevant companies fund
54,767,945.15 54,767,945.15 accounts
Contracting profit receivable
4,145,704.16 4,145,704.16 Distributing dividends receivable
18,099,494.00 18,099,494.00 Guarantee deposit
563,818.99 563,818.99 Advance money for custody fee
350,000.00 350,000.00 Other fund accounts
245,477.64 23,114.20 Petty money
78,772.22 78,772.22 Utilities
92,411.70 164,165.49 Money from invested items
30,500.00 30,500.00 Personal social security、
29,502.50 37,831.43 Accumulation fund
Project funds
3,700.00 3,700.00 Cash deposit for invoices
1,300.00 1,300.00
||||
|-|-|-|
|Total|||
||78,408,626.36|78,266,345.64|

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5.4.4 Top five other account receivables collected by arrears party at ending balance
|||||||
|-|-|-|-|-|-|
|||||Proportion in|Ending|
||Nature of|Ending||||
|Company name|||Aging|total other|balance of bad|
||money|balance||||
|||||receivables|debt provision|

 Hainan Dadonghai Hotel Current More than
54,767,945.15 69.85% 54,767,945.15 Co., Ltd. accounts five years
Dividends
distributed
Cash dividends More than
and ought to 16,899,000.00 21.55% 16,899,000.00 distributed in 1994-1996 five years
be
recovered
Hainan Hong Kong&
Current More than
Macao International 4,145,704.16 5.29% 4,145,704.16 accounts five years
Tourism Ltd.
Guangdong Jinma More than
Dividends 1,200,494.00 1.53% 1,200,494.00 Tourism Ltd. five years
More than
Shareholder custody fee Custody fee 350,000.00 0.45% 350,000.00 five years
|||||||
|-|-|-|-|-|-|
|Total||||||
||--|77,363,143.31|--|98.67%|77,363,143.31|

5.5 Inventories
5.5.1 Classification of inventories
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||Ending balance||||||Beginning balance|||||
|Item||Book||Depreciatio||||||Depreciatio|||
|||||||Book value||Book balance||||Book value|
|||balance||n reserve||||||n reserve|||
|Stock materials||923,401.41||742,966.17||180,435.24||876,822.10||742,966.17||133,855.93|
|Stock|||||||||||||
|||22,771.38||11,102.41||11,668.97||22,771.38||11,102.41||11,668.97|
|commodities|||||||||||||
|Food and|||||||||||||
|||39,315.16||||39,315.16||52,660.42||||52,660.42|
|beverages|||||||||||||
|Fuels|21,795.68||||21,795.68||20,994.40||||20,994.40||
|Total|1,007,283.63||754,068.58||253,215.05||973,248.30||754,068.58||219,179.72||

财务报表附注第43页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.5.2 Inventory depreciation reserve
|||||||||
|-|-|-|-|-|-|-|-|
|||Provision in Period||Decrease in Period||||
|Category of|Beginning|||||||
|||Withdrawi|Other|Reversal or||Ending balance|Ending balance|
|inventories|balance||||Other|||
|||ng||Write-off||||
|Stock||||||||
||742,966.17||||||742,966.17|
|materials||||||||
|Stock||||||||
||11,102.41||||||11,102.41|
|commodities||||||||
||754,068.58||||||754,068.58|
|Total||||||||

 5.6 Non-current liabilities maturing within one year
|||||
|-|-|-|-|
|Item|Ending balance|Beginning balance|Remarks|

 Long-term deferred expenses Hotel exterior needed to be amortised within one 292,184.72 584,369.42 wall
year decoration
||||
|-|-|-|
|Total|292,184.72|584,369.42|

5.7 Other current assets
|||||
|-|-|-|-|
|||Beginningbalance|Remarks|
|Item|Ending balance|||

Prepay corporate income tax
1,702,702.80 1,702,702.80
Prepay VAT
318,164.96 173,746.42
Debt investment Wuhan Aierjia Technology
9,000,000.00
Development Co., Ltd.
||||
|-|-|-|
|Total|||
||11,020,867.76|1,876,449.22|

财务报表附注第44页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.8 Available-for-sale financial assets
5.8.1 Available-for-sale financial assets
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Item||Provision forimpairment|||Provision for||
||Book balance||Book value|Book balance||Book value|
||||||impairment||

Available-for-sale debts
Available-for-sale equity
5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00
instruments.
Of which:
Measured at fair value
Measured at cost 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00
|||||||
|-|-|-|-|-|-|
||5,000,000.00|5,000,000.00|5,000,000.00|5,000,000.0|0|
|Total||||||

5.8.2 Available-for-sale financial assets measured at cost at the end of the period
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Book balance||||Provision for impairment||||Shareho|Cash|
||||||||Decr||lding|divid|
|||||||Increase inPeriod|||||
|||Increa|Decrea||||ease||ratio in|ends|
|Item|Beginning|||Endingbalance|Beginningbalance|||Endingbalance|||
||||||||||investee|in|
|||se in|se in||||in||||
||balance||||||||||
||||||||||(%)|Peri|
|||Period|Period||||Perio||||
||||||||d|||od|

Shenzhen
Difu
Investment&
5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 14.28 Development
Ltd
|||||||||
|-|-|-|-|-|-|-|-|
|Total|5,000,000.0|0|5,000,000.0|0|5,000,000.00|5,000,000.0|0|

5.9 Long-term equity investments
5.9.1 The classification of long-term equity investment is as follows:
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Investee||Provision forimpairment|Book||Provision for|Book|
||Book balance|||Book balance|||
||||Value||impairment|Value|

财务报表附注第45页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|Investee||Provision for|Book||Provision for|Book|
||Book balance|||Book balance|||
|||impairment|Value||impairment|Value|

 Hubei Jingsha Dadonghai Club Ltd.
4,566,207.42 4,566,207.42 4,566,207.42 4,566,207.42
SanyaShun’an Casino
5,150,166.84 5,150,166.84 5,150,166.84 5,150,166.84
||||||
|-|-|-|-|-|
|Total|9,716,374.26|9,716,374.26|9,716,374.26|9,716,374.26|

财务报表附注第46页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.9.2 Details of long-term equity investment
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Remark on||Provisi||
||||||||Shareholdi|||||Cash|
||Accoun|||||||Voting ratio|different ratios||on for||
|||Investment|Beginning|Increase in|Decrease|Ending|ng ratio in|||Provision for||dividen|
|Investee|ting|||||||in investee|of shareholding||impair||
|||costs|balance|Period|in Period|balance|investee|||impairment||ds in|
||Method|||||||(%)|and voting in||ment in||
||||||||(%)|||||Period|
||||||||||investee||Period||

 Hubei
Jingsha
4,566,207.42 4,566,207.42 4,566,207.42 91.00 91.00 4,566,207.42
Dadonghai Cost
Club Ltd. method
Sanya
Shun’an Cost 5,150,166.84 5,150,166.84 5,150,166.84 70.00 70.00 5,150,166.84
Casino method
||||||
|-|-|-|-|-|
|Subtotal of|||||
||9,716,374.26|9,716,374.26|9,716,374.26|9,716,374.26|
|cost method|||||

财务报表附注第47页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.10 Investment real estate
Investment real estate by cost measurement
|||||
|-|-|-|-|
||Houses and|||
|Item||Land use right|Total|
||buildings|||

I. Original book value:
1. Beginning balance 18,856,504.44 5,662,740.59 24,519,245.03 2. Increase in Period
(1) Purchase
(2) Transfer from fixedassets\intangible
assets
(3) Increase in business merger
3. Decrease in Period
(1) Disposal
(2) Other transfer
4. Ending balance 18,856,504.44 5,662,740.59 24,519,245.03 II. Accumulated depreciation and
accumulated amortization
1. Beginning balance 9,771,216.42 2,107,046.45 11,878,262.87 2. Increase in Period 209,091.78 28,170.00 237,261.78 (1) Withdraw or amortize
3. Decrease in Period
(1) Disposal
(2) Other transfer
4. Ending balance 9,980,308.20 2,135,216.45 12,115,524.65 III. Depreciation reserve
1. Beginning balance 1,404,400.47 1,903,054.14 3,307,454.61 2. Increase in Period
(1) Withdraw
3. Decrease in Period
(1) Disposal
(2) Other transfer
4. Ending balance 1,404,400.47 1,903,054.14 3,307,454.61
IV．Book value
财务报表附注第48页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
|||||
|-|-|-|-|
||Houses and|||
|Item||Land use right|Total|
||buildings|||

1. Book value at the end of the period 7,471,795.77 1,624,470.00 9,096,265.77
|||||
|-|-|-|-|
|2. Book value at the beginning of the period|7,680,887.55|1,652,640.00|9,333,527.55|

 5.11 Fixed assets
5.11.1 Fixed assets
||||||||
|-|-|-|-|-|-|-|
||Buildings and|||Electronic|||
|Item||Machines|Vehicles||Others|Total|
||Constructions|||Equipments|||

I. Original book value:
136,564,783.1 2,091,322.7 2,585,268.9 1,703,389.4 156,086,235.2 1.Beginning balance 13,141,471.00
5 7 2 5 9 2. Increase in
253,752.14 -16,489.74 14,423.30 251,685.70 Period
(1) Purchase 253,752.14 6,758.12 14,423.30 274,933.56 (2) transfer in of
-23,247.86 -23,247.86 the construction project
(3) the increase in
business combination
3. Decrease in Period
(1) Disposal or
scrap
136,564,783.1 2,345,074.9 2,568,779.1 1,717,812.7 156,337,920.9 4.Ending balance 13,141,471.00
5 1 8 5 9 II. Accumulated
depreciation
1,252,935.7 1,447,909.8
1.Beginning balance 68,185,246.92 9,092,676.08 2,111,146.45 82,089,914.95 0 0
2. Increase in Period 1,066,956.49 138,639.24 87,765.30 51,597.85 37,937.12 1,382,896.00 (1) Withdraw
1,066,956.49 138,639.24 87,765.30 51,597.85 37,937.12 1,382,896.00 3. Decrease in Period
(1) Disposal or
scrap
1,340,701.0 2,162,744.3 1,485,846.9
4.Ending balance 69,252,203.41 9,231,315.32 83,472,810.95
0 0 2
财务报表附注第49页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||||||
|-|-|-|-|-|-|-|
||Buildings and|||Electronic|||
|Item||Machines|Vehicles||Others|Total|
||Constructions|||Equipments|||

III．Depreciation reserve
1.Beginning balance 31,072,788.17 2,527,851.26 33,600,639.43 2. Increase in Period
(1) Withdraw
3. Decrease in Period
(1) Disposal or
scrap
4.Ending balance 31,072,788.17 2,527,851.26 33,600,639.43IV．Book value of fixed
assets
(1) Book value at the end 1,004,373.9
36,239,791.57 1,382,304.42 406,034.88 231,965.83 39,264,470.61 of the period
1
||||||||
|-|-|-|-|-|-|-|
|(2) Book value at the|||||||
||37,306,748.06|1,520,943.66|838,387.07|474,122.47|255,479.65|40,395,680.91|
|beginning of the period|||||||

Other explanation: no temporary idle fixed assets at end of the period, and no fixed assets mortgage or guarantee
5.12 Construction in process
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|||Provisio|||Provision||
|Item||n for||Book|for|Book|
||Book balance||Book Value||||
|||impairm||balance|impairme|Value|
|||ent|||nt||

Reconstruction of
805,644.64 805,644.64
swinging pool
Hatchway of the
100,000.00 100,000.00
sightseeing elevator
Reconstruction of
46,800.00 46,800.00
high-voltage metering
cubicle
25,767.00 25,767.00
Reconstruction of fire
财务报表附注第50页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||||||
|-|-|-|-|-|-|-|
||Ending balance|||Beginning balance|||
|||Provisio|||Provision||
|Item||n for||Bookbalance|for|Book|
||Book balance||Book Value||||
|||impairm|||impairme|Value|
|||ent|||nt||

stair in Building A
||||
|-|-|-|
|Total|978,211.64|978,211.64|

5.13 Intangible assets
||||
|-|-|-|
|Item|Land use right|Total|

I. Original book value
81,653,137.15 81,653,137.15 1. Beginning balance
2. Increase in the period
3. Decrease in the period
81,653,137.15 81,653,137.15 4. Ending balance
II. Accumulated amortization
30,382,276.95 30,382,276.95 1. Beginning balance
406,193.58 406,193.58 2. Increase in the period
3. Decrease in the period
30,788,470.53 30,788,470.53 4. Ending balance
III. Depreciation reserve
27,440,836.84 27,440,836.84 1. Beginning balance
2. Increase in the period
3. Decrease in the period
27,440,836.84 27,440,836.84 4. Ending balance
IV. Booking value
23,423,829.78 23,423,829.78
1. Ending book value
||||
|-|-|-|
|2. Beginning book value|23,830,023.36|23,830,023.36|

财务报表附注第51页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
Note: The provision for impairment of intangible assets was the excess of the book value over the marker price of the lands at Oceanside which was restricted for use under the plan of Sanya Municipal Government.
5.14 Long-term deferred expenses
||||||||
|-|-|-|-|-|-|-|
||Beginning balance||||Ending balance||
|||||||Long-term|
||Long-term|Long-term|Increase in|Amortization|Long-term||
|Item|||||||
|||||||prepaid|
||deferred|prepaid expenses|Period|in Period|deferred||
|||||||expenses due|
||expenses|due within a year|||expenses||
|||||||within a year|

 Hotel exterior
wall coating
1,071,343.97 584,369.42 292,184.70 1,071,343.97 292,184.72 project
|||||||
|-|-|-|-|-|-|
|Total|1,071,343.97|584,369.42|292,184.70|1,071,343.97|292,184.72|

 5.15 Provision for assets impairment
|||||||
|-|-|-|-|-|-|
||||Decrease in Period|||
||Beginning|Increase in||||
|Item|||Revers||Ending balance|
||balance|Period||Write-off||
||||al|||
|Provision for bad debts|80,321,764.27||||80,321,764.27|
|Inventory depreciation reserve|754,068.58||||754,068.58|
|Provision for impairment of||||||
||5,000,000.00||||5,000,000.00|
|available-for-sale financial||||||
|assets||||||
|Provision for impairment of||||||
||9,716,374.26||||9,716,374.26|
|long-term equity investments||||||
|Provision for impairment of||||||
||33,600,639.43||||33,600,639.43|
|fixed assets||||||
|Provision for impairment of||||||
||27,440,836.84||||27,440,836.84|
|intangible assets||||||
|Impairment provision of||||||
||3,307,454.61||||3,307,454.61|
|investment real estate||||||

财务报表附注第52页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||||||
|-|-|-|-|-|-|-|
||||Decrease in Period||||
||Beginning|Increase in|||||
|Item|||Rever|s||Ending balance|
||balance|Period|||Write-off||
||||al||||
|Total|160,141,137.99|||||160,141,137.99|

 5.16 Accounts payable
5.16.1 Details of accounts payable are as follows:
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

 Within 1 year (including 1 year)
801,070.51 856,048.21 1-2 years (including 2 years)
329,718.70 199,317.78 2-3 years (including 3 years)
334,316.59 334,316.59 Over 3 years
577,882.93 577,882.93
||||
|-|-|-|
|Total|2,042,988.73|1,967,565.51|

 5.16.2 Accounts payable with major amount and aging of over one year
||||
|-|-|-|
|Item|Ending balance|Reason|

Purchase amount recorded Provisional estimation
719,013.26
without invoice issued
||||
|-|-|-|
|Total|719,013.26|/|

5.17 Accounts received in advance
5.17.1 Accounts received in advance
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

 Within 1 year (including 1 year)
625,072.93 1,272,672.89 1-2 years (including 2 years)
141,408.02 141,408.02 2-3 years (including 3 years)
65,874.80 65,874.80
Over 3 years
414,568.57 414,568.57
||||
|-|-|-|
|Total|1,246,924.32|1,894,524.28|

财务报表附注第53页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.17.2 Accounts received in advance with major amount and aging of over one year
||||
|-|-|-|
|||Outstanding or carry-over|
|Item|Ending balance||
|||reasons|

Guangzhou South Holiday International Travel
101,244.00 No settlement
Service Co., Ltd. Sanya Branch
Hainan QiongZhong Ecological Investment
31,314.00 No settlement
Guarantee Co., Ltd.
Beijing Yualuxincheng Management Consulting
30,540.00 No settlement
Co., Ltd.
PEGAS Zheng Qingbo 32,243.02 No settlement
Sanya Public Security Fire Control Team 19,420.88 No settlement
|||
|-|-|
|Total|214,761.90|

5.18 Employee compensation payable
5.18.1 Classification of employee compensation payable
||||||
|-|-|-|-|-|
|||Increase inPeriod|Decrease in|Beginningbalance|
|Item|Ending balance||||
||||Period||

 Short-term employee benefits
2,148,514.36 5,388,428.75 5,737,180.73 1,799,762.38 Post-employment benefits -
470,188.05 470,188.05
defined contribution plans
Termination benefits
Other benefits due within one
year
||||||
|-|-|-|-|-|
|Total|2,148,514.36|5,858,616.80|6,207,368.78|1,799,762.38|

 5.18.2 Short-term employee benefits
||||||
|-|-|-|-|-|
|Item|Beginning|Increase in|Decrease in|Ending balance|

财务报表附注第54页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||
|-|-|-|
|balance|Period|Period|

(1) Salary, bonus, allowance and
1,299,545.99 4,273,089.74 4,695,482.96 877,152.77 subsidy
(2) Employee welfare
674,073.97 674,073.97
(3) Social insurance premium
222,048.79 222,048.79
Of which: including: medical
198,783.08 198,783.08
insurance expenses
Work injury insurance expenses
10,135.79 10,135.79
Maternity insurance
13,129.92 13,129.92
(4) Housing provident funds
69,293.32 59,593.32 9,700.00 (5) Labor union expenditures and
848,968.37 149,922.93 85,981.69 912,909.61 employee education expenses
(6) Short-term paid absences
||||||
|-|-|-|-|-|
|Total|2,148,514.36|5,388,428.75|5,737,180.73|1,799,762.38|

 5.18.3 Details of defined contribution plans
||||||
|-|-|-|-|-|
||Beginningbalance|Increase in|Decrease in||
|Item||||Ending balance|
|||Period|Period||

Basic endowment insurance
455,465.02 455,465.02
expenses
Unemployment insurance expenses
14,723.03 14,723.03
||||
|-|-|-|
|Total|470,188.05|470,188.05|

5.19 Taxes and surcharges payable
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

 VAT
205,157.45 228,923.41 Individual income tax
1.14 Urban maintenance and
4,842.25 6,505.86
construction tax
Educational surtax
2,075.24 2,788.22
财务报表附注第55页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

 Local educational surtax
1,383.50 1,858.82 Property tax
199,326.91 234,032.26 Land use tax
108,590.91 108,588.06 Stamp tax
246.50 18,147.74
Security for disabled person
||||
|-|-|-|
|Total|539,524.00|582,944.27|

Other explanation: in line with relevant regulation of accounting rules of business enterprise, the business income tax prepaid in previous at period-end will re-classified to other current assets for calculation
5.20 Other payables
5.20.1 Other payables by fund quality
||||
|-|-|-|
|Fund quality|Ending balance|Beginning balance|

Fine for rule-breaking operation
19,810,000.00 on the stock of the Company
Audit fee
285,003.21 285,003.21 Project funds
327,589.46 317,277.05 Agency fund
30,884.66 139,319.74 Quality retention money
35,731.15 230,096.75 Guarantee deposit
333,000.00 350,600.90 membership of Board director,
40,506.98 214,506.98 the board of supervisors
Personal fund accounts
67,918.27 73,752.85 Other fund accounts
11,144,451.10 1,001,405.96 Deposit and rental
821,158.32 662,541.29
||||
|-|-|-|
|Total|13,086,243.15|23,084,504.73|

Other explanation: the fine 19,810,000.00 Yuan for illegal stock operation of the Company
are paid to CSRC on 20 February 2017
财务报表附注第56页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.20.2 Other payables with large amount and aging of over one year
|||||
|-|-|-|-|
|||Reason for||
|Company name|Ending balance||Remark|
|||non-repayment||

Hong Kong Deloitte& Touche
285,003.21 No settlement
LLP
Sanya Shuxin Building
170,000.00 No settlement
Waterproofing Co. Ltd
China Building Decoration
161,111.03 No settlement
Company Hannan Branch
|||
|-|-|
|Total|616,114.24|

5.21 Estimates liabilities
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

 Accrual the un-payment electricity
1,489,685.04 1,489,685.04 account
||||
|-|-|-|
|Total|1,489,685.04|1,489,685.04|

 Other explanation: See Note IX
5.22 Share capital
Unit: share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before this change||Increase or decrease (＋, －)|||||After this change||
||||||Share|||||
||||||capital|||||
|Item||Proporti||Shares|converte||||Proportio|
||Amount||New issue|||Others|Sub-total|Amount||
|||on (%)||granted|d from||||n (%)|
||||||reserve|||||
||||||fund|||||

1. Restricted shares
10,455,687 2.87 10,455,687 2.87
(1) State shareholding
财务报表附注第57页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before this change||Increase or decrease (＋, －)|||||After this change||
||||||Share|||||
||||||capital|||||
|Item||Proporti||Shares|converte||||Proportio|
||Amount||New issue|||Others|Sub-total|Amount||
|||on (%)||granted|d from||||n (%)|
||||||reserve|||||
||||||fund|||||

(2) State-owned legal
2,369,400 0.65 2,369,400 0.65 person shareholding
(3) Other domestic capital
8,085,000 2.22 8,085,000 2.22 shareholding
Including: domestic legal
7,953,000 2.18 7,953,000 2.18 person shareholding
Domestic natural person
132,000 0.04 132,000 0.04 shareholding
(4) Foreign capital
shareholding
Including: overseas legal
person shareholding
Overseas natural person
shareholding
(5) Senior officers shares
1,287 1,287 2. Unrestricted shares
353,644,313 97.13 353,644,313 97.13 (1) RMB ordinary shares
265,644,313 72.96 265,644,313 72.96 (2) Foreign shares listed in
88,000,000 24.17 88,000,000 24.17 China
(3) Foreign shares listed
overseas
(4). Others
||||||
|-|-|-|-|-|
|3. Total shares|364,100,000|100.00|364,100,000|100.00|

财务报表附注第58页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.23 Capital reserves
||||||
|-|-|-|-|-|
|Item|Beginning balance|Increase in Period|Decrease in Period|Ending balance|

 Capital (share capital)
33,336,215.58 33,336,215.58 premium
Other capital reserves 20,806,634.43 20,806,634.43
||||
|-|-|-|
|Total|54,142,850.01|54,142,850.01|

 5.24 Undistributed profits
||||
|-|-|-|
|Item|The Period|Last period|

Undistributed profits as at June 30, 2016
-343,966,434.57 -341,305,382.08 Plus: net profit attributable to owner of
1,719,253.80 172,122.52 parent company in Period
Less: appropriation of statutory surplus
reserves
Appropriation of discretionary surplus
reserve
Appropriation of reserve funds
Appropriation of enterprise expansion funds
Appropriation of bonus and welfare funds
Appropriation of general risk reserve
Ordinary share dividends payable
Ordinary share dividends transferred to
share capital
||||
|-|-|-|
|Undistributed profits as at June 30, 2016|-342,247,180.77|-341,133,259.56|

 5.25 Operating income and operating cost
5.25.1 Operating income and operating cost
||||||
|-|-|-|-|-|
||The Period||Last period||
|Item|||||
||Income|Cost|Income|Cost|

财务报表附注第59页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||||
|-|-|-|-|-|
||The Period||Last period||
|Item|||||
||Income|Cost|Income|Cost|

 Operating income
13,518,444.89 5,018,862.48 10,836,467.50 4,222,761.53 Operating cost
1,577,828.53 237,250.03 1,226,330.10 237,261.78
||||||
|-|-|-|-|-|
|Total|15,096,273.42|5,256,112.51|12,062,797.60|4,460,023.31|

Other explanation: The current operating income increased by25.15% compared with the previous year, of which the main operating income increased by20.34% compared with the previous year, mainly due to the increase of Russian tourists in the current period. The main operating costs increased by17.85% compared with the previous year, mainly due to the increase in food and beverage consumption brought by the increase of passenger traffic in the report period.
5.25.2 Primary business (by industry)
||||||
|-|-|-|-|-|
||The Period||Last period||
|Name of industry|||||
||Operating income|Operating cost|Operating income|Operating cost|
|Tourism, catering andservice industry|||||
||15,096,273.42|5,256,112.51|12,062,797.60|4,460,023.31|
|Total|15,096,273.42|5,256,112.51|12,062,797.60|4,460,023.31|

 5.25.3 Primary business (by products)
||||||
|-|-|-|-|-|
||The Period||Last period||
|Name of products|||||
||Operating income|Operating cost|Operating income|Operating cost|
|Guest room income|11,676,662.38|4,079,275.81|9,811,796.58|3,668,041.91|
|Catering and entertainmentincome|||||
||1,841,782.51|939,586.67|1,024,670.92|554,719.62|
|Rental income|1,577,828.53|237,250.03|1,226,330.10|237,261.78|
|Total|15,096,273.42|5,256,112.51|12,062,797.60|4,460,023.31|

财务报表附注第60页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.25.4 Primary business (by region)
||||||
|-|-|-|-|-|
||The Period||Last period||
|Name of region|||||
||Operating income|Operating cost|Operating income|Operating cost|
|Hainan region|15,096,273.42|5,256,112.51|12,062,797.60|4,460,023.31|
|Total|15,096,273.42|5,256,112.51|12,062,797.60|4,460,023.31|

 5.26 Business tax and surcharges
||||
|-|-|-|
|Item|The Period|Last period|

Urban maintenance and
52,296.64 40,719.96 construction tax
Educational surtax
37,289.14 29,085.71 Property tax
441,630.64
Land use tax
217,184.65
4,980.00
Vehicle and vessel use tax
Stamp tax
863.20
Business tax
497,150.96
||||
|-|-|-|
|Total|754,244.27|566,956.63|

 Other explanation:
1. Due to the increase of property tax, land use tax, travel tax, stamp tax and others, the Ministry of Finance issued Accounting Regulations for Value-added Tax (CS No.[2016] 22) on December 3, 2016, which reclassifies the property tax, land use tax, travel tax, and stamp tax generated from the business operation since May 1, 2016 to the “taxes and additional” project, and the taxes and dues occurred before May 1, 2016 shall not be adjusted. The comparative data shall not be adjusted.
2. According to the Notice on Comprehensively Launching the Pilot of Business Tax to Value-added Tax (CSNo.[2016] 36) of the Ministry of Finance and the State Administration of Taxation, because the business tax to value-added tax policy has been comprehensively launched since May 1, 2016.
财务报表附注第61页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.27 Selling expenses
||||
|-|-|-|
|Item|The Period|Last period|

1,532,804.73 1,257,447.17 Staff wages and benefits
224,176.69 217,223.10 Social workers insurance expenses
Depreciation
245,942.02 272,774.51 Water and electricity fees
83,061.58 95,815.71 Repair charges
65,649.32 57,227.50 Other expenses
306,510.59 198,547.75
||||
|-|-|-|
|Total|2,458,144.93|2,099,035.74|

 5.28 Administrative expenses
||||
|-|-|-|
|Item|The Period|Last period|

Staff wages and benefits
2,450,309.99 2,069,711.09 325,482.11 250,843.95 Social workers insurance expenses
Taxes
646,738.02 Business entertainment
402,028.00 295,348.47 Travel expenses
97,189.95 87,737.20 Social labor insurance premium
406,193.58 406,193.58 Other expenses
1,408,246.94 1,232,871.46
||||
|-|-|-|
|Total|5,089,450.57|4,989,443.77|

 5.29 Financial expenses
||||
|-|-|-|
|Type|The Period|Last period|

Interest expenses
Less: interest income
-204,780.17 -258,930.94
Gains or losses on exchange
Handling charges
24,107.51 54,178.40
财务报表附注第62页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||
|-|-|-|
|Total|-180,672.66|-204,752.54|

 5.30 Losses on assets impairment
||||
|-|-|-|
|Item|The Period|Last period|

Losses on bad debt
Losses on inventory depreciation
Losses on impairment of other
current assets
Losses on impairment of
long-term equity investments
Loss on fixed asset impairment
Loss on intangible asset
impairment
||
|-|
|Total|

Other explanation: there no loss of impairment of fix assets occurred in the period and last period
5.30 Non-operating income
Non-operating income by items
|||||
|-|-|-|-|
||||Amount included in current|
|Item|The Period|Last period||
||||non-recurring profits or losses|

 Total gains on disposal of
non-current assets
Including: gain on disposal
of fixed assets
Gain on disposal of
intangible assets
Income from compensation
64,926.00
Others
260.00 12,480.00
||||
|-|-|-|
|Total|260.00|77,406.00|

财务报表附注第63页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.32 Notes to statement of cash flow
5.32.1 Other cash receipts related to operating activities
||||
|-|-|-|
|Item|The Period|Last period|

Compensation for articles in the guest
77,406.00 rooms
204,780.17 258,930.94 Interest income
472,635.21 209,424.79 Other income
||||
|-|-|-|
|Total|677,415.38|545,761.73|

5.32.2 Cash paid for other operating activities
||||
|-|-|-|
|Item|The Period|Last period|

Business entertainment expenses
402,028.00 295,848.47 Audit fee
400,000.00 390,000.00 Announcement fee
60,000.00 60,000.00 Traveling expenses
109,715.87 95,971.20 Promotion expenses
21,162.60 5,312.00 Repair charge
100,191.70 71,380.30 Directors and supervisors membership dues
354,000.00 234,000.00 Others
690,202.00 394,368.26
||||
|-|-|-|
|Total|2,137,300.17|1,546,880.23|

 5.32.3 Cash received with other financing activities concerned
||||
|-|-|-|
|Item|The Period|Last period|

19,810,000.00
LUONIUSHAN Group Co. Ltd.
|||
|-|-|
|Total|19,810,000.00|

财务报表附注第64页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
5.32.4 Cash paid for other financing activities
||||
|-|-|-|
|Item|The Period|Last period|

LUONIUSHAN Group Co. Ltd.
10,000,000.00
CSRC
19,810,000.00
|||
|-|-|
|Total|29,810,000.00|

5.33 Supplementary information to statement of cash flows
5.33.1 Supplementary information to statement of cash flows
||||
|-|-|-|
|Item|The Period|Last period|

 (1) Net profit adjusted to cash flows from operating activities
Net profit
1,719,253.80 172,122.52 Plus: provision for asset impairment
Depreciation of fixed assets, gas and oil assets and productive
1,591,987.78 1,764,713.08 biological assets
Amortization of intangible assets
434,363.58 434,363.58 Amortization of long-term deferred expenses
292,184.70 266,250.00 Loss on disposals of fixed assets, intangible assets and other
long-term assets ("-" for gains)
Loss on write-off of fixed assets ("-" for gains)
Losses from the changes in fair value ("-" for gains)
Financial expenses ("-" for gains)
Investments loss ("-" for gains)
Loss from debts restructuring ("-" for gains)
Decrease in deferred income tax assets ("-" for increases)
Increase in deferred income tax liabilities ("-" for decreases)
Decrease in inventories ("-" for increases)
-34,035.33 -17,511.97
Decrease in operating receivables ("-" for increases)
159,732.97 -290,307.05
Increase in operating payables ("-" for decreases)
-932,414.40 -875,932.72
财务报表附注第65页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
||||
|-|-|-|
|Item|The Period|Last period|

 Others (Projected liabilities)
Net cash flows from operating activities
3,231,073.10 1,453,697.44 2. Significant investing and financing activities not involving
cash receipts and payments
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Fixed assets under financial lease
3. Net changes in cash and cash equivalents
Ending balance of cash
10,108,175.91 11,825,290.70 Less: Beginning balance of cash
27,210,248.01 19,782,392.26 Plus: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
||||
|-|-|-|
|Net increase in cash and cash equivalents|-17,102,072.10|-7,957,101.56|

 5.33.2 Breakdowns of cash and cash equivalents:
||||
|-|-|-|
|Item|Ending balance|Beginning balance|

 1. Cash
10,108,175.91 27,210,248.01 Including: cash on hand
329,071.51 273,523.86 Bank deposit available for payment at any time
9,779,104.40 26,936,724.15 Other monetary funds available for payment at any time
Deposits in the central bank available for payment
Deposits with banks and other financial institutions
Loans to banks and other financial institutions
2. Cash equivalents
Including: Bond investment due within three months
||||
|-|-|-|
|3. Ending balance of cash and cash equivalents|10,108,175.91|27,210,248.01|

财务报表附注第66页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
6 Business combination and consolidated financial statements
6.1 Scope of consolidation (aggregation) of financial statements
The scope of consolidation (aggregation) of financial statements covers the headquarter of the Company and the subsidiary South China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd., which is subject to independent accounting.
6.2 Changes in scope of consolidation (aggregation) of financial
statements:
There is no change in scope of consolidation (aggregation) of the financial statements of the Company in the year.
7 Risks relating to financial instruments
The Company faces a variety of financial risks in business process: credit risk, market risk and liquidity risk. TheCompany’s Board of Directors is overall responsible for risk management objectives and determining policies, and bears the ultimate responsibility for risk management objectives and policies, but the board has authorized theCompany’s enterprise management department to design and executive the procedure which could guarantee the effective implementation of risk management objectives and policies. TheCompany’s internal auditors will audit the policies and procedures of risk management as well, and will report the discovery to Audit Committee.
The overall objective of theCompany’s risk management is to set the risk management policies to reduce risks as possible without giving excessive influence to competitiveness and strain capacity of the Company.
7.1 Credit risk
Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of another party to meet its obligations. The Company mainly faces credit risk generated from customers through credit sales. The Company will understand and assess the credit risk of the new customer before signing the new contract. The Company makes credit rating for existing customers and aging analysis of accounts receivable to ensure theCompany’s overall credit risk falls within a controllable range.
财务报表附注第67页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
7.2 Market risk
Market risk is the risk of financialinstruments’ fair value and future cash flow fluctuating due to change of market price, including currency risk, interest risk and other pricing risk.
7.3 Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling the obligations when paying cash or settle in way of other financial assets. The policy of the Company is to ensure there are enough cash to pay back mature debts. The liquidity risk is centralized controlled by theCompany’s accounting department. The accounting department ensures the Company to possess enough cash to pay back the debts in all reasonable foreseeable circumstances through monitor the balance of cash, monitor the securities that can be converted into cash at any time and rolling forecasts of future cash flows in twelve months.
8 Related parties and related party transactions
8.1 The largest shareholder of the Company
Registered Ultimate Name of Relationship Nature Shareholding
Business Registered Legal Capital Voting ratio in the controller parent with the of ratio in the
Type place representative (RMB Company(%) of the company Company Business Company(%)
0’000) Company Hainan Plant
LuoNiu Luoniushan The largest Listed Haikou and
Xu Zili 115,151.00 16.90 16.90 Shan Co., Ltd. shareholder company City culturing
Holding business
Group Note: As of June 30, 2016, Luoniushan Co., Ltd., as the largest shareholder, held 61,515,400 shares(16.90% of the total share capital of the Company).
财务报表附注第68页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
8.2 Related party transactions
8.2.1 Sale of goods/rendering of labor services
Contents Pricing method
The Period Last period of related and
Proportion Proportion Related party party decision-making
in similar in similar Amount Amount
transactio procedure of
transactions transaction ns related transaction
(%) s(%) Luoniushan Accommo
Market price 252,303.00 1.67% 20,672.00 0.17% Co., Ltd. dation
8.2.2 Receivables and payables of related parties
Name Related party Ending balance Beginning balance Accounts receivable Luoniushan Co., Ltd. 51,896.00 10,668.00 8.2.3 Remuneration of key management
Name The Period (RMB’0,000) Last period (RMB’0,000) Remuneration of key management 73.15 64.58 9 Contingencies
At May26,2016，the Company receivedlawyer’s letter of Hainan Yunfan law firm which is entrusted by Hainan Power Grid Co., LTD Sanya Power Supply Bureau (hereinafter referred to as the "Sanya Power Supply Bureau"), the letter claims that Sanya Power Supply Bureau found that theCompany’s subsidiary South China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co.,Ltd’s the amount of CT is different with its marketing management system record. The inconformity time is July, 2006, and thehotel’s CT is changing on April, 2016. Therefore, undercounted electricity consumption amount is 10,313,373.00 kilowatt-hours, and estimated cost is 7,200,165.75 Yuan as
财务报表附注第69页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
various electricity prices and charges.
According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute between South China Grand Hotel and Sanya Power Supply Bureau” issued by Beijing Junhe (Haikou) Law Firm at December 20, 2016, which claims that Sanya Power Supply Bureau has responsibility for CT to purchase, install, enseal, unseal and change, therefore, the responsibility of the guilty party for undercounted electricity consumption of South China Grand Hotel is Sanya Power Supply Bureau. According to the one hundred and thirty-five item of “General Rule of Civil Law”, this item claims that limitation of action is two years if accuser request people'scourt’s protection, except situations provided by law. The Company has withheld the undercounted electricity consumption cost in 2016 which is about 1,489,685.04 Yuan during the period from April, 2014 to April, 2016.
10 Commitments
There are no commitments required to be disclosed by the Company.
11 Notes to other significant events
11.1 Correction of accounting errors in previous period
11.1.1 Retrospective restatement method
There is no correction of accounting errors using retrospective restatement method in previous period.
11.1.2 Prospective application method
There is no correction of accounting errors using prospective application method in previous period
11.2 Others
In accordance with the requirements of the Regulatory Guidelines of Listed Companies No. 4 - Actual Controller, Shareholders, Related Parties, Purchaser and Commitments and Fulfillment of Listed Companies (CSRC Announcement No.[2013] 55) of China Securities Regulatory Commission, on June 7, 2014, Luoniushan Co., Ltd. (hereinafter referred to as “Luoniushan”) sent
财务报表附注第70页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
out the Letter about Changing the Commitments of Luoniushan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. to the Company, and made commitments that Luoniushan shall actively seek reorganization party to reorganize the assets of Dadonghai within three years from the date theCompany’s general meeting of shareholders considered and approved this commitment. The above matters have been considered and approved by the general meeting of shareholders of Dadonghai on June 27, 2014.
On February 22, 2017, the company received the Letter about the Progress of Planning and Preparing for the Fulfillment of Commitments from the largest shareholder Luoniushan, Luoniushan planned to transfer100% equity stake it held in the wholly-owned subsidiary - Industrial Corporation (thereinto, Industrial Corporation shall firstly plan to accept the transfer of some equity stake of financial assets held by Luoniushan, tentatively confirmed as6.91% equity stake of Sanya Rural Commercial Bank, which is subject to the transaction object confirmed by ultimate negotiation) to the Company, the means of transaction is expected to be cash offer, and the transaction amount is approximately RMB 300 million. At present, the work is being promoted.
13 Supplementary information
13.1 Details of current non-recurring profits and losses
Item The Period Introduction Profits or losses from disposal of non-current assets
Tax refunded, reduced or exempted with unauthorized approval or
without formal documents of approval
Government subsidies included into current profits and losses (other
than government subsidies related closely to enterprise business and
granted by quota or quantity according to national unified standard)
Fund occupancy expenses collected from non-financial enterprises
and accounted into current profit and loss
Gains from differences between the investment costs of acquiring of
subsidiaries, joint ventures or associates and the share of fair value
财务报表附注第71页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
Item The Period Introduction of identifiable net assets of the investees at such investment
Gains or losses from non-monetary assets exchange
Gains or losses from commissioned investment or management on
assets
Provisions for asset impairment due to force majeure, such as
natural disasters
Gain or loss from debt restructuring
Enterprise reorganizing expenses, such as employee
accommodation costs and integration expenses
Gains or losses from excess over fair value due to obvious unfair
transaction price
Current net gains or losses of subsidiaries acquired through business
combination under common control from the beginning of current
period till the date of consolidation
Gains or losses incurred by contingencies irrelevant to the
Company’s normal business
Gains or losses from changes in fair value of financial assets or
liabilities held for trading, as well as investment income from
disposal of financial assets or liabilities held for trading and
available-for-sale financial assets, other than those in valid hedging
businesses related to theCompany’s normal businesses
Reversal of provisions for impairment of accounts receivable tested
for impairment independently
Gains or losses from external consigned loans
Gains or losses from external consigned loans
Effect on current profit and losses of one-off adjustments for current
profit and loss in accordance with the requirements of laws and
regulations regarding taxation or accounting
Trustee fee obtained from entrusted operations
财务报表附注第72页
海南大东海旅游中心股份有限公司
2017年半年度财务报告
财务报表附注
Item The Period Introduction Other non-operating income and expense other than the
abovementioned ones
Effect of income tax
Effect of minority interest (after tax)
Total
13.2 Return on net assets and earnings per share
Weighted average
Earnings per share (RMB) Profit during the reporting period return on net
Basic earnings Diluted earnings assets(%)
per share per share Net profits attributable to ordinary shareholders
2.29% 0.0047 0.0047 of the Company
Net profits attributable to ordinary shareholders
of the Company after deduction of non-recurring 2.29% 0.0047 0.0047 profits or losses
13.3 Accounting difference between IFRS and CAS
There are no accounting differences between IFRS and CAS.
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD 17August 2017
财务报表附注第73页