Shandong Zhonglu Oceanic Fisheries Co., Ltd.
Annual Report for Year of 2017
March 2018
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shandong Zhonglu Oceanic Fisheries Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents.
Lu Lianxing, Principal of the Company, Zhao Minkun, person in charge of accounting works and Lei Lixin, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2017 Annual Report is authentic, accurate and complete.
All directors are attended the Board Meeting for report deliberation.
The forward-looking statement set out in the annual report relating to the future plan of the Company does not constitute the material commitment of the Company for its investors. Therefore, investors and related stakeholders shall hold sufficient awareness of the risks and should understand the difference between plan, expectation and commitment.
Certain risks that may exist in theCompany’s business operation and countermeasures adopted by the Company are disclosed in the clause “IX. Outlook of future development” in the fourth section hereof headed “Discussion
and Analysis on Operation”, which shall be brought to attention of investors. This report is prepared in both of Chinese and English. The Chinese version shall prevail when there are any controversial statements in the two versions. The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either
Contents
Section I Important Notice, Contents and Paraphrase ................................................................. 2 Section II Company Profile and Main Finnaical Indexes ............................................................. 6 Section III Summary of Company Business ................................................................................ 10 Section IV Discussion and Analysis on Operation ...................................................................... 14 Section V Important Events .......................................................................................................... 30 Section VI Changes in shares and particular about shareholders ............................................... 39 Section VII PreferredStock……………………………………………………………………….45 Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 46 Section IX Corporate Governance ............................................................................................... 552 Section X Corporate Bond .............................................................................................................. 59 Section XI Financial Report ............................................................................................................ 60 Section XII Documents available for reference ........................................................................... 138
Paraphrase
||||
|-|-|-|
|Items|Refers to|Contents|
|“The Company” or “Company”|Refers to|Shandong Zhonglu Oceanic Fisheries Co., Ltd.|
|“Shandong State-owned Assets Investment”|Refers to|Shandong State-owned Assets Investment Holding Company Limited|
|”Luxin Group”|Refers to|Shandong Luxin Investment Holding Company Limited|
|||State-owned Assets Supervision and Administration Commission of|
|“SASACP”|Refers to||
|||Shandong Provincial Government|
|“CSRC”|Refers to|China Securities Regulatory Commission|
|“The report”|Refers to|Annual Report for 2017 compiled by the Company|

Section II Company Profile and Main Finnaical Indexes
I. Company information
|||||
|-|-|-|-|
|Short form of the stock|Zhonglu-B|Stock code|200992|
|Stock exchange for listing|Shenzhen Stock Exchange|||
|Name of the Company (in|山东省中鲁远洋渔业股份有限公司|||
|Chinese)||||
|Short form of the Company||||
||中鲁远洋|||
|(in Chinese)||||
|Foreign name of the Company||||
||Shandong Zhonglu Oceanic Fisheries Company Limited|||
|(if applicable)||||
|Short form of foreign name of||||
||ZLYY|||
|the Company (if applicable)||||
|Legal representative|Lu Lianxing|||
|Registrations add.|No. 29 Miaoling Rd. Laoshan District, Qingdao, Shandong|||
|Code for registrations add|266061|||
|Offices add.|No. 65 Haier Rd., Laoshan District, Qingdao, Shandong|||
|Codes for office add.|266061|||
|Company website|http://www.zofco.cn/|||
|Email|zl000992@163.com|||

II. Person/Way to contact
||||
|-|-|-|
||Secretary of the Board|Rep. of security affairs|
|Name|Li Ming|Li Ying|
||No. 65 Haier Rd., Laoshan District,|No. 65 Haier Rd., Laoshan District,|
|Contacts add.|||
||Qingdao, Shandong|Qingdao, Shandong|
|Tel.|0532-55717968|0532-55715968|
|Fax.|0532-55719258|0532-55719258|
|Email|zl000992@163.com|zl000992 @163.com|

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

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

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

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

Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable√ Not applicable
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not
□Yes√ No
||||||
|-|-|-|-|-|
||2017|2016|Changes over last year|2015|
|Operating income (RMB)|924,116,785.80|845,877,519.52|9.25%|723,723,003.05|
|Net profit attributable to|91,517,485.28|52,585,070.74|||
|shareholders of the listed company|||74.04%|12,141,360.21|
|(RMB)|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||85,499,842.39|47,095,370.03|81.55%|14,060,740.19|
|after deducting non-recurring gains|||||
|and losses (RMB)|||||
|Net cash flow arising from|63,205,894.49|87,435,723.19|||
||||-27.71%|55,443,390.22|
|operating activities (RMB)|||||
|Basic earnings per share|0.34|0.20|70.00%|0.05|

||||||
|-|-|-|-|-|
|(RMB/Share)|||||
|Diluted earnings per share|0.34|0.20|||
||||70.00%|0.05|
|(RMB/Share)|||||
|Weighted average ROE|13.79%|8.88%|4.91%|2.16%|
||||Changes over end of||
||End of 2017|End of 2016||End of 2015|
||||last year||
|Total assets (RMB)|1,065,483,763.80|835,239,699.07|27.57%|798,232,793.11|
|Net assets attributable to|703,769,793.95|617,662,263.72|||
|shareholder of listed company|||13.94%|565,708,222.79|
|(RMB)|||||

VII. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable√ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable√ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
VIII. Quarterly main financial index
In RMB
||||||
|-|-|-|-|-|
||First quarter|Second quarter|Third quarter|Fourth quarter|
|Operating income|216,338,301.13|223,839,790.62|236,982,664.29|246,956,029.76|
|Net profit attributable to|||||
||8,613,898.03|23,387,692.83|12,192,814.54|47,323,079.88|
|shareholders of the listed company|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||8,590,563.93|22,800,451.17|11,720,799.33|42,388,027.96|
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|||||
||-21,126,040.30|39,002,196.84|17,321,201.66|28,008,536.29|
|operating activities|||||

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in thecompany’s quarterly report and semi-annual report
□Yes√ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable□Not applicable
In RMB
||||||
|-|-|-|-|-|
|Item|Amount in 2017|Amount in 2016|Amount in 2015|Note|
|Gains/losses from the disposal of|422,100.74||||
|non-current asset (including the write-off||2,552,387.02|-4,260,148.37||
|that accrued for impairment of assets)|||||
|Governmental subsidy reckoned into current|6,401,185.48||||
|gains/losses (not including the subsidy|||||
|enjoyed in quota or ration according to||4,123,881.73|2,021,471.48||
|national standards, which are closely|||||
|relevant to enterprise’s business)|||||
|Other non-operating income and expenditure|-83,259.70||||
|||-4,353.25|82,182.68||
|except for the aforementioned items|||||
|Less: impact on income tax|197,626.19|194,279.09|||
|Impact on minority’s equity (after-tax)|524,757.44|987,935.70|-237,114.23||
|Total|6,017,642.89|5,489,700.71|-1,919,379.98|--|

Concerning the extraordinary profit (gain)/loss defined byQ&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss inQ&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons
√Applicable□Not applicable
||||
|-|-|-|
|Item|Amount (RMB)|Reason|
|Subsidy for exploitation and|||
|||The subsidy enjoyed in quota or ration according to national standards,|
|utilization of international|23,359,800.00||
|||which are closely relevant to enterprise’s business|
|fishery resources|||

Section III Summary of Company Business
I. Main businesses of the company in the reporting period
Whether the company needs to comply with the disclosure requirements of the particular industry
No
The Company is a comprehensive fishery enterprise integrated with ocean-going fishing, ocean refrigerated transport, and refrigeration, processing and trading of aquatic products, its main businesses involve all major aspects of the industry chain.
(I) Business introduction
1. Ocean-going fishing
During the reporting period, the company has owned a total of 22 vessels for ocean-going fishing, including 7 large-scale tuna seiners, 13 large ultra-low temperature tuna long liners, and 2 medium-sized trawlers, which have been respectively working in Indian Ocean and the Atlantic Ocean. During the reporting period, the pattern of world's tuna resources have been changing, some fishery resources decline sharply, the company has adhered to the principle of combining deploying and retracting, operated scientifically, deployed reasonably, and positively implemented offshore production based on the fishing characteristics and the actual situation of offshore production. As for the long-line fishing, the company became more familiar with the distribution of the fishing waters along with the continuous exploration and in-depth development to the Indian Ocean, and maintained rather good production and management efficiency. As for the purse seine fishing, according to the industry environment and development situation, The Company bought five large tuna purse seine fishing vessels in overseas market for fishing operation in the Atlantic Ocean. Currently, two of the vessels have commenced operation. Together with the two purse seine fishing vessels transferred from the central and west Pacific ocean, a total of four purse seine fishing vessels are put into operation in the Atlantic ocean to meet the expected results. The fishing production of Ghana trawl project has reduced compared with the previous reporting period, mainly caused by the reduction of trawl fish resources and aging of ships.
2. Refrigerated transport
During the reporting period, the company had 7 ocean cold-storage boats for operation service and took various measures to complete the annual economic indicators. The first was to stand on the special refrigerated shipping market, conform to the market demands, expand the navigation area, increase the transport capacity, and strive to enhance the market share. The second was to strictly control the cost accounting, and ensure all expenses, especially the overwhelming expenses were under surveillance all the time. The third was to take account of the non-operating income, especially focus on the exchange rate trend of US dollar against RMB, so as to make foreign exchange settlement at the appropriate time. The fourth was to strengthen the risk management and control, and minimize the risk factors of uncertainties. The fifth was to increase the self-repair efforts to ships, and achieved a good effect.
3. Refrigeration processing trade
During the reporting period, thecompany’s refrigeration processing trade had a foothold on “two markets”, the first was to insist on internal absorption and external introduction, give full play to advantages of industrial
clusters, resist the risks and face the market development together with fishing industry, strengthen efforts to the return shipping and deep processing of tuna, form a processing industry chain by centering on Zhonglu food, and give a real play to the distributing centre as the deep-processing of deep-sea fishing products and cold-chain logistics base in Shandong Province and the tuna trading center of China, and had far-reaching significance to refine and strengthen the tuna industry chain. The second was to focus on improving the automatic mechanization level of processing, strive to improve the automatic mechanization level of important processes and key processes in the production, which increased the production capacity, reduced the waste of raw materials, stabilized the product quality and reduced the operating costs. The third was to expand the processing business, and increase the market development efforts.
(II) Industry development
In general, theCompany’s strategy adjustment focusing on tuna purse seine fishing has been proven to be accurate and proper since both domestic and overseas economic conditions and the macro environment remains uncertainty in 2017. in addition, it seized the opportunity to buy five large purse seine fishing vessels for fishing operation in the Atlantic ocean, and other business segments experienced balanced development with stable growth or minor decline, which indicated that it was right for the Company to insist on the policy of “develop balanced industry chain and optimize assets structure” for years. The relatively matured industry chain formed by the Company and win-win benefits achieved among various business segments played an essential role during the general development depression of distant fishery industry.
II. Major changes in main assets
1. Major changes in main assets
|||
|-|-|
|Major assets|Note of major changes|
|Equity assets|No major change.|
||Increased 110.2918 million Yan on a y-o-y basis, mainly due to the purchasement of|
|Fixed assets||
||vessels and fishing net|
|Intangible assets|No major change.|
|Construction in progress|The project got shelved and accrual assets impairment losses of 4.0777 million Yuan|

 2. Main overseas assets
√Applicable□Not applicable
||||||||||
|-|-|-|-|-|-|-|-|-|
||||||Control||Ratio of the|Whether has|
||||||measures to||overseas|major|
|||||Operating||Earnings|||
|Content|Reasons|Assets scale|Location||ensure the||assets in net|impairment|
|||||mode||status|||
||||||safety of||assets of the|risks or not|
||||||assets||Company|(Y/N)|
|ZHONG|Wholly-owne||The Republic|Independent|A||20.97%|N|

||||||||||
|-|-|-|-|-|-|-|-|-|
|GHA|d subsidiary|154,993,994.|of Ghana|operation|professional|-8,977,749.75|||
|FOODS|established|63 Yuan|||management|Yuan|||
|COMPANY|aboard||||team||||
|LIMITED|||||overseas||||
||||||posting and||||
||||||ship &||||
||||||personnel||||
||||||insurance||||
|HABITAT|Wholly-owne||Panama|Independent|Ship and||28.54%|N|
|INTERNATI|d subsidiary|210,971,306.||operation|personnel|17,958,095.2|||
|ONAL|established|10Yuan|||insurance|4 Yuan|||
|CORPORATI|aboard||||||||
|ON|||||||||

III. Core competitive-ness analysis
Whether or not the Company complies with disclosure requirement of the special industry
No
The Company is an outgoing comprehensive oceanic fishery enterprise, established in July 1999 with the approval fromPeople’s Government of Shandong province. We have completed industry chain and we are the leading enterprise of oceanic fishery for the Shandong Province.
As a comprehensive fishery enterprise, the company's core competitiveness is mainly reflected in the following aspects: Firstly, the company is a comprehensive fishery enterprise integrating deep-sea fishing, refrigerated transport, and refrigeration and processing and trading of aquatic products, its main business involves all key links of industry chain, and the businesses among all operating entities are highly related, possess the conditions for overall collaborative operation, and provides guarantee for strengthening and extending the industrial chain strategy; secondly, as one of the enterprises engaged in deep-sea fishing business at the earliest in China, the company starts the production and operation early with high starting point, and high-quality talents and assets. After many years of professional management, the company has accumulated a large number of professional talents covering all fields of deep-sea fishing. For both vessel numbers, gross tonnage and profitability of current refrigerated transport fleet, the Company occupies the national leading level. We own biggest super-low temperature cold storage and raw food processing factory in China. The advantage of tuna processing and trading ability are being strengthen by the Tuna Trading Center and new Tuna E-Trading Platform System; the 30000 tons variable-temperature cold storage and supporting facilities in tide refrigerated logistic center adopted many new technology and operates well; Thirdly, the distant fishery, we mainly operates, is the parts of “going out” strategy and maritime strategy of the country, and also it is the part of Blue Economic Zone Plans in Shandong Province. The distant fishery still has a development opportunity in way of depth adjustment. The products of distant water finseries are mainly out from the deep ocean, which have a favorable market prospect for being pure natural, high-quality and unconditioned secure. Fourhly, the Company enlarge the tuna seine fleet in Atlantic, under the shelter of tight regulations from WCPFC in WCPO and ICCAT, the tuna seine business will have a stable growth.
The above mentioned factors were provided a powerful strategic support for the development of the Company; the
Company will make good use of these strategic resources, creating innovative, and participated in the construction
of new-aged energy transform actively, accelerate the strategic transformation, and vigorously implement the
industrial chain extension projects to upgrade the influence and completive in deep-sea fishing market in and out of China.
Section IV Discussion and Analysis on Operation
I. Introduction
In 2017, the Company keeps growing with its best efforts for development. During the reporting period, the Company seeks for benefits and development with united efforts focusing on completion of the established objectives. It takes all effective measures to expand the scale of business, strengthen cost management, refine fund management, which enables it to over fulfill the budget target determined at the beginning of the year.
(I)Business review during the reporting period
1. Refrigerated transportation leasing business segment: With the target of reducing safety accident and increasing voyage rate of vessels, the Company reinforced vessel safety inspection and provision of operation guidance to secure safety shipping days. Besides, it emphasized cost management through in-house repair for vessels, which not only practiced and improved its professional capability, but also brought down cost. It recorded operating income of RMB96.84 million from this business segment with a year-on-year increase of5.82%; it recorded net profit of RMB23.4673 million from this business segment with a year-on-year increase of22.73%.
2. Distant fishery business segment: the two set of purse seine fishing vessels which turned to work for the Company in the Atlantic ocean made successful fishing operation, which led to substantial increase of production capacity. A total of five new purse seine vessels were acquired by the Company, among which, two were put into operation during the year which satisfied the Company with expected fishing performance. Besides, benefiting from the general high price of tune captured via purse seine fishing vessels in 2017, the profit generated from purse seine fishing business exceeded the initial target with net profit amounting to RMB14.6377 million. With respect to tune longline business, the fishing grounds were adjusted on a scientific basis and reasonable operation hours were arranged to make its best to improve production capacity. Besides, it enhanced cost management while saving expenditure. It realized profit of RMB35.8743 million for the year, with an increase of RMB0.5085 million.
3. Refrigeration, processing and trading of aquatic products business segment: increase development for new market, customers and products, strengthen inventory management and capital management, and strive to expand overseas market to increase export. During the reporting period, it recorded operating income of RMB678.66 million from this business segment with a year-on-year increase of2.59%; it recorded net profit of RMB24.1461 million from this business segment with a year-on-year increase of8.48%.
(II) General operation
In reporting period, the Company achieved business revenue of 924.1168 million Yuan, increased9.25% compared lastyear’s 845.8775 million Yuan; total profit achieved 97.8998 million Yuan, increased 39.0516 million Yuan over that of 58.8482 million Yuan in last period with growth of66.36%; net profit attributable to parent company amounted as 91.5175 million Yuan, an74.04% growth over that of 38.9324 million Yuan at last year. Total assets amounted as 1065.4838 million Yuan with27.57% growth over that of period-begin. Profit have a majority growth mainly because, the tuna seine business reached a major growth from a year eariler.
II. Main business analysis
1. Introduction
See “I. Introduction” in “Discussion and Analysis of Business”.
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
|||||||
|-|-|-|-|-|-|
||2017||2016|||
||||||Increase/decrease|
|||Ratio in operation||Ratio in operation||
||Amount||Amount||y-o-y|
|||revenue||revenue||
|Total of operation|924,116,785.80||845,877,519.52|||
|||100%||100%|9.25%|
|revenue||||||
|According to industries||||||
|Seine tuna fishing|101,348,675.03|10.97%|5,180,247.30|0.61%|1,856.44%|
|Longlines tuna||||||
||29,227,283.99|3.16%|68,475,554.71|8.10%|-57.32%|
|fishing||||||
|Boat rental|96,839,023.35|10.48%|91,513,054.10|10.82%|5.82%|
|Other deep-sea||||||
||10,270,768.88|1.11%|10,304,142.94|1.22%|-0.32%|
|fishing||||||
|Aquatic products||||||
|refrigerated|678,661,095.40|73.44%|661,507,107.61|78.20%|2.59%|
|processing trade||||||
|House rental|3,793,486.57|0.41%|4,691,924.05|0.55%|-19.15%|
|Waste income and||||||
||3,976,452.58|0.43%|4,205,488.81|0.50%|-5.45%|
|others||||||
|According to products||||||
|Seine tuna fishing|101,348,675.03|10.97%|5,180,247.30|0.61%|1,856.44%|
|Longlines tuna||||||
||29,227,283.99|3.16%|68,475,554.71|8.10%|-57.32%|
|fishing||||||
|Boat rental|96,839,023.35|10.48%|91,513,054.10|10.82%|5.82%|
|Other deep-sea||||||
||10,270,768.88|1.11%|10,304,142.94|1.22%|-0.32%|
|fishing||||||
|Aquatic products||||||
|refrigerated|678,661,095.40|73.44%|661,507,107.61|78.20%|2.59%|
|processing trade||||||

|||||||
|-|-|-|-|-|-|
|House rental|3,793,486.57|0.41%|4,691,924.05|0.55%|-19.15%|
|Waste income and||||||
||3,976,452.58|0.43%|4,205,488.81|0.50%|-5.45%|
|others||||||
|According to region||||||
|Japan|323,521,991.97|35.01%|285,073,795.29|33.70%|13.49%|
|China|167,609,757.40|18.14%|300,038,378.94|35.47%|-44.14%|
|South Korea|25,985,955.53|2.81%|32,022,697.43|3.79%|-18.85%|
|Singapore|16,006,430.12|1.73%|13,237,412.63|1.56%|20.92%|
|Taiwan|214,730,006.65|23.24%|102,493,887.61|12.12%|109.51%|
|Ghana|21,347,108.49|2.31%|14,347,425.72|1.70%|48.79%|
|Other|154,915,535.64|16.76%|98,663,921.90|11.66%|57.01%|

 (2) About the industries, products, or regions accounting for over10% of thecompany’s operating income or operating profit
√Applicable□Not applicable
Whether or not the Company complies with disclosure requirements of special industry
No
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrease|Increase/decrease|
||Operating||||||
|||Operating cost|Gross profit ratio|of operating|of operating cost|of gross profit|
||revenue||||||
|||||revenue y-o-y|y-o-y|ratio y-o-y|
|According to industries|||||||
|Seine tuna fishing|101,348,675.03|53,850,966.50|46.87%|1,856.44%|1,067.35%|35.92%|
|Boat rental|96,839,023.35|58,302,833.08|39.79%|5.82%|-15.58%|15.26%|
|Aquatic products|||||||
|refrigerated|678,661,095.40|613,140,850.89|9.65%|2.59%|-2.75%|4.96%|
|processing trade|||||||
|According to products|||||||
|Seine tuna fishing|101,348,675.03|53,850,966.50|46.87%|1,856.44%|1,067.35%|35.92%|
|Boat rental|96,839,023.35|58,302,833.08|39.79%|5.82%|-15.58%|15.26%|
|Aquatic products|||||||
|refrigerated|678,661,095.40|613,140,850.89|9.65%|2.59%|-2.75%|4.96%|
|processing trade|||||||
|According to region|||||||
|Japan|323,521,991.97|297,085,055.06|8.17%|13.49%|15.18%|-1.35%|
|China|167,609,757.40|117,990,458.58|29.60%|-44.14%|-38.38%|-6.58%|

||||||||
|-|-|-|-|-|-|-|
|Taiwan|214,730,006.65|153,148,553.78|28.68%|109.51%|104.24%|1.84%|

 Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest oneyear’s scope of period-end
□ Applicable√ Not applicable
(3) Whether income from physical sales larger than income from labors or not
√ Yes□ No
|||||||
|-|-|-|-|-|-|
||||||Increase/decrease|
|Industries|Item|Unit|2017|2016||
||||||y-o-y|
||Sales volume|Ton|12,848|5,814|120.98%|
|Deep-sea fishing and||||||
||Production|Ton|17,822|5,825|205.95%|
|re-processing||||||
||Inventory|Ton|6,508|1,534|324.23%|
|Aquatic products|Sales volume|Ton|16,617|18,469|-10.03%|
|processing,|Production|Ton|17,059|23,367|-27.00%|
|refrigerator and||||||
||Inventory|Ton|4,813|4,371|10.11%|
|others sales volume||||||

Reasons for y-o-y relevant data with over30% changes
√Applicable□Not applicable
Deep-sea fishing and re-processing have a205.95% growth of production volume on a year-on-year basis, mainly because two purse seiner have larger fishery ability in the year (same period of last year in the moratorium temporary ); furthermore, another two purse seiners have a good operates in fishery, the volume approached expected target; sales volume growth120.98% from a year earlier mainly due to the increase of productions; inventory has major increase from a year earlier, mainly because most of the fishes are not setting out for sales in the period yet.
(4) Fulfillment of thecompany’s signed significant sales contracts up to this reporting period
□ Applicable√ Not applicable
(5) Constitute of operation cost
Industry classification
Industry classification
In RMB
||||||||
|-|-|-|-|-|-|-|
|||2017||2016|||
|Industry|||||||
||Item||Ratio in operation||Ratio in operation|Y-o-y changes|
|classification||Amount||Amount|||
||||cost||cost||
||Access fishing||||||
|Seine tuna fishing||1,710,859.10|3.18%|32,847.88|0.71%|5,108.43%|
||fee||||||
|Seine tuna fishing|Raw material|10,502,687.49|19.50%|284,557.19|6.17%|3,590.89%|
|Seine tuna fishing|Fuel power|12,123,788.08|22.51%|887,587.30|19.24%|1,265.93%|

||||||||
|-|-|-|-|-|-|-|
||Employee||||||
|Seine tuna fishing||10,189,429.86|18.92%|1,599,487.30|34.67%|537.04%|
||compensation||||||
||Depreciation||||||
|Seine tuna fishing||6,808,808.92|12.64%|1,318,059.63|28.57%|416.58%|
||charge||||||
|Seine tuna fishing|Other|12,515,393.05|23.25%|490,559.19|10.63%|2,451.25%|
|Seine tuna fishing|Total|53,850,966.50|100.00%|4,613,098.49|100.00%|1,067.35%|
|Longlines tuna|Access fishing||||||
|||609,811.22|2.68%|1,605,983.95|2.94%|-62.03%|
|fishing|fee||||||
|Longlines tuna|||||||
||Raw material|4,741,002.35|20.87%|15,523,773.54|28.42%|-69.46%|
|fishing|||||||
|Longlines tuna|||||||
||Fuel power|7,495,326.13|32.99%|14,626,043.32|26.78%|-48.75%|
|fishing|||||||
|Longlines tuna|Employee||||||
|||5,207,375.40|22.92%|9,225,406.84|16.89%|-43.55%|
|fishing|compensation||||||
|Longlines tuna|Depreciation||||||
|||1,613,354.27|7.10%|3,918,851.37|7.17%|-58.83%|
|fishing|charge||||||
|Longlines tuna|||||||
||Other|3,053,740.66|13.44%|9,718,908.55|17.79%|-68.58%|
|fishing|||||||
|Longlines tuna|||||||
||Total|22,720,610.04|100.00%|54,618,967.57|100.00%|-58.40%|
|fishing|||||||
||Employee||||||
|Boat rental||27,807,218.57|47.69%|27,452,639.89|39.75%|1.29%|
||compensation||||||
||Depreciation||||||
|Boat rental||8,377,195.44|14.37%|9,995,678.65|14.47%|-16.19%|
||charge||||||
|Boat rental|Material|7,489,336.19|12.85%|12,890,662.42|18.67%|-41.90%|
|Boat rental|Other|2,655,613.95|4.55%|5,565,061.56|8.06%|-52.28%|
||Insurance||||||
|Boat rental||3,527,376.77|6.05%|4,232,481.15|6.13%|-16.66%|
||premium||||||
|Boat rental|Fuel|2,878,178.31|4.94%|5,247,961.59|7.60%|-45.16%|
|Boat rental|Repairs fee|4,053,539.65|6.95%|1,592,330.61|2.31%|154.57%|
|Boat rental|Inspection fee|1,514,374.20|2.60%|2,085,697.63|3.02%|-27.39%|
|Boat rental|Total|58,302,833.08|100.00%|69,062,513.50|100.00%|-15.58%|
|Other deep-sea|||||||
||Fuel power|4,403,186.71|42.53%|3,396,209.80|36.22%|29.65%|
|fishing|||||||
|Other deep-sea|||||||
||Raw material|740,737.98|7.15%|1,607,813.42|17.15%|-53.93%|
|fishing|||||||
|Other deep-sea|||||||
||Labor charges|2,071,330.94|20.01%|1,092,601.29|11.65%|89.58%|
|fishing|||||||

||||||||
|-|-|-|-|-|-|-|
|Other deep-sea|Depreciation||||||
|||835,870.99|8.07%|634,964.98|6.77%|31.64%|
|fishing|charge||||||
|Other deep-sea|||||||
||Other|2,302,718.41|22.24%|2,644,837.84|28.21%|-12.94%|
|fishing|||||||
|Other deep-sea|||||||
||Total|10,353,845.03|100.00%|9,376,427.33|100.00%|10.42%|
|fishing|||||||
|Aquatic product|||||||
||Direct materials|536,276,159.88|87.46%|558,440,160.95|88.58%|-3.97%|
|processing|||||||
|Aquatic product|||||||
||Packaging|12,473,421.01|2.03%|11,737,782.79|1.86%|6.27%|
|processing|||||||
|Aquatic product|||||||
||Labor wage|24,692,908.62|4.03%|24,005,569.26|3.81%|2.86%|
|processing|||||||
|Aquatic product|||||||
||Depreciation|4,817,731.61|0.79%|4,636,574.72|0.74%|3.91%|
|processing|||||||
|Aquatic product|||||||
||Other|34,880,629.77|5.69%|31,634,400.86|5.02%|10.26%|
|processing|||||||
|Aquatic product|||||||
||Total|613,140,850.89|100.00%|630,454,488.60|100.00%|-2.75%|
|processing|||||||
|House rental|Labor charges|65,010.00|3.73%|64,800.00|3.60%|0.32%|
||Out-of –pocket||||||
|House rental||27,037.84|1.55%|26,647.10|1.48%|1.47%|
||expenses||||||
||Depreciation||||||
|House rental||1,225,193.44|70.21%|1,218,665.52|67.71%|0.54%|
||charge||||||
|House rental|Electric charge|148,338.16|8.50%|216,953.47|12.05%|-31.63%|
|House rental|Repairs fee etc.|73,237.39|4.20%|97,853.83|5.44%|-25.16%|
|House rental|Heating fee|206,133.30|11.81%|175,030.45|9.72%|17.77%|
|House rental|Total|1,744,950.13|100.00%|1,799,950.37|100.00%|-3.06%|

 Note
(6) Whether the changes in the scope of consolidation in Reporting Period
√ Yes□ No
In 2017, Shandong Zhonglu Haiyan Oceanic Fishery Co., Ltd. established a subsidiary-AFRICA STAR FISHERIES LIMITED and ZHONG GHA FOODS COMPANY LIMITED in Republic of Ghana, and the two companies are included in consolidate statement. (7) Major changes or adjustment in business, product or service of the Company in Reporting Period
□ Applicable√ Not applicable
(8) Major sales and main suppliers
Major sales of the Company
|||
|-|-|
|Total top five clients in sales (RMB)|394,080,353.75|
|Proportion in total annual sales volume for top five clients|42.64%|
|Ratio of related parties in annual total sales among the top||
||0.00%|
|five clients||

Information of top five clients of the Company
|||||
|-|-|-|-|
|Serial|Name|Sales (RMB)|Proportion in total annual sales|
|1|Hong Kong Liantai Co., Ltd.|119,174,860.56|12.90%|
|2|F.C.F Fishery Co., Ltd.|96,839,023.35|10.48%|
|3|Japan Wiki|68,529,574.11|7.42%|
|4|Japan Daoshui|59,683,779.12|6.46%|
|5|Japan SanKo Co., Ltd.|49,853,116.61|5.39%|
|Total|--|394,080,353.75|42.64%|

 Other situation of main clients
□ Applicable√ Not applicable
Main suppliers of the Company
|||
|-|-|
|Total purchase amount from top five suppliers (RMB)|258,987,420.40|
|Proportion in total annual purchase amount for top five||
||36.64%|
|suppliers||
|Ratio of related parties in annual total sales among the top||
||0.00%|
|five suppliers||

Information of top five suppliers of the Company
|||||
|-|-|-|-|
|Serial|Name|Purchases (RMB)|Proportion in total annual purchase|
|1|Yantai Beijing Ocean Fishery Co., Ltd.|80,259,889.00|11.35%|
|2|CNFC Overseas Fishery Co., Ltd.|54,515,350.00|7.71%|
|3|Shenzhen South Fishery Co., Ltd.|50,544,995.90|7.15%|
|4|Rongcheng Ocean Fishery Co., Ltd.|38,601,516.00|5.46%|
|5|Shenzhen Lianmei Commerce Co., Ltd.|35,065,669.50|4.96%|
|Total|--|258,987,420.40|36.64%|

 Other notes of main suppliers of the Company
□ Applicable√ Not applicable
3. Expense
In RMB
||||||
|-|-|-|-|-|
||2017|2016|Y-o-y changes|Note|
||14,174,043.49|6,016,283.26||Major expenditure in port|
|Sales expense|||135.59%||
|||||miscellaneous charges in the period|
|Management expense|56,525,982.12|57,369,652.49|-1.47%||
||16,828,357.12|-6,330,453.36||More increased in interest costs and|
|Financial expense|||-365.83%||
|||||exchange losses|

4.R&D investment
□ Applicable√ Not applicable
5. Cash flow
In RMB
|||||
|-|-|-|-|
|Item|2017|2016|Y-o-y changes|
|Subtotal of cash in-flow from|1,031,418,431.05|945,613,387.44||
||||9.07%|
|operation activity||||
|Subtotal of cash out-flow from|968,212,536.56|858,177,664.25||
||||12.82%|
|operation activity||||
|Net cash flow from operation|63,205,894.49|87,435,723.19||
||||-27.71%|
|activity||||
|Subtotal of cash in-flow from|703,494.70|5,930,806.81||
||||-88.14%|
|investment activity||||
|Subtotal of cash out-flow from|149,566,249.27|32,045,019.74||
||||366.74%|
|investment activity||||
|Net cash flow from investment|-148,862,754.57|-26,114,212.93||
||||470.04%|
|activity||||
|Subtotal of cash in-flow from|216,117,252.93|69,109,844.43||
||||212.72%|
|financing activity||||
|Subtotal of cash out-flow from|102,491,433.08|80,873,244.26||
||||26.73%|
|financing activity||||
|Net cash flow from financing|113,625,819.85|-11,763,399.83||
||||-1,065.93%|
|activity||||
|Net increased amount of cash|18,329,690.04|57,273,291.78||
||||-68.00%|
|and cash equivalent||||

Main factors of relateddata’s significant changes on a year-on-year basis
√Applicable□Not applicable
(1) Net cash flow from operation activity decreased from a year earlier mainly because: the cash paid for
purchasing goods and receiving labors and cash paid for other operation activities in the period are more over than
last year;
(2) Net cash flow from investment activity decreased from a year earlier mainly because: we purchased five tuna seine ships in the period, and no such amount occurred at same period of last year;
(3) Net cash flow from financing activity has major amount occurred mainly because the amount from financing are larger than last year.
The reasons for the significant difference between the net cash flow from the company's operating activities and the net profit of current year during the reporting period
√ Applicable□ Not applicable
(1) Asset impairment loss, depreciation and amortization of fixed assets and intangible assets and financial expenses affect the net profits but not affect the operating cash flow project 53,110,000 Yuan, which makes the net profit is 53,110,000 Yuan less than the operating cash flow;
(2) The inventory balance of 2017 has increased by 90,340,000 Yuan compared with the inventory balance of 2016, resulting in a decrease of operating cash flow of 90,340,000 Yuan;
(3) The operating receivables of 2017 has increased by 15,280,000 Yuan compared to 2016, resulting in a decrease of operating cash flow of 15,280,000 Yuan; The operating receivables of 2016 has increased by 20,550,000 Yuan compared to 2015, resulting in an increase of operating cash flow of 20,550,000 Yuan; the above caused the differences between net profit and operating cash flow.
III. Analysis of the non-main business
√Applicable□Not applicable
In RMB
||||||
|-|-|-|-|-|
||Amount|Ratio in total profit|Note|Whether be sustainable|
||||Including bad debt losses||
||||472400 Yuan, inventory||
||||falling price loss of 1.231||
|Asset impairment|5,781,049.23|5.91%|million Yuan and|No sustainable.|
||||devaluation loss in||
||||construction project 4.0777||
||||million Yuan||
||||Headquarter of the Company||
||||moves to Qingdao from||
||||Jinan, and in 2017, we||
|Non-operating|||||
||3,228,686.87|3.30%|received one-off financial|No sustainable.|
|income|||||
||||subsidy from Qingdao||
||||Finance Bureau 3 million||
||||Yuan.||
|Non-operating|||Work compensation for||
||311,946.57|0.32%||No sustainable.|
|expense|||staffs||

IV. Assets and liability
1. Major changes of assets composition
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of 2017||End of 2016||||
||||||Ratio||
|||Ratio in total||Ratio in total||Notes of major changes|
||Amount||Amount||changes||
|||assets||assets|||
||147,489,843.54||129,521,203.29||||
|Monetary fund||13.84%||15.51%|-1.67%||
|Account|38,792,912.89||42,679,066.65||||
|||3.64%||5.11%|-1.47%||
|receivable|||||||
||243,744,590.07||154,636,414.05|||Volume of fishes increased, and most|
|Inventory||22.88%||18.51%|4.37%||
|||||||of them are not sales|
|Investment real|31,694,375.13||32,338,392.18||||
|||2.97%||3.87%|-0.90%||
|estate|||||||
|Long term equity|||||||
||||||0.00%||
|investment|||||||
||525,975,263.88||415,683,489.86|||The Company purchase 5 large tuna|
|Fixed assets||49.36%||49.77%|-0.41%||
|||||||seine boats in the period|
|Construction in|||4,066,989.68|||The project on hold, and accrual asset|
|||||0.49%|-0.49%||
|progress||||||impairment loss in full|
|Short-term|176,394,931.62||54,961,454.59|||Borrow 100 million Yuan from China|
|||16.56%||6.58%|9.98%||
|borrowing||||||Citic Bank|

2. Assets and liability measure by fair value
□ Applicable√ Not applicable
3. Assets right restriction till end of reporting period
||||
|-|-|-|
|Item|Ending book value|Limited cause|
|Monetary fund|862,500.14|L/C|
|Fixed assets|88,200,769.64|Loan mortgage|
|Intangible assets|12,700,956.67|Loan mortgage|
|Total|101,764,226.45|--|

V. Investment
1. Overall situation
√Applicable□Not applicable
||||
|-|-|-|
|Amount invested (RMB)|Last period’s amount (RMB)|Changes|
|162,425,625.20|0.00|100.00%|

 2. The major equity investment obtained in Reporting Period
□ Applicable√ Not applicable
3. The major non-equity investment doing in Reporting Period
√Applicable□Not applicable
In RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||Reasons|||
|||Whether|||Amount|||||of fails|||
||||||||||Earnings||Disclosu|Disclosu|
|||it is a||Amount|actual|||||to the|||
||||Investme|||||Estimate|achieved||re date|re index|
||Investme|fixed||input in|invested|Capital||||estimate|||
|Project|||nt||||Progress|d|ended as||(if|(if|
||nt way|assets||the|up to|resources||||d|||
||||industry|||||earnings|period-e||applicabl|applicabl|
|||investme||period|period-e|||||earnings|||
||||||||||nd||e)|e)|
|||nt (Y/N)|||nd|||||and|||
|||||||||||plans|||
|||||||Short-ter|||||||
|Purchase|||||||||||||
|||||||m loans|||||||
|d the||||||||||Not||http://w|
||Acquisiti|||162,425,|162,425,|from the|||3,576,87||2016-12-||
|tuna||Y|Fishery||||100.00%|0.00||applicabl||ww.cninf|
||on|||625.20|625.20|bank and|||6.32||31||
|seine||||||||||e||o.com.cn|
|||||||owned|||||||
|boat|||||||||||||
|||||||fund|||||||
|||||162,425,|162,425,||||3,576,87||||
|Total|--|--|--|||--|--|0.00||--|--|--|
|||||625.20|625.20||||6.32||||

4. Financial assets investment
(1) Securities investment
□ Applicable√ Not applicable
The company had no securities investment in the reporting period.
(2) Derivative investment
□ Applicable√ Not applicable
The company had no derivative investment in the reporting period.
5. Application of raised proceeds
□ Applicable√ Not applicable
The company had no application of raised proceeds in the reporting period.
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable√ Not applicable
The Company had no sales of major assets in the reporting period.
2. Sales of major equity
□ Applicable√ Not applicable
VII. Analysis of main holding company and stock-jointly companies
√Applicable□Not applicable
Particular about main subsidiaries and stock-jointly companies net profit over10%
In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Company||Main|Register|||Operating|Operating||
||Type|||Total assets|Net Assets|||Net profit|
|name||business|capital|||revenue|profit||
|Shandong|||||||||
|Zhonglu|||||||||
|||Food||363,039,088.|187,435,982.|682,192,667.|25,437,679.6|24,146,113.5|
|Oceanic|Subsidiary||75,593,300||||||
|||processing||24|88|23|9|0|
|(Yantai) Food|||||||||
|Co., Ltd.|||||||||
|Shandong|||||||||
|Zhonglu|||||||||
|Haiyan||Marine||363,393,284.|188,435,478.|113,240,985.|19,877,216.9|19,410,369.8|
||Subsidiary||138,731,900||||||
|Oceanic||fishing||47|45|79|1|5|
|Fishery Co.,|||||||||
|Ltd.|||||||||
|HABITAT|||||||||
|INTERNATI|||||||||
|||Refrigerated||210,971,306.|202,740,844.|62,806,895.0|17,956,056.0|17,958,095.2|
|ONAL|Subsidiary||12,476,146||||||
|||shipment||10|50|0|8|4|
|CORPORAT|||||||||
|ION|||||||||
|Shandong|||||||||
||Subsidiary|Refrigerated|22,505,600|38,598,880.3|7,390,009.77|34,032,128.3|6,321,474.45|5,509,247.60|
|Zhonglu|||||||||

|||||
|-|-|-|-|
|Fishery|shipment|6|5|
|Shipping Co.,||||
|Ltd.||||

Particular about subsidiaries obtained or disposed in report period
□ Applicable√ Not applicable
Notes of main holding company and stock-jointly companies
VIII. Structured vehicle controlled by the Company
□ Applicable√ Not applicable
IX. Outlook of future development
(I)The prevailing development and future development trend
With the country's a series of policy supports to the ocean fishery, the ocean fishing in China has developed rapidly and the scale of the ocean fleet is increasing. However, the main business is still focused on acquiring resources with original fish as the major products. Processing of products with high added-value, market development and marketing remain weak, and the support system for production services is relatively fragile. At present, our country is implementing switch of old and new kinetic energy, which means ocean fishery will be offered with new opportunities for development, adjustment and transformation. With respect to development trend, it is expected that: (i)stable development of ocean fishery in international waters, and increase fishing scale for fishes living in the middle and upper level of the waters, cephalopod, Antarctic krill and other varieties which have the potential for further development; (ii)consolidate and improve ocean fishery in other countries sea, aiming to facilitating transformation and upgrade of this kind of fishery through change of cooperation model, enhancement of management, vessel update and remake and projects merger and acquisition; (iii)optimize industry structure and extend industry chain, develop refrigeration, processing and trading of aquatic products; (iv)strengthen construction of fishery production service supporting system, greatly develop overseas fishing bases and ocean production platforms, and conduct a series of value-added services, such as fishing port wharf, fishing goods storage logistics, fishing vessel repair, ocean transportation and recharge.
(II)Outlook of major business
1. Ocean fishery
The Company continues to develop the ocean fishery business with purse seine and longline fishing as the core business. In respect of tuna purse seine, the Company bought five large tuna purse seine fishing vessels in overseas market for fishing operation in the Atlantic Ocean during the reporting period. Currently, two of the vessels have commenced operation. Together with the two purse seine fishing vessels transferred from the central and west Pacific Ocean fishing grounds, a total of four purse seine fishing vessels are put into operation in the Atlantic Ocean to meet the expected results. For the upcoming year, the five vessels will become our new point of growth upon full and complete operation. In respect of longline business, the Company has become further familiar with the distribution of fishing grounds in the Indian Ocean as it continues to explore and develop this
region. By reasonable coordination, the Company is able to maintain satisfying operating results and provide
stable revenue source.
2. Refrigerated transport
Consolidate and enhance refrigerated transportation business. Ocean refrigerated transportation has always been the business segment contributing stable operating results for the Company. Based on the specific condition of refrigerated transportation market, we plan to gradually eliminate the old and small vessels with small capacity, to be replaced with those vessels with moderate capacity and relatively young shipping age, so as to continue to maintain the leading position of our transportation fleet in the industry.
3. Refrigeration, processing and trading
Actively develop and extend refrigeration, processing and trading business. First of all, the Company seeks development by innovation. It continues to optimize product structure to improve our competitiveness and risk-prevention ability. Second, it continues to increase acquisition, processing and sales of tunas fished by ocean fishery enterprises, making its best to expand both domestic and international market. Third, the Company increase development of new products and further-processed products with high added-value in addition to the existing business, expecting to make new point of growth.
(III)Future development strategy
By adherence to the strategic target, the Company captures the business opportunities in ocean fishery market in compliance with the development requirements as a listed company, preventing risks effectively and achieving stable performance. With ocean fishery as the major business, the Company endeavors to broaden brand recognition, explore ocean pasture and innovate profit model pursuant to the development idea of “hold fishery as major business, integrated with refrigeration, processing and trading, adjust structure and seek for transformation and upgrade”, which facilitate the Company to realize development of modernization, information, digitization and intelligence.
(IV)Working plan for 2018
Under the working target of “maintain growth, emphasize regulation, adjust structure and promote transformation”, the Company plans to improve its development quality, enhance economic performance, focus on switch of new and old kinetic energy and market penetration, propel construction of significant projects, seeking for moderate and stable growth. In respect of the major problems restricting its development, the Company makes its best to conduct operation, adjust transformation, market penetration and regulate management, aiming to making new point of growth. Besides, it continues to strengthen and improve its ability of control, competitiveness, and influence and risk prevention, ensuring that the annual operating tasks could be successfully completed in full. The relevant plans are summarized as follows: (1)to accelerate development of fishing and transportation fleet and aquatic products refrigeration and processing business, thus to enable the Company to develop on a quality, scaled and professional basis; (2)to insist on development with diversified business and market participation, thus to propel the Company to transform into a comprehensive enterprise; (3)to strengthen industry chain construction and optimize and integrate operating business, thus to propel the Company on an integrated basis; (4)to propel the Company to transform into a stable overseas-engaged enterprise by orderly explore of quality and regulated overseas market projects; (5)to materialize a series of effective measures to further deepen reform of the Company, thus to enable it to transform into a regulated and growing enterprise; (6)to propel the Company to transform into an innovative enterprise with innovation in technology, products, business and management.
(V)Potential risks and countermeasures
1. The risk of change of resources, especially the decrease of resources of major varieties to be fished. Though various international fishery resources protection organizations, resources countries and responsible fishing enterprises are committed to secure sustainable fishery, fishing resources are still subject to fluctuation, including decrease of fishing resources, due to lots of factors such as periodic change of resources, climate and water conditions, which will directly lead to deduction of our production capacity. We have made scientific and reasonable arrangement for supporting works, including maintenance of vessels, repair of equipment, material resources, bait, facilities and staff, to ensure our shipping rate.
2.The risk of fish price fluctuation. Fish price may continue to decline and maintain running at low price, which may affect the revenue throughout the year. In this regard, we make every chance to sell out the fishes captured to minimize the loss arising from price decline. Besides, the supporting policies issued by the national and local governments are fully capitalized by us through processing to improve theproduct’s added-value.
3.The risk of exchange rate. Appreciation of RMB against US dollar and Yen will impose certain influence upon our export of products and vessel leasing service. Therefore, we pay close attention to development trend of exchange rate, and adopt effective financial instruments (such as forward settlement and sale of exchange) to lock in exchange rate in advance, so as to bring down exchange risk to the largest extent.
4.The risk of change of preferential and supporting policies in the industry. These policies include but not limited to the subsidy policy for development and utilization of international fishing resources and the tax refund policy for export. Decrease of subsidy or drop of tax refund rate may lead to decrease of our non-operating income. 5.The risk of price change of raw materials and equipment and components. The biggest cost component of our processing business is procurement of raw materials, which means increase of raw material price will further press our space of profit. Maintenance of ocean fishing vessels requires prompt maintenance or update of key equipment or components, the price change of which will also affect cost fluctuation of fishing business. The Company will strengthen strategic cooperation with these major raw materials suppliers to respond to the risk of price change of raw materials, and increase use of key equipment or components made by domestic manufacturers to minimize the influence on cost.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable□Not applicable
|||||
|-|-|-|-|
|Time|Way|Type|Basic situation index of investigation|
||||Operation of the Company and no|
|2017-01-09|Telephone communication|Individual||
||||material required|
|2017-04-05|Telephone communication|Individual|Asking about cause of suspension|
||||Operation of the Company and no|
|2017-05-02|Telephone communication|Individual||
||||material required|
|2017-06-12|Telephone communication|Individual|Lawsuits and operation of the|

||||||
|-|-|-|-|-|
|||||Company ,no material required|
|||||Operation of the Company and no|
|2017-08-16|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2017-11-01|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2017-11-24|Telephone communication||Individual||
|||||material required|
|||||Operation of the Company and no|
|2017-12-14|Telephone communication||Individual||
|||||material required|
|Reception (times)||8|||
|Number of hospitality||0|||
|Number of individual reception||8|||
|Number of other reception||0|||
|Disclosed, released or let out major undisclosed|||||
|||No|||
|information|||||

Section V. Important Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during the Reporting Period
□ Applicable√ Not applicable
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years (including the reporting period)
In latest three years, after cover the deficit of previous years, the retained profit at period-end still negative; being deliberated and approved by the Board andShareholders’ General Meeting, no profit distributed either. The Company has no plan of cash dividend distribution, no bonus distributed and capitalizing of common reserves either for year of 2017.
The Company, though as a listed company offering B shares, has almost never conducted financing from securities market since its listing, which means the parent company and its subsidiaries could merely operate with its own profits made. Therefore, no mandatory dividend policy is issued on its subsidiaries. Due to a series of reasons, including the operation of the parent company, no dividend is paid in respect of the distributable profit of subsidiaries and past reorganization, the accumulated profit available for distribution to shareholders of ordinary shares of the parent company is negative during the reporting period.
The Company held the 10th meeting of the 6th session of board of directors on 26 October 2017 to amend the Subsidiary Management System with addition of chapter six “Obligation of income payment”: in case that any subsidiary records profit for a year and the accumulated undistributed profit is positive, the subsidiary shall pay shareholders cash dividend with an amount not less than30% of the distributable net profit for the year. If the subsidiary is not able to make cash dividend at the prescribed proportion due to significant investment or shortage of operating capital, it shall apply to the Company in advance and be subject to approval from the Company. During the reporting period, the four subsidiaries realized total net profit of RMB67,0238 million. The Company will demand the subsidiaries to make dividend payment to the parent company according to relevant requirements based on the audited results issued by Daxin Accounting Firm and other conditions.
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
|||||||
|-|-|-|-|-|-|
|||Net profit|Ratio in net profit|||
|||attributable to|attributable to|||
|||common stock|common stock|||
|Year for bonus|Amount for cash|shareholders of|shareholders of|Amount for cash|Proportion for cash|
|shares|bonus (tax included)|listed company in|listed company|bonus by other ways|bonus by other ways|
|||consolidation|contained in|||
|||statement for bonus|consolidation|||
|||year|statement|||
|2017|0.00|91,517,485.28|0.00%|0.00|0.00%|
|2016|0.00|52,585,070.74|0.00%|0.00|0.00%|

|||||||
|-|-|-|-|-|-|
|2015|0.00|12,141,360.21|0.00%|0.00|0.00%|

 The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is positive but no plan of cash dividend proposed of common stock
□ Applicable√ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable√ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the year.
III. Implementation of commitment
1. Commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies
□ Applicable√ Not applicable
The Company has no commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies
2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in forecasting period, explain reasons of reaching the original profit forecast
□ Applicable√ Not applicable
IV. Non-operational fund occupation from controlling shareholders and its related party□ Applicable√ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable√ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculation method compared with the financial report of last year
√Applicable□Not applicable
The Ministry of Finance issued the Enterprise Accounting Standards No.42 - Non-current Assets Held for Trading, Disposal Group and Discontinued Operation in 2017, which came into effect since 28 May 2017. The non-current
assets held for trading, disposal group and discontinued operation existed as of the implementation date are
required to be treated by prospective application method.
The Ministry of Finance amended the Enterprise Accounting Standards No.16 - Government Subsidy in 2017, which came into effect since 12 June 2017. the government subsidy existed as of 1 January 2017 is required to be treated under prospective application method; the government subsidy newly granted during the period from 1 January 2017 to the implementation date shall be adjusted under the amended standard.
The Ministry of Finance released in 2017 the Notice relating to Amending and Printing of Financial Statement Forms of General Enterprises(CK[2017]No.30). enterprises adopting Enterprise Accounting Standards shall prepare their financial statements for 2017 and other accounting periods according to the Enterprise Accounting Standards and the Notice.
||||||
|-|-|-|-|-|
|Changes of contents andreasons|Items changed|Amountchanged|Re-stated amountlast period|Amount innon-operationrevenue lastperiod|
|1. Government subsidy withroutine operation activitiesconcerned are reckoned intoother income|Other income|26,760,985.48|—|43,105,385.48|
|2.Adjustment of assets disposalgains/losses|Assets disposalincome|422,100.74|2,552,387.02|2,657,141.63|

VII. Major accounting errors within reporting period that needs retrospective restatement□ Applicable√ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with lastyear’s financial report; explain changes in consolidationstatement’s scope
√Applicable□Not applicable
In 2017, Shandong Zhonglu Haiyan Oceanic Fishery Co., Ltd. established a subsidiary-AFRICA STAR FISHERIES LIMITED and ZHONG GHA FOODS COMPANY LIMITED in Republic of Ghana, and the two companies are included in consolidate statement. IX. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
|||
|-|-|
|Name of domestic accounting firm|PKF Daxin Certified Public Accountants LLP|
|Remuneration for domestic accounting firm (in 10||
||40|
|thousand Yuan)||
|Continuous life of auditing service for domestic||
||15|
|accounting firm||
|Name of domestic CPA|Zhang Lifa; Chen Xiujian|

Whether re-appointed accounting firms in this period or not
□ Yes√ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√ Applicable□Not applicable
After approval and passed by the Annual General Meeting of 2016, the Company engaged PKF Daxin Certified Public Accountants LLP to be the auditing CPA for internal control 2017 of the Company, totally 100,000 Yuan are paid in the period.
X. Particular about suspended and delisting after annual report disclosed
□ Applicable√ Not applicable
XI. Bankruptcy reorganization
□ Applicable√ Not applicable
No bankruptcy reorganization for the Company in reporting period.
XII. Significant lawsuits and arbitrations of the Company
√Applicable□Not applicable
|||||||||
|-|-|-|-|-|-|-|-|
||||Progress|||||
|||Whether||Trial Results and|Judgment|||
|Basic Situation of|Amount||of|||||
|||Formed||Effects of|Implementation|Disclosure|Disclosure|
|Litigation|Related to the||Litigation|||||
|||Accrued||Litigation|of Litigation|Date|Index|
|(Arbitration)|Case (Yuan)||(Arbitration|||||
|||Liabilities(Y/N)||(Arbitration)|(Arbitration)|||
||||)|||||
||||Shandong|||||
|In the process of|||Higher|||||
|implementing the|||People’s|||||
|loan dispute case of|||Court|||||
|||||It is ruled that the||||
|Shenzhen Qiwu|||dismissing|||||
|||||application is|||Progress of|
|Wealth Management|||the claims|||||
|||||rejected and this|||the Lawsuits|
|Co., Ltd. and|||from|||||
|||||rule shall be|||(Notice No.:|
|Shandong Longkou|||applicant|||||
|||||deemed as the|||2017-15 ;|
|Aquatic Integrated|||for|||||
|||||final verdict. This|Reject an||No.:|
|Co., Ltd., the|||reconsiderat|||||
||1,936.24|No||lawsuit will not|application,|2017-06-10|2017-18;|
|execution applicant|||ion -|||||
|||||materially affect|unenforced||No.: 2017-19|
|Shenzhen Qiwu|||Shenzhen|||||
|||||the profit for the|||and No.:|
|Wealth Management|||Qiwu|||||
|||||period or|||2017-37) on|
|Co., Ltd. applied for|||Wealth|||||
|||||subsequent|||Juchao|
|adding the Company|||Manageme|||||
|||||periods of the|||website|
|as the person subject|||nt Co., Ltd.|||||
|||||Company.||||
|to enforcement to|||and upheld|||||
|Jinan Intermediate|||the ruling|||||
|People's Court.|||from|||||
||||Jinan|||||

||
|-|
|Intermediat|
|e People's|
|Court|
|(2017) Lu|
|01 ZY No.|
|235|

XIII. Penalty and rectification
□ Applicable√ Not applicable
No penalty and rectification for the Company in reporting period.
XIV. Integrity of the company and its controlling shareholders and actual controllers
√Applicable□Not applicable
The company and its controlling shareholders and actual controllers do not have a relatively large amount of due existing debt with court's effective judgments.
XV. Implementation of thecompany’s stock incentive plan, employee stock ownership plan or other employee incentives
□ Applicable√ Not applicable
During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives that have not been implemented.
XVI. Material related transactions
1. Related transaction with daily operation concerned
□ Applicable√ Not applicable
No related transaction with daily operation concerned for the Company in reporting period.
2. Related transactions by assets acquisition and sold
□ Applicable√ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period.
3. Main related transactions of mutual investment outside
□ Applicable√ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period
4. Contact of related credit and debt
□ Applicable√ Not applicable
No contact of related credit and debt for the Company in reporting period
5. Other material related transactions
□ Applicable√ Not applicable
No other material related transactions for the Company in reporting period
XVII. Major contract and implantation
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable√ Not applicable
No trusteeship for the Company in reporting period
(2) Contract
□ Applicable√ Not applicable
No contract for the Company in reporting period
(3) Leasing
□ Applicable√ Not applicable
No leasing for the Company in reporting period
2. Major guarantee
□ Applicable√ Not applicable
No guarantee for the Company in reporting period
3. Entrust others to cash asset management
(1) Trust financing
□ Applicable√ Not applicable
The company had no trust financing in the reporting period.
(2) Entrusted loans
□ Applicable√ Not applicable
The company had no entrusted loans in the reporting period.
4. Other material contracts
□ Applicable√ Not applicable
No other material contracts for the Company in reporting period
XVIII. Social responsibility
1. Execution of social responsibility of targeted poverty alleviation
Take on social responsibility and support social public welfare is part of the core value for the enterprise from beginning to end. We participate in social responsibility through respect foremployees’ rights, prevent and remedy pollution, promote sustainable utilization of resources, pay attention and participation in public welfare.
2. Execution of other social responsibility
The Company did not have precision poverty alleviation in the period, and there are no subsequent precision poverty alleviation programs either in the period
3. Environment protection
Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection No
Listed company and its subsidiary are not belongs to key pollution enterprise listed by Department of Environmental Protection XIX. Explanation on other significant events
√Applicable□Not applicable
||||
|-|-|-|
|Name|Date of disclosed|Internet website and retrievalpath for disclosed information|
|Performance Forecast for year of 2016|2017-1-7|http://www.cninfo.com.cn|
|Notice of the Resignation of Directors|2017-2-18|http://www.cninfo.com.cn|
|Resolution of 5th session of 6th BOD|2017-3-4|http://www.cninfo.com.cn|
|Resolution of 4th session of 6th Supervisory Committee|2017-3-4|http://www.cninfo.com.cn|
|Summary of Annual Report 2016|2017-3-4|http://www.cninfo.com.cn|
|Notice of Suspension of Important Matters|2017-4-6|http://www.cninfo.com.cn|
|Performance Forcast for 1Q|2017-4-11|http://www.cninfo.com.cn|
|Progress of Suspension of Important Matters|2017-4-12|http://www.cninfo.com.cn|
|Notice of Resumption of Important Matters|2017-4-19|http://www.cninfo.com.cn|
|Summary of 1Q of 2017|2017-4-29|http://www.cninfo.com.cn|
|Notice of Change the Office Address, Contact Way and Logo of|2017-4-29|http://www.cninfo.com.cn|
|the Company|||

||||
|-|-|-|
|Resolution of 7th session of 6th BOD|2017-5-26|http://www.cninfo.com.cn|
|Notice of Convening the AGM 2016|2017-5-26|http://www.cninfo.com.cn|
|Reminder Notice of Convening the AGM 2016|2017-6-9|http://www.cninfo.com.cn|
|Notice of Lawsuits|2017-6-10|http://www.cninfo.com.cn|
|Resolution of AGM of 2016|2017-6-16|http://www.cninfo.com.cn|
|Performance pre-notice of half year of 2017|2017-7-11|http://www.cninfo.com.cn|
|Lawsuit Progress|2017-7-14|http://www.cninfo.com.cn|
|Lawsuit Progress|2017-7-21|http://www.cninfo.com.cn|
|Resolution Notice of 6th Meeting of 8th Session of the Board|2017-8-16|http://www.cninfo.com.cn|
|Related Transactions on Received Loans by Mandate and|2017-8-16|http://www.cninfo.com.cn|
|Guarantee Period from Controlling Subsidiary|||
|Convening the First Extraordinary Shareholders General|2017-8-16|http://www.cninfo.com.cn|
|meeting of 2017|||
|Resolution Notice of 6th Meeting of 9th Session of the Board|2017-8-31|http://www.cninfo.com.cn|
|Summary of Semi-annual Report for year of 2017|2017-8-31|http://www.cninfo.com.cn|
|CFO Resignation|2017-8-31|http://www.cninfo.com.cn|
|Resolution Notice of First Extraordinary Shareholders General|2017-9-1|http://www.cninfo.com.cn|
|meeting of 2017|||
|Participate in Investor Online Reception Day|2017-9-12|http://www.cninfo.com.cn|
|3 Q Performance Forcast for year of 2017|2017-10-13|http://www.cninfo.com.cn|
|Resolution Notice of 6th Meeting of 10th Session of the Board|2017-10-27|http://www.cninfo.com.cn|
|Resolution Notice of 6th Meeting of 7th Session of the Board of|2017-10-27|http://www.cninfo.com.cn|
|supervisors|||
|Summary of Third Quarterly Report for year of 2017|2017-10-27|http://www.cninfo.com.cn|
|Change of Accounting Policy|2017-10-27|http://www.cninfo.com.cn|
|Notice of Chairman Pass Away|2017-11-1|http://www.cninfo.com.cn|
|Received Government Subsidy|2017-11-4|http://www.cninfo.com.cn|
|Resolution Notice of 6th Meeting of 11th Session of the Board|2017-12-13|http://www.cninfo.com.cn|
|Convening the Second Extraordinary Shareholders General|2017-12-13|http://www.cninfo.com.cn|
|meeting of 2017|||
|Lawsuit Progress|2017-12-19|http://www.cninfo.com.cn|
|Resolution Notice of Second Extraordinary Shareholders|2017-12-29|http://www.cninfo.com.cn|
|General meeting of 2017|||
|Election of the Staff Representative Director|2017-12-30|http://www.cninfo.com.cn|
|Change of Staff Representative Director|2017-12-30|http://www.cninfo.com.cn|

XX. Significant event of subsidiary of the Company
√Applicable□Not applicable
The fourth meeting of the 6th Board of Directors of the Company examined and approved the Proposal on the
Purchase of Tuna Seine Boat Project, agreed thecompany’s holding subsidiary– Shandong Zhonglu Haiyan
Oceanic Fishery Co., Ltd. to purchase five tuna seine boats with ICCAT registered fishing license. During the reporting period, RMB 162,425,625.20 was invested, and five boats have been handed over up to the disclosure date of this report, and one boat has gone to sea for fishing, the maintenance and preparation and operations of relevant assets of other boats are being processed actively and shall be put into operation.
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in shares
1. Changes in shares
In Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before changes||(+,-)|||||After changes||
||||||Capitaliza|||||
||||||tion of|||||
||Amount|Ratio|New issue|Bonus||Other|Subtotal|Amount|Ratio|
||||||public|||||
||||||reserve|||||
||128,071,3|||||||128,071,3||
|I. Unlisted shares||48.13%|||||||48.13%|
||20|||||||20||
||128,071,3|||||||128,071,3||
|1. Sponsor shares||48.13%|||||||48.13%|
||20|||||||20||
|Including: State-owned|127,811,3|||||||127,811,3||
|||48.04%|||||||48.04%|
|shares|20|||||||20||
|Domestic corporate||||||||||
||260,000|0.10%||||||260,000|0.10%|
|shares||||||||||
||138,000,0|||||||138,000,0||
|II. Listed shares||51.87%|||||||51.87%|
||00|||||||00||
|2. Domestically listed|138,000,0|||||||138,000,0||
|||51.87%|||||||51.87%|
|foreign shares|00|||||||00||
||266,071,3|||||||266,071,3||
|III. Total shares||100.00%|||||||100.00%|
||20|||||||20||

Reasons for share changed
□ Applicable√ Not applicable
Approval of share changed
□ Applicable√ Not applicable
Ownership transfer of share changed
□ Applicable√ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period
□ Applicable√ Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable√ Not applicable
2. Changes of restricted shares
□ Applicable√ Not applicable
II. Securities issue and listing
1. Security offering (without preferred stock) in Reporting Period
□ Applicable√ Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and liability structure
□ Applicable√ Not applicable
3. Existing internal staff shares
□ Applicable√ Not applicable
III. Shareholders and actual controller
1. Number of shareholders of the Company and share-holding
In Share
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||11,823||||||Total preference|||
||||||||Total preference||||shareholders|||
|||Total common|||||shareholders||||with voting|||
|Total common||||||||||||||
|||stock|||||with voting||||rights recovered|||
|stock||||||||||||||
|||shareholders at|||||rights recovered||||at end of last|||
|shareholders in|11,863||||||||0||||0|
|||end of last month|||||at end of||||month before|||
|reporting||||||||||||||
|||before annual|||||reporting period||||annual report|||
|period-end||||||||||||||
|||report disclosed|||||(if applicable)||||disclosed (if|||
||||||||(found in note8)||||applicable)|||
||||||||||||(found in note8)|||
|Particulars about shares held above 5% by shareholders or top ten shareholders||||||||||||||
|||||Total|||Amount|||Number of shares pledged/frozen||||
|||||||||Amount||||||
|||||sharehol|||of|||||||
||||Proportio|||Changes||of listed||||||
|||||ders at|||unlisted|||||||
|Full name of|Nature of||n of|||in report||outstandi||||||
|Shareholders|shareholder||shares|the end|||outstandi|||State of share||Amount||
||||held|||period||ng shares||||||
|||||of report|||ng shares|||||||
|||||||||held||||||
|||||period|||held|||||||
|ShandongState-owned|State-ownedlegal person||33.07%|88,000,000|||88,000,000|||||||

|||||||
|-|-|-|-|-|-|
|Assets InvestmentHolding Co., Ltd||||||
|Shandong LuxinInvestmentHolding GroupCo., Ltd|State-ownedlegal person|14.18%|37,731,320|37,731,320||
|ShenwanHongYuan (H.K.)Limited|Foreign legalperson|3.52%|9,367,590||9,367,590|
|Chen Tianming|Foreign natureperson|2.16%|5,760,427||5,760,427|
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|Foreign legalperson|1.87%|4,978,704||4,978,704|
|HaitongInternationalSecuritiesCompanyLimited-AccountClient|Foreign legalperson|0.82%|2,176,900||2,176,900|
|China NationalHeavy DutyTruck GroupJinan Truck LLC|State-ownedlegal person|0.73%|1,950,000|1,950,000||
|Cai Yujiu|Domestic natureperson|0.52%|1,370,917||1,370,917|
|Wang Dongsheng|Foreign natureperson|0.46%|1,215,203||1,215,203|
|Qin Jun|Domestic natureperson|0.41%|1,083,220||1,083,220|
|Strategy investors or general legal||||||
|person becomes top 10 shareholders||||||
|||Not applicable||||
|due to rights issued (if applicable)||||||
|(see note3)||||||
|||Shandong State-owned Assets Investment Holding Co., Ltd and Shandong Luxin Investment||||
|||Holding Group Co., Ltd are provincial state-owned enterprises under the same stock controlling of||||
|Explanation on associated||||||
|||Shandong Provincial Commission; China National Heavy Duty Truck Group Jinan Truck LLC||||
|relationship among the aforesaid||||||
|||is the sponsor shareholder of the Company, Shandong State-owned Assets Investment||||
|shareholders||||||
|||Holding Co., Ltd has 20% shares of China National Heavy Duty Truck Group Jinan Truck||||
|||LLC. Rests of the shareholders are the domestically listed foreign shareholders, and t he||||

|||||
|-|-|-|-|
||Company is unknown whether there exists associated relationship or belongs to consistent|||
||actor regulated by “management method for acquisition of listed company” among the above|||
||said shareholders|||
|Shareholding of top 10 circulated shareholders||||
|||Type of shares||
|Shareholders|Amount of listed shares held at end of the Period|||
|||Type|Amount|
|Shenwan HongYuan (H.K.) Limited|9,367,590|Domestically||
|||listed foreign|9,367,590|
|||shares||
|Chen Tianming|5,760,427|Domestically||
|||listed foreign|5,760,427|
|||shares||
|GUOTAI JUNANSECURITIES(HONGKONG)LIMITED|4,978,704|Domestically||
|||listed foreign|4,978,704|
|||shares||
|Haitong International SecuritiesCompany Limited-Account Client|2,176,900|Domestically||
|||listed foreign|2,176,900|
|||shares||
|Cai Yujiu|1,370,917|Domestically||
|||listed foreign|1,370,917|
|||shares||
|Wang Dongsheng|1,215,203|Domestically||
|||listed foreign|1,215,203|
|||shares||
|Qin Jun|1,083,220|Domestically||
|||listed foreign|1,083,220|
|||shares||
|Yi Ying|1,078,200|Domestically||
|||listed foreign|1,078,200|
|||shares||
|Huang Jiayi|1,048,687|Domestically||
|||listed foreign|1,048,687|
|||shares||
|Lin Mingyu|964,001|Domestically||
|||listed foreign|964,001|
|||shares||
|Expiation on associated relationship||||
||The Company is unknown whether there exists associated relationship or belongs to|||
|or consistent actors within the top 10||||
||consistent actor regulated by “management method for acquisition of listed company” among|||
|un-restrict shareholders and between||||
||the above said shareholders.|||
|top 10 un-restrict shareholders and||||

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

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period
□ Yes√ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period.
2. Controlling shareholders
Nature of controlling shareholders: local state-owned holding
Type of controlling shareholders: legal person
||||||
|-|-|-|-|-|
||Legal person/person|Date of foundation|||
|Controlling shareholders|||Organization code|Main operation business|
||in charge of the unit||||
|||||Operating management and|
|||||disposal on state-owned|
|||||assets (shares), assets|
|||||management, equity|
|Shandong State-owned Assets|||||
||Li Guangqing|1994-03-25|91370000163073167C|investment management|
|Investment Holding Co., Ltd|||||
|||||and operation, enterprise|
|||||re-construction, acquisition|
|||||and combination,|
|||||investment consultant|

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

||||
|-|-|-|
|Government||supervised etc.|
|Equity of other|||
|foreign/domestic listed|||
|company that controlled by|Not applicable||
|actual controller in reporting|||
|period|||

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

||
|-|
|operation, capital operation;|
|guarantee; hotel|
|management; leasing house|
|and property management|

 5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers, restructuring side and other commitment subjects
□ Applicable√ Not applicable
Section VII. Preferred Stock
□ Applicable√ Not applicable
The Company had no preferred stock in the reporting.
Section VIII. Particulars about Directors, Supervisors and Senior Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Increasin|Decreasin|||
||||||||Shares|||||
|||||||||g shares|g shares||Shares|
||||||Start||held at|||Other||
|||Working||||End date||held in|held in||held at|
||Title||Sex|Age|dated of|of office|period-be|||changes||
|Name||status|||office|||this|this||period-en|
||||||term|term|gin|||(Share)||
|||||||||period|period||d(Share)|
||||||||(Share)|||||
|||||||||(Share)|(Share)|||
|Lu||Currently|||2016-05-|2019-05-||||||
||Director||M|44|||0|0|0|0|0|
|Xiaonan||in office|||19|18||||||
||Director/|||||||||||
|Sui||Currently|||2017-03-|2019-05-||||||
||Deputy||M|58|||0|0|0|0|0|
|Jianshi||in office|||02|18||||||
||GM|||||||||||
||Independ|||||||||||
|||Currently|||2016-05-|2019-05-||||||
|Jiang Lu|ent||M|58|||0|0|0|0|0|
|||in office|||19|18||||||
||director|||||||||||
||Independ|||||||||||
|Song||Currently|||2016-05-|2019-05-||||||
||ent||M|52|||0|0|0|0|0|
|Xiliang||in office|||19|18||||||
||director|||||||||||
||Director/|||||||||||
||Deputy|||||||||||
|||Currently|||2015-04-|2019-05-||||||
|Li Ming|GM/Secre||M|52|||0|0|0|0|0|
|||in office|||28|18||||||
||tary of the|||||||||||
||Board|||||||||||
||Chairman|||||||||||
||of|||||||||||
|Zhang|Superviso|Currently|||2016-05-|2019-05-||||||
||||F|52|||0|0|0|0|0|
|Liqing|ry|in office|||19|18||||||
||Committe|||||||||||
||e|||||||||||
|Hou|Superviso|Currently|||2016-05-|2019-05-||||||
||||M|35|||0|0|0|0|0|
|Zhenkai|r|in office|||19|18||||||
||Superviso|Currently|||2017-12-|2019-05-||||||
|Qiu Hong|||F|50|||0|0|0|0|0|
||r|in office|||29|18||||||
|Wang|Deputy|Currently|||2016-03-|2019-05-||||||
||||M|49|||0|0|0|0|0|
|Huan|GM|in office|||03|18||||||

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Zhao||Currently|||2017-08-|2019-05-||||||
||CFO||M|34|||0|0|0|0|0|
|Minkun||in office|||29|18||||||
|Chi|Chairman|Demissio|||2016-05-|2017-10-||||||
||||M|51|||0|0|0|0|0|
|Weizhen|/GM|n|||19|31||||||
|Zhao||Demissio|||2016-05-|2017-06-||||||
||Director||M|54|||0|0|0|0|0|
|Zhiguo||n|||19|15||||||
|Shang|Superviso|Demissio|||2003-10-|2017-12-||||||
||||F|47|||0|0|0|0|0|
|Qinghua|r|n|||23|29||||||
|||Demissio|||2016-03-|2017-08-||||||
|Yue Juan|CFO||F|42|||0|0|0|0|0|
|||n|||03|29||||||
|Total|--|--|--|--|--|--|0|0|0|0|0|

 II. Changes of directors, supervisors and senior executives
√ Applicable□Not applicable
||||||
|-|-|-|-|-|
|Name|Title|Type|Date|Reasons|
|Chi Weizhen|Chairman|Demission|2017-10-31|Mort death|
|Chi Weizhen|GM|Dismissal|2017-10-31|Mort death|
|Zhao Zhiguo|Director|Demission|2017-06-15|Work changes|
|Shang Qinghua|Supervisor|Demission|2017-12-29|Work changes|
|Yue Juan|CFO|Dismissal|2017-08-29|Work changes|

III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors, supervisors and senior executive at the present in latest five years
1. Directors
Lu Xiaonan, a MBA, master of economics and a member of the CPC. He was a deputy chief of resource environment audit office of the Auditing Office Nantepai Office, deputy GM of Shandong Dongyin Investment Co., Ltd., the deputy director of assets management department, director of risk management department and director of disciplinary inspection and supervision office of Shandong State-Owned Assets Holding Co., Ltd; now he serves as GM of the assets operation center of Shandong State-Owned Assets Holding Co., Ltd., supervisor of Shandong Assets Management Operation Co., Ltd. and chairman of the supervisory of Zhongtong Bus Holding Co., Ltd. He serves as director of the Company since 19 May 2016.
Sui Jianshi, graduate student, and a member of the CPC; he was appointed as deputy GM of Qingdao Wenhua Real Estate Development Co., Ltd.; deputy GM of Shandong Luxin Property Co., Ltd.; deputy GM of Shandong
Luxin Tiandi Property Co., Ltd. and deputy GM of Yantai Zhenghai Wire Drawing Mold Co., Ltd.; he servers as
deputy GM of the Company since 2 March 2017 and servers as director of the Company since 15 Jun 2017.
Jiang Lu, Bachelor of Laws and a senior lawyer. He was served as independent directors in Shandong Hengtong Chemical Co., Ltd. and Shandong Shanda WIT Science and Technology Co., Ltd; lawyer of Jinan Jingji Laws Firm, Shandong Yuanxin Law Firm and Partner of Shandong Jun Yi Da Law Firm; he currently works as a partner of Grandall Law Firm (Jinan). And serves as independent director of the Company since 19 May 2016. Song Xiliang, a PHD, Prof. of Accountancy. He works as accounting professor in Shandong University of Finance and Economics, member of a council in Chinese Institute of Finance and Cost for Young and mid-career Professionals and Shandong Chamber of Accounting. He also works as independent directors in two listed companies- SACRED SUN (code: 002580) and Weihai Huadong Automation Co., Ltd. (code: 002248); he act as independent director of the Company since 19 May 2016.
Li Ming, university degree, an economist, member of the CPC and member of the party committee of the Company. He serves as deputy GM of the Company since April 2007, and also serves as deputy GM and secretary of the Board of the Company since April 2015; servers as staff director of the Company since 29 December 2017. 2. Supervisor
Zhang Liqing, MBA, member of PC. She served as CFO in Shandong Gezhi Thermal Co., Ltd., CFO of Jinan Ginza Shopping Mall Co., Ltd, and Silver Plaza Group Co., Ltd., a director of auditing department of Shandong Commercial Group Corporation, the chief of information HQ of the Shandong Ginza Mall Co., Ltd., CFO of Shandong Freda Medicine Corporation and Shandong Pharmaceutical Academy of Sciences, a supervisor of Langchao Group Ltd, director of auditing department (discipline inspection dept.) in Shandong State-Owned Assets Investment Holding Co., Ltd; now she acts director of auditing dept. of Shandong State-Owned Assets Investment Holding Co., Ltd, chairman of supervisory of Shandong Assets Management Operation Co., Ltd and supervisor of Shandong Ocean Investment Co., Ltd, she serves as chairman of supervisory committee of the Company since 19 May 2016.
Hou Zhenkai, master degree candidate, a lawyer. He worked as attorney of security business in Jindu Law Firm, staff of Risk Compliance Dept. (Legal Affairs Dept.) in Shandong Luxin Investment Holdings Group Co., Ltd and supervisor of Shandong International Trust Corporation; he serves as supervisor of the Company since 19 May 2016.
Qiu Hong, university degree, member of the CPC. She served as director of the GM Office and deputy director of department of party work of the Company in last five years; now she serves as deputy director of the discipline inspection department of the Company. She serves as staff supervisor of the Company since 29 December 2017. 3. Senior executive
Wang Huan, bachelor of economics with university degree. He worked as deputy GM of oceanic management dept. in Shandong Zhonglu Oceanic Fisheries Co., Ltd., business chief of the fishery in Ghana, chief of fishery in Gambia and GM of Shandong Zhonglu Aquatic Shipping Co., Ltd. now he work as chairman of Shandong Zhonglu Aquatic Shipping Co., Ltd and deputy GM of the Company since 3 March 2016.
Zhao Minkun, university degree, intermediate accountant and a CPA. He worked as a senior staff in financial
department under the name of Shandong Luxin Investment Group; a senior staff, business chief and senior business manager in financial management department under the name of Shandong Luxin Investment Holding. He serves as CFO of the Company since 29 August 2017.
Post-holding inshareholder’s unit
√Applicable□Not applicable
|||||||
|-|-|-|-|-|-|
|||||End date of|Whether receiving|
||||||remuneration from|
|Name|Name of shareholder’s units|Position|Start dated of|||
||||office term|office term|shareholder’s units|
||||||or not|
|||GM of capital||||
|Lu Xiaonan|Shandong State-owned Assets Investment|operation|||Y|
|||center||||
|||Director of||||
|Zhang Liqing|Shandong State-owned Assets Investment||||Y|
|||audit dept.||||
|||Deputy||||
|||director of||||
|||risk of||||
|Hou Zhenkai|Luxin Group||||Y|
|||compliance||||
|||dept. (legal||||
|||dept.)||||

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

Punishment of securities regulatory authority in recent three years to thecompany’s current and outgoing directors, supervisors and senior management during the reporting period
□ Applicable√ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
In accordance with relevant requirement and regulation of “Code of Corporate Governance for Listed Companies” from CSRC, the
remuneration plan for directors, supervisors and senior executives of the Company was proposed by remuneration and appraisal
committee of the Board, and being deliberated by 7th meeting of 3rd session of the Board held on 14 February 2008 and approved in
AnnualShareholders’ General Meeting of 2007 held on 18 March 2008.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
||||||||
|-|-|-|-|-|-|-|
|||||||Whether|
||||||Total||
|||||||remuneration|
|||||Post-holding|remuneration||
|Name|Title|Sex|Age|||obtained from|
|||||status|obtained from the||
|||||||related party of|
||||||Company||
|||||||the Company|
|||||Currently in|||
|Lu Xiaonan|Director|M|44||0|Y|
|||||office|||
||Director/Deputy|||Currently in|||
|Sui Jianshi||M|58||34.93|N|
||GM|||office|||
||Independent|||Currently in|||
|Jiang Lu||M|58||4|N|
||director|||office|||
||Independent|||Currently in|||
|Song Xiliang||M|52||4|N|
||director|||office|||
||Director/Deputy||||||
|||||Currently in|||
|Li Ming|GM/ secretary of|M|52||41.92|N|
|||||office|||
||the Board||||||
||Chairman of||||||
|||||Currently in|||
|Zhang Liqing|supervisory|F|52||0|Y|
|||||office|||
||committee||||||
|||||Currently in|||
|Hou Zhenkai|Supervisor|M|35||0|Y|
|||||office|||
|||||Currently in|||
|Qiu Hong|Supervisor|F|50||18.41|N|
|||||office|||
|||||Currently in|||
|Wang Huan|Deputy GM|M|49||42.62|N|
|||||office|||
|||||Currently in|||
|Zhao Minkun|CFO|M|34||13.97|N|
|||||office|||
|Chi Weizhen|Chairman, GM|M|51|Demission|46.91|N|
|Zhao Zhiguo|Director|M|54|Demission|0|N|
|Shang Qinghua|Supervisor|F|47|Demission|16.21|N|
|Yue Juan|CFO|F|42|Demission|27.95|N|
|Total|--|--|--|--|250.92|--|

 Delegated equity incentive for directors, supervisors and senior executives in reporting period
□ Applicable√ Not applicable
V. Employees of the Company
1. numbers of the employee, professional constitution and education background
|||
|-|-|
|Serving staff in parent company (person)|161|
|Serving staff in main subsidiaries (person)|896|
|Total serving staff (person)|1,057|
|Total staff in payroll in current period (person)|1,060|
|Retired staff with charges paid by the parent company and main||
||81|
|subsidiaries (person)||
|Professional constitution||
|Type|Number|
|Production personnel|874|
|Sales man|17|
|Technicians|14|
|Fianncial personnel|28|
|Administrative personnel|124|
|Total|1,057|
|Education background||
|Type|Number|
|Master’s degree|6|
|Bachelor degree|63|
|Junior college|132|
|Technical secondary school|153|
|High school or below|703|
|Total|1,057|

 2. Remuneration policy
The Company formulated a management mechanism of remunerations, and paying salaries to employees on time.
3. Training plan
Exercising multi-style training for senior executives, financial staff and technicians according to their own situation and working demands as well as pre-job training
4. Labor outsourcing
□ Applicable√ Not applicable
Section IX. Corporate Governance
I. Basic state of corporate governance
In reporting period, by strictly followed requirement of relevant laws and regulations of “Company Law”, “Securities Laws”, “Rules of Corporate Governance for Listed Company”, “Standard Operation Guide of Stock Listing in Main Board of Shenzhen Stock Exchange” and related normative documents, the Company constantly improve structure of the corporate governance, and further to regulated company operation as well as enhancing corporate governance. General Meeting, the Board Meeting and Supervisory Meeting are convening under the regulations, directors and supervisors are earnestly perform their duties and carry out due diligence. The Company believes that in the reporting period, there are no difference between actual condition of corporate governance and relevant requirements of CSRC and “Company Law”.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC?
□Yes√ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC.
II. Independency of the Company relative to controllingshareholders’ in aspect of businesses, personnel, assets, institution and finance
TheCompany’s business, personnel, assets, institution and finance are separated with itsshareholders’ and owe independent self-operation ability.
1. Business independence: production and administrative management are totally separated with controlling shareholders, and no horizontal competition being found with controlling shareholders;
2. Personnel independence: the Company has an independent HR system and completed system of salary management, and has a self-governed staff team. Senior executives of GM, deputy GM, financial principal and secretary of the Board are not serves in controllingshareholders’ unit and other enterprise controlled byshareholders’ unit except for office-holding as director, supervisor, and all of them are receiving remuneration from the Company. Financial staffs are not taking a part-time in controllingshareholders’ unit and other enterprise controlled byshareholders’ unit.
3. Assets integrity: the Company has completed and separated assets with clear-defined property relations. There are no capital occupations by controlling shareholders being found and assts of the Company are totally independent of its controlling shareholders. 4. Institutional independence: the Company owes a completed organization structure and separated totally with controlling shareholders in institution;shareholders’ general meeting, the Board and supervisory committee running independently and has an independent decision-making ability.
5. Financial independent: the Company owes independent financial department and personnel, has completed and independent financial calculation system, qualified standardized financial accounting mechanism and has ability to making decisions in aspect of finance. Open a bank account and levy a tax independently.
III. Horizontal Competition
□ Applicable√ Not applicable
IV. In the report period, the Company held annualshareholders’ general meeting and extraordinaryshareholders’ general meeting
1. AnnualShareholders’ General Meeting in the report period
|||||||
|-|-|-|-|-|-|
|||Ratio of investor||||
|Session of meeting|Type||Date|Date of disclosure|Index of disclosure|
|||participation||||
||||||“Annual General|
||||||Meeting of 2016”|
||||||(No.: 2017-16)|
|Annual General|Annual General||||published on China|
|||51.07%|15 June 2017|16 June 2017||
|Meeting of 2016|Meeting||||Securities Journal,|
||||||Hong Kong|
||||||Commercial Daily|
||||||and Juchao Website|
||||||“Resolution Notice|
||||||of First|
||||||Extraordinary|
||||||Shareholders|
|First Extraordinary|||||Meeting of 2017”|
||Extraordinary|||||
|Shareholders||51.27%|31 August 2017|1 Sept. 2017|(No.: 2017-26)|
||shareholders meeting|||||
|Meeting of 2017|||||published on China|
||||||Securities Journal,|
||||||Hong Kong|
||||||Commercial Daily|
||||||and Juchao Website|
||||||“Resolution Notice|
||||||of Second|
||||||Extraordinary|
||||||Shareholders|
|Second||||||
||||||Meeting of 2017”|
|Extraordinary|Extraordinary|||||
|||48.09%|28 Dec. 2017|29 Dec. 2017|(No.: 2017-38)|
|Shareholders|shareholders meeting|||||
||||||published on China|
|Meeting of 2017||||||
||||||Securities Journal,|
||||||Hong Kong|
||||||Commercial Daily|
||||||and Juchao Website|

 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore□ Applicable√ Not applicable
V. Responsibility performance of independent directors in report period
1. The attending of independent directors to Board meetings andshareholders’ general meeting
The attending of independent directors
||||||||
|-|-|-|-|-|-|-|
||Times of Board||||||
|||||||Whether absent|
||meeting||Times of|Times of|||
|Name of independent||Times of present|||Times of|the Meeting for|
||supposed to||attending by|entrusted|||
|director||in person|||Absence|the second time|
||attend in the||communication|presence|||
|||||||in a row or not|
||report period||||||
|Jiang Lu|7|1|6|0|0|N|
|Song Xiliang|7|1|6|0|0|N|
|Times presented in shareholders’|||||||
|general meeting by independent||3|||||
|directors|||||||

Explanation of absent the Board Meeting for the second time in a row
2. Objection for relevant events from independent directors
Whether independent directors come up with objection aboutcompany’s relevant matters or not
□ Yes√ No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
Whether the opinions from independent directors have been adopted or not
√ Yes□ No
Explanation on advice that accepted/not accepted from independent directors
In accordance with relevant rules and requirements from “Company Law”, “Guiding Opinions for Establishment of Independent Director Mechanism for Listed Company” and “Article of Association”, independent directors of the Company is serious to performing the duties given by laws, regulations, article of associations and mechanism of independent directors; they proactively present the Board Meeting andshareholders’ general meeting, examine and guild the operation of the Company, kept eyes on normalization of the operation, independently performed duties with all efforts, propose several professional advice in aspect of the mechanism perfection and routine operation decisions, furthermore, carried out independent opinions for significant events which plays a necessary role in perfecting supervisory system and protecting legal interest of the Company and whole shareholders. VI. Responsibility performance of subordinate special committee of the Board in report period
(I) Auditing Committee:
1. Conduct a regular meeting
In reporting period, totally four meetings are held by audit committee of the Board, and discuss “Annual Report 2016”, “1Q Report of 2017”, “Semi-Annual Report of 2017”, “3Q Report of 2017”and relevant events respectively.
2. Final report of the auditing works for year of 2017 from PKF Daxin Certified Public Accountants
Auditing committee took an all-around review on auditing works for year of 2017 and after standard unqualified
auditors report and relevant documents issued by Daxin CPA while all auditing procedures completed, auditing committee held the first meeting of 2018 and they believes that the Daxin is able to exercise relevant auditing procedures and quality controlling system of the CPA in line with new auditing rules, the CPA owns good business qualities and fulfill their duties to complete vary auditing works. Therefore, auditing committee submit to the Board for Daxin CPA re-engagement as the auditing body for year of 2018 and auditing organization for internal control as well.
(II) Nomination Committee
During the reporting period, the nominations committee of the board of directors has convened two meetings which seriously reviewed the qualification of director candidates, deputy GM and CFO in accordance with the requirements of "Nomination Committee Implementing Rules"
(III) Strategy Committee
During the reporting period, the strategy committee of the Board has convened one meeting which seriously reviewed the proposal ofCompany’s 13th Five-Year Plan in accordance with requirement of “Strategy Committee Implementing Rules”
VII. Works from Supervisory Committee
Whether the Company has risks or not in reporting period that found in supervisory activity from supervisory committee
□ Yes√ No
Supervisory committee has no objection about supervision events in reporting period
VIII. Appraisal and incentive mechanism for senior executives
Check on senior employees by the Board based on the Measure of Operation Evaluation that approved inShareholders’ General Meeting.
IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes√ No
2. Appraisal Report of Internal Control
||||
|-|-|-|
|Disclosure date of full internal control|||
||2018-03-08||
|evaluation report|||
|Disclosure index of full internal control|||
||www.cninfo.com.cn||
|evaluation report|||
|The ratio of the total assets of units|||
|included in the scope of evaluation|||
|accounting for the total assets on the|99.05%||
|company's consolidated financial|||
|statements|||
|The ratio of the operating income of units|||
|included in the scope of evaluation|||
|accounting for the operating income on the|98.85%||
|company's consolidated financial|||
|statements|||
|Defects Evaluation Standards|||
|Category|Financial Reports|Non-financial Reports|
||Major deficiencies: a. fraud of directors,|Major deficiencies: a) violation of state|
||supervisors and senior management; b.|laws and regulations, such as|
||Material misstatements found in current|environmental pollution; b) project|
||financial statements by the external audit|decision-making process is not scientific,|
||which are not found in the process of|wrong decision-making caused by lack|
||internal control; c. the supervision of audit|of democratic decision-making process;|
||committee and internal audit service to|c) brain drain of managers or|
||internal control is invalid. Significant|technicians; d) frequent negative news on|
||deficiencies: The misstatements caused by|media; e ) the results of internal control|
|Qualitative criteria|||
||single deficiency or together with other|evaluation especially major deficiencies|
||deficiencies that cannot be timely prevented|and significant deficiencies have not|
||or found and corrected in the financial report|been rectified and reformed; f)|
||and has not reached or has exceed the major|significant business is lack of system|
||deficiencies but still should be taken into|control or systematic-ness is invalid.|
||account by the management; other|Significant deficiencies: The deficiencies|
||circumstances determined by the degree of|caused by single deficiency or together|
||influence. Common deficiencies: other|with other deficiencies of which the|
||internal control deficiencies do not constitute|severity, direct or potential negative|

||||
|-|-|-|
||major or significant deficiencies.|impact have not reached or has exceed|
|||the major deficiencies but still should be|
|||taken into account by the management;|
|||other circumstances determined by the|
|||degree of influence. Common|
|||deficiencies: other internal control|
|||deficiencies do not constitute major or|
|||significant deficiencies.|
||Compare the misstatements and missing||
||reports (i.e. amount affected by internal||
||control deficiencies) of some subjects in the|Compare the amount of direct property|
||financial reports that may cause or have|loss with certain ratio of total profits in|
||caused by internal control deficiencies with|the company’s current consolidated|
||certain ratio of total profits in the company’s|financial statements, and determine the|
||current consolidated financial statements,|type of deficiencies in internal control as|
||and determine the type of deficiencies in|follows: it should be judged to be major|
||internal control as follows: it should be|deficiency if the amount of direct|
||judged to be major deficiency if the amount|property loss is more than 5% of total|
|Quantitative criteria|affected by internal control deficiencies is|profits; it should be judged to be|
||more than 5% of total profits; it should be|significant deficiency if the amount of|
||judged to be significant deficiency if the|direct property loss is more than 3% but|
||amount affected by internal control|less than 5% (including 5%) of total|
||deficiencies is more than 3% but less than|profits; it should be judged to be|
||5% (including 5%) of total profits; it should|common deficiency if the amount of|
||be judged to be common deficiency if the|direct property loss is less than 3%|
||amount affected by internal control|(including 3%) of total profits;|
||deficiencies is less than 3% (including 3%)||
||of total profits;||
|Amount of significant defects in financial|||
||0||
|reports|||
|Amount of significant defects in|||
||0||
|non-financial reports|||
|Amount of important defects in financial|||
||0||
|reports|||
|Amount of important defects in|||
||0||
|non-financial reports|||

X. Auditing report of internal control
√Applicable□Not applicable
Deliberation section of auditing report of IC
|||
|-|-|
|In our opinion, the Company, in line with Basic Norms of Enterprises Internal Control and relevant regulations, shows an||
|effectiveness internal control of financial report in all major aspects.||
|Disclosure details of audit report of||
||Disclosed|
|internal control||
|Disclosure date of audit report of||
||2018-03-08|
|internal control (full-text)||
|Index of audit report of internal||
||www.cninfo.com.cn|
|control (full-text)||
|Opinion type of auditing report of||
||Standard unqualified|
|IC||
|Whether the non-financial report||
||No|
|had major defects||

Issued a modified audit opinions for internal control
□Yes√ No
Auditing report of internal control issued by CPA shows the same opinion as self-evaluation report issued by the Board
√ Yes□ No
Section X Corporation bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at maturity on the approval date for annual report disclosed
No
Auditor's Report
DAXIN SHEN ZI[2018] No. 3-00026 To the Shareholders of Shandong Zhonglu Oceanic Fisheries Co., Ltd.:
I. Opinion
We have audited the financial statements of Shandong Zhonglu Oceanic Fisheries Co., Ltd. (hereafter referred to as “the Company”), which comprise the consolidated and the Company's balance sheets as at December 31, 2017, the consolidated and the Company's statements of income, the consolidated and the Company's statements of cash flows and the consolidated and the Company's statements of changes in equity for the year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at December 31, 2017, and of its financial performance and cash flows for the year then ended in accordance with Accounting Standards for Business Enterprises.
II.Basis for Opinion
We conducted our audit in accordance with Chinese Certified Public Accountants Auditing Standards. Our responsibilities under those standards are further described in theAuditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics for Chinese Certified Public Accountants and have fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
A. The existence,valuation and allocation and impairment test of vessels
1.The Matter
As disclosed in note 3.15 and note 5.9 fixed assets, the Company held RMB 525.98 million of fixed assets at December 31 2017, of which vessels and nets accounted for77.02% of the total net value. The carrying value of thecompany’s fixed assets
accounted for49.36% of the total consolidated assets as at December 31 2017 and91.40% of the total consolidated non-current assets at December 31 2017. The Company purchased 5 seine vessels which increased the cost of fixed assets by RMB 140.78million. The management should determine the significant accounting estimates and judgements such as period of depreciation, residual rate and the future cash flow generated from the cash-generating units including the vessels according to specific conditions of each vessel because the newly purchased seine vessels are old ones from other countries. As a result, we identified the existence, valuation and allocation and impairment test of vessels as a key audit matter.
2.Audit response
(1) We confirmed the location and navigation condition of each vessel, whose actual physical counting is not available, by logging Ocean Fisheries Monitoring system on Ministry of Agriculture website at different time and checking the satellite position of these vessels.
(2) We reviewed the certificates of title and documents of vessels.
(3) We verified the completeness of related examination and approval procedures,purchase contracts,funds payment documents of newly purchased vessels. We reviewed the correctness of related accounting treatments.
(4) We checked if the depreciation policy is in compliance with Accounting Standards for Business Enterprises consistently. We recalculated the depreciation of vessels.
(5) We communicated with the management; obtained accounting estimate documents prepared by them, and evaluated the rationality of the accounting estimates such as depreciation period and residual rate on the basis of referring to industry practice data.
(6) We evaluated the sign of impairment for each vessel and assessed the rationality of impairment provision if necessary. B. The recognition of seine tuna fishing revenue
1. The Matter
As described in the Accounting Policies in note 3.22 Revenue and disclosed in note 5.30 Operating income and operating cost to the Financial Statements, theCompany’s seine fishery revenue is recognized by the transfer ofgoods’ ownership on the basis of sales agreement and final settlement. The Company recognizes the revenue on the basis of sales agreement and final settlement. TheCompany’s seine fishery revenue increases sharply from RMB5.18 million in year 2016 to RMB101.35 million in year 2017 due to the growth of operation time and numbers of seine tuna fishing vessels in year 2017 and the circulation of related fishery goods is finished overseas completely. As a result, there may be potential misstatements whether the revenue is recorded in the appropriate financial statement period and whether the amount of revenue recognized is accurate. Consequently we identified the recognition of seine tuna fishing revenue as a key audit matter.
2. Audit response
(1) We interviewed the management about the operation procedure of seine tuna fishing and evaluated the design and operation effectiveness of key internal controls of seine tuna fishing and related revenue recognition.
(2) We evaluated whether theCompany’s seine tuna fishing revenue recognition policy is in compliance with Accounting Standards for Business Enterprises concerning the actual situations of sale contracts and circulation of fishery goods. (3) We analyzed and judged the possibility and rationality of the fishing quantity and sales quantity by checking the key operation index such as operating vessel numbers, operating days in the whole year, major operating maritime space, fuel consumption, and also referring to historic seine tuna fishing quantity and sales quantity.
(4) We performed sampling test on related supportive documents of revenue recognition during the reporting period, including sales contracts, bills of lading, final settlements and so on. We also checked the collection of related revenue and performed confirmation procedure.
(5) We evaluated whether revenue is recorded in the appropriate accounting period by checking bills of lading and marine transportation cycle based on the assessement of the marine transportation time of different customers. We checked ifthere’s revenue recognized in improper reporting period by reviewing supportive documents like final settlements of revenue around balance sheet date.
IV. Other Information
The directors of the Company are responsible for the other information. The other information comprises all of the information included in the annual report other than the financial statements and ourauditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibilities of the Directors and Those Charged with Governance for the Financial Statements
The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Accounting Standards for Business Enterprises, and for such internal control as the directors determine is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing theCompany’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations or have no realistic alternative but to do so. Those charged with governance are responsible for overseeing theCompany’s financial reporting process.
VI.Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue anauditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
A. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
B. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
C. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
D. Conclude on the appropriateness of thedirectors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
E. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements. We are responsible for the direction, supervision and performance
of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in ourauditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
WUYIGE CERTIFIED PUBLIC ACCOUNTANTS LLP.
Certified Public Accountant of China
(Engagement partner)
Certified Public Accountant of China
Beijing . China
Date: March 6 , 2018
Consolidated Balance Sheet
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31,2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2017|As at 1/1/2017|
|Current assets:||||
|Cash at bank and on hand|5.1|147,489,843.54|129,521,203.29|
|Financial assets measured at fair value through profit or loss for thecurrent period||||
|Derivative financial assets||||
|Notes receivable||||
|Accounts receivable|5.2|38,792,912.89|42,679,066.65|
|Prepayments|5.3|18,573,111.58|7,787,603.40|
|Interest receivable||||
|Dividends receivable||||
|Other receivables|5.4|11,305,713.11|9,384,672.16|
|Inventories|5.5|243,744,590.07|154,636,414.05|
|Held-for-sale assets||||
|Non-current assets due within one year||||
|Other current assets|5.6|30,081,962.56|23,748,949.31|
|Total current assets||489,988,133.75|367,757,908.86|
|Non-current assets:||||
|Available-for-sale financial assets|5.7|||
|Held-to-maturity investments||||
|Long-term receivables||||
|Long-term equity investments||||
|Investment property|5.8|31,694,375.13|32,338,392.18|
|Property, plant and equipment|5.9|525,975,263.88|415,683,489.86|
|Construction in process|5.1||4,066,989.68|
|Construction materials||||
|Disposal of property, plant and equipment||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets|5.11|13,495,947.76|13,107,393.57|
|Development expenditures||||
|Goodwill||||

Long-term deferred expenses 5.12 516,181.25
|||||
|-|-|-|-|
|Deferred tax assets|5.13|286,696.05||
|Other non-current assets|5.14|3,527,165.98|2,285,524.92|
|Total of non-current assets||575,495,630.05|467,481,790.21|
|Total of assets||1,065,483,763.80|835,239,699.07|

 LegalrepresentativeLegal： Person in charge of accounting function: Person in charge of accounting department: Consolidated BalanceSheet（Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31,2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2017|As at 1/1/2017|
|Current liabilities:||||
|Short-term loans|5.15|176,394,931.62|54,961,454.59|
|Financial liabilities measured at fair value through profit or loss forthe current period||||
|Derivative financial liabilities||||
|Notes payable||||
|Accounts payable|5.16|65,204,257.98|59,173,732.88|
|Advances from customers|5.17|19,875,122.76|19,940,900.11|
|Employee benefits payable|5.18|42,854,174.79|30,612,403.76|
|Taxes and surcharges payable|5.19|3,378,698.19|1,344,879.85|
|Interest payable|5.20|360,208.32|86,747.10|
|Dividends payable||||
|Other payables|5.21|6,175,352.76|5,221,040.82|
|Held-for-sale liabilities||||
|Non-current liabilities due within one year|5.22|866,585.48|866,585.48|
|Other current liabilities||||
|Total of current liabilities||315,109,331.90|172,207,744.59|
|Non-current liabilities:||||
|Long-term loans||||
|Bonds payable||||
|Including: Preference shares||||
|Perpetual loans||||
|Other long-term payables||||
|Long-term employee benefits payable|5.23|1,577,667.63|1,699,751.84|
|Specific payables||||
|Provisions||||
|Deferred income|5.24|9,705,869.14|10,572,454.62|

Deferred tax liabilities
|||||
|-|-|-|-|
|Other non-current liabilities||||
|Total of non-current liabilities||11,283,536.77|12,272,206.46|
|Total of liabilities||326,392,868.67|184,479,951.05|
|Equity:||||
|Paid-in capital（or Share capital)|5.25|266,071,320.00|266,071,320.00|
|Other equity instruments||||
|Including: Preference shares||||
|Perpetual loans||||
|Capital reserve|5.26|279,998,206.82|279,998,206.82|
|Less:treasury shares||||
|Other comprehensive income|5.27|-6,075,014.12|-665,059.07|
|Special reserve||||
|Surplus reserve|5.28|21,908,064.19|21,908,064.19|
|Retained earnings|5.29|141,867,217.06|50,349,731.78|
|Equity attributable to parent company||703,769,793.95|617,662,263.72|
|Minority interests||35,321,101.18|33,097,484.30|
|Total equity||739,090,895.13|650,759,748.02|
|Total liabilities and equity||1,065,483,763.80|835,239,699.07|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Balance Sheet
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31,2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2017|As at 1/1/2017|
|Current assets：||||
|Cash at bank and on hand||48,034,853.41|43,007,956.89|
|Financial assets measured at fair value through profit or loss for thecurrent period||||
|Derivative financial assets||||
|Notes receivable||||
|Accounts receivable|13.1|8,484,060.27|13,062,916.00|
|Prepayments||2,760,665.71|734,980.49|
|Interest receivable||||
|Dividends receivable||||
|Other receivables|13.2|64,689,774.99|39,910,882.35|
|Inventories||49,373,616.72|35,431,052.28|
|Held-for-sale assets||||
|Non-current assets due within one year||1,016,912.35|848,434.74|
|Other current assets||||
|Total current assets||174,359,883.45|132,996,222.75|

Non-current assets:
|||||
|-|-|-|-|
|Available-for-sale financial assets||||
|Held-to-maturity investments||||
|Long-term receivables||5,397,947.02|6,078,056.38|
|Long-term equity investments|13.3|204,189,455.23|204,189,455.23|
|Investment property||31,694,375.13|32,338,392.18|
|Property, plant and equipment||76,550,539.61|89,752,865.40|
|Construction in process||||
|Construction materials||||
|Disposal of property, plant and equipment||||
|Productive biological assets||||
|Oil and gas assets||||
|Intangible assets||525,800.21|22,566.74|
|Development expenditures||||
|Goodwill||||
|Long-term deferred expenses||516,181.25||
|Deferred tax assets||||
|Other non-current assets||196,581.20|285,524.92|
|Total of non-current assets||319,070,879.65|332,666,860.85|
|Total of assets||493,430,763.10|465,663,083.60|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Balance Sheet (Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. December 31,2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|As at 31/12/2017|As at 1/1/2017|
|Current liabilities:||||
|Short-term loans||||
|Financial liabilities measured at fair value through profit or loss for thecurrent period||||
|Derivative financial liabilities||||
|Notes payable||||
|Accounts payable||14,290,700.38|10,161,960.89|
|Advances from customers||3,883,689.36|2,530,163.00|
|Employee benefits payable||22,130,930.92|15,154,703.75|
|Taxes and surcharges payable||278,991.52|242,626.86|
|Interest payable||||
|Dividends payable||||
|Other payables||67,530,200.11|81,881,163.31|
|Held-for-sale liabilities||||
|Non-current liabilities due within one year||||
|Other current liabilities||||
|Total of current liabilities||108,114,512.29|109,970,617.81|
|Non-current liabilities:||||

Long-term loans
||||
|-|-|-|
|Bonds payable|||
|Including: Preference shares|||
|Perpetual loans|||
|Other long-term payables|||
|Long-term employee benefits payable|1,127,604.68|1,188,790.98|
|Specific payables|||
|Provisions|||
|Deferred income|||
|Deferred tax liabilities|||
|Other non-current liabilities|||
|Total of non-current liabilities|1,127,604.68|1,188,790.98|
|Total of liabilities|109,242,116.97|111,159,408.79|
|Equity:|||
|Paid-in capital（or Share capital)|266,071,320.00|266,071,320.00|
|Other equity instruments|||
|Including: Preference shares|||
|Perpetual loans|||
|Capital reserve|279,115,900.17|279,115,900.17|
|Less:treasury shares|||
|Other comprehensive income|||
|Special reserve|||
|Surplus reserve|19,184,672.34|19,184,672.34|
|Retained earnings|-180,183,246.38|-209,868,217.70|
|Total equity|384,188,646.13|354,503,674.81|
|Total liabilities and equity|493,430,763.10|465,663,083.60|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Consolidated Statement of Income
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended 31/12/2017||
|1.Operating income|5.30|924,116,785.80|845,877,519.52|
|Less: Operating cost|5.30|760,114,055.67|769,925,445.84|
|Taxes and surcharges|5.31|2,893,283.05|2,525,544.74|
|Selling and distribution expenses|5.32|14,174,043.49|6,016,283.26|
|General and administrative expenses|5.33|56,525,982.12|57,369,652.49|
|Finance expenses|5.34|16,828,357.12|-6,330,453.36|
|Impairment on assets|5.35|5,781,049.23|3,236,092.07|
|Add: Gain from fair value changes("-" for loss)||||

Investment income("-" for loss)
|||||
|-|-|-|-|
|Including: Investment income from associates andjoint ventures||||
|Gains from disposal of assets("-" for loss)|5.36|422,100.74|2,552,387.02|
|Other income|5.37|26,760,985.48||
|2.Operating profits("-" for loss)||94,983,101.34|15,687,341.50|
|Add: Non-operating income|5.38|3,228,686.87|43,838,443.79|
|Less: Non-operating expenses|5.39|311,946.57|677,615.31|
|3.Profit before tax("-" for loss)||97,899,841.64|58,848,169.98|
|Less: Income tax expenses|5.40|2,744,853.05|1,207,900.13|
|4.Net profit("-" for net loss)||95,154,988.59|57,640,269.85|
|Net profit attributable to parent company||91,517,485.28|52,585,070.74|
|Profit/loss attributable to minority share-holders||3,637,503.31|5,055,199.11|
|Profit or loss from continuing operations||95,154,988.59|57,640,269.85|
|Profit or loss from discontinued operations||||
|5.Other comprehensive income, net of tax||-6,823,841.48|-631,029.81|
|Total other comprehensive income attributable to parent company||-5,409,955.05|-631,029.81|
|(1) Comprehensive income not to be reclassified as profit or loss||||
|1) Changes in remeasured defined benefit obligations or net assets||||
|2) Portion of comprehensive income not to be reclassified as profit or lossunder equity method||||
|(2) Comprehensive income to be reclassified as profit or loss||-5,409,955.05|-631,029.81|
|1) Portion of comprehensive income to be reclassified as profit or lossunder equity method||||
|2) Gain or loss from fair value changes of available-for-sale financialassets||||
|3) Gain or loss from reclassification of held-to-maturity investments asavailable-for-sale financial assets||||
|4) Gain or loss on effective cash flow hedging||||
|5) Currency translation difference||-5,409,955.05|-631,029.81|
|6) Others||||
|Other comprehensive income attributable to minority share-holders, net oftax||-1,413,886.43||
|6. Total comprehensive income||88,331,147.11|57,009,240.04|
|Total comprehensive income attributable to share-holders of parentcompany||86,107,530.23|51,954,040.93|
|Total comprehensive income attributable to minority share-holders||2,223,616.88|5,055,199.11|
|7. Earnings per share||||
|(1) Basic earnings per share||0.34|0.20|
|(2) Diluted earnings per share||0.34|0.20|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department: Statement of Income
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended 31/12/2017|Year ended31/12/2016|

1.Operating income 13.4 144,277,906.55 70,580,279.73
|||||
|-|-|-|-|
|Less: Operating cost|13.4|91,872,006.62|64,033,624.56|
|Taxes and surcharges||679,940.56|576,726.24|
|Selling and distribution expenses||8,609,358.81|437,044.09|
|General and administrative expenses||28,179,715.55|39,535,683.20|
|Finance expenses||1,449,077.72|-953,222.95|
|Impairment on assets||508,778.67|899,373.68|
|Add: Gain from fair value changes("-" for loss)||||
|Investment income("-" for loss)||||
|Including: Investment income from associates and jointventures||||
|Gains from disposal of assets("-" for loss)||413,354.51||
|Other income||13,552,100.00||
|2.Operating profits("-" for loss)||26,944,483.13|-33,948,949.09|
|Add: Non-operating income||3,010,737.38|23,576,885.98|
|Less: Non-operating expenses||270,249.19|7,516.91|
|3.Profit before tax("-" for loss)||29,684,971.32|-10,379,580.02|
|Less: Income tax expenses||||
|4.Net profit("-" for net loss)||29,684,971.32|-10,379,580.02|
|Profit or loss from continuing operations||29,684,971.32|-10,379,580.02|
|Profit or loss from discontinued operations||||
|5.Other comprehensive income net of tax||||
|(1) Comprehensive income not to be reclassified as profit or loss||||
|1)Changes in remeasured defined benefit obligations or net assets||||
|2)Portion of comprehensive income not to be reclassified as profit or lossunder equity method||||
|(2) Comprehensive income to be reclassified as profit or loss||||
|1) Portion of comprehensive income to be reclassified as profit or lossunder equity method||||
|2) Gain or loss from fair value changes of available-for-sale financialassets||||
|3) Gain or loss from reclassification of held-to-maturity investments asavailable-for-sale financial assets||||
|4) Gain or loss on effective cash flow hedging||||
|5) Currency translation difference||||
|6) Others||||
|6. Total comprehensive income||29,684,971.32|-10,379,580.02|
|7. Earnings per share||||
|(1) Basic earnings per share||||
|(2) Diluted earnings per share||||

Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department:
Consolidated Statement of Cash Flows
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended|Year ended|

|||||
|-|-|-|-|
|||31/12/2017|31/12/2016|
|1.Cash flows from operating activities||||
|Cash received from sales and services||937,924,177.76|849,958,354.36|
|Taxes and surcharges refunds||60,397,864.61|48,100,549.00|
|Cash received related to other operating activities|5.41|33,096,388.68|47,554,484.08|
|Total cash inflows from operating activities||1,031,418,431.05|945,613,387.44|
|Cash paid for goods and services||803,413,479.45|710,308,874.30|
|Cash paid to and for employees||122,484,248.87|110,895,303.01|
|Taxes and surcharges cash payments||5,930,500.68|8,766,120.05|
|Cash paid related to other operating activities|5.41|36,384,307.56|28,207,366.89|
|Total cash outflows from operating activities||968,212,536.56|858,177,664.25|
|Net cash flows from operating activities||63,205,894.49|87,435,723.19|
|2.Cash flows from investing activities：||||
|Cash received from withdraw of investments||||
|Cash received from investment income||||
|Net cash received from disposal of \property, plant and equipement,intangibleassets and other long-term assets||703,494.70|5,282,538.12|
|Net cash received from disposal of subsidiaries and other business units||||
|Cash received related to other investing activities|5.41||648,268.69|
|Total cash inflows from investing activities||703,494.70|5,930,806.81|
|Cash paid for property, plant and equipement,intangible assets and otherlong-term assets||149,566,249.27|32,045,019.74|
|Cash payments for investments||||
|Net cash paid for acquiring subsidiaries and other business units||||
|Cash paid related to other investing activities||||
|Total cash outflows from investing activities||149,566,249.27|32,045,019.74|
|Net cash flows from investing activities||-148,862,754.57|-26,114,212.93|
|3.Cash flows from financing activities:||||
|Cash received from investments by others||||
|Including: Cash received by subsidiaries from minority shareholders'investments||||
|Cash received from borrowings||216,117,252.93|69,109,844.43|
|Cash received related to other financing activities||||
|Total cash inflows from financing activities||216,117,252.93|69,109,844.43|
|Cash repayments for debts||94,579,750.06|62,359,333.28|
|Cash payments for distribution of dividends, profit and interest expenses||7,911,683.02|3,883,910.98|
|Including: Dividends or profit paid by subsidiaries to minorityshareholders||||
|Cash paid related to other financing activities|5.41||14,630,000.00|
|Total cash outflows from financing activities||102,491,433.08|80,873,244.26|
|Net cash flows from financing activities||113,625,819.85|-11,763,399.83|
|4.Effect of foreign exchange rate changes on cash and cash equivalents||-9,639,269.73|7,715,181.35|
|5.Net increase in cash and cash equivalents||18,329,690.04|57,273,291.78|
|Add:beginning balance of cash and cash equivalents||128,737,661.78|71,464,370.00|
|6.Ending balance of cash and cash equivalents||147,067,351.82|128,737,661.78|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department:
Statement of Cash Flows
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit:RMB Yuan
|||||
|-|-|-|-|
|Item|Note|Year ended 31/12/2017|Year ended31/12/2016|
|1.Cash flows from operating activities||||
|Cash received from sales and services||141,631,041.41|55,717,739.89|
|Taxes and surcharges refunds||||
|Cash received related to other operating activities||17,853,926.89|39,215,516.79|
|Total cash inflows from operating activities||159,484,968.30|94,933,256.68|
|Cash paid for goods and services||70,513,904.42|46,522,451.03|
|Cash paid to and for employees||32,792,031.58|25,152,151.66|
|Taxes and surcharges cash payments||754,683.14|3,323,847.61|
|Cash paid related to other operating activities||17,176,220.60|14,803,988.31|
|Total cash outflows from operating activities||121,236,839.74|89,802,438.61|
|Net cash flows from operating activities||38,248,128.56|5,130,818.07|
|2.Cash flows from investing activities：||||
|Cash received from withdraw of investments||||
|Cash received from investment income||||
|Net cash received from disposal of property, plant andequipement,intangible assets and other long-term assets||548,468.64||
|Net cash received from disposal of subsidiaries and other business units||||
|Cash received related to other investing activities|||648,268.69|
|Total cash inflows from investing activities||548,468.64|648,268.69|
|Cash paid for property, plant and equipement,intangible assets andother long-term assets||1,465,010.50|16,105,162.79|
|Cash payments for investments||||
|Net cash paid for acquiring subsidiaries and other business units||||
|Cash paid related to other investing activities||14,482,617.25||
|Total cash outflows from investing activities||15,947,627.75|16,105,162.79|
|Net cash flows from investing activities||-15,399,159.11|-15,456,894.10|
|3.Cash flows from financing activities:||||
|Cash received from investments by others||||
|Cash received from borrowings||||
|Cash received related to other financing activities||7,000,000.00|14,000,000.00|
|Total cash inflows from financing activities||7,000,000.00|14,000,000.00|
|Cash repayments for debts|||1,900,000.00|
|Cash payments for distribution of dividends, profit and interestexpenses|||250,237.72|
|Cash paid related to other financing activities||24,500,000.00||
|Total cash outflows from financing activities||24,500,000.00|2,150,237.72|
|Net cash flows from financing activities||-17,500,000.00|11,849,762.28|
|4. Effect of foreign exchange rate changes on cash and cash equivalents||-322,072.93|871,415.47|
|5. Net increase in cash and cash equivalents||5,026,896.52|2,395,101.72|
|Add:beginning balance of cash and cash equivalents||43,007,956.89|40,612,855.17|
|6. Ending balance of cash and cash equivalents||48,034,853.41|43,007,956.89|

Legalrepresentative： Person in charge of accounting function: Person in charge of accounting department:
Consolidated Statement of Changes in Equity
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit:RMB Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2017|||||||||||||
||Equity attributable to shareholders of parent company|||||||||||Minorityinterests|Total equity|
||Share capital|Other equity instruments|||Capital reserve|Less:treasury shares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Retainedearnings|Sub-total|||
|||Preference shares|Perpetual loans|Others||||||||||
|1.Ending balance of last year|266,071,320.00||||279,998,206.82||-665,059.07||21,908,064.19|50,349,731.78|617,662,263.72|33,097,484.30|650,759,748.02|
|Add: Impact from changes inaccounting policies||||||||||||||
|Impact fromcorrections of errors in priorperiod||||||||||||||
|Business combinationunder common control||||||||||||||
|Others||||||||||||||
|2.Beginning balance of currentyear|266,071,320.00||||279,998,206.82||-665,059.07||21,908,064.19|50,349,731.78|617,662,263.72|33,097,484.30|650,759,748.02|
|3.Movement for current year("-"for decrease）|||||||-5,409,955.05|||91,517,485.28|86,107,530.23|2,223,616.88|88,331,147.11|
|(1) Total comprehensive income|||||||-5,409,955.05|||91,517,485.28|86,107,530.23|2,223,616.88|88,331,147.11|
|(2) Shareholder's contributionsand withdrawals of captial||||||||||||||
|1) Common stock contributed byshareholders||||||||||||||
|2) Capital contributed by otherequity instruments holders||||||||||||||
|3) Share-based payment recordedin shareholder's equity||||||||||||||
|4) Others||||||||||||||
|(3) Profits distribution||||||||||||||
|1) Appropriation of surplusreserve||||||||||||||
|2) Distribution to shareholders||||||||||||||
|3) Others||||||||||||||
|(4) Internal transfer withinshareholder's equity||||||||||||||
|1) Conversion of capital reserveinto share capital||||||||||||||
|2) Conversion of surplus reserve||||||||||||||

into share capital
||||||||||
|-|-|-|-|-|-|-|-|-|
|3) Recover of loss by surplusreserve|||||||||
|4) Others|||||||||
|(5) Special reserve|||||||||
|1) Accrual of special reserve|||||||||
|2) Utilization of special reserve|||||||||
|(6) Others|||||||||
|4. Ending balance of current year|266,071,320.00|279,998,206.82|-6,075,014.12|21,908,064.19|141,867,217.06|703,769,793.95|35,321,101.18|739,090,895.13|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accountingdepartment： Consolidated Statement of Changes in Equity (Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit:RMB Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2016|||||||||||||
||Equity attributable to shareholders of parent company|||||||||||Minorityinterests|Total equity|
||Share capital|Other equity instruments|||Capitalreserve|Less:treasuryshares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Retainedearnings|Sub-total|||
|||Preferenceshares|Perpetualloans|Others||||||||||
|1.Ending balance of last year|266,071,320.00||||279,998,206.82||-34,029.26||21,908,064.19|-2,235,338.96|565,708,222.79|28,042,285.19|593,750,507.98|
|Add: Impact from changes inaccounting policies||||||||||||||
|Impact fromcorrections of errors in priorperiod||||||||||||||
|Businesscombination under commoncontrol||||||||||||||
|Others||||||||||||||
|2.Beginning balance of currentyear|266,071,320.00||||279,998,206.82||-34,029.26||21,908,064.19|-2,235,338.96|565,708,222.79|28,042,285.19|593,750,507.98|
|3.Movement for current year("-"for decrease）|||||||-631,029.81|||52,585,070.74|51,954,040.93|5,055,199.11|57,009,240.04|
|(1) Total comprehensive income|||||||-631,029.81|||52,585,070.74|51,954,040.93|5,055,199.11|57,009,240.04|
|(2) Shareholder's contributionsand withdrawals of captial||||||||||||||
|1) Common stock contributed byshareholders||||||||||||||
|2) Capital contributed by otherequity instruments holders||||||||||||||

3) Share-based payment
recorded in shareholder's equity
||||||||||
|-|-|-|-|-|-|-|-|-|
|4) Others|||||||||
|(3) Profits distribution|||||||||
|1) Appropriation of surplusreserve|||||||||
|2) Distribution to shareholders|||||||||
|3) Others|||||||||
|(4) Internal transfer withinshareholder's equity|||||||||
|1) Conversion of capital reserveinto share capital|||||||||
|2) Conversion of surplus reserveinto share capital|||||||||
|3) Recover of loss by surplusreserve|||||||||
|4) Others|||||||||
|(5) Special reserve|||||||||
|1) Accrual of special reserve|||||||||
|2) Utilization of special reserve|||||||||
|(6) Others|||||||||
|4. Ending balance of current year|266,071,320.00|279,998,206.82|-665,059.07|21,908,064.19|50,349,731.78|617,662,263.72|33,097,484.30|650,759,748.02|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accountingdepartment： Statement of Changes in Equity
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit: RMB Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2017|||||||||||
||Share capital|Other equity instruments|||Capital reserve|Less:treasury shares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Retainedearnings|Total equity|
|||Preference shares|Perpetual loans|Others||||||||
|1. Ending balance of last year|266,071,320.00||||279,115,900.17||||19,184,672.34|-209,868,217.70|354,503,674.81|
|Add: Impact from changes in accounting policies||||||||||||
|Impact from corrections of errors in prior period||||||||||||
|Others||||||||||||
|2. Beginning balance of current year|266,071,320.00||||279,115,900.17||||19,184,672.34|-209,868,217.70|354,503,674.81|
|3. Movement for current year("-" for decrease）||||||||||29,684,971.32|29,684,971.32|
|(1) Total comprehensive income||||||||||29,684,971.32|29,684,971.32|
|(2) Shareholder's contributions and withdrawals of captial||||||||||||
|1) Common stock contributed by shareholders||||||||||||

2) Capital contributed by other equity instruments holders
|||||||
|-|-|-|-|-|-|
|3) Share-based payment recorded in shareholder's equity||||||
|4) Others||||||
|(3) Profits distribution||||||
|1) Appropriation of surplus reserve||||||
|2) Distribution to shareholders||||||
|3) Others||||||
|(4) Internal transfer within shareholder's equity||||||
|1) Conversion of capital reserve into share capital||||||
|2) Conversion of surplus reserve into share capital||||||
|3) Recover of loss by surplus reserve||||||
|4) Others||||||
|(5) Special reserve||||||
|1) Accrual of special reserve||||||
|2) Utilization of special reserve||||||
|(6) Others||||||
|4. Ending balance of current year|266,071,320.00|279,115,900.17|19,184,672.34|-180,183,246.38|384,188,646.13|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accountingdepartment： Statement of Changes in Equity (Continued)
Preparedby：Shandong Zhonglu Oceanic Fisheries Co., Ltd. For the year ended 31 December 2017 Unit: RMB Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Year 2016|||||||||||
||Share capital|Other equity instruments|||Capital reserve|Less:treasuryshares|Othercomprehensiveincome|Specialreserve|Surplusreserve|Retainedearnings|Total equity|
|||Preferenceshares|Perpetualloans|Others||||||||
|1. Ending balance of last year|266,071,320.00||||279,115,900.17||||19,184,672.34|-199,488,637.68|364,883,254.83|
|Add: Impact from changes in accounting policies||||||||||||
|Impact from corrections of errors inprior period||||||||||||
|Others||||||||||||

2. Beginning balance of current year 266,071,320.00 279,115,900.17 19,184,672.34 -199,488,637.68 364,883,254.83
|||||||
|-|-|-|-|-|-|
|3. Movement for current year("-" for decrease）||||-10,379,580.02|-10,379,580.02|
|(1) Total comprehensive income||||-10,379,580.02|-10,379,580.02|
|(2) Shareholder's contributions and withdrawals ofcaptial||||||
|1) Common stock contributed by shareholders||||||
|2) Capital contributed by other equity instrumentsholders||||||
|3) Share-based payment recorded in shareholder'sequity||||||
|4) Others||||||
|(3) Profits distribution||||||
|1) Appropriation of surplus reserve||||||
|2) Distribution to shareholders||||||
|3) Others||||||
|(4) Internal transfer within shareholder's equity||||||
|1) Conversion of capital reserve into share capital||||||
|2) Conversion of surplus reserve into share capital||||||
|3) Recover of loss by surplus reserve||||||
|4) Others||||||
|(5) Special reserve||||||
|1) Accrual of special reserve||||||
|2) Utilization of special reserve||||||
|(6) Others||||||
|4. Ending balance of current year|266,071,320.00|279,115,900.17|19,184,672.34|-209,868,217.70|354,503,674.81|

 Legalrepresentative： Person in charge of accounting function: Person in charge of accountingdepartment：
SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in Chinese Renminbi Yuan unless otherwise stated)
1. Company profile
1.1 The Company's registered place, organization structure and the address of head quarter.
Shandong Zhonglu Oceanic Fisheries Co., Ltd. (the “Company”), whose registered address is No.29, Miaoling Road, Qingdao, Shandong, was incorporated as a liability limited company in thePeople’s Republic of China on July 30, 1999 according to the document of Lu Ti Gai Zi[1999] No.85 issued by Shandong Development and Reform Commission, and the holding company of the Company is Shandong Fisheries Enterprise Group General Corporation. On June 26, 2000, the Company issued 120 million domestic listed foreign shares (B shares) to foreign investors with face value of 1 Yuan per share according to the document of Zheng Jian Fa Xing Zi[2000] No.82 issued by the China Securities Regulatory Commission. The B shares, Zhonglu B with stock code of 200992, have been listed on the Shenzhen Stock Exchange since July 24, 2000. On August 22, 2000.
The basic structure of the company: shareholders committee, board of directors, board of supervisors, the board of directors office, human resources, finance department, administration department, audit department, general department,discipline inspection department.
1.2 The Company's business nature and main operation activities, like its industry, primary product or service, customers' nature, trading strategy and supervisory environment etc.
Operating activity: ocean fisheries
Main product: tuna and its products.
Operating scope: aquatic products breeding, processing and sale; goods import and export business within approved scope; ice machine manufacture and sale; refrigeration equipment manufacture, installation, maintenance; refrigeration; load and unload services; housing lease.
Advance licensed operating scope: marine and oceanic fishing;
1.3 The approver and approval date of the financial reporting.
The financial statement is predetermined and authorized by the board of company on 6th March, 2018.
1.4 The consolidation scope of financial year 2017 consolidated financial statements includes the Company and its
subsidiaries (hereafter referred to as "the Company").
Consolidation scope of financial statement includes: 4 wholly-owned subsidiaries: Shandong Zhonglu Oceanic Fisheries Transportation Co., Ltd.; Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd.; HABITAT INTERNATIONAL CORP; Shandong Zhonglu Haiyan Oceanic Fisheries Co., Ltd. ; 4 sub-subsidiaries: LAIF FISHERIES COMPANY LIMITED; Shandong Zhonglu Oceanic Fisheries Refrigeraton Co., Ltd; AFRICA STAR FISHERIES LIMITED; ZHONG GHA FOODS COMPANY LIMITED; 1 operational entity through control over operating leases: YAW ADDO FISHERIES COMPANY LIMITED. More information is disclosed in Note.7“ Equity disclosure in other entities”.
2. Basis of preparation of financial statements
2.1 Basis of preparation
On the basis of going concern and transactions and events actually occurred, the Company prepares its financial statements with the following accounting policies and accounting estimates in accordance with the Accounting Standards for Business Enterprises– basic Standards, specific accounting standards and other relevant provisions (hereinafter collectively known as "Accounting Standards for Business Enterprises" or "CAS")
2.2 Going concern
Within at least 12 months of this report, the company should maintain its operational capacity without matters that have potential impact on ability of the continuing operations.
3. Significant accounting policies and accounting estimates
The Company has made specific accounting policies of recognition of income and other items based on its own operating characteristic under relevant regulations in Accounting Standard for Business Enterprise:
3.1 Declaration on compliance with the Accounting Standards for Business Enterprises
The financial statements have been prepared in compliance with the Accounting Standards for Business Enterprises to truly and completely reflect theCompany’s financial position as of 31 December 2017 and its operating results, cash flows and other relevant information for the year ended 31 December 2017.
3.2 Accounting period
The financial year of the Company is from January 1 to December 31 of each calendar year.
3.3 Operating cycle
TheCompany’s operating cycle is 12 months in each calendar year and it classifies the assets and liabilities' liquidity by operating cycle.
3.4 Functional currency
The Company's functional currency is Chinese Renminbi (hereafter referred to as "RMB").
3.5 Business combination
3.5.1 Business combinations involving enterprises under common control
In a business combination involving enterprises under common control, if the acquirer pays for the business combination in cash, by transferring of non-cash assets or assuming liabilities, net assets in the ultimate controlling party's consolidated financial statements are measured at their carrying amounts of the acquiree at the acquisition date. If the acquirer issues equity instruments for the business combination, the acquirer measures the share capital by the par value of the shares issued. The difference between the original investment costs and the carrying amounts (or the total par value of shares issued) will be adjusted to the capital reserves. If the capital reserves is insufficient to absorb the difference, the remaining amount shall be deducted from retained earnings.
3.5.2 Business combinations involving enterprises not under uncommon control
In a business combination involving enterprises not under common control, the combination costs are the aggregate of the fair values of the assets paid, the liabilities incurred or assumed and the equity instruments issued by the acquirer in exchange for control over the acquiree at the acquisition date. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquiree that meet the recognition criteria are measured at their fair value. The Company shall recognize the difference of the combination costs in excess of its interest portion in the fair value of the net identifiable assets acquired from the acquiree as goodwill. The Company shall recognize the difference of the combination costs less than its interest portion in the fair value of the net identifiable assets acquired from the acquiree in the non-operating income for current period after reassessment.
3.6 Preparation of consolidated financial statements
3.6.1 The scope of consolidated financial statements
The Company incorporates all its subsidiaries (including individual entities under its control) into
the scope of the consolidated financial statements, including the enterprises controlled by the Company, divisible part in the investees and structured entities.
3.6.2 Uniform accounting policies, balance sheet date and accounting period
If the subsidiaries adopt different accounting policies or accounting period compared with the Company, the Company shall make necessary adjustments on the subsidiaries' financial statements according to its accounting policies or accounting period.
3.6.3 The elimination in the preparation of consolidated financial statements
The consolidated financial statements are prepared based on the individual financial statements of the Company and its subsidiaries, after elimination of the transactions incurred among the Company and the subsidiaries. The portion of asubsidiary’s equity that is not attributable to the Company is treated as minority interests and presented in the consolidated balance sheet within equity. The equity investment of the Company held by one subsidiary shall be treated as the Company's treasury shares and a deduction of the shareholders' equity which is presented as "less: treasury shares" in the consolidated balance sheet within equity.
3.6.4 The accounting treatment for obtaining subsidiaries through a business combination
Where a subsidiary or business has been acquired through a business combination involving enterprises under common control in the reporting period, the obtained subsidiary or business is deemed to be included in the consolidated financial statements from the date they are controlled by the ultimate controlling party. Their assets, liabilities, operating results and cash flows are included in the consolidated financial statements from the beginning of the accounting period in which the acquisition occurred. Where a subsidiary or business has been acquired through a business combination not involving enterprises under common control, their individual financial statements are adjusted based on the fair value of identifiable net assets at the acquisition date when preparing the consolidated financial statements.
3.7 Joint arrangement classification and accounting treatments
||
|-|
|3.7.1 The classification of joint arrangement|
|Joint arrangements are classified as joint operations or joint ventures. A joint arrangement will be classified as joint|
|operation when the joint arrangement achieves not through an individual entity. Individual entity is an entity with|

||
|-|
|individual identifiable finance structure, including single legal entity and entity unqualified as legal entity but|
|qualified as lawful entity. A joint arrangement is usually be classified as joint venture when the joint arrangement|
|achieves through incorporating an individual entity. When changes arising from relevant events or environment|
|cause changes of the cooperative parties' rights and obligations in the joint arrangements, the cooperative parties|
|shall reassess the classification of the joint arrangements.|
|3.7.2 The accounting treatment of joint operations|
|The party participating in joint operations shall recognize the following items relating to its interests in the joint|
|operations and account for them in accordance with related requirements of Accounting Standards for Business|
|Enterprises: a) Its solely-held assets and solely-assumed liabilities, and b) Its share of any assets and liabilities held|
|jointly; c) Its revenue from the sale of its share of the output arising from the joint operation; d) Its share of the|
|revenue from the sale of the output by the joint operation; e) Its own expenses; and f) Its share of any expenses|
|incurred jointly.|
|The other parties involving in joint operations without common control power shall account for their investments|
|referring to the treatment method of joint operation participants if they are entitled to relevant assets and undertake|
|relevant liabilities of the joint operations, otherwise, they shall account for their investments according to related|
|requirements of Accounting Standards for Business Enterprises.|
|3.7.3 The accounting treatment of joint ventures|
|The parties participating in a joint venture account for its investment in accordance with Accounting Standards for|
|Business Enterprises No.2 - Long-term Equity Investment. And the other parties involving in joint ventures|
|without common control power shall account for their investments according to their influence extent on the joint|
|ventures.|

3.8 Cash and cash equivalents
The cash in the Company's statement of cash flows is cash on hand and deposits that can be readily drawn on demand. Cash equivalents in the statement of cash flows are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
3.9 Foreign currency transactions and translation of financial statements denominated in foreign
currency
3.9.1 Translation of foreign currency transactions
The Company recordconverts foreign currency into RMB for accounting purpose using the spot exchange rate prevailing on the date when the transactions occurs. At the balance sheet date, monetary items denominated in foreign currency are converted translated to RMB by adopting the prevailing exchange rate on that date. Foreign exchange difference between the prevailing exchange rate on that date and the prevailing exchange rate on initial recognition or on the previous balance sheet date are recognized in profit or loss for the current period, except the foreign exchange arising from specific loan denominated in foreign currency qualified as capital expenditure and included in the cost of related assets. Non-monetary items denominated in foreign currency that are measured at historical cost are still measured at amount denominated in reporting currency exchanged at the prevailing exchange rate at the transaction date. Non-monetary items denominated in foreign currency that are measured at fair value are converted translated using the exchange rate at the date when fair value was determined and the difference between the converted translated functional currency amount and the prior converted translated amount on initial recognition or on the previous balance sheet date are recorded in profit or loss for the current period or other comprehensive income.
3.9.2 The translation of financial statements denominated in foreign currency
If the Company's controlled subsidiaries, joint ventures and associates etc. adopt different reporting currency, their financial statements denominated in foreign currency shall be translated to financial statements in RMB when preparing consolidated financial statements. The assets and liabilities are translated to RMB amounts using the spot exchange rate at the balance sheet date. Items of the equity, except for "retained earnings ", are translated at the spot exchange rate at the dates on which such items occured. The revenue and expenditures in the statement of income are translated using the spot exchange rate at the transaction date. The difference arising from foreign currency financial statements translation is presented in other comprehensive income at the consolidated balance sheet within equity. Items of the statement of cash flows are determined by systemic method and translated using the spot exchange rate when they incurred. Effect arising
from changes of exchange rates on cash and cash equivalents is presented separately in the statement of cash flows. When disposing of foreign operations, exchange differences of foreign currency financial statements attributable to the foreign operations are transferred to profit or loss for the current period entirely or in proportion with the disposal portion of the foreign operations.
3.10 Financial instruments
3.10.1 Recognition and classification of financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments. A financial asset, financial liability or equity instrument is recognized when the Company becomes one party of financial instrument contracts.
The financial assets are classified into the following four categories upon initial recognition: financial assets at fair value through profit or loss (“FVTPL” financial assets), held-to-maturity investments, receivables, and available-for-sale financial assets (“AFS” financial assets). The classification of financial assets depends on the holding intention and capability of the Company except for receivables. The financial liabilities are classified into financial liabilities at fair value through profit or loss (“FVTPL” financial liabilities) and other financial liabilities upon initial recognition.
Financial assets at fair value through profit or loss include financial assets held for trading in the short term and those upon initial recognition designated as at fair value through profit or loss. Receivables are non-derivative financial assets with fixed or determinable amounts that are not quoted in an active market. AFS financial assets are those non-derivative financial assets that are designated as available for sale and financial assets other than those above mentioned. Held-to-maturity investments are non-derivative financial assets with fixed or determinable amounts and fixed maturity dates that the Company has the positive intention and capability to hold to maturity.
3.10.2 Measurement of financial instruments
The Company measures the financial instruments at fair value upon initial recognition. The subsequent measurement includes: a) FVTPL financial assets, AFS financial assets and FVTPL
financial liabilities are measured at fair value; b) Held-to-maturity investments, receivables, and other financial liabilities are subsequently measured at amortized cost; c) Equity instruments that are not quoted in an active market and whose fair value cannot be reliably measured, and derivative financial assets or derivative financial liabilities linked to the equity instruments that will be settled by delivering the equity instruments are subsequently measured at cost. The gains or losses of fair value changes arising from subsequent measurement of financial assets and liabilities shall be accounted for according to the following methods except hedging instrument involving in: a) The gains or losses arising from fair value changes of FVTPL financial assets and FVTPL financial liabilities are recognized in the profit or loss for current period; b) The gains or losses arising from fair value changes of AFS financial assets are recognized in other comprehensive income.
3.10.3 Recognition method of financial instruments' fair value
For financial assets or financial liabilities in active markets, the Company uses the quoted prices in active markets to determine their fair value. If there is no active market, the Company uses valuation techniques to determine their fair value. The valuation techniques mainly include market approach, income approach and cost approach.
3.10.4 Recognition and measurement of transfer of financial assets
The Company derecognizes a financial asset if it transfers substantially all the risks and rewards of the financial asset or it does not transfer or maitain substantially all the risks and rewards of ownership of the financial asset, but surrender control on the financial asset. If a financial asset meets the derecognition criteria, the difference between the transfer consideration received and the sum of transferred financial asset's carrying amount and the accumulated change amount on fair value which has been recognized in other comprehensive income shall be charged to profit or loss for current period. If the partial transfer of financial asset meets the derecognition criteria, the entire carrying amount of the transferred financial asset shall be split into the derecognized portion and retained portion according to their respective fair value.
A financial liability shall be entirely or partially derecognized if its present obligations are wholly or partly dissolved.
3.10.5 Impairment of financial assets
If the financial assets measured at amortized costs are impaired, the impairment provision shall be recognized at the difference of the carrying amount of financial assets and the present value of estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence of a recovery in value of the financial asset which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss for current period.
If the financial assets measured at cost are impaired, the impairment provision shall be recognized by the difference between the equity instrument investments and the present value of book value of similar derivative financial assets that are determined by market discount rate. And the impairment loss shall not be reversed after recognition.
If there is objective evidence that AFS financial assets are impaired, accumulated losses due to decreases in fair value previously recognized directly in the shareholders' equity are transferred to profit or loss for the current period. In the subsequent periods, if the fair value of AFS debt instruments increases and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment losses are reversed and charged to profit or loss for the current period. For AFS equity instruments, the increase of fair value in the subsequent periods shall be accounted for in the shareholders' equity.
For investments of equity instruments, the Company determines the following specific criteria for their fair value decline "seriously" or "non-temporarily", calculation of cost, fair value determination at period end and continuous decline periods:
Specific quantitative criteria for fair value decline " Decrease in closing fair value relative to the cost has reached seriously" or exceeded50%
Specific quantitative criteria for fair value decline
Fall for 12 consecutive months
"non-temporarily"
Consideration of payment at acquisition (net of cash dividends declared but not yet paid or due but unpaid Calculation of cost interest on bonds) and the relevant transaction cost are recognized as the investment cost.
As for a financial instrument for which there is an active market, the quoted prices in the active market shall be used to recognize the fair values thereof. Where there is no active Fair value determination at period end
market for a financial instrument, the enterprise concerned shall adopt value appraisal techniques to determine its fair value.
The rebound in the continuous fall or the period with the tread of fall is less than20% margin. Rebound duration not Definition of continuous decline periods
more than six months is treated as continuous decrease period.
3.11 Receivables
Receivables include accounts receivable, long-term receivables and other receivables. If there are objective evidence that the receivables are impaired, the Company recognizes the doubtful debts allowance on the shortfall between the present value of future cash flows and the carrying amount of the receivables.
3.11.1 Provision of doubtful debts allowance for individually significant receivables
Amount above 1 million Yuan (including 1 million) of Criteria of individually significant receivables
the accounts receivable
Method of provision for doubtful debts allowance of Recognized according to the difference of book value individually significant receivables and present value of estimated future cash flows
3.11.2 Receivables that are provided for doubtful debts allowance on portfolio basis
Basis for determining portfolios Payment properties and risk characteristics
Single significant amount without provision for bad Aging combination debt, single less-significant ,less-risky amount
Accounts receivable within consolidation scope and Riskless combination amounts without default risk within the next 12 months Calculation method of doubtful debts allowance on
portfolio basis
Aging accounting method
Aging combination
No provision for bad debts
Riskless combination
Portfolios that aging analysis is used for calculation of the doubtful debts allowance:
||
|-|
|Allowance percentage for accountsreceivable (%)|
|5|
|10|
|30|
|50|
|100|

3.11.3 Provision of doubtful debts allowance for individually insignificant receivables
Accounts receivable with Aging more than 3 years of Criteria of individually insignificant receivables and objective evidence that the impairment has occurred
Method of provision for doubtful debts allowance of According to the difference of book value and present
individually insignificant receivables value of estimated future cash flows to recognize
3.12 Inventories
3.12.1 Categories of inventories
Inventories are the finished goods or commodities that the Company holds to sell, the work in progress in production process, and the material and goods consumed during the production process or service rendering process in daily operation. Inventories include raw materials, revolving materials, consigned processing materials, packaging materials, low-value consumables, work in progress, self-manufactured semifinished product and finished goods (commodities) etc.
3.12.2 Measurement of inventories upon delivery
Weighted average method is used to measure the actual costs of inventories upon delivery.
3.12.3 Provision for diminution in value of inventories
At each balance sheet date, inventories are measured at the lower of cost and net realisable value. When the cost of inventory exceeds its net realizable value, provision for diminution in value of inventories is recognized. The Company usually recognizes provision for diminution in value of inventories by a single inventory item. For the inventory items of large quantity and low price, the Company recognizes provision for diminution in value of inventories based on inventory categories.
The basis of determining inventory net realizable value:
(1) Finishedgoods’net realizable value is the amount of an estimated price minus the estimated cost of sales and relevant taxes.
(2) Materials held for production are based on cost measurement when the finishedproducts’ net realizable value is higher than cost; the material price decline shows that the finishedproducts’ net realizable value is lower than cost, net realizable value is calculated as an estimated sales price minus the estimated cost, the cost of sales and the relevant taxes amount.
(3) the materials held for sale may use the market price as net realizable value.
3.12.4 Inventory count system
The Company adopts the perpetual inventory system.
3.12.5 Amortization methods of low-value consumables and packaging materials
Equal-split amortization method.
3.13 Long-term equity investment
3.13.1 Determination of initial investment cost
Long-term equity investment acquired through a business combination: For a business combination involving enterprises under common control, the initial investment cost of a long-term equity investment is the acquirer's share of the carrying amount of the owners' equity in the acquiree at the acquisition date. For a business combination not involving enterprises under common control, the initial investment cost of a long-term equity investment is the cost of acquisition determined at the date of acquisition. For a long-term equity investment acquired in cash, the initial investment cost is the amount of cash paid. For a long-term equity investment acquired by issuing equity securities, the initial investment cost is the fair value of the equity securities issued. For a long-term equity investment acquired by debt restructuring, the initial investment cost is determined according to related requirements of Accounting Standards for Business Enterprises No. 12- Debt Restructuring. For a long-term equity investment acquired by exchange of non-cash assets, the initial investment cost shall be determined according to related accounting standards.
3.13.2 Subsequent measurement and recognition of profit or loss
Where the Company is able to exercise control over an investee, the long-term equity investment is accounted for using the cost method. Where the Company has investment in associates and joint ventures, the long-term equity investment is accounted for using the equity method. Where portion of the long-term equity investment in an associate is indirectly held through venture capital organizations, mutual funds, trust companies or similar entities including investment-linked insurance funds, regardless whether these entities can exercise significant influence on the investments, the Company shall measure the indirectly held portion at fair value through profit or loss and accounted for the remaining portion using the equity method according to Accounting Standards for Business Enterprises No. 22- Financial Instrument Recognition and Measurement.
3.13.3 Basis for recognition of joint control or significant influence over an investee
Joint control of an investee is that the decision of activities that can significantly affect the arrangement's return must require the unanimous consent of the parties sharing control, including sale and purchase of goods or services, financial assets management, purchase and disposal of assets, research and development activity and financing activities etc. The Company holding of20%-50% voting capital of the investee presents it can exercise significant influence over the investee. The Company usually can exercise significant influence over the investee even its voting capital less than20% if it can meet one of the following situations: a) Appointing representatives in the board of directors or similar governing body of the investee; b) Participating in the strategy and policy decision process; c) Delegating management personnel; d) The investee relying on the Company's technique or technical material; e) Significant transactions occur between the Company and the investee.
3.14 Investment property
Investment property of the Company includes land use rights and buildings leased to other party, and land use rights held for resale after appreciation. Investment property is initially measured at acquisition cost, and is subsequently measured using the cost method【or the fair valuemethod】. The buildings leased to third party are depreciated using the straight line method according to the same depreciation policy for fixed assets. The land use rights leased to third party and land use rights held for resale after appreciation are amortized using the straight line method according to the same amortization policy for intangible assets.
3.15 Fixed assets
3.15.1 Recognition criteria for fixed assets
Fixed assets refers to tangible assets held for the purpose of producing commodities, services rendering, renting or business administration with useful lives exceeding one accounting year. Fixed assets can be recognized when the following criteria are met: a) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and b) The costs of the fixed assets can be measured reliably.
3.15.2 Classification and depreciation method of fixed assets
The categories of fixed assets mainly include: buildings, boats& nets, machinery& equipment, transportation equipment, furniture and office equipment. The Company adopts the straight line method for depreciation. The useful life and residual value of an asset is assessed based on its nature and the manner of use. At the end of each financial year, the useful lives, residual values and the depreciation method are reviewed, and adjusted if there are variances with the original estimates. Other than fully depreciated assets which are still in use and land individually measured and recorded, depreciation is provided for all fixed assets.
|||
|-|-|
|Depreciation period(years)|Residual rate (%)|
|20—40|0—10|
|5—30|3—5|
|8—20|0—10|
|5|0—10|
|5|0—10|

3.15.3 Recognition and measurement of fixed assets leased in under finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. At the commencement of the lease term, the Company, as the lessees, shall recognize finance leases as assets at amounts equal to the lower of the fair value of the leased property or the present value of the minimum lease payments, each determined at the inception of the lease. Subsequent measurement of fixed assets under finance lease should be in accordance with the accounting policies adopted for self-owned fixed assets in respect of provision of depreciation and impairment.
3.16 Construction in progress
The construction in progress of the Company includes self-construction and sub-contracting construction. Construction in progress is transferred to fixed assets when it has reached the
working condition for its intended use. The recognition criteria of intended use include any of the
followings: a) The tangible work of fixed assets (including installation) have been entirely or
substantively completed; b) Trial production or trial operation has occurred whose outcome indicates the asset can be operated properly or manufacture quality product steadily; c) No expenditure or insignificant expenditure occur subsequently for the constructed asset; d) The constructed asset has achieved or substantively achieved the requirement of design or contract.
The majority of the projects of construction in progress of the Company are ships. When the ships are tested qualified and accepted and meet the criteria of sea sailing, the company determines that project of construction in progress has reached the expectations for use.
3.17 Borrowing costs
3.17.1 Recognition criteria for capitalization of borrowing costs
Borrowing costs are capitalized when they are directly attributable to the acquisition, construction or production of a qualifying asset and included in the cost of related assets. Other borrowing costs are recognized as expenses and recorded in profit or loss for the current period when incurred. Qualifying assets that meet conditions for capitalization are fixed assets, investment property, inventory or other assets that take a substantial period of time for construction or production in order to get ready for their intended use or sale.
3.17.2 Calculation of capitalization cost
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its termination. The period during which capitalization is suspended is excluded. Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is suspended abnormally and when the suspension is for a continuous period of more than 3 months.
For designated borrowings, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing less any bank interest earned from unused funds of the designated borrowings or any investment income on the temporary investment of those funds. For funds borrowed for general purpose, the amount of interest to be capitalized on such borrowings is calculated by applying a capitalization rate to the weighted average of the excess amounts of cumulative expenditures on the asset over and above the amounts of designated borrowings.
Capitalization rate is determined by calculating weighted average interest rate of general borrowings. If there is any premium or discount of the borrowings, the interest cost shall be adjusted in every accounting period by the amortized amount of premium or discount calculating by effective interest method.
Effective interest method is the method to calculate the amortization amount of premium or discount or interest expenses by the effective interest rate of the borrowings. The effective interest rate is the interest rate to discount the future cash flow of the borrowing during its expected duration to the present carrying amount of the borrowing.
3.18 Intangible assets
3.18.1 The measurement of intangible assets
The intangible assets shall be initially measured according to its cost. Acquisition costs of intangible assets include purchase price and relevant expenditures. The invested cost of intangible assets contributed by investors shall be determined according to the conventional value in the investment contract or agreement, except for those of unfair value in the contract or agreement. If the conventional value in the investment contract or agreement is unfair, the costs of intangible assets shall be their fair value. The costs of internally generated intangible assets include the total development expenditures to bring the asset to its intended use.
The subsequent measurements for intangible assets are as follows: a) The intangible assets with definite useful life are amortized by straight line method and reviewed the useful life and amortization method at the end of each year. Any discrepancy between the review and initial estimates shall be adjusted accordingly. b) The intangible assets with indefinite useful life are not amortized, and reviewed for the useful life at the end of each year. If there are objective evidence indicating their useful life is definite, the Company shall estimate the useful life of the intangible assets and amortize them by straight line method.
3.18.2 The assessment basis for indefinite useful life
Intangible assets without foreseeable period to bring economic benefits to the Company or with uncertain useful life are classified as intangible assets of indefinite life. The judgment basis for
indefinite life includes: a) The legal rights are derived from contractual rights or other legal rights, however there is no explicit useful life indicated in the contracts or regulations; b) Although considering the industry practice or demonstration from related professionals comprehensively, the benefit period of the intangible assets still can't be decided.
At the end of each year, the Company reviews the intangible assets with indefinite useful life mainly using bottom-to-top approach. The related departments who use the intangible assets will perform a basic review and evaluate whether there are changes on the basis to determine indefinite useful life.
3.19 Impairment of long-term assets
At each balance sheet date, if there are impairment indications for the long-term assets including long-term equity investments, investment property subsequently measured at cost model, fixed assets, construction in progress, productive biological assets measured at cost, oil and gas assets, intangible assets, goodwill, etc., the Company shall perform impairment test. If the outcome of impairment test indicates the recoverable amount of the asset is lower than its carrying amount, the Company shall recognize the provision for impairment based on the amount of the shortfall.
The recoverable amount of an asset is determined by the higher of the net amount after deducting the disposal costs from the asset's fair value and the present value of the asset's estimated future cash flow. The provision for impairment of asset is estimated and recognized on individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Company shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the minimum portfolio of assets that could generate cash inflow independently.
Impairment tests are conducted for goodwill presented in the financial statements separately at least at the end of every accounting year regardless whether there are impairment indications or not. The carrying amount of goodwill arising from business combinations is allocated to relevant asset groups or asset group portfolio. The related impairment loss shall be recognized if the impairment test indicates the recoverable amount of the asset groups or asset group portfolio embodied the goodwill is lower than their carrying amounts. The amount of impairment loss shall firstly be deducted from the carrying amount of goodwill embodied in the asset groups or asset
group portfolio, then be deducted from the carrying amounts of other assets' based on the proportions of their carrying amounts in the asset group or asset groups portfolio.
The impairment losses of assets will not be reversed in subsequent periods once they are recognized.
3.20 Long-term deferred expenses
Long-term deferred expenses refer to expenses that have been paid but their benefit period is more than one year (excluding one year). Long-term deferred expenses will be amortized in the benefit periods. If one long-term deferred expense can't benefit the Company in the subsequent periods, the remaining balance of the long-term deferred expense shall be recognized as expense in profit or loss for the current period.
3.21 Employee benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits.
3.21.1 Short-time employee benefits
In the accounting period in which employees have rendered services, the Company recognizes the employee benefits as liability, and charges to profit or loss for the current period, or includes in the cost of relevant assets in accordance with other accounting standards. Welfare benefit are charged to profit or loss for the current period or included in the cost of relevant assets when incurred. Welfare benefit in non-monetary forms is measured at fair value. In the accounting period in which employees have rendered services, the Company recognizes the social security contributions as liability according to regulations such as medical insurance, work injury insurance and maternity insurance as well as housing funds, and charges to profit or loss for the current period or includes in the cost of relevant assets.
3.21.2 Post-employment benefits
During the accounting period in which employees provide the service, the Company calculates the
defined contribution plans payable according to the basis and percentage required by local government, recognized as the liability and charges to profit and loss for current period or includes in the cost of related assets. The Company attributes the obligation incurred by defined benefits plans using the projected accumulated benefit unit credit method to periods in which the employees rendered services and charges the obligation to profit and loss for the current period or includes in the cost of related assets.
3.21.3 Termination benefits
Termination benefits provided by the Company to employees are recognized as an employee benefit liability and charged to profit or loss for the current period at the earlier of the following dates: a) The Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; and B) When the Company recognizes costs or expenses related to the restructuring that involves the payment of termination benefits.
3.21.4 Other long-term employee benefits
If other long-term employee benefits provided by the Company to the employees meet the conditions for classifying as a defined contributions plan, those benefits are accounted for in accordance with the above requirements relating to defined contribution plan. Besides, net obligations or net assets of other long-term employee benefits are recognized and measured in accordance with the above requirements relating to defined benefits plan.
3.22 Revenues
3.22.1 Revenue from sales goods
Revenue from sales goods is recognized according to the price stipulated in the contract or agreement, only when all of the following conditions are satisfied:(1) The group has transferred to the buyer the significant risks and rewards of ownership of the goods; (2) The group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; (3) The amount of revenue can be measured reliably; (4) It is probable that the associated economic benefits will flow in the group; (5) The associated costs incurred or to be incurred can be measured reliably.
TheCompany’s seine fishery sales occurs mainly at sea. When the ship is fully loaded, the captain will contact with our sales department, sales department contacting transporting ship, cargo transferred to transporting ship (mate receipt signed by both parties). Then sales department will sign sales agreement according to the tonnage showed on the mate receipt. Finally, financial department confirm the revenue on the basis of mate receipt, sales agreement, and sales invoice.
The Company long-line fishery is transported back and sold domestically. Sales department make sales price referring to Japan's Shimizu transaction prices, and both sides confirm the change of thefreight’s ownership according to sales contract and decision tables based on values. Financial department confirm the revenue on the basis of sales contract, decision tables, and sales invoices . The process of thecompany’s aquatic products domestic sales: Domestic Sales Department (tuna sales center) ,according to domesticcustomers’ fax or mail orders, issue delivery confirmation and sales department staff will arrange warehouse to stock and to ship by air, bus transportation, etc. According to the dispatch list, with warehouse department signature and issued by sales department, the finance department will issue sales invoice and confirm revenue.
The oversea sales of theCompany’s aquatic products processing: After obtaining purchase orders from foreign customers, the International Trade Sector will issue export shipment orders and arrange Transportation Department to prepare stocking. After the export goods be packed and transported out, Warehousing Sector will sign on the dispatch list issued by International Trade Department. After the cargo exported, export documents issued by transport department will be delivered, such as packing lists, bills of lading, etc. and Warehousing Sector will get the export declaration issued by Customs Department. Finance Department issue sales invoice and confirm sales revenue under the dispatch list, packing slips documents, declarations, etc.
Deferred method should be employed in the charge of the price of contract or agreement. The sales of goods should be determined according to fair value in receivable contract or agreement that in financing nature.
3.22.2 Revenue from providing sevices
If the outcome of a transaction involving the rendering of services can be estimated reliably, at the balance sheet date, revenue associated with the transaction is recognized using the percentage of
completion method. When the outcome of a transaction involving the rendering of services cannot be estimated reliably on balance sheet date, different accounting treatments shall be adopted depending on the circumstances:
a. when the costs incurred are expected to be recoverable, revenue shall be recognized to the extent of costs incurred that are expected to be recoverable and an equivalent amount shall be charged to profit or loss as service costs.
b. when the costs incurred are not expected to be recoverable, the costs incurred shall be recognized in profit or loss for the current period and no service revenue shall be recognized.
3.22.3 Revenue from abalienating of right to use assets
Revenue arising from the use by others of enterprise assets shall be recognized only when both of the following conditions are satisfied:
(1) It is probable that the associated economic benefits will flow to the enterprise; and
(2) The amount of the revenue can be measured reliably.
3.23 Government grants
3.23.1 Category of government grants
Government grants are the monetary assets and non-monetary assets received from the government without consideration and be classified as government grants related to assets or government grants related to income.
3.23.2 Accounting treatment of government grants
Government grants related to assets are recognized as deferred income which are amortized in profit and loss for each period over the asset's estimated useful period on a systematic basis. Government grants related to the Company's routine operation will be recorded in other income and government grants not related to the Company's routine operation will be recorded in non-operating income.
Government grants measured at nominal cost will be recorded in profit and loss for the current period when received.
Government grants related to income are treated as follows: a) If the grant is a compensation for
related expenses or losses to be incurred in subsequent periods, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized.; b) if the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the current period. Government grants related to the Company's routine operation will be recorded in other income and government grants not related to the Company's routine operation will be recorded in non-operating income
3.23.3 The detailed criteria to distinguish government grants related to assets and government grants related to income:
Government grants obtained by the Company for purchase, construction or formation of long-term assets are recognized as the government grants related to assets. The government grants other than the government grants related to assets are classified as government grants related to income.
If there is no explicit recipient in the related government grant document, the judgement criteria to distinguish government grants related to assets and government grants related to income:
① If government grant document specifies assigned projects, the government grants are divided by the relative proportion of expenditures incurred in forming the assets and the expenses in the budget of the project. The proportion should be reviewing on each balance sheet date and be changed if necessary.② If government grant document only has a general description of its purpose without specific projects , the government grants are classified as government grants related to income.
3.23.4 The recognition time point for government grants
The receivable government grants will be recognized when there are conclusive evidence to indicate the Company could meet all related government grants requirements and the Company expects to receive the government grants in the future. Other government grants will be recognized when the grant fund received.
3.23.5 Accounting treatment for concessional loan
A. When the bank receives the discount interest fund from the financal sector and then provides loan to the Company with preferential interest rate, the Company accounts for the loan at the actual received amount and related interest expenses will be calculated based on the principal and the preferential interest rate.
B. When the Company receives the discount interest fund from the financal sector directly, the
discount interest fund will be deducted from related borrowing cost.
3.24 Deferred tax asset and deferred tax liability
3.24.1 Temporary differences arising from the difference between the carrying amount of an asset or liability (asset or liability not recognized in balance sheet but the tax base is ascertained by the current tax laws and regulation, the tax base is the temporary difference) and its tax base are recognized as deferred tax calculating by the effective tax rate in the expected period to receive the asset or discharge the liability.
3.24.2 Deferred tax assets are recognized for deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary differences can be utilized and should be recognized for deductible loss or tax reduction that could be carried forward in subsequent periods to the extent that it is probable that taxable income will be available against which deductible loss or tax reduction can be utilized. If it is probable that sufficient taxable profits will not be available in future periods to allow the benefit of the deferred tax asset to be utilized, the carrying amount of the deferred tax asset is reduced.
3.24.3 The taxable temporary differences associated with investments in subsidiaries and associates shall be recognized deferred tax liability; except the Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The deductible temporary differences associated with investments in subsidiaries, associates, the corresponding deferred tax asset is recognized when it is probable that the temporary difference will reverse in the foreseeable future and it is probable that taxable profits will be available in the future against which the temporary difference can be utilized.
3.25 Leases
3.25.1 The accounting treatment for operating lease: rental payment for operating leases is recognized in profit or loss for current period or the cost of related assets on a straight-line basis over the lease term.
3.25.2 The accounting treatment for financing lease: the Company will recognize the lower of the fair value of leased asset or the present value of minimum lease payments as the initial book value
of the leased asset. The difference between carrying amount of leased asset and the present value of minimum lease payments is recognized as future finance charge which is amortized over the lease period by effective interest method. Minimum lease payments deducted unrecognized finance charge is presented as long-term payables.
3.26 Main changes of accounting policies and accounting estimates
The Ministry of Finance released< CAS No.42-Held for sale Assets and DiscontinuedOperations> in year 2017 which will be in effect from May 28, 2017. The accounting standard requires prospective application for the exised held for sale assets and discontinued operations.
The Ministry of Finance revised< CAS No.16-Governmentgrants> which will be in effect from June 12, 2017. The accounting standard requires prospective application for the exised governement grants at January 1, 2017 and adjustment for the governement grants received from January 1, 2017 to the enforcement date.
The Ministry of Finance released< Notice for amendments of financial statements format of industrial and commercialenterprises>(Caikuai (2017) No.30) in year 2017 and the enterprises who adopt<Accounting Standards for BusinessEnterprises> should prepare the financial statements for year 2017 and the following financial periods in according to<Accounting Standards for BusinessEnterprises> and the Notice.
The main influence on the financial statments after the Company adopts the above two standards and the Notice (Caikuai (2017) No.30) is as following:
|||||
|-|-|-|-|
|Itemaffected|The amount ofitem affected|Restatementamount ofprior period|Amountpresented innon-operatingincome ofprior period|
|Otherincome|26,760,985.48|—|43,105,385.48|
|Gains(Losses)fromdisposal ofassets|422,100.74|2,552,387.02|2,657,141.63|

4. Taxes
4.1 Main taxes categories and tax rates
||
|-|
|Tax base|
|Output tax deducted input tax that|

||
|-|
|Tax base|
|can be credited against the outputtax|
|Turnover taxes already paid|
|Taxable income|

Income tax rate of taxpayers adopting different incme tax rate
Name of tax enterprise Tax rate of income tax
Ocean fisheries part is tax exemption; housing lease
Shandong Zhonglu Oceanic Fisheries Co., Ltd.
part is25%.
Shandong zhonglu Haiyan Oceanic Fisheries Co., Ltd. tax exemption
AFRICA STAR FISHERIES LIMITED Export sales part is8%, domestic sales part is25%.
HABITAT INTERNATIONAL CORPORATION tax exemption
Shandong Zhonglu Oceanic Fisheries Transportation
25%
Co., Ltd
Aquatic products processing part is tax exemption;
Shandong Zhonglu Oceanic (Yantai) Food Co.
refrigeration part is25%.
4.2 Significant tax incentives and approval documents
4.2.1 Value added tax preferences
According to the government document Cai Shui Zi (1997) No.64<Notice of pelagic fishery enterprises taxation about import fishing equipment and shipped back self trapping aquaticproducts>, self trapping aquatic products shipped back for domestic sale are regarded as the domestic products that are free from tariff and import value added tax. Corresponding, the domestic sale business belongs to primary agricultural products sale business are free from value added tax accoriding to the rules of value added tax. So, thecompany’ revenue from the pelagic fishery is free value added tax.
4.2.2 Enterprise income tax preferences
On the basis of relevant policies in the following documents: Cai Shui Zi (1994) No. 001< Notice of income tax preferential policies of theCompany>, Cai Shui Zi (1997) No.114< Notice of income tax of domestic-funded fishery companies engaged in fishingbusiness>, finance and agriculture document of Ministry of Finance (2000) No.104< Document of suggestions on development acceleration of pelagic fishery industry in ourcountry>, Order of the Chairman of
thePeople’s Republic of China (2007) No.63<People’s Republic of China Enterprise Income
TaxLaw>, Decree of the State Council of thePeople’s Republic of China No.512< Enforcement
regulations ofPeople’s Republic of China Enterprise Income TaxLaw>. Income from activities of pelagic fishery and preliminary production of agricultural products in which the Company is engaged is exempt from income tax. Income from activities other than pelagic fishery and preliminary production of agriculture products that the Company is engaged in is taxed25%.
5. Notes to the consolidated financial statements
5.1 Cash at bank and on hand
||
|-|
|Balance as at 31/12/2017|
|1,252,378.69|
|145,374,964.71|
|862,500.14|
|147,489,843.54|
|8,621,445.18|

Note: The other monetary funds of RMB 862,500.14 is the credit guarantee of the letter of credit; the deposits outside the territory of China are the cash and bank deposits of the overseas subsidiaries.
5.2 Accounts receivable
5.2.1 Accounts receivable by category
As at 31/12/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|46,984,593.00|100.00|8,191,680.11|
|46,984,593.00|100.00|8,191,680.11|

As at 1/1/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|50,739,789.74|100.00|8,060,723.09|

As at 1/1/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|50,739,789.74|100.00|8,060,723.09|

Allowance for doubtful debts on portfolio
Accounts receivable whose allowance for doubtful debts is using aging analysis method:
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowance rate (%)|Allowance fordoubtful debts|Balance|Allowance rate (%)|
|39,370,753.63|5.00|1,968,537.67|44,125,508.62|5.00|
|525,987.40|10.00|52,598.74|598,001.95|10.00|
|1,182,595.20|30.00|354,778.56|290,005.66|30.00|
|178,983.26|50.00|89,491.63|37,255.50|50.00|
|5,726,273.51|100.00|5,726,273.51|5,689,018.01|100.00|
|46,984,593.00||8,191,680.11|50,739,789.74||

 5.2.2 Provision, recovery or reversal of allowance for doubtful debts during the year
Provision of allowance for doubtful debts within this year is RMB130,957.02 and no recovery or reversal of
provision during the year.
5.5.3 Accounts receivable due from the top five debtors of the Company are as follows:
|||
|-|-|
|Balance as at31/12/2016|Percentage in totalaccounts receivable(%)|
|6,502,655.38|13.84|
|3,600,962.12|7.66|
|3,135,644.77|6.67|
|2,795,773.06|5.95|
|2,780,436.40|5.92|
|18,815,471.73|40.05|

 5.3 Prepayments
5.3.1 Aging analysis of prepayments
||||
|-|-|-|
|As at 31/12/2017|||
|Balance|PCT (%)|Balance|
|18,410,772.78|99.13|7,773,914.94|
|162,338.80|0.87|13,688.46|
|18,573,111.58|100.00|7,787,603.40|

5.3.2 The top five prepayments are as follows:
||
|-|
|Balance as at 31/12/2017|
|2,466,582.09|
|2,357,016.62|
|2,047,352.59|
|1,340,001.07|
|1,339,079.74|
|9,550,032.11|

5.4 Other receivables
5.4.1 Other receivables
As at 31/12/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|16,219,704.01|100.00|4,913,990.90|
|16,219,704.01|100.00|4,913,990.90|

As at 1/1/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|13,943,479.12|100.00|4,558,806.96|
|13,943,479.12|100.00|4,558,806.96|

Allowance for doubtful debts on portfolio
① Other receivables whose allowance for doubtful debts is using aging analysis method
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowancerate (%)|Allowancefor doubtfuldebts|Balance|Allowancerate (%)|
|4,243,117.54|5.00|212,155.85|2,355,970.40|5.00|
|1,325,979.51|10.00|132,597.97|359,240.66|10.00|
|645,060.98|30.00|193,518.31|264,584.44|30.00|
|178,539.17|50.00|89,269.59|89,834.35|50.00|
|4,286,449.18|100.00|4,286,449.18|4,280,791.85|100.00|
|10,679,146.38||4,913,990.90|7,350,421.70||

② Other receivables whose doubtful debts is made by riskless method:
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowance rate (%)|Allowance fordoubtful debts|Balance|Allowance rate (%)|
|5,540,557.64|||5,593,057.42||
||||1,000,000.00||
|5,540,557.64|||6,593,057.42||

5.4.2 Provision, recovery or reversal of allowance for doubtful debts during the year
Provision of allowance for doubtful debts within this year is RMB 355,183.94 and there is no recovery or reversal of provision during the year.
5.4.3 Other receivables by nature
||
|-|
|Balance as at 31/12/2017|
|5,540,557.64|
|421,456.37|
|244,407.54|
|10,013,282.46|
|16,219,704.01|

5.4.4 Other receivables due from the top five debtors of the Company are as follows:
|||||
|-|-|-|-|
|Nature ofbalance|Balance as at31/12/2017|Aging|Percentage intotal otherreceivables (%)|
|Export taxrefund|5,540,557.64|Within 6months|34.16|
|Employeeloan|573,885.57|Within6months|3.54|
|Employeeloan|467,457.91|Within 6months|2.88|
|Employeeloan|303,721.83|Within 6months|1.87|
|intercoursecredit|288,896.39|More than 3years|1.78|
||7,174,519.34||44.23|

 5.5 Inventories
5.5.1 Inventories by categories
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Book balance|Provisionfordiminutionin value|Carryingamount|Book balance|Provisionfordiminutionin value|
|125,849,777.03|45,543.42|125,804,233.61|71,541,108.42|32,811.83|
|688,367.24||688,367.24|813,924.17||
|98,514,789.13|1,349,243.78|97,165,545.35|84,023,702.28|2,472,715.03|
|1,038,881.75||1,038,881.75|763,206.04||
|19,047,562.12||19,047,562.12|||
|245,139,377.27|1,394,787.20|243,744,590.07|157,141,940.91|2,505,526.86|

 5.5.2 Provision for diminution in value of inventories
|||||
|-|-|-|-|
|As at1/1/2017|Provisionfor the year|Reductions during the year||
|||Reversal|Write-down|
|32,811.83|21,180.61||8,449.02|
|2,472,715.03|1,209,824.18||2,333,295.43|
|2,505,526.86|1,231,004.79||2,341,744.45|

Note1: The basis of determining inventory net realizable value is described in Note 3.12.3 Provision for diminution
in value of inventories.
Note2: The reversal of provision for diminution is induced by the raw materials, revolving materials and packaging materials which were used for production and finished goods which were sold.
5.6 Other current assets
||
|-|
|Balance as at 31/12/2017|
|29,993,482.01|
|88,480.55|
|30,081,962.56|

 5.7 Available-for-sale financial assets
5.7.1 Available-for-sale financial assets
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Bookbalance|Provision forimpairment|Carryingamount|Bookbalance|Provision forimpairment|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|
|33,000,000.00|33,000,000.00|-|33,000,000.00|33,000,000.00|

5.7.2 Available-for-sale financial assets measured at cost
||||||||||
|-|-|-|-|-|-|-|-|-|
|Book balance||||Provision for impairment||||Shareholdingpercentage(%)|
|As at1/1/2017|Increase|Decrease|As at31/12/2017|As at 1/1/2017|Increase|Decrease|As at31/12/2017||
|33,000,000.00|||33,000,000.00|33,000,000.00|||33,000,000.00|0.87|
|33,000,000.00|||33,000,000.00|33,000,000.00|||33,000,000.00||

Note: On 29th April, 2005, China Southern Securities received its administrative penalty, and its security business
license was cancelled by China Securities Regulatory Commission. On 16th August, 2006, Shenzhen Intermediate
People’s court announced its bankruptcy. The Company has full provision of overall holding shares of China
Southern Securities.
5.8 Investment property
Investment property measured by cost
||
|-|
|Buildings|
|47,120,794.80|
|581,176.39|
|581,176.39|
|47,701,971.19|
|13,895,890.56|
|1,225,193.44|
|1,225,193.44|
|15,121,084.00|
|886,512.06|
|886,512.06|
|31,694,375.13|
|32,338,392.18|

 5.9 Fixed assets
Movement of fixed assets
||||||
|-|-|-|-|-|
|Buildings|Boats & nets|Machinery &equipment|Transportation equipment|Furniture andofficeequipment|
|117,457,596.34|459,879,579.56|40,577,242.13|7,142,397.05|11,139,890.83|

||||||
|-|-|-|-|-|
|Buildings|Boats & nets|Machinery &equipment|Transportation equipment|Furniture andofficeequipment|
||143,632,728.68|2,080,727.58|119,789.79|745,996.76|
||140,775,434.31|2,080,727.58|119,789.79|745,996.76|
||2,857,294.37||||
|714,141.41|672,822.03||1,355,792.65|469,388.06|
|132,965.02|||1,341,210.97|460,143.36|
|581,176.39|672,822.03||14,581.68|9,244.70|
|116,743,454.93|602,839,486.21|42,657,969.71|5,906,394.19|11,416,499.53|
|22,569,125.34|169,453,741.31|15,716,521.23|4,990,349.64|7,625,905.03|
|3,304,926.49|28,140,801.56|2,200,990.92|497,241.85|659,392.90|
|3,304,926.49|28,140,801.56|2,200,990.92|497,241.85|659,392.90|
||||1,282,944.63|445,084.46|
||||1,282,944.63|445,084.46|
|25,874,051.83|197,594,542.87|17,917,512.15|4,204,646.87|7,840,213.47|
||157,573.50||||
||157,573.50||||
|90,869,403.10|405,087,369.84|24,740,457.56|1,701,747.32|3,576,286.06|
|94,888,471.00|290,268,264.75|24,860,720.90|2,152,047.41|3,513,985.80|

Note1: The original value of fixed assets that has been fully depreciated but still in use is RMB 76,340,630.41 as at
December 31 2017.
Note2: According to the Debt Repayment Advice signed between the Company and Shandong Fishery Group Corporation in April 2006, and Civil Ruling Li Zhi Zi No.1299 published by Lixia District People's Court of Jinan in 2005, the building of Shandong Fishery Group Corporation located at Heping road No.43 Lixia District of Jinan with the value of 54,221,197.05 Yuan was used to repay debt. The transfer procedure of the property right certificate is not yet accomplished; The board of management coordinates actively relevant parties and the property right certificate is still in process.
5.10 Construction in process
5.10.1 Construction in process
||||||
|-|-|-|-|-|
|Balance as at 31/12/2017|||||
|Bookbalance|Provisionforimpairment|Carrying amount|Book balance|Provision forimpairment|
|4,077,658.55|4,077,658.55||4,066,989.68||
|4,077,658.55|4,077,658.55||4,066,989.68||

5.10.2 Provision for impairment of construction in progress
|||||
|-|-|-|-|
|Balance as at1/1/2017|Additions|Reductions|Balance as at31/12/2017|
||4,077,658.55||4,077,658.55|
||4,077,658.55||4,077,658.55|

Note: The construction in process is the fishing quota of two tuna fishing vessels bought in 2014 and the Company intended to exchange it for fishing quota of one tuna seine vessel. At present, the project has been suspended due to the adjustment of the project plan, and there is no use plan for a short period of time. Also the possibility of realizing cash flow in the future is small. For prudence, full provision for impairment was made.
5.11 Intangible assets
|||
|-|-|
|Land use rights|Computer software|
|17,154,729.00|197,000.00|
||834,396.71|
||834,396.71|

|||
|-|-|
|Land use rights|Computer software|
|17,154,729.00|1,031,396.71|
|4,069,902.17|174,433.26|
|383,870.16|61,972.36|
|383,870.16|61,972.36|
|4,453,772.33|236,405.62|
|12,700,956.67|794,991.09|
|13,084,826.83|22,566.74|

 5.12 Long-term deferred expenses
|||||
|-|-|-|-|
|Balance as at1/1/2017|Additions|Amortization|Reductions|
||640,776.70|124,595.45||
||640,776.70|124,595.45||

 5.13 Deferred tax assets
5.13.1Deferred tax assets
||||
|-|-|-|
|As at 31/12/2017|||
|Deferred taxassets|Deductabletemporarydifferences|Deferred taxassets|
|286,696.05|1,146,784.18||
|286,696.05|1,146,784.18||

5.13.2 The items not recognized deferred tax assets
||
|-|
|Balance as at 31/12/2017|
|11,958,886.83|
|1,394,787.20|
|4,077,658.55|
|66,496,331.84|
|83,927,664.42|

Note: No deferred income tax assets are recognized for deductible temporary differences and deductible losses,
due to the exemption of corporate income tax for those companies that form deductible temporary differences and deductible losses. In the future, there is no tax liability for income tax, so there will be no temporary differences adjustments in income tax.
5.13.2 Expiry years of deductible losses not yet recognized deferred tax assets are as follows:
|||
|-|-|
|Balance as at 31/12/2017|Balance as at 1/1/2017|
||9,076,877.08|
||2,332,822.24|
||19,540,058.22|
|67,342,296.02|42,543,508.71|
|16,690,414.60|16,690,414.60|
|84,032,710.62|90,183,680.85|

5.14 Other non-current assets
||
|-|
|Balance as at 31/12/2017|
|2,000,000.00|
|1,527,165.98|
|3,527,165.98|

 5.15 Short-term loans
Short-term loans by categories:
||
|-|
|Balance as at 31/12/2017|
|36,000,000.00|
|100,000,000.00|
|40,394,931.62|
|176,394,931.62|

 5.16 Accounts payable
||
|-|
|Balance as at 31/12/2017|
|57,101,822.73|
|8,102,435.25|
|65,204,257.98|

Significant accounts payable with aging over 1 year
||
|-|
|Balance as at 31/12/2017|
|1,910,882.29|
|1,910,882.29|

5.17 Advances from customers
||
|-|
|Balance as at 31/12/2017|
|19,187,510.18|
|687,612.58|
|19,875,122.76|

 5.18 Employee benefits payable
5.18.1 Movement of employee benefits payable
||||
|-|-|-|
|As at 1/1/2017|Increase|Decrease|
|30,320,927.64|127,677,992.55|115,267,928.84|
||6,707,133.27|6,707,095.57|
|253,690.98|286,599.63|454,468.35|
|37,785.14|54,122.90|54,584.56|
|30,612,403.76|134,725,848.35|122,484,077.32|

 5.18.2 Details of the short-term employee benefits
||||
|-|-|-|
|As at 1/1/2017|Accrued|Paid|
|28,903,757.58|116,662,209.13|104,302,144.69|
||4,048,777.44|4,048,777.44|
||3,581,133.07|3,581,133.07|
||2,986,336.64|2,986,336.64|
||284,000.06|284,000.06|
||310,796.37|310,796.37|
||2,839,703.53|2,839,703.53|
|1,417,170.06|546,169.38|496,170.11|
|30,320,927.64|127,677,992.55|115,267,928.84|

 5.18.3 Defined contribution plans
||||||
|-|-|-|-|-|
|Item|As at 1/1/2017|Accrued|Paid|As at|
|||||31/12/2017|

|||||
|-|-|-|-|
|1. Primary endowment insurance|6,262,418.75|6,262,381.05|37.7|
|2. Unemployment insurance|248,829.73|248,829.73||
|3. Pension insurance|195,884.79|195,884.79||
|Total|6,707,133.27|6,707,095.57|37.7|

 5.19 Taxes and surcharges payable
||
|-|
|Balance as at 31/12/2017|
|298,473.86|
|2,271,827.08|
|32,054.49|
|273,051.86|
|158,804.18|
|119,102.33|
|22,896.07|
|202,488.32|
|3,378,698.19|

 5.20 Interest payable
||
|-|
|Balance as at 31/12/2017|
|360,208.32|
|360,208.32|

 5.21 Other payables
||
|-|
|Balance as at 31/12/2017|
|633,984.87|
|1,259,769.66|
|4,281,598.23|
|6,175,352.76|

 5.22 Non-current liabilities due within one year
||
|-|
|Balance as at 31/12/2017|
|866,585.48|
|866,585.48|

5.23 Long-term employee benefits payable
||
|-|
|Balance as at 31/12/2017|
|518,846.65|
|1,058,820.98|
|1,577,667.63|

 5.24 Deferred income
5.24.1 Deferred income by category
|||||
|-|-|-|-|
|Balance as at1/1/2017|Increase|Decrease|Balance as at31/12/2017|
|10,572,454.62||866,585.48|9,705,869.14|
|10,572,454.62||866,585.48|9,705,869.14|

5.24.2 Deferred income– government grants
||||||
|-|-|-|-|-|
|Balance as at1/1/2017|Increase|Recorded incurrentnon-operatingincome|Othermovement|Balance as at31/12/2017|
|9,867,781.98||838,209.48||9,029,572.50|
|704,672.64||28,376.00||676,296.64|
|10,572,454.62||866,585.48||9,705,869.14|

5.25 Share capital
|||||||
|-|-|-|-|-|-|
|Balance as at1/1/2017|Movement|||||
||Issuanceof newshare|Bonusshares|Capitalreservetransferin|Others|sub-total|
|266,071,320.00||||||

 5.26 Capital reserve
||||
|-|-|-|
|Balance as at1/1/2017|Increase|Decrease|
|185,036,701.86|||
|94,961,504.96|||
|279,998,206.82|||

5.27 Other comprehensive income
|||||||
|-|-|-|-|-|-|
|As at1/1/2017|Movement in the year|||||
||Amountbefore tax|Less: othercomprehensiveincome in priorperiods transferin profit or lossfor the currentperiod|Less:incometax|Amountafter taxattributableto theCompany|Amount aftertax attributableto minorityinterests|
|-665,059.07|-6,823,841.48||||-1,413,886.43|
|-665,059.07|-6,823,841.48||||-1,413,886.43|
|-665,059.07|-6,823,841.48||||-1,413,886.43|

5.28 Surplus reserve
||||
|-|-|-|
|Balance as at1/1/2017|Increase|Decrease|
|21,908,064.19|||
|21,908,064.19|||

5.29 Retained earnings
As at 31/12/2017
Item
||
|-|
|Amount|
|50,349,731.78|

||
|-|
|50,349,731.78|
|91,517,485.28|
|141,867,217.06|

5.30 Operating income and operating cost
||||
|-|-|-|
|Year ended 31/12/2017|||
|Income|Cost|Income|
|916,346,846.65|758,381,626.82|836,980,106.66|
|101,348,675.03|53,850,966.50|5,180,247.30|
|29,227,283.99|22,720,610.04|68,475,554.71|
|96,839,023.35|58,302,833.08|91,513,054.10|
|10,270,768.88|10,353,845.03|10,304,142.94|
|678,661,095.40|613,153,372.17|661,507,107.61|
|7,769,939.15|1,732,428.85|8,897,412.86|
|3,793,486.57|1,584,090.69|4,691,924.05|
|3,976,452.58|148,338.16|4,205,488.81|
|924,116,785.80|760,114,055.67|845,877,519.52|

 5.31 Taxes and surcharges
||
|-|
|Year ended 31/12/2017|
|342,007.05|
|146,556.58|
|97,704.40|
|48,151.89|
|1,233,859.68|
|638,891.55|
|357,407.46|
|28,190.26|

||
|-|
|Year ended 31/12/2017|
|514.18|
|2,893,283.05|

 5.32 Selling and distribution expenses
||
|-|
|Year ended 31/12/2017|
|9,597,938.59|
|1,549,084.25|
|2,393,490.45|
|255,154.66|
|101,635.36|
|38,319.66|
|11,253.47|
|178,570.08|
|11,703.04|
|36,893.93|
|14,174,043.49|

 5.33 General and administrative expenses
||
|-|
|Year ended 31/12/2017|
|33,422,096.52|
|3,315,896.29|
|2,740,393.19|
|1,264,336.30|
|677,865.92|
|1,178,783.06|
|4,362,588.33|
|851,980.11|
|4,351,750.85|
|4,360,291.55|
|56,525,982.12|

5.34 Finance expenses
||
|-|
|Year ended 31/12/2017|
|8,129,314.22|
|453,193.11|
|8,471,798.27|
|556,287.91|
|124,149.83|
|16,828,357.12|

 5.35 Impairment on assets
||
|-|
|Year ended 31/12/2017|
|472,385.89|
|1,231,004.79|
|4,077,658.55|
|5,781,049.23|

 5.36 Gains (Losses) from disposal of assets
||
|-|
|Year ended 31/12/2017|
|422,100.74|
|422,100.74|

 5.37 Other income
|||
|-|-|
|Year ended 31/12/2017|Year ended 31/12/2016|
|23,359,800.00||
|2,534,600.00||
|28,376.00||
|838,209.48||
|26,760,985.48||

Note 1: The company received RMB 23,359,800.00 government grants about development and utilization of international fishery resources from Qingdao finance bureau accordingto< Qingdao Municipal Bureau of Oceanic and Fishery Circular on Dissemination of Public Funding of Ship Scrapping and Shipbuilding Standardization
(Offshore Fisheries) for2017>（NO.【2017】24）
Note 2: The company received RMB 2,534,600.00 government grants about tuna transportation accordingto<
Notice of Qingdao Municipal Bureau of Finance on Disposal of Specific Funds for the Development of Offshore Fisheries in2016>（NO.【2017】36）
Note 3: According to<Issued the Second Batch of 800 Million "Two Districts" in 2011 Notice of the Second Batch of Specialized Fund Investment Plans for the Blue Peninsula Economic Development Zone in Shandong Peninsula and the High-efficient Ecological Economic Zone in the Yellow River Delta in2011>(NO.【2011】464) issued by Yantai Development and Reform Commission and Yantai FinanceBureau，<Notice on Issuing Unit Budget Indicators for2011>（NO【2011】514）issued by Yantai Economic and Technological Development Zone Finance Bureau, Yantai Development Zone Finance Bureau issued a special indicator of the company blue economic zone construction RMB 13,600,000.00, RMB 6,800,000.00 in 2012, RMB 6,800,000.00 in 2013, the company kept accounts in deferred income when receiving the funds and are amortized in profit and loss for each period over the asset's estimated useful period on a systematic basis. Other income amounts to 838,209.48 in 2017. Note 4: Accordingto< Circular on Issuing the Budget Targets of Fiscal Discounted Funds for Provincial-level Fishery Enterprises in 2013 issued on Jun.252013>(NO【2013】32) by Shandong Provincial Department of Finance, the company received Financial discount RMB 830,000.00 in 2013 for vessel construction subsidy, the company kept accounts in deferred income when receiving the funds and are amortized in profit and loss for each period over the asset's estimated useful period on a systematic basis. Other income amounts to 28,376.00 in 2017.
5.38 Non-operating income
5.38.1 Non-operating income by category
|||
|-|-|
|Year ended31/12/2017|Year ended31/12/2016|
|3,000,000.00|43,165,181.73|
|228,686.87|673,262.06|
|3,228,686.87|43,838,443.79|

 5.38.2 Government grants included in profit and loss for the current period:
|||
|-|-|
|Year ended31/12/2017|Year ended31/12/2016|
||39,041,300.00|
||3,197,500.00|
||838,209.48|
||28,376.00|
||59,796.25|

|||
|-|-|
|Year ended31/12/2017|Year ended31/12/2016|
|3,000,000.00||
|3,000,000.00|43,165,181.73|

Note: The company headquarter moved from Jinan to Qingdao in 2017, according to Notice of Qingdao Municipal Bureau of Finance on Disposal of Specific Funds for the Development of Offshore Fisheries in 2016(NO.【2017】 36), the company received one-time settlement financial subsidies RMB 3,000,000.00 from Qingdao Municipal Bureau of Finance.
5.39 Non-operating expenses
|||
|-|-|
|Year ended31/12/2017|Year ended31/12/2016|
||490,642.50|
|265,966.81||
|45,979.76|186,972.81|
|311,946.57|677,615.31|

5.40 Income tax expenses
5.40.1 Details of income tax expenses
||
|-|
|Year ended 31/12/2017|
|3,031,549.10|
|-286,696.05|
|2,744,853.05|

 5.40.2 Reconciliation between income tax expenses and accounting profit is as follows:
Item Amount
Profit before tax 97,899,841.64 Income tax expenses calculated at statutory/applicable tax rates 24,474,960.41 Effect of different tax rate -12,925,040.90 Effect of adjustment for income tax in prior year -87,958.83 Effect of income not subject to income tax -5,141,726.64 Effect of expenses undeductible for tax purposes 70,134.20 Effect of utilization of tax losses in prior years which haven't been
-8,359,421.35
recognized deferred tax assets
Effect of unrecognized deductible temporary differences and 4,713,906.14
Item Amount
deductible losses in current period
Income tax expenses 2,744,853.05 5.41 Notes to statement of cash flows
5.41.1 Cash received or paid relating to other operating activities
||
|-|
|Year ended 31/12/2017|
|33,096,388.68|
|453,193.11|
|29,017,295.18|
|3,428,428.94|
|197,471.45|
|36,384,307.56|
|12,587,166.05|
|18,453,510.96|
|3,067,379.15|
|2,276,251.40|

 5.41.2 Cash received or paid related to other investing activities
||
|-|
|Year ended 31/12/2017|

 5.41.3 Cash received or paid related to other financing activities
||
|-|
|Year ended 31/12/2017|

 5.42 Supplement to statement of cash flows
5.42.1 Supplement to statement of cash flows
||
|-|
|Year ended 31/12/2017|
|95,154,988.59|
|5,781,049.23|
|36,028,547.16|

||
|-|
|Year ended 31/12/2017|
|445,842.52|
|124,595.45|
|-422,100.74|
|11,443,077.58|
|-286,696.05|
|-90,339,180.81|
|-15,275,360.83|
|20,551,132.39|
|63,205,894.49|
|147,067,351.82|
|128,737,661.78|
|18,329,690.04|

 5.42.2 Cash and cash equivalents
||
|-|
|Balance as at 31/12/2017|
|147,067,351.82|
|1,252,378.69|
|145,374,973.13|
|440,000.00|
|147,067,351.82|

 5.43 Ownership or using rights of assets subject to restriction
||||
|-|-|-|
|Item|||
||Carrying amount as at 31/12/2017|Restriction reason|
|Cash at bank and on hand|862,500.14|Marginal deposit|

||||
|-|-|-|
|Fixed assets|88,200,769.64|Pledge loans|
|Intangible assets|12,700,956.67|Pledge loans|
|Total|101,764,226.45|--|

5.44 Monetary items denominated in foreign currency
5.44.1 Monetary items denominated in foreign currency
|||||||
|-|-|-|-|-|-|
|Item||Balance in foreigncurrency as at 31/12/2017|Exchange rate||Balance translated into|
||||||RMB as at 31/12/2017|
||Cash||||72,166,578.53|
||Including: USD|8,604,964.07||6.5342|56,226,553.06|
||Euro|29,432.79||7.8023|229,643.46|
||JPY|247,166,535.00||0.0579|14,306,740.54|
||GHS|947,358.23||1.4798|1,401,901.94|
||XAF|135,000.00||0.0129|1,739.53|
||Accounts receivable||||27,511,934.75|
||Including: USD|3,510,855.48||6.5342|22,940,631.88|
||JPY|78,854,077.00||0.0579|4,564,310.53|
||GHS|4,725.30||1.4798|6,992.34|
||Other receivables||||3,281,023.65|
||Including: USD|250,638.67||6.5342|1,637,723.20|
||GHS|1,110,514.19||1.4798|1,643,300.46|
||Accounts payable||||23,539,452.36|
||Including: USD|3,274,247.75||6.5342|21,394,602.72|
||JPY|37,054,915.00||0.0579|2,144,849.64|
||Other payables||||547,954.08|
||Including: USD|25,180.00||6.5342|164,531.16|
||JPY|259,110.62||1.4798|383,422.93|

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

5.45 Government grants
1.The Company has received government grants a total amount of RMB 28,894,400.00 in 2017, of which the amount of government grants related to income is 28,894,400.00.
2.government grants related to income
||||
|-|-|-|
|Item|Presented amount in profit and||
|||Presented item in profit and loss|
||loss of current period||
|One-time settlement financial|||
|||Non-operating income|
|subsidies|3,000,000.00||
|Tuna backhaul subsidy|2,534,600.00|Other income|
|International Fisheries Resources|||
|||Other income|
|Development and Utilization Grants|23,359,800.00||
|TOTAL|28,894,400.00|——|

6. Changes in consolidation scope
Shandong Zhonglu Haiyan Oceanic Fisheries Co., Ltd. set up subsidiaries AFRICA STAR FISHERIES LIMITE D and ZHONG GHA FOODS COMPANY LIMITED in The Republic of Ghana in
2017 and included them in the consolidated statements.
7. Interest in other entities
7.1 Interest in subsidiaries
7.1.1 Constitution of the Company
|||||
|-|-|-|-|
|Registrationplace|Principal placeof business|Businessnature|Shareholding(%)|
|ShandongQingdao|ShandongQingdao|Refrigerationtransportation|100.00|
|ShandongYantai|ShandongYantai|Foodprocessing|100.00|
|ShandongQingdao|ShandongQingdao|Oceanicfishing|81.26|
|The Republicof Panama|The Republicof Panama|Refrigerationtransportation|100.00|
|The Republicof Ghana|The Republicof Ghana|Oceanicfishing||

7.1.2 Significant non-wholly owned subsidiary
|||||
|-|-|-|-|
|Company name|Minorityshareholding(%)|Profit or lossattributable to theminority for thecurrent period|Dividendsannounced todistribute to theminority|
|Shandong Zhonglu HaiyanOceanic Fisheries Co., Ltd.|18.74%|3,637,503.31||

7.1.3 Main financial information of significant non-wholly owned subsidiary
As at 31/12/2017
||||||
|-|-|-|-|-|
|Current assets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|
|137,172,698.60|226,220,585.87|363,393,284.47|174,281,509.38|676,296.64|

(Continued)
As at 1/1/2017
||||||
|-|-|-|-|-|
|Current assets|Non-currentassets|Total assets|Currentliabilities|Non-currentliabilities|
|96,844,105.24|92,416,572.75|189,260,677.99|12,017,618.20|704,672.64|

|||||||||
|-|-|-|-|-|-|-|-|
|Subsidiary name|||Year ended 31/12/2017|||||
||||Operating|Net profit|Total comprehensivincome|e|Cash flows from|
||||income||||operating activities|
||Shandong Zhonglu Haiyan|113,240,985.79||19,410,369.85|11,897,091.30|4,008,314.66||
||Oceanic Fisheries Co., Ltd.|||||||

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

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

Note: Shandong State-owned assets investment Co. Ltd is the ultimate controller of the Company.
9.2 Subsidiaries of the Company
Details of subsidiaries refer to Note 7 Interest in other entities.
9.3 Other related parties
Name Relationship
Shandong Luxin Investment Holdings Ltd. Shareholder(≥5%)
Inspur General Software co., Ltd. A company that has a transaction in the current period controlled by the same parent company
9.4 Transactions with related parties
9.4.1 Purchase of goods/receipt of services and sales of goods/rendering of services
|||||||
|-|-|-|-|-|-|
|Type|Contents|Pricing modeanddeterminationprocess|Year ended 31/12/2017|||
||||Amount|Pct. of thesame typetransactions(%)|Amount|
|Purchase|Software|Market price|612,800.00|73.44||

9.4.2 Guarantee activities with related parties
|||||
|-|-|-|-|
|Guarantee|Amount ofguarantee|Start date|Maturity date|
|Shandongzhonglu Haiyan|100,000,000.00|2017-4-28|2018-2-28|

|||||
|-|-|-|-|
|Guarantee|Amount ofguarantee|Start date|Maturity date|
|Oceanic FisheriesCo., Ltd||||

9.4.3 Remuneration of key management
||
|-|
|Year ended 31/12/2017|
|2,245,100.00|

 10. Commitments and contingencies
10.1 Commitments
None
10.2 Contingencies
None
11. Post balance sheet events
The 14th meeting (temporary meeting) of the company's 6th board of directors deliberated andapproved< the Proposal On Increasing the Capital of the Holding Subsidiary and Gave up the Right to Increase the Capital in the Same Proportion> on Feb 9 2018. Thecompany’s holding subsidiary Shandong Zhonglu Haiyan Oceanic Fisheries Co., Ltd. intends to increase in capital and shares by original shareholders in order to ease the pressure of development funds tension and guarantee the capital turnover of its daily operation and new business. Shandong State-owned assets investment Co. Ltd contributed RMB10, 10,000 in currency; The Company contributed RMB 2,800, 000 in currency, and gave up the right to increase capital in the same proportion at the same time. After the increase, theCompany’s shareholding ratio was changed to59.05%, so as to continue to maintain the status of controlling shareholder. Shandong Zhonglu Haiyan Oceanic Fisheries Co., Ltd. is still included in the scope of consolidation of the Company.
12. Other significant events
12.1 Segment reporting
12.1.1 Determination basis of segment reporting and related accounting policy
Thecompany’s mainly business are oceanic fishing, aquatic products processing, vessels leasing and others.
The company disclosure the branches reports by the character and plate of its main bussiness.
12.1.2 Financial information of segment reporting
||||||
|-|-|-|-|-|
|Oceanicfishing|Vesselsleasing|Aquaticproductsprocessing|Others|Eliminationbetweenbranches|
|253,280,525.02|96,839,023.35|678,661,095.40|10,270,768.88|-122,704,566.00|
|171,981,908.37|58,302,833.08|640,447,606.34|10,353,845.03|-122,704,566.00|
|5,212,417.11|6,939.52|478,657.99|83,034.61||
|19,779,816.42|8,712,038.62|6,224,436.89|1,312,255.23||
|59,053,921.67|24,238,542.16|25,437,009.84|-10,829,632.03||
|682757.39|771199.32|1,290,896.34|||
|58,371,164.28|23,467,342.84|24,146,113.50|-10,829,632.03||
|612,762,811.13|249,570,186.46|363,039,088.24|249,305,578.69|-409,193,900.72|
|271,074,267.86|39,439,332.19|175,603,105.36|249,470,063.98|-409,193,900.72|

12.2 Other significant transactions and events which may be important to the investors' decision
In addition to the above matters, the companydoesn’t have other important matters to disclosure.
13. Notes to the financial statements of the Company
13.1 Accounts receivable
13.1.1 Accounts receivable by category
As at 31/12/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|14,421,567.93|100.00|5,937,507.66|
|14,421,567.93|100.00|5,937,507.66|

 As at 1/1/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|

As at 1/1/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT (%)|Amount|
|18,751,934.01|100.00|5,689,018.01|
|18,751,934.01|100.00|5,689,018.01|

13.1.1.1 Allowance for doubtful debts on portfolio
①Accounts receivable whose allowance for doubtful debts is using aging analysis method:
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowancerate(%)|Allowancefor doubtfuldebts|Balance|Allowancerate(%)|
|4,969,792.92|5.00|248,489.65|||
|5,689,018.01|100.00|5,689,018.01|5,689,018.01|100.00|
|10,658,810.93||5,937,507.66|5,689,018.01||

②Accounts receivable whose doubtful debts is made by riskless method:
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowancerate(%)|Allowancefordoubtfuldebts|Balance|Allowancerate(%)|
|3,762,757.00|||13,062,916.00||
|3,762,757.00|||13,062,916.00||

13.1.2 Accounts receivable due from the top five debtors of the Company are as follows:
|||
|-|-|
|Balance as at31/12/2017|Percentage in totalaccounts receivable (%)|
|4,965,502.92|34.43|
|3,762,757.00|26.09|
|3,600,962.12|24.97|
|430,625.10|2.99|
|158,154.98|1.10|
|12,918,002.12|89.57|

13.2 Other receivables
13.2.1 Other receivables
As at 31/12/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|68,363,431.90|100.00|3,673,656.91|
|68,363,431.90|100.00|3,673,656.91|

As at 1/1/2017
||||
|-|-|-|
|Balance|||
|Amount|PCT(%)|Amount|
|43,482,072.02|100.00|3,571,189.67|
|43,482,072.02|100.00|3,571,189.67|

① Other receivables whose allowance for doubtful debts is using aging analysis method:
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowancerate (%)|Allowancefor doubtfuldebts|Balance|Allowancerate (%)|
|683,139.79|5.00|34,156.99|551,508.88|5.00|
|501,682.83|10.00|50,168.29|211,193.41|10.00|
|276,406.49|30.00|82,921.95|210,636.11|30.00|
|155,408.10|50.00|77,704.05|59,397.23|50.00|
|3,428,705.63|100.00|3,428,705.63|3,429,605.42|100.00|
|5,045,342.84||3,673,656.91|4,462,341.05||

② Other receivables whose doubtful debts is made by riskless method:
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowancerate (%)|Allowance fordoubtful debts|Balance|Allowance rate(%)|

||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Allowancerate (%)|Allowance fordoubtful debts|Balance|Allowance rate(%)|
|63,318,089.06|||39,019,730.97||
|63,318,089.06|||39,019,730.97||

13.2.2 Other receivables by nature
||
|-|
|Balance as at 31/12/2017|
|63,318,089.06|
|5,045,342.84|
|68,363,431.90|

 13.2.3 Other receivables due from the top five debtors of the Company are as follows:
|||||
|-|-|-|-|
|Nature ofreceivable|Balance as at31/12/2017|Aging|Percentage intotal otherreceivables (%)|
|Internalcurrentaccount|24,716,830.96|More than 3years|36.16|
|Internalcurrentaccount|12,011,222.79|Within 1 year,1-2year、Morethan 3 years|17.57|
|Internalcurrentaccount|11,928,106.07|Within 1 year,|17.45|
|Internalcurrentaccount|6,207,490.00|Within 1 year,|9.08|
|Internalcurrentaccount|6,000,000.00|Within 1 year,|8.78|
||60,863,649.82||89.03|

13.3 Long-term equity investments
||||||
|-|-|-|-|-|
|As at 31/12/2017|||||
|Balance|Provisionforimpairment|Carryingamount|Balance|Provisionforimpairment|
|204,189,455.23||204,189,455.23|204,189,455.23||

||||
|-|-|-|
|204,189,455.23|204,189,455.23|204,189,455.23|

 13.3.1 Investment to subsidiaries
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Investee||As at 1/1/2017||Additions|Reductions|As at31/12/2017||Provision|Provision|
|||||||||for impairment in|for impairment|
|||||||||current period|as at 31/12/2017|
||HABITAT|12,476,145.60||||12,476,145.60||||
||INTERNATIONAL CORP.|||||||||
||Shandong Zhonglu Oceanic|22,869,513.38||||22,869,513.38||||
||Fisheries Transportation|||||||||
||Co., Ltd.|||||||||
||Shandong Zhonglu Oceanic|55,448,185.24||||55,448,185.24||||
||(Yantai) Food Co., Ltd.|||||||||
||Shandong zhonglu Haiyan|113,395,611.01||||113,395,611.01||||
||Oceanic Fisheries Co., Ltd.|||||||||
||Total||204,189,455.23||||204,189,455.23|||

13.4 Operating income and operating cost
||||
|-|-|-|
|Year ended 31/12/2017|||
|Income|Cost|Income|
|140,286,633.63|90,139,577.77|65,888,355.68|
|84,551,266.16|45,828,407.82|5,180,247.30|
|55,488,273.07|44,145,494.76|60,708,108.38|
|247,094.40|165,675.19||
|3,991,272.92|1,732,428.85|4,691,924.05|
|3,793,486.57|1,584,090.69|4,691,924.05|
|197,786.35|148,338.16||
|144,277,906.55|91,872,006.62|70,580,279.73|

 14. Supplementary information
14.1 Details of non-recurring gain or loss for the year
||
|-|
|Amount|
|422,100.74|
|6,401,185.48|

||
|-|
|Amount|
|-83,259.70|
|-197,626.19|
|-524,757.44|
|6,017,642.89|

The Company identifies the following items as "other items qualified the definition of non-recurring gain or loss" or classifies the following "non-recurring gain or loss items" as "recurring gain or loss items":
||
|-|
|Amount|
|23,359,800.00|

14.2 Return on equity and earnings per share
||||
|-|-|-|
|Weighted average return on equity (%)|||
|Year ended31/12/2017|Year ended31/12/2016|Year ended31/12/2017|
|13.79|8.88|0.3440|
|12.89|7.96|0.3213|

Section XII. Documents available for reference
I. Accounting statement of the Company with signature and seal from the person in charge of the Company, person in charge of the accounting works and person in charge of accounting;
II. Original auditing report carrying the seal of CPA and autography and seal of the accountants;
III. Original text of all documents of the Company as well as manuscript of the announcement that disclosed on website appointed by CSRC.
Shandong Zhonglu Oceanic Fisheries Co., Ltd.
Chairman: Lu Lianxing
6 March 2018