CHENGDE NANJIANG CO., LTD.
REPORT OF THE AUDITORS
DAHUASHENZI[2017]NO.006030(EN)
CHENGDENANJIANG CO., LTD.
REPORT OF THE AUDIORS& FINANCIAL STATEMENTS
YEAR 2016
CONTENTS PAGES
1.AUDITOR’S REPORT-------------------------------------------------------------------------------------1-2
2. THE (CONSOLIDATED) FINANCIAL STATEMENTS
STATEMENT OF (CONSOLIDATED) FINANCIAL POSITION -------------------------------------------1-3
STATEMENT OF (Parent Company) FINANCIAL POSITION ----------------------------------------- 4-6
STATEMENT OF (CONSOLIDATED) COMPREHENSIVE INCOME-------------------------------------7-8
STATEMENT OF (Parent Company) COMPREHENSIVE INCOME---------------------------------------9
STATEMENT OF (CONSOLIDATED) CHANGES INOWNERS’ EQUITY -----------------------------10-13
STATEMENT OF (Parent Company) CHANGES INOWNERS’ EQUITY ----------------------------14-17
STATEMENT OF (CONSOLIDATED) CASH FLOWS ---------------------------------------------------------18
STATEMENT OF (Parent Company) CASH FLOWS---------------------------------------------------------19
3.NOTES TO (CONSOLIDATED)FINANCIAL STATEMENTS ------------------------------------------1-75
Theauditors’ report and the accompanying financial statements are English translations
of the Chineseauditors’ report andfinancial statements.
In case the English version does not conform to the Chinese version, the Chinese version is the standard.
Auditors’Report
DAHUASHENZI[2017]NO.006030(EN)
To all shareholders of CHENGDE NANJIANG CO., LTD.,
We have audited the accompanying financial statements of CHENGDE NANJIANG CO., LTD. (hereinafter referred to as―“CDNJ”), includingtheconsolidatedandcompany’sbalancesheets on December 31, 2016,theconsolidatedandcompany’sincomestatements,theconsolidatedandcompany’s cashflowstatements andtheconsolidatedandcompany’sstatementsofchangesinowners’equityforthe year 2016andnotestofinancialstatements.
I. Management's Responsibility for the Financial Statements
The management of CDNJis responsible for thepreparationandthetrueandfairpresentationofthesefinancialstatements.Theseresponsibilitiesinclude: (1) prepare the financial statements inaccordancewithAccountingStandardforBusinessEnterprisesandChinaAccountingSystemForBusiness
Enterprisesto fairly and truly reflect situation of the Company; (2) design, implement and maintain the internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
II.Auditor’s responsibility
Our responsibilityis to express opinions on these financial statements based on our audit. We conducted our audits in accordance with Auditing Standards for CPAs of China. Weconductedour auditin accordancewiththeStandardsonAuditing forCertified PublicAccountants.Thosestandardsrequirethat wecomply withethicalrequirementsand planand perform theauditto obtain reasonableassurancewhether thefinancial statementsfreefrommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. Inmakingthoseriskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationofthefinancialstatementsand
fairstatementinordertodesignauditproceduresthatareappropriateinthecircumstances.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Audit opinion
In our opinion, the above financial statements of CDNJ have been prepared in accordance with the Accounting Standards for Business Enterprises in all material respects and give a fair view of the
Company and itssubsidiaries’ consolidated financial positions as at 31 Dec. 2016 and the consolidated business results and cash flows for the year 2016, as well as theCompany’s financial positions as at 31 Dec. 2016 and business results and cash flows for the year then ended.
Da Hua Certified Public Accountants
(Special General Partnership)
Certified PublicAccountants：
Beijing, thePeople’s Republic of China
April 26, 2017
STATEMENT OF (CONSOLIDATED) FINANCIAL POSITION
December 31, 2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Ending balance|Beginning balance|
|Current assets:||||
|Monetary funds|1|132,970,162.23|88,237,416.98|
|Derivative financial assets||||
|Financial assets measured at fair value with changes included incurrent profits and losses||||
|Notes receivable||||
|Accounts receivable|2|77,884.75|156,113.53|
|Prepayments|3|18,250,328.13|1,105,122.95|
|Interest receivable||||
|Dividends receivable||||
|Other receivables|4|67,805,513.40|88,149,302.51|
|Inventory|5|341,740,059.14|619,241,374.72|
|Divided into assets held for sale||||
|Non-current assets due within one year||333,716.08||
|Other current assets|6|19,177,045.07|33,761,457.51|
|Total current assets||580,354,708.80|830,650,788.20|
|Non-current assets:||||
|Available-for-sale financial assets||22,784,131.93||
|Held-to-maturity investment||||
|Long-term accounts receivable||||
|Long-term equity investments|7|1,022,730.46|2,343,974.43|
|Investment property||4,831,153.75||
|Fixed assets|8|14,980,260.33|8,905,699.17|
|Construction in progress||||
|Biological assets|9|42,133.76|148,509.76|
|Engineering material||||
|Liquidation of fixed assets||||
|Intangible assets|10|1,073,407.21|6,392,510.57|
|Development expenses||641,604.82|172,416.18|
|Goodwill|11|||
|Long-term deferred expenses|12|160,010.87|202,353.97|
|Deferred income tax assets|13|775,645.41|775,645.41|
|Other non-current assets|14|91,040.00|5,201,365.53|
|Total non-current assets||46,402,118.54|24,142,475.02|
|Total assets||626,756,827.34|854,793,263.22|

The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative: Accounting supervisor: Legal representative of the accounting firm:
STATEMENT OF (CONSOLIDATED) FINANCIALPOSITION（Continued）
December 31, 2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Ending balance|Beginning balance|
|Current liabilities:||||
|Short-term loans||||
|Financial liabilities measured at fair value with changes included incurrent profits and losses||||
|Notes payable|16|||
|Accounts payable|17|12,889,329.86|35,013,234.30|
|Advance received|18|243,917,918.70|435,991,938.57|
|Payroll payable|19|1,937,682.44|9,929.42|
|Tax payable|20|1,359,022.01|21,343.61|
|Interests payable||||
|Dividends payable||||
|Other payables|21|4,476,864.40|12,746,101.70|
|Divided into liabilities held for sale||||
|Non-current liabilities due within one year||||
|Other current liabilities||||
|Total current liabilities||264,580,817.41|483,782,547.60|
|Non-current liabilities:||||
|Long-term loans||||
|Bonds payable||||
|Including: preferred shares||||
|Perpetual capital securities||||
|Long-term payables||||
|Long-term payroll payable||||
|Special payables||||
|Estimated liabilities||||
|Deferred income||||
|Deferred income tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||||
|Total liabilities||264,580,817.41|483,782,547.60|
|Owners' equity:||||
|Share capital|22|706,320,000.00|706,320,000.00|
|Other equity instruments||||
|Including: preferred shares||||
|Perpetual capital securities||||
|Capital reserve|23|463,681,309.55|452,767,424.55|
|Less: treasury stocks||||
|Other comprehensive income||||
|Special reserves||||

|||||
|-|-|-|-|
|Item|Note|Ending balance|Beginning balance|
|Surplus reserve|24|76,791,550.17|76,791,550.17|
|Undistributed profits|25|-886,966,408.74|-883,628,320.90|
|Total owners' equity attributable to parent company||359,826,450.98|352,250,653.82|
|Minority shareholders' equity||2,349,558.95|18,754,592.06|
|Total shareholders' equity||362,176,009.93|371,005,245.88|
|Total liabilities and shareholders' equity||626,756,827.34|854,787,793.48|

The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative: Accounting supervisor: Legal representative of the accounting firm:
STATEMENT OF (Parent Company) FINANCIAL POSITION
December 31, 2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Ending balance|Beginning balance|
|Current assets:||||
|Monetary funds||69,381,131.38|25,647,536.08|
|Derivative financial assets||||
|Financial assets measured at fair value with changes includedin current profits and losses||||
|Notes receivable||||
|Accounts receivable||||
|Prepayments||18,240,099.06|10,000.00|
|Interest receivable||||
|Dividends receivable||||
|Other receivables|1|23,582,767.33|13,893,565.73|
|Inventory||341,419,337.97|599,128,751.32|
|Divided into assets held for sale||||
|Non-current assets due within one year||||
|Other current assets||18,152,929.82|32,139,201.03|
|Total current assets||470,776,265.56|545,809,329.99|
|Non-current assets:||||
|Available-for-sale financial assets||22,784,131.93||
|Held-to-maturity investment||||
|Long-term accounts receivable||||
|Long-term equity investments|2|178,114,466.37|202,284,836.37|
|Investment property||||
|Fixed assets||2,100,122.12|1,906,708.89|
|Construction in progress||||
|Biological assets||||
|Engineering material||||
|Liquidation of fixed assets||||
|Intangible assets||||
|Development expenses||||
|Goodwill||||
|Long-term deferred expenses||142,798.37|130,322.92|
|Deferred income tax assets||750.00|750.00|
|Other non-current assets||||
|Total non-current assets||203,142,268.79|204,322,618.18|
|Total assets||673,918,534.35|875,141,672.34|

The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative: Accounting supervisor: Legal representative of the accounting firm:
STATEMENT OF (Parent Company) FINANCIALPOSITION（Continued）
December 31, 2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Ending balance|Beginning balance|
|Current liabilities:||||
|Short-term loans||||
|Financial liabilities measured at fair value with changes included in current profits and losses||||
|Notes payable||||
|Accounts payable||12,777,756.02|25,479,538.71|
|Advance received||242,747,445.35|430,730,271.19|
|Payroll payable||576,458.22|628.22|
|Tax payable||1,340,388.72|2,174.06|
|Interests payable||||
|Dividends payable||||
|Other payables||237,841,253.38|246,243,610.32|
|Divided into liabilities held for sale||||
|Non-current liabilities due within one year||||
|Other current liabilities||||
|Total current liabilities||495,283,301.69|702,456,222.50|
|Non-current liabilities:||||
|Long-term loans||||
|Bonds payable||||
|Including: preferred shares||||
|Perpetual capital securities||||
|Long-term payables||||
|Long-term payroll payable||||
|Special payables||||
|Estimated liabilities||||
|Deferred income||||
|Deferred income tax liabilities||||
|Other non-current liabilities||||
|Total non-current liabilities||||
|Total liabilities||495,283,301.69|702,456,222.50|
|Owners' equity:||||
|Share capital||706,320,000.00|706,320,000.00|
|Other equity instruments||||
|Including: preferred shares||||
|Perpetual capital securities||||
|Capital reserve||456,569,124.55|452,767,424.55|
|Less: treasury stocks||||
|Other comprehensive income||||
|Special reserves||||
|Surplus reserve||76,791,550.17|76,791,550.17|

|||||
|-|-|-|-|
|Item|Note|Ending balance|Beginning balance|
|Undistributed profits||-1,061,045,442.06|-1,063,193,524.88|
|Total owners' equity attributable to parent company||||
|Minority shareholders' equity||||
|Total shareholders' equity||178,635,232.66|172,685,449.84|
|Total liabilities and shareholders' equity||673,918,534.35|875,141,672.34|

The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative: Accounting supervisor: Legal representative of the accounting firm:
STATEMENT OF (CONSOLIDATED) COMPREHENSIVE INCOME
2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Amountincurred in thisyear|Amount incurred inprevious year|
|I. Total operating income||367,898,631.53|141,221,936.00|
|Including: operating income|26|367,898,631.53|141,221,936.00|
|II. Total operating cost||373,893,460.5|175,958,802.74|
|Including: operating cost|26|314,642,164.52|132,726,960.01|
|Operating taxes and surcharges|27|26,312,343.93|3,682,470.14|
|Sales expenses|28|350,486.06|2,411,839.88|
|Management expenses|28|26,421,215.87|30,697,053.62|
|Financial expenses|28|-1,269,366.77|33,089.91|
|Assets impairment losses|29|7,436,616.89|6,407,389.18|
|Add: income from changes in fair value (―-‖ indicates the loss)||||
|Investment profit (―-‖ indicates the loss)|30|-3,459,156.75|11,424,439.83|
|III. Operating profit (“-” indicates the loss)||-9,453,985.72|-23,312,426.91|
|Add: non-operating income|31|5,070,622.61|104,222,251.52|
|Including: gains from disposal of non-current assets||4,923,285.64|104,222,251.52|
|Less: non-operating expenditure|32|794,508.49|6,184,684.92|
|Including: loss from disposal of non-current assets||122,581.06|776,688.73|
|IV. Total profit (“-” indicates the total loss)||-5,177,871.60|74,725,139.69|
|Less: income tax|33|-2,211,707.50|22,360,936.07|
|V. Net profit (―-‖ indicates the net loss)||-2,966,164.10|52,364,203.62|
|Net profits attributable to the parent company shareholders||3,760,806.51|58,872,707.12|
|Gain and loss of minority shareholders||-6,726,970.61|-6,503,033.76|
|VI. After-tax net of other comprehensive incomes||||
|After-tax net of other comprehensive incomes owned by the owner of the parent company||||
|(I) Other comprehensive incomes that cannot be classified into profit and loss in the future||||
|1. Re-measurement of changes in net liabilities or net assets in defined benefit plan||||
|2. Share in other comprehensive incomes that cannot be reclassified into profit and loss in investee byequity method||||
|(II) Other comprehensive incomes that would be classified into profit and loss in the future||||
|1. Shares in other comprehensive incomes that can be reclassified into profit and loss in investee by equitymethod in the future||||
|2. Loss and profit of change in fair value of available-for-sale financial assets||||
|3. Loss and profit of available-for-sale financial assets of held-to-maturity investments||||
|4. Effective part of hedge profit and loss of cash flow||||
|5. Translation difference in the foreign currency financial statement||||
|6. Others||||
|Net of tax from other comprehensive incomes owned by minority stockholders||||
|VII. Total comprehensive income||-2,966,164.10|59,468,567.71|
|Total consolidated income attributable to the shareholder of the parent company||3,760,806.51|65,971,601.47|

||||
|-|-|-|
|Total consolidated income attributable to minority shareholders|-6,726,970.61|-6,503,033.76|
|VIII. Earnings per share:|||
|(I) Basic earnings per share|0.01|0.08|
|(II) Diluted earnings per share|0.01|0.08|

STATEMENT OF (Parent Company) COMPREHENSIVE INCOME
2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Amount incurred inthis year|Amount incurredin previous year|
|I. Total operating income||356,304,109.02|43,323,398.13|
|Including: operating income|3|356,304,109.02|43,323,398.13|
|II. Total operating cost||11,260,016.63|44,782,333.72|
|Including: operating cost|3|299,798,387.73|28,048,885.03|
|Operating taxes and surcharges||25,509,060.91|3,540,970.51|
|Sales expenses||128,405.00|185,090.00|
|Management expenses||15,272,547.08|12,727,362.70|
|Financial expenses||-279,587.26|-143,391.30|
|Assets impairment losses||11,260,016.63|423,416.78|
|Add: income from changes in fair value (―-‖ indicates the loss)||||
|Investment profit (―-‖ indicates the loss)||-2,327,984.14|-4,608,125.64|
|III. Operating profit (“-” indicates the loss)||2,287,294.79|-6,067,061.23|
|Add: non-operating income||105,833.04|50,000.00|
|Including: gains from disposal of non-current assets||||
|Less: non-operating expenditure||245,045.01|4,339,480.51|
|Including: loss from disposal of non-current assets||||
|IV. Total profit (“-” indicates the total loss)||2,148,082.82|-10,356,541.74|
|Less: income tax||||
|V. Net profit (―-‖ indicates the net loss)||2,148,082.82|-10,356,541.74|
|VI. After-tax net of other comprehensive incomes||||
|After-tax net of other comprehensive incomes owned by the owner of the parent company||||
|(I) Other comprehensive incomes that cannot be classified into profit and loss in thefuture||||
|1. Re-measurement of changes in net liabilities or net assets in defined benefit plan||||
|2. Share in other comprehensive incomes that cannot be reclassified into profit andloss in investee by equity method||||
|(II) Other comprehensive incomes that would be classified into profit and loss in thefuture||||
|1. Shares in other comprehensive incomes that can be reclassified into profit and lossin investee by equity method in the future||||
|2. Loss and profit of change in fair value of available-for-sale financial assets||||
|3. Loss and profit of available-for-sale financial assets of held-to-maturityinvestments||||
|4. Effective part of hedge profit and loss of cash flow||||
|5. Translation difference in the foreign currency financial statement||||
|6. Others||||
|VII. Total comprehensive income||2,148,082.82|-10,356,541.74|

STATEMENT OF (CONSOLIDATED) CHANGES INOWNERS’ EQUITY
2016
Prepared by: CHENGDE NANJIANG Co., Ltd.Unit: Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Current year|||||||||||||
||Total shareholders' equity attributed to parent company|||||||||||Minorityshareholders'equity|Total owners'equity|
||Share capital|Other equity instruments|||Capitalreserve|Less:treasurystocks|Othercomprehensive income|Specialreserve|Surplusreserve|Generalriskprovisions|Undistributedprofits|||
|||Preferredshare|Perpetualcapitalsecurities|Others||||||||||
|I. Balances at the end of previous year|706,320,000.00||||459,871,788.64||||76,791,550.17||-890,727,215.25|18,754,592.05|371,010,715.61|
|Add: profit or loss from accountingpolicy changes||||||||||||||
|Fund for corrections of errors ofprevious period||||||||||||||
|Corporate combination under commoncontrol||||||||||||||
|Others||||||||||||||
|II. Balances at the beginning of this year|706,320,000.00||||459,871,788.64||||76,791,550.17||-890,727,215.25|18,754,592.05|371,010,715.61|
|III. Increased/decreased amount thisyear (“-” indicates decrease)|||||3,809,520.91||||||3,760,806.51|-16,405,033.10|-8,834,705.68|
|(I) Total comprehensive income|||||||||||3,760,806.51|-6,726,970.61|-8,834,705.68|
|(II) Capital paid in and reduced byshareholders|||||3,809,520.91|||||||-9,678,062.49|-5,868,541.58|
|1. Ordinary share invested byshareholders|||||3,801,700.00|||||||-9,678,062.49|-5,876,362.49|

||||||||
|-|-|-|-|-|-|-|
|2. Capital invested by other equityinstruments holders|||||||
|3. Amounts of share-based paymentsrecognized in shareholders' equity|||||||
|4. Others||7,820.91||||7,820.91|
|(III) Profit distribution|||||||
|1. Appropriation to surplus reserves|||||||
|2. Appropriation of general riskreserves|||||||
|3. Distribution to owners (orshareholder)|||||||
|4. Others|||||||
|(IV) Internal carry-forward of shareholders’equity|||||||
|1. Capital reserves transferred to sharecapital|||||||
|2. Surplus reserves transferred to sharecapital|||||||
|3. Surplus reserves for making uplosses|||||||
|4. Others|||||||
|(V) Special reserve|||||||
|1. Withdrawn amount of this year|||||||
|2. Utilization amount of this year|||||||
|(VI) Others|||||||
|IV. Balance at the end of this year|706,320,000.00|463,681,309.55|76,791,550.17|-886,966,408.74|2,349,558.95|362,176,009.93|

STATEMENT OF (CONSOLIDATED) CHANGES INOWNERS’ EQUITY
2015
Prepared by: CHENGDE NANJIANG Co., Ltd.Unit: Yuan
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Current year|||||||||||||
||Total shareholders' equity attributed to parent company|||||||||||Minorityshareholders' equity|Total owners'equity|
||Share capital|Other equity instruments|||Capitalreserve|Less:treasurystocks|Othercomprehensive income|Specialreserve|Surplusreserve|Generalriskprovisions|Undistributedprofits|||
|||Preferredshare|Perpetualcapitalsecurities|Others||||||||||
|I. Balances at the end of previous year|706,320,000.00||||456,470,388.64||||76,791,550.17||-949,599,922.37|20,257,625.81|310,239,642.25|
|Add: profit or loss from accountingpolicy changes||||||||||||||
|Fund for corrections of errors ofprevious period||||||||||||||
|Corporate combination under commoncontrol||||||||||||||
|Others||||||||||||||
|II. Balances at the beginning of this year|706,320,000.00||||456,470,388.64||||76,791,550.17||-949,599,922.37|20,257,625.81|310,239,642.25|
|III. Increased/decreased amount thisyear (“-” indicates decrease)|||||3,401,400.00||||||65,971,601.47|-1,503,033.76|60,765,603.62|
|(I) Total comprehensive income|||||||||||65,971,601.47|-6,503.033.76|59,468,567.71|
|(II) Capital paid in and reduced byshareholders|||||3,401,400.00|||||||5,000,000|1,297,035.91|
|1. Ordinary share invested byshareholders|||||3,401,400.00|||||||5000000|5000000|

||||||||
|-|-|-|-|-|-|-|
|2. Capital invested by other equityinstruments holders|||||||
|3. Amounts of share-based paymentsrecognized in shareholders' equity|||||||
|4. Others||||||-3702964.09|
|(III) Profit distribution|||||||
|1. Appropriation to surplus reserves|||||||
|2. Appropriation of general riskreserves|||||||
|3. Distribution to owners (orshareholder)|||||||
|4. Others|||||||
|(IV) Internal carry-forward of shareholders’equity|||||||
|1. Capital reserves transferred to sharecapital|||||||
|2. Surplus reserves transferred to sharecapital|||||||
|3. Surplus reserves for making uplosses|||||||
|4. Others|||||||
|(V) Special reserve|||||||
|1. Withdrawn amount of this year|||||||
|2. Utilization amount of this year|||||||
|(VI) Others|||||||
|IV. Balance at the end of this year|706,320,000.00|459,871,788.64|76,791,550.17|-883,628,320.90|18,754,592.05|371,005,245.87|

STATEMENT OF (Parent Company) CHANGES INOWNERS’ EQUITY
2016
Prepared by: CHENGDE NANJIANG Co., Ltd.Unit: Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Current year|||||||||||
||Share capital|Other equity instruments|||Capitalreserve|Less:treasurystocks|Othercomprehensiveincome|Specialreserve|Surplusreserve|Undistributedprofits|Total owners'equity|
|||Preferredshare|Perpetual capitalsecurities|Others||||||||
|I. Balances at the end of previous year|706,320,000.00||||452,767,424.55||||76,791,550.17|-1,063,193,524.88|172,685,449.84|
|Add: profit or loss from accounting policychanges||||||||||||
|Fund for corrections of errors of previousperiod||||||||||||
|Others||||||||||||
|II. Balances at the beginning of this year|706,320,000.00||||452,767,424.55||||76,791,550.17|-1,063,193,524.88|172,685,449.84|
|III. Increased/decreased amount this year (“-”indicates decrease)|||||3,801,700.00|||||2,148,082.82|5,949,782.82|
|(I) Total comprehensive income||||||||||2,148,082.82|2,148,082.82|
|(II) Capital paid in and reduced byshareholders|||||3,801,700.00||||||3,801,700.00|
|1. Ordinary share invested by shareholders|||||3,801,700.00||||||3,801,700.00|
|2. Capital invested by other equityinstruments holders||||||||||||
|3. Amounts of share-based paymentsrecognized in shareholders' equity||||||||||||

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Current year|||||||||||
||Share capital|Other equity instruments|||Capitalreserve|Less:treasurystocks|Othercomprehensiveincome|Specialreserve|Surplusreserve|Undistributedprofits|Total owners'equity|
|||Preferredshare|Perpetual capitalsecurities|Others||||||||
|4. Others||||||||||||
|(III) Profit distribution||||||||||||
|1. Appropriation to surplus reserves||||||||||||
|2. Distribution to owners (or shareholder)||||||||||||
|3. Others||||||||||||
|(IV) Internal carry-forward of shareholders’equity||||||||||||
|1. Capital reserves transferred to sharecapital||||||||||||
|2. Surplus reserves transferred to sharecapital||||||||||||
|3. Surplus reserves for making up losses||||||||||||
|4. Others||||||||||||
|(V) Special reserve||||||||||||
|1. Withdrawn amount of this year||||||||||||
|2. Utilization amount of this year||||||||||||
|(VI) Others||||||||||||
|IV. Balance at the end of this year|706,320,000.00||||456,569,124.55||||76,791,550.17|-1,061,045,442.06|178,635,232.66|

STATEMENT OF (Parent Company) CHANGES INOWNERS’ EQUITY
2015
Prepared by: CHENGDE NANJIANG Co., Ltd.Unit: Yuan
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Current year|||||||||||
||Share capital|Other equity instruments|||Capital reserve|Less:treasurystocks|Othercomprehensiveincome|Specialreserve|Surplusreserve|Undistributedprofits|Total owners'equity|
|||Preferred share|Perpetual capitalsecurities|Others||||||||
|I. Balances at the end of previous year|706,320,000.00||||449,366,024.55|||76,791,550.17||-1,052,836,983.14|179,640,591.58|
|Add: profit or loss from accounting policychanges||||||||||||
|Fund for corrections of errors of previousperiod||||||||||||
|Others||||||||||||
|II. Balances at the beginning of this year|706,320,000.00||||449,366,024.55|||76,791,550.17||-1,052,836,983.14|179,640,591.58|
|III. Increased/decreased amount this year (“-”indicates decrease)|||||3,401,400.00|||||-10,356,541.74|-6,955,141.74|
|(I) Total comprehensive income||||||||||-10,356,541.74|-10,356,541.74|
|(II) Capital paid in and reduced byshareholders|||||3,401,400.00||||||3,401,400.00|
|1. Ordinary share invested by shareholders|||||3,401,400.00|||||||
|2. Capital invested by other equityinstruments holders||||||||||||
|3. Amounts of share-based payments|||||||||||3,401,400.00|

|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Item|Current year|||||||||||
||Share capital|Other equity instruments|||Capital reserve|Less:treasurystocks|Othercomprehensiveincome|Specialreserve|Surplusreserve|Undistributedprofits|Total owners'equity|
|||Preferred share|Perpetual capitalsecurities|Others||||||||
|recognized in shareholders' equity||||||||||||
|4. Others||||||||||||
|(III) Profit distribution||||||||||||
|1. Appropriation to surplus reserves||||||||||||
|2. Distribution to owners (or shareholder)||||||||||||
|3. Others||||||||||||
|(IV) Internal carry-forward of shareholders’equity||||||||||||
|1. Capital reserves transferred to sharecapital||||||||||||
|2. Surplus reserves transferred to sharecapital||||||||||||
|3. Surplus reserves for making up losses||||||||||||
|4. Others||||||||||||
|(V) Special reserve||||||||||||
|1. Withdrawn amount of this year||||||||||||
|2. Utilization amount of this year||||||||||||
|(VI) Others||||||||||||
|IV. Balance at the end of this year|706,320,000.00||||452,767,424.55|||76,791,550.17||-1,063,193,524.88|172,685,449.84|
|IV. Balance at the end of this year|706,320,000.00||||449,366,024.55||||76,791,550.17|-1,052,836,983.14|179,640,591.58|

STATEMENT OF (CONSOLIDATED) CASH FLOWS
2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Amount incurred inthis year|Amount incurred in previous year|
|I. Cash flows from operating activities:||||
|Cash received from sales of commodities and provision of services||193,653,061.42|283,465,295.71|
|Refunds of taxes and levies||2,869,946.68|302,041.39|
|Cash received from other operating activities|34|21,061,688.34|43,239,009.63|
|Sub-total of cash inflows from operating activities||217,584,696.44|327,006,346.73|
|Cash paid for purchasing goods and services||86,320,676.70|179,630,816.56|
|Cash paid to and on behalf of employees||19,481,823.26|11,308,046.10|
|Payments of taxes and rates||15,171,612.52|41,378,704.14|
|Other cash paid relating to operating activities|34|42,126,232.63|74,876,722.08|
|Sub-total of cash outflows from operating activities||163,100,345.11|307,194,288.88|
|Net cash flows from operating activities||54,484,351.33|19,812,057.85|
|II. Cash flows from investing activities:||||
|Cash received from withdrawal of investments||||
|Cash received from returns on investments||25,196,105.00||
|Net cash received from disposal of fixed assets, intangible assets & other long-term assets||-2,877,155.25|28,598,914.86|
|Net cash received from disposal of subsidiaries and other business units||||
|Other cash received relating to investing activities|34|||
|Sub-total of cash inflows from investing activities||22,318,949.75|28,598,914.86|
|Cash paid to acquire fixed assets, intangible assets and other long-term assets||2,078,709.89|2,421,206.16|
|Cash paid to acquire investments||29,800,000.00||
|Net cash received from payment of subsidiaries and other business units||||
|Cash payments relating to other investment activities||||
|Sub-total of cash outflows from investing activities||31,878,709.89|2,421,206.16|
|Net cash flows from investing activities||-9,559,760.14|26,177,708.70|
|III. Cash flows from financing activities:||||
|Cash received from capital contribution|||5,000,000|
|Cash received from borrowings||||
|Cash from issue of bonds||||
|Other cash received relating to financing activities|34|||
|Sub-total of cash inflows from financing activities|||5,000,000.00|
|Cash repayments of amounts borrowed||||
|Cash payments for interest expenses and distribution of dividends or profit||||
|Other cash payments relating to financing activities|34|3,023,878.08|2,277,554.26|
|Sub-total of cash outflows from financing activities||3,023,878.08|2,277,554.26|
|Net cash flows from financing activities||-3,023,878.08|2,722,445.74|
|IV. Influence of exchange rate change on cash and cash equivalents||526,444.27|249,105.26|
|V. Net increase of cash and cash equivalents||42,427,157.38|48,961,317.55|
|Add: balance of cash and cash equivalents at the beginning of period||84,543,677.45|35,582,359.90|
|VI. Balance of cash and cash equivalents at the end of period||126,970,834.83|84,543,677.45|

STATEMENT OF (Parent Company) CASH FLOWS
2016
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
|||||
|-|-|-|-|
|Item|Note|Amount incurred in this year|Amount incurred in previous year|
|I. Cash flows from operating activities:||||
|Cash received from sales of commodities and provision of services||181,626,478.47|167,953,196.30|
|Refunds of taxes and levies||625,557.55|191094.28|
|Cash received from other operating activities||85,862,267.01|50,972,901.14|
|Sub-total of cash inflows from operating activities||268,114,303.03|219,117,191.72|
|Cash paid for purchasing goods and services||70,596,989.77|73,096,022.78|
|Cash paid to and on behalf of employees||8,770,121.67|6,559,550.54|
|Payments of taxes and rates||13,575,103.85|17,931,811.23|
|Other cash paid relating to operating activities||118,982,746.17|68,128,661.55|
|Sub-total of cash outflows from operating activities||211,924,961.46|165,716,046.10|
|Net cash flows from operating activities||56,189,341.57|53,401,145.62|
|II. Cash flows from investing activities:||||
|Cash received from withdrawal of investments||||
|Cash received from returns on investments||42,672,015.86||
|Net cash received from disposal of fixed assets, intangible assets & other long-term assets||||
|Net cash received from disposal of subsidiaries and other business units||||
|Other cash received relating to investing activities||||
|Sub-total of cash inflows from investing activities||42,672,015.86||
|Cash paid to acquire fixed assets, intangible assets and other long-term assets||127,466.50|1,044,876.13|
|Cash paid to acquire investments||55,000,000.00|45,000,000.00|
|Net cash received from payment of subsidiaries and other business units||||
|Cash payments relating to other investment activities||||
|Sub-total of cash outflows from investing activities||55,127,466.50|46,044,876.13|
|Net cash flows from investing activities||-12,455,450.64|-46,044,876.13|
|III. Cash flows from financing activities:||||
|Cash received from capital contribution||||
|Cash received from borrowings||||
|Cash from issue of bonds||||
|Other cash received relating to financing activities||||
|Sub-total of cash inflows from financing activities||||
|Cash repayments of amounts borrowed||||
|Cash payments for interest expenses and distribution of dividends or profit||||
|Other cash payments relating to financing activities||2,309,878.89|2,309,878.89|
|Sub-total of cash outflows from financing activities||2,309,878.89|2,309,878.89|
|Net cash flows from financing activities||-2,309,878.89|-2,309,878.89|
|IV. Influence of exchange rate change on cash and cash equivalents||||
|V. Net increase of cash and cash equivalents||40,710,012.85|5,046,390.60|
|Add: balance of cash and cash equivalents at the beginning of period||22,671,791.13|17,625,400.53|
|VI. Balance of cash and cash equivalents at the end of period||63,381,803.98|22,671,791.13|

NOTES TO FINANCIAL STATEMENTS
December 31, 2016
CURRENCY UNIT: RMB I. Company Profile
1. Background
The predecessor of ChengDe NanJiang Corporation, Ltd. (“the Company”) was ChengDe DiXian Textile Corporation, Ltd (“DiXian”). According to the approval of JiGuBan(1999) No.36 issued by thePeople’s Government of HeBei Province, DiXian was established in thePeople’s Republic of China (the “PRC”) and obtained the Corporate Business License from HeBei Administration for Industry and Commerce (“CSRC”). The initial registered capital of DiXian was RMB 100,000,000 (divided into 100,000,000 shares, one Yuan per share): ShuXian Wang contributed RMB 85,100,000, accounting for85.1% of the total; HeBei province ChengDe County North Industrial Company contributed RMB 7,564,400, accounting for7.56% of the total; ZhengSong Wang contributed RMB 5,444,400, accounting for5.44% of the total; ChengDe LongFeng Cosmetic Co., Ltd. contributed RMB 945,600, accounting for0.95% of the total; Chengde County Board Town of Red Star plastic products factory contributed RMB 945,600, accounting for0.95% of the total.
According to the issue[2000] 121 by the China Securities Regulatory Commission on August 29, 2000, the company issued 100,000,000 foreign capital stocks listed in China (hereinafter referred to as the " B ")on September 19, 2000 on Shenzhen stock exchange; and excised the overallotment option to increase issuing 15,000,000 B shares from September 29 to October 29, 2000. The registered capital of the company after the issuance of B shares was RMB 215,000,000, and was divided into 215,000,000 shares with one Yuan of face value per share.
According to the resolution of theshareholder’s meeting on March 12, 2002, The Company allotted 43,000,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every 10 shares, and meanwhile increased 107500000 shares to all of the shareholding by transferring from capital reserve according to 5 shares free for every 10 shares. The registered capital of the company was changed to RMB 365,500,000 after it allotted bonus shares and increased by transferring.
According to the resolution of theshareholder’s meeting on July 22, 2003, The Company allotted 73,100,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every 10 shares, and the registered capital of the company was changed to RMB 438,600,000 after such bonus shares were allotted.
On March 11, 2004, approved by the Ministry of Commerce of the People's Republic of China, the company was allowed to be changed to Foreign-Funded Joint Stock Companies Limited.
On July, 2004, the company increased 150,000,000 B shares directionally, during which 91,300,000 shares were subscribed inHK$, and another 58,700,000 shares were subscribed in RMB, upon check by China Securities Regulatory Commission with the issue[2004] No.101.
According to the resolution of theshareholder’s meeting on June 8, 2006, The Company allotted 117,720,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every 10 shares,
On August 4, 2008, according to the judgment ruled by Shenzhen Intermediate People's court,
112,324,800 sponsor shares held by ShuXian Wang was compensated to Rong Chen for RMB 45,491,544 Yuan, and on August 15, 2008, 96,000,000 sponsor shares held by ShuXian Wang was compensated to Rong Chen for RMB 38,880,000 Yuan according to the judgment ruled by Dalian Intermediate People's court.
On November 11, 2009, according to “reply to the approval of capital increase, and change of share as well as name of Chengde DiXian Knitting Co., Ltd” with No.143[2009] by Bureau of Commerce of Hebei Province, it agreed that the company increased 150,000,000 foreign shares listed in China in 2004 and allotted 2 bonus shares free for every 10 shares in 2006; and it agreed that 208324800 shares of DiXian stock held by ShuXian Wang. DiXian was changed to Rong Chen; as well as the name of the company changed to Chengde DaLu Co., Ltd. The total share capital was 706,320,000 shares and the registered capital of the company was RMB 706,320,000 Yuan after the company increased and allotted, which has been validated by ZhongLei CPA Co., Ltd, who provided the capital verification report with[2010] No. 10009.
On August 23 ,2011, the company renewed its Corporate Business License that was issued by HeBei Administration for Industry and Commerce. The new registration number was 130000400001225. Both registered capital and paid-in capital are RMB 706,320,000. The company type was a foreign joint stock limited company.
On April 6, 2012, an equity transfer agreement was signed between corporate shareholder Rong Chen and Dong Wang. According to the agreement, Rong Chen transferred 208,324,800 shares, which occupied29.49% of the total share capital, to Dong Wang. After the transfer of equity, Shareholders proportion of capital contribution was: Dong Wang (RMB 208,324,800, accounted for29.49%); HeBei province ChengDe County North Industrial Company (RMB 18,517,651, accounted for2.62%); Zhengsong Wang(RMB 13,327,891, accounted for1.89%); ChengDe City LongFeng Cosmetic company (RMB 2,314,829, accounted for0.33%); Chengde County Board Town of Red Star plastic products factory (RMB 2,314,829, accounted for0.33%), shareholders of domestically listed foreign shares (RMB 461,520,000, accounted for65.34%).
On September 19, 2012, with the authorization of HeBei Administration for Industry and Commerce, the company name was changed from ChengDe DaLu Corporation, Ltd. to ChengDe NanJiang Corporation, Ltd.
2. Business scope
New energy ,R&D of new materialproduct、sales and technologypromotion、technology service ;R&D of modern agricultural production,technology promotion service, wholesale of ecological agricultural products; international trading of products and technology; project HuiJingTianDi (2013-12 , 2013-13) : the development and construction of common residence and supporting commercial facilities based on twoland、sales and operation; property management.
3. Nature of Business
The company major in real estate development and management; Subsidiaries engage in real estate development,international trading and ecological agriculture planting and breeding.
4. Major products and labour service
Sales of real estate,plastic raw material trading and sales of products of ecological agriculture planting and breeding.
5. Fundamental structure of the company
The highest authority is board minutes and the company adopts the managerial responsibility system. According to requirements from the business, the company set up Securities Department, Administrative Department, Human Resource Department, Financial Department, Auditing Department, Sales Department, Research and Development Department.
II. Scope of consolidated financial statements
The consolidated financial statements of the Group involve 8 companies, including ChengDe NanJiang Trading Co., Ltd, RunHua Rural Water (Tianjin) International Trade Co., Ltd., ChengDe NanJiang Investment Co., Ltd., Chengde NanJiang Ecological Agriculture Co., Ltd., Hangzhou Dongfeng Stealth Technology Co., Ltd., NanJiang Asia Investment Co., Ltd., NanJiang Technology Co., Ltd.and Chengde HuiJing property Co., Ltd, Hangzhou HangFeng Technology Co., Ltd., ChengDe KeFeng Aerospace Technology Development Co. Ltd.
Two subsidiaries-Hangzhou HangFeng Technology Co., Ltd. and ChengDe KeFeng Aerospace Technology Development Co. Ltd. have been set up in the year 2016 and One subsidiary - Hangzhou Dongfeng Stealth Technology Co., Ltd has been made in liquidation and cancellation in the reporting period .
For details, see Note VII Change in consolidation scope and VIII Rights and interests in other parties.
III. Basis for preparation of financial statements
1. Preparation basis
The financial statements were prepared on the basis of transactions and other events that actually occurred, in accordance with<The Accounting Standards for BusinessEnterprises—BasicStandard> issued by the Ministry of Finance and revised with the specific accounting standards, the Application Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards for Business Enterprises and other regulations (hereinafter jointly referred to as “the Accounting Standards for Business Enterprises”), as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15– General Regulations for Financial Reporting (revised in 2014) by China Securities Regulatory Commission.
2. Continuation
There will be no such events or situations in the 12 months from the end of the reporting period that will cause material doubts as to the continuation capability of the Company.
IV. Significant Accounting Policies and Accounting Estimates
1. Statement for Compliance with Enterprise Accounting System
The financial statements prepared by the Company fully comply with Accounting Standards for Business Enterprise and demonstrate truly and completely the financial status of the Company and the Group, operating performance and cash flow.
2. Accounting period
The fiscal year of the Group runs from January 1 to December 31 of each calendar year.
3. Reporting Currency
RMB is adopted as the functional currency of the Group.
4. Accounting methods for corporate merger under the same control and not under the same control
(1)The terms, conditions and economic impact of the various transactions in the process of enterprise merger are in accordance with one or more of the following conditions, we will deal with multiple transactions as a package deal when making accountingtreatment：
a.These transactions are made at the same time or considering the effects of each other
b.These transactions only in entirety can achieve a complete business results only when
c.The occurrence of a transaction depends on the happening of at least one other transaction
d.A single transaction is not economical, but it is economical when being considered together with other transactions
(2)Business combinations involving entities under common control
For a business combination involving enterprises under common control, assets and liabilities that are obtained in a business combination is measured at the carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date, except for the adjustments of different accounting policies. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or total par value of shares issued) is adjusted to capital reserve, if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.Business combinations involving entities under common control achieved in stages that involves multiple transactions.
In the separate financial statements, the initial investment cost is the absorbingparty’s share of the carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. The difference between initial investment cost and original investment carrying amount prior combination plus newly paid consideration at the combination date is adjusted to capital reserve (share/capital premium), if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
In the consolidated financial statements, assets and liabilities that are obtained in a business combination are measured at their carrying amount of theowners’ equity of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date, except for the adjustments of different accounting policies. The difference between the original investment carrying amount prior combination plus newly paid consideration at the combination date and the carrying amount of the net assets obtained is adjusted to capital reserve (share/capital premium), if the capital reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. The long-term equity investment of the absorbing party prior to combination, profit or loss, other comprehensive income and changes of otherowners’ equity recognized between the later of combination date and the date that the absorbing party and the absorbed party are under common ultimate control are offset the opening retained earnings or profit or loss for the current period in the comparative statement. (3)Business combination involving entities not under common control
For business combinations involving entities not under common control, the consideration for each combination is measured at the aggregate of the fair values, at the acquisition date, of assets given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquire are measured at their fair value.
Where the cost of combination exceeds theacquirer’s interest in the fair value of theacquiree’s
identifiable net assets, the difference is recognized as goodwill, and measured on the basis of its costs
minus the accumulative impairment provisions. Where the cost of combination is less than the
acquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognized
in profit or loss for the current period after reassessment.
Business combinations involving entities not under common control achieved in stages that involves multiple transactions.In the separate financial statements, the initial investment cost is the sum of the carrying amount of equity investment of the acquiree held prior to the acquisition date and the additional investment cost at the acquisition date. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized is not changed on the combination date and is accounted for on the same basis as would have been required if the investor had directly disposed of the related assets or liabilities. Theowners’ equity recognized as the changes of theinvestee’s otherowners’ equity except for net profit or loss, other comprehensive income and profit distribution are transferred to profit or loss for the current period when disposing the investment. For the previously-held equity investment which was accounted for using fair value, the accumulated changes in fair value included in other comprehensive income is transferred to profit or loss for the current period upon commencement of the cost method.
In the consolidated financial statements, the cost of business combination is the sum of the
consideration paid at the acquisition date plus the fair value of equity investment of the acquiree held
prior to the acquisition date. The cost of equity investment of the acquiree held prior to the acquisition
date is re-measured at the fair value at the acquisition date, the difference between the fair value and
carrying value is recognized as profit or loss for the current period. Other comprehensive income and
changes of otherowners’ equity from the equity interest held in the acquire prior to the acquisition date
are transferred to profit or loss for the current period except for other comprehensive income due to the
movement of net liabilities or assets in theinvestee’s re-measurement defined benefit plan.
(4)Transaction costs for business combination
The intermediary and other relevant administrative expenses such as audit, legal and valuation
advisory for business combinations are recognized in profit or loss for the current year when incurred.
Transaction costs of equity or debt securities issued as the considerations of business combination are
included in the initial recognition amounts.
The assets and debts acquired by the Group (as the merging party) through merging with other enterprises under common control shall be measured as per the book value of the merged party in the consolidated financial statements of the ultimate controller on the day of merger. The difference between the book value of net assets acquired and the book value of the combination paid is used to adjust the capital reserves, and the retained earnings are adjusted in case of insufficient capital reserves.
Regarding combination not under common control, the recognizable assets, liabilities and contingent liabilities of the seller are measured upon fair value on the purchase day. The merger cost is the sum of cash or the fair value of non-cash assets, issued or borne debts and issued equity securities paid by the Group for acquiring the control over the acquired on the purchase day and all of the expenses incurred to the Group directly relevant to the merging. In case of merging by step, the merger cost is the sum of the cost of every single transaction. Where the merger cost is more than acquired definable net assets fair proportion of the acquired, the balance is recognized as goodwill. Where the merger cost is less than acquired definable net assets fair proportion of the acquired, the definable assets, debts, fair value of contingent liabilities and the fair value of the non-cash assets or issued equity securities as merger consideration are rechecked first, and in case the merger cost is less than acquired definable net
assets fair proportion of the acquired after recheck, the balance is included in current nonrevenue receipt. 5. Preparation method of consolidated financial statements
The consolidation scope for financial statements is determined on the basis of control. The
consolidated financial statements comprise the financial statements of the Group and its subsidiaries.
A subsidiary is an enterprise or entity controlled by the Group.
The Group incorporates all of the subsidiaries and structured entities under its control into the consolidated financial statements.
For any difference occurring in accounting policies and accounting periods between the Company and its subsidiaries when preparing consolidated financial statements, necessary adjustments shall be made based on accounting policies and periods of the Company.
The company prepare consolidated financial statements based on its own and thesubsidiaries’ financial statements as well as other relevant information. In the preparation of the consolidated financial statements, the group are identified as an accounting entity to reflect the overall financial position, operating results and cash flow,according to the requirements of the related accounting standards for business enterprises recognition, measurement and presentation, in accordance with the unified accounting policy.
All the subsidiaries in the consolidation scope are as consistent in subsidiary accounting policies, accounting period with the company. If those above are inconsistent, when preparing the consolidated financial statements, it need make necessary adjustments according to the company's accounting policies and accounting period .
In the process of consolidation, it is necessary to offset the impact on consolidated income statement, consolidated cash flow statement, consolidated statement of changes in equity which are caused by occurrence of insider trading between the company and subsidiary and also between each subsidiary.If there is different opinion on the identity of the same transaction when standing on the point of the consolidation statement on the enterprise group or which the company and subsidiary are the main body of accounts , it need make adjust from the perspective of the enterprise group.
The balance which are formed because that the loss minority shareholders bear in the current period are more than the share of the owner's equity minority shareholders have in the early period,offset the interests minority shareholders have. For the subsidiary acquired in a business consolidation under the same control , adjustment is made based on its book value in the financial statements with ultimate control. For the subsidiary acquired in a business consolidation not under the same control, adjustment is made based on the fair value of the identifiable net assets on purchasing day.
The acquired in a business combination under the same control subsidiary, with its assets and liabilities (including the ultimate controlling party acquisition of the subsidiaries and the formation of goodwill) adjustment is based on its financial statements on financial statements in the book value of ultimate control.
For the subsidiary companies under the control of non identical control, the fair value of the identifiable net assets of the company is adjusted on the basis of the fair value of the net assets.
Where the Group disposed part of long-term equity investment in the subsidiaries without losing control over of such subsidiaries, in the financial statements, the balance between the income from disposal and the net assets proportion of the subsidiaries entitled by the disposed long-term equity investment and continually calculated from the purchase day or day of merger is adjusted as the capital stock premium of the capital public reserve and retained earnings is adjusted in case of the capital public
reserve not enough for deduction.
Where the Group lost the control over the invested party for such reason as disposing partial equity investment, the remaining equity was re-measured as per the fair value of such equity on the day of losing controlling right when preparing the consolidated financial statements. The balance between the sum of the consideration from the disposal of equity and the fair value of the remaining equity and the net assets proportion of the subsidiaries entitled by the disposed long-term equity investment and continually calculated from the purchase day or day of merger is included in the investment income for the period and the goodwill is deducted. Other consolidated income related to the equity investment of the original subsidiary shall be transferred into current investment profit and loss upon losing control.
Where the Group lost control over a subsidiary through multiple transactions and step-by-step disposal of the equity of the subsidiary, and such multiple transactions to a package deal, the multiple transactions shall be deemed one transaction in which the control in the subsidiary was lost; however, the balance between the disposal price and the net assets proportion of the subsidiaries entitled by the disposed long-term equity investment prior losing control over the subsidiary was recognized as other comprehensive income and was transferred to the profits and losses of current period at the time of losing control.
6. Classification of joint arrangement and accounting methods for joint operation
The joint arrangement of the Group includes joint operation and joint venture. For jointly operated projects, the Group as a partner recognizes the assets and debts it holds independently and proportionally as well as recognizes the income and expenses as agreed. Where purchase and sale of an asset during joint operation does not constitute a business, only the part in the profits and losses from the transaction belonging to other partners is recognized.
(1) Category of the joint arrangement
A joint arrangement refers to an arrangement jointly controlled by two participants or above.
The Group classifies joint arrangements into joint operations and joint ventures according to its rights
and duties in the joint arrangements. A joint operation refers to a joint arrangement where the Group
enjoys assets and has to bear liabilities related to the arrangement. A joint venture refers to a joint
arrangement where the Group is only entitled to the net assets of the arrangement.
The joint arrangement achieves not through the individual main body should be divided as
joint operation. Individual main body refers to the entity owns individual distinguishable financial
structure, including the individual legal entities and the entities without legal entity qualification but
gains the legal permits. The joint arrangement achieves through individual main body is usually
divided into the joint venture, but for the joint arrangement with definite evidence vindicates that
meet with any condition of the followings and meet with the regulations of the relevant laws and
regulations should be divided into joint operation; the legal form of other joint arrangement indicates
that, the jointly owned party respectively enjoys the rights and burdens the obligations of the relevant
assets and liabilities among the arrangement; the clauses of the contacts of the joint arrangement
agrees that, the jointly owned party respectively enjoys the rights and burdens the obligations of the
relevant assets and liabilities among the arrangement; other relevant facts and situation indicates that,
the jointly owned party respectively enjoys the rights and burdens the obligations of the relevant
assets and liabilities among the arrangement, for example, the jointly owned party enjoys almost all
of the output related to the joint arrangement and the liquidation of the liabilities of the arrangement
constantly depends on the support of the jointly owned party.It’s forbidden to regard the jointly
owned party which provides the liabilities for the joint arrangement as it has the responsibility to bear
the relevant liabilities. For the jointly owned party takes the responsibility to pay the attributive
obligations for the joint arrangement, not be considered to undertake the relevant liabilities related to
the arrangement. For the relevant facts and the changes of the situation leads the rights enjoyed and
the liabilities undertook amount the joint arrangement change, the Group should re-assess the
category of the joint arrangement. For the structure agreement setting various joint arrangements for
achieving different activities, the Group respectively recognizes each category of the joint
arrangement.
For the details of the basis of recognizing the joint control and the accounting policies of
the measurement of the joint venture, please refer to Notes (IV) 13.
(2) Accounting treatment of joint operations
The following projects related to the interests portion among the joint operation recognized by
the Group and be executed according to the regulations of the relevant ASBE: recognizes the assets
held alone and the assets joint held by recognizing according to the portion; recognizes the
jointly-held assets and jointly-borne liabilities according to theGroup’s stake in the joint operation;
recognizes the income from sale of theGroup’s share in the output of the joint operation;
recognizes the income from sale of the jointoperation’s outputs according to theGroup’s stake in it;
and recognizes the expense solely incurred to the Group and the expense incurred to the joint
operation according to theGroup’s stake in it.
When the Group, as a joint operator, transfers or sells assets (except for the assets
constituing business) to the joint operation, before the assets are sold to a third party, the Group
only recognizes the share of the other joint operators in the gains and losses arising from the sale.
Where impairment occurs to the assets as prescribed in<The Accounting Standard No. 8 for
BusinessEnterprises—AssetImpairment>, the Group shall fully recognizes the loss. When the
Group, purchases assets from the joint operation (except for the assets constituing business) to the
joint operation, before the assets are sold to a third party, the Group only recognizes the share of the
other joint operators in the gains and losses arising from the sale. Where impairment occurs to the
assets as prescribed in<The Accounting Standard No. 8 for BusinessEnterprises—Asset
Impairment>, the Group shall fully recognizes the loss according to its stake in the joint operation for
a purchase of assets from the joint operation.
If the Group attributes to the participate party without joint control on the joint operation,if
enjoys the relevant assets and undertakes the relevant liabilities of the joint operation, should execute
accounting treatment according to the above principles; otherwise, should execute the accounting
treatment according to the accounting policies of the measurement of the financial instruments or the
long-term equity investment formulated by the Group.
7. Recognition standard for cash and cash equivalents
Cash in the Cash Flow Statement refers to cash in hold and deposits which can be used for payment at any time. Cash equivalents in the Cash Flow Statements refer to short-lived (generally not more than 3 months) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.
8. Foreign currency businesses and translation of foreign currency financial statements
(1) Accounting treatments for translation of foreign currency transactions
The transactions denominated in foreign currency of the Group are converted in the initial recognition at the rate which is approximate to the spot exchange rate on the transaction day, which shall be the spot exchange rate of the beginning of the month when the transaction occurs.
On the balance sheet date, the monetary items denominated in foreign currency are translated to RMB at the spot exchange rate at the balance sheet date, and the balance between the spot exchange rate at the balance sheet date and the rate in the initial recognition or on the last balance sheet date is included in current profits and losses except for 1) the balance from exchange of specific borrowings that is capitalized and included as part of the cost qualifying asset; 2) the balance from exchange of hedge instrument adopted for evading the exchange risks that is treated according to hedge accounting; 3) the balance from exchange arising from the foreign currency non-monetary items available for sale (e.g. the stock) and that arising from the change in the book value of the monetary items available for sale except for amortized cost is recognized as other comprehensive income.Non-monetary items of foreign currency measured by historical cost still adopt spot exchange rate of transaction date for conversion with functional currency amount unchanged. As for the foreign currency non-monetary items measured by fair value, the spot exchange rate on the date when the fair value is confirmed is adopted for conversion. The amount differences between functional currency amount after conversion and the original functional currency amount, processed as fair value changes (including change in exchange rate), are recognized into current profits and losses or recognized into other comprehensive incomes.
(2) Translation of foreign currency financial statements
The asset and liability items in the balance sheets shall be translated at a spot exchange rate
ruling at the balance sheet date. Among the owner's equity items, except the ones as “retained
earnings”, others shall be translated at the spot exchange rate ruling at the time when they
occurred.The income and expense items in the income statements shall be translated at an exchange
rate which is determined in a systematic and reasonable way and is approximate to the spot exchange
rate (calculated by the average of starting rate and closing rate on the reporting period) ruling at the
transaction date. The foreign exchange difference arisen from the translation of foreign currency
financial statements shall be presented separately under the owner's equity in the balance sheet.
Disposal in overseas business, the balance sheet items of other comprehensive income is
presented, and the overseas business translation of foreign currency financial statements related to
difference from other comprehensive income items into the disposal of profits and losses of the
current period; in the disposal of equity investment or other reasons lead to hold environment
operating outside the ratio of equity to reduce but not a loss of overseas business control, and the
offshore disposal operations in part related to the translation of foreign currency statements difference
will belong to minority interests. Do not turn into the profits and losses of the current period. When
dealing with overseas operations as an affiliated enterprise or part of the equity of the joint venture, the
foreign currency statement translation difference with the overseas operation shall be transferred to
the current profit and loss.
9. Financial tools
Financial instruments include financial assets, financial liabilities and equity instruments.
1. Categories of financial Tools
The Company divides the financial assets into four categories: financial assets measured at fair value and their variations are recognized as current gain/loss, including trade financial assets or financial liabilities and recognized directly as financial assets measured at fair value and their variations are
recognized as current gain/loss; Investment hold till expiration; loans and account receivable; saleable financial assets .The company divides the financial liabilities into two categories: financial liabilities measured at fair value and their variations are recognized as current gain/loss; other financial liabilities. 2. Recognition and measurement of financial tools
(1) Financial assets and liabilities measured at fair value and their variations are recognized as current gain/loss
The fair value (after deducting of announced but not distributed cash dividend or due but not obtained bond interests) is recognized as initial amount when obtained.
Interests or cash dividends during the period of holding are recognized as investment gains. The fair value will be adjusted and accounted as current gain/loss.
When disposed, the differences between fair value and initial amount are recognized as investment gains, and thus adjust the gain/loss of fair value.
(2) Account receivable
Receivables are non derivative financial assets that are not available in the active market and are fixed or determined by the amount of the recovery.
The receivable debts of selling goods or providing services, and the credits of other company hold by the company not including the debt which has price in active market, including accounts receivable, notes receivable, prepaid accounts, other receivables, long-term receivables, etc. The contract or agreement price charging from purchaser should be taken as the initial confirmation amount; if it has the nature of financing, it should be confirmed according its current value.
When retrieved or disposed of, the difference between the actual received amount and the book value is accounted as current gain/loss.
(3) Investment hold till expiration
The fair value (after deducting of due but not obtained bond interests) plus the related trade expenses is recognized as initial amount when obtained.
Interest gains will be calculated at amortizing of costs and actual interest rate (the face rate is adopted when the difference between the actual rate and face rate is minor) during the period of holding, and accounted as investment gains. Actual rate is recognized when obtained, and is not changed in the predictable holding period or applicable shorter period.
When disposed, the difference between the obtained price and book value is accounted as investment gains.
If the company sells or reclassifies large-amount due investments before the expired date (large amount refers to comparing with the amount before the selling or reclassifying the investments), the company will reclassify the rest of the investments as financial assets for sale, and in the current accounting period or within two complete accounting years, no financial assets will be classified as holding due assets, except for the following situations: the sale date or reclassification date is close to the expired date of the investment (such as three months before the expired), and the change of interest rate has no significant influence on the fair value of the investment; after all the initial principal is mostly recovered according to periodic payments or repay in advance regulated in the contract, the rest part will be sold or reclassified; the sale and reclassification is caused by the independent events which are uncontrollable and unexpected and will not happen anymore.
(4) Saleable financial assets
The fair value (after deducting of announced but not distributed cash dividend or due but not obtained bond interests) plus the related trade expenses is recognized as initial amount when obtained.
Interest or cash dividend occurred during the period of holding is recognized as investment gains. Change of fair value is accounted as capital reserves (other capital reserves) at the end of term.
When disposed, the difference between the obtained price and book value is accounted as investment gains.
Meanwhile, the corresponding part of accumulated change of fair value accounted asowners’ equity is transferred into investment gain/loss.
(5) Other financial liabilities
Other financial liabilities are recognized initially at the sum of fair value and related trade expenses. Successive measurement will be on the basis of amortized costs.
(6) Investment hold till expiration by the company to sell or reclassified as available for sale financial assets
If the amount of held to maturity investment disposal or re-classified as other financial assets, are relatively larger than maturity investment all held by the company before sale or re-classification, it is necessary to re-classify the rest of held to maturity investment as available-for-sale financial assets immediately after disposal or sale. However, the following circumstances are excluded:
a. the date of sale or the date of reclassification is relatively close to the date of maturity or redemption date of investment (e.g., within three months prior to the expiration date), and the change in the market interest rate has no significant effect on the fair value of the investment;
b. in accordance with the terms of payment agreed upon in the contract, the enterprise has recovered almost all initial principal;
c. the sale or reclassification is caused by an uncontrollable event that the company is unable to control, which is not expected to recur and is difficult to reasonably predict.
3. Recognition and measurement basis of financial asset transposition
When financial asset transposition occurred, the recognition of this particular financial asset is terminated if almost all risks and rewards attached to the asset have been transferred to the acceptor. If retain all the risks and rewards of ownership of financial assets, the financial assets can be confirmed.
When determine whether the transfer of financial assets meet the conditions of confirmation of the above financial assets, the principle of substance being more important than form should be adopted. The transfer of financial assets can be divided into overall transfer and part transfer of financial assets. If the transfer of financial assets meet the conditions of terminating confirmation, the following the difference of the two amounts will be included in the current profit and loss: a. Book value of the financial asset to be transposed; b.The sum of price received due to the transposition, and the accumulation of change in fair value originally accounted asowners’ equity (when the asset to be transposed is saleable financial asset).
If part transfer of financial assets meet the conditions of terminating confirmation, the book value of the transferred financial assts, the difference between the confirmed part and the unconfirmed part (in this case, the service assets retained should be deemed as the part of unconfirmed financial assets), should be amortized in accordance with their relative fair value, and the difference between the following two amount should be included current profit and loss:
a. Book value of the confirmed part;
b .All fair values of financial assets and financial liabilities are recognized with reference to the price in the active market.
If the transfer of financial assets does not meet the conditions of terminating confirmation, the financial assets should be confirmed again, the prices received will recognized as financial liabilities.
4. The conditions to stopping the financial liabilities
The obligation of financial liabilities are already cancelled which should be stopped confirming the financial liability or the part of it. Our company could stop confirming the currently financial liability and begin to confirm the newly financial liability if the loaner made an agreement that they would assume the new way of financial liability which replace the current one, and make sure the newly financial liability is totally different from the old one in contract with our company. Stop admitting the financial liability or a part of it, and at mean time we could admit the newly financial liability which is in new insertions of contract as the newly financial liability if the current financial liability has been revised.
Stop admitting the balance of value of financial liability and consideration (Including the roll-out of non-cash assets or financial liabilities) which could be consider as current profits and losses.
Stop and continue admitting a part of value, and distribute the value of financial liability, if our company repurchased the part of financial liability. And the balance of value of which distributed to the part of stopping admitting and paid (Including the roll-out of non-cash assets or financial liabilities) which could be consider as current profits and losses.
5.Recognition basis of financial assets and financial liabilities
All fair values of financial assets and financial liabilities are recognized with reference to the price in the activemarket（Using valuation technique,etc.）.
6. Impairment provision for financial assets
(1)Impairment provision for financial assets for sale:
If the fair value of financial assets for sale greatly drops at the end of the period, or after considering all the relevant factors and expecting decrease trend is non-temporary, the impairment should be confirmed, and the accumulative loss formed by the decrease of fair value ofowner’s equity originally included should be transferred out altogether and confirmed as impairment loss.
(2)Holding the impairment provision of expired investments:
The measurement of holding the impairment provision of expired investment will be according to the method of the measurement of impairment provision for receivables.
7.Offset between financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Otherwise, financial assets and financial liabilities are separately shown in the balance sheet and not allowed to offset.
10. Provision for bad debts of accounts receivable
（1）Receivables of individual account with significant amount and accrued provision for bad debt Recognition Criterion for individually significant amounts:
The receivables with more than RMB 1 million shall be recognized as the significant receivables;
The accruing method of the receivables with individually significant amounts:
The Group should make the impairment test separately or in combination and accrue the bad debt provisions which shall be recorded into current profit or loss at the end of the period. If there is defined evidence for the receivables not to or not likely to be received, which shall be recognized as the loss of bad debt and write off the accrued bad debts provisions after going through the approval procedure of the
Group.
(2) Accounts receivable accrued bad debt provision by portfolio
a. The basis for determining the characteristics of credit risk:
For accounts receivable of which the single amount is not significant, together with which the single amount is significant by testing alone without impairment,are divided into several portfolio according to the characteristics of credit risk.considering the the actual loss rate of receivable portfolio of significant individual amount of receivables with division according to the features of credit risk with similar credit risk characteristics in previous years and the situation in the year,we determined the amount of provision.
The basis for determining the portfolio:
Portfolio name provisioning approach The basis for determining the portfolio
Portfolio of
no provision for bad
related party in Portfolio of related party in consolidation
debts
consolidation
According to the nature of the business, identified as no provision for bad no credit,including employees public reserve fund, No risk portfolio
debts social security, payment in advance and employee loan
Accounts receivable besides the portfolio mentioned Portfolio of the above, company make a best estimate on the aging analysis aging analysis method proportion of accounts receivable according to the method previous experience,and carry on the classification on credit risk portfolio considering the age of receivables Accounting aging analysis method:
Use the accounting aging of the receivables as the credit risk characteristics to classify the portfolio. Accrue the bad debt provision by accounting aging analysis method .
Proportion for Provision for bad debt Proportion for Provision for bad debt
Aging
（receivable）% ( other receivable)%
Within 1 year 5 5
1-2 years 20 20
2-3 years 50 50
Over 3 years 100 100
(3) Individually insignificant amount accounts receivable but accrued bad debt provision
Recognition Criterion for individually insignificant amounts:
Where there are obvious evidences suggesting impairment: debtor has been log-out, bankruptcy, minus net asset, significant poor cash flow and significant nature disaster leads to discontinue production and the debtors could not pay for the debts within the foreseeable time.
The accruing method of the receivables with individually insignificant amounts:
The Group should make the impairment test separately or in combination and accrue the bad debt provisions which shall be recorded into current profit or loss at the end of the period. If there is defined evidence for the receivables not to or not likely to be received, which shall be recognized as the loss of bad debt and write off the accrued bad debts provisions after going through the approval procedure of the Group.
11. Inventory
The inventories of the Group include mainly property development products, raw materials, commodity stocks, low-value consumables and others.
The property development products include the properties under construction (including the land to be developed) and as-built properties (including the leased property available for sale). Actual costs of real estate development products include land-transferring cost, supporting infrastructure cost, construction& installation cost, loans before completion of the development projects and other relevant cost during development. Actual costs of delivered real estate development products are determined by specific identification of costs.
Actual cost accounting is adopted for construction contract, including direct costs and indirect costs from contract signing to completion of the contract and related to fulfillment of the contract. The net amount after the offset of accumulated cost and accumulated recognized gross profits (loss) for the properties under construction and the settlement is listed as net amount after offset in the balance sheet. Where the sum of accumulated cost and accumulated recognized gross profits (loss) for the properties under construction is more than the settlement, the balance is listed as inventories; where the latter is more than the former, the balance is listed as unearned revenue.
Travel expenses, tender expenses, etc. for construction contract signing can be separately distinguished and reliably calculated. For contracts probably to be concluded, expenses are recognized into contract cost upon receiving the contract; otherwise, expenses are recognized into current profits or losses.
One-off amortization method is adopted for receipt of low-value consumables and other inventories. The ending inventory is measured by the cost and net reliable value whichever is lower. When the net reliable value of the property development product is less than the cost, the inventory falling price reserve shall be withdrawn. Net reliable value refers to the amount of the predicted sale price less predicted as-built cost and expenses arising from sale and taxes during normal production and operation process. Estimates of net realizable value are based on the most reliable evidence available at the time the estimates are made and take into consideration the purpose for which the inventory is held and the influences of events occurring after the balance sheet day.
After the accrual of devaluation provision for inventory, where affecting factors for former write-down of inventory value has disappeared, the write-down amount shall be recovered and reversed in the formerly accrued depreciation provision amount, and reversed amount shall be included in current profit or loss and reversed amount shall be included in current profit or loss.
12. Divided as assets held for sale
(1)Recognition criteria of the assets held for sale
The Group recognizes the enterprise compose part (or the non-current assets, similarly hereinafter) that simultaneously meets with the following conditions as assets held for sale:
a. The compose part must be immediately sold only according to the usual terms of selling the compose part of this kind under the current conditions;
b. The relevant power institutions of the Group had made agreement on disposing the compose part, if receive the approval from the shareholders according to the rules, which equals to had received the
approved of the Annual General Meeting or the corresponding power institution;
c. The Group has signed the irrevocable transfer agreement with the assignee;
d. The sale transaction is highly probable to be completed within one year.
(2) Accounting treatments of the assets held for sale
Non-current assets held for sale include single-item assets and disposal groups. Where a
disposal group is an asset group and the goodwill obtained in the business combination is
apportioned to the asset group according to the “Accounting Standard No. 8 for Business
Enterprises—Asset Impairment”, or a disposal group is an operation in such an asset group, the
disposal group shall include the goodwill in the business combination.
As for the non-current assets and disposal group which be classified held for sale by the
Group, shall be measured at the lower one of the net amounts of the book value and the fair value
after deducting the disposal expense. If the net amount the fair value minuses the disposal expenses
is lower than the original book value, the difference should be included in the current gains and
losses as the assets impairment losses; if the held for sale is the disposal group, the assets
impairment losses should be firstly distributed to the goodwill and then included in the current gains
and losses by amortized according to the proportion and attributed to the other non-current assets
within the held for sale assets scope. The deferred income tax assets, the financial assets
standardized by No.22 of ASBE-Recognition and Measurement of Financial Instruments,
investment property and biological assets measured by fair value, contacts rights occurred from the
insurance contacts and the assets occurred from the employee benefits are not suit for the held.
13. Long-term equity investments
The long-term equity investment of the Group includes mainly the investment to the subsidiaries, associated enterprises and joint ventures.
The basis for the Group to define joint control is that all participating parties or the combination of the parties control the arrangement jointly and the policies relevant to the activities of the arrangement must be agreed by such parties.
The Group will be generally deemed to have significant impact on the invested entity if the Group holds20% (inclusive) to50% of voting right of an invested entity directly or indirectly through its subsidiaries. Where the Group holds less than20% of voting right of an invested entity, theGroup’s significant impact on the invested entity will depend on whether the Group has its representative in the Board of Director or any similar organ of power of the invested entity, whether the Group participates in the formulation of financial and operation policies of the invested entity, whether the Group has important deals with the invested entity, whether the Group dispatches management personnel to the invested entity or whether the Group provides the invested entity with key technical data.
Any entity under the control of the Group is the subsidiary of the Group. The long-term equity investment acquired through merging with an enterprise under common control, the book value of net asset of the acquire in the consolidated financial statements of the ultimate controller on the day of merger is taken as the initial investment cost of the long-term equity investment. Where the book value of net asset of the acquiree on the day of merger is negative, the cost of the long-term equity invest is recognized as zero.
Where the long-term equity investment is acquired thorough merging with an enterprise not under common control, the merger cost is taken as initial investment cost. The merger cost is the fair value of the assets given, debt occurred or borne and equity securities issued by the Group for acquiring the
controlling right of the acquiree on the day of merger
Aside from the above long-term equity investment acquired by the merger of enterprises, long-term equity investment acquired by cash payment adopts the actual paid purchase amount as the investment cost; long-term equity investment acquired by issuance of equity securities adopts the fair value of issued equity securities as the investment cost; long-term equity investment invested by investors adopts the value reached in the investment contract or agreement as the investment cost.
The investment of the Group to the subsidiaries is calculated with cost method, and equity method is applied for joint ventures and associated enterprises.
For the long-term equity investment with cost method applied for subsequent measurement, in case investment is added, the book value of the long-term equity investment cost is added with the fair value of additional investment cost and resulting transaction expenses. The cash dividend or profit distributed by an invested entity is recognized as current return on investment based on the distributed amount.
For the long-term equity investment with equity method applied for subsequent measurement, the book value of the long-term equity investment is increased or decreased with the change in the ownership equity of the invested entity. The proportion of net profit or loss of the invested company to be enjoyed or assumed by the Group is confirmed by taking the fair value of recognizable assets of the invested company upon obtaining the investments as the base, and offsetting the proportion of internal transaction profits and losses occurring between the associated enterprises and joint ventures which is due to the investing enterprise according to shareholding proportion and adjusting the net profit of the invested unit. For disposal of long-term equity investment, the difference between the book value and the actual received payment shall be recognized into current income. For the disposal of the long-term equity investments which are calculated with equity method and recognized into the owner equity due to the changes in owner equity other than the net profits and losses of the invested company, the part initially recognized into the owner equity shall be carried over to current income and losses in corresponding proportion.
Where losing joint control over or significant impact on the invested entity is a result of such fact as disposing partial equity investment, the remaining equity is calculated as the finance asset available for sale and the balance between the fair value and the book value of the remaining equity on the day of losing joint control or significant impact is included in current profits and losses. For other comprehensive income of the original equity investment recognized with equity method, the basis same as that of the invested entity directly disposing relevant asset or debts is applied for accounting when the equity method is ceased to be used.
Where losing control over the invested entity is a result of disposing partial long-term equity investment and the Group has a common control over or have significant impact on the invested entity by using the remaining equity, the equity method is applied, the balance between the book value and disposal consideration of the disposed equity is included in the return on investment, and the remaining equity is adjusted as if it was calculated with equity method since the acquiring of such equity. In case the Group cannot have a common control over or have significant impact on the invested entity by using the remaining equity, regulations for financial assets available for sale are applied and the balance between the book value and disposal consideration of the disposed equity is included in the return on investment, and the balance between the fair value and book value of the remaining equity on the day of losing control is included in current profits and losses.
14. Investment property
The investment property of the Group includes the leased land use right, the land use right it is entitled to for assignment after appreciation, the leased properties and the properties it holds for sale. Cost model is applied for measurement.
The investment property of the Group is amortized with the average service life method. Estimated service life, net residual value rate and annual amortization rate of investment property are as follows:
Items Useful Lives Residual Rates(%) Annual Depreciation Rates(%) land usage rights 50 years 0.00-10.00 1.80-2.00
House and Building 20-28 years 0.00-10.00 3.56-4.50
After initial recognition, the Company adopts the cost model to measure its investment properties. The Company amortizes or depreciates its investment properties measured using cost model in the same way as fixed assets and intangible assets If the Group had definite evidence indicated the usage of the property had changed, when transferring the self-used real estate or the inventories as the investment real estate or transferring the investment real estate as the self-used real estate, the book value before the transfer should be regarded as the entry value after transfer.
The Group values the investment property measured using cost model at the lower of its cost and its recoverable amount at the end of the period. Where the cost exceeds the recoverable amount, the difference shall be recognized as impairment loss. Once a provision for impairment loss is made, it cannot be reversed.
An investment real estate is derecognized on disposal or when the investment real estate is permanently withdrawn from use and no future economic benefits are expected from its
disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment real estate less its carrying amount and related taxes and expenses is recognized in profit or loss in the period in which it is incurred.
15. Fixed assets
The Group's fixed assets are tangible assets that: (1)are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; (2) have useful lives more than one year; and (3) have unit value more than RMB 2,000.
The fixed assets can be recognized only when their economic interests may flow into the Group and their costs can be reliably measured. Fixed assets of the Group are classified as houses and buildings, machines and equipment, transportation equipment, office facility, etc.
All fixed assets, apart from those fixed assets that have been depreciated and accrued but are still in use and those lands that are transferred into fixed assets separately according to actual values, are depreciated and accrued by the Group. The average service life method is applied for accrual of depreciation.
The classification, depreciation years, estimated net residual value rate and depreciation rate of fixed assets are as follows:
Items Useful Lives Residual Rates(%) Annual Depreciation Rates(%) House and Building 20-28 years 5.00 3.39-4.75
Machinery equipment 4-5 years 5.00 19.00-23.75
Transportation 5-20 years
5.00 4.75-19.00
equipment
Items Useful Lives Residual Rates(%) Annual Depreciation Rates(%) Other equipment 3.0-5 years 5.00 19.00-31.67
The Group shall check the useful life of fixed assets, expected net salvage value and depreciation method not later than the end of the year. Any change will be disposed as accounting estimation change. 16. Construction in progress
The valuation of the construction in progress: recognizes the engineering cost according to the
cost actual occurred. The cost of construction in progress also includes the borrowing expenses and
exchange gains and losses which should be capitalized.
The company should transfer the construction in progress into fixes assets when the construction
in progress is ready for their intended use. If the built construction had reached the state ready for
intended use but had not settled the fixed assets of completion settlement, should recognized as fixed
assets according to the estimated value as well withdrew and depreciated; after execute the
completion settlement procedure, it should adjust the original provisional estimate value according to
the actual cost but not the original withdrew depreciation amount.
Impairment of construction in progress refers to accounting policy “Long-term assets
impairment” of the Group.
17. Biological Assets
The biological assets in the company are consumptive biological assets and productive biological assets. Consumptive biological assets include baby breeding and fat breeding. Productive biological assets are hens.
Biological assets are recognized only when the following criteria are met simultaneously:
(1) The company acquired the biological assets because of past transactions or events.
(2) The potential economic benefits generated by the biological assets may flow into the company
(3) The cost of biological assets can be calculated reliably
The purchase and disposal of biological assets: the costs of biological assets after the transfer of purpose are same as the book value before the transfer of purpose; When biological assets are sold, destroyed or have inventory loss, the differences between the proceeds of disposal and the book value plus relevant taxes are included in the profit and loss of the current period.
The initial cost of biological assets includes purchase price, transportation cost, insurance cost, and other cost directly attributed to purchasing the assets. The initial cost of self-breeding productive biological assets (before the expected condition for use) includes breeding cost, wages and other indirect costs. Before the expected condition for use, cost of biological assets, including breeding and protection, are recorded in profits and losses of the current period.
Biological assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated useful lives. For the biological assets being provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, residual rates and annual depreciation rates are as follows:
Items Useful Lives Residual Rates(%) Annual Depreciation Rates(%) Chicken and Eggs 1 years 5.00 95
boar、sheep for breeding 3 years 5.00 31.67
At the balance sheet date, if potential impairment of biological assets exists, estimation of its net realizable value shall be made. Recognizing impairment loss where net realizable value below its book value. Once an impairment loss is recognized, it is not reversed in a subsequent period.
When biological assets are sold, destroyed or have inventory loss, the difference between the revenue from disposal and its book value plus relevant taxation are recorded into profits and losses of the current period.
18. Borrowing costs
(1) Recognition principles for capitalization of borrowing costs and capitalization period
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. When the borrowing costs can be directly attributable to the construction or production of assets eligible for capitalization, and the asset disbursements or the borrowing costs have already incurred, and the construction or production activities which are necessary to prepare the asset for its intended use or sale have already started, the capitalization of borrowing costs begins. When the asset eligible for capitalization under acquisition and construction or production is ready for the intended use or sale, the capitalization of the borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when incurred.
The assets which can fulfill the principles for capitalization refers to fixed assets, investment property and inventories which need a long time to be in use or for sale .Capitalization of borrowing costs starts when:
a. The assets expenditures have incurred.Asset expenditures include the payment of cash, transfer of non-cash assets or the occurrence of interest bearing debt in the form of assets that are in line with the conditions of capitalization for the purchase and construction or production;
b. The borrowing costs have incurred;
c. The acquisition and construction activities that are necessary to bring the asset to its expected usable condition have commenced.
(2) Capitalization of borrowing costs
The period of capitalization refers to the period from the start point of capitalization to the stop point of capitalization , the suspension period is not included.
When the assets in construction or production which can meet the capitalization conditions were in use or sale status, the cost of borrowing need stop the capitalization.
When the assets in construction or production which can meet the capitalization conditions were partly completed and can be used separately, the cost of borrowing need stop the capitalization.
Each part of the assets in construction or production are respectively completed, and it can only be used or sold after the completion of the whole,at the time when the asset wholly completed need the cost of borrowing stop the capitalization.
(3) Suspended during the period of capitalization
Capitalization of borrowing costs should be suspended during periods in which the acquisition or construction is interrupted abnormally, and the interruption period is three months or longer. These borrowing costs should be recognized directly in profit or loss during the current period. However, capitalization of borrowing costs during the suspended periods should continue when the interruption is a
necessary part of the process of bringing the asset to working condition for its intended use.
(4)Calculation method of capitalized amount of borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is determined as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of the borrowing.
To the extent that funds are borrowed generally and used for the purpose of acquiring or constructing a qualifying asset, the amount of borrowing costs eligible for capitalization shall be determined by applying a capitalization rate to the weighted average of excess of accumulated expenditures on qualifying asset over that on specific purpose borrowing. The capitalization rate is the weighted average rate of the general borrowings.
During the period of capitalization, the exchange balance on foreign currency special borrowings shall be capitalized; the exchange balance on foreign currency general borrowings shall be recorded into current profits and losses.
19. Intangible assets
The intangible assets of the Group include the land use right and software acquired for the construction of self-used properties. The land use right acquired for daily operation is calculated as the inventory. Intangible assets are measured at actual cost upon acquisition, where, the actual cost of intangible assets purchased consists of the actual payment and relevant expenses; and the cost input by the investors in intangible assets is determined in accordance with the value stipulated in the investment contract or agreement; unless the contract or agreement stipulates that the value is not fair, then the actual cost is measured at the fair value.
Land use right is amortized averagely according to transfer term counted from transferring date; software and other intangible assets shall be amortized averagely according to the shortest term among anticipated service life, beneficiary years stipulated in contract and valid terms formulated by law. Amortized amount is included in relevant asset cost and current profit or loss by beneficiaries. Estimated service life and amortization method of intangible assets with limited service life are recheck at the end of each year, treatment of changes in accounting estimates is adopted for any change.
As for the intangible assets with limited life, its service life shall be estimated at the year-end
Item Amortisation periods Basis
Less than the period stated at contracts or Land use rights 50 years
included in other legal rights
Patent, brand, software Less than the period stated at contracts or 5 years
and technology included in other legal rights
20. Impairment of long-term assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets
with limited service life, investing real estate with cost model, long-term equity investment of
subsidiaries, cooperative enterprises and joint ventures, the Group should judge whether decrease in
value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value
if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible
intangible assets should be tested for decrease in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be the
higher of net value of asset fair value deducting disposal charges or present value of predicted cash
flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales
agreement exists but with asset active market, fair value should be determined according to the
Buyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could be
acquired on the basis of best information available. Disposal expenses include legal fees, taxes,
cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of
predicted asset cash flow should be determined by the proper discount rate according to Assets in
service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on
the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets,
recoverable amounts should be determined according to the belonging asset group. Asset group is the
minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared to
beneficial asset group and asset group combination in collaboration of business merger. It is shown in
the test that if recoverable amounts of shared business reputation asset group or asset group
combination are lower than book value, it should determine the impairment loss. Impairment loss
amount should firstly be deducted and shared to the book value of business reputation of asset group
or asset group combination, then deduct book value of all assets according to proportions of other
book value of above assets in asset group or asset group combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned
in future.
21. Goodwill
The balance of the equity investment costs or consolidation costs not under the same control greater than the fair value of the share of net assets or recognizable net assets of the invested unit or seller acquired from enterprise consolidation is recognized as goodwill.
Goodwill related to the subsidiary is separately listed on the consolidated financial statements; goodwill related to the associated enterprises and joint ventures is included in the book value of long-term equity investment.
Impairment test is carried out for goodwill at the end of the year, no matter whether there is any sign of impairment. The goodwill was, together with the related asset group or combination of asset groups, subject to the impairment test. That is, the book value of goodwill was reasonably apportioned to the asset group or combination of asset groups which benefit from the synergy of business merger from the purchase date. If the recoverable amount of the asset group or combination of asset groups of goodwill with apportionment is less than its book value, the related impairment loss shall be recognized. Impairment loss is firstly amortized to the carrying values of goodwill in asset group or asset group portfolio, and then deducted for the carrying value of other assets in according to the percentage occupied of other assets (except goodwill) in the asset group or asset group portfolio.
22. Long-term deferred expenses
The Company recognizes all expenses which have occurred during the period but shall be amortized beyond one year, such as improvement expenditures of operating leased fixed assets, as
long-term deferred expenses. The Company amortizes long-term deferred expenses using straight-line method according to relevant beneficial periods.
Long term deferred expenses which have a clear benefit period are made according to the average amortization period, in other situation , amortization need be made according to the average amortization period of 5 years.
23. Employee remuneration
(1) Accounting treatment of short-term compensation
Employee compensation refers to the reward or compensation of various modes provided by the Group which wants to receive the service offering by the employees or to execute the release of the labor relationship. The employee compensation including the short-term salary, departure benefits, demission benefits and other long-term employee benefits. The Group provides the benefits for the spouses, children, supported families of the employees, the members of the deceased's employees and other beneficiaries, which are also employee compensations.
The short-term compensation actually happened during the accounting period when the active staff offering the service for the Group should be recognized as liabilities and is included in the current gains and losses or relevant assets cost except for those be required or permitted to included in the assets cost by other ASBE.
(2) Accounting treatment of the welfare after demission
The Group divides the departure benefits plan into defined contribution plans and defined benefit plans. Benefits plan of after demission refer to the agreement between the Group and employees on the departure benefits, or the regulations or methods formulated by the Group for providing welfare after demission for the employees. Of which, defined contribution plans refers to the departure benefits plan that the Group no more undertake the further payment obligations after the payment and deposit of the fixed expenses for the independent funds; defined benefit plans refers to the departure benefits plan except for the defined contribution plans.
a. Defined contribution plans
During the accounting period when providing the service for the employees, the Group will recognize the deposited amount as the liabilities which measured by defined contribution plans and include in the current gains and losses or the relevant assets cost.
b. Defined benefit plans
Other long-term employee benefits the Group had not executed the defined contribution plans or met with the conditions of defined benefit plans.
(3) Accounting treatment of the demission welfare
When the Company is unable to unilaterally withdraw the plan on the cancellation of labor relationship or the layoff proposal, or when recognizing the costs or expenses (the earlier one between the two) related to the reorganization of paying the demission welfare, should recognize the payroll liabilities from the demission welfare and include in the current gains and losses.
24. Estimated liabilities
When the businesses related to contingencies like external guarantee and pending actions or arbitration conform to the following conditions at the same time, they will be recognized as the debt by the Group: the obligation is the current obligation undertaken by the Group; the implementation of such obligation may probably cause the outflow of economic interests from the Group; and the amount of that
obligation can be measured reliably.
(1) Recognition criteria of estimated liabilities
The company should recognize the related obligation as a provision for liability when the obligation meets the following conditions:That obligation is a present obligation of the enterprise;It is probable that an outflow of economic benefits from the enterprise will be required to settle the obligation;A reliable estimate can be made of the amount of the obligation.
(2)Measurement of estimated liabilities
To fulfill the present obligations, which initially measured by the best estimate of the expenditure required to settle the liability. Where there is a continuous range of possible amounts of the expenditure required to settle the liability, as all kinds of possibilities are at same level, the best estimate should be determined according to the average of the lower and upper limit of the range. In other cases, the best estimate should be determined in accordance with the following methods:
Where the contingency involves a single item, the best estimate involves a singe item, the best
estimate should be determined according to the most likely outcome;
Where the contingency involves several items; The best estimate should be determined by weighting all possible outcomes by their associated probabilities of occurrence.
To determine the best estimate, it should be considered with factors such as: related contingency
risks, uncertain matters and time value of currency. If time value of currency has a significant
impact, the best estimate should be measured at its converted present value through the relevant
future cash outflows.
Where some or all of the expenditures are expected to be reimbursed by a third party, the
reimbursement should be separately recognized as an asset only when it is virtually received. The
amount of the reimbursement should not exceed the carrying amount of the liability recognized.
25. Share payment
The equity-settled share-based payment to exchange the provision of service by employees is measured by the fair value of the equity instrument conferred to the employees on the grant date. Where it is exercisable upon finishing the service within the waiting period or satisfying the regulated performance conditions, based on the optimal estimation of the exercisable equity instrument quantity within the waiting period, the fair value amounts are included in relevant cost or expense after calculation by the method of line, with relevant capital surplus increased.
26. Recognition and measurement of income
The operation revenue of the Group mainly include the sales revenue, lease revenue and property management revenue of real estate development products and revenue recognition policies are as follows:
(1) The revenue of real estate development products are recognized under the following conditions:
a. Seller and Purchaser sign the sales contract and file a record in the land department;
b. The revenue of real estate development products are completed and are qualified in acceptance; c. The company has received full house-purchase price or obtained the right of collecting the full purchase price (e.g. the written commitment letter for releasing mortgage payment from bank);
d. The formalities of property delivery are handled or the customers are deemed to accept the property according to the terms in the purchase contract.
(2) Lease revenue:
The lease revenue of investment property is recognized as the lease revenue by the method of line according to rent agreed in the contract or agreement over the lease term.
(3) Property management revenue:
When property management service has been provided and its relevant economic benefit has obtained by the Company, meanwhile, relevant revenue and cost can be measured reliably, the realization of utilities revenue is recognized.
27. Government subsidies
Government subsidies refer to monetary assets and non-monetary assets acquired without any charge from the government. Government subsidies can only be recognized upon meeting the condition that the Company meets all conditions of government subsidy and is able to receive the government subsidy.
If government subsidies are monetary assets, it shall be calculated according to the received; if the government subsidy is distributed subject to fixed quota standard or if there is definite evidence showing that it is in conformity with relevant requirements of the financial support policies, it shall be calculated according to the receivable amount; and if the government subsidy is non-monetary assets, it shall be measured at the fair value; and if the fair value fails to be obtained reliably, it shall be calculated according to nominal amount (RMB 1).
Government subsidies in relation to assets are recognized as deferred income and allocated equally within the service life of relevant assets, which will then be included in current profit or loss. Government subsidies relevant with incomes and that are used to make up future expenses or losses will be recognized as deferred income and recognized into current profits and losses within the recognition period of relevant expenses; government subsidies used to make up incurred relevant expenses or losses are included into current profits or losses directly.
28. Deferred income tax assets and deferred income tax liabilities
The Company executes the accounting treatments of the income tax by adopting the balance sheet
liability method.
(1) Deferred income tax assets
Where there are deductible temporary differences between the carrying amount of assets or
liabilities in the balance sheet and their tax bases, a deferred tax asset shall be recognized for all those
deductible temporary differences to the extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilized. Deferred tax assets arising from
deductible temporary differences should be measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled.
At the balance sheet date, where there is strong evidence showing that sufficient taxable profit
will be available against which the deductible temporary difference can be utilized, the deferred tax
asset unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If
it’s probable that sufficient taxable profit will not be available against which the deductible
temporary difference can be utilized, the Company shall write down the carrying amount of deferred
tax asset, or reverse the amount written down later whenit’s probable that sufficient taxable profit
will be available.
(2) Deferred income tax liabilities
A deferred tax liability shall be recognized for all taxable temporary differences, which are
differences between the carrying amount of an asset or liability in the balance sheet and its tax base,
and measured at the tax rates that are expected to apply to the period when the asset is realized
or the liability is settled.
(3)Other notes
The current income tax assets and liabilities of the Group should be listed by the written-off net
amount which intend to executes the net amount settlement as well as the assets acquiring and
liabilities liquidation at the same time while owns the legal rights of settling the net amount.
The deferred income tax assets and liabilities of the Group should be listed as written-off net
amount when having the legal rights of settling the current income tax assets and liabilities by net
amount and the deferred income tax and liabilities is relevant to the income tax which be collected
from the same taxpaying bodies by the same tax collection and administration department or is
relevant to the different taxpaying bodies but during each period which there is significant reverse of
the deferred income assets and liabilities in the future and among which the involved taxpaying
bodies intend to settle the current income tax and liabilities by net amount or are at the same time
acquire the asset as well as liquidate the liabilities.
29. Leasing
The leasing business of the Group is operating lease.
The rent paid by the Group as the Lessee in the operating lease is included in related asset costs or current profits and losses by the method of line over the lease term.
30. Change in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
Not Applicable.
(2) Significant changes in accounting estimates
Not Applicable.
31.early error correction
Not Applicable.
32.Statement of changes in financial statements
On December 3, 2016,The Ministry of Finance issued the "value-added tax accounting regulations" (Accounting[2016] No. 22).
The provisions in The "VAT accounting regulations" are: after the completely implementation of business tax changing to VAT tax, the subject “business taxes and surcharges” adjusted for taxes and surcharges subject, which is used to account business activities of the consumption tax, city maintenance and construction tax, resource tax, education surcharges and property tax, land use tax and travel tax, stamp tax and other related taxes. Business tax and surcharges project change into "tax and surcharges" project in the profit statement as well.
The "VAT accounting regulations" also specifically requested the closing debit balance of "taxes payable" account under the "VAT payable" and "non-payment of value-added tax, input tax to be deducted", "to be certified VAT, VAT tax retained" and other details of the subjects should be listed as
"other current assets" or "other non-current assets" item based on the situation in the balance sheet; the
closing credit balance of "taxes payable - for resale tax" and other subjects should be listed as other current liabilities "or" other non-current liabilities "items based on the situation in the balance sheet.
V. Taxation
1. Main taxes and tax rates
Tax category Tax basis Tax rate
Sales of goods, taxable sales and service
Value Added Tax income, intangible assets or immovable 3%-17%
property
Land value-added tax Land VAT or pre-requisitioned Super rate progressive rate City maintenance and construction tax Transfer tax payable 5%
Education surcharge Transfer tax payable 3%
Local education surcharge Transfer tax payable 2%
Rental income or original value of real
Housing property tax 12% or1.2% estate
2. Corporate income tax
Company Tax rate
Parent company 25%
Chengde Nanjiang Real Estate Development Co., Ltd 25%
Runhua Rural Water (Tianjin) International Trade Co., Ltd. 25%
ChengDe NanJiang Investment Co., Ltd. 25%
ChengDe NanJiang Ecological Agriculture Co., Ltd. 25%
Hangzhou Dongfeng Stealth Technology Co., Ltd. 25%
NanJiang Asia Investment Co., Ltd. 16.5%
Chengde Morsh Technology Co., Ltd 25%
Chengde HuiJing property Co., Ltd 25%
NOTE：NanJiang Asia Investment Co., Ltd. is in special administrative region, and the applicable corporate income tax rate is16.5%.
3. The company withhold individual income tax.
V. Notes to Major Items in Consolidated Financial Statement
With respect to the following data disclosed in the Financial Statements, unless otherwise stated, "the beginning of the year" refers to January 1, 2016; "the end of the year" refers to December 31, 2016; "this year" refers to the period between January 1, 2016 to December 31, 2016, and the "previous year" refers to the period between January 1, 2015 to December 31, 2015. The currency unit is RMB.
1. Monetary fund
Items Closing Balance Opening Balance
Cash on hand 33,804.54 70,613.10
Bank deposit 126,937,030.29 84,473,064.35 Other monetary fund 5,999,327.40 3,693,739.53 Total 132,970,162.23 88,237,416.98
||
|-|
|Of which: the total amount|
|deposited overseas|

(1)Restricted monetary fund during the reporting period are shown below:
Item Closing Balance Opening Balance
guaranteed deposit for housing mortgages 5,999,327.40 3,693,739.53 Total 5,999,327.40 3,693,739.53 NOTE: Compared to the Opening Balance, the Closing Balance of monetary fund increased by RMB 44,732,745.25, with the increased rate of50.70%. The main reason for the increase was: the income of house pre-sale grew.
2. Accounts receivable
(1) Types of accounts receivable
Closing Balance
Book balance Provision for bad debts
Categories
Proportio Proportion Book value Amount Amount
n(%) (%)
||||||
|-|-|-|-|-|
|2,320,047.40|94.74|2,320,047.40|100|---|
|128,771.85|5.26|50,887.10|39.52|77,884.75|
|---|---|---|---|---|
|2,448,819.25|100|2,370,934.50|96.82|77,884.75|

 Continued:
Opening Balance
Book balance Provision for bad debts
Categories
Proportio Proportion Book value Amount Amount
n(%) (%)
||||||
|-|-|-|-|-|
|2,320,047.40|92.86|2,320,047.40|100.00|---|
|178,497.35|7.14|22,383.82|12.54|156,113.53|

Opening Balance
Book balance Provision for bad debts
Categories
Proportio Proportion Book value Amount Amount
n(%) (%)
||||||
|-|-|-|-|-|
|---|---|---|---|---|
|2,498,544.75|100.00|2,342,431.22|93.75|156,113.53|

 Notes for Category:
a. Accounts receivable with significant single amount with bad debt provision separately accrued:
Closing balance
Accounts receivable
(classified by units) Accounts Bad debt Proportion
Reason
receivable provision （%）
Beijing xiang e qing
industry and trade co., 2,320,047.40 2,320,047.40 100 Uncollectible
LTD
Total 2,320,047.40 2,320,047.40 --- ---
b. In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision: Closing balance
Aging
Withdrawal
Accounts receivable Bad debt provision
proportion（%）
Within 1 year 6,102.50 305.13 5
1 to 2 years 50,339.00 10,067.80 20
2 to 3 years 63,632.35 31,816.18 50
Total 120,073.85 42,189.11 35.14
c. Accounts receivable with insignificant single amount for which bad debt provision separately
accrued are inapplicable.
(2) Accounts receivable withdraw, reversed or collected during the reporting period.
The withdrawal amount of the bad debt provision during the reporting period was of RMB 0.00; the amount of the reversed or collected part during the reporting period was of RMB 28,503.28.
(3) There was no write-off the accounts receivable during the reporting period.
(4) Top 5 of the closing balance of the accounts receivable collected according to the arrears party.
Proportion of the total year
Closing balance of bad Name of units Closing balance end balance of the accounts
debt provisionreceivable(%)
Beijing xiang e qing industry
2,320,047.40 94.74 2,320,047.40 and trade co., LTD
Chengde Great wall Group 12,611.00 0.51 7,564.00 Electricity Authority of
71,988.85 2.94 34,488.70 Chengde county
Inner Mongolia A Jin Nai Ma
culture development co., 44,172.00 1.80 8,834.40 LTD
合计 2,448,819.25 100.00 2,370,934.50 (5)There was no account receivable which terminate the recognition owning to the transfer of the financial assets during the reporting period.
(6)There was no amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable during the reporting period.
3. Prepayments
(1)The aging analysis of prepayments is as follows:
Closing Balance Opening Balance Aging Proportion Amount Proportion(%) Amount
(%) Within 1 year 18,243,428.68 99.96 1,105,122.95 100 1-2 years 6,899.45 0.04 --- --- 2-3 years --- --- --- --- Over 3 years --- --- --- --- Total 18,250,328.13 100.00 1,105,122.95 100 (2) There was no prepayment with an aging above 1 year.
(3) Top 5 of the closing balance of the prepayment collected according to the prepayment target
Closing balance
Closing
Name of Units of bad debt Aging Reason
balance
provision
Shanxi Eagles Men
Aeronautic Science the credit period
15,969,092.73 87.50 Within 1 year
and Technology Co. in transit
Ltd.
Eagles Men
Aeronautic Science the credit period
2,241,461.40 12.28 Within 1 year
and Technology in transit
Group Co.,Ltd
Liaoning Zhong
Wang aluminum gold the credit period
23,000.00 0.13 Within 1 year
deep processing Co., in transit
Ltd.
Beijing branch of
large North the credit period
6,537.13 0.04 1-2 years
agricultural feed in transit
company
Tianjin Zhao Li Feng the credit period
5,000.00 0.03 Within 1 year
Trading Co., Ltd. in transit
Total 18,245,091.26 99.98 --- ---
NOTE: compared to the opening balance, the amount of prepayment increased by RMB 17,145,205.18 at the end of 2016, with the drop of1551.43%. The main reason for the rise was the purchase of Airship hangar from Shanxi Eagles Men Aeronautic Science and Technology Co. Ltd. and Eagles Men Aeronautic Science and Technology Group Co.,Ltd.
4. Other receivables
（1）Classification of other receivables
Closing Balance
Book balance Provision for bad debts
Type
Proportion Proportion Book value Amount Amount
(%) (%)
||||||
|-|-|-|-|-|
|2,709,273.00|3.72|2,709,273.00|100.00|---|
|67,638,107.30|93.00|170,334.55|0.25|67,467,772.75|

Closing Balance
Book balance Provision for bad debts
Type
Proportion Proportion Book value Amount Amount
(%) (%)
||||||
|-|-|-|-|-|
|2,384,698.35|3.28|2,046,957.70|85.84|337,740.65|
|72,732,078.65|100.00|4,926,565.25|6.77|67,805,513.40|

 Continued:
Opening Balance
Book balance Provision for bad debts
Type
Proportion Proportion Book value Amount Amount
(%) (%)
||||||
|-|-|-|-|-|
|2,709,273.00|2.90|2,709,273.00|100.00|---|
|88,424,018.54|94.90|274,716.03|0.31|88,149,302.51|
|2,046,957.70|2.20|2,046,957.70|100.00|---|
|93,180,249.24|100.00|5,030,946.73|5.40|88,149,302.51|

 a. Other receivables which single amount is significant and bad debts reserve is withdrawn at the end of the year
Closing Balance
Name of Units Provision for bad Accruing proportion Reasons for Other receivables
debts (%) Accrual
Chengde county Expected
1,500,000.00 1,500,000.00 100
administration of non-tax irrecoverable
revenue
ExpectedCreditor’s right from auctions 1,209,273.00 1,209,273.00 100
irrecoverable Total 2,709,273.00 2,709,273.00 100
Other receivables which single amount is significant refer to receivables which the single amount is not less than RMB 1,000,000. After specific identification of those which single amount is significant,the receivables from Chengde county administration of non-tax revenue( RMB 1,500,000.00 ) andCreditor’s right from auctions( RMB1,209,273.00 ) are identifed irrecoverable and were made Provision for bad debts totally.
b. Other receivable with provisions of bad debts accrued by aging analysis method in the portfolio Closing Balance
Aging
Other receivables Provision for bad debts Accruing proportion(%)
|||||||
|-|-|-|-|-|-|
|817,822.43||40,891.12||5.00||
||147,109.04||29,421.80||20.00|
|85,043.25||42,521.63||50.00||
|57,500.00||57,500.00||100.00||
||1,107,474.72||170,334.55||15.38|

c. Other receivable with provisions of bad debts accrued by other method in the portfolio
Closing Balance
Aging
Other receivables Provision for bad debts Accruing proportion(%) The prepayment of
188,836.28 --- ---
oil company
The purchase
payment of land
66,025,400.00 --- ---
of Chengde county
land reserve center
Special fund of
90,421.00 --- ---
cement
Staff’s loan 225,975.30 --- ---
Total 66,530,632.58 --- ---
d.Other receivables of individual account with insignificant amount and accrued for provision for bad debts at the end of the year
Accrui
ng
Bad debt Aging(ye
Accounts Receivable Book Amount propor Reasons for Accrual provision
ar)
tion(%
)
Expected Qizhong Yan 270,000.00 270,000.00 4-5 100.00
irrecoverable
Expected
Ansheng Wang 141,005.79 141,005.79 4-5 100.00
irrecoverable
Expected
Degang Bao 356,838.00 356,838.00 More 100.00
than 4 irrecoverable years
Expected Chengquan Liu 300,000.00 300,000.00 4-5 100.00
irrecoverable More Expected Tianhong Li 217,424.66 217,424.66 than 100.00 irrecoverable 5years
Expected Haihong Zhou 642,689.25 642,689.25 3-4 100.00
irrecoverable Expected Guang Tong Company 119,000.00 119,000.00 4-5 100.00
irrecoverable Tianjin Zhuo Rui Trade within
216,836.65 ---
Development Company 1year
Taiyuan intermediate within
40,904.00 ---
people's court 1year
Tianjin Shuze Law within
80,000.00 ---
Office 1year
2,384,698.35 2,046,957.70 --- ---
Total
(2) Provision for bad debts withdrawn and returned back (taken back) in this year
Provision for bad debts extract in this year is RMB 14,609.76; bad debts reserve returned back or taken back in this year is RMB 129,243.28.
(3) Classification of other receivables by nature
Book balance at the end of the Book balance at the beginning Fund nature
year of the year
Earnest money 1,570,000.00 1,550,000.00 Employees deposit 3,056,261.97 3,883,802.72Creditor’s right from auctions 1,209,273.00 1,209,273.00 The purchase payment of land 66,025,400.00 86,025,400.00 Others 871,143.68 511,773.52 Total 72,732,078.65 93,180,249.24（4）The top five other accounts receivable
Proportion in Year-end
Debtors total year-end balance of Fund nature Ending balance Aging
Ranking balance of other provision for receivables(%) bad debts Land
Customer I 66,025,400.00 2-3years 90.78 --- acquisition
bid fund use
Customer II 1,500,000.00 2-3years 2.06 1,500,000.00 for land
Within 1
Customer III deposit 216,836.65 0.30 --- year,
Within 1
Customer I V deposit 188,836.28 year,1-2year 0.26 --- s
Proportion in Year-end
Debtors total year-end balance of Fund nature Ending balance Aging
Ranking balance of other provision for receivables(%) bad debts Within 1
Customer IV others 80,000.00 0.11 --- year
Total --- 68,011,072.93 --- 93.51 1,500,000.00 NOTE: Compared to the opening balance, the closing balance of other receivables decreased by RMB 20,448,170.59, with the increase rate of21.94%. The reduction of payment on land was the main reason.
5. Inventories
(1)Inventories Classification
Closing Balance Opening Balance
Items
Net Book Provisio Net Book Book Balance Provision Book Balance
Balance n Balance Raw
205,531.64 --- 205,531.64 596,830.85 --- 596,830.85 Material
Cost of
production 83,168.30 --- 83,168.30 --- --- --- Finished
1,158,462.11 229,002.27 929,459.84 61,739.48 --- 61,739.48 goods
Circulation
127,945.
materials 18,498.40 --- 18,498.40 13,571,110.15 13,443,164.95 20
Consumptiv
e biological
5,600.00 --- 5,600.00 18,498.40 --- 18,498.40 assets
Developmen
279,423,016.25 --- 279,423,016.25 130,431.42 5,795.58 124,635.84 t costs
Product
61,074,784.71 --- 61,074,784.71 432,613,281.99 --- 432,613,281.99 development
Total 341,969,061.41 229,002.27 341,740,059.14 172,383,223.21 --- 172,383,223.21 (2)Provision for diminution in value of inventories
Increase during the
Decrease during the current accounting
current accounting Closing Category Opening Balance period
period Balance Accrual Other Reversal Written off Other
Finished goods 127,945.20 225,042.12 --- --- 123,985.05 --- 229,002.27 Consumptive
5,795.58 --- --- --- 5,795.58 --- --- biological
assets
Total 133,740.78 225,042.12 --- --- 129,780.63 --- 229,002.27 Note:After a comprehensive check of inventories at end of the year, provision for obsolete stock would be extracted or adjusted depend on the less one between the cost and the net realizable. Provision for inventory was made by single item at the end of the year.
(3) There is no amount of capitalization of the borrowing costs in final balance of the stock
(4) Development Cost
Time for Estimation of Estimation of
Closing Opening Item commenceme time for total investment
Balance Balance nt completion amount
HuiJing
2013 2016 5.7bilion 279,423,016.25 432,613,281.99 TianDi
Total --- --- --- 279,423,016.25 432,613,281.99 (5)Product development
Increase during the Decrease during
Time for Opening Closing Item current accounting the current
completion Balance Balance period accounting period
Qian
December
Yuan 5,867,753.88 --- 5,867,753.88 --- 2012
Area
HuiJin
September
gTian 166,515,469.33 193,398,565.84 298,839 250.46 61,074,784.71 2016
Di
Total --- 172,383,223.21 193,398,565.84 304,707,004.34 61,074,784.71 (6)Consumptive biological assets
Item Closing Balance Opening Balance
Chick 2,100.00 7,854.00 Boer goat 3,500.00 122,577.42 Total 5,600.00 130,431.42 (7) Materials in transport
Item Closing Balance Opening Balance
Airship ground
2,538,461.43 ---
protection
Stratospheric satellite
17,499,999.96 ---
ground protection
Skeleton type hangar 508,974.36 ---
door with leopard
Propulsion chambe 76,068.38 ---
Total 20,623,504.13 ---
The detailed statements about materials in transport are in statement14.
NOTE: Compared to the opening balance, the closing balance of inventories decreased by RMB 277,406,054.09,with the increased rate of44.79%. The main reason is Product development carry over cost due to the completion of HuiJing TianDi project .
6. Non current assets due within one year
Items Closing Balance Opening Balance
Wait deal assets loss or
333,716.08 ---
income
||
|-|
|Total|

NOTE: Non current assets due within one year are wait deal assets loss or income of Three subsidiary of Nanjiang ecological agriculture Limited company.
7.Other Current Assets
Items Closing Balance Opening Balance
Provisional tax 19,177,045.07 33,761,457.51
||
|-|
|Total|

NOTE: Compared to the opening balance , the closing balance of inventories decreased by RMB 14,584,412.44,with the increased rate of43.2%.The provisional tax increased for the decrease of the sales from HuiJing TianDi was the main reason .
8. Assets available for sale financial assets
(1) List of available-for-sale financial assets
amount in year-end
Items Available for sale Available for sale Other available for sale
Total
equity instruments debt instruments financial assets
The cost of equity
instruments / debt 25,000,000.00 --- --- 25,000,000.00
instruments
Fair value --- --- --- ---
Among them: the total
amount of the fair value
--- --- --- ---
of other comprehensive
income
Provision for
2,215,868.07 --- --- 2,215,868.07
impairment
Net Value 22,784,131.93 --- --- 22,784,131.93
amount in year-begin
Items Available for sale Available for sale Other available for sale
Total
equity instruments debt instruments financial assets
The cost of equity
instruments / debt --- --- --- ---
instruments
Fair value --- --- --- ---
Among them: the total
amount of the fair value
--- --- --- ---
of other comprehensive
income
Provision for
--- --- --- ---
impairment
Net Value --- --- --- ---
(2) impairment of available for sale financial assets
Available for sale
Available for sale Other available for sale
Items equity Total
debt instruments financial assets
instruments
Provision for impairment
--- --- --- ---
in year-begin
Provision for impairment
2,215,868.07 --- --- 2,215,868.07
in the year
Among them: from other
--- --- --- ---
comprehensive income
Decrease this yea --- --- --- ---
Among them: swich back
after the recovery of fair --- --- --- ---
value
Provision for impairment
2,215,868.07 --- --- 2,215,868.07
in year-end
9.Long-term equity investments
Increase,decrease in
Accountin Investment at Opening
Invested Company this period(decrease Closing Balance g method cost Balance
-)
RunHua (TianJin) Water Saving Equity
2,000,000.00 2,343,974.43 -1,321,243.97 1,022,730.46 Tech Co., Ltd.
method
MinFeng (TianJin) Material
Equity
Industry Chemical Trading Co., 4,410,000.00 4,455,549.93 --- 4,455,549.93 method
Ltd.
Increase,decrease in
Accountin Investment at Opening
Invested Company this period(decrease Closing Balance g method cost Balance
-)
Total --- 6,410,000.00 6,799,524.36 -1,321,243.97 5,478,280.39 Provision for
Stake ratio Voting right ratio Cash Dividend in Invested Company Provision impairment loss in
（%） （%） this period this period
RunHua (TianJin) Water Saving
31.75 31.75 --- --- --- Tech Co., Ltd.
MinFeng (TianJin) Material
Industry Chemical Trading Co., 49.00 49.00 --- 4,455,549.93 --- Ltd.
Total --- --- --- 4,455,549.93 --- (1) On October 14 2011, RunHua (TianJin) Water Saving Tech Co., Ltd. was established and obtained the business liscence, with the registered capital of RMB 6,300 thousand, including RunHua developing Co., Ltd. Contribute RMB 3000 thousand, accounting for47.619% of the total share capital, subsidiary RunHua contribute RMB 2000 thousand, accounting for31.746% of the total share capital, LangFang ChunYuan irrigating prject Co., Ltd contribute RMB 1000 thousand, accounting for15.873% of total share capital, HePing Zhang contribute RMB 300 thousand, accounting for4.7619% of total share capital.
(2) On December 21 2012, MinFeng (TianJin) Material Industry Chemical Trading Co., Ltd. was established, with the registered capital of RMB 9000 thousand, including MinFeng (ShanXi) Material Industry Chemical Trading Co., Ltd contribute 459 thousand, accounting for51% of the total share capital, subsidiary RunHua contribute RMB 4410 thousand, accounting for49% of the total share capital.
10. Investment Property
Item land-use right Total
I. Original carrying value
1. Beginning balance
--- ---
2. Increase in the year
5,475,870.75 5,475,870.75
(1) Purchasing --- ---
(2) Carried over from
inventory/fixed assets/ --- ---
intangible assets
(3) Other increases 5,475,870.75 5,475,870.75
(4) Increase of
--- ---
corporate combination
3. Decrease in the
--- ---
year
(1) Disposal --- ---
(2) Carried over to
inventory/fixed assets/ --- ---
intangible assets
(3) Other decreases
--- ---
4. Ending balance
5,475,870.75 5,475,870.75
II. Accumulated depreciation (amortization)
1. Beginning balance
--- ---
2. Increase in the year 644,717.00 644,717.00
(1) Withdrawing or
--- ---
amortization
(2) Carried over from
inventory/fixed assets/ --- ---
intangible assets
(3) Other increases 644,717.00 644,717.00
3. Decrease in the
--- ---
year
(1) Disposal --- ---
(2) Other transfer-out --- ---
(3) Other decreases --- ---
4. Ending balance
644,717.00 644,717.00
III. Provision for impairment
1. Beginning balance
--- ---
2. Increase in the year
--- ---
(1) Withdrawing
--- ---
(2) Carried over from
inventory/fixed assets/ --- ---
intangible assets
(3) Increase of
--- ---
corporate combination
3. Decrease in the
--- ---
year
(1) Disposal
--- ---
(2) Carried over to
inventory/fixed assets/ --- ---
intangible assets
4. Ending balance --- ---
IV. Book value
1. Ending book value 4,831,153.75 4,831,153.75
2. Beginning book
--- ---
value
11.Fixed assets
(1) Statement of Fixed Assets
Machinery Transportatio Other
Item Buildings Total
equipment n vehicles equipment
I. Original carrying value
1. Beginning
8,095,437.08 1,310,815.43 4,007,079.15 755,832.37 14,169,164.03 balance
2. Increase in the
5,582,985.58 721,627.85 451,800.85 180,597.82 6,937,012.10 year
(1) Purchasing --- 721,627.85 451,800.85 180,597.82 1,354,026.52 (2) Carried over
from
inventory/fixed --- --- --- --- ---
assets/ intangible
assets
(3) Other increases 5,582,985.58 --- --- --- 5,582,985.58 (4) Increase of
corporate --- --- --- --- ---
combination
3. Decrease in the
--- --- 170,203.29 134,906.54 305,109.83 year
(1) Disposal --- --- 170,203.29 134,906.54 170,203.29 (2) Carried over to
inventory/fixed
--- --- --- --- ---
assets/ intangible
assets
(3) Other decreases --- --- --- --- ---
4. Ending balance 13,678,422.66 2,032,443.28 4,288,676.71 801,523.65 20,801,066.30 II. Accumulative depreciation and amortization
1. Beginning
1,845,759.60 1,181,130.82 1,755,387.42 481,187.02 5,263,464.86 balance
2. Increase in the
311,728.29 14,700.51 282,009.86 67,877.60 676,316.26 year
(1) Withdrawing or
311,728.29 14,700.51 282,009.86 67,877.60 676,316.26 amortization
(2) Carried over
from
--- --- --- --- ---
inventory/fixed
assets/ intangible
Machinery Transportatio Other
Item Buildings Total
equipment n vehicles equipment
assets
(3) Other increases --- --- --- --- ---
3. Decrease in the
--- --- 118,975.15 --- 118,975.15 year
(1) Disposal --- --- 118,975.15 --- 118,975.15 (2) Other
--- --- --- --- ---
transfer-out
(3) Other decreases --- --- --- 5,522.35 5,522.35 4. Ending balance 2,157,487.89 1,195,831.33 1,918,422.13 549,064.62 5,820,805.97 III. Provision for impairment
1. Beginning
--- --- --- --- ---
balance
2. Increase in the
--- --- --- --- ---
year
(1) Withdrawing --- --- --- --- ---
(2) Carried over
from
inventory/fixed --- --- --- --- ---
assets/ intangible
assets
(3) Increase of
corporate --- --- --- --- ---
combination
3. Decrease in the
--- --- --- --- ---
year
(1) Disposal --- --- --- --- ---
(2) Carried over to
inventory/fixed
--- --- --- --- ---
assets/ intangible
assets
4. Ending balance --- --- --- --- ---
IV. Book value
1. Ending book
11,520,934.77 836,611.95 2,370,254.58 252,459.03 14,980,260.33 value
2. Beginning book
6,249,677.48 129,684.61 2,251,691.73 274,645.35 8,905,699.17 value
(2)There are no fixed assets which has not completed the property right certificate at the end of
the period.
12. Productive Biological Assets
Planting industr Fishing
Item Husbandry industry Total
y industry
I. Original
carrying value
1. Beginning
--- 189,663.61 --- 189,663.61 balance
2. Increase in
--- 175,255.81 --- 175,255.81 the year
(1)Purchasing --- ---
(2）cultivate --- 175,255.81 --- 175,255.81 3. Decrease in
--- 150,116.74 --- 150,116.74 the year
1) Disposal or
discard as --- 150,116.74 --- 150,116.74 useless
4. Ending
--- 214,802.68 --- 214,802.68 balance
II. Accumulated
depreciation
1. Beginning
--- 41,153.85 --- 41,153.85 balance
2. Increase in
--- 133,208.79 --- 133,208.79 the year
(1)
--- 133,208.79 --- 133,208.79 Withdrawing
3. Decrease in
--- 1,693.72 --- 1,693.72 the year
(1) Disposal or
discard as --- 1,693.72 --- 1,693.72 useless
4. Ending
--- 172,668.92 --- 172,668.92 balance
III. Provision
for impairment
1. Beginning
--- --- --- ---
balance
2. Increase in
--- --- --- ---
the year
3. Decrease in
--- --- --- ---
the year
4. Ending
--- --- --- ---
balance
Planting industr Fishing
Item Husbandry industry Total
y industry
IV. Book value
1. Ending book
--- 42,133.76 --- 42,133.76 value
2. Beginning
--- 148,509.76 --- 148,509.76 book value
13. Intangible assets
(1) Details of intangible assets
Item Land use rights Software other Total
I. Original carrying value
1. Beginning
7,042,791.01 228,000.00 --- 7,270,791.01
balance
2. Increase in the ---
--- --- ---
year
(1) Purchasing --- --- --- ---
(2) Increase of
corporate --- --- --- ---
combination
(3) Other
--- --- --- ---
increases
3. Decrease in the
5,845,223.65 --- --- 5,845,223.65
year
(1) Disposal 369,352.90 --- --- 369,352.90
(2) Decrease of
corporate --- --- --- ---
combination
(3) Other
5,475,870.75 --- --- 5,475,870.75
decreases
4. Ending balance 1,197,567.36 228,000.00 --- 1,425,567.36
II. Accumulated amortization
1. Beginning
650,280.44 228,000.00 --- 878,280.44
balance
2. Increase in the
154,367.10 --- --- 154,367.10
year
(1) Withdrawing
154,367.10 --- --- 154,367.10
(2) Increase of
corporate --- --- --- ---
combination
(3) Other
--- --- --- ---
increases
3. Decrease in the 680,487.39 --- --- 680,487.39
year
(1) Disposal 35,770.39 --- --- 35,770.39
(2) Decrease of
corporate --- --- --- ---
combination
(3) Other 644,717.00 --- --- 644,717.00
decreases
4. Ending balance 124,160.15 228,000.00 --- 352,160.15
III. Provision for impairment
1. Beginning --- --- --- ---
balance
2. Increase in the --- --- --- ---
year
(1) Withdrawing --- --- --- ---
(2) Other --- --- --- ---
increases
3. Decrease in the --- --- --- ---
year
(1) Disposal --- --- --- ---
(2) Other --- --- --- ---
decreases
4. Ending balance --- --- --- ---
IV. Book value
1. Ending book
1,073,407.21 --- --- 1,073,407.21
value
2. Beginning
6,392,510.57 --- --- 6,392,510.57
book value
NOTE: Compared to the opening balance, the closing balance of Intangible assets decreased by RMB 5,319,103.36, with the decrease rate of83.21%. The main reason for the decrease was some land had been taken back by Chengde County land reserve center and land NO.23 was adjusted to investment real estate this period.
14.Development expenditure
Item Beginning Increase in the year Decrease in the year Ending
balance Development Included in the balance fix as intangible
expenditure Other current profits and
assets
inside losses
The airship
172,416.18 641,604.82 --- 172,416.18 --- 641,604.82 project
Total 172,416.18 641,604.82 --- 172,416.18 --- 641,604.82 15. Goodwill
(1) Original value of goodwill
The company Increase in the year Decrease in the year
be invested or
Beginning Fromed of Ending the events
balance corporate Other Disposal Other balance formed
combination
goodwill
RunHua 1,809,762.89 --- --- --- --- 1,809,762.89 Total 1,809,762.89 --- --- --- --- 1,809,762.89 (2)Provision for goodwill
Decrease of this
Beginning Increase of this year Ending
Invested company year
balance balance
Withdrawing Others Disposal Others
RunHua --- 1,809,762.89 --- --- --- 1,809,762.89合计 --- 1,809,762.89 --- --- --- 1,809,762.89 NOTE: Runhua was under deficit in the year 2014,2015,2016,and failed to meet the performance objectives. Goodwill impairment has already happened.
16.Long Term Deferred Expenses
Amortization
Opening Increase in Other decrease Closing
Items amount in
Balance this period in this period Balance
this period
Office’s
202,353.97 41,512.50 138,597.93 --- 105,268.54
Decoration fee
Factory
--- 55,000.00 5,499.96 --- 49,500.04
Decoration fee
Color steel
--- 6,507.61 1,265.32 --- 5,242.29
room
Total 202,353.97 103,020.11 145,363.21 --- 160,010.87
17. Deferred income tax assets and deferred income tax liabilities
(1) Non-offset deferred income tax assets
Ending balance
Beginning balance
Deductible Deferred Deductible Deferred
Item
temporary income tax temporary income tax
difference assets difference assets
Provision for assets impairment 775,645.41 3,102,581.64 775,645.41 3,102,581.64 Total 775,645.41 3,102,581.64 775,645.41 3,102,581.64 (2) Unconfirmed details of deferred income tax assets
Item Ending balance Beginning balance
Deductible temporary
-75,878.20 2,369,994.88 difference
Deductible losses 96,377,902.07 79,895,176.78 Total 96,302,023.87 82,265,171.66 Whether sufficient taxable income in the future can be obtained is uncertain, so there is no deductible temporary difference and deductible losses deferred income tax assets which can be recognized as deferred income tax assets in this period.
(3) Unrecognized deductible losses of deferred income tax assets will be expired at the end of following years
Amount at the end of Amount at the
Year Remarks
the year beginning of the year
2017 12,891,377.63 12,891,377.63 ---
2018 --- --- ---
2019 30,576,125.82 30,576,125.82 ---
2020 33,429,382.84 34,719,925.53 ---
2021 19,481,015.78 --- ---
Total 96,377,902.07 78,187,428.98 ---
18. Other non-current assets
Items Closing Balance Opening Balance
Advance payment of housing --- 5,201,365.53 Advance payment of equipments 91,040.00 ---
Total 91,040.00 5,201,365.53 NOTE: Compared to the opening balance, the closing balance decreased by RMB 5,110,325.53, with the decrease rate of98.25%.
19. Provision for assets impairment
Decrease in this
Opening Increase in period Closing Items
Balance this period Written Balance Reversal
off
Bad debt provision 7,373,377.95 50,343.24 126,221.44 --- 7,297,499.75
Decrease in this
Opening Increase in period Closing Items
Balance this period Written Balance Reversal
off
Provision for obsolete
133,740.78 225,042.12 --- 129,780.63 358,782.90 stock
Provision for impairment
of available for sale --- 2,215,868.07 --- --- 2,215,868.07 financial assets
Impairment for
long-term equity 4,455,549.93 --- --- --- 4,455,549.93 investment
Provision for impairment
of other non current --- 5,201,365.53 --- --- 5,201,365.53 assets
Impairment provision for
1,809,762.89 --- --- --- 1,809,762.89 goodwill
Total 13,772,431.55 7,692,618.96 126,221.44 129,780.63 21,338,829.07 20. Accounts payable
(1) Accounts payable
Item Ending balance Beginning balance
Payment of construction 5,080.00 22,867.00 Payment of raw material 12,446,199.86 25,947,762.55 Payment of goods --- 8,813,034.75 Payments of equipments 8,700.00 80,000.00 Others 429,350.00 149,570.00 Total 12,889,329.86 35,013,234.30 (2) Significant accounts payable aging over one year
Company Name Closing Balance Reason for unsettle
LiCheng(Chengde) Construction Co., Ltd. 3,330,347.69 Engineering Warranty XingCheng(Chengde) Construction Co., Ltd. 2,938,815.24 Engineering Warranty YingWang(Chengde) Construction Co., Ltd. 1,899,510.50 Engineering Warranty HanYi(Handan) Construction Co., Ltd. 400,000.00 Engineering Warranty Beijing Huanyu rainbow Coating
39,837.50 before settlement period Technology Co., Ltd.
Total 8,608,510.93 ---
NOTE: Compared to the opening balance, the closing balance decreased by RMB22,123,904.44, with the increase rate of63.19%, the main reason for the decrease was that decrease in balance payable caused by the completion of HuiJing TianDi Project.
21. Advance from customers
(1) List of advance from customers byaging：
Aging Closing Balance Opening Balance
Within 1 year 143,346,741.74 435,991,938.57 1-2years 100,571,176.96 ---
Total 243,917,918.70 435,991,938.57 (2) List of advance from customers byitem：
Propotion Completio
Item Opening Balance Closing Balance of pre-sale n time
(%)
estimated
House’ receivable in
December
advance-Project Of HuiJing 242,747,445.35 430,730,271.19 54.70 2016
TianDi
Goods’ receivable in advance --- 3,955,757.50 --- ---
Heating fee receivable in
962,488.89 1,113,841.30 --- ---
advance
Others 207,984.46 192,068.58 --- ---
Total 243,917,918.70 435,991,938.57 --- ---
(3) There is no receivable in advance from the company where shareholders with more than5% (including5%) voting share belong to at the end of year.
(4) There is no receivable in advance from any related parties.
(5) Other notes:
Advance from customers decreased by RMB 192,074,019.87,comparing the beginning balance, with a decrease of44.05%.Receivable fromHuiJingTianDi’s house pre-sale decreased was the main reason.
22. Payroll payable
(1) List of Payroll payable:
Opening Increase in Decrease in this Closing Item
Balance this period period Balance The short-term salary 3,737.12 18,528,434.63 16,616,760.56 1,915,411.19 Post-employment
6,192.30 1,048,593.09 1,032,514.14 22,271.25 benefit-defined contribution
Termination benefits --- 514,074.00 514,074.00 ---
Total 9,929.42 20,091,101.72 18,163,348.70 1,937,682.44 (2) List of the short-term salary:
Opening Increase in Decrease in
Item Closing Balance Balance this period this period
1.Wage, bonus, allowance and --- 17,718,844.10 15,821,778.36 1,897,065.74
Opening Increase in Decrease in
Item Closing Balance Balance this period this period
subsidy
2.Employee welfare --- 140,328.95 140,328.95 ---
3.Social insurance charges 3,108.90 245,901.74 231,591.41 17,419.23Including：a. Essential medical
2,861.50 183,360.68 170,995.90 15,226.28 insurance charges
b.Supplement medical
--- --- --- ---
insurance charges
c. Work related injury --- 48,660.64 47,917.81 742.83 d. Maternity insurance 247.40 13,880.42 12,677.70 1,450.12 4.Housing fund --- 416,567.20 416,039.20 528.00 5.Trade union and educational
628.22 6,792.64 7,022.64 398.22 fees
6.Short-term accumulation
--- --- --- ---
of absence with pay
7.Short-term profit sharing
--- --- --- ---
plan
8.Other --- --- --- ---
Total 3,737.12 18,528,434.63 16,616,760.56 1,915,411.19（3）List of Defined Contribution Plan(DCP):
Opening Increase in Decrease in
Item Closing Balance Balance this period this period
Essential endowment insurance 5,685.70 1,001,086.29 985,980.63 20,791.36 Unemployment insurance 506.60 47,506.80 46,533.51 1,479.89 Total 6,192.30 1,048,593.09 1,032,514.14 22,271.25 23. Tax payable
Items Closing Balance Opening Balance
VAT 565,795.13 971.36 Business tax --- 3,663.76 Urban construction tax 684.49 231.26 Land VAT --- ---
Corporate income tax --- ---
Land use tax --- ---
Individual taxable income 1,417.40 10,315.24 Education surcharge 410.70 137.96 Stamp tax 9,123.40 5,930.73 Local education surcharge 273.80 93.30 Housing property tax --- ---
River defense fare --- ---
Items Closing Balance Opening Balance
Contract tax 781,317.09 ---
Total 1,359,022.01 21,343.61 NOTE: Total tax payable increase by RMB 1,337,678.4 at the end of the year ,comparing with the amount in the beginning, with a increase of6267.35%, for the reason that Business tax changing to VAT make the increase of VAT in the HuiJing TianDi Project from May to December.
24. Other accounts payable
(1) Other accounts payable listed by nature of the account
Categories Closing Balance Opening Balance
Deposit and margin 587,221.20 1,276,413.11 Interest payable 1,016,666.66 ---
Commission 400,000.00 ---
Intercourse funds 1,693,445.34 10,020,000.00 Withholding and remitting tax 28,669.69 19,480.82 Others 750,861.51 1,430,207.77 Total 4,476,864.40 12,746,101.70 (2) There is no accounts payable from the company where shareholders with more than5% (including5%) voting share belong to at the end of the reporting period.
(3)There is no important accounts payable with an aging of over 1 year at the end of the reporting period.
(4) Other accounts payable in significantamount：
Item Amount Nature or content
Chengde Liyuan Investment Consulting Ltd 2,700,112.00 Current account
Chengde Yaolin Tax Advisory Services Limited 200,000.00 Commission
Xin Long company 100,989.64 Electricity fees
Total 3,001,101.64 ---
25.Share capital
Increase(+) and decrease (-) in this period
Items Opening Balance Issue new Reserves transfer to Closing Balance Share bonus Other Sub-total
shares shares
1 limited shares
(1)shares held by government --- --- --- --- --- --- --- (2)shares held by State-own Legal-person --- --- --- --- --- --- --- (3)shares held by other domestic capital --- --- --- --- --- --- --- Including: shares held by Legal person 23,147,309.00 --- --- --- --- --- 23,147,309.00 Shares held by natural person 221,652,691.00 --- --- --- --- --- 221,652,691.00 (4)shares held by foreign capital --- --- --- --- --- --- --- Including: shares held by foreign Legal
--- --- --- --- --- --- --- person
shares held by foreign nature
--- --- --- --- --- --- --- person
(5) Other --- --- --- --- --- --- --- Sub-total for limited shares 244,800,000.00 --- --- --- --- --- 244,800,000.002．Unlimited shares ---
(1) Ordinary shares in RMB --- --- --- --- --- --- --- (2) Domestic listed foreign shares 461,520,000.00 --- --- --- --- --- 461,520,000.00 (3) Foreign listed foreign shares --- --- --- --- --- --- --- (4) Other --- --- --- --- --- --- --- Sub-total for unlimited shares 461,520,000.00 --- --- --- --- --- 461,520,000.00
Increase(+) and decrease (-) in this period
Items Opening Balance Issue new Reserves transfer to Closing Balance Share bonus Other Sub-total
shares shares
Total 706,320,000.00 --- --- --- --- --- 706,320,000.00
26. Capital reserves
Opening Increase in this Decrease in
Items Closing Balance Balance period this period
1 .Capital premium (share capital premium) --- --- --- --- (1) Capital from investors 393,998,569.41 3,809,520.91 --- 397,808,090.32 (2) Effect of business combination under the
--- --- --- --- common control
Sub-total 393,998,569.41 3,809,520.91 --- 397,808,090.32 2.Other capitalreserve* 65,873,219.23 --- --- 65,873,219.23 Total 459,871,788.64 3,809,520.91 --- 463,681,309.55 NOTE:The amount increased in this period was RMB3,809,520.91 ,came from the Performance bonuses for big shareholder.
27. Surplus reserves
Increase in this
Items Opening Balance Decrease in this period Closing Balance period
Statutory surplus reserves 76,791,550.17 --- --- 76,791,550.17 Total 76,791,550.17 --- --- 76,791,550.17 28. Retained profits
Withdrawal or
Items Closing Balance
allocation proportion
Opening balance of retained profits before
-890,727,215.25 ---
adjustments
Total opening balance of retained profits before
--- ---
adjustments(increase+, decrease -)
Opening balance of retained profits after
-890,727,215.25 ---
adjustments
Add: Net profit attributable to owners of the 3,760,806.51 ---
Company
--- ---
Less: Withdrawal of statutory surplus reserves
---
---
Withdrawal of discretional surplus reserves
---
---
Dividend of common stock payable
Dividend of common stock transfer into share --- ---
capital
||
|-|
|Add: Other transfer|
|Less: surplus reserves for recovery of loss|

Closing Balance -886,966,408.74 ---
29. Revenues and operating costs
(1) Classification of Revenues and operating costs
Items This period Last Period
Business income 367,898,631.53 141,221,936.00
Principal business income 367,443,830.74 139,960,362.91
Other business income 454,800.79 1,261,573.09
Business cost 314,642,164.52 132,726,960.01
Principal business cost 313,683,027.25 131,825,386.92
Other business cost 959,137.27 901,573.09
(2) Principal business income and cost (by industry)
This period Last Period
Industry
Income Cost Income Cost
Agriculture 789,677.38 933,678.97 3,689,064.91 5,747,403.41
Commerce 12,229,025.49 13,205,220.85 99,654,943.04 98,793,309.48
Real Estate industry 354,321,321.95 299,447,836.25 36,501,825.04 27,216,297.96
Tourism and
103,805.92 96,291.18 114,529.92 68,376.07
restaurant
Total 367,443,830.74 313,683,027.25 139,960,362.91 131,825,386.92
(3) Principal business income and cost (by products)
This period Last Period
Product
Income Cost Income Cost
Agriculture product 789,677.38 933,678.97 3,689,064.91 5,747,403.41
Chemical Material 9,397,196.11 8,740,329.32 97,624,160.58 97,500,069.15
Heating and Property
2,831,829.38 4,464,891.53 2,030,782.46 1,293,240.33
management
Robots and robot
103,805.92 96,291.18 114,529.92 68,376.07
vision system
Real Estate 354,321,321.95 299,447,836.25 36,501,825.04 27,216,297.96
Including:
1,244,696.55 608,585.79 90,000.00 68,986.02
QianYuan Aera
Hui Jing Tian Di 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
Total 367,443,830.74 313,683,027.25 139,960,362.91 131,825,386.92
(4) Principal business income and cost (by district)
This period Last Period
District
Income Cost Income Cost
Chengde District 357,942,828.71 304,846,406.75 42,221,672.41 34,256,941.70
District This period Last Period
Tianjin District 9,397,196.11 8,740,329.32 97,624,160.58 97,500,069.15
Zhejiang District 103,805.92 96,291.18 114,529.92 68,376.07
Total 367,443,830.74 313,683,027.25 139,960,362.91 131,825,386.92
(5) The operating income from the top five customers
Proportion of
Principal business
Customer name company’s total
income
businessincome(%)
Customer 1 1,798,676.58 0.49
Customer2 1,712,532.00 0.47
Customer 3 1,664,218.60 0.45
Customer 4 1,618,676.58 0.44
Customer 5 1,618,676.58 0.44
Total 8,412,780.34 2.30
30. Tax and surcharges
Items This Period Last Period Tax rate
Business tax 15,930,024.97 2,205,002.33 5%
Urban maintenance and
1,036,934.60 110,718.39 5%
construction tax
Education surcharge 622,071.55 66,250.23 3%
Local education surcharge 414,713.04 44,168.18 2%
Super rate
Land VAT 7,347,633.65 773,431.93
progressive rate
Property tax 14,939.23 --- 12%
Others 946,026.89 482,899.08 ---
Total 26,312,343.93 3,682,470.14 ---
NOTE: Compared to the opening balance, the closing balance of tax and surcharges increased by RMB22，629，873.79, with a rise of614.53% .The main reason for the increase was from the house sales of HuiJing Tiandi and the tax in Administrative expenses are adjusted in the item.
31. Sales expenses, Administrative expenses and financial expenses
(1)Sales expenses
Item This Period Last Period
Printing expense --- 1,800.00
Item This Period Last Period
Repair expense --- 10,809.02
Warehouse expense 1,140.47 31,673.06
Wages 67,190.00 179,766.00
Advertise expense 86,215.00 104,790.00
Harbor expense --- 693,698.50
Manufacturing expense for unfolded plank --- ---
Contract fee 4,483.49 268,860.30
Transportation expense 176,729.02 1,048,992.17
Depreciation/ Amortization --- 3,580.88
Material consumption --- 20,800.00
Product packing 14,728.08 19,134.01
Others --- 27,935.94
Total 350,486.06 2,411,839.88
(2)Administrative expenses
Item This Period Last Period
Wages 12,220,981.34 5,887,235.45
Intermediary fees 2,025,476.70 2,359,318.07
Land use tax 319,891.35 993,320.75
Business entertainment 2,020,259.23 1,854,692.89
Accumulated amortization 913,441.52 10,181,276.35
Travel expense 1,637,334.03 1,585,708.09
Welfare 1,347,259.16 2,339,685.61
Office expense 890,671.34 914,658.13
Insurance 820,870.38 720,528.82
Stamp tax 49,244.92 117,074.73
Transportation 238,100.68 325,913.19
Low-valued consumption goods 219,071.44 43,284.00
Housing provident fund 367,165.20 239,677.56
Long-term deferred expenses 128,150.71 185,715.23
Repair charge 200,059.28 281,839.19
Item This Period Last Period
Material consumption 178,735.79 407,446.75
Educational fund 8,733.86 240.00
Rental fees 472,000.84 293,460.40
Insurance expenses 465,242.40 409,398.55
Residual premium 23,624.49 ---
Others 1,874,901.21 1,556,579.86
Total 26,421,215.87 30,697,053.62
(3) Financial expenses
Item This Period Last Period
Interest expense --- 541,657.65
Less: interest income 789,496.97 280,610.27
Exchange gain or loss -526,444.27 -281,429.89
Bank charges 46,574.47 53,472.42
Total -1,269,366.77 33,089.91
NOTE: The financial expenses in this period decreased by RMB 1,302,456.68, with the reduction rate of3936.11%, for the reason of the reduction from the interest expense within the past period .
32. Asset impairment loss
Item This Period Last Period
Provision for bad debt -75,878.20 2,648,362.86
Provision for long-term equity investment --- 4,455,549.93
Provision for inventory 95,261.49 -696,523.61
Provision for goodwill --- ---
Provision for other non-current assets 5,201,365.53 ---
Impairment of available for sale financial
2,215,868.07 ---
assets
Total 7,436,616.89 6,407,389.18
NOTE: The asset impairment loss increased by RMB 1,029,227.71, with a rise of16.06%,for the reason that the provision for long-term equity increased in this period.
33. Investment income
Item This Period Last Period
1.Financial assets --- ---
Investment income from bank financial
--- ---
products in this period
Item This Period Last Period
2.Long-term equity --- ---
Long-term equity (investment income
-1,321,243.97 114,563.90
accounted by equity)
3.Investment income arising from
-2,137,912.78 11,309,875.93
disposal of long-term equity investments
Total -3,459,156.75 11,424,439.83
34.Non-operating gains
Recorded in the
amount of the
Item This Period Last Period non-recurring
gains and losses
this period
Disposal of non-current assets 4,923,285.64 104,022,338.58 4,923,285.64
Profit from disposal of fixed
5,738.15 --- 5,738.15
assets
Profit from disposal of
4,862,522.49 103,610,779.62 4,862,522.49
intangible assets
Profit from disposal of
55,025.00 411,558.96 55,025.00
biological assets
Government subsidies 94,100.26 2,720.00 94,100.26
Other 53,236.71 197,192.94 53,236.71
Total 5,070,622.61 104,222,251.52 5,070,622.61
(1) Government subsidies recorded into current profits and losses
Relevant to
Items This period Last period
assets/income
Related to the
Financial subsidy 94,100.26 2,720.00
income
Total 94,100.26 2,720.00 ---
NOTE: Chengde County land reserve center withdraw the land use right located in the northeast side of YingBin Road in two land totaling 11.5469 acres with compensation lawfully which belongs to ChengDe NanJiang according to "land reserve management approach" issued by Ministry of state land resources, Cheng County (2013) No.22 and thecounty’s master plan.450,000.00 yuan per Mu,with a total amount of 5,196,105.00 yuan. Fulfill the confirmation of income condition, minus the cost of tthe land , confirm the final operating income of 4,862,522.49 yuan.
35.Non-operating expenses
Recorded in the
amount of the
Item This period Last period non-recurring
gains and losses
in this period
Disposal of non-current assets 122,581.06 776,688.73 122,581.06
Including: Disposal of fixed
--- 263,014.00 ---
assets
Disposal of intangible assets --- --- ---
Recorded in the
amount of the
Item This period Last period non-recurring
gains and losses
in this period
Disposal of biological assets 122,581.06 513,674.73 122,581.06
Loss on debt restructuring --- --- ---
Loss on exchange of
--- --- ---
non-monetary assets
Donations contributed 100,000.00 2,020,000.00 100,000.00
Including: Public welfare
--- 2,020,000.00 ---
donations contributed
Compensation and Tax penalty 237,267.76 3,310,100.39 237,267.76
Inventory loss of fixed assets --- --- ---
Other 334,659.67 72,426.06 334,659.67
Total 794,508.49 6,179,215.18 794,508.49
NOTE: Non-operating expense decreased by RMB 5,384,706.69, with a drop of87.14% in this period. 36.Income tax expense
(1) Lists of income tax expense
Item This Period Last Period
Current income tax calculated based on tax
-2,211,707.50 22,302,358.29
law and relevant rules
Deferred income tax adjustment
--- 58,577.78
Total
-2,211,707.50 22,360,936.07
(2)Adjustment process of accounting profit and income tax expense
Item This period
Total profits -5,177,871.60
Current income tax expense accounted by tax and
relevant regulations
Influence of different tax rate suitable to subsidiary ---
Influence of income tax adjustment for the internal
---
transaction
Impact from tax preferential rate in certain subsidiaries ---
Influence of income tax before adjustment ---
Influence of non taxable income ---
Influence of not deductible costs, expenses and losses 5,241.27
Influence of deductible losses of deferred income tax
-2,216,948.77
assets derecognized used in previous period
Influence of deductible temporary difference or
deductible losses of deferred income tax assets ---
derecognized in reporting period.
Income tax expense -2,211,707.50
NOTE: Income tax expense increase by RMB 24,572,643.57, with the growth of109.89%. It brought by making up for losses.
37.Supplementary information to cash flow statement
(1) Other cash receive relevant from operating activities
Item This Period Last Period
Interest income 324,005.28 562,040.16
Current accounts received 13,496,633.67 40,681,464.92
Subsidy income 115,532.78 2,720.00
Other 7,125,516.61 1,992,784.55
Total 21,061,688.34 43,239,009.63
(2) Other cash paid relevant to operating activities
Item This Period Last Period
Expenditure 11,733,426.18 16,080,175.32
Donation expense --- 2,020,000.00
Intercourse funds
16,745,245.65 51,364,514.05
Penalty and late fee
183,416.18 3,310,100.39
Other expense
13,464,144.62 2,101,932.32
Total
42,126,232.63 74,876,722.08
(3) Other cash paid relevant to investment activities
Item This Period Last Period
Restricted cash at bank and in hand
3,023,878.08 2,277,554.26
Total 3,023,878.08 2,277,554.26
(4) Supplemental information for statement of cashflow：
Supplemental information This Period Last Period
Supplemental information This Period Last Period
1.Adjustments to reconcile net profit to net cash
provided by operating activities:
Net profit -2,966,164.10 52,369,673.36
Add: impairment provision for assets 7,436,616.89 6,407,389.18
Depreciation of fixed assets, consumption&
depreciation of fuel and gas, depreciation of 2,762,775.87 936,747.64
productive biological assets
Amortization for intangible assets 154,367.10 242,190.98
Amortization for long-term prepayment 159,118.63 8,385,673.19
Loss on disposal of fixed assets, intangible assets
-4,777,167.14 -102,834,090.89
and other long-term assets
Loss upon rejection of fixed assets --- ---
Loss on variance of fair value --- ---
Finance cost -526,444.27 -281,429.89
Loss in investment -28,985.98 -11,424,439.83
Decrease of deferred tax assets --- 58,577.78
Increase of deferred tax liability --- ---
Decrease of inventories 277,501,315.58 -102,831,565.02
Decrease of operating receivable account items -6,029,351.06 17,262,437.97
Increase of operating payable account items -219,201,730.19 151,520,893.38
Other --- ---
Net cash flow from operating activities 54,484,351.33 19,812,057.85
2 Significant investing and financing activities for
non-cash items
Liabilities capitalized --- ---
Convertible bonds payable mature in one year --- ---
Financing leased fixed assets --- ---
3. Net increase (decrease) for cash and cash
equivalents
Closing balance for cash 126,970,834.83 84,543,677.45
Less: opening balance for cash 84,543,677.45 35,582,359.90
Add: closing balance for cash equivalent --- ---
less：opening balance for cash equivalent --- ---
Net increase (decrease) for cash and cash
42,427,157.38 48,961,317.55
equivalents
(5) Cash and cash equivalent
Item This Period Last Period
1 Cash
126,970,834.83 84,543,677.45
Including: Cash in hand
33,804.54 70,613.10
Cash at bank
126,937,030.29 84,473,064.35
Other cash and cash equivalents
--- ---
2 Cash equivalent
--- ---
Including: Bond matured within three months
--- ---
3 Closing balance for cash and cash equivalents
126,970,834.83 84,543,677.45
38.Restricted the right of use of assets
Item Closing balance Reason
Cash at bank and in hand
5,999,327.40
Housing mortgage deposit
Total
5,999,327.40
VI. Consolidation scope change
1.Set up two subsidiaries through the investment in this period
Name of Invest The date to Shareholding Net assets at the end of Net profit at the
subsidiary method set up ratio(%) the period end of the period
HangZhou newly September
100 29,562,331.60 -437,668.40
Hangfeng established 21, 2016
ChengDe newly December
100 --- ---
KeFeng established 12, 2016
Total --- --- --- 29,562,331.60 -437,668.40
Hangzhou Hang Feng was established on September 21, 2016, with a registered capital of RMB 50
million and a paid-in capital of RMB 30 million.
ChengDe KeFeng was established on December 12, 2016, with a registered capital of RMB 30 million and a paid-in capital of RMB 0 till December 31, 2016.
2. The subsidiary which is no longer included in the consolidated scope in this period is
as follows:
Net profit from Name of Reason for The date to Shareholding Net assets on the date the beginning to subsidiary transfer set up ratio(%) of disposal the date of disposal
HangZhou Liquidation December
90% 48,702,416.04 -1,295,783.96 Dongfeng cancellation 15 2016
Total --- --- --- 48,702,416.04 -1,295,783.96
Hangzhou Dong Feng has completed the cancellation of liquidation in December 15, 2016. This period is no longer included in the consolidated balance sheet. But according to the "Enterprise Accounting Standards No.33, consolidated financial statements" provisions: the parent company disposal of subsidiaries during the reporting period, the company shall make income, expenses, profit included in the consolidated income statement coming from the beginning of the period to the date of disposal, shall make the cash flow coming from the beginning of the period to the date of disposal included in the consolidated cash flow statement. So the income, expenses, profit of Hangzhou Dong Feng coming from the beginning of the period to the date of disposal period are still included in the scope of consolidation
VI. Rights and interests in other parties
1. Rights and interests in subsidiary
（1）Organization of enterprise group
hareholding ratio
Name of Main Registered Acquisition Business nature (%)
subsidiary businesses address method Directly Indirectly
Hardware
mechanical and
Chengde Corporate ChengDe electrical, building
Nanjiang Real Estate consolidation County, HeBei materials, rental 100 ---
Trading Development under the Province housing,
Co.,Ltd.*1 same control machinery and
equipment sales
ChengDe
ChengDe Investment of
NanJiang
Investment County, HeBei new energy, new 100 --- set up
Investment Co.,
Province material
Ltd.*2
Production of
ChengDe coarse cereals and
Ecological
NanJiang ChengDe edible fungus;
Agriculture
Ecological County, HeBei Planting offruit、 --- 100 set up
Planting and
Agriculture Province vegetable and
Breeding
Co., Ltd.*3 Chinese medical
herbs
Production and
Hangzhou
marketing of
Dongfeng ChengDe
Stealth high-grade coated
Stealth County, HeBei 90 --- set up
Technology paper and kraft
Technology Province
liner board paper
Co., Ltd.*4
series
NanJiang Asia International
Investment Co., Trading HongKong,China investment and 100 --- set up
Ltd.*5 trading
Research,
development, sales,
technical
NanJiang Energy ChengDe
marketing and
Technology Research and County, HeBei --- 90 set up
technical services
Co., Ltd.*6 Development Province
of grapheme and
its application
materials
Chengde
Property ChengDe Property
HuiJing
management County, HeBei management --- 100 set up
property Co.,
service Province service
Ltd.*7
Runhua Rural
Corporate Water (Tianjin) International
International consolidation International TianJin trading of plastic 30 ---
trading not under the Trade Co., material
same controlLtd*8
HangZhou
Investment of
HangFeng
High-tech HangZhou new energy, new 100 --- set up
Technology
material
Co., Ltd.*9
Aerospace product
ChengDe
technology
KeFeng Aerospace
research and
Aerospace product
ChengDe development, 100 --- set up
Technology technology
technical advice,
Development research
technology
Co. Ltd.*10
promotion
*1. On February 20 2009, Chengde Rongyida Real Estate Development Co., Ltd was established with registered capital of RMB 10,000,000.00 (Fei Wang contributed RMB 9,000,000.00, accounted for90% of the total equity; LiPing Chen contributed RMB 1,000,000.00, accounted for10% of the total equity). On July 27 2009, Fei Wang and LiPing Chen transfer90% ofRongyida’s and10% ofRongYiDa’s equity to former largest shareholder Rong Chen at the price of RMB 9,000,000.00 and RMB 1,000,000.00 respectively. At the same day, Rong Chen transfer100% ofRongYiDa’s equity to the company at the price of RMB 1.00. After the transfer, the company held100% ofRongYiDa’s equity.
On April 3, 2014, Chengde Rongyida Real Estate Development Co., Ltd was renamed Chengde Nanjiang Real Estate Development Co.,Ltd.
On December 12, 2016, approved by the Chengde Municipal Administration for Industry and commerce, the company agreed to change the name to Chengde Nanjiang trading company, business scope is: Electrical and mechanical hardware, building materials, machinery and equipment sales; housing rental service.
*2. On October 9 2012, ChengDe NanJiang Investment Co., Ltd. was established and invested by Chengde Rongyida Real Estate Development Co., Ltd. The registered capital was RMB 50,000,000.00 and RongYiDa accounted for100% of NanJiangInvestment’s equity. On December 21 2012, RongYiDa transfer100% of NanJiangInvestment’s equity to the company at the price of RMB 50,000,000.00. After the transfer, the company held100% of NanJiangInvestment’s equity. On January 6 2013, NanJiang increase share capital of NanJiang Investment by RMB 40,000,000.00. After the increment, the registered capital of NanJiang Investment reach RMB 90,000,000.00.
*3. On October 24 2012, ChengDe NanJiang Ecological Agriculture Co., Ltd. established and invested by ChengDe NanJiang Investment Co., Ltd. The registered capital was RMB 5,000,000.00 and NanJiang Investment held100% of EcologicalAgriculture’s equity. On April 18 2013, NanJiang Investment increase share capital of NanJiang Ecological Agriculture by RMB 5,000,000.00. After the increment, the registered capital of NanJiang Ecological Agriculture reach RMB 10,000,000.00.
*4. On October 13, 2015, Hangzhou Dongfeng Stealth Technology Co., Ltd.(“Hangzhou Dongfeng”)
was invested by NanJiang and Eagles Men Aeronautic Science and Technology Group Co.,Ltd , with
the register capital of RMB 100,000,000.00,and the paid-in capital of RMB 50,000,000.00: NanJiang
contribute RMB 45,000,000.00, accounting for90% of the total share capital; agles Men Aeronautic
Science and Technology Group Co.,Ltd contribute RMB 5,000,000.00, accounting for10% of the total share capital. Hangzhou Dong Feng started in November 1, 2016 and completed the liquidation,
cancellation of liquidation in December 15, 2016.
*5. On November 14, 2013, NanJiang Asia Investment Co., Ltd. (“NanJiang Asia”) was invested by
NanJiang, with the register capital of USD 20 million. Paid-in share capital is USD 797,538.34 and the register place is Hong Kong.
*6. On January 24, 2013, Chengde Morsh Technology Co., Ltd. (“Morsh Technology”) was invested
by NanJiang and Morsh (NingBo) Technology Co., Ltd, with the register capital of RMB
50,000,000.00: NanJiang contribute RMB 45,000,000.00, accounting for90% of the total share capital; Morsh (NingBo) Technology contribute RMB 5,000,000.00, accounting for10% of the total share
capital.
On September 26, 2016, approved by the Chengde Municipal Administration for Industry and
commerce, the company agreed to change the name to Chengde Nanjiang Technology Co. Ltd.,
business scope is: inflatable sac, graphene, graphene materials, power batteries and battery materials,
high performance membrane materials, nano materials research and development, production and the
product sales and technical promotion and technical services.
*7. On November 18, 2013, Chengde HuiJing property Co., Ltd (“HuiJing Property”) was invested by
NanJiang Investment, with the register capital of RMB 500,000.00. NanJiang Investment contributes
RMB 500,000.00, accounting for100% of share capital.
*8. Runhua Rural Water (Tianjin) International Trade Co., Ltd. (“RunHua”) is a limited liability company registered through TianJing BinHai New District Administration for Industry and Commerce(Runhua’s business license is 120192000028688). The initial registered capital is RMB 30 million, including: Runhua Rural Water developing Co., Ltd contribute 4 million, accounting for13.34% of the total registered capital, BaoSheng Yang contribute 1 million, accounting for3.33% of the total
registered capital, QianYing Wang contribute 2 million, accounting for6.67% of the total registered capital, PeiWen Ren contribute 2.01 million, accounting for6.70% of the total registered capital, XiaoFan Zhang contribute 1 million, accounting for3.33% of the total registered capital, ChunHong Lan contribute 9.03 million, accounting for30.10% of the total registered capital, QinHua Zhao contribute 7 million, accounting for23.33% of the total registered capital, ZhengHong Jia contribute 3 million, accounting for10.00% of the total registered capital, Kai Li contribute 0.96 million, accounting for3.20% of the total registered capital.
On June 25 2013, according to theequity’s transfer agreement, ChunHong Lan and QinHua Zhao transfer6.67% and23.33% of share capital respectively to NanJiang. After the transfer, Nanjiang contribute 9 million, accounting for30% of the total share capital. After the transfer, the capital ratio is: Runhua Rural Water developing Co., Ltd contribute 4 million, accounting for13.34% of the total registered capital, BaoSheng Yang contribute 1 million, accounting for3.33% of the total registered capital, QianYing Wang contribute 2 million, accounting for6.67% of the total registered capital, PeiWen Ren contribute 2.01 million, accounting for6.70% of the total registered capital, XiaoFan Zhang contribute 1 million, accounting for3.33% of the total registered capital, ChunHong Lan contribute 7.03 million, accounting for23.43% of the total registered capital, ZhengHong Jia contribute 3 million, accounting for10.00% of the total registered capital, Kai Li contribute 0.96 million, accounting for3.20% of the total registered capital, Nanjiang contribute 9 million, accounting for30% of the total share capital.
*9. On September 21 2016, HangZhou HangFeng Technology Co., Ltd. established and invested by ChengDe NanJiang Investment Co., Ltd. The registered capital was RMB 50 million with the actual investment 30 million yuan.
*10. OnDecember 12, 2016, Chengde KeFeng Aerospace Technology Development Co. Ltd. Established, invested by ChengDe NanJiang Investment Co., Ltd. The registered capital was RMB 30 million with the actual investment 0.00yuan till December 31,2016.
2. Change ofowner’s equity share in subsidiaries and subsidiaries still under control
Not Applicable.
3. Equity in joint ventures or associated enterprises
Important joint ventures or associated enterprises
Name of joint
hareholding ratio
Main Accounting ventures or
(%)
business Registered place Business nature treatment associated
place method enterprises Directly Indirectly
Joint venture
MinFeng (TianJin)
Material industry
Tianjin Tianjin International trade --- 49 equity chemical industry
Co.Ltd
Agricultural water
Runhua Rural Water
saving technology
(Tianjin)Water
Tianjin Tianjin development, --- 31.75 equity Saving Technology
transfer, promotion
Co., Ltd
services
VII. Related parties and related transaction
1. Relation of affiliated parties
（1） Controlling shareholder and ultimate controller
The company has no parent company. The related parties with controlling relationship of the
Company refer to Mr. Rong Chen, who held29.49% equity of the Company.
（2）Subsidiary
See VIII-1-(1) - Organization of enterprise group.
（3） Joint ventures and associated enterprises
Name of related parties Relationship Organizational Code MinFeng (TianJin) Material industry chemical
Joint venture 05874083-7
industry Co.Ltd
Runhua Rural Water (Tianjin)
Joint venture 58327621-9
Water Saving Technology Co., Ltd
（4）Other related party:
Name of related parties Relationship
Eagles Men Aeronautic Science and Technology Group Co.,Ltd The actual control of the company Shanxi Eagles Men Aeronautic Science and Technology Co. Ltd. The actual control of the company Runhua Rural Water Industrial development Co. The controller of Joint venture
MinFeng (ShanXi) Material industry chemical industry Co.Ltd The controller of Joint venture
2. Related transactions
（1）The subsidiaries which are under control in the consolidation ,its transaction with each other and with parent company and have already been set off in consolidation scope.
（2）Related transaction regarding purchasing products and obtaining labor services
This period Last Period
Name of related parties Trading content
Eagles Men Aeronautic Science 2,970,000.00 ---
purchase goods
and Technology Group Co.,Ltd
Shanxi Eagles Men Aeronautic 21,159,500.00 ---
Science and Technology Co. purchase goods
Ltd.
Total --- 24,129,500.00 ---
Notes: On November 15, 2016, Chengde Nanjiang (hereinafter referred to as "the company") convened the sixth session of the 14th meeting of the board of directors which approved "on the daily
motion of related party transactions" business. The company signed< Sales contract for ground protection system> with Eagles Men Aeronautic Science and Technology Group Co.,Ltd (hereinafter referred to as " Eagles Men ") and signed< Sales contract for stratospheric satellite ground protection system> with Eagles Men’ wholly-owned subsidiary Shanxi Eagles Men Aeronautic Science and Technology Co. Ltd(hereinafter referred to as "ShanXi Eagles Men).The company the purchase lattice airship ground base protection equipment produced by Eagles Men and ShanXi Eagles Men with a total contract amount of 24.1295 million. Till December 31, 2016, the actual payment was 21.7166 million
On December 3, 2016, the two sides in accordance with the contract agreed to pay and delivery on time and signed the escrow letter , entrusted Shanxi Eagles Men with the full custody to keep the equipment.
After the company's technical staff survey ,the company found that there are unpredictable differences in some critical factors between the original contract for the technical scheme and the original scheme, drawings and the purpose of the contract is unable to fulfill .Confirmed by technical validation of Eagles Men and ShanXi Eagles Men, Gershman and Shanxi grid technology for iridium, in order to avoid the potential risk and the loss to both sides, the company lift the original sales contract by mutual consensus, and return refund temporarily in processing.
On March 15, 2017, The company signed< Termination agreement of Sales contract for ground protection system> with Eagles Men and signed< Termination agreement of Sales contract for stratospheric satellite ground protection system> with ShanXi Eagles Men.After the agreement comes into force, the original sales contract shall be terminated, and both sides shall fulfill the obligation of refund of the goods in accordance with the agreement.
On March 16th, on March 17th, on March 20th,2016 the company recovered the payment with a total amount of 21.7166 million in three times : 3.5million,a 15.5436 million and a 2.6730million.
（3）Related transactions regarding selling goods and providing services
Not Applicable.
（4）Associated managed enterprise
Not Applicable.
（5）Related contract situation
Not Applicable.
（6）Associated rental condition
Not Applicable.
（7） Status of Associated Guarantee
Not Applicable.
（8） Inter-bank lending of affiliated parties
Not Applicable.
（9） Important related transactions with joint investments
Not Applicable.
（10） Re-numeration for key management personnel
Not Applicable.
（11）Key management personnel compensation Unit: RMB 10,000
Item name This period Last period Key management personnel compensation 236.37 190.62（12）Accounts receivable from related parties
a. Receivables
Not Applicable.
b . payables
Item name Related party Ending balance Beginning balance Prepayments
Eagles Men Aeronautic
Science and Technology 2,241,461.40 ---
Group Co.,Ltd
Shanxi Eagles Men
Aeronautic Science and 15,969,092.73 ---
Technology Co. Ltd.
VIII. Contingency
By the end of December 31, 2016, the closing balance of housing mortgage deposit, for the purchaser of commercial houses, was RMB 150,61.71.
IX. Other significant events
Not Applicable.
X. Commitment
Not Applicable.
XI. Events after the Balance Sheet Date
On March 6, 2017, approved by the Chengde Municipal Administration for Industry and commerce, Chengde Nanjiang trading company are divided into Chengde KeFeng Trading Co. Ltd., Chengde KeFeng Engineering Project Management Co. Ltd. and Chengde Nanjiang trading company. The registered capital of Chengde KeFeng Trading Company which is wholly owned by Chengde Nanjiang Limited is 8.5 millionyuan;it’s business scope: mechanical equipment, machinery fittings, mechanical and electrical products sales; housing rental service; The registered capital of Chengde KeFeng Project Management Limited is 0.5 million yuan, which is wholly owned by Chengde Nanjiang Limited;it’sbusiness scope: project management and consulting services; infrastructure construction; housing rental service; The registered capital of Chengde Nanjiang Trading Company Limited is 1 million yuan, which is also wholly owned by Chengde Nanjiang Limited;it’s business scope: Electrical and mechanical hardware, building materials, machinery and equipment sales; housing rental service.
XII. Other Important Events
According to interim general meeting of stockholders of Runhua rural water 2016,the resolution of a wholly owned subsidiary of extraordinary general meeting in 2016, business activity of Runhua rural water will be in suspend because of three consecutive years of losses ,Runhua rural water has not yet run for cancellation of tax registration business. These matters have great effects on sustainable management
ability of Runhua rural water. However, it does not impact sustainable management ability of the other entities within the scope of consolidation.
XIII. Notes to Main Items of Financial Statements of Parent Company
1. Other receivable
(1)Disclosure of other receivables by category
Closing Balance
Book balance Bad debt provision
Categories
Ratio Book value Amount Amount Ratio（%）
（%）
||||||
|-|-|-|-|-|
|---|---|---|---|---|
|23,650,673.11|99.51|67,905.78|0.56|23,582,767.33|
|70,000.00|0.49|70,000.00|100|---|
|23,720,673.11|100|137,905.78|1.05|23,582,767.33|

 Continue:
Opening Balance
Categories Book balance Bad debt provision
Book value Amount Ratio（%） Amount Ratio（%）
||||||
|-|-|-|-|-|
|---|---|---|---|---|
|14,087,692.95|99.51|194,127.22|1.38|13,893,565.73|
|70,000.00|0.49|70,000.00|100.00|---|
|14,157,692.95|100.00|264,127.22|1.87|13,893,565.73|

 a. Other receivables which single amount is significant and bad debts reserve is withdrawn at the end of the year.
Not Applicable.
b. Other receivable with provisions of bad debts accrued by aging analysis method in the portfolio Closing Balance
Aging
Other receivables Provision for bad debts Accruing proportion(%)
||||
|-|-|-|
|640,924.82|32,046.24|5|
|130,597.72|26,119.54|20|
|19,480.00|9,740.00|50|
|---|---|100|

||||
|-|-|-|
|791,002.54|67,905.78|8.58|

C. Other receivable with provisions of bad debts accrued by other method in the portfolio
Closing Balance
Aging Other Provision for bad Accruing
receivables debts proportion(%)
ChengDe NanJiang
Ecological Agriculture 15,795,515.58 --- ---
Co., Ltd.
NanJiang Technology
284,228.00 --- ---
Co., Ltd.
HuiJing Property
2,591,523.19 --- ---
company
NanJiang Asia Investment
4,971.22 --- ---
Co., Ltd.
Prepaid for oil 188,836.28 --- ---
Balance payment of land
acquisition Chengde
County Land Reserve 3,678,200.00 --- ---
Center land acquisition
tail
Cement special fund 90,421.00 --- ---
Employee loan 225,975.30 --- ---
Total 22,859,670.57 --- ---
Notes for determining the basis of the portfolio:
In the portfolio, provision for bad debts by other method amounted to RMB0.00,mainly taking into account of their estimated irrecoverable risk is extremely low.
d.Other receivables of individual account with insignificant amount and accrued for provision for bad debts at the end of the year
Accruin
g
Accounts Receivable Book Amount Bad debt provision Reasons for Accrual
proport
ion(%)
Expected
Qizhong Yan 70,000.00 70,000.00 100.00
irrecoverable
70,000.00 70,000.00 ---
Total
(2) Provision for bad debts withdrawn and returned back (taken back) in this year
Provision for bad debts extract in this year is RMB0.00,bad debts reserve returned back or taken back in this year is RMB126,221.44.
(3) Classification of other receivables by nature
Fund nature Book balance at the end of the Book balance at the beginning of
year the year
Intercourse fund 18,676,237.99 8,301,151.68 Employees deposit 1,056,241.02 1,862,870.77 The purchase payment of land 3,678,200.00 3,678,200.00 Others 309,994.10 315,470.50 Total 23,720,673.11 14,157,692.95（4）The top five other accounts receivable
Year-end Proportion in total
balance of year-end balance of
Debtors Ranking Fund nature Ending balance Aging provision other receivables
for bad(%)
debts ChengDe NanJiang
Within 1 year,1-2
Ecological Agriculture Intercourse fund 15,795,515.58 66.59% ---
years
Co., Ltd.
Chengde County
Acquisition of
Land Reserve Center 3,678,200.00 2-3years 15.51% ---
land acquisition
land
HuiJing Property
Intercourse fund 2,591,523.19 Within 1 year 10.93%
company
NanJiang Technology
Intercourse fund 284,228.00 1-2years,2-3years 1.20% ---
Co., Ltd.
The Branch of ChengDe Prepayment of Within 1
188,836.28 0.80% ---
Oil company oil year,1-2years
Total --- 22,538,303.05 --- 95.02% ---
(5) No other receivables are derecognized for the transfer of financial assets.
(6) There was no other receivables which are in termination due to the transfer of financial
assets .
(7) There was no amount of assets and liabilities that are formed by the transfer of other
receivables and the continued involvement.
2. Long-term equity investments
opening balance closing balance
Bad
Nature Bad debt debt
Book balance Book value Book balance Book value provision provisio
n
Subsidiaries 187,284,836.37 9,170,370.00 178,114,466.37 202,284,836.37 --- 202,284,836.37 Joint
--- --- --- --- --- --- venture/affiliate
d concern
Total 187,284,836.37 9,170,370.00 178,114,466.37 202,284,836.37 --- 202,284,836.37 (1) Subsidiaries
Impairmen Impairmen Stake Invested Accounting Initial Opening Closing t accrued t in
Increase decrease ratio Voting right(%) Company method investment cost Balance Balance in this Closing(%) period Balance NanJiangT --- ---
rading 53,114,299.73 53,114,299.73 53,114,299.73 --- --- 53,114,299.73 100 100.00 Company
NanJiang --- --- --- ---
90,000,000.00 90,000,000.00 90,000,000.00 90,000,000.00 100 100 Investment
RunHua --- ---
9,170,370.00 9,170,370.00 9,170,370.00 9,170,370.00 9,170,370.00 9,170,370.00 30 53.43 Water
NanJiang --- --- --- ---
--- 30,000,000.00 5,000,166.64 5,000,166.64 100 100 Asia
HangZhou --- --- --- ---
45,000,000.00 45,000,000.00 45,000,000.00 45,000,000.00 90 90 DongFeng
HangZhou --- ---
30,000,000.00 --- 30,000,000.00 --- 30,000,000.00 100 100 HangFeng
Total 823,851,997.76 257,284,669.73 202,284,836.37 30,000,000.00 45,000,000.00 187,284,836.37 9,170,370.00 9,170,370.00 --- --- (2) No long-term equity investments of Joint venture/affiliated concern.
3. Revenues and operating costs
(1) Classification of Revenues and operating costs
Items This period Last Period
Business income 356,304,109.02 43,323,398.13
Principal business income 353,076,625.40 36,411,825.04
Other business income 3,227,483.62 6,911,573.09
Business cost 299,798,387.73 28,048,885.03
Principal business cost 298,839,250.46 27,147,311.94
Other business cost 959,137.27 901,573.09
DAHUASHENZI[2017] NO. 006030 (EN) Audit Report
(2) Principal business income and cost (by industry)
This period Last Period
Industry
Income Cost Income Cost
Real Estate industry 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
Total 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
(3) Principal business income and cost (by products)
This period Last Period
Product
Income Cost Income Cost
Hui Jing Tian Di 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
Total 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
(4) Principal business income and cost (by district)
This period Last Period
District
Income Cost Income Cost
Chengde District 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
Total 353,076,625.40 298,839,250.46 36,411,825.04 27,147,311.94
(5) The operating income from the top five customers
Proportion of
Principal business
Customer name company’s total
income
businessincome(%)
Customer 1 1,798,676.58 0.50
Customer 2 1,712,532.00 0.48
Customer 3 1,664,218.60 0.47
Customer 4 1,618,676.58 0.45
Customer 5 1,618,676.58 0.45
Total 8,412,780.34 2.35
XIV. Supplemental information
1. Current non-recurring gains and losses
Items This period Notes
1 Losses/gains on disposal of non-current assets 4,800,704.58 ---
2. Government subsidies included in the current profits and
94,100.2 ---
losses (government subsidies which are closely related to the
DAHUASHENZI[2017] NO. 006030 (EN) Audit Report
Items This period Notes
Company’s business and received at national statutory
standard and amount are excluded)
3. Gains or loss from delegation investment --- ---
4. Other non- recurring loss and profits other than the above --- ---
5.Gains or loss from the contingency irrelevant with normal
---
operation
6.Other non-operating revenue and expense -618,690.72
7. Effect of minority interest on non-recurring losses or gains --- ---
8. Effect of income tax on non-recurring losses and gains 1,069,028.53 ---
Total 3,207,085.59 ---
Notes: All non-recurring items are disclosed before taxation.
2. Return on equity and earnings per share
Earnings per share
Weighted average of
Profit in the reporting period
Return onequity（%） Basic earnings Diluted earnings per share per share Net profit attributable to shareholders holding
1.06 0.01 0.01
ordinary shares of the Company
Net profit attributable to shareholders holding
ordinary shares of the Company after 0.16 0.00 0.00
deducting non-recurring gains and losses
Legal representative: Accounting supervisor: Legal representative of the accounting firm:
Chengde NanJiang Co., Ltd. April 26, 2017