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珠江B:2017年半年度财务报告(英文版)2017-08-25  

						Hainan Pearl River Holdings
         Company Limited

Semi-annual Financial Report 2017




       Legal representative: Wang Chunli


  Principal in charge of accounting: Guan Ying


  Head of the accounting department:Wu Xiukun




                August 2017
                                  Hainan Pearl River Holding Company Limited
                                                Consolidated Balance Sheet
                                                                                                             Unit:RMB
                        ASSETS                              Note(VII)       30 June 2017        31 December 2016
Current assets                                                                                ——
    Currency Funds                                                      167,840,121.26        246,504,351.39
    Provision of settlement fund
    Funds lent
    Financial assets at fair value through profit or loss
    Derivative financial assets
    Notes receivable
    Accounts receivable                                                 20,229,593.44         16,084,139.32
    Advances to suppliers                                               85,382,747.88         67,598,789.02
    Interest receivable                                                 2,710,880.79          2,710,880.79
    Dividends receivable                                                260,015.00            260,015.00
    Other receivables                                                   300,245,043.39        350,870,047.05
    Buying back the sale of financial assets
    Inventories                                                         158,016,371.89        297,867,807.05
    Reclassified to assets held for sale
    Current portion of non-current assets
    Other current assets                                                14,411,010.80         8,714,139.07
                  Total current assets                                  749,095,784.45        990,610,168.69
Non-current assets                                                                            ——
    Available-for-sale financial assets                                 30,824,994.90         30,824,994.90
    Held-to-maturity investments
    Long-term receivables
    Long-term equity investments                                        32,771,272.56         33,866,644.98
    Investment property                                                 15,801,889.83         19,244,780.80
    Fixed assets                                                        213,188,579.04        220,409,931.29
    Construction in progress                                            78,501,913.02         78,169,695.02
    Construction materials
    Fixed assets pending for disposal
    Productive biological assets
    Oil and gas assets
    Intangible assets                                                   3,619,565.30          3,692,130.10
    Development disbursements
    Goodwill
    Long-term prepaid expenses                                          1,113,550.80          2,083,962.89
    Deferred tax assets                                                 -                     4,985,486.50
    Other non-current assets                                            1,581,840.00          1,581,840.00
              Total non-current assets                                  377,403,605.45        394,859,466.48
                      Total assets                                      1,126,499,389.90      1,385,469,635.17

The accompanying notes form an integral part of the financial statements.

Legal representative: Wang Chunli Principal in charge of accounting: Guan Ying   Head of the accounting department: Wu Xiukun
                                      Hainan Pearl River Holding Company Limited
                                            Consolidated Balance Sheet (Continued)
                                                                                                                              Unit:RMB

                          ASSETS                                  Note(VII)             30 June 2017            31 December 2016
Current liabilities                                                                                                                 ——
     Short-term borrowings
     Financial liabilities at fair value through profit or loss

     Derivative financial assets
     Notes payable
     Accounts payable                                                                      66,826,515.71                 77,627,005.61
     Advances from customers                                                              230,886,723.58                365,746,868.16
     Employee benefits payable                                                             13,303,711.44                 12,392,816.29
     Taxes payable                                                                         43,455,350.36                 84,404,890.27
     Interest payable                                                                      84,670,716.84                 86,294,850.36
     Dividends payable                                                                       3,213,302.88                  3,213,302.88
     Other payables                                                                       606,193,379.59                541,823,806.30
     Current portion of non-current liabilities                                                                          78,710,181.59
     Other current liabilities
               Total current liabilities                                                1,048,549,700.40              1,250,213,721.46
Non-current liabilities                                                                                                             ——
     Long-term borrowings                                                                    5,000,000.00                73,666,666.66
     Bonds payable
     Long-term payable
     Grants payable
     Provisions
     Deferred income
     Deferred tax liabilities                                                                  597,896.93                    597,896.93
     Other non-current liabilities
            Total non-current liabilities                                                    5,597,896.93                74,264,563.59
                     Total liabilities                                                  1,054,147,597.33              1,324,478,285.05
Equity                                                                                                                              ——
     Share capital                                                                        426,745,404.00                426,745,404.00
     Capital reserve                                                                      543,615,438.94                543,615,438.94
          Less:Treasury Share
     Other comprehensive income
     Surplus reserve                                                                      109,487,064.39                109,487,064.39
     Provision for general risks
     Retained earnings                                                                   -997,533,457.93             -1,014,759,604.45
     Equity attributable to parent company                                                 82,314,449.40                 65,088,302.88
     Minority interests                                                                     -9,962,656.83                 -4,096,952.76
                 Total owner's equity                                                      72,351,792.57                 60,991,350.12
        Total liabilities and owner's equity                                            1,126,499,389.90              1,385,469,635.17

The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli        Principal in charge of accounting: Guan Ying     Head of the accounting department: Wu Xiukun
                                                                                          Hainan Pearl River Holding Company Limited
                                                                                                  Consolidated Income Statement
                                                                                                                                                                                    Unit:RMB
                                                         ITEM                                                            Note(VII)     2017(January -- June )            2016
I. Revenue                                                                                                                                               393,836,785.57          149,032,528.40
     Including:Operating income                                                                                                                         393,836,785.57          149,032,528.40
II.Total cost                                                                                                                                            364,005,163.14          237,320,083.66
     Including:Operating cost                                                                                                                           288,602,024.02          122,029,925.99
     Interest expenses
     Handling charges and commissions expenses
     Business taxes and surcharges                                                                                                                        16,524,745.23           10,405,923.57
     Selling expenses                                                                                                                                      6,598,207.36            8,871,001.02
     Administrative expenses                                                                                                                              49,041,651.89           45,226,141.70
     Including:research and development expenses
     Finance expenses                                                                                                                                      7,378,082.80           48,791,814.72
     Including: Interest expenses
                         Interest income
                         Net loss on foreign exchange
      Impairment losses of assets                                                                                                                         -4,139,548.16            1,995,276.66
     Others
     Add:Gain on fair-value changes(“-”for loss)
    Investment income(“-”for loss)                                                                                                                    -1,095,372.42           37,928,898.30
    Including:investment income from associates and joint ventures                                                                                       -1,095,372.42             -234,924.26
    Gain or loss on foreign exchange ( "-"for loss)
III.Operating profits(“-”for loss)                                                                                                                   28,736,250.01          -50,358,656.96
   Add:Non-operating income                                                                                                                                623,290.84             2,651,492.34
                 Including:Gains on disposal of non-current assets                                                                                         168,799.75             2,555,707.19
                                          Gains from exchange of non-monetary assets
                                          Government grants
                                          Gains from debt restructuring
   Less:Non-operating expenses                                                                                                                            1,617,428.07            3,278,378.77
                 Including:Losses on disposal of non-current assets                                                                                          19,264.12             131,916.10
                                      Losses from exchange of non-monetary assets
                                      Losses from debt restructuring
IV.Profit before tax(“-”for loss)                                                                                                                    27,742,112.78          -50,985,543.39
    Less:Income tax expenses                                                                                                                              7,201,670.33             183,697.96
V.Net profit(“-”for loss)                                                                                                                            20,540,442.45          -51,169,241.35
    Net profit attributable to owners of the Company                                                                                                      17,226,146.52          -47,370,594.88
  *Profit/loss attributable to minority shareholders                                                                                                       3,314,295.93           -3,798,646.47
VI.Post-tax net value of other comprehensive income                                                                                                                                           -
    Post-tax net value of other comprehensive income attributable to owners of the Company
    (I) Other comprehensive income that will be reclassified subsequently to profit or loss                                                                           -
           i.Gain or loss from fair-value changes on available for sale financial assets
   Post-tax net value of other comprehensive income attributable to minority shareholders
VII.Total comprehensive income attributable to:                                                                                                           20,540,442.45          -51,169,241.35
   Owners of the Company                                                                                                                                  17,226,146.52          -47,370,594.88
 *Minority shareholders                                                                                                                                    3,314,295.93           -3,798,646.47
VIII.Earnings per share
i.Basic earnings per share                                                                                                                                                      0.04                -0.11
ii.Diluted earnings per share                                                                                                                                                   0.04                -0.11
The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli                            Principal in charge of accounting: Guan Ying                      Head of the accounting department: Wu Xiukun



                                                                                            Hainan Pearl River Holding Company Limited
                                                                                                  Consolidated Cash Flow Statement
                                                                                                                                                                                                 Unit:RMB
                                                        ITEM                                                              Note(VII)                 2017(January -- June )            2016
Ⅰ.Cash flows from operating activities:                                                                                                                                                               ——
   Cash received from sales and services                                                                                                                             261,403,951.89           479,504,679.10
   Tax refunds
   Net cash from other operating activities                                                                                                                           28,064,358.46            40,079,903.61
                                  Sub-total of cash inflows from operating activities                                                                                289,468,310.35           519,584,582.71
   Cash paid for goods and services                                                                                                                                   78,618,001.87           187,434,195.91
   Cash paid to and on behalf of employees                                                                                                                           111,663,682.62           101,699,085.20
   Payment of taxes and surcharges                                                                                                                                    84,700,876.79            45,957,728.39
   Other cash payments relating to operating activities                                                                                                               84,215,959.09            23,148,007.67
                                 Sub-total of cash outflows from operating activities                                                                                359,198,520.37           358,239,017.17
                                       Net cash flows from operating activities                                                                                      -69,730,210.02           161,345,565.54
Ⅱ.Cash flows frow investing activities:                                                                                                                                                               ——
   Cash receipts from withdraw of investments                                                                                                                         10,000,000.00            12,000,000.00
   Cash received from investment income                                                                                                                                                             8,271.82
   Net cash from disposal of fixed assets, intangible assets and other long-term assets                                                                               43,616,812.51             4,849,613.03
   Net cash received from disposal of subsidiaries and other business units
   Other cash receipts relating to investing activities                                                                                                                   49,136.10
                                   Sub-total of cash inflows from investing activities                                                                                53,665,948.61            16,857,884.85
   Cash paid for fixed assets, intangible assets and other long-term assets                                                                                              354,834.72             3,287,207.48
   Cash payments for investments                                                                                                                                                                8,000,000.00
   Net cash paid for acquiring subsidiaries and other business units
   Net cash used in other investing activities                                                                                                                                                    123,352.41
                                  Sub-total of cash outflows from investing activities                                                                                   354,834.72            11,410,559.89
                                        Net cash flows from investing activities                                                                                     -62,245,134.00             5,447,324.96
Ⅲ.Cash flows from financing activities:                                                                                                                                                               ——
   Cash proceeds from investments by others
   Including:cash received by subsidiaries from minority shareholders' investment
   Cash received from borrowings                                                                                                                                     208,957,725.27            43,968,657.29
   Cash received from issuance of bonds
   Cash receipts related to other financing activities
                                  Sub-total of cash inflows from financing activities                                                                                208,957,725.27            43,968,657.29
   Cash repayments for debts                                                                                                                                         256,353,451.20           254,610,856.00
   Cash payments for distribution of dividends, profit and interest expenses                                                                                          13,129,408.07            14,499,908.50
   Including: dividends or profit paid by subsidiaries to minority shareholders
   Other cash payments relating to financing activities                                                                                                                1,720,000.00             4,302,704.04
                                 Sub-total of cash outflows from financing activities                                                                                271,202,859.27           273,413,468.54
                                                 Net cash flows from financing activities                                                                                                         -62,245,134.00                               -229,444,811.25
            Ⅳ.Effect of foreign exchange rate changes on cash and cash equivalents                                                                                                                                                                          -
            Ⅴ.Net increase in cash and cash equivalents                                                                                                                                          -78,664,230.13                                -62,651,920.75
              Add: beginning balance of cash and cash equivalents                                                                                                                                 246,504,351.39                                205,762,131.54
            Ⅵ. Ending balance of cash and cash equivalents                                                                                                                                       167,840,121.26                                143,110,210.79
           The accompanying notes form an integral part of the financial statements.
           Legal representative: Wang Chunli                                 Principal in charge of accounting: Guan Ying                                        Head of the accounting department: Wu Xiukun



                                                                                                             Hainan Pearl River Holding Company Limited
                                                                                                          Consolidated Statement of Changes in Owners’ Equity
                                                                                                                                                                                                                                                        Unit:RMB
                                                                                                                                              2017(January -- June )
                                                                                                                      Attributable to the parent company
                                                Note                       Other                                      Other
                   ITEM                                                                             Less:treasury                Specialized                  Provision for                                                          Minority      Total owner's
                                                (VII)   Paid-in capital    equity   Capital reserve               comprehensive               Surplus reserve               Retained earnings        Others         Sub-total
                                                                                                       shares                       reserve                   general risks                                                          interests        equity
                                                                        instruments                                  income
                                                               1              2           3               4             5              6             7              8               9                     10           11               12                13
I.Closing balance of the preceding year                 426,745,404.00   -          543,615,438.94   -                               -          109,487,064.39                -1,014,759,604.45                                 -4,096,952.76      60,991,350.12
   Add:Changes in accounting policies                   —               —         —               —             —               —         —               —           —                     —        —               —                 —
     Corrections of errors in Prior Period              —               —         —               —             —               —         —               —           —                     —        —               —                 —
               Others                                   -                -          -                -              -                -          -                -            -                      -         -                -                  -
II.Opening balance of the current year                  426,745,404.00   -          543,615,438.94   -              -                -          109,487,064.39   -            -1,014,759,604.45      -         65,088,302.88    -4,096,952.76      60,991,350.12
III.Changes for the year                                -                -                           -                               -          -                -            17,226,146.52          -         17,226,146.52    -5,865,704.07      11,360,442.45
    (I) Total comprehensive income                      -                -          -                -                               -          -                             17,226,146.52          -         17,226,146.52    3,314,295.93       20,540,442.45
    (II) Capital contribution and
                                                        -                -                           -              -                -          -                -            -                      -         -                -                  -
withdrawals by owners
    i.Capital contributions from owners                 -                -          -                -              -                -          -                -            -                      -         -                                   -
      ii.Capital contribute from other
                                                        -                -          -                -              -                -          -                -            -                      -         -                -                  -
equity instrument holders
    iii.Share-based payment recorded
                                                        -                -          -                -              -                -          -                -            -                      -         -                -                  -
in owner's equity
    iv.Others                                           -                -                           -              -                -          -                -            -                      -         -                                   -
      ( III).Profits distribution                       -                -          -                -              -                -          -                -            -                      -         -                9,180,000.00       9,180,000.00
      i.Appropriation to surplus reserve                -                -          -                -              -                -          -                -            -                      -         -                                   -
        Including:Statutory surplus reserve             -                -          -                -              -                -                           -                                   -         -                9,180,000.00       9,180,000.00
                Optional surplus reserve                -                -          -                -              -                -          -                -            -                      -         -                -                  -
    ii.Appropriation of provision for
                                                        -                -          -                -              -                -          -                -            -                      -                          -                  -
general risks
     iii.Profit distribution to equity owners           -                -          -                -              -                -          -                -            -                      -         -                -                  -
     iv.Others                                          -                -          -                -              -                -          -                -            -                      -         -                7,780,950.31       7,780,950.31
    (V).Transfer within owner's equity                  -                -          -                -              -                -          -                -            -                      -         -                -                  -
     i.Capital reserve transferred to
                                                                         -                           -              -                -          -                -            -                      -         -                -                  -
paid-in capital
     ii.Surplus reserve transferred to
                                                        -                -          -                -              -                -          -                -            -                      -         -                -                  -
paid-in capital
    iii.Recover of loss by surplus reserve              -                -          -                -              -                -          -                -            -                      -         -                -                  -
    iv.Others                                    -                 -                                 -              -                -                           -                                   -         -                -                  -
   IV. Closing balance of the year               426,745,404.00    -                543,615,438.94   -              -                -          109,487,064.39   -            -997,533,457.93        -         82,314,449.40    -9,962,656.83      72,351,792.57
The accompanying notes form an integral part of the financial statements.
 Legal representative: Wang Chunli                                                Principal in charge of accounting: Guan Ying                              Head of the accounting department:Wu Xiukun
                                                                                                          Hainan Pearl River Holding Company Limited
                                                                                                       Consolidated Statement of Changes in Owners’ Equity
                                                                                                                                                                                                                                                   Unit:RMB
                                                                                                                                                     2016
                                                                                                                     Attributable to the parent company
                                                 Note                       Other                                    Other
                  ITEM                                                                               Less:treasu                Specialized                  Provision for                                                     Minority       Total owner's
                                                 (VII)   Paid-in capital    equity   Capital reserve             comprehensive               Surplus reserve                    Retained earnings Others      Sub-total
                                                                                                      ry shares                    reserve                   general risks                                                     interests         equity
                                                                         instruments                                income
                                                                1              2            3             4            5              6            7               8                    9           10           11                12               13
I.Closing balance of the preceding year                  426,745,404.00               334,690,837.45                                         109,487,064.39                     -1,088,060,174.99                            -16,057,057.25   -233,193,926.40
    Add:Changes in accounting policies                           -              -                                                      -                                                —                                         —               —
       Corrections of errors in Prior Period                     -              -            -             -            -              -                                                —                                         —               —
              Others                                             -              -            -             -            -              -            -               -                    -           -            -                 -                -
II.Opening balance of the current year                   426,745,404.00       -       334,690,837.45       -             -            -      109,487,064.39          -          -1,088,060,174.99    -                       -16,057,057.25 -233,193,926.40
                                                                                                                                                                                                           -217,136,869.15
III.Changes for the year                                                                                                                                                          -47,370,594.88            282,225,172.03     3,982,303.84   -43,388,291.04
        (I) Total comprehensive income                                                                                                                                            -47,370,594.88             73,300,570.54    -3,798,646.47   -51,169,241.35
        (II) Capital contribution and
                                                                                                                                                                                                           208,924,601.49     7,780,950.31     7,780,950.31
    withdrawals by owners
              i.Capital contributions
                                                                                                                                                                                                                  -                                  -
   from owners
         ii.Capital contribute from
                                                                                                                                                                                                                  -                 -                -
   other equity instrument holders
         iii.Share-based payment
                                                                                                                                                                                                                  -                 -                -
   recorded in owner's equity
         iv.Others                                                                                                                                                                                         208,924,601.49     7,780,950.31     7,780,950.31
   ( III).Profits distribution                                                                                                                                                                                                                -233,193,926.40
                                                                                                                                                              -233,193,926.40                              -233,193,926.40
     i.Appropriation to surplus reserve                                                                                                                                                                                             -                -
    Including:Statutory surplus reserve                                                                                                                                                                                             -                -
            Optional surplus reserve                                                                                                                                                                                                -                -
       ii.Appropriation of provision
                                                                                                                                                                                                                                    -                -
          for general risks
      iii.Profit distribution to equity owners                                                                                                                                                                                      -                -
       iv.Others                                                                                                                                                                                                                                     -
   (V).Transfer within owner's equity                                                                                                                                                                                               -                -
     i.Capital reserve transferred to
                                                                                                                                                                                                                                    -                -
       paid-in capital
     ii.Surplus reserve transferred to
                                                                                                                                                                                                                                    -                -
       paid-in capital
     iii.Recover of loss by surplus   reserve                                                                                                                                                                                       -                -
    iv.Others                                                                                                                                                                                                                       -                -

IV. Closing balance of the year                          426,745,404.00       -       334,690,837.45       -             -            -      109,487,064.39          -          -1,135,430,769.87    -                       -12,074,753.41 -276,582,217.44
                                                                                                                                                                                                           -168,105,623.52
The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli                                                     Principal in charge of accounting: Guan Ying                                 Head of the accounting department:Wu Xiukun
                                                Hainan Pearl River Holding Company Limited
                                                        Balance Sheet of the Company
                                                                                                                                     Unit:RMB
                             ASSETS                                  Note(XV)       30 June 2017                   31 December 2016
Current assets:                                                                                                                            ——
           Cash and cash equivalent                                                          6,748,196.36                           33,952,786.37
           Provision of settlement fund
           Funds lent
           Financial assets at fair value through profit or loss
           Derivative financial assets
           Notes receivable
           Accounts receivable                                              1                1,016,974.23                            1,032,085.83
           Advances to suppliers                                                            50,000,000.00                           50,000,000.00
           Interest receivable
           Dividends receivable                                                               260,015.00                               260,015.00
           Other receivables                                                2              539,854,746.94                          591,785,222.60
           Buying back the sale of financial assets
           Inventories                                                                       4,824,035.45                            4,824,035.45
           Reclassified to assets held for sale
           Current portion of non-current assets
           Other current assets
                        Total current assets                                               602,703,967.98                          681,854,145.25
Non-current assets:                                                                                                                        ——
           Available-for-sale financial assets                                              30,824,994.90                           30,824,994.90
           Held-to-maturity investments
           Long-term receivables
           Long-term equity investments                                                    100,784,906.50                          101,713,800.55
           Investment property                                                               6,232,449.23                            6,383,667.53
           Fixed assets                                                                      3,792,790.35                            4,019,513.64
           Construction in progress
           Construction materials
           Fixed assets pending for disposal
           Productive biological assets
           Oil and gas assets
           Intangible assets
           Development disbursements
           Goodwill
           Long-term prepaid expenses                                                         185,859.30                               278,707.32
           Deferred tax assets
           Other non-current assets
                   Total non-current assets                                                141,821,000.28                          143,220,683.94
                            Total assets                                                   744,524,968.26                          825,074,829.19
The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli           Principal in charge of accounting: Guan Ying             Head of the accounting department: Wu Xiukun
                                                   Hainan Pearl River Holding Company Limited
                                                     Balance Sheet of the Company(Continued)
                                                                                                                              Unit:RMB
                                  ASSETS                                    Note(XV)        30 June 2017          31 December 2016
Current liabilities:                                                                                                                ——
           Short-term borrowings
           Financial liabilities at fair value through profit or loss
           Derivative financial assets
           Notes payable
           Accounts payable                                                                       2,482,949.70                2,482,949.70
           Advances from customers                                                                   38,896.41                   38,896.41
           Financial assets sold for repurchase
           Employee benefits payable                                                              1,446,129.33                1,224,801.48
               Including:Accrued payroll                                                                                      1,224,801.48
               Welfare benefits payable
                    Including:Staff and workers' bonus and selfare
           Taxes and surcharges payable                                                           1,048,322.24               27,537,449.60
                Including:Taxes payable                                                                                      27,537,449.60
           Interest payable                                                                      82,468,756.03               82,468,756.03
           Dividends payable                                                                      3,213,302.88                3,213,302.88
           Other payables                                                                       526,544,809.35              650,471,361.88
           Cession insurance premiums payable
           Provision for insurance contracts
           Funds received as agent of stock exchange
           Funds received as stock underwrite sale
           Reclassified to liabilities held for sale
           Current portion of non-current liabilities
           Other current liabilities
                         Total current liabilities                                              617,243,165.94              767,437,517.98
Non-current liabilities:                                                                                                            ——
           Long-term borrowings
           Bonds payable
           Long-term payable
           Grants payable
           Provisions
           Deferred tax liabilities
           Other non-current liabilities
                        Total non-current liabilities                                                        -                           -
                               Total liabilities                                                617,243,165.94              767,437,517.98
Equity:                                                                                                                             ——
           Share capital                                                                        426,745,404.00              426,745,404.00
           Capital reserve                                                                      546,201,098.01              546,201,098.01
               Less:Treasury Share
           Other comprehensive income
           Surplus reserve                                                                      109,487,064.39              109,487,064.39
         Provision for general risks
         Retained earnings                                                                     -955,151,764.08           -1,024,796,255.19
                             Total owner's equity                                               127,281,802.32               57,637,311.21
                   Total liabilities and owner's equity                                         744,524,968.26              825,074,829.19

The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli            Principal in charge of accounting: Guan Ying     Head of the accounting department: Wu Xiukun
                                                                                                        Hainan Pearl River Holding Company Limited
                                                                                                              Income Statement of the Company
                                                                                                                                                                                                                        Unit:RMB
                                                                     ITEM                                                                            Note(XV)                 2017(January -- June )          2016
I. Revenue                                                                                                                                                                                        2,857.14                620,935.59
      Including:Operating income                                                                                                                                                                 2,857.14                620,935.59
II.Total cost                                                                                                                                                                                 4,438,420.05             51,302,567.04
      Including:Operating cost                                                                                                                                                                 151,218.30                173,367.05
      Business taxes and surcharges                                                                                                                                                              67,528.32              4,203,229.46
      Selling expenses
      Administrative expenses                                                                                                                                                                 7,823,134.52              8,249,999.98
      Including:research and development expenses
      Finance expenses                                                                                                                                                                        2,014,415.03             38,649,091.37
      Including: Interest expenses
                       Interest income
                       Net loss on foreign exchange
       Impairment losses of assets                                                                                                                                                           -5,617,876.12                 26,879.18
      Others
      Add:Gain on fair-value changes(“-”for loss)
      Investment income(“-”for loss)                                                                                                                                                     74,891,105.95               -159,255.52
      Including:Investment income from associates and joint ventures                                                                                                                          -928,894.05               -159,255.52
      Gain or loss on foreign exchange ( "-"for loss)
III.Operating profits(“-”for loss)                                                                                                                                                      70,455,543.04            -50,840,886.97
     Add:Non-operating income                                                                                                                                                                      920.00              2,456,114.61
                   Including:Gains on disposal of non-current assets                                                                                                                                                   2,456,114.61
                                    Gains from exchange of non-monetary assets
                                    Government grants
                                    Gains from debt restructuring
     Less:Non-operating expenses                                                                                                                                                               811,971.93              1,802,042.70
                 Including:Losses on disposal of non-current assets                                                                                                                                                   1,802,042.70
                                    Losses from exchange of non-monetary assets
                                    Losses from debt restructuring
IV.Profit before tax(“-”for loss)                                                                                                                                                       69,644,491.11            -50,186,815.06
     Less:Income tax expenses
V.Net profit(“-”for loss)                                                                                                                                                               69,644,491.11            -50,186,815.06
VI.Post-tax net value of other comprehensive income                                                                                                                                                      -                         -
    (I) Other comprehensive income that will not be reclassified subsequently to profit or loss
    (II) Other comprehensive income that will be reclassified subsequently to profit or loss                                                                                                                                       -
        i.Other comprehensive incomes that be able to reclassify as profit under equity method.
      ii.Gain or loss from fair-value changes on available for sale financial assets
      iii.Reclassify held-to-maturity investment to hold-to-sale financial assets gain or loss
      iv. The effective cash flow hedgeing gain or loss
      v. Translation differences arising on translation of financial statements denominated in foreign currencies
VII.Total comprehensive income                                                                                                                                                               69,644,491.11            -50,186,815.06
The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli                                                  Principal in charge of accounting: Guan Ying                                 Head of the accounting department: Wu Xiukun
                                                                                                       Hainan Pearl River Holding Company Limited
                                                                                                            Cash Flow Statement of the Company
                                                                                                                                                                                                             Unit:RMB
                                                               ITEM                                                                    Note(XV)         2017(January -- June )                    2016
Ⅰ.Cash flows from operating activities:                                                                                                                                                                          ——
    Cash received from sales and services                                                                                                                                               -                  12,455,200.00
    Tax refunds
    Net cash from other operating activities                                                                                                                                15,082,818.77                 136,609,030.88
                                          Sub-total of cash inflows from operating activities                                                                               15,082,818.77                 149,064,230.88
    Cash paid for goods and services                                                                                                                                                                       76,485,200.00
    Cash paid to and on behalf of employees                                                                                                                                  2,803,476.91                   3,292,324.17
    Payment of taxes and surcharges                                                                                                                                         26,529,602.12                   2,107,925.47
    Other cash payments relating to operating activities                                                                                                                     5,574,741.83                   6,410,947.28
                                         Sub-total of cash outflows from operating activities                                                                               34,907,820.86                  88,296,396.92
                                               Net cash flows from operating activities                                                                                    -19,825,002.09                  60,767,833.96
Ⅱ.Cash flows frow investing activities:                                                                                                                                                                          ——
    Cash receipts from withdraw of investments                                                                                                                              10,000,000.00                   8,000,000.00
    Cash received from investment income
    Net cash from disposal of fixed assets, intangible assets and other long-term assets                                                                                    35,000,000.00                   3,060,360.00
    Net cash received from disposal of subsidiaries and other business units
    Other cash receipts relating to investing activities                                                                                                                        49,136.10
                                          Sub-total of cash inflows from investing activities                                                                               45,049,136.10                  11,060,360.00
    Cash paid for fixed assets, intangible assets and other long-term assets                                                                                                                                   26,549.00
    Cash payments for investments                                                                                                                                                                          13,330,000.00
    Net increase of pledged loans
    Net cash paid for acquiring subsidiaries and other business units
    Net cash used in other investing activities
                                         Sub-total of cash outflows from investing activities                                                                                           -                  13,356,549.00
                                                Net cash flows from investing activities                                                                                    45,049,136.10                  -2,296,189.00
Ⅲ.Cash flows from financing activities:                                                                                                                                                                          ——
    Cash proceeds from investments by others
    Including:cash received by subsidiaries from minority shareholders' investment
     Cash received from borrowings                                                                                                                                          29,000,000.00                  27,585,780.73
     Cash received from issuance of bonds
     Cash receipts related to other financing activities
                                          Sub-total of cash inflows from financing activities                                                                               29,000,000.00                  27,585,780.73
     Cash repayments for debts                                                                                                                                              78,049,598.52                  78,870,856.00
     Cash payments for distribution of dividends, profit and interest expenses                                                                                               1,659,125.50                   6,875,492.05
     Including: dividends or profit paid by subsidiaries to minority shareholders
     Other cash payments relating to financing activities                                                                                                                    1,720,000.00                     176,704.04
                                          Sub-total of cash outflows from financing activities                                                                              81,428,724.02                  85,923,052.09
                                                Net cash flows from financing activities                                                                                   -52,428,724.02                 -58,337,271.36
Ⅳ.Effect of foreign exchange rate changes on cash and cash equivalents                                                                                                                                                -
Ⅴ.Net increase in cash and cash equivalents                                                                                                                               -27,204,590.01                     134,373.60
    Add: beginning balance of cash and cash equivalents                                                                                                                     33,952,786.37                     479,720.71
Ⅵ. Ending balance of cash and cash equivalents                                                                                                                              6,748,196.36                     614,094.31
The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli                                                      Principal in charge of accounting: Guan Ying                 Head of the accounting department: Wu Xiukun
                                                                                           Hainan Pearl River Holding Company Limited
                                                                                      Statement of Changes in Owners’ Equity of the Company
                                                                                                                                                                                                                                       Unit:RMB

                                                                                                                                              2017 (January -- June )
                                                                       Note                                                                                                               Provision
                                  ITEM                                                                                                         Other
                                                                                                Other equity                 Less:treasury               Specialized         Surplus         for           Retained                Total owner's
                                                                       (XV)   Paid-in capital                Capital reserve               comprehensive                                                                  Others
                                                                                                instruments                     shares                     reserve           reserve       general         earnings                   equity
                                                                                                                                              income
                                                                                                                                                                                            risks
                                                                                      1               2                3             4            5             6              7              8               9               10         11
I.Closing balance of the preceding year                                       426,745,404.00                    546,201,098.01                                           109,487,064.39                                            57,637,311.21
                                                                                                                                                                                                      -1,024,796,255.19
   Add:Changes in accounting policies
       Corrections of errors in Prior Period
              Others                                                                                                                                                                                                               -

II.Opening balance of the current year                                        426,745,404.00                    546,201,098.01                                           109,487,064.39                                            57,637,311.21
                                                                                                                                                                                                      -1,024,796,255.19
III.Changes for the year                                                      -                 -               -                -        -                 -            -                -            69,644,491.11      -        69,644,491.11

      (I) Total comprehensive income                                          -                 -               -                -                          -            -                             69,644,491.11      -        69,644,491.11

      (II) Capital contribution and withdrawals by owners                     -                 -               -                -        -                 -            -                -                               -        -

          i.Capital contributions from owners                                                   -               -                -        -                 -            -                -            -                  -        -
          ii.Capital contribute from other equity instrument holders          -                 -               -                -        -                 -            -                -            -                  -        -
          iii.Share-based payment recorded in owner's equity                  -                 -               -                -        -                 -            -                -            -                  -        -

          iv.Others                                                           -                 -                                -        -                 -            -                -            -                  -        -
    ( III).Profits distribution                                               -                 -               -                -        -                 -            -                -                               -        -
          i.Appropriation to surplus reserve                                  -                 -               -                -        -                 -            -                -                               -        -
               Including:Statutory surplus reserve                            -                 -               -                -        -                 -                             -                               -        -
                           Optional surplus reserve                           -                 -               -                -        -                 -            -                -            -                  -        -
         ii.Appropriation of provision for general risks                      -                 -               -                -        -                 -            -                -            -                  -        -
        iii.Profit distribution to equity owners                              -                 -               -                -        -                 -            -                -            -                  -        -
        iv.Others                                                             -                 -               -                -        -                 -            -                -            -                  -        -
   (V).Transfer within owner's equity                                         -                 -               -                -        -                 -            -                -            -                  -        -

         i.Capital reserve transferred to paid-in capital                     -                 -               -                -        -                 -            -                -            -                  -        -

        ii.Surplus reserve transferred to paid-in capital                     -                 -               -                -        -                 -            -                -            -                  -        -

        iii.Recover of loss by surplus reserve                                -                 -               -                -        -                 -            -                -            -                  -        -

        iv.Others                                                             -                 -               -                -        -                 -                             -                               -        -

IV. Closing balance of the year                                               426,745,404.00    -               546,201,098.01   -        -                 -            109,487,064.39   -            -955,151,764.08    -        127,281,802.32

The accompanying notes form an integral part of the financial statements.

Legal representative: Wang Chunli                                                 Principal in charge of accounting: Guan Ying                           Head of the accounting department: Wu Xiukun
                                                                                              Hainan Pearl River Holding Company Limited
                                                                                        Statement of Changes in Owners’ Equity of the Company
                                                                                                                                                                                                                               Unit:RMB

                                                                                                                                                    2016
                                                                     Note                                                                                                             Provision
                             ITEM                                                                                                            Other
                                                                                              Other equity                 Less:treasury               Specialized     Surplus           for        Retained                 Total owner's
                                                                     (XV)   Paid-in capital                Capital reserve               comprehensive                                                              Others
                                                                                              instruments                     shares                     reserve       reserve         general      earnings                    equity
                                                                                                                                            income
                                                                                                                                                                                        risks
                                                                                  1                2              3             4             5             6              7             8              9            10            11
             I.Closing balance of the preceding year                        426,745,404.00                  337,276,496.52                                           109,487,064.39               -648,479,829.56            225,029,135.35

                Add:Changes in accounting policies                                 -                -                            -                           -              -             -              -             -            -
                  Corrections of errors in Prior Period                            -                -              -             -             -             -              -             -              -             -            -
                                     Others                                        -                -              -             -             -             -              -             -              -             -            -
             II.Opening balance of the current year                          426,745,404.00         -        337,276,496.52      -             -             -       109,487,064.39       -       -648,479,829.56      -     225,029,135.35

                     III.Changes for the year                                      -                -                            -             -             -              -             -        -50,186,815.06      -      -50,186,815.06

                    (I) Total comprehensive income                                 -                -                            -           0.00            -                                     -50,186,815.06      -      -50,186,815.06

          (II) Capital contribution and withdrawals by owners                      -                -                            -             -             -              -             -              -             -            -

                   i.Capital contributions from owners                             -                -              -             -             -             -              -             -              -             -            -
        ii.Capital contribute from other equity instrument holders                 -                -              -             -             -             -              -             -              -             -            -
           iii.Share-based payment recorded in owner's equity                      -                -              -             -             -             -              -             -              -             -            -

                                 iv.Others                                         -                -                            -             -             -              -             -              -             -            -
                       ( III).Profits distribution                                 -                -              -             -             -             -              -             -              -             -            -
                     i.Appropriation to surplus reserve                            -                -              -             -             -             -              -             -              -             -            -
                       Including:Statutory surplus reserve                         -                -              -             -             -             -                            -                            -            -
                                  Optional surplus reserve                         -                -              -             -             -             -              -             -              -             -            -
               ii.Appropriation of provision for general risks                     -                -              -             -             -             -              -             -              -             -            -
                  iii.Profit distribution to equity owners                         -                -              -             -             -             -              -             -              -             -            -
                                 iv.Others                                         -                -              -             -             -             -              -             -              -             -            -
                 (V).Transfer within owner's equity                                -                -              -             -             -             -              -             -              -             -            -

               i.Capital reserve transferred to paid-in capital                    -                -              -             -             -             -              -             -              -             -            -

              ii.Surplus reserve transferred to paid-in capital                    -                -              -             -             -             -              -             -              -             -            -

                  iii.Recover of loss by surplus reserve                           -                -              -             -             -             -              -             -              -             -            -

                                 iv.Others                                         -                -              -             -             -             -              -             -              -             -            -

                 IV. Closing balance of the year                             426,745,404.00         -        337,276,496.52      -             -             -       109,487,064.39       -       -698,666,644.62      -     174,842,320.29

The accompanying notes form an integral part of the financial statements.
Legal representative: Wang Chunli                                             Principal in charge of accounting: Guan Ying                           Head of the accounting department: Wu Xiukun
                   Hainan Pearl River Holding Company Limited
            Notes on the Financial Statements for the end of June 2017
I. General information

    Hainan Pearl River Holding Company Limited, referred to as ‘the Company’ or ‘Pearl River
    Holding’, grew out of the lawful re-registration by the original Hainan Pearl River Industry
    Company Limited on January 11 1992. The re-registration was based on the document of Qiong
    Fu Ban [1992] No.1 issued by the General Office of Hainan People’s Government and City
    Management Office Qiong Yin [1992] No. 6 issued by the People’s Bank of Hainan province. By
    the time when the re-registration took place, the Company issued a total amount of 81,880,000
    shares, among which 60,793,600 shares were folded from the predecessor’s net assets while the
    rest amount, 21,086,400 shares, were newly issued and were listed on Shenzhen Stock Exchange
    according to the document of securities administration office [1992] No. 83 issued by the
    People's Bank of China in December 1992. The parent company of the Pearl River Holding, the
    Guangjiang Industrial Company held the amount of 36,393,600 shares in 1992, equivalent to a
    shareholding ratio of 44.45%. The business license registration number is 20128455-6 and the
    company is defined as belonging to the real estate industry.

    On 25th March 1993, approved by the Hainan joint-stock system pilot leading group office with
    the supporting document of Qiong joint-stock office [1993] No.028 and the Shenzhen special
    economic zone branch of the People’s Bank of China with the corresponding document of Shen
    People’s Bank Fu [1993] No.099, the company increased its share capital by stock-for stock: five
    new shares for every ten shares held plus two freely delivered new shares. As a result, the share
    capital increased to 139,196,000 shares, of which the shareholder, Guangzhou Pearl River
    Industrial Company occupied 48,969,120 shares, holding an equity stake of 35.18%.

    In 1994, the equity capital was raised to the amount of 278,392,000 shares through delivering 10
    new free shares for every 10 shares held. Guangzhou Pearl River Industrial Company occupied
    97,938,240 shares, holding an equity stake of 35.18%.

    In 1995, based on the approval stated at the document of Shenzhen BanFu [1995] No. 45 and
    Shenzhen BanFu [1995] No.12, the company issued 50 million B shares. An incremental share
    capital was thus followed based on the fact that every 1.5 new shares were generated for every
    ten B shares, resulting in the amount of 377,650,800 shares outstanding in total. Guangzhou
    Pearl River Industrial Company occupied 112,628,876 shares, holding an equity stake of 29.82%.

    In 1999, 112,628,976 shares that were held by the Guangzhou Pearl River Industrial Group Co.,
    Company were transferred to Beijing Wanfa Real Estate Development Company. Consequently,
    Beijing Wanfa Real Estate Development Company became the first majority shareholder, holding
    the amount of 112,628,976 shares, which accounts for 29.82% of the total outstanding shares of
    the company.

    On 10th January 2000, with the Business License for Legal Person issued by the Hainan
    Administrative Bureau for Industry and Commerce and the registration number 4600001006830
    obtained, the name of the company was formally changed to Hainan Pearl River Holding
    Company Limited.

    August 17, 2006, with the implementation of equity division reform, an incremental of share
    capital to the total amount of 49.094604 million shares took place since additional shares were
    delivered to all shareholders based on a 10:1.3 (1.3 free new shares for every 10 held)
    distribution regime. The total amount of shares outstanding was thus increased to 426,745,404
shares with the Wanfa Real Estate Development Company occupying 107,993,698 shares, taking
up the ownership percentage of 25.31%. In 2007 and 2009, non-circulation stock shareholders
paid back consideration for reform of the shareholder structure; the corresponding value was
respectively 3,289,780 and 1,196,000 shares of stock. Beijing Wanfa Real Estate Development
Company held an amount of 112,479,478 shares at the end of 2009, which was equivalent to an
equity stake of 26.36%. In 2010, the controlling shareholder Beijing Wanfa Real Estate
Development Stock Limited Company changed its name to Beijing Wanfa Real Estate
Development Limited Liability Company. At the end of 2011, this dominant shareholder held an
amount of 112,479,478 shares, equivalent to an ownership percentage of 26.36%.

September 2, 2016, the original controlling shareholder of Beijing Wanfa Real Estate
Development Co., Ltd will be held by 112,479,478 shares all transferred to the Beijing Grain
Group Co., Ltd., 2016 September after the transfer of equity is completed, the Beijing Grain
Group Co., Ltd. held 112,479,478 shares, accounting for 26.36% of the total number of shares. In
November 2016, based on the confidence in the reorganization of the major assets and the
future development of the Company, Beijing Grain Group Co., Ltd. decided to adopt the
centralized bidding method to increase its holdings through the secondary market, holding
123,561,963 shares, Accounting for 28.95% of the total number of shares, becoming the largest
shareholder of the Company.

Registered capital: RMB 426,745,400 Yuan

Unified social credit code: 914600002012845568

Legal representative: Wang Chunli

Registered address: 29/F., Dihao Building, Pearl River Plaza, Binhai Avenue, Haikou, Hainan, the
PRC.

Office adress: 29/F., Dihao Building, Pearl River Plaza, Binhai Avenue, Haikou, Hainan, the PRC.

The parent company of Beijing grain group co., LTD

The operation scope: Industrial investment, tropical farming, aquaculture, real estate
development and management, hotel investment and management, material supply,
construction equipment purchasing, leasing, hardware, chemical, trade of household items,
decoration, vehicle parking, and high-tech investment projects, investment in environmental
protection projects, investment advice.

The company's business nature and the main business activities: The company mainly engaged in
real estate development and property management, which belong to real estate aspect.

The Company's basic organizational structure: General meeting of shareholders is the highest
organ of power. Board of directors is the executing agency. Supervisory board is the Company's
internal auditing agency. General Manager is responsible for the Company's daily operational
management.There are General Manager Office, Securities Department, and Tourism Real Estate
Department, Financial Department, Management Department, Auditing Department and others
in the Company.

Hainan Peapl River Holding Company Limited Beijing Investment Consulting Branch was
established on May 6, 2010, and the unified social credit code is 91110107554875351W. The
address is: Room 5078, Building 3, No. 3, Xijing Road, High-tech Park, Badachu, Shijing Mountain
District, Beijing City. The business scope includes investment consulting, hotel investment and
management; construction equipment purchasing and leasing; the sales of construction
materials, hardware and electrical equipment, furniture, plastics, daily necessities, leather
     products, rubber cavity products, feed, the packed seed that will not be sub-packed again, the
     grain, beans, potatoes, flowers, grass and other decorative plants, chemical fertilizer, non-metallic
     ore, metal products, metal ore, metal materials, and the import and export of goods; the salary
     point system and development application of high-tech products. (“1. Without the approval of
     the relevant department, it is prohibited from using public mode to raise funds; 2. It is prohibited
     from publically carrying out security products and financial derivative instrument transaction
     activities; 3. It is prohibited from issuing loans; 4. It is prohibited from providing guarantee for
     other enterprises, except the invested enterprise; 5. It is prohibited from making commitment to
     the investor about no damage of investment principal or the minimum income”; for the projects
     that shall be legally approved, the business activities can be carried out as per the approved
     contents after being approved by the relevant department.)

     Hainan Peapl River Holding Company Limited Heilongjiang Branch was established on October 22,
     2012, and the unified social credit code is 91230110598492651P. The address is: No. 34,
     Nongxiao Street, Xiangfang District, Harbin City. The business scope includes: industrial
     investment, hotel investment and management, construction equipment purchasing, leasing,
     indoor and outdoor decoration, high-tech project investment, computer network investment,
     communication project investment, high-tech product development and application as well as
     environmental protection project investment. (For projects that require the administrative
     licensing, they shall be operated with the license) (For projects that shall be legally approved, the
     business activities can be carried out after being approved by the relevant department.)The
     approval of the financial statements reported: the financial statements by the company all the
     directors are submitted on August 23, 2017.

II. The scope of consolidated financial statements

          This period into the body of the scope of consolidated financial statements, a total of 15 units,
     specific include:


                                                                           Shareholding     Proportion       of
       Company name                 Abbreviation       Unit type   Level
                                                                           ratio(%)       voting rights(%)

 Hainan Pearl River Property
 Hotel Management Co., Ltd      Pearl River Property   Holdings        2            98.00                 98.00

 Hainan     Pearl       River
 Landscaping Co., Ltd           Landscaping Company     Wholly         3           100.00                100.00

 Hainan Pearl River Property
 Cleaning Co., Ltd               Cleaning Company       Wholly         3           100.00                100.00

 Hainan Pearl River Property
                                   Electrical and                      3
 Electrical and Mechanical                              Wholly                     100.00                100.00
                                Mechanical Company
 Engineering Company
 Hubei Pearl River Real
 Estate Development Co.,          Hubei Pearl River    Holdings        2            89.20                 89.20
 Ltd
 Wuhan Zhujiang Meilin
 Hotel Management Co., Ltd          Meilin Hotel        Wholly         3           100.00                100.00


 Shanghai Rongxin        Real                                          2
                                  Shanghai Realty       Wholly                     100.00                100.00
 Estate Co., Ltd
                                                                         Shareholding      Proportion       of
       Company name               Abbreviation      Unit type    Level
                                                                         ratio(%)        voting rights(%)


 Beijing  Jiubo     Culture                                          2
                                  Jiubo Culture      Wholly                       100.00                100.00
 Development Co., Ltd
 Mudanjiang City Pearl River
 Wanjia Tourism Investment        Mudanjiang                         2
                                                     Wholly                       100.00                100.00
 Development Group Co.,          TourismGroup
 Ltd
 Hailin City Wanjia Xuexiang                                         3
                                Xuexiang Resort      Wholly                       100.00                100.00
 Resort Hotel
 Mudanjiang City Jingpo
 Lake Zhujiang Wanjia Hotel     Jingpo Lake Hotel    Wholly          3            100.00                100.00
 Co., Ltd
 Mudanjiang City       Wanjia                                        3
                                Mudanjiang Hotel     Wholly                       100.00                100.00
 Star Hotel Co., Ltd

 Harbin     Wanjia     Travel                                        3
                                 Travel Service      Wholly                       100.00                100.00
 Service Co., Ltd
 Hebei Zhengshi Qinghui
 Real Estate Development          Hebei Realty      Holdings         2             51.00                 51.00
 Co., Ltd
 Shanghai Pearl Property                                             3
                                 Pearl Property     Holdings                       50.00                 50.00
 Management Co., Ltd

     At the end of this period, the subsidiary corporation Hainan Pearl River Industrial Co., Ltd.
     Shanghai real estate company, approved by the Shanghai Administration for Industry &
     Commerce, changes his name into Shanghai Rongxin Real Estate Co., Ltd. The shareholding ratio
     and voting rights remain the same. The scope of consolidation financial statements remains the
     same, either.
III. The basis for the formulation of financial statement

     1. The basis for the formulation of financial statement

     On the basis of continuous operation, the company has conducted confirmation and
     measurement as per the actually occurred transaction and affairs, the Enterprise Accounting
     Criterion—Basic Criterion and the specific enterprise accounting criterion, the enterprise
     accounting criterion application guide, the enterprise accounting criterion explanation and other
     relevant regulations (hereinafter collectively referred to as “the enterprise accounting criterion”),
     and then on this basis, it has also compiled the financial statement in combination with No. 15
     Information Disclosure Formulation and Report Regulations of Companies with Public Issue of
     Securities—General Regulations for Financial Report (Revised in 2014).

     2. Going concern

     The company since the final 12 months there is no ability to continue as a going concern our
     company serious doubts about the items or situations.
IV. Accounting policies, accounting estimates and error correction of previous years
1. Announcement about compliance with Accounting Standards for Business Enterprises

The Company’s financial statements are prepared in accordance with the requirements of the
Accounting Standards for Business Enterprises, and they fairly and completely present the
financial position, operation results, cash flow and other relevant information of the Company.

2. Accounting year

Accounting year of the Group is the calendar year from January 1 to December 31. This report
covers the period from January 1, 2017 to June 30, 2017.

3. Reporting currency

The Company’s reporting and presentation currency is Renminbi (“RMB”).

4. Business combinations

4.1.      Where a business combination achieved in stages, such multiple transactions accounted
          as a package deal if one or more following conditions are satisfied:
       i.    such transactions made simultaneously or after consider each other's effect;

       ii.    only such transactions made in whole,a complete commercial result achieved;

       iii.   one transactions made depend upon at least one other transaction;

     iv. one transactions is not commercial invidually,but when consider with other
transactions,it is commercial.

4.2. Business combinations involving enterprises under common control
(1)separate financial statement

The consideration is the cash given, non-montary assets transferred,liabilities incurred or
assumed, and equity securities issued by the acquirer in exchange for control of the acquiree.The
initial cost of the long-term equity investment is the share of the consolidated financial
statements, at the acquisition date, of ultimate controlling parties’s net assets.The difference
between the initial cost of the long-term equity investment obtained and the consideration paid
for the combination is adjusted to the share premium in capital reserve. If the share premium is
not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. If
there is contingent consideration and need to recognize contingent assets or liabilities, the
difference between amounts of the contingent assets or liabilities and the subsequent
settlement price is adjusted to the share premium in capital reserve. If the share premium is not
sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

Where a business combination involving enterprises under common control is achieved in stages
that involve multiple transactions, if such transaction is a package deal,the all transactions are
accounted as a package deal to obtain control power. If not, at the acquisition date, the
difference between the initial cost of the long-term equity investment and the aggregate of the
carrying amount of the long-term equity investment held before acquisition date and the new
consideration paied in order to achieve futher equity is adjusted to the share premium in capital
reserve. If the share premium is not sufficient to absorb the difference, any excess shall be
adjusted against retained earnings. As for the other comprehensive income relating to the equity
held in the acquiree before the acquisition date are not accounted untill dispose such
investment.when disposed, adopt the basis,which is same to investee dispose related assets or
liabilities,to accounted. The other comprehensive income recognized on the changes of other
owner’s equity except for net profit, other comprehensive income and dividend declared are not
accounted untill transferred to investment income when dispose such investment.

Costs directly attributable to the combination are included in profit or loss in the period in which
they are incurred. Transaction costs associated with the issue of equity for the business
combination are adjusted to the share premium in capital reserve. If the share premium is not
sufficient to absorb the difference, any excess shall be successively adjusted against surplus
reserve and retained earnings.

Transaction costs associated with the issue of debt securities for the business combination are
included in the initially recognized amounts of the debt securities.

If the combined parties praparied consolidated financial statements, the initial cost of the
long-term equity investment is determined on the basis of owner’s equity attributed to parent
company.

(2)consolidated financial statements

The assets and liabilities obtained by the absorbing party in a business combination are
measured at the carrying amount.

Where a business combination involving enterprises under common control is achieved in stages
that involve multiple transactions, if such transaction is a package deal,the all transactions are
accounted as one tansaction to obtain control power.

If not, the long-term equity investment held by absorbing party before acquisition date and the
profit or loss, other comprehensive income and other equity changes recognized from the later
of the acquisition date and the date on which absorbing party or combined party ultimately
controlled by same party to combining date offset beginning retained earnings of comparative
financial statements and current P/L respectively.

Where the accounting policy adopted by the combined party is different from that adopted by
the combining party, the combining party shall, according to accounting policy it adopts, adjust
the relevant items in the financial statements of the absorbing party, and shall, pursuant to the
present Standard, recognize them on the basis of such adjustment.

4.3. Business combinations not involving enterprises under common control
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets
given, liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for
control of the acquiree. In the merger agreement on a future event that is likely to affect the
combination costs make a contract, if estimated future matters are likely to occur and the
influence of the amount on the combination costs can be reliably measured, are also included in
the combination costs.

The intermediary expenses incurred by the acquirer in respect of auditing, legal services,
valuation and consultancy services, etc. and other associated administrative expenses
attributable to the business combination are recognized in profit or loss when they are incurred.
Transaction costs associated with the issue of equity or debt securities for the business
combination are included in the initially recognised amounts of the equity or debt securities.

Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's
identifiable net assets, the difference is treated as an asset and recognized as goodwill, which is
measured at cost on initial recognition. Where the cost of combination is less than the acquirer's
interest in the fair value of the acquiree's identifiable net assets, the acquirer firstly reassesses
the measurement of the fair values of the acquiree's identifiable assets, liabilities and contingent
liabilities and measurement of the cost of combination. If after that reassessment, the cost of
combination is still less than the acquirer's interest in the fair value of the acquiree's identifiable
net assets, the acquirer recognizes the remaining difference immediately in profit or loss for the
current period.

In case that the merger of enterprises under different controls that is realized by steps through
several times of exchange transaction belongs to a package deal, each transaction shall be
subject to accounting treatment as the transaction that has obtained the control right; in case
that it doesn’t belong to a package deal, the individual financial statements and the consolidated
financial statements shall be distinguished and subject to the relevant accounting treatment
respectively:

(1)In the individual financial statements, in case that the equity investment held before the
date of merger is checked as per the equity method, the sum of the book value of the acquiree’s
equity investment held before the date of purchasing and the newly increased investment cost
on the date of purchasing shall be regarded as the initial investment cost of such investment;
other comprehensive incomes checked and confirmed through adopting the equity method for
the equity investment held before the date of purchasing shall be subject to accounting
treatment when disposing the investment through adopting the basis for the direct disposal of
relevant assets or debts of the invested unit.


In case that the equity investment held before the date of merger isconfirmed by financial
instrument and checked as per the measurement standard, the sum of the fair value of the
equity investment on the date of merger and the newly increased investment cost shall be
regarded as the initial investment cost on the date of merger. The balance between the fair value
and book value of original equity held and accumulativefair value changesincluded in other
comprehensive incomes shall be transferred into the investment income of the current period on
the date of merger.

(2)In the consolidated financial statements, to hold the equity of the acquiree before on the
acquisition date. The equity held in the acquiree before the acquisition date is remeasured at its
fair value at the acquisition date, with any difference between its fair value and its carrying
amount being recognized as investment income, and the other comprehensive income relating
to the equity held in the acquiree before the acquisition date being transferred to investment
income.

5. Methods for the formulation of consolidated financial statements

The scope of consolidation in the consolidated financial statements is determined on the basis of
control. All subsidiaries(including separate entities controled parent company) should be included
in the consolidated financial statements.

In preparing the consolidated financial statements, where the accounting policies and the
accounting periods of the Company and subsidiaries are inconsistent, the financial statements of
the subsidiaries are adjusted in accordance with the accounting policies and the accounting
period of the Company.

The consolidated financial statements are prepared on the basis of the financial statements of
the Company and all of its subsidiaries.

All significant intra-group balances and transactions are eliminated on consolidation.

When the amount of loss for the period attributable to the minority shareholders of a subsidiary
exceeds the minority shareholders' portion of the opening balance of shareholders' equity of the
subsidiary, the excess amount is still allocated against minority interests.

For a subsidiary that is acquired in a business combination involving enterprises under common
control, it is included in the consolidated financial statements from the date when it, together
with the Company, comes under common control of the ultimate controlling party.

Their operating results and cash flows from the beginning of the current reporting period are
included in the consolidated income statement and consolidated statement of cash flows, as
appropriate.

For a subsidiary acquired through a business combination not involving enterprises under
common control, the operating results and cash flows from the acquisition date (the date when
control is obtained) are included in the consolidated income statement and consolidated
statement of cash flows, as appropriate, and no adjustment is made to the opening balances and
comparative figures in the consolidated financial statements.

For a subsidiary disposed of by the Company, the operating results and cash flows before the
date of disposal (the date when control is lost) are included in the consolidated income
statement and consolidated statement of cash flows, as appropriate.

When the company loses control over a subsidiary due to disposal of equity investment or other
reason, any retained interest is re-measured at its fair value at the date when control is lost. The
difference between (i) the aggregate of the consideration received on disposal and the fair value
of any retained interest and (ii) the share of the former subsidiary's net assets cumulatively
calculated from the acquisition date according to the original proportion of ownership interests
is recognized as investment income in the period in which control is lost. Other comprehensive
income associated with investment in the former subsidiary is reclassified to investment income
in the period in which control is lost.

6. Jointly operated arrangement classification and joint management accounting processing
        method

1. Jointly operated arrangement classification

According to the structure and legal form of jointly operated arrangement and the terms, other
relevant facts and situations agreed injointly operated arrangement, the company will divide
jointly operated arrangement into joint management and joint venture.

The jointly operated arrangement not reached by separate subject is divided into joint
management; the jointly operated arrangement reached by separate subject is usually divided
into joint venture; but the concrete evidence shows that the jointly operated arrangement that
meets the any one of the following conditions and the relevant laws and regulations is divided
into joint management:

(1) The legal form of jointly operated arrangement shows that the joint venture shall enjoy the
right and under the obligation for the relevant assets and liabilitiesin arrangementrespectively.

(2) The contract terms of jointly operated arrangement agree that the joint venture shall enjoy
the right and under the obligation for the relevant assets and liabilitiesin
arrangementrespectively.

(3) The other relevant facts and situations show that the joint venture shall enjoy the right and
under the obligation for the relevant assets and liabilitiesin arrangementrespectively, and for
instance, the joint venture enjoys almost all outputs related to jointly operated arrangement, and
the liquidation of the liabilitiesin arrangement depends on the support from the joint venture
continuously.

2. Joint management accounting processing method

The company confirms the following items related to quantum of interest in joint management,
and conducts accounting processing according to the regulations of Accounting Standards for
Business Enterprises:

(1) Confirm the asset held solely and the asset held jointly as per share;

(2) Confirm the liability borne solely and the liability borne jointly as per share;

(3) Confirm the income from selling the enjoyed joint management output share;

(4) Confirm the income from selling the joint management output as per share;

(5) Confirm the expense incurred solely and the expense incurred by joint management as per
share.

The company outputs or sells the asset to joint management (except the asset constitutes the
business), and before the joint management sells the asset to the third party, the part belonging
to other participants in the profit and lossincurred by the deal is only confirmed. In case that the
asset output or sold conforms to the asset impairment loss specified in Accounting Standards for
Business Enterprises No.8 -- Asset Impairment, the company shall confirm the full loss.

Before the company purchases the asset from joint management (except the asset constitutes
the business) and sells the asset to the third party, the part belonging to other participants in the
profit and lossincurred by the deal is only confirmed. In case that the asset purchased conforms
to the asset impairment loss specified in Accounting Standards for Business Enterprises No.8 --
Asset Impairment, the company shall confirm the part loss as per share.

The company shall not enjoy the joint control for joint management, and if the company enjoys
the relevant assets of joint management and undertake the relevant liabilities of joint
management, the accounting processing shall still be conducted according to the above principle;
otherwise, the accounting processing shall be conducted according to the regulations of
Accounting Standards for Business Enterprises.

7. Cash and Cash equivalents

Cash refers to cash on hand and demand deposits. “Cash equivalents” refer to short-term, highly
liquid investments that are readily convertible to known amounts of cash and which are subject
to an insignificant risk on change in value.

8. Foreign currency transactions

8.1. Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying the spot exchange
rate on the date of the transaction.

At the balance sheet date, foreign currency monetary items are translated into RMB using the
spot exchange rates at the balance sheet date. Exchange differences arising from the differences
between the spot exchange rates prevailing at the balance sheet date and those on initial
recognition or at the previous balance sheet date are recognised in profit or loss for the period,
except the exchange differences related to a specific-purpose borrowing denominated in foreign
currency that qualify for capitalisation are capitalised as part of the cost of the qualifying asset
during the capitalisation period.

Foreign currency non-monetary items measured at historical cost are translated to the amounts
in functional currency at the spot exchange rates on the dates of the transactions; the amounts in
functional currency remain unchanged.

Foreign currency non-monetary items measured at fair value are re-translated at the spot
exchange rate on the date the fair value is determined. Difference between the re-translated
functional currency amount and the original functional currency amount is treated as changes in
fair value including changes of exchange rate and is recognized in profit and loss or as other
comprehensive income included in capital reserve.The difference arising on available for sale
non-monetary items is recognized in other comprehensive income.

8.2. Translation of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a
foreign operation are translated from the foreign currency into RMB using the following method:
assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at
the balance sheet date; shareholders' equity items except for retained earnings are translated at
the spot exchange rates at the dates on which such items arose; all items in the income
statement as well as items reflecting the distribution of profits are translated at the spot
exchange rates on the dates of the transactions;The difference between the translated assets and
the aggregate of liabilities and shareholders' equity items is separately presented as the exchange
differences arising on translation of financial statements denominated in foreign currencies
under the shareholders' equity in the balance sheet.

On disposal of the Company's entire interest in a foreign operation , the Company transfers the
accumulated translation differences that relating to translation of the financial statements of that
foreign operation, presented in comprehensive income, to profit or loss in the period in which
the disposal occurs. As for part disposal ,the Company transfers the accumulated translation
differences that relating to translation of the financial statements to profit or loss in the period in
proportion to the weight of part disposal interest in a foreign operation.

9. Financial Instruments

Financial Instruments comprises financial assets,financial liabilities and equity instruments.

9.1. Classification of financial assets and financial liabilities
Financial instruments are classified into the following categories at initial recognition: financial
assets(or liabilities) at fair value through profit or loss, entrusted loans, receivables,
available-for-sale financial assets and held-to-maturity investments, other financial liabilities. The
classification of financial assets depends on not only commercial substance in contract but also
the Company’s intention and ability to hold the financial assets.

9.2. Recognition and measurement
(1)Financial assets(or liabilities) at fair value through profit or loss ("FVTPL")

Financial assets or financial liabilities at FVTPL include financial assets or financial liabilities held
for trading and those designated as at fair value through profit or loss.

A financial asset or financial liabilities is classified as held for trading if one of the following
conditions is satisfied:

(i) It has been acquired principally for the purpose of selling in the near term; or
(ii) On initial recognition it is part of a portfolio of identified financial instruments that the Group
     manages together and there is objective evidence that the Company has a recent actual
     pattern of short-term profit-taking; or

(iii) It is a derivative that is not designated and effective as a hedging instrument, or a financial
      guarantee contract, or a derivative that is linked to and must be settled by delivery of an
      unquoted equity instrument (without a quoted price in an active market) whose fair value
      cannot be reliably measured.

A financial asset or financial liabilities may be designated as at FVTPL upon initial recognition only
when one of the following conditions is satisfied:

(i) Such designation eliminates or significantly reduces a measurement or recognition
    inconsistency that would otherwise result from measuring assets (or liabilities)or recognizing
    the gains or losses on them on different bases; or

(ii) The financial asset(or liabilities) forms part of a group of financial assets (or liabilities)or a
     group of financial assets and financial liabilities, which is managed and its performance is
     evaluated on a fair value basis, in accordance with the Company's documented risk
     management or investment strategy, and information about the grouping is reported to key
     management personnel on that basis;

(iii) Hybrid instruments associated with embedded derivatives,except for embedded derivatives
      have not significant impact on cash flow of hybrid instrument ,or obviously embedded
      derivatives should not be spilt from hybrid instrument.

(iv) Hybrid instruments associated with embedded derivatives,which are needed to split but not
     measurend separately at initial acquisition date or at subsequent balance sheet date.

For financial assets and financial liabilities at FVTPL are initially measured at fair value, and
transaction costs are immediately recognized in profit or loss. Financial assets or financial
liabilities at FVTPL are subsequently measured at fair value. Any gains or losses arising from
changes in the fair value and any dividend or interest income earned on the financial assets are
recognized in profit or loss.

When dispose,the difference between fair value and initial cost are rcognized in investment
income; besides,adjust gain or loss from fair-value changes.

(2)Receivables

Accounts receivable arising from sale of goods or rendering of services are initially recognised at
fair value of the contractual payments from the buyers or service recipients.

Receivables are classified into the following categories: receivable, other receivables, notes
receivable,advances to suppliers and long-term receivables.

When the Comapny recover or dispose the accounts receivable, the difference between the
proceeds received from the transaction and their carrying amounts is recognised in profit or loss
for the current period.

(3)Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that the Company's management has the positive intention
and ability to hold to maturity.Held-to-maturity investments are initially measured at fair value,
and transaction costs are included in their initial recognized amounts.

Held-to-maturity investments are subsequently measured at amortized cost using the effective
interest method. effective interest determined at acquisition date and keep remain unchanged in
estimated period or appropriate shorter period.Gain or loss arising from DE recognition,
impairment or amortization is recognized in profit or loss. When dispose,the difference between
proceeds received from the transaction and their carrying amounts are rcognized in investment
income.

(4)Available-for-sale financial assets

Available-for-sale financial assets include non-derivative financial assets that are designated on
initial recognition as available for sale, and financial assets that are not classified as financial
assets at fair value through profit or loss, loans and receivables or held-to-maturity investments.

Available-for-sale financial assets are initially measured at fair value, and transaction costs are
included in their initial recognized amounts. Interests obtained and the dividends declared by the
investee during the period in which the available-for-sale financial assets are held, are recognized
in investment gains.

Available-for-sale financial assets are subsequently measured at fair value, and gains or losses
arising from changes in the fair value are recognized as other comprehensive income, except that
impairment losses and exchange differences related to amortized cost of monetary financial
assets denominated in foreign currencies are recognized in profit or loss, until the financial assets
are derecognized, at which time the gains or losses are released and recognized in profit or loss.

(5)Othere financial liabilities

According to its fair value and the associated transaction cost the sum as the amount of initial
recognition. Is follow-up measurement with the amortized cost.

9.3. Transfer of financial assets
The Company derecognizes a financial asset if the financial asset has been transferred and
substantially all the risks and rewards of ownership of the financial asset is transferred to the
transferee; If not,continue to recognize as a financial asset.

When determine whether the transfer of financial assets satisfies DE recognition criteria or
not,the substance over form should be taken into consideration

For a transfer of a financial asset in its entirety that satisfies the DE recognition criteria, the
difference between (1) the carrying amounts of the financial asset transferred; and (2) the sum of
the consideration received from the transfer and any cumulative gain or loss that has been
recognized in other comprehensive income is recognized in profit or loss.

If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognized and the
part that is derecognized, based on the respective fair values of those parts. The difference
between (1) the carrying amount allocated to the part derecognized; and (2) the sum of the
consideration received for the part derecognized and any cumulative gain or loss allocated to the
part derecognized which has been previously recognized in other comprehensive income, is
recognized in profit or loss.

If a transfer of a financial asset are not satisfies the DE recognition criteria, such financial asset
continuing involved in the transferred financial asset and recognizes consideration as an financial
liability.
9.4. Derecognition of financial liabilities
The Company derecognizes a financial liability (or part of it) only when the underlying present
obligation (or part of it) is discharged. An agreement between the Company (an existing
borrower) and an existing lender to replace the original financial liability with a new financial
liability with substantially different terms is accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability. When the Company derecognizes
a financial liability or a part of it, it recognizes the difference between the carrying amount of the
financial liability (or part of the financial liability) derecognized and the consideration paid
(including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.

If the Company buy back part of financial liability,the carrying amounts of financial liability
should be allocated between the derecognized parts and continuing recognized parts in
proportion to ratio of its fair value.The difference between the carrying amount of part of the
financial liability derecognized and the consideration paid (including any non-cash assets
transferred or new financial liabilities assumed) is recognized in profit or loss.



9.5. Basis for fair values of the financial assets and financial liabilities
The fair value of financial assets and financial liabilities traded on active markets are determined
with reference to quoted market bid prices; The fair value of other financial assets and financial
liabilities (excluding derivative instruments) are determined in accordance with generally
accepted pricing models based on

discounted cash flow analysis or using prices from observable current market transactions; The
fair value of initial acquired or derivative instruments are determined with reference to quoted
market prices.

9.6. Impairment of financial assets(except for receivables)
The Company assesses at each balance sheet date the carrying amounts of financial assets other
than those at fair value through profit or loss. If there is objective evidence that a financial asset
is impaired, the Company determines the amount of any impairment loss.

Objective evidence that a financial asset is impaired includes the following observable events:

(1) Significant financial difficulty of the issuer or obligor;

(2) A breach of contract by the borrower, such as a default or delinquency in interest or
      principal payments;

(3) The Comapny, for economic or legal reasons relating to the borrower's financial difficulty,
      granting a concession to the borrower;

(4) It becoming probable that the borrower will enter bankruptcy or other financial
      reorganizations;

(5) The disappearance of an active market for that financial asset because of financial
      difficulties of the issuer;

Upon an overall assessment of a group of financial assets, observable data indicates that there is a
measurable decrease in the estimated future cash flows from the group of financial assets since the
initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the group. Such observable data includes: -Adverse changes in the
payment status of borrower in the group of assets; Economic conditions in the country or region of
the borrower which may lead to a failure to pay the group of assets;
(6) Significant adverse changes in the technological, market, economic or legal environment in
      which the issuer operates, indicating that the cost of the investment in the equity
      instrument may not be recovered by the investor;

(7) A significant or prolonged decline in the fair value of an investment in an equity
      instrument below its cost;

The method for impairment loss of financial assets are set out below:

(1) Impairment of available-for-sale financial assets:

The Company assesses the available-for-sale equity instruments individually for impairment at
balance sheet date. If the fair value of the equity instruments are reduced to 50%(or over 50%) of
the cost or less than its cost and lasts more than one year, the impairment is recognized. If the
the fair value of the equity instruments at the balance sheet date are less than 20% but more
than 50% of the cost, the Company determines the impairment loss taking into account other
related factors such as price fluctuation.

When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in
fair value previously recognized directly in capital reserve is reclassified from the capital reserve
to profit or loss. The amount of the cumulative loss that is reclassified from capital reserve to
profit or loss is the difference between the acquisition cost (net of any principal repayment and
amortization) and the current fair value, less any impairment loss on that financial asset
previously recognized in profit or loss.

If, subsequent to the recognition of an impairment loss on available-for-sale financial assets,
there is objective evidence of a recovery in value of the financial assets which can be related
objectively to an event occurring after the impairment is recognized, the previously recognized
impairment loss is reversed. The amount of reversal of impairment loss on available-for-sale
equity instruments is recognized as other comprehensive income, while the amount of reversal
of impairment loss on available-for-sale debt instruments is recognized in profit or loss.

But for the impairment loss incurred on an investment in unquoted equity instrument (without a
quoted price in an active market) whose fair value cannot be reliably measured, or on a
derivative financial asset that is linked to and must be settled by delivery of such an unquoted
equity instrument, the impairment loss on such financial asset is not reversed once it is
recognized.

(2) Impairment of held-to-maturity investments:

If there is objective evidence that a held-to-maturity investments is impaired, the difference
between carrying amounts and present value of estimated future cash flows is recognized as an
impairment loss in profit or loss. If there is objective evidence of a recovery in value of a
held-to-maturity investments which can be related objectively to an event occurring after the
impairment is recognized, the previously recognized impairment loss is reversed. However, the
reversal is made to the extent that the carrying amount of the held-to-maturity investments at
the date the impairment is reversed does not exceed what the amortized cost would have been
had the impairment not been recognized.

9.7. Offsetting financial assets and financial liabilities
Where the Company has a legal right that is currently enforceable to set off the recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to realize the
financial asset and settle the financial liability simultaneously, a financial asset and a financial
liability shall be offset and the net amount is presented in the balance sheet. Except for the
above circumstances, financial assets and financial liabilities shall be presented separately in the
balance sheet and shall not be offset.

10. Receivables

(1) Receivables with major single amount and provision for bad debts withdrawn

1. The confirmation standard of receivables with major single amount and provision for bad
debts: the specific standard of major single amount: the ending balance is up to more than RMB
1,000,000 (including RMB 1,000,000).
2. The withdrawing method of provision for bad debts for receivables with major single amount:
separately conduct the impairment test, and include the provision for bad debts into the current
profit and loss according to the balance between the present value and book value of the
expected future cash flow. The receivables without impairment in separate test shall be included
into the corresponding combination of provision for bad debts.
(2) Receivables with provision for bad debts withdrawn as per combination
(1) Determination basis of the credit risk feature combination
In principle, there is no provision for bad debts for receivables of the related parties between
enterprises within the consolidation scope of the Pearl River holdings, and if the concrete
evidence shows that receivables can not be withdrawn or receivables are less likely to be
withdrawn, then the provision for bad debts shall be withdrawn as per uncollectible amount.
For receivables without major ending amount and consolidated financial statement of Pearl River
holdings, similar to receivables without impairmentafter separate test, the provision for bad
debts shall be withdrawn by aging analysis method.
(2) The withdrawing method confirmed according to credit risk feature combination: the
provision for bad debts is withdrawn by aging analysis method.
                                                      Percentage of Accounts    Percentage of Others
                       Ages
                                                          Receivable (%)       Receivable         (%)
Within 1 year (including 1 year, same as following)             2                        2
1 year to 2 years                                               5                        5
2 years to 3 years                                             10                       10
3 years to 4 years                                             20                       20
4 years to 5 years                                             30                       30
Over 5 years                                                   50                       50



 (3) Receivables with not major single amount but provision for bad debts withdrawn

The reason for withdrawing provision for bad debts: the objective evidence shows that the
company can not withdraw money according to the original terms of receivables.
The withdrawing method of provision for bad debts: withdrawing according to the balance
between the present value and book value of the expected future cash flow of receivables.
11. Inventories

(1) Inventories include: development cost (constructing development product), development
product, finished goods, low-value consumable supplies and etc.
The real estate development products include real estate under construction development
product, completiondevelopment product and the land to be developed, etc.. The actual cost of
real estate development products includes landtransfer fee, auxiliary facilitiesexpenditure,
building installation engineeringexpenditure, loan expense incurred by project development
before completion and other related expenses in development.

The development cost refers to the real estate that has not been built for the purpose of sales;
the land to be developed refers to the purchased land that is developed into the
completiondevelopment product; thedevelopment product refers to the real estate that has
been built for sale. When the integrated development is carried out, the land to be developed is
transferred into the development cost; when the phased developmentis carried out, the part
land developed by stage is transferred into the development cost, and the undeveloped land still
remains in the land to be developed.

(2) Inventory valuation method:Real estate development product inventory when individual
recognition method is used to determine its actual cost, other inventory issued by weighted
average method.

(3)The determination of net realisable value basis and inventory write-down provision method:
The ending inventory shall be measured according to the lower of cost and net realizable value.
The inventory falling price reserves shall be withdrawn according to the balance between the
inventory cost and net realizable value. The net realizable value shall be confirmed according to
the estimated sale priceminus the estimated cost, selling expenses and related taxes after
completion.

In case that the influence factors of the previous write-downinventory value have disappeared,
the write-down amount is recovered and returned back within the originally withdrawn inventory
falling price reserves, and the returned amount is included into the current profit and loss.

(4) Stock inventory system: Uses the perpetual inventory system.

(5) The amortization method of low-value consumables and packaging: the low-value
consumables adopt one-time reselling method.

(6) The accounting method of land development: for the integrated developmentproject, in
case that the expense bearing object can be distinguished, generally, the commercial housing
cost is calculated according to the actual area.

(7)        The accounting method of public supporting facilities expense

The public supporting facilities that can not be transferred with compensation: included into the
commercial housing cost according to the benefit ratio;

The public supporting facilities that can be transferred with compensation: taking the supporting
facilities as the cost accounting object, to collect the cost.

 (8)          The accounting method of maintenance funds

According to the local relevant regulations, when the development product is sold (presold), the
development cost charged from the purchaser or withdrawn and included by the company is paid
to the maintenance fund management department.

 (9)       The accounting method of quality deposit

The quality deposit is reserved from the project funds of construction unit according to the
construction contract. The maintenance cost incurred during the warranty period of
development product writes off the quality deposit; after the warranty period expires, the quality
deposit balance will be returned to the construction unit.



12. Long-term equity investment

12.1. Determination of investment cost
(1) For a long-term equity investment acquired through a business combination, please refer
to Notes“ IV-4” in detail.

(2) Long-term equity investment acquired through other ways

The initial cost of a long-term equity investment obtained by making payment in cash shall be the
purchase cost which is actually paid. The initial cost consists of the expenses directly relevant to
the obtainment of the long term equity investment, taxes and other necessary expenses.

The initial cost of a long-term equity investment obtained on the basis of issuing equity securities
shall be the fair value of the equity securities issued. Transaction cost of issuing or obtaining
equity directly attributed to euity transaction can subtract from equity.

If the transaction is commercial in nature and fair values of both the assets received and
surrendered can be reliably measured, the fair value of the assets surrendered shall be the basis
for the determination of the cost of the assets received, unless there is any exact evidence
showing that the fair value of the assets received is more reliable.Where any non-monetary
assets transaction does not meet the conditions as prescribed in above, the carrying value and
relevant payable taxes of the assets surrendered shall be the initial cost of a long-term
investment obtained.

The initial cost of a long-term equity investment obtained by debt restructuring shall be
ascertained on the basis of fair value.

12.2. Subsequent measurement and recognition of profit or loss
(1) A long-term equity investment accounted for using the cost method

For long-term equity investments over which the Company can exercise control, the Company
accounts for such long-term equity investments using the cost method. Under the cost method, a
long-term equity investment is measured at initial investment cost. Except for cash dividends or
profits already declared but not yet paid that are included in the price or consideration actually
paid upon acquisition of the long-term equity investment, investment income is recognized in the
period in accordance with the attributable share of cash dividends or profit distributions declared
by the investee.

(2) A long-term equity investment accounted for using the equity method

TheCompany accounts for investment in associates and joint ventures using the equity method.
An associate is an entity over which the Group has significant influence and a joint venture is an
entity over which the Group exercises joint control along with other investors.

Under the equity method, where the initial investment cost of a long-term equity investment
exceeds the Group's share of the fair value of the investee's identifiable net assets at the time of
acquisition, no adjustment is made to the initial investment cost. Where the initial investment
cost is less than the Comany's share of the fair value of the investee's identifiable net assets at
the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of
the longterm equity investment is adjusted accordingly.

For long-term equity investments accounted for using the equity method, the Company
recognises the investment income and other comprehensive income according to its share of net
profit or loss and other comprehensive income of the investee, and the cost of the longterm
equity investment is adjusted accordingly.The Company discontinues recognising its share of net
losses of an investee after the carrying amount of the long-term equity investment together with
any long-term interests that, in substance, form part of the investor’s net investment in the
investee are reduced to zero. However, if the Company has obligations for additional losses and
the criteria with respect to recognition of provisions under the accounting standards on
contingencies are satisfied, the Company continues recognising the investment losses and the
provisions. For changes in owners’ equity of the investee other than those arising from its net
profit or loss, other comprehensive income, and profit distribution, the Company adjusts the
book value of the investment and records capital surplus accordingly. The carrying amount of
the investment is reduced by the Company’s share of the profit distribution or cash dividends
declared by an investee. The unrealised profits or losses arising from the intra-company
transactions amongst the Company and its investees are eliminated in proportion to the
Company’s equity interest in the investees, and then based on which the investment gains or
losses are recognised. For the loss on the intra-company transaction amongst the Company and
its investees attributable to asset impairment,any unrealised loss is not eliminated.

12.3.The transfer of accounting methods
(1) Fair value measurement to equity method accounting
As for the equity investment held by the company without control, joint control or significance on
the invested unit and conducting accounting treatment according to financial instrument
confirmation and measurement regulations, if it may exert significance or joint control (without
control) on the invested unit due to increased investment, the fair value of original equity
investment (established in accordance with Accounting Standards for Business Enterprises No. 22
– Confirmation and Measurement of Financial Instruments) and added investment cost will be
regarded as initial investment cost accounted based on equity method.

If the original equity investment is classified as available-for-sale financial assets, the balance
between fair value and book value as well as the accumulative fair value changes included into
other comprehensive incomes will be transferred to current profits and losses measured based
on equity method.

The balance between the initial investment cost accounted with equity method and the fair value
of recognizable net assets on additional investment date (invested unit) determined and
calculated based on the new shareholding ratio after additional investment will be used to adjust
the book value of long-term equity investment and included into current non-operating income.

(2) Fair value measurement or equity method accounting is converted to cost method
accounting

As for the equity investment held by the company without control, joint control or significant
influence on the invested unit and conducting accounting treatment according to financial
instrument confirmation and measurement regulations, or as for the long-term equity
investment of associated enterprise and joint venture held by the company, if it can control the
invested unit not under the same control due to increased investment, the book value of original
equity investment plus additional investment will be regarded as initial investment cost
accounted with cost method while preparing individual financial statement.

The equity investment held before purchase date is included into other comprehensive incomes
upon accounting with equity method will be disposed with the same method as disposing the
relevant assets or liabilities.

If the equity investment held before purchase date is disposed according to Accounting Standards
for Business Enterprises No. 22 – Confirmation and Measurement of Financial Instruments, the
changes in accumulative fair value included into other comprehensive incomes will be transferred
into current profits and losses upon measurement with cost method.

(3)     Equity method accounting is converted to fair value measurement

If the company loses joint control or significant influence on the invested unit due to disposing
part of equity investment, the remaining equity will be measured according to Accounting
Standards for Business Enterprises No. 22--Recognition and Measurement of Financial
Instruments. The balance between fair value and book value will be included into current profits
and losses on the date losing joint control or significant influence.

The original equity investment is included into other comprehensive incomes upon end up
terminating accounting with equity method will be disposed with the same method as disposing
the relevant assets or liabilities.

(4)     Cost method is converted to equity method.

If the company loses control to the invested unit due to disposing equity part of investment, and
the remaining equity may exert joint control or significant influence on the invested unit while
preparing individual financial statement, it will be measured and adjusted with equity method.

(5)     Cost method is converted to fair value measurement

If the company loses control to the invested unit due to disposing part of equity investment, and
the remaining equity may not exert joint control or significance on the invested unit while
preparing individual financial statement, the accounting treatment will be conducted in
accordance with Accounting Standards for Business Enterprises No. 22 – Confirmation and
Measurement of Financial Instruments. The balance between fair value and book value will be
included into current profits and losses on the date losing control.

12.4. Disposal of long-term equity investments
On disposal of a long term equity investment, the difference between the proceeds actually
received and receivable and the carrying amount is recognized in profit or loss for the period. For
a long-term equity investment accounted for using the equity method, the amount included in
the shareholders' equity attributable to the percentage interest disposed is transferred to profit
or loss for the period.

When the clause, condition and the economic impact of making equity investment in subsidiaries
is subject to one or more of the following conditions, conduct accounting treatment by taking the
multiple transactions as a package deal:

(1) These transactions are considered to be made at the same time or in the case of considering
mutual influence;

(2) These transactions only as a whole can achieve a complete business result;

(3) The occurrence of a transaction depends on the occurrence of at least other one transaction;

(4) One transaction alone is not economic, but when being considered together with other
transactions, it is economic.

When the company loses its control rights over the original subsidiary because of the disposal of
part equity investment or other reasons other than package deal, a distinction shall be made
between individual financial statement and the consolidated financial statement to conduct the
accounting treatment:
(1) As for the disposed equity in individual financial statement, the balance between book value
and actual value will be included into current profits and losses. In case of disposed residual
equity with joint control and significant impact on the invested unit, calculate with equity
method, and adjust the residual equity with equity method since the time of obtaining; In case of
the disposed residual equity being not able to jointly control or have a significant influence on
the invested unit, conduct accounting treatment according to relevant regulations in Accounting
Standard for Business Enterprises No. 22 — Recognition and Measurement of Financial
Instruments, and account the balance between the fair value on the date losing control and book
value into current profits and losses.

(2) In consolidated financial statement, for the balance between each transaction, disposal price
and disposed long-term equity investment before losing control rights to subsidiary and the
corresponding net asset share calculated since the date of purchasing or merging the subsidiary,
adjust capital reserve (capital stock premium), and adjust retained earnings for those capital
reserves insufficient for offset; In case of losing control rights to subsidiary, re-calculate residual
equity according to fair value on the date of losing control rights. The difference of sum of the
acquired consideration from equity disposal and fair value of residual equities deducting the
shares of net assets continuously calculated from the purchase date of original subsidiary
enjoyed upon calculation as per original shareholding proportion shall be included into the
current investment incomes of losing the control rights with goodwill offset. For other
comprehensive income associated with the equity investment of the original subsidiary, it should
be converted into investment income when losing the control rights.

If the transaction disposing subsidiary equity investment until losing control rights belongs to
package deal, the transaction will conduct accounting treatment as a transaction disposing
subsidiary equity investment and losing control rights. Accounting treatment will be conducted
separately on individual financial statement and consolidated financial statement;

(1) In individual financial statement, the balance of long-term equity investment book value when
disposing price and stock will be confirmed as other comprehensive income before loss of control
rights, and when the control rights lose, the other comprehensive income concurrently
transferred to current profits and losses.

(2) In consolidated financial statement, the balance of net asset shares of subsidiaries when
disposing price and investment will be confirmed as other comprehensive income before loss of
control rights, and when the control rights lose, the other comprehensive income concurrently
transferred to current profits and losses.

12.5.     Judgment standard of joint control and significant influence

If the company controls certain arrangement together with other participators as agreed and
makes decision on activities with significant influence, the decision may exist upon consent of
participators sharing control rights. It will be deemed as the company controlling the
arrangement with other participators. The arrangement refers to joint-operation arrangement.

If joint- operation arrangement is reached by independent entity and the company is entitled to
the net assets of the independent entity as agreed, the independent entity will be regarded as
joint venture and be accounted with equity method. If the company is not entitled to the net
assets of the independent entity, the independent entity will be regarded as joint operation. The
company confirms the items related to joint operation share and conduct accounting treatment
in accordance with Accounting Standards for Business Enterprises.

The term "significant influence" means investors having the power to participate in the decision
of financial and operating policies to invested unit, but not to control or jointly control the
formulation of these policies together with other parties. The company judges to have significant
influence on the invested unit by means of one or several circumstances as follows and upon
considering all facts and conditions. (1) Representatives have been appointed in the board of
directors or equivalent authorities of the investees; (2) Participate in making financial and
operation policy of the invested unit; (3) Conduct important deals with the invested unit; (4) Send
administrative staff to the invested units; (5) Provide key technical data for the invested units.

13. Investment property

The term "investment property" refers to the real estates held for generating rent and/or capital
appreciation, including: the right to use any land which has already been rented; the right to use
any land which is held and prepared for transfer after appreciation; and the right to use any
building which has already been rented. The initial measurement of the investment property
shall be made at its cost. An enterprise shall make a follow-up measurement to the investment
real estate through the cost pattern. For buildings which have already been rented, the Company
calculates depreciation as the same method of fixed assets. For the right to use any land, it is
amortized with straight-line method according to the serviceable life. At the balance sheet date,
where any evidence shows that there is possible assets impairment, the impairment provision is
made.

     Listed as follows:

                                                                                     rate        of
                                  Estimated               Rate of expected
     Category                                                                   depreciation
                             useful lives(Year)    net salvage value
                                                                                (amortization)


     Building                          25                     5.00%                    3.80%



In case that the purpose of investment property is changed as self-use, the investment property
shall be converted into fixed assets or intangible assets since the date of changing. In case that
the purpose of the self-use real estates is changed as earning rent or capital gain, fixed assets or
intangible assets shall be converted into investment property since the date of changing. In case
of conversion, the book value before conversion should be recognized as the entry value after
conversion.

If an investment property is disposed, or if it withdraws permanently from use and it is predicted
that no economic benefit will be obtained from the disposal, this investment real estate should
be derecognized. The amount as the book value and relevant taxes are deducted from the
disposal income obtained from the sale investment real estate, transfer, discard or damage of the
investment property shall be included in the current profit and loss.

14. Fixed assets

(1) Recognition of fixed assets
Fixed assets are tangible assets that are held for use in production or supply of goods or services,
for rental to others, or for administrative purpose, and have useful lives more than one
accounting year.

The expected discard expenses should be taken into consideration in the ascertainment of the
cost of a fixed asset. (1) the economic benefits associated with the fixed assets are likely to flow
into the enterprise; (2) the cost of the fixed asset can be measured reliably.

(2) Initial measurement of fixed assets

The fixed assets of the company shall be measured initially in accordance with its cost. Where the
costs of outsourcing fixed assets include the purchasing price, import tariff and other relevant
taxes as well as other expenditures incurred before letting fixed asset reach the expected
serviceable conditions which can directly belong to this asset. The cost of self-built fixed assets is
constituted by the necessary expenditures spent before that property reaches the predetermined
serviceable status. As for fixed assets invested by investors, the entry value thereof equals to the
value agreed in investment contracts or agreements. But, should the agreed value in contracts or
agreements is not fair, fair value should be used as the entry value. If the fixed asset is purchased
at a price beyond normal credit conditions and delay in payment, and substantially has financing
nature, the cost of the fixed asset shall be confirmed based on the current value of the
acquisition price. The balances between the cost actually paid and the present value of the
purchase price will be included in current profit and loss during the credit period except the part
that should be capitalized.

 (3)The category and depreciation method of fixed assets

(1)Depreciation of fixed assets

The depreciation of fixed assets is calculated and withdrawn within in the predicted service life
according to its entry value less the predicted net residual value. For fixed assets withdrawing
impairment reserve, depreciation amount is determined according to book value deducted
impairment reserves and durable years in future.

The company shall determine the fixed asset service life and anticipated net residual value
according to the nature and use condition of the fixed assets.At the end of the year, the company
shall recheck the service life, anticipated net residual value and depreciation method of the fixed
assets. In case of difference from the original estimation, the corresponding adjustment shall be
made.

Depreciable life and yearly depreciation rate of various fixed assets, are listed as follow:


                         Estimated   useful   lives   Expected residual value   Annual depreciation rate
Category
                         (years)                      (%)                       (%)
Buildings          and
                                     25                         5                         3.80
structures
Vehicles                             5                          5                        19.00
General equipments                   10                         5                         9.50
Other equipments                     5                          5                        19.00



(2) Fixed assets subsequent expenses
In case that the subsequent expenditure related to fixed assets conforms to recognition
conditions of fixed assets, they shall be accounted into fixed assets cost; If the fixed assets do not
conform to the confirmation criteria, it shall be reckoned into the current profits and losses.

 (3) Disposal of fixed assets

When the fixed assets are disposed or cannot be expected to produce economic interests
through use or disposal, the asset shall be derecognized. The amount as the book value and
relevant taxes are deducted from the disposal income obtained from the sale of fixed assets,
transfer, discard or damage of the investment property shall be included in the current profit and
loss.

15. Construction in progress

Construction in progress (“CIP”) includes all costs incurred during the preparation period before
commencement of construction and until the asset is ready for its intended use. These costs
include direct materials, direct labour, equipment for installation, construction and installation
charges, management fees, gain or loss on trial run production and borrowing costs which are
qualified for capitalization.

CIP is transferred to fixed assets when the asset is ready for its intended use.

At the balance sheet date, where any evidence shows that there is possible CIP impairment, the
impairment provision is made according to Notes II.17.

16. Borrowing Costs

Borrowing costs are interest and other related costs incurred by the Company in connection with
the borrowing of funds, and include interest, amortization of discounts or premiums related to
borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and
exchange differences arising from foreign currency borrowings. Borrowing costs that are directly
attributable to the acquisition, construction or production of a qualifying asset shall be
capitalized as part of the cost of that asset. The amounts of other borrowing costs incurred shall
be recognized as an expense in the period in which they are incurred.

Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily
take a substantial period of time for acquisition, construction or production to get ready for their
intended use or sale. The capitalization of borrowing costs can commence only when all of the
following conditions are satisfied: (1) expenditures for the asset are being incurred; (2) borrowing
costs are being incurred; (3) activities relating to the acquisition, construction or production of
the asset that are necessary to prepare the asset for its intended use or sale have commenced.

When the qualified asset under acquisition and construction or production is ready for the
intended use or sale, the capitalization of the borrowing costs shall be ceased; then the
borrowing costs incurred shall be recorded into the profits and losses of the current period.
Borrowing costs due to loans from real estate development are recorded into development cost
before the completion of the project and recorded into current profit and loss after the
completion of the project. Borrowing costs are recorded into development cost and amortized
quarterly.

Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended. The borrowing costs incurred during such period shall be
recognized as expenses, and shall be recorded into the profits and losses of the current period.
During the capitalization period, the amount of interest to be capitalized for each accounting
period shall be determined as follows:

(1) for a specific-purpose borrowing, the amount of interest to be capitalized shall be the actual
interest expense incurred for the period less temporary deposit’s interest or investment income;

(2) Where funds are borrowed under general-purpose borrowings, the Company shall determine
the amount of interest to be capitalized by applying a capitalization rate to the weighted average
of the excess amounts of cumulative expenditures on the asset over and above the amounts of
specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest
rates applicable to the general-purpose borrowings.

17. Intangible assets

The term "intangible assets" refers to the identifiable non-monetary assets possessed or
controlled by enterprises which have no physical shape. If it is unable to forecast the period when
the intangible asset can bring economic benefits to the enterprise, it shall be regarded as an
intangible asset with uncertain service life. The intangible assets shall be initially measured
according to its cost. If it is unable to determine the expected realization pattern reliably,
intangible assets shall be amortized by the straight-line method. An enterprise shall, at least at
the end of each year, check the service life and the amortization method of intangible assets with
limited service life, and adjust them when necessary. Intangible assets with uncertain service life
may not be amortized. An enterprise shall check the service life of intangible assets with
uncertain service life during each accounting period. Where any evidence shows that there is
possible assets impairment, the impairment provision is made.

18. Long-term prepaid expenses

Long-term prepaid expenses mainly include spending paid with the benefit period of more than
one year (excluding the year period) such as car parking fees, housing renovation fees, etc.
Long-term prepaid expenses shall be amortized the costs over the duration of the project
beneficiary.

19. Contingencies liabilities

The obligation pertinent to a Contingencies shall be recognized as accrued liabilities when the
following conditions are satisfied simultaneously: (1) That obligation is a current obligation of
the enterprise; (2) It is likely to cause any economic benefit to flow out of the enterprise as a
result of performance of the obligation; (3) The amount of the obligation can be measured in a
reliable way. The estimated debts shall be initially measured in accordance with the best estimate
of the necessary expenses for the performance of the current obligation.

20. Revenue recognition

Revenue from sale of goods
Revenue from sale of goods is recognised when (1) the Group has transferred to the buyer the
significant risks and rewards of ownership of the goods; (2) the Group retains neither continuing
managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold; (3) the amount of revenue can be measured reliably; (4) it is probable that
the associated economic benefits will flow to the Group; and (5) the associated costs incurred or
to be incurred can be measured reliably.

Where the receivable is delayed beyond the normal credit conditions, which is of financing
intention, the revenue shall be determined on the basis of the fair value of the contract or
agreement price.
Real estate sales revenue: the Company can recognize real estate sales revenue after the
completion and acceptance of the property, signing sale contract, acquiring payment proof from
buyer and delivery. When the buyer receives written delivery notice and has no warrant to refuse
to accept it, the sales revenue is realized after delivery limit closed of delivery notice. For the
development project consigned by other, as well as in accordance with “Accounting Standards for
Business Enterprises -Construction Contract", the revenue shall be recognized in light of the
percentage-of- completion method. The percentage-of- completion is determined by the
proportion of finished workload.

Revenue from rendering of services

When the outcome of a transaction involving the rendering of services can be estimated reliably,
revenue associated with the transaction shall be recognized by reference the stage of completion
of the transaction at the reporting date. The stage of completion of the transaction is recognized
according to the proportion of the cost having taken place occupied the estimated total cost.

The outcome of a transaction can be estimated reliably when all the following conditions are
satisfied:

the amount of revenue can be measured reliably;

it is probable that the associated economic benefits will flow to the enterprise;

the stage of completion of the transaction can be measured reliably;

the costs incurred and to be incurred for the transaction can be measured reliably

When the outcome of a transaction involving the rendering of services cannot be estimated
reliably at the balance sheet date: when the costs incurred are expected to be recoverable,
revenue shall be recognized to the extent of costs incurred and an equivalent amount shall be
charged to profit or loss as service costs; when the costs incurred are not expected to be
recoverable, the costs incurred shall be recognized in profit or loss for the current period and no
service revenue shall be recognized.

The revenue of property management service is recognized when following conditions are
satisfied: the property management service has been offered; the associated economic benefits
will flow to the enterprise; the associated costs can be measured reliably.

Transfer of asset with buy-back condition

The company determined whether sale of goods or transfer of assets with buy-back condition in
contract is satisfy criterias of revenue recognition or not according to clauses of agreement. If it is
a financing transaction, revenue are not be recorded. The amount of buy-back price after sales
price is recognized in financial cost during the term of buy-back.

Government grants

Government grants shall be recognized at fair value on the conditions that the Company can
receive the grant and comply with the conditions attaching to the grant. For a government grant
related to income, if the grant is a compensation for related expenses or losses to be incurred by
the Company in subsequent period, the grant shall be recognized as deferred income, and
recognized in profit or loss over the periods in which the related costs are recognized. A
government grant related to an asset shall be recognized as deferred income, and evenly
amortized to profit or loss over the useful life of the related asset.
Recognition of deferred income tax assets and liabilities

(1) The Company shall recognize the deferred income tax assets arising from a deductible
temporary difference to the extent of the amount of the taxable income which it is most likely to
obtain and which can be deducted from the deductible temporary difference. However, the
deferred income tax assets, which are arising from the initial recognition of assets or liabilities
during a transaction which is simultaneously featured by the following, shall not be recognized:

(i) This transaction is not business combination; and

(ii) At the time of transaction, the accounting profits will not be affected, nor will the taxable
amount (or the deductible loss) be affected.

(2) Where the deductible temporary difference related to the investments of the subsidiary
companies, associated enterprises and joint enterprises can meet the following requirements
simultaneously, the enterprise shall recognize the corresponding deferred income tax assets:

(i) The temporary differences are likely to be reversed in the expected future; and

(ii) It is likely to acquire any amount of taxable income tax that may be used for making up the
deductible temporary differences.

(iii) As for any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax assets shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely obtained.

 (3) Recognition of deferred income tax liabilities

Except for the deferred income tax liabilities arising from the following transactions, an
enterprise shall recognize the deferred income tax liabilities arising from all taxable temporary
differences:

(i) The initial recognition of business reputation;

(ii) The initial recognition of assets or liabilities arising from the following transactions which are
simultaneously featured by the following:

(a) The transaction is not business combination;

(b) At the time of transaction, the accounting profits will not be affected, nor will the taxable
amount (or the deductible loss) be affected.

(4) The income taxes of the current period and deferred income tax of an enterprise shall be
treated as income tax expenses or incomes, and shall be recorded into the current profits and
losses, excluding the income taxes incurred under the following circumstances:

(i) The business combination; and

(ii) The transactions or events directly recognized as the owner's rights and interests.

 (5) Impairment on the deferred income tax assets

On the balance sheet date, the carry amounts of the deferred income tax assets shall be
reviewed.
    Maintenance fund

    The Company’s property management company receives and manages public maintenance fund
    consigned by owners, and charges to “agency fund”. The fund is used in the maintenance and
    update of the common apparatus and common position of the house and communal facilities of
    property management region.

    Quality assurance reserve funds

    Construction party should remain quality assurance reserve funds according to the amount in the
    construction contract, and list in "accounts payable". The funds should be paid according to the
    actual conditions and contract after guarantee period.

    Changes of accounting policies and accounting estimates and error correction

V. Changes of significant accounting policies and accounting estimates and prior error correction

    1.   Changes of accounting policies

    No alteration of accounting policies occurred in the report period.

    2.   Changes in accounting estiminations

    No alteration of accounting estiminations occurred in the report period.

    3.   Corrections of previous period critical errors

    No corrections of previous period critical errors occurred in the report period.

    V.Taxation

    The main taxes include: business tax, city construction and maintenance tax, education fee,
    income tax and etc. The tax rates are as following:

                      Category                  Rate                         Taxable base
                                                          Sales of goods, taxable services income
                                            3%、5%、6%、 and taxable services revenue (business
    Value-added tax
                                            11%、13%、17% reform pilot areas applicable taxable

                                                          services income)
    City construction and maintenance tax      5%、7%       Payable turnover tax
    Education fee                                3%         Payable turnover tax
    Local education fee is attached           1.5%、2%      Payable turnover tax
    Income tax                                10%、25%      Taxable income
    property tax                                            According to 70% of the original value of
                                            1.2%、8%、12%   the property (or rental income) for the tax
                                                            base
    Land value - added tax                      1.5%        According to the amount of income

    Different taxable income tax rate Description:


    The three-tier subsidiary Shanghai Pearl Property Management Co., Ltd. and Wuhan Zhujiang
Meilin Hotel Management Co., Ltd. belong to the small profit-making enterprise, the applicable
enterprise income tax rate is 10%, the Company and other subsidiaries applicable corporate
income tax rate of 25%.

VI. Notes to significant items of the consolidated financial statements
(All amounts are stated in RMB Yuan unless otherwise stated)

Note 1 Currency Funds

                   Items                                Closing Balance                          Opening Balance
Cash in treasury                                                          786,233.90                           1,305,777.52
Bank deposit                                                         162,045,485.08                          240,190,186.44
Other monetary funds                                                   5,008,402.28                            5,008,387.43
                   Total                                             167,840,121.26                          246,504,351.39
The restricted monetary fund details are as follows:

               Project                              Closing Balance                             Opening Balance
CDS used for hypothecation
                                                                     5,000,000.00                              5,000,000.00
deposit and notice deposit
                   Total                                             5,000,000.00                              5,000,000.00
Note: as of June 31, 2017, this company limited monetary fund is a subsidiary of Hubei of pledge
of property to Shanghai pudong development bank loan margin. See note 44.

Note 2 Accounts receivable
      1) Disclosure of category details of accounts receivable:

                                                                      Closing Balance

        Categories                  Book Balance                      Provision for Bad Account
                                                   Ratio                                 Rate Chargeable     Book Value
                               Amounts                            Amounts
                                                   (%)                                        (%)
Accounts receivable with
significant single amount
                                  8,856,207.60      26.72%            8,856,207.60              100.00%
and individual provision
for bad debts
Accounts receivable with
combinational
withdrawal of the bad            22,259,256.35      67.17%            2,029,662.91                9.12%       20,229,593.44
debt provision by credit
risks characteristics
Accounts receivable with
non-significant       single
                                  2,022,991.02          6.10%         2,022,991.02              100.00%
amount and individual
provision for bad debts
           Total                 33,138,454.97     100.00%           12,908,861.53                   -----    20,229,593.44

      Continued:

                                                                      Opening Balance

         Categories                       Book Balance                     Provision for Bad Account
                                                          Ratio                            Rate Chargeable    Book Value
                                    Amounts                               Amounts
                                                          (%)                                   (%)
Accounts receivable with
                                         8,856,207.60       31.23%        8,856,207.60            100.00%
significant single amount
                                                                Opening Balance

        Categories                Book Balance                      Provision for Bad Account
                                                 Ratio                            Rate Chargeable       Book Value
                                Amounts                           Amounts
                                                 (%)                                   (%)
and individual provision for
bad debts
Accounts receivable with
combinational withdrawal
of the bad debt provision       17,480,913.67       61.64%        1,396,774.35              7.99%      16,084,139.32
by        credit        risks
characteristics
Accounts receivable with
non-significant       single
                                 2,022,991.02       7.13%         2,022,991.02             100.00%
amount and individual
provision for bad debts
             Total              28,360,112.29     100.00%        12,275,972.97                         16,084,139.32

Description of categories of accounts receivable:
(1) Accounts receivable with significant single amount and individual provision for bad debts at
the end of period:

                                                                  Closing Balance
               Name                                                             Rate
                                   Accounts               Provision for                              Reasons of
                                                                             Chargeable
                                  Receivable              Bad Account                                Withdrawal
                                                                               (%)
Hainan racing entertainment
                                     1,046,985.40           1,046,985.40         100.00%      Irrecoverable
Co., LTD
Hainan Baoping company               2,218,494.43           2,218,494.43         100.00%      Irrecoverable
Hainan Zhongyuan tenement                                                                     Irrecoverable
agency company                       2,406,158.00           2,406,158.00         100.00%
Singapore China holding co.,                                                                  Irrecoverable
LTD                                  2,090,069.77           2,090,069.77         100.00%

Hainan dragon film studio                                                                     Irrecoverable
                                     1,094,500.00           1,094,500.00         100.00%
             Total                   8,856,207.60           8,856,207.60           -----

(2) Accounts receivable in the combination which adopts aging analysis method to determine
provision for bad debt:

                                                                   Closing Balance
               Aging
                                Accounts Receivable          Provision for Bad Account     Rate Chargeable(%)
Within 1 year                             11,361,453.65                      227,229.07               2.00%
1-2 years                                  5,135,048.9                      256,752.44               5.00%
2-3 years                                 2,084,911.46                      208,491.14              10.00%
3-4 years                                  824,727.71                       164,945.54              20.00%
4-5 years                                 1,271,562.90                      381,468.87              30.00%
Over 5 years                               1,581,551.67                      790,775.84              50.00%
                Total                     22,259,256.35                     2,029,662.91    -----

Continued:
                                                                      Opening Balance
               Aging
                                   Accounts Receivable         Provision for Bad Account          Rate Chargeable(%)
Within 1 year                                 7,946,820.54                      158,936.42               2.00%
1-2 years                                    5,856,250.85                      292,812.55               5.00%
2-3 years                                      824,727.71                       82,472.78               10.00%
3-4 years                                    1,271,562.90                      254,312.58               20.00%
4-5 years                                      912,679.10                      273,803.73               30.00%
Over 5 years                                    668,872.57                      334,436.29               50.00%
                Total                        17,480,913.67                     1,396,774.35               -----

(3) Accounts receivable with non-significant single amount and individual provision for bad debts
at the end of period:

                                                                      Closing Balance
             Name                   Accounts           Provision for Bad          Rate                  Reasons of
                                   Receivable              Account           Chargeable(%)            Withdrawal
Haikou       Peijie    clothing
                                        497,520.00             497,520.00               100.00%    Irrecoverable
company
Hainan International silver city
                                        451,712.00             451,712.00               100.00%    Irrecoverable
Real estate company
Haikou       Jingye     trading                                                                    Irrecoverable
                                        250,000.00             250,000.00               100.00%
development company
Hainan Jinhe Real estate                                                                           Irrecoverable
                                        119,446.00             119,446.00               100.00%
company
Hainan Qiongshan Tianxin                                                                           Irrecoverable
                                        112,116.50             112,116.50               100.00%
Pawn Investment company
Amount below RMB100000                  592,196.52             592,196.52               100.00%    Irrecoverable

               Total                   2,022,991.02          2,022,991.02           -----

2) Situation of the current bad debt provision withdrawn, recovered or reversed:
The amount of current bad debt provision withdrawn was RMB632,888.56yuan.
3) There is no money owed by the shareholders who hold more than 5% (5% is included) of
voting shares of the Company in the closing accounts receivable.
4) Top 5 units of accounts receivable of the closing balance gathered on the basis of parties
which owe the money:
                                                                       Ratio in Closing
                                                                                                  Bad           Account
                 Name                        Closing Balance           Amount of Accounts
                                                                                                  Provisions Withdrawn
                                                                       Receivable (%)
Hunan     Railway   Lianchuang
                                                       5,052,919.43                 15.25%                        101,058.39
Technology Development Co., Ltd.
Sino (Zhengzhou) Real Estate Co.,
                                                       3,525,276.00                 10.64%                        155,866.08
Ltd.
Hainan racing entertainment Co., LTD                   2,406,158.00                     7.26%               2,406,158.00
Dahailin forestry bureau                               2,547,615.17                     7.69%                     140,406.64
Nanning wiing asset management co.
                                                       2,499,750.00                     7.54%                      49,995.00
LTD
                  Total                               16,031,718.60                 48.38%                  2,853,484.11


Note 3 Advance payment
1) Advance payment is listed as per the aging.

                                                                 Closing Balance
                Aging               Accounts Paid in                                           Provision for Bad
                                                                 Ratio (%)
                                       Advance                                                     Account
Within 1 year                             20,659,366.89                 22.35
1-2 years                                 8,492,355.99                  9.19
2-3 years
Over 3 years                              63,281,186.00                 68.46                           7,050,161.00
                Total                     92,432,908.88               100.00                            7,050,161.00

Continued:

                                                                Opening Balance
                Aging               Accounts Paid in                                           Provision for Bad
                                                                 Ratio (%)
                                       Advance                                                     Account
Within 1 year                              3,196,725.55               4.28%
1-2 years                                 8,121,038.47               10.88%
2-3 years                                   570,000.00               0.76%
Over 3 years                              62,761,186.00               84.08%                            7,050,161.00
                Total                     74,648,950.02               100.00%                           7,050,161.00

2) Description on the reasons why the advance payment whose aging is more than one year
and amount is significant fails to be timely settled accounts
                                                                                Reasons why to fail to be settled
                 Name                Closing Balance         Aging
                                                                                           timely

                                                                                  Not check and accept the
Haikou Hongzhou Real Estate
                                        50,000,000.00     over 3years
Development Unrelated Client                                               house


                                                                                  Advance payment for the
Heilongjiang province mudanjiang
                                         8,068,538.47      1-2years
forest engineering company                                                 construction cost


                                                                                  Advance payment for the
Dahailin Forestry Bureau                 4,596,469.00     over 3 years
                                                                           construction cost

                                                          over 3 years
Hebei in implementing investment                                                  Project shutdown
                                         4,000,000.00
co., LTD
                                                          over 3 years
Hebei mountain building materials                                                 Project shutdown
                                         2,800,000.00
co., LTD


                  Total                 69,465,007.47

3) Top 5 units of advance payments of the closing balance gathered on the basis of parties for
which the Company prepaid:
                                                              Ratio in
                                                             the total
                                                                           Advance       Reasons why to be
               Name                     Closing Balance      advance
                                                                         Payment Time       outstanding
                                                             payment
                                                                (%)
                                                                                        The house under the
                                                                                        advance payment is
Haikou      Hongzhou          Coastal
                                             50,000,000.00     54.09      over 5 years  not checked and
Construction Co., Ltd.
                                                                                        accepted
                                                                                        temporarily
                                                                                        Advance     payment
Jiangsu nantong erjian group co.
                                                                         Within 1 yea   for the construction
LTD
                                              9,002,522.00    9.74%                     cost
                                                                                        Advance     payment
Heilongjiang Mudanjiang Forestry                                         Within 1 yea、
                                              8,489,855.99     9.18                     for the construction
Engineering Company                                                        1-2years
                                                                                        cost
                                                                                        Advance     payment
Dahailin Forestry Bureau                      4,596,469.00     4.97        4-5years     for the construction
                                                                                        cost
                                                                                        Advance     payment
Wuhan changyou           construction
                                              4,100,745.70    4.44%      Within 1 yea   for the construction
materials co. LTD
                                                                                        cost
               Total                         76,189,592.69    82.43%

4) Other descriptions on advance payment
According to the Arrangement agreed upon “Supplementary Agreement of Execution of Longzhu
Phase-III Project” made by between the Company and Haikou Real Estate Development Co., Ltd.
(hereinafter referred to as “Hongzhou Property”), the Company prepaid with RMB50 million yuan
for purchasing Longzhu Phase-III Project----Office Building covering 15000 square meters with
the qualified acceptance. On August 22, 2013, the Company and Hongzhou Property, Haikou
HongZhou Coastal Construction Co., Ltd. (hereinafter referred to as “HongZhou Construction”),
Haikou HongZhou Real Estate Group Co.,Ltd. (hereinafter referred to as “HongZhou Group”)
signed "Supplementary Agreement on the Implementation of Original Six Agreements in Haikou
Hongzhou Center Project ". The rights, obligations and legal responsibilities owned by HongZhou
Real Estate in the original contract are inherited by HongZhou Construction. The original
guarantee contract signed by between the Company and HongZhou Group shall continue to keep
effective. HongZhou Group handed over the land and housing ownership certificate of basement
of Times Mansion of Sanya HongZhou Aiderui Hotel located in Yuya Road, Hedong District,
Sanya City to the Company for being held in trust. As of June 30, 2017, the second planning of the
project has been approved. As of the date of issue of this financial reporting, the design of the
construction plan is under way and the cleaning of the site has been completed.

 5) There is no money owed by the shareholders who hold more than 5% (5% is included)
of voting shares of the Company in the closing accounts paid in advance.


Note 4 Interest receivable

             Item                          Closing Balance                        Opening Balance
Enterprise loan interest                                  2,710,880.79                            2,710,880.79
             Total                                        2,710,880.79                            2,710,880.79
Note 5 Dividends receivable

            Investee                            Closing Balance                          Opening Balance
Hainan PEARL RIVER Tube-pile
                                                                  260,015.00                               260,015.00
Co., Ltd.
              Total                                               260,015.00                               260,015.00


Note 6 Other receivables
1) Disclosure of category details of other receivables

                                                                     Closing Balance

          Categories                     Book Balance             Provision for Bad Account
                                                     Ratio                         Rate Chargeable   Book Value
                                      Amounts                       Amounts
                                                     (%)                                (%)
Other       receivables      with
significant single amount and
                                     53,159,496.14    11.80%       53,159,496.14       100.00
individual provision for bad
debts
Other       receivables      with
combinational withdrawal of
                                    390,597,483.22    86.71%       92,603,389.79        23.71        297,994,093.43
the bad debt provision by
credit risks characteristics
Other       receivables      with
non-significant single amount
                                      6,681,254.55      1.48%       4,430,304.59        66.31          2,250,949.96
and individual provision for
bad debts
             Total                  450,438,233.91   100.00%      150,193,190.52                     300,245,043.39

Continued:

                                                                     Opening Balance
                                         Book Balance             Provision for Bad Account
          Categories
                                                                                          Rate       Book Value
                                                      Ratio
                                      Amounts                         Amounts          Chargeable
                                                      (%)
                                                                                         (%)
Other       receivables      with
significant single amount and
                                     53,159,496.14    10.51%           53,159,496.14    100.00%
individual provision for bad
debts
Other       receivables      with
combinational withdrawal of
                                    448,284,617.33    88.62%           97,418,770.28    21.73%       350,865,847.05
the bad debt provision by
credit risks characteristics
Other       receivables      with
non-significant single amount
                                      4,391,560.82     0.87%            4,387,360.82    99.90%               4,200.00
and individual provision for
bad debts
              Total                 505,835,674.29    100.00%        154,965,627.24                  350,870,047.05

Description of categories of other receivables:
      (1)        Other receivables with significant single amount and individual provision for bad
debts at the end of period:

                                                                    Closing Balance
               Name                                           Provision for            Rate              Reasons of
                                     Other Receivables
                                                              Bad Account         Chargeable(%)        Withdrawal
Singapore China holding co., LTD          16,981,016.24        16,981,016.24           100.00          Irrecoverable
Shenzhen Yinxiang Computers
                                           6,482,625.00          6,482,625.00          100.00          Irrecoverable
Co., Ltd.
Hainan macun port harbor                                                                               Irrecoverable
                                           6,000,000.00          6,000,000.00          100.00
company
Beijing kun of consulting                                                                              Irrecoverable
                                           3,200,000.00          3,200,000.00          100.00
services co., LTD
Dingjia International Co., Ltd.            2,725,702.71          2,725,702.71          100.00          Irrecoverable

Hainan Enxin Industry Co., Ltd.            2,314,592.00          2,314,592.00          100.00          Irrecoverable
Hainan Zhongda Real Estate
                                           2,210,779.10          2,210,779.10          100.00          Irrecoverable
Company
Dabao Cement Factory                       1,901,383.56          1,901,383.56          100.00          Irrecoverable
Jinguang Real Estate Company               1,752,100.00          1,752,100.00          100.00          Irrecoverable
Shenzhen Zhuce Real Estate
                                           1,550,278.23          1,550,278.23          100.00          Irrecoverable
Company
Shenzhen         State-Investment
                                           1,409,934.28          1,409,934.28          100.00          Irrecoverable
Securities Co., Ltd.
Haikou Industrial Development
                                           1,392,430.00          1,392,430.00          100.00          Irrecoverable
Import and Export Co., Ltd.
Xinhua       Liming       Aviation
                                           1,208,804.70          1,208,804.70          100.00          Irrecoverable
Decoration Company
Hainan Shenhai Real Estate Co.,
                                           1,029,850.32          1,029,850.32          100.00          Irrecoverable
Ltd.
Hainan Yangtze River Travel                1,000,000.00          1,000,000.00          100.00          Irrecoverable
Sanya Land and Housing
                                           1,000,000.00          1,000,000.00          100.00          Irrecoverable
Administration
Beijing jardine spring catering
                                           1,000,000.00          1,000,000.00          100.00          Irrecoverable
co., LTD
                Total                     53,159,496.14        53,159,496.14             -----

      (2)        Other receivables in the combination which adopts aging analysis method to
determine provision for bad debt:

                                                                    Closing Balance
               Aging                                               Provision for Bad
                                      Other Receivables                                          Rate Chargeable(%)
                                                                       Account
Within 1 year                                124,293,186.00                    2,499,833.59              2.01
1-2 years                                    39,366,728.18                    1,968,336.43              5.00
2-3 years                                     1,120,940.33                     112,094.03              10.00
3-4 years                                    30,485,856.54                    6,097,171.31             20.00
4-5 years                                    78,711,060.84                   23,613,318.25             30.00
Over 5 years                                 116,619,711.33                   58,312,636.17             50.00
                Total                        390,597,483.22                   92,603,389.78                        -----

Continued:
                                                                     Opening Balance
               Aging                                                 Provision for Bad
                                    Other Receivables                                       Rate Chargeable(%)
                                                                         Account
Within 1 year                               190,264,261.72                   3,805,285.26            2.00%
1-2 years                                     22,129,825.90                 1,106,491.30            5.00%
2-3 years                                        497,956.54                    49,795.66           10.00%
3-4 years                                     31,339,904.84                 6,267,980.97           20.00%
4-5 years                                     79,185,585.34                23,755,675.60           30.00%
Over 5 years                                124,867,082.99                  62,433,541.49           50.00%
                Total                       448,284,617.33                  97,418,770.28                     -----

     (3)         Other receivables with non-significant single amount and individual provision for
bad debts at the end of period

                                                                     Closing Balance
             Name                  Other             Provision for       Rate Chargeable
                                                                                            Reasons of Withdrawal
                                 Receivables         Bad Account              (%)
Sell Dabao cement on a
                                    560,610.00           560,610.00          100.00         Irrecoverable
commission basis
Hainan Development Bank             440,000.00           440,000.00          100.00         Irrecoverable
Hainan Sanli Industry and
                                    283,478.62           283,478.62          100.00         Irrecoverable
Trade Company
Chamber of Commerce of
                                    270,000.00           270,000.00          100.00         Irrecoverable
Hainan Province
Telephone rate of customers
                                    268,542.54           268,542.54          100.00         Irrecoverable
of PEARL RIVER Square
China Construction Sixth
Engineering Division Group,         260,335.00           260,335.00          100.00         Irrecoverable
Ltd
Huazhou Jianan Company              200,000.00           200,000.00          100.00         Irrecoverable
PEARL RIVER Advertisement
                                    184,911.62           184,911.62          100.00         Irrecoverable
Company
Initial installation charge of
                                    156,271.60           156,271.60          100.00         Irrecoverable
telephone
                                                                                            Withdrawal       of
Amount below RMB150000             4,057,105.17        1,806,155.21                         non-recoverable
                                                                             44.52%
(49units)                                                                                 amount according to
                                                                                            the estimate

               Total                                                           -----
                                   6,681,254.55        4,430,304.59

2) Situation of the current bad debt provision withdrawn, recovered or reversed:
The amount of current bad debt provision withdrawn was RMB4,772,436.72 yuan.

3) There is no money owed by the shareholders who hold more than 5% (5% is included) of
voting shares of the Company in the closing other receivables.

4) Top 5 units of other receivables of the closing balance gathered on the basis of parties
which owe the money:
                                                                                          Ratio     in
                                                                                          Closing        Closing
                                     Nature          of                                   Amount of      Balance     of
Name                                                      Closing Balance    Aging
                                     Money                                                Other          Bad       Debt
                                                                                          Receivables    Provisions
                                                                                          (%)
                                     Payment for the
                                                                             4-5years、
Beijing Kangtai Xingye Investment      project and
                                                            102,500,000.00     over 5        22.76        43,050,000.00
Co.,Ltd                                intercourse
                                                                               years
                                          funds
Beijing  runshun        technology     Intercourse
                                                             97,720,000.00   1-2years        21.70         1,954,400.00
development co. LTD                       funds
                                     Payment for the
                                                                             4-5years、
                                       project and
Public Investment Co., Ltd                                   90,400,000.00     over 5        20.07        37,800,000.00
                                       intercourse
                                                                               years
                                          funds
Lion king international investment   Payment for the                         1-2years、
                                                             50,000,000.00                   11.10         7,000,000.00
co., LTD                                 project                              3-4years
                                                                             1-5years、
Singapore Great Land Holdings          Intercourse
                                                             16,981,016.24   over             3.77        16,981,016.24
Co.,Ltd                                   funds
                                                                             5year
               Total                                        382,601,016.24                   79.39       106,785,416.24

In 2016, the company and Beijing Runshun Science and Technology Development Co., Ltd.
(hereinafter referred to as “Runshun Science and Technology”) signed the grain trade purchase
agreement and paid the prepayment of 112,720 Ten thousand yuan, and later the eighth board
of directors of the company held the 8th meeting in order to solve the competition between
controlling shareholders and company and cancel the grain trade business. The above mentioned
payments will be returned by September 30, 2017, and the amount of the above mentioned
amount will be 15 million yuan as of the date of this report. In 2011, “Agreement on Special
Railway Sidings for Mulin Town as well as Coal Wholesale Market Construction Cooperation
Project” and supplementary agreement of project were signed by between the Company and
Zhonghe Investment Co., Ltd. (hereinafter referred to as “Zhonghe Investment”), which stipulate
the joint investment of both parties in the special railway sidings for Mulin town as well as coal
wholesale market construction project. Under the agreement, the staged financing is required
from both parties, of which covers the upper limit investment amount for the PEARL RIVER
Holding is RMB140 million. The Beijing Branch of Investment & Consultation Firm which belongs
to the Company will supervise the use of license and official seal of Zhonghe Investment. Both
parties signed the supplementary agreement of investment in 2012, which stipulates an
additional increase of RMB37 million yuan contributed by the Company. As the project is not
approved and initiated and production line is not carried out really, the Company recovered the
investment of RMB40 million yuan in 2013 and RMB36.6 million in 2014. Zhonghe Investment
mortgaged the project land and real estate to the Company in 2014, but no registration of
mortgage was carried out. On December 31, 2016, the two sides signed agreement, the
termination of the project cooperation and recovery of the investment fund. As of this report, is
according to the agreement to recover the first instalment of 10 million yuan.
The main intercourse funds between the Company and Beijing Kangtai Xingye Investment Co., Ltd.
(hereinafter referred to as “Kangtai Xingye”) consist of the money for cooperation of project. In
2011, the Company has signed a Cooperation Agreement together with Beijing Kangtai Xingye
Investment Co., Ltd. and the natural person, GU Lijun. Under this agreement, a project company
will be co-founded by the capital contribution of RMB70 million from the natural person and the
capped capital contribution of RMB64 million from the Company, with responsibility for the
development and sales of the iron and ore resources at Dujiawan Magnetite Iron Ore and
Zhaojiayuan Iron Ore located at Shiyan City, Hubei Province. Kangtai Xingye used its own 70% of
equities holding in Yuxi Shengying Mining, Zhongjia Sun Energy Technology (Group) Co., Ltd. used
its own 10% of equities holding in Yuxi Shengying Mining and Natural Person, GU Lijun used his
own 70% of equities holding in Yuxi Shengying Mining as the pledged collateral to the Company,
but no registration of pledge was carried out. In 2012, according to the progress of investment in
the project, three parties signed a Supplementary Agreement which stipulated an additional
increase of investment of RMB36 million from the Company, those investments would be used
for the upgrading of production lines in above-mentioned two mining areas and building more
production lines.


In September 2016, the parties jointly signed the Supplementary Agreement III of Cooperation
Agreement, which specified that original agreement shall be continued to perform if
administrative examination and approval permissions (mining permit) of Dujiawan Iron Mine or
Zhaojiayuan Iron Mine were obtained as of December 31, 2017, otherwise the company would
withdraw from the project as stipulated in original cooperation agreement, and fulfill the
obligation of the payment of investment amount and fees for the possession of funds as of June
30, 2018. As of the date of financial statement, Kangtai Industrial Co., Ltd. was entrusting relevant
agencies with the application for mining permit.In May 2013 and August 2013, the Company has
signed a Cooperation Agreement together with Singapore Great Land Holdings Ltd. (hereinafter
referred to as “Singapore Great Land”), According to this Agreement, the Company planned to
develop the Land No. 20 owned by Sanya PEARL RIVER Tube-pipe Co., Ltd. and located in Lizhigou
Industrial Park, Hairun Road, Sanya City. The Company has paid with RMB50 million for planning
to become the assignee of 80% equities in the project company owned by Singapore Great Land.
In June 2015, the use certificate of this land was issued. At present, all parties are discussing for
the procedures of transferring ownership. At present, Singapore to hold the equity of the project
company has transferred to lion king international investment co., LTD., shall be borne by the lion
king on international investment co., LTD. Of the equity transfer of obligations and has begun the
equity transfer procedures.



Note 7 inventories
1) Classification of inventories
                                    Closing Balance                                              Opening Balance

   Items        Book Balance         Provision for         Book Value       Book Balance           Provision for       Book Value

                                      Fall in Price                                                 Fall in Price

Raw
                     550,085.67                                550,085.67       2,780,859.54                            2,780,859.54
materials                                             -
Low-value
consumption          354,012.90                                354,012.90         355,982.90                              355,982.90
goods:                                                -
Finished
                     333,330.38                                333,330.38         347,003.84                              347,003.84
goods                                                 -
Constructing
development        42,701,132.90      17,439,325.19        25,261,807.71       42,701,132.90        17,439,325.19      25,261,807.71
product
Development
                153,210,397.31        21,726,889.27       131,483,508.04    290,815,415.14          21,726,889.27     269,088,525.87
products
Consumptive
biological              33,627.19                               33,627.19           33,627.19                              33,627.19
assets                                                -

    Total       197,182,586.35        39,166,214.46       158,016,371.89    337,034,021.51          39,166,214.46     297,867,807.05

The closing book value of inventories used for the guarantee was RMB 4,824,035.45 yuan, the
details are set forth in Note 44

2) Provision for fall in price of inventories

                                          Current Increase                        Current Decrease
                    Opening                                                                                              Closing
 Categories                                                                            Amount
                    Balance            Amount                         Amount                                             Balance
                                                          Other                        Written           Other
                                      Withdrawn                       Reversed
                                                                                         Off
Products
                   21,726,889.27                                                                                       21,726,889.27
Developed
Constructing
development        17,439,325.19                                                                                       17,439,325.19
product
    Total          39,166,214.46                                                                                       39,166,214.46

3) Description on capitalization of borrowing cost included in the closing balance of inventories
                                                                     Current Decrease                                Capitalization rate
                                                                                                                       of capitalized
    Name of               Opening              Current                                                 Closing
                                                                 Decrease of          Other                               amount
   Inventory              Balance             Increase                                                 Balance
                                                                    Sales            Decrease                        confirmed in this
                                                                                                                        period (%)
Meilin Qingcheng
(Phase III)            15,212,376.71                     -      11,314,634.08     636,000.00       3,261,742.63

      Total
                         15,212,376.71                     -      11,314,634.08     636,000.00       3,261,742.63




4) Development Cost
                                               Estimated
                                                                 Total Investment
  Name of Project         Starting Time       Completion                                Closing Balance             Opening Balance
                                                                    Estimated
                                                 Time
Wuhan          Meilin       April 2013         June 2016           640,000,000.00               25,261,807.71            25,261,807.71
                                               Estimated
                                                            Total Investment
  Name of Project         Starting Time       Completion                          Closing Balance       Opening Balance
                                                               Estimated
                                                 Time
Qingcheng
Hebei            New
                                                                                      17,439,325.19           17,439,325.19
Residential Project
        Total                                                   640,000,000.00        42,701,132.90           42,701,132.90

Phase III of the subsidiary Meilin Qingcheng of Hubei Pearl River covers 18138 square meters of
land area and 73363 square meters of construction area. On December 5, 2016, Phase III of Meilin
Qingcheng has obtained a certificate of completion inspection and acceptance for the record and
start making a room formalities on December 7.

New Residential Project of the subsidiary Hebei Real Estate is located in Luoling Community,
located in Luquan City, Shijiazhuang City, covers 1000 acres of land area and about 1600000
square meters of construction area, it is planned to cover 400,000 square meters of construction
area in Phase I with a building period of 3-5 years. No any progress was carried out because the
relocation plan is not completed.

5) Products Developed
                                Completion       Opening              Current         Current           Closing
    Name of Project
                                  Time           Balance             Increase        Decrease           Balance
Wuhan              Meilin
                                August 2006       497,649.84                           388,204.44         109,445.40
Qingcheng, Phase I
Wuhan              Meilin       September
                                                 7,117,653.91                                           7,117,653.91
Qingcheng, Phase II                2009
Haikou Dijing Building, 6
                                  In 1995        5,315,696.54                                           5,315,696.54
floors
Haikou Longzhu Building,
                                                 1,598,659.60                                           1,598,659.60
21 floors
Garage of Haikou PEARL
                                                 6,919,373.98                                           6,919,373.98
RIVER Square
Garage      of    Haikou
                                                 2,664,000.00                                           2,664,000.00
Longzhu Building
Rear Cubicle of                                   954,436.94                                              954,436.94
Underground Garage of
                                                35,265,199.35                                          35,265,199.35
Shanghai Rose Garden
Wuhan              Meilin       December
                                               230,482,744.98                      137,216,813.39      93,265,931.59
Qingcheng, Phase III              2016
          Total                                 65,330,786.48                      137,605,017.83     153,210,397.31

6) Consumptive Biological Assets

                  Item                             Closing Balance                       Opening Balance
Meat Animals                                                         33,627.19                             33,627.19
                  Total                                              33,627.19                             33,627.19


Note 8 Other current assets

         Category and content                      Closing Balance                      Opening Balance
Prepaid Taxes                                                      14,411,010.8                         8,714,139.07
           Category and content                      Closing Balance                         Opening Balance
                   Total                                              14,411,010.8                            8,714,139.07


Note: other current assets prepay taxes for subsidiary of HuBei house opens to booking the
relevant taxes involved in the pearl river real estate company.


Note 9 Available-for-sale financial assets
1) Information of available-for-sale financial assets

                                   Closing Balance                                         Opening Balance

    Item          Book Balance      Impairment           Book Value        Book Balance      Impairment         Book Value

                                      Provision                                               Provision
Available-fo
r-sale
equity
instruments
:
Measured
at fair value
Measured
                   49,263,555.29     18,438,560.39       30,824,994.90     49,263,555.29     18,438,560.39      30,824,994.90
at the cost
   Total           49,263,555.29     18,438,560.39       30,824,994.90     49,263,555.29     18,438,560.39      30,824,994.90

2) Available-for-sale financial assets measured at the fair value at the end of report period

There is no available-for-sale financial assets measured at the fair value at the end of reportperiod.

3) Equity instruments measured at the cost at the end of report period
                                       Ratio of shares                               Book Balance
                                         held in the
                Investee                                     Opening           Current         Current         Closing
                                          investee
                                             (%)             Balance          Increase        Decrease         Balance
Hainan pearl river pipe pile co.,
                                             1.33             426,315.00                                       426,315.00
LTD
Hainan province chamber of
                                             6.67             500,000.00                                       500,000.00
commerce
China to promote science and
                                            10.00          10,000,000.00                                     10,000,000.00
technology investment co., LTD
Hainan China pearl river basic
                                             1.07             160,000.00                                       160,000.00
engineering co., LTD
Guangzhou          pearl     river
                                             9.48          18,177,240.29                                     18,177,240.29
investment management co., LTD
HuaQing emerging construction
engineering          management             20.00
(Beijing) co., LTD
Chongqing long jinbao network
                                           13.559
technology co., LTD                                        20,000,000.00                                     20,000,000.00
Shenzhen fortis loan financial
                                            20.00
services co., LTD
                 Total                                     49,263,555.29                                     49,263,555.29

      Continued:
                                                           Impairment Provision
                                                                                                       Current Cash
              Investee                    Opening          Current      Current         Closing           Bonus
                                          Balance         Increase     Decrease         Balance
Hainan pearl river pipe pile co., LTD     426,315.00                                    426,315.00
Hainan province chamber of
                                          500,000.00                                    500,000.00
commerce
China to promote science and
                                        10,000,000.00                                 10,000,000.00
technology investment co., LTD
Hainan China pearl river basic
engineering co., LTD                      160,000.00                                    160,000.00
Guangzhou pearl river investment
                                         7,352,245.39                                  7,352,245.39
management co., LTD
Hainan macun port harbor
company
HuaQing emerging construction
engineering management (Beijing)
co., LTD
Chongqing long jinbao network
technology co., LTD
Shenzhen fortis loan financial
services co., LTD
               Total                    18,438,560.39                                 18,438,560.39

Note: the company to HuaQing emerging construction engineering management (Beijing) co.,
LTD. 20% stake, and the shenzhen co., LTD. 20% stake in fortis credit financial services are
subscribed stage, not actual investment.


Note 10 Long-term Equity Investment

                                                                        Current Increase or Decrease
                                    Opening                                            Investment           Adjustment of
           Investee                                   Additional      Contribution       Results                Other
                                    Balance
                                                     Contribution       Reduced       Recognized by        Comprehensive
                                                                                      Equity Method            Income
1. Associated Enterprises
Sanya Wanjia Industry Co.,
Ltd.                               32,393,800.55                  -               -      -928,894.05
Beijing Viewpoint Discovery
Media Co., Ltd.                     1,472,844.43                  -               -      -166,478.37
          Sub-total
                                   33,866,644.98                  -               -    -1,095,372.42

            Total
                                   33,866,644.98                  -               -    -1,095,372.42

     Continued:

                                              Current Increase or Decrease
                                                   Declared to                                              Closing Balance
           Investee               Change of                       Impairment             Closing Balance    of Impairment
                                                    grant cash
                                    Other                          Provision   Other                            Reserve
                                                   dividends or
                                   Equities                       Withdrawn
                                                      profits
1. Associated Enterprises

Sanya Wanjia Industry Co.,
                                                                                           31,464,906.50
Ltd.
                                            Current Increase or Decrease
                                                Declared to                                                   Closing Balance
            Investee            Change of                      Impairment              Closing Balance        of Impairment
                                                 grant cash
                                  Other                         Provision     Other                               Reserve
                                                dividends or
                                 Equities                      Withdrawn
                                                   profits
Beijing Viewpoint Discovery
                                                                                             1,306,366.06
Media Co., Ltd.


            Sub-total                                                                    32,771,272.56

              Total                                                                      32,771,272.56

The Company’s long-term equity investment does not the situation that the capacity of remitting
funds to the other companies is restricted.


Note 11 Investment-based real estate
1) Information of investment-based real estate
                              Houses and                                   Construction in
            Item                                   Land Use Right                                           Total
                               buildings                                      Progress
1. Book Value

1.1 Opening Balance             31,531,031.71                                                           31,531,031.71
                                                                    -                         -
1.2 Current Increase

1.3 Current Decrease             4,830,941.70                                                               4,830,941.70
                                                                    -                         -

  (1)Disposal                  4,830,941.70                                                               4,830,941.70
                                                                    -                         -

1.4 Closing Balance             26,700,090.01                                                           26,700,090.01
                                                                    -                         -
2.        Accumulative
Depreciation
(Amortization)

2.1 Opening Balance              9,205,051.50                                                               9,205,051.50
                                                                    -                         -

2.2 Current Increase              488,873.68                                                                  488,873.68
                                                                    -                         -
  ( 1 ) Amount
  Withdrawn   or                  488,873.68                                                                  488,873.68
                                                                    -                         -
  Amortized

2.3 Current Decrease             1,876,924.41                                                               1,876,924.41
                                                                    -                         -

  (1)Disposal                  1,876,924.41                                                               1,876,924.41
                                                                    -                         -

2.4 Closing Balance
                                 7,817,000.77                       -                         -             7,817,000.77
3.            Impairment
Provision
3.1 Opening Balance              3,081,199.41                                                               3,081,199.41
3.2 Current Increase
3.3 Current Decrease
  (1)Disposal
                                Houses and                                    Construction in
         Item                                          Land Use Right                                    Total
                                 buildings                                       Progress
3.4 Closing Balance                 3,081,199.41                                                          3,081,199.41
4. Book Value

4.1 Closing Book Value            15,801,889.83                                                          15,801,889.83
                                                                        -                       -
4.2 Opening       Book
                                  19,244,780.80                                                         19,244,780.80
Value                                                                   -                       -


2) Description on investment-based real estate
   The closing book value of assets mortgaged was RMB6,232,449.23yuan, the details are set forth in
  Note 44.

Note 12 Original value and depreciation of fixed assets
1) Information of fixed assets
                          Houses and           Common                                  Other
       Item                                                       Transportation                           Total
                           buildings          Equipments                             Equipments
1.    Totality    of
Original Book Value
1.1         Opening
                          252,105,519.76      21,500,871.50         30,069,143.44     28,573,990.22     332,249,524.92
Balance
1.2          Current
                                                                      185,535.90        165,498.82          351,034.72
Increase                                  -                   -

(1)Purchase                                                         185,535.90        165,498.82          351,034.72
                                          -                   -
(2)Transferred in
from Construction
in Progress
( 3 ) Other
Transfer-in
1.3         Current
                                                                      172,569.84        258,979.00          431,548.84
Decrease                                  -                   -
( 1 ) Disposal or
                                                                      172,569.84        258,979.00          431,548.84
Scrap                                     -                   -
( 2 ) Other
Transfer-out
1.4 Closing Balance      252,105,519.76        21,500,871.50        30,082,109.50     28,480,510.04     332,169,010.80
2.    Accumulative
Depreciation
2.1        Opening
                           46,105,138.09        8,358,326.69        24,978,246.81     24,898,586.12     104,340,297.71
Balance
2.2         Current
Increase                    4,663,993.85           997,730.58        1,102,734.96       780,670.21        7,545,129.60
( 1 ) Amount
Withdrawn                   4,663,993.85           997,730.58        1,102,734.96       780,670.21        7,545,129.60
2.3       Current
Decrease                                  -                   -       155,492.63        248,798.84          404,291.47
( 1 ) Disposal or
Scrap                                     -                   -       155,492.63        248,798.84          404,291.47
( 2 ) Other
Transfer-out                              -                   -                 -                   -                   -
2.4 Closing Balance        50,769,131.94        9,356,057.27        25,925,489.14     25,430,457.49     111,481,135.84
3.      Impairment
Reserve                                                                                                                 -
                               Houses and               Common                                       Other
       Item                                                               Transportation                                    Total
                                buildings              Equipments                                  Equipments
3.1          Opening
                                 7,499,295.92                                                                              7,499,295.92
Balance
3.2           Current
Increase                                       -                     -                       -                  -                        -
3.3           Current
Decrease                                       -                     -                       -                  -                        -

3.4 Closing Balance             7,499,295.92                                                                              7,499,295.92
                                                                     -                       -                  -
4. Totality of Book
Value
4.1 Closing Book
                              193,837,091.90            12,144,814.23           4,156,620.36        3,050,052.55         213,188,579.04
Value
4.2 Opening Book
                               198,501,085.75           13,142,544.81           5,090,896.63        3,675,404.10         220,409,931.29
Value

2) Other descriptions on fixed assets
   (1) The closing book value of assets used for the guarantee was RMB3,076,944.63yuan, the
details are set forth in Note 44.
      (2) The closing original value of fixed assets that continued to work after being depreciated
fully was RMB51,642,081.97yuan.

Note 13 Construction in progress
1) Information of construction in progress

                                         Closing Balance                                             Opening Balance
      Item                    Book             Impairmen               Book             Book           Impairmen               Book
                             Balance            t Reserve              Value           Balance          t Reserve              Value
Snow      Town
                       5,648,964.09         3,000,000.00         2,648,964.09       5,648,964.09       3,000,000.00        2,648,964.09
Train 550
Snow      Town
                       4,180,000.00         2,000,000.00         2,180,000.00       4,180,000.00       2,000,000.00        2,180,000.00
Train 400
Early Stage of
                            360,000.00             360,000.00                         360,000.00        360,000.00
Snow Town                                                                      -                                                         -
Snow      Town
Integrated            73,672,948.93                             73,672,948.93      73,340,730.93                          73,340,730.93
Service Center                                              -                                                       -

  Total               83,861,913.02         5,360,000.00        78,501,913.02      83,529,695.02       5,360,000.00       78,169,695.02




2) Current change of important constructions in progress
                                                                                 Current
                                                                                 amount
                                 Opening                   Current
          Item                                                                 transferred       Other Decrease         Closing Balance
                                 Balance                  Increase
                                                                               into fixed
                                                                                  assets
Snow                Town
Integrated        Service        73,340,730.93            332,218.00                                                      73,672,948.93
                                                                                             -                  -
Center

          Total                  73,340,730.93              332,218.00                                                    73,672,948.93
                                                                                             -                  -

Continued:
                            Ratio of
                   Budget investment                                            Including:    Current
                                             Progress of        Accumulative
                    (10      in the                                               Current    Capitalization Sources of
     Item                                    Constructio          Interest
                  thousan constructio                                             Interest      Rate of       Funds
                                                n (%)            Capitalized
                  d yuan)   n in the                                             Capitalized Interest (%)
                          budget (%)
Snow     Town
Integrated       10,605.84         69.46                        13,567,288.74
Service Center
    Total        10,605.84         69.46        ——            13,567,288.74


Note 14Intangible Assets
1) Information of intangible assets
                                                                   Trademark
       Item            Software            Land Use Right                              Other              Total
                                                                      Right
1.    Totality    of
Original Book Value
1.1         Opening
                       1,448,739.53            3,827,129.21            93,900.00       911,400.00         6,281,168.74
Balance
1.2          Current
                             8,800.00                                                                         8,800.00
Increase                                                    -                   -               -

(1)Purchase                8,800.00                                                                         8,800.00
                                                            -                   -               -
1.3         Current
Decrease                            -                       -                   -               -                    -
1.4 Other Decrease     1,457,539.53            3,827,129.21            93,900.00       911,400.00         6,289,968.74

1.5Closing Balance
                                                                                                                     -
2.    Accumulative
Depreciation
2.1        Opening
                       1,163,972.34             489,408.80             24,257.50                          1,677,638.64
Balance                                                                                         -
2.2         Current
                         36,564.90               40,104.90              4,695.00                             81,364.80
Increase                                                                                        -
( 1 ) Amount
                         36,564.90               40,104.90              4,695.00                             81,364.80
Withdrawn                                                                                       -
2.3       Current
Decrease                            -                       -                   -               -                    -

2.4 Other Decrease
                                                                                                                     -

2.5 Closing Balance    1,200,537.24             529,513.70             28,952.50                          1,759,003.44
                                                                                                -
3.      Impairment
Reserve                             -                       -                   -               -                    -
3.1        Opening
Balance                             -                       -                   -      911,400.00           911,400.00
3.2         Current
Increase                            -                       -                   -
3.3         Current
Decrease                                                                                                             -
3.4 Other Decrease
3.5 Closing Balance                                                                    911,400.00           911,400.00
4. Totality of Book
Value
                                                                       Trademark
        Item                   Software        Land Use Right                                   Other               Total
                                                                          Right
4.1 Closing Book
Value                          257,002.29           3,297,615.51             64,947.50                   -          3,619,565.30
4.2 Opening Book
Value                          284,767.19           3,337,720.41             69,642.50                   -          3,692,130.10

Note 15Long-term deferred expenses
                                             Opening             Current           Current            Other           Closing
               Item
                                             Balance            Increase         Amortization        Decrease         Balance

Decoration and Reform                        733,485.03                             216,255.60                        517,229.43
                                                                             -                                  -

Lease of Snow Park                           300,000.00                             300,000.00
                                                                             -                                  -               -
Snow publicity expenses
                                               5,133.53                                  5,133.53
                                                                             -                                  -           0.00
Snow fish pond royalties
                                             266,059.02                             139,413.00                        126,646.02
                                                                             -                                  -
Snow ski resort fee
                                             429,285.31                             189,609.96                        239,675.35
                                                                             -                                  -
L. chinensis mountain facilities
fee                                          230,000.00                                 60,000.00                     170,000.00
                                                                             -                                  -
Erlong       studio     amusement
facilities fee                               120,000.00                                 60,000.00                      60,000.00
                                                                             -                                  -

               Total                        2,083,962.89                            970,412.09                      1,113,550.80
                                                                             -                                  -


Note 16 Deferred tax assets/deferred tax liabilities

1) Deferred tax assets not offset

                                                     Closing Balance                                Opening Balance
                        Item              Taxable Temporary                     Taxable Temporary
                                                            Deferred Tax assets                   Deferred Tax assets
                                             Differences                           Differences
Real estate enterprises in
accordance with the pre - sale
                                                                                              19,941,945.99         4,985,486.50
income is expected to pay gross
income tax
                Total                                                                         19,941,945.99         4,985,486.50

2) Deferred tax liabilities not offset

                                                     Closing Balance                                Opening Balance
                        Item              Taxable Temporary        Deferred Tax         Taxable Temporary       Deferred Tax
                                             Differences            Liabilities            Differences           Liabilities
Changes in fair value of available
- for - sale financial assets
The difference between the fair
value      of     the     acquiree's
identifiable net assets and its                  2,391,587.72              597,896.93           2,391,587.72          597,896.93
carrying amount of the net
assets recognized by the
                                                      Closing Balance                             Opening Balance
                        Item             Taxable Temporary       Deferred Tax        Taxable Temporary      Deferred Tax
                                            Differences           Liabilities           Differences          Liabilities
business combination

                Total                           2,391,587.72            597,896.93          2,391,587.72             597,896.93

3) Deferred income tax assets or liabilities as set out in the net amount after offsetting.
                                  The final amount       Offset the ending      Deferred tax assets Offset the balance at
                                   set-off deferred     balance of deferred     and liabilities at the   the beginning of
         Item
                                 income tax assets     income tax assets or       beginning of the     deferred income tax
                                    and liabilities          liabilities         amount of set-off     assets and liabilities
Deferred Tax Assets                                                                                              4,985,486.50
Deferred Tax Liabilities                                           597,896.93                                        597,896.93

4) Unconfirmed deferred income tax assets detail the deductible temporary differences

                                 Item                                    Closing Balance                Opening Balance
Asset impairment loss                                                            244,608,883.23               248,748,431.39
Deductible losses                                                                192,055,060.47               212,595,502.92
                                 Total                                           436,663,943.70               461,343,934.31

The deferred income tax assets related to deductible temporary differences and deductible losses
are not recognized as a result of the availability of sufficient taxable income in the future.
5) The deductible loss of unrecognized deferred income tax assets will expire in the following
years

                     Item                        Closing Balance         Opening Balance                   Remark
                     2017                               21,814,360.45            42,354,802.90
                     2018                               52,373,550.83            52,373,550.83
                     2019                               45,704,368.46            45,704,368.46
                     2020                               45,826,297.05            45,826,297.05
                     2021                               26,336,483.68            26,336,483.68
                合          计                         192,055,060.47           212,595,502.92


Note 17Other Non-current Assets

         Category and Item                               Closing Balance                           Opening Balance
villa                                                                   1,581,840.00                             1,581,840.00
                  Total                                                 1,581,840.00                             1,581,840.00

Note: On September 20, 2014, an Agreement on Debt Offset was signed by between Mudanjiang
Mingzhen Real Estate Development Co., Ltd. (hereinafter referred to as “Mingzhen Company”),
Mudanjiang Jingbo Lake Scenery Environmental Production Property Management Co., Ltd.
(hereinafter referred to as “Environmental Protection Property Company”) and our subsidiary
Mudanjiang Wanjia Star Hotel Co., Ltd.. Because the above-mentioned three parties have the debt
relation with each other, three parties reach an Agreement as follows: Mingzhen Company used its
Shangjing Chuanshuo D12# brick-concrete villa (located in Jingbo Lake Town) with a value of
RMB1,581,840.00 (131.82 square meters x RMB12 thousand) offsetting the compensation for the
lease of RMB1,019,340.00 that Environmental Protection Property Company owed the Company,
of which covered a difference of RMB562,500.00 that had been recognized in the income for the
year 2014, but no procedure of ownership transfer was carried out as June 30, 2017.

Note 18Provision of asset impairment
                                                                                                                    Closing
                                                           Current Increase             Current Decrease
                                                                                                                    Balance
                                        Opening
               Item                                                                                    Current
                                        Balance          Current     Current           Current
                                                                                                     Transfer-ou
                                                        Withdrawal Transfer-in         Reverse
                                                                                                          t

Bad debt provision
                                      174,291,761.21 1,516,307.63                - 5,655,855.79                - 170,152,213.05

Provision for decline in value of
inventories                       39,166,214.46                    -             -               -             - 39,166,214.46
Provision for impairment of
available-for-sale financial assets    18,438,560.39               -             -               -             - 18,438,560.39

Provision for impairment of
investment-based real estate            3,081,199.41               -             -               -             -    3,081,199.41

Provision for impairment of
fixed assets                            7,499,295.92               -             -               -             -    7,499,295.92

Provision for impairment of
construction in progress                5,360,000.00               -             -               -             -    5,360,000.00

Provision for impairment of
intangible assets                        911,400.00                -             -               -             -     911,400.00

               Total
                                      248,748,431.39 1,516,307.63                - 5,655,855.79                - 244,608,883.23


Note 19Accounts Payable

                Item                                   Closing Balance                               Opening Balance
Accounts     Payable       for    the
                                                                       54,020,418.10                               64,695,314.44
Construction
Accounts Payable for the Materials                                      6,593,171.80                                6,403,644.98
Investment not paying                                                   5,000,000.00                                5,000,000.00
The deposit                                                             1,205,232.30                                1,528,008.58
Other                                                                       7,693.51                                      37.61
                Total                                                  66,826,515.71                               77,627,005.61

Significant accounts payable with aging of more than one year

               Name                                    Closing Balance                   Reasons of Outstanding Accounts
                                                                                       Snow deiss hotel buy the balance
Lin Deying, guan-wen Chen                                              5,000,000.00
                                                                                       payment
Hainan pearl river industrial
engineering           construction                                     3,572,235.33    Money is tight
supervision company
Mudanjiang Long Yang boiler
                                                                       1,425,651.00    Money is tight
installation co., LTD
                Total                                                  9,997,886.33
Note 20Accounts Received in Advance
1) Information of accounts received in advance

                  Item                                  Closing Balance                           Opening Balance
Lease of Garage                                                         27,288,955.50                         26,697,103.84
Heating                                                                             -                          1,673,048.13
Cooperative Operation                                                       35,382.03                          2,487,649.01
Pre-deposit for Consumption                                               659,368.63                           1,317,010.23
Property Management                                                     19,318,276.01                         16,857,732.88
Supporting of Heating Facilities                                          174,789.00                             174,789.00
Houses in Pre-sell                                                     183,368,166.00                        316,499,198.66
Other                                                                       41,786.41                               40,336.41
                  Total                                                230,886,723.58                        365,746,868.16

2) Significant accounts received in advance with aging of more than one year

                Name                           Closing Balance                     Reasons of Outstanding Accounts
                                                                           Accounts received in advance with pending to
The taxi such                                            27,288,955.50     be transferred in (Hubei PEARL RIVER received
                                                                           the rent in advance)
                  Total                                  27,288,955.50


Note 21 Remunerations payable for employees
1) List of remunerations payable for employees
                           Opening                                          Current            Other         Closing
        Item                                 Current Increase
                           Balance                                         Decrease          reductions      Balance

Short-term Wage           12,237,780.42            110,348,589.72         109,387,183.53                    13,199,186.61

Post-employment
Benefit - Defined
Contribution Plans                    -               6,936,500.47          6,936,500.47                                 -
Payable
Dismiss Welfare             155,035.87                  121,870.30            172,381.34                      104,524.83
        Total             12,392,816.29             117,406,960.49        116,496,065.34                    13,303,711.44

2) List of Short-term Wage
                                   Opening               Current              Current            Other          Closing
           Item
                                   Balance              Increase             Decrease          reductions       Balance
Salary,        Reward,
                                   2,624,422.78        99,490,263.03         99,226,008.85                     2,888,676.96
Allowance and Subsidy
Employee Services and
                                                        4,373,409.14          4,373,409.14
Benefits                                                                                                                     -
Social Insurance Charges                                3,491,656.04          3,491,656.04
                                               -                                                                             -
Including:Basic Medical
                                                        3,049,618.58          3,049,618.58
Insurance                                      -                                                                             -
Employment        Injury
                                                         195,705.66             195,705.66
Insurance                                      -                                                                             -
Maternity Insurance                                      232,518.52             232,518.52
                                      Opening             Current                Current             Other           Closing
          Item
                                      Balance            Increase               Decrease           reductions        Balance
                                                 -                                                                                -

Other                                                         13,813.28             13,813.28
                                                 -                                                                                -

Housing Fund                            26,300.40       1,003,496.10             1,029,796.50
                                                                                                                                  -
Union Funds and Staff
                                      9,587,057.24      1,989,765.41             1,266,313.00                      10,310,509.65
Training Expense
          Total                      12,237,780.42    110,348,589.72           109,387,183.53                      13,199,186.61

3) List of Defined Contribution Plans

               Item                    Opening Balance           Current Increase        Current Decrease       Closing Balance

Basic Endowment Insurance                                             6,720,336.16              6,720,336.16
                                                          -                                                                       -

Unemployment Insurance                                                     216,164.31            216,164.31
                                                          -                                                                       -
               Total                                                  6,936,500.47              6,936,500.47
                                                          -                                                                       -


Note 22        axes Payable

               Item                                  Closing Balance                                 Opening Balance
VAT                                                                        696,501.06                                  601,975.02
Business tax                                                              1,037,501.70                              1,037,501.70
Urban maintenance              and
                                                                           193,848.31                                  222,121.34
construction tax
corporate income tax                                                       166,941.28                              51,998,909.07
property tax                                                               620,853.31                                  586,772.39
land holding tax                                                             5,349.84                                   65,717.04
Land value - added tax                                               40,291,508.75                                 29,383,815.46
Personal Income Tax                                                        139,316.63                                  380,075.07
Education surcharge                                                         53,627.67                                   60,702.24
other                                                                      249,901.81                                   67,300.94
Total                                                                43,455,350.36                                 84,404,890.27


  Note: the balance of land value added tax is mainly the land value added tax of the subsidiary of
  the subsidiary of hubei real estate merrill lynch.


      Note 23Interest Payable
                       Item                                    Closing Balance                          Opening Balance
Enterprise loan interest                                                      74,044,695.35                        75,668,828.87
Entrust loan interest                                                         10,449,888.49                        10,449,888.49
Other interest                                                                   176,133.00                            176,133.00
                       Total                                                  84,670,716.84                        86,294,850.36
Note 24 Dividends Payable
                                                                                             Reasons why not to be
                   Item                       Closing Balance         Opening Balance
                                                                                               paid over one year
Dividends payable for the legal person             3,213,302.88             3,213,302.88       Suspend payment
                   Total                           3,213,302.88             3,213,302.88


Note 25 Other Payables
1) Other payables presented as per the nature of accounts

            Nature of Account                       Closing Balance                        Opening Balance
Borrowing                                                         491,987,919.32                       353,508,342.24

Payment for land transfer                                                                               43,000,000.00
                                                                               -
Collection for property management                                 22,404,362.60                        46,986,947.42
Money owned by the suppliers                                       43,499,279.07                        47,024,723.13
Accrued Expenses                                                    7,218,926.06                         7,394,338.41
Deposit for Quality of Decoration                                  10,317,063.21                         7,773,945.21
Maintenance Fund                                                    5,084,849.49                         9,566,749.16
Funds Raised for Houses                                             2,270,000.00                           150,000.00
Risk Funds of Employees                                             1,233,332.51                         1,057,677.88
Working Fund of Water and Electricity                               7,204,250.70                         6,781,072.84
Deferred compensation                                                                                    1,140,466.00
Others                                                             14,973,396.63                        17,439,544.01
                   Total                                          606,193,379.59                       541,823,806.30

2) Significant other payables with aging of more than one year
                                                                                       Reasons of Outstanding
                 Name                               Closing Balance
                                                                                               Accounts
Beijing Xinxing Real Estate Development                                            Loan is not due
                                                                   84,778,095.18
Corporation
Xinhe (zhengzhou) real estate co. LTD                              18,740,795.93   Electricity and collection
Shanghai frost       Xiong      Investment                                         Loan is not due
Management          Center         (limited                        17,998,000.00
partnership)
Sanya wanjia hotel management co. LTD                              11,404,670.60   No settlement
Mudanjiang construction engineering                                                Financial tension
                                                                    7,000,000.00
group co. LTD
Dahailin forestry bureau                                            6,842,000.00   Financial tension

Haikou drainage collection                                          4,646,827.79   Handling of sewage charges

                   Total                                          151,410,389.50


Note 26 Non-current liabilities matured within one year

                   Item                             Closing Balance                        Opening Balance
Long-term Borrowing Matured Within                                                                      78,710,181.59
One Year
Including:Pledged Loan
                     Item                             Closing Balance                        Opening Balance
Mortgage Loan                                                                                           15,000,000.00

Guaranteed Loan                                                                                         63,710,181.59

                     Total                                                                              78,710,181.59


Note 27 Long-term Borrowing
1) Classification of long-term borrowing

                Category                              Closing Balance                        Opening Balance
Pledged Loan                                                      5,000,000.00                           5,000,000.00

Mortgage Loan                                                                                           24,000,000.00
                                                                             -

Guaranteed Loan                                                                                        123,376,848.25
                                                                             -
Sub-total                                                         5,000,000.00                         152,376,848.25
Less : Long-term Borrowing Matured
                                                                                                        78,710,181.59
Within One Year                                                              -
                     Total                                        5,000,000.00                          73,666,666.66

2) Long-term borrowings with large amount
                              Starting  Ending
                                                                                         Closing         Opening
            Lender            Date of   Date of Currency            Interest Rate
                                                                                         Balance         Balance
                             Borrowing Borrowing
                                                                   The benchmark
Harbin Branch of China CITIC
                             2014-10-30   2019-3-30      RMB     interest rate has a                    24,000,000.00
Bank
                                                                    float by 10%
Mudanjian Taiping Road                                             The benchmark
Branch of Industrial & 2014-3-28          2020-3-20      RMB     interest rate has a
                                                                                                        81,456,595.19
Commercial Bank of China                                            float by 10%
                                                                   The benchmark
Mudanjiang Branch of China
                           2012-1-12      2019-1-11      RMB     interest rate has a                    41,920,253.06
Construction Bank
                                                                    float by 10%
                                                                   The benchmark
Wuhan Branch of Shanghai
                         2015-6-24        2018-6-23      RMB     interest rate has a    5,000,000.00     5,000,000.00
Pudong Development Bank
                                                                    float by 20%
            Total                                                                       5,000,000.00 152,376,848.25

3) Pledged Loan:

                    Lender          Balance of Loan                                 Pledge
Shanghai Pudong Development                              The 5 million deposit are subsidiary of Hubei Pearl River
                                          5,000,000.00
Bank Co., Ltd. Wuhan Branch                              Real Estate Development Co., Ltd
                Total                     5,000,000.00

e Company, the collateral is cash deposit of RMB 5 million of the Hubei Real Estate Company.

4) Other descriptions on long-term borrowing

The long-term borrowing rate was 5.39% to 5.9%. As of the financial reporting date, the loans of
the Harbin branch of citic bank, the bank of China industrial and commercial bank of China and
the bank of mudanjiang branch of construction bank have been paid off.
Note 28 Capital stock

                                                      Current Increase(+)or Decrease(-)

                                                  Issuance Bonus
                                  Opening                      Capitalization                                 Closing
              Item
                                  Balance         of New Share   of Public         Other       Sub-total      Balance
                                                               Reserve Fund
                                                  Shares s

1 . Shares with conditions
limited to sell
(1) Shares held by the state
(2) Shares held by the
state-owned     artificial
persons
(3) Shares held by other
                                   1,325,131.00          -      -             - -25,631.00 -25,631.00        1,299,500.00
domestic enterprises
Including:
Shares held by the domestic
                                   1,299,500.00                                                              1,299,500.00
legal persons
Shares held by the domestic
                                      25,631.00                                   -25,631.00 -25,631.00
natural persons
(4). Shares held by the
foreign companies
Including:
Shares held by the foreign
legal persons
Shares held by the foreign
natural persons
Total shares with conditions
                                   1,325,131.00          -      -             - -25,631.00 -25,631.00        1,299,500.00
limited to sell
2 . Outstanding shares
without conditions limited
to sell
(1) Common Share in RMB          360,445,273.00                                   25,631.00 25,631.00 360,470,904.00
(2) Foreign Shares Listed at
                                  64,975,000.00                                                             64,975,000.00
Home
(3) Foreign Shares Listed at
Oversea
(4) Others
Total    shares       without
                                 425,420,273.00          -     --             - 25,631.00 25,631.00 425,445,904.00
conditions limited to sell
              Total              426,745,404.00          -      -             -            -           - 426,745,404.00


Note 29 Capital reserve
                                                                    Current           Current
              Item                   Opening Balance                                                   Closing Balance
                                                                   Increase          Decrease
Capital premium                             225,390,819.63                                                 225,390,819.63
The original system of capital
                                            109,300,017.82                                                 109,300,017.82
reserves transferred
Others capital reserve                      208,924,601.49                                                 208,924,601.49
                                                                    Current              Current
               Item                   Opening Balance                                                     Closing Balance
                                                                   Increase             Decrease
               Total                        543,615,438.94                                                    543,615,438.94


Note 30 Surplus Reserve

       Item                 Opening Balance            Current Increase        Current Decrease         Closing Balance
Statutory      surplus
                                     71,852,236.46                                                             71,852,236.46
reserve
General        surplus
                                     37,634,827.93                                                             37,634,827.93
reserve
       Total                        109,487,064.39                                                            109,487,064.39


Note 31 Undistributed profits
                                                                                                Ratio of Withdrawal or
                         Item                                         Amount
                                                                                               Undistributed Amount (%)
Undistributed Profits at the End of Previous Period
                                                                                                          —
Before Adjustment                                                      -1,014,759,604.45
Total Amount of Undistributed Profits at the
                                                                                                          —
Beginning of Adjustment Period (+/-)
Undistributed Profits at the Beginning of Period
                                                                                                          —
After Adjustment                                                       -1,014,759,604.45
Plus: Current Net Profits Attributive to the Owners
                                                                                                          —
of the Parent Company                                                      17,226,146.52
Less: Appropriation of Statutory Surplus Reserve
Withdrawn
Appropriation of Discretionary Surplus Reserve

Plus:Surplus Reserve Made up for Losses
Other Internal Carry-over of Owner’s Equity
Closing Undistributed Profit                                              -997,533,457.93


Note 32Operating income and operating cost
1) Operating income and operating cost

       Item                            Current Amount                                       Previous Amount

                                Income                    Cost                     Income                      Cost

Main Business                   380,199,673.96          283,157,510.17            139,890,677.66              119,343,421.77
Other Business                   13,637,111.61             5,444,513.85              9,141,850.74               2,686,504.22
       Total                    393,836,785.57          288,602,024.02            149,032,528.40              122,029,925.99

2) Main Business(Accounted as per Industries)

                                      Current Amount                                        Previous Amount
      Industry
                         Operating Income            Operating Cost          Operating Income           Operating Cost

Real        Estate
Development                     225,675,181.93           137,605,017.83                             -                      -
Property
Management                      147,212,684.42           142,317,526.88            118,897,725.42             108,945,720.20
                                 Current Amount                              Previous Amount
        Industry
                     Operating Income       Operating Cost         Operating Income       Operating Cost


Tourist Hotel
                             7,311,807.61           3,234,965.46         20,992,952.24          10,397,701.57

         Total
                           380,199,673.96         283,157,510.17         139,890,677.66        119,343,421.77

3) Main Business(Accounted as per Regions)

                                 Current Amount                              Previous Amount
         Region
                     Operating Income       Operating Cost         Operating Income       Operating Cost


Hainan
                           145,542,234.96         141,134,119.14         129,263,957.43        114,904,019.82

Heilongjiang
                             6,949,447.43           2,995,608.34           8,258,678.00          3,126,864.51

Hubei
                           226,037,542.11         137,844,374.95             570,446.04           385,963.46

Shanghai
                             1,670,449.46           1,183,407.74           1,797,596.19           926,573.98

         Total
                           380,199,673.96         283,157,510.17         139,890,677.66        119,343,421.77


Note 33 Business tax and surcharges

         Item                   Current Amount                               Previous Amount

Business Tax                                                  -                                  5,376,975.72
Urban
Maintenance      &
Construction Tax                                   1,286,031.12                                   442,857.90
Education
Surcharges                                          869,796.78                                    253,712.29
Increment Tax on
Land Value                                        14,045,896.99                                  4,205,515.05
Other Taxes                                         323,020.34                                    126,862.61
         Total                                    16,524,745.23                                 10,405,923.57

In accordance with CK (2016) No. 22 Document published by the Ministry of Finance in Dec.
2016, the "Business Taxes and Surcharges" item name is adjusted as "Taxes and Surcharges" item
after fully trying out the change from business tax to value-added tax, the item accountings the
relevant taxes and fees of enterprise activities, such as consumption tax, urban maintenance and
construction tax, resource tax, extra charges of education funds and property tax, land use tax,
vehicle and vessel tax, stamp tax, in accordance with Article 12 of ASBE, it conducts the
adjustment on relevant items of 2016 annual income statement according to new requirements
specified. This company's other taxes and fees mainly include stamp tax, property tax, land use tax
and vehicle and vessel tax, etc.

Note 34 Selling expenses
                        Item                  Current Amount          Previous Amount
Employees’ Wages                                       651,115.08              405,220.67
Advertisement                                           562,182.00            1,392,667.57
Repair                                                   49,000.00              140,530.00
Selling Service                                        4,910,000.00           6,690,000.00
Others                                                  425,910.28              242,582.78
                         Total                         6,598,207.36           8,871,001.02


Note 35 Administrative expenses

                        Item                  Current Amount          Previous Amount
Employees’ Wages
                                                      19,764,096.35          13,206,958.52
Depreciation
                                                       7,073,122.82          14,189,830.37

Business Entertainment
                                                       1,410,828.86           2,728,763.69
Business Travel
                                                       1,165,859.09           1,526,947.44
Tax
                                                                              1,793,692.10

Amortization of Intangible Assets
                                                       1,051,776.89           2,602,040.00

Repair
                                                        440,517.23              328,378.88
Insurance
                                                        706,117.18              817,666.46
Consultation fee, service charge, audit fee           11,222,874.99           2,343,637.99
Traffic
                                                        536,146.30            2,153,757.83

Office
                                                        211,066.64              413,401.22

Property management, utilities, heating fee
                                                       1,523,212.00           1,820,962.03
Lease
                                                       2,843,565.44

Other
                                                       1,092,468.10           1,300,105.17
Total                                                 49,041,651.89          45,226,141.70


Note 36Financial expenses

                       Category               Current Amount          Previous Amount
Interest Expense                                       7,671,493.40          45,230,435.59
Less: Interest Income                                  1,330,070.14           3,616,128.15
Financial Consultant                                    773,584.91

Financing Expenses                                                            6,800,478.63
                                                                  -
Others                                                  263,074.63              377,028.65
                        Category                                   Current Amount                 Previous Amount

                         Total                                              7,378,082.80                   48,791,814.72


Note 37      Loss on assets impairment

                          Item                                     Current Amount                 Previous Amount

Loss on Bad Debts                                                          -4,139,548.16                    7,219,276.66

Loss of Impairment of Construction in Progress
                                                                                        -                    776,000.00
Loss on available - for - sale financial assets                                                            -6,000,000.00
                                                                                        -
                          Total                                            -4,139,548.16                    1,995,276.66


Note 38 Investment income
1) Details of investment income
                          Item                                     Current Amount                Previous Amount
Long - term equity investment income from equity
                                                                           -1,095,372.42                     -234,924.26
method
Disposal of long-term equity investment generated
investment income                                                                                          38,155,550.74
                                                                                        -
other
                                                                                        -                       8,271.82
                         Total                                             -1,095,372.42                   37,928,898.30


Note 39 Non-operating income
                                                                                                  Amount Recorded in
                 Item                             Current Amount        Previous Amount           Current Extraordinary
                                                                                                     Gain and Loss
Total Gain on the Disposal of
Non-current Assets                                       168,799.75            2,555,707.19                  168,799.75
Including: Gain on the Disposal of
Fixed Assets                                             168,799.75            2,462,319.87                  168,799.75
Gain on the Disposal of Intangible
Assets                                                              -               93,387.32                          -
Others
                                                         454,491.09                 95,785.15                454,491.09

Total
                                                         623,290.84            2,651,492.34                  623,290.84


Note 40 Non-operating cost
                                                                                                  Amount Recorded in
                 Item                             Current Amount         Previous Amount          Current Extraordinary
                                                                                                      Gain and Loss
Loss on disposal of non - current
assets                                                     19,264.12                131,916.10                19,264.12
Among them: loss of fixed assets
disposal                                                   19,264.12                131,916.10                19,264.12
                                                                                                    Amount Recorded in
                Item                         Current Amount             Previous Amount             Current Extraordinary
                                                                                                       Gain and Loss
Asset scrapped, loss of damage
                                                                -                  2,456,199.23                          -
Compensation, liquidated damages
Donations                                           852,793.17                      569,746.62                 852,793.17
othes
                                                    745,370.78                      120,516.82                 745,370.78

                Total
                                                   1,617,428.07                    3,278,378.77               1,617,428.07


Note 41 Income tax expenses
1) List of income tax expenses

                Item                              Current Amount                              Previous Amount
Current Income Tax Expenses                                         2,216,183.83                         199,363.38
Deferred Income Tax Expenses                                        4,985,486.50                         -15,665.42
                Total                                               7,201,670.33                         183,697.96

2) Accounting profits and adjustment process of the income tax expenses

                                      Item                                                       Current Amount
Total Profits                                                                                               27,742,112.78
Income Tax Expenses Calculated at the Statutory/Applicable Tax Rate                                          6,935,528.20
Influence of Adjustment of Previous Income Tax
Influence of the Non-deducible Cost, Expense and Loss                                                        2,419,787.22
Influence of the Deducible Loss of the Previous Deferred Income Tax Assets
Not Recognized
Current Influence of the Deducible Temporary Difference or the Deducible
Loss of the Current Deferred Income Tax Assets Not Recognized                                                -7,329,732.09
Recognition of Deferred Tax Assets of Previous Deducible Loss

Other                                                                                                         5,176,087.00
Income Tax Expenses                                                                                          7,201,670.33


Note 42 Notes to cash flow statement
1) Other cash received relating to operating activities

                    Item                                Current Amount                            Previous Amount
Received payment from Beijing runshun
technology development co., LTD                                       15,000,000.00
Received from Beijing yuanrongtong asset
management co., LTD                                                                                         12,300,000.00
I received the payment from li peng
                                                                                                            11,500,000.00
Received from Beijing emerging real estate
development corporation                                                7,160,000.00
I received the money from the yayxuyi stack
                        Item                       Current Amount          Previous Amount
scenic spot in the changting town of hailin                                           1,237,761.89
Received cheng shuxian exchange
                                                                                       300,000.00
Received from Chen jilin
                                                                                       100,000.00
Other exchanges
                                                             441,203.98               3,400,000.00
To collect and renovate the rent, maintenance
fund and customer's fees and tax                            3,035,457.52              3,500,000.00
Collect water and electricity, garbage disposal,
heating gas, TV viewing fee, etc                            1,472,647.25              5,502,810.13
Other
                                                             955,049.71               2,239,331.59

                     Total
                                                           28,064,358.46             40,079,903.61

2) Other cash paid relating to operating activities

                        Item                       Current Amount          Previous Amount
To return the land transfer intention gold of
wuhan middle China century real estate
development co., LTD                                       43,000,000.00
Pay Beijing yuanrongtong asset management
co., LTD                                                                             11,948,840.00
Beijing emerging real estate development
corporation                                                 6,800,000.00
Other related parties
                                                             962,345.10
Payment of huiyu payment in shandong
                                                                                      3,000,000.00
Pay Ms. Cheng shuxian
                                                                                       300,000.00
Pay for water and electricity renovation and
rent deposit, maintenance fund and customer
handling fees and tax payment                               7,216,742.86
Payment of deferred housing penalty and area
difference                                                  2,149,096.00
We will pay for water and electricity, garbage
disposal, heating gas and TV viewing fee                     348,816.16
Overhead expenses
                                                           20,346,084.13              4,533,549.75
Other daily expenses and spare cash
                                                            2,665,652.99              2,739,887.76
other
                                                             727,221.85                625,730.16

                        Total
                                                           84,215,959.09             23,148,007.67

3) Other cash received relating to investment activities

                        Item                       Current Amount          Previous Amount

Received funds for occupation                                 49,136.10
                        Total                                 49,136.10
     4) Payment of other cash related to financing activities

                           Item                               Current Amount         Previous Amount

Disposal of cash outflows from subsidiaries                                                   123,352.41

                           Total                                                              123,352.41


     5、Payment of other cash related to financing activities

                           Item                               Current Amount         Previous Amount

Pay the financial consultant fee
                                                                      1,720,000.00
Payment of financing service fee
                                                                                             4,302,704.04

                           Total
                                                                      1,720,000.00           4,302,704.04


Note 43 Supplementary information of cash flow statement
1) Supplementary information of cash flow statement

                            Item                              Current Amount         Previous Amount
1. Cash Flow to Adjust the Net Profit into the Operating
Activities
Net Profit
                                                                    20,540,442.45          -51,169,241.35
Plus: Provision for Asset Impairment
                                                                     -4,139,548.16           1,995,276.66
Depreciation of Fixed Assets, Consumption of Oil and Gas
Assets and Depreciation of Productive Biological Assets              8,034,003.28           15,164,316.52
Amortization of Intangible Assets
                                                                        81,364.80             559,669.98
Amortization of Long-term Deferred Expenses
                                                                       970,412.09            2,142,700.22
Loss on the Disposal of Fixed Assets, Intangible Assets and
Other Long-term Assets (Income is Marked as “-”)                   -5,636,646.05          -3,224,684.28
Loss on the Discarding of Fixed Assets (Income is
Marked as “-”)                                                         1,108.20            2,500,181.85
Loss on the Variation of Fair Value (Income is Marked as
“-”)                                                                           -                      -
Financial Expenses (Income is Marked as “-”)
                                                                     6,150,568.35           48,936,433.19
Investment Loss (Income is Marked as “-”)
                                                                     1,095,372.42          -37,928,898.30
Decrease in Deferred Income Tax Assets (Increase is
Marked as “-”)                                                     4,985,486.50                       -
Increase in Deferred Income Tax Liabilities (Decrease is
Marked as “-”)                                                                 -             -15,665.42
Decrease in Inventory (Increase is Marked as “-”)
                                                                   139,851,435.16         -102,163,618.46
Decrease in Operating Items Receivable (Increase is
Marked as “-”)                                                     7,014,675.01         -114,889,161.41
Increase in Operating Items Payable (Decrease is Marked
as “-”)                                                          -248,678,884.07         399,438,256.34
                           Item                                  Current Amount            Previous Amount
Other
                                                                                       -                      -
Net Cash Flow from Operating Activities
                                                                          -69,730,210.02         161,345,565.54
2. Significant Investment and Financing Activities without
Cash Receipts and Payments
Conversion of Debt Into Capital
Convertible Bonds Maturing Within One Year
Fixed Assets Acquired Under Financial Lease
3. Change in Cash and Cash Equivalent
Closing Balance of the Cash
                                                                          167,840,121.26         143,110,210.79
Less: Opening Balance of the Cash
                                                                          246,504,351.39         205,762,131.54
Plus: Closing Balance of the Cash Equivalent
                                                                                       -                      -
Less: Opening Balance of the Cash Equivalent
                                                                                       -                      -
Net Increase of Cash and Cash Equivalent
                                                                          -78,664,230.13         -62,651,920.75

2) Composition of cash and cash equivalent

                          Item                                   Closing Balance           Opening Balance
1. Cash
                                                                      162,840,121.26             241,504,351.39
1.1 Cash in Stock
                                                                             786,233.90            1,305,777.52
Bank Deposit Available for Immediate Payment
                                                                      162,045,485.08             240,190,186.44
Other Currency Available for Immediate Payment
                                                                               8,402.28                8,387.43
2. Cash Equivalent
Including: Bond Investment Maturing Within Three
Months
3. Balance of Closing Cash and Cash Equivalent
                                                                      162,840,121.26             241,504,351.39
Including: Restricted Cash and Cash Equivalent Used by
the Subsidiaries of the Parent Company or the Group


Note 44Assets with restriction on ownership or use right

          Item                Balance                              Reason of Restriction
Currency Funds                     5,000,000.00   Borrowing on Mortgage

Inventories                        4,824,035.45   Borrowing on Mortgage
Investment-based                                  Borrowing on Mortgage
                                   6,232,449.23
Real Estate
Fixed Assets                       3,076,944.63   Borrowing on Mortgage

        Total                     19,133,429.31
VII. Merge scope change

 The merger scope has not changed during this reporting period


VIII. Equities in other entities
1) Equities in the subsidiary
(1) Composition of the Company
                                                                               Equity interest
                                Place of        Place of       Nature of          held (%)        Accounting
     Company name
                                operation      registration    business                 Indirec     method
                                                                              Direct
                                                                                             t
Hainan   Pearl    River                                        Property
Property          Hotel          Hainan,
                                              Hainan Haikou   managemen       98.00                   set-up
Management Co., Ltd            Zhengzhou
                                                                    t
Hainan   Pearl   River                                         Property
Greening   Engineering                                                        100.0                   set-up
Co., Ltd                      Hainan Haikou   Hainan Haikou   managemen
                                                                                0
                                                                    t
Hainan   Pearl   River                                         Property
Property Cleaning Co.,                                                        100.0                   set-up
Ltd                           Hainan Haikou   Hainan Haikou   managemen
                                                                                0
                                                                    t
Hainan    Pearl    River                                       Property
Property Electrical and                                                                               set-up
Mechanical Engineering        Hainan Haikou   Hainan Haikou   managemen       100.00
Company                                                             t
Hubei Pearl River Real
Estate Development Co.,       Wuhan, Hubei    Wuhan, Hubei       estate        89.20                  set-up
Ltd
Wuhan Zhujiang Meilin
Hotel Management Co.,         Wuhan, Hubei    Wuhan, Hubei       Hotel        100.00                  set-up
Ltd
Hainan     Pearl     River
Industrial    Co.,     Ltd.                                                                           set-up
                                Shanghai        Shanghai         estate       100.00
Shanghai real estate
company
Beijing Jiubo Culture
                                 Beijing         Beijing        culture       100.00                set-up
Development Co., Ltd
Mudanjiang City Zhujiang
Wanjia             Tourism
                               Mudanjiang      Mudanjiang     Hotel, travel   100.00                set-up
Investment Development
Group Co., Ltd
Hailin Wanjia Xuexiang
                               Mudanjiang      Mudanjiang        Hotel        100.00                set-up
Resort Hotel
Mudanjiang Jingpo Lake
Zhujiang Wanjia Hotel          Mudanjiang      Mudanjiang        Hotel        100.00                set-up
Co., Ltd
                                                                                                   Business
Mudanjiang Wanjia Star                                                                            combination
                               Mudanjiang      Mudanjiang        Hotel        100.00
Hotel Co., Ltd                                                                                    s involving
                                                                                                  enterprises
                                                                                                            Equity interest
                                       Place of                Place of             Nature of                   held (%)              Accounting
    Company name
                                   operation                registration               business                       Indirec          method
                                                                                                        Direct
                                                                                                                           t
                                                                                                                                      not under
                                                                                                                                       common
                                                                                                                                       control
Harbin Wanjia Travel
                                       Harbin                   Harbin                 tourism           100.00                         set-up
Service Co., Ltd
Hebei Zhengshi Qinghui
Real Estate Development          Shijiazhuang               Shijiazhuang                estate              51.00                       set-up
Co., Ltd
                                                                                       Property
Shanghai Pearl Property
                                   Shanghai                   Shanghai             managemen                50.00                       set-up
Management Co., Ltd
                                                                                          t
(2)ant non-wholly-owned subsidiaries
                                                                     Current      P/L          Current                Closing
                                              Proportion
                                                                     attributable to           dividend               balance         of
          Company name                        of                                                                                              Note
                                                                     minority                  payements to           minority
                                              minority(%)
                                                                     shareholders              minority               interest
 Hainan Pearl River Properties and
 Hotels                                              2
 Management Co., Ltd.                                                        -29,941.85                                    118,777.80
 Hubei Pearl River Real Estate
                                                    10.8
 Development Co., Ltd.                                                    4,468,420.17             9,180,000.00        14,343,892.07
 Hebei Zhengshi Qinghui Real
                                                     49
 Estate Development Co., Ltd.                                            -1,132,972.17                                -24,751,387.76
 Shanghai Sea Pearl Property
                                                     50
 Management Co., Ltd.                                                          8,789.78                                    326,061.06

                Total                                       -----
                                                                          3,314,295.93             9,180,000.00        -9,962,656.83

(3)Main Financial Information of the Significant Non-wholly-owned Subsidiaries
                                                                           Closing balance
 Company
 name                                    Non-current                                           Current              Non-current               Total
                 Current assets                                     Total assets
                                           assets                                             liabilities            liabilities           liabilities
 Hainan Pearl
 River
 Properties
                   102,078,910.95           3,009,653.45              105,088,564.40           99,149,674.50                                99,149,674.50
 and Hotels
 Managemen
 t Co., Ltd.
 Hubei Pearl
 River Real
 Estate            422,470,230.16          10,487,341.26              432,957,571.42          295,147,842.52           5,000,000.00        300,147,842.52
 Developmen
 t Co., Ltd.
 Hebei
 Zhengshi
 Qinghui Real
                            4,376.10         103,106.04                   107,482.14           50,620,518.39                                50,620,518.39
 Estate
 Developmen
 t Co., Ltd.
 Shanghai               2,804,641.19            10,454.52               2,815,095.71             2,162,973.60                                2,162,973.60
                                                                   Closing balance
 Company
 name                                  Non-current                                    Current           Non-current                 Total
                  Current assets                          Total assets
                                         assets                                      liabilities         liabilities             liabilities
 Sea Pearl
 Property
 Managem
 ent   Co.,
 Ltd.

     Continued:

                                                                    Opening balance
   Company
    name                                Non-current                              Current                 Non-current           Total
                   Current assets                          Total assets
                                        assets                                   liabilities              liabilities          liabilities
 Hainan Pearl
 River
 Properties
                      100,602,853.49       3,206,886.08       103,809,739.57           96,373,756.84                               96,373,756.84
 and Hotels
 Managemen
 t Co., Ltd.
 Hubei Pearl
 River     Real
 Estate               936,796,523.40      15,943,287.84       952,739,811.24          771,305,685.50           5,000,000.00       776,305,685.50
 Developmen
 t Co., Ltd.
 Hebei
 Zhengshi
 Qinghui Real
                            5,439.60        107,189.63             112,629.23          48,313,477.37                               48,313,477.37
 Estate
 Developmen
 t Co., Ltd.
 Shanghai Sea
 Pearl
 Property               2,956,358.12         13,012.80            2,969,370.92          2,334,828.37                                2,334,828.37
 Managemen
 t Co., Ltd.

Continued:

                                                                                 Closing balance
            Company name                                                                       Total
                                                                                                                   Net cash flows from
                                               Operating income         Net profit         comprehensive
                                                                                                                   investing activities
                                                                                              income
Hainan Pearl River Properties and
Hotels
                                                145,542,234.96        -1,497,092.83          -1,497,092.83                    552,082.24
Management Co., Ltd.
Hubei Pearl River Real Estate
Development Co., Ltd.                           226,838,984.15       41,375,603.16          41,375,603.16               -39,220,031.55
Hebei Zhengshi Qinghui Real Estate
Development Co., Ltd.                                                 -2,312,188.11          -2,312,188.11                      -1,063.50
Shanghai  Sea      Pearl         Property
Management Co., Ltd.                               1,670,449.46           17,579.56                17,579.56                  -151,716.93

Continued:

                                                                                 Opening balance
            Company name                                                                      Total                 Net cash flows
                                                  Operating
                                                                       Net profit         comprehensive             from investing
                                                   income
                                                                                             income                    activities
                                                                             Opening balance
           Company name                                                                   Total                Net cash flows
                                                   Operating
                                                                      Net profit      comprehensive            from investing
                                                    income
                                                                                         income                   activities
Hainan Pearl River Properties and
Hotels
Management Co., Ltd.                           117,100,129.23         -304,098.01           -304,098.01           -16,640,735.33
Hubei Pearl River Real Estate
Development Co., Ltd.                                957,519.04     -12,948,342.22        -12,948,342.22          118,558,721.37
Hebei Zhengshi Qinghui Real Estate
Development Co., Ltd.                                                -2,590,547.57         -2,590,547.57              -70,898.18
Shanghai   Sea      Pearl Property
Management Co., Ltd.                               1,797,596.19        471,514.49            471,514.49              661,708.32


2) Transactions that the shares of the owners’ equities in the subsidiary changed but still
control such subsidiary
(1) Description on the change of shares of owners’ equities in the subsidiary
There is no the change of shares of the owners’ equities in the Company at the end of report
period.

(2) Influence of such transaction on the minority shareholders’ equities and owners’ equities
attributive to the parent company

There is no transaction with influence on the minority shareholders’ equities and owners’ equities
attributive to the parent company at the end of report period.


3) Equities in the cooperative enterprises or associated enterprises
(1) Significant cooperative enterprises or associated enterprises

                                                    Place of                          Equity interest
                                                                  Nature
                                        Plac                      of           held (%)
                                                         re                                                          Accounti
     Name                         e           of                        bu
                                                    gistrati                                                    ng method
                                  operation                       siness              Dir              Dir
                                                    on
                                                                               ect              ect

                                                                     Real
    Sanya Wanjia Industrial                                                                                          equity
                                                                    estate
                                      Sanya          Sanya                           40
Co. Ltd                                                            develop                                      method
                                                                    ment

(2) Main financial information of significant cooperative enterprises

                                                                     Closing balance                       Opening balance
                       Item                                       Sanya Wanjia Industrial             Sanya Wanjia Industrial
                                                                         Co. Ltd                             Co. Ltd
Current asset                                                                  4,354,532.36                         4,215,581.28
Non-current asset                                                             76,699,398.26                        78,410,198.72
                    Total asset                                               81,053,930.62                        82,625,780.00
                                                         Closing balance                Opening balance
                            Item                      Sanya Wanjia Industrial        Sanya Wanjia Industrial
                                                             Co. Ltd                        Co. Ltd
Current liability                                                  2,391,664.36                   1,641,278.62
Non-current liability
                        Total liability                            2,391,664.36                   1,641,278.62
Minority interests
Equity attributable to parent company                             78,662,266.26                  80,984,501.38
Net assets share calculated according to proportion
                                                                  31,464,906.50                  32,393,800.55
of shareholding
Net book value of the equity investment in
                                                                  31,464,906.50                  32,393,800.55
associates

Continued:

                                                            Year 2017                      Year 2016
                            Item                      Sanya Wanjia Industrial        Sanya Wanjia Industrial
                                                             Co. Ltd                        Co. Ltd
Operating income                                                      19,796.10                        17766.67
Net profit                                                        -2,322,235.12                    -398,138.81
Other comprehensive income
Total comprehensive income                                        -2,322,235.12                    -398,138.81

(3) Summary of financial information of insignificant cooperative enterprises or associated
enterprises

                     Item                  31 December 2014/ Year 2014          31 December 2013/ Year 2013
Net book value of the equity investment
                                                             1,306,366.06                         1,472,844.43
in associates
calculated according to proportion of
                                                                                                             —
shareholding:
Net profit                                                    -166,478.37                           -75,668.74
Other comprehensive income
Total comprehensive income                                    -166,478.37                           -75,668.74

(4) Unrecognized commitment relating to cooperative enterprises or associated enterprises
There is no commitment needing to be disclosed in the Company.

(5) Contingent liabilities relating to cooperative enterprises or associated enterprises
There is no contingency needing to be disclosed in the Company.

 IX. Disclosure of risks related to the financial instruments
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk and
market risk (primarily interest rate risk),. The Company's overall risk management program
focuses on the unpredictability of financial markets and seeks to minimize potential adverse
effects on the Company's financial performance.
1) Credit risk
The Company’s credit risk mainly arises from the monetary funds, accounts receivable,
available-for-sale financial assets, etc. The management has formulated the appropriate credit
policy and will continuously monitor the exposure of those credit risks.
The Company’s monetary funds are mainly deposited in the financial institutions such as
commercial bank, etc., the Company’s management believe that those commercial banks have
bigger credit and conditions of assets with lower risk of credit. The Company adopts the policy of
quota for avoiding the credit risk of any financial institution.

The Company expects that there is no significant credit risk associated with cash at bank since

they are deposited at state-owned banks and other medium or large size listed banks.

Management does not expect that there will be any significant losses from non-performance by

these counterparties.
In regard with the accounts receivable and other receivables, the Company has policies to control
the credit exposure on those accounts receivable and other receivables. The Company assesses
the credit quality of and sets credit limits on its customers by taking into account their financial
position, the availability of guarantee from the third parties, their credit history and other factors
such as current market conditions. The credit history of the customers is regularly monitored by
the Company. In respect of customers with a poor credit history, the Company will use written
payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the
Company is limited to a controllable extent.
The biggest credit exposure faced by the Company is the book value of each asset in the balance
sheet. Except for the Company’s guarantee stated in Notes, the Company does not provide any
guarantee possible to make the Company face the credit risk.
2) Liquidity risk
Liquidity risk refers to the risk that the Company fails to obtain the sufficient capital to meet operational needs or
pay for the due debts and other obligations.
The Company’s finance department monitors rolling forecasts of the Company's short-term and long-term
liquidity requirements to ensure it has sufficient cash and securities that are readily convertible to cash to meet
operational needs, while maintaining sufficient headroom on its undrawn committed borrowing facilities from
major financial institution so that the Company does not breach borrowing limits or covenants on any of its
borrowing facilities to meet the short-term and long-term liquidity requirements.
As at 30June 2017, the financial assets and liabilities of the Company are analyzed by their maturity date below at
their undiscounted contractual cash flows :

                                                              30 Juner 2017
Item                    Net book          Carrying                                                            Over
                                                          Within 1year      1 to 2 years    2 to 5 years
                          value           amount                                                             5years
Currency Funds          167,840,121.26   167,840,121.26    167,840,121.26

Accounts
receivable               20,229,593.44    33,138,454.97     33,138,454.97

Other receivables       300,245,043.39   450,438,233.91    450,438,233.91
                                                                  30 Juner 2017
Item                      Net book           Carrying                                                                     Over
                                                             Within 1year        1 to 2 years        2 to 5 years
                            value            amount                                                                       5years
Available-for-sale
financial assets           30,824,994.90     49,263,555.29      49,263,555.29

Subtotal                  519,139,752.99    700,680,365.43     700,680,365.43

Accounts payable           66,826,515.71     66,826,515.71      66,826,515.71

Other payables            606,193,379.59    606,193,379.59     606,193,379.59

Long-term
borrowings                  5,000,000.00      5,000,000.00       5,000,000.00

Subtotal                  678,019,895.30    678,019,895.30     678,019,895.30


Continued:

                                                             31 December 2016
                                                                                                                            Over
    Item                                   Carrying
                   Net book value                            Within 1year         1 to 2 years          2 to 5 years          5
                                           amount
                                                                                                                            years
Currency
Funds                 246,504,351.39       246,504,351.39       246,504,351.39
Accounts
receivable             16,084,139.32        28,360,112.29        28,360,112.29
Other
receivables           350,870,047.05       505,835,674.29       505,835,674.29
Available-fo
r-sale
financial
assets                 30,824,994.90        49,263,555.29        49,263,555.29
Subtotal              644,283,532.66       829,963,693.26       829,963,693.26
Accounts
payable                77,627,005.61        77,627,005.61        77,627,005.61
Other
payables              541,823,806.30       541,823,806.30       541,823,806.30
Long-term
borrowings            152,376,848.25       152,376,848.25        78,710,181.59       37,666,666.64        36,000,000.02
Subtotal              771,827,660.16       771,827,660.16       698,160,993.50       37,666,666.64        36,000,000.02

3) Market risk
(1) Risk from exchange rate
None.

(2) Interest rate risk
The Company's interest rate risk arises from the borrowings from bank. Financial liabilities issued
at floating rates expose the Company to cash flow interest rate risk. The Company determines the
relative proportions of its fixed rate and floating rate contracts depending on the prevailing
market conditions.
For the year ended 30 June2017, the amount of interest rates contract on the floating rate for
long-term borrowings amounted to RMB184,000,000.00, the amount of interest rates contract on
the fixed rate for long-term borrowings amounted to RMB245,590,202.29.

X. Fair Value
1) Financial instruments measured at fair value
There is no financial instrument measured at fair value in the Company

2) Financial instruments measured at fair value at the end of report period
There is no financial instrument measured at fair value at the end of report period

3) Basis of determination of market price for the items measured at fair value

There is no financial instrument measured at fair value in the Company.
4) Information of fair value of financial assets and liabilities not measured at fair value
The financial assets and liabilities not measured at fair value include: the accounts receivable,
short-term borrowing, accounts payable, non-current liabilities and long-term borrowings
matured within one year, investment in equities that are not quoted in active market and whose
fair value cannot be measured reliably.
 The Company’s management gives a view that the difference between the book value of
 above-mentioned financial assets and liabilities not measured at fair value and the fair value is
 very small.

XI. Related party relationship and transactions
 1) Information of parent company of the Company
                                                  Real estate                   Holding      Voting
                                 Registered                       Registered
              Name                             development and                 proportio     rights
                                  address                           capital
                                                  operation                        n       proportion
                                              Investment
Beijing Grain Group Co., Ltd    Beijing                            90,000.00     28.95       28.95
                                              management
   The company's ultimate control is Beijing grain group co., LTD.
2) The information of the Company’s subsidiaries is set forth in Note 8-1 “Equities in the
Subsidiaries”.
3) The information of the Company’s cooperative enterprises and associated enterprises is set
forth in Note 8-3 “Equities in the cooperative enterprises and associated enterprises”

4) Information of Other Related Parties
                                                     Relationship between other related party and the
Name of Other Related Party
                                                     Company
Beijing Zhongjia Yangguang energy technology (Company)
                                                       With same controller
Co., Ltd.
Beijing Xinxing Real Estate Development Corporation    The parent company of the original controlling
                                                       shareholder
                                                            Relationship between other related party and the
Name of Other Related Party
                                                            Company
Beijing Wanfa Real Estate Development Co., Ltd              The original controlling shareholder

Mudanjiang City Development and Construction Co., Ltd       With same controller
Sanya Wanjia Industrial Co., Ltd                            Associates
Sanya Wanjia Hotel Management Co., Ltd                      With same controller


 5) Transactions with related parties
(1) In regard with any subsidiary that has the control relationship with the Company and has
been included in the Company’s consolidated financial statements, its intercourse transaction
and the transaction with the parent company has been offset.

(2) Relation of sales of goods and rendering of service
                                        Nature of related
          Related party                                               Year 2017                    Year 2016
                                          transaction
Sanya Wanjia Hotel Management         Hotel services                         2,754,012.00
Co., Ltd
                                      Provide    asset
Beijing Xinxing Real         Estate
                                      management                             1,200,000.00
Development Corporation
                                      services
               Total                                                         3,954,012.00




(3) Related party assets transfer, debt restructuring
                                        Nature of related
          Related party                                               Year 2017                    Year 2016
                                          transaction
Beijing  wanfa     real      estate   Equity transfer
development co. LTD                                                                                     277,332,301.49
Beijing  wanfa     real      estate   Transfer of fixed
development co. LTD                                                                                      35,000,000.00
                                      assets
               Total
                                                                                                        312,332,301.49

(4) Information of related guarantee

When the Company is the guarantor:

                                                                 Beginning date      Maturity date
                                                                                                          Guarantee
                Guarantor                        Amount          of   guarantee      of
                                                                                                          obligation
                                                                                     guarantee
                                                                 contract                                expired
                                                                                     contract
Beijing Zhongjia Sunny Energy Technology
                                                  9,400,000.00           2013/9/12          2016/9/12         No
(Company) Co., Ltd.
                   Total                          9,400,000.00

(5) Fund calling between related parties
As at 30 June 2017, the total amount of loan principal that Beijing Xinxing Real Estate
Development corporation has been made to the Pearl River Holding has a balance of
RMB54,680,395.18with interest payable of RMB33,801,954.73.
As at 30 June 2017,the total amount of loan principal that the controlling shareholder Beijing
Wanfa Real Estate Development Corporation has been made to the Pearl River Holding has a
balance of RMB 0.00 with interest payable of RMB38,227,058.49.
As of June 30, 2017, the principal balance of the company's borrowings to Beijing grain group co.,
ltd. is RMB179,000,000.00, with the interest balance of RMB4,182,283.33
(6) Remuneration of key management personnel (10 thousand yuan)
                Item                                   Current Amount                   Previous Amount
Key management personnel salary                                         61.43                             59.62

(7) Accounts payable for related parties
(1)Accounts payable for related parties by the Company

    Items                     Company Name                         31 December 2017         31 December 2014
Other          Beijing Xinxing Real Estate Development
payables       General Company                                             54,680,395.18          84,778,095.18
Other          Beijing    Zhongjia        Yangguang     Energy
payables       Technology ( Group) Co., Ltd.                                3,586,021.00           3,586,021.00
Other          Mudanjiang          City       Development    &
payables       Construction Co., Ltd                                            70,000.00             70,000.00
Other          Sanya Wanjia Industrial Co., Ltd
payables                                                                    1,133,732.83           1,133,732.83
Other          Sanya Wan Jia Hotel Management Co., Ltd
payables                                                                    9,635,737.42          10,187,745.63
Other          Beijing Grain Group Co., Ltd
payables                                                                 183,182,283.33          150,746,266.66
Other          Heilongjiang Longshi Culture Communication
payables       Co., Ltd                                                                            2,225,224.84
                                      Total
                                                                         252,288,169.76          252,727,086.14
Other          Beijing Wangfa Real Estate Development
receivables    Holdings Co., Ltd                                                                  35,000,000.00
                                      Total
                                                                                                  35,000,000.00
Interest       Beijing Xinxing Real Estate Development
payable        General company                                             33,801,954.73          33,615,676.05
Interest       Beijing Wangfa Real Estate Development Co.,
payable        Ltd.                                                        38,227,058.49          38,227,058.49
                                      Total
                                                                           72,029,013.22          71,842,734.54
Interest       Heilongjiang Long as Culture Communication
receivable     Co., Ltd                                                                            2,710,880.79

                                      Total
                                                                                        -          2,710,880.79


XII. Commitments and Contingency
1) Significant commitments
          Not

2) Contingency incurred after the balance sheet
b)On Apr. 2, 2015, this company borrowed RMB 20,280,000 from the individual Zhanghua
through Hainan Zhuye Investment Management Co., Ltd. and handled the collateral registration
formalities. On Apr. 24, 2015, Hainan Zhuye Investment Management Co., Ltd. transferred the
RMB 60,000 of debt in the borrowing of this company and Zhang Hua to Lin Xiaolian through
signing Credit and Debt Transfer Agreement, and Hainan Zhuye Investment Management Co., Ltd.
issued Letter of Guarantee at the same time and agreed to bear the joint and several guarantee
responsibility. When the borrowing term has expired, because Hainan Zhuye Investment
Management Co., Ltd. is suspected of being involved in illegally absorbing public deposit an has
been registered by the public security organs for an investigation, then it temporarily fails to
continuously perform the repayment obligations. Now Lin Xiaolianpersonnaly brings a borrowing
contract dispute lawsuit to Hualong District People's Court of Longkou, Hainan. As of the date of
audit report, the case's first-instance judgment has been dismissed, and will be tried again after
the criminal case of Hainan Zhuye Investment Management Co., Ltd. is tried.

XIII. Events after the balance sheet

1) Information of profit distribution

According to the company's 18th board resolution, no profit distribution is made during this
period.

2)Information of other events after the balance sheet date

a)On November 3, 2014, Hainan Fangyuan Law Firm lodged a lawsuit on the dispute over the
property rights of the company’s Parking Space 57, 61, 62, 63, 64 (formerly Parking Space
101-105) of the Pearl Square Underground Parking Lot to the court, requiring to obtain the
ownership certificates of the parking spaces. As of the issuance date of the financial statement, the
first trial of the case was handed down, requiring the company to transfer the ownerships of above
five parking spaces to Hainan Fangyuan Law Firm, but the company refused to accept the verdict
and is now preparing materials to appeal to the Hainan Province Haikou City Intermediate
People's Court.

b) In September 2013, the company borrowed 27 million Yuan from Lv Gengying via Hainan
Zhuyei Investment Management Co., Ltd., and went through registration procedures of mortgaged
property. On November 20, 2015, the company signed Agreement on the Transfer of Creditor's
Rights and Debts with Shi Xuyun, Pu Ding, Lv Gengying and Hainan Zhuyei Investment
Management Co., Ltd., to transfer 9.4 million Yuan of debts that it borrowed from Lv Gengying to
Shi Xuyun (4.7 million Yuan) and Pu Ding (4.7 million Yuan). The term of the loan has expired, as
Hainan Zhuyei Investment Management Co., Ltd. was suspected of illegal pooling of public
deposits and was investigated by the public security bureau and therefore temporarily could not
continue to fulfill its repayment obligation, Shi Xuyun and Pu Ding filed a lawsuit to the Hainan
Province Haikou City People's Court on the dispute over loan contract, and was dismissed in the
first trial. However, Shi Xuyun and Pu Ding refused to accept the verdict and lodged a lawsuit to
the Hainan Province Haikou City Intermediate People's Court. As of the issuance date of the
financial statement, the second trial maintained the verdict made during the first trial, i.e., to
rejected their claim and hear the case after the completion of the trial of criminal case of Hainan
Zhuyei Investment Management Co., Ltd.


XIV. Other significant events
1)Guaranty events

     There is no external guarantee of this report period

2)Other events

a)The company is planning on major asset reorganization, which was approved by the
State-owned Assets Supervision and Administration Commission of the Beijing Municipal
People's Government on July 21, 2016. The reorganization programme involves three transactions,
such as major asset replacement, issuance of shares, purchase of assets and supporting financing.
The subject of the transactions is 100% shares of Beijing Grain Stock Co. Ltd held by BGG and
other related parties. As of the issuance date of the financial statement, the company received On
the Approval of Hainanzhujiangkonggu Co., Ltd to Issue Shares and Purchase and Raise
Supporting Funds to BGG and other related parties issued by China Securities Regulatory
Commission (CSRC License No. [2017]1391).

b)This company's subsidiary Hubei Pearl River Real Estate Development Co., Ltd. Signed an
agreement with Hubei Supply and Marketing XudongMinsheng Plaza Real Estate Co., Ltd. on
Dec. 4, 2016 to transfer the legally-owned land plot located in No. 20, Fangji Road, Hongshan
District, Wuhan City to Hubei Supply and Marketing XudongMinsheng Plaza Real Estate Co., Ltd.
The transfer area is about 13560 ㎡ with a transfer price of 135million RMB. The payment has
been received. In case of the complex transfer processes dealing with Land Use Certificate, the
Planning and Design, Asset Evaluation and Government approveal, the handover formalities have
not been handled.

XV. Notes to significant items of the parent company’s financial statements
Note 1 Accounts receivable
1) Disclosure of category details of accounts receivable:

                                                           Closing Balance
                                   Book Balance           Provision for Bad Account
       Categories
                                                                                Rate        Book Value
                                                Ratio
                            Amounts                       Amounts             Chargeabl
                                                (%)
                                                                               e(%)
                                                                   Closing Balance
                                      Book Balance                Provision for Bad Account
        Categories
                                                                                         Rate         Book Value
                                                    Ratio
                                Amounts                           Amounts              Chargeabl
                                                    (%)
                                                                                        e(%)
Accounts receivable with
significant single amount
                                     8,856,207.60    74.25%             8,856,207.60    100.00%
and individual provision for                                                                                         -
bad debts
Accounts receivable with
combinational withdrawal
of the bad debt provision            1,172,461.81        9.83%            155,487.58      13.26%
by         credit       risks                                                                             1,016,974.23
characteristics
Accounts receivable with
non-significant       single
                                     1,898,690.60    15.92%             1,898,690.60    100.00%
amount and individual                                                                                                -
provision for bad debts
           Total                    11,927,360.01                      10,910,385.78                      1,016,974.23

Continued:

                                                                  Opening Balance
                                      Book Balance                Provision for Bad Account
        Categories
                                                                                         Rate         Book Value
                                                    Ratio
                                Amounts                           Amounts              Chargeabl
                                                    (%)
                                                                                        e(%)
Accounts receivable with
significant single amount
                                     8,856,207.60    74.16%             8,856,207.60    100.00%
and individual provision for                                                                                         -
bad debts
Accounts receivable with
combinational withdrawal
of the bad debt provision            1,187,881.81        9.95%            155,795.98      13.12%
                                                                                                          1,032,085.83
by         credit       risks
characteristics
Accounts receivable with
non-significant       single
                                     1,898,690.60    15.90%             1,898,690.60    100.00%
amount and individual                                                                                                -
provision for bad debts
           Total                    11,942,780.01                      10,910,694.18                    1,032,085.83

Description of categories of accounts receivable:
(1) Accounts receivable with significant single amount and individual provision for bad debts at
the end of period:

                                                                    Closing Balance
             Name                                                                 Rate
                                        Accounts             Provision for
                                                                                Chargeabl     Reasons of Withdrawal
                                       Receivable            Bad Account
                                                                                 e(%)
                                                                                              Estimates cannot
Hainan dragon film studio                                                       100.00%
                                          1,046,985.40           1,046,985.40                 be brought back
                                                                                              Estimates cannot
Hainan Baoping company                                                          100.00%
                                          2,218,494.43           2,218,494.43                 be brought back
Hainan racing entertainment                                                     100.00%       Estimates      cannot
                                                                    Closing Balance
               Name                                                                Rate
                                      Accounts                Provision for
                                                                                 Chargeabl    Reasons of Withdrawal
                                     Receivable               Bad Account
                                                                                  e(%)
Co., LTD                                2,406,158.00            2,406,158.00                  be brought back
Hainan     centaline    property                                                              Estimates cannot
                                                                                 100.00%
agency                                                                                        be brought back
                                        2,090,069.77            2,090,069.77
Singapore China holding co.,                                                                  Estimates cannot
                                                                                 100.00%
LTD                                     1,094,500.00            1,094,500.00                  be brought back
               Total                                                                     —
                                        8,856,207.60            8,856,207.60

(2) Accounts receivable with non-significant single amount and individual provision for bad debts
at the end of period:

                                                                     Closing Balance
               Name                                                                 Rate
                                      Accounts            Provision for Bad
                                                                                  Chargea Reasons of Withdrawal
                                     Receivable               Account
                                                                                  ble(%)
                                                                                              Management
Haikou Peijie clothing company            497,520.00                497,520.00    100.00%
                                                                                              identification
Hainan International silver city                                                  100.00%     Management
                                          451,712.00                451,712.00
 Real estate company                                                                          identification
Haikou         Jingye    trading                                                  100.00%     Management
                                          250,000.00                250,000.00
development company                                                                           identification
  Hainan Jinhe Real estate                                                        100.00%     Management
                                          119,446.00                119,446.00
company                                                                                       identification
Hainan     Qiongshan     Tianxin                                                  100.00%     Management
                                          112,116.50                112,116.50
Pawn Investment company                                                                       identification
Amount less than one hundred                                                      100.00%     Management
                                          467,896.10                467,896.10
thousand yuan                                                                                 identification
               Total                    1,898,690.60              1,898,690.60           —

(3) Accounts receivable in the combination which adopts aging analysis method to determine
provision for bad debt:

                                                                     Closing Balance
               Aging                                                Provision for Bad
                                   Accounts Receivable                                        Rate Chargeable(%)
                                                                        Account

Within 1 year                                                                                                  2.00%
                                                  36,000.00                        720.00

1-2 years                                                                                                     5.00%
                                              918,807.39                         45,940.37

2-3 years                                                                                                     10.00%
                                                          -                              -

3-4 years                                                                                                     20.00%
                                                          -                              -

4-5 years                                                                                                     30.00%
                                                          -                              -
Over 5 years                                                                                                   50.00%
                                                                     Closing Balance
               Aging                                                 Provision for Bad
                                   Accounts Receivable                                        Rate Chargeable(%)
                                                                         Account
                                                217,654.42                      108,827.21

                Total                                                                        -----
                                              1,172,461.81                     155,487.58

Continued:

                                                                     Opening Balance
               Aging                                                 Provision for Bad
                                   Accounts Receivable                                        Rate Chargeable(%)
                                                                         Account
Within 1 year                                    51,420.00                        1,028.40                    2.00%
1-2 years                                      918,807.39                      45,940.37                     5.00%
2-3 years                                                                                                   10.00%
3-4 years                                                                                                   20.00%
4-5 years                                                                                                   30.00%
Over 5 years                                    217,654.42                     108,827.21                    50.00%
                Total                         1,187,881.81                     155,795.98              —

2) Situation of the current bad debt provision withdrawn, recovered or reversed:
The amount of current bad debt provision reversed was RMB308.4 .
3) There is no money owed by the shareholders who hold more than 5% (5% is included) of
voting shares of the Company in the closing accounts receivable.
4) Top 5 units of accounts receivable of the closing balance gathered on the basis of parties
which owe the money:
                                                                        Ratio in Closing
                                                                          Amount of          Bad Account Provisions
                  Name                      Closing Balance
                                                                           Accounts               Withdrawn
                                                                        Receivable (%)
Hainan racing entertainment Co., LTD                  2,406,158.00          20.17%                      2,406,158.00
Hainan Baoping company                                2,218,494.43          18.60%                      2,218,494.43
Hainan Zhongyuan tenement agency
                                                      2,090,069.77          17.52%                      2,090,069.77
company
Singapore China holding co., LTD                      1,094,500.00           9.18%                      1,094,500.00
Hainan Longzhu Cinema City                            1,046,985.40           8.78%                      1,046,985.40
                  Total                               8,856,207.60                                      8,856,207.60

5) There is no account receivable from the related party at the end of report period.

Note 2 Other Receivables
1) Disclosure of category details of other receivables

                                                                 Closing Balance
                                       Book Balance              Provision for Bad Account
       Categories
                                                                                           Rate       Book Value
                                                   Ratio
                              Amounts                            Amounts                 Chargeabl
                                                   (%)
                                                                                          e(%)
                                                                  Closing Balance
                                         Book Balance             Provision for Bad Account
          Categories
                                                                                          Rate      Book Value
                                                       Ratio
                                   Amounts                        Amounts               Chargeabl
                                                       (%)
                                                                                         e(%)
Other      receivables      with
significant single amount and
                                                        53.18%        139,476,136.40      33.93%
individual provision for bad          411,091,072.35                                                271,614,935.95
debts
Other      receivables      with
combinational withdrawal of
the bad debt provision by                                                                                        -
credit risks characteristics
      Combination 1 : Aging
Combination                           357,846,097.75                   89,749,525.58                268,096,572.17
      Combination        2 :
Receivables         in       the
inter-companies in range of              143,238.82                                 -                  143,238.82
consolidation

     Totality of Combination                            46.31%                            25.07%
                                      357,989,336.57                   89,749,525.58                268,239,810.99
Other     receivables    with
non-significant single amount
                                                         0.51%                           100.00%
and individual provision for            3,963,362.46                    3,963,362.46                             -
bad debts

             Total                                      100.00%       233,189,024.44
                                      773,043,771.38                                                539,854,746.94

  Continued:

                                                                  Opening Balance
                                         Book Balance             Provision for Bad Account
          Categories
                                                                                          Rate      Book Value
                                                       Ratio
                                   Amounts                        Amounts               Chargeabl
                                                       (%)
                                                                                         e(%)
Other      receivables      with
significant single amount and
                                      408,838,943.39    49.22%        139,476,136.40      34.12%    269,362,806.99
individual provision for bad
debts
Other      receivables      with
combinational withdrawal of
the bad debt provision by
credit risks characteristics
      Combination 1 : Aging
                                      417,682,205.01                   95,367,093.30                322,315,111.71
Combination
      Combination        2 :
Receivables         in       the
                                         107,303.90                                                    107,303.90
inter-companies in range of
consolidation
     Totality of Combination          417,789,508.91    50.30%         95,367,093.30      22.83%    322,422,415.61
Other     receivables    with
non-significant single amount
                                        3,963,362.46     0.48%          3,963,362.46     100.00%
and individual provision for
bad debts
             Total                    830,591,814.76    100.00%       238,806,592.16                591,785,222.60

  Description of categories of other receivables:
(1) Other receivables with significant single amount and individual provision for bad debts at the
end of period:

                                                         Closing Balance
         Name                                                                 Rate
                                                   Provision for Bad                        Reasons of
                            Other Receivables                              Chargeable
                                                       Account                              Withdrawal
                                                                             (%)
Mudanjiang city pearl                                                                   According   to   the
river wanjia tourism
investment                                                                              expected    amount
development group                                                                       provision shall not
co. LTD
                                  246,195,408.23         70,855,952.42         28.78%   withdraw
Shanghai rongxin real                                                                   According   to   the
estate co. LTD
                                                                                        expected    amount
                                                                                        provision shall not
                                   68,810,525.99          1,882,525.99          2.74%   withdraw
Hebei       zhengshi                                                                    According   to   the
qinghui real estate
development co. LTD                                                                     expected    amount
                                                                                        provision shall not
                                   49,928,266.99         22,732,273.67         45.53%   withdraw
Singapore      CHINA
                                                                                        Irrecoverable
GREAT LAND HOLD                    16,981,016.24         16,981,016.24        100.00%
Hainan marcun port
                                                                                        Irrecoverable
company                             6,000,000.00          6,000,000.00        100.00%
Ding jia international
                                                                                        Irrecoverable
co. LTD                             2,725,702.71          2,725,702.71        100.00%
Hainan          entrust
                                                                                        Irrecoverable
industry co. LTD                    2,314,592.00          2,314,592.00        100.00%
Hainan         zhongda
                                                                                        Irrecoverable
industrial corporation              2,210,779.10          2,210,779.10        100.00%
Great treasure cement
                                                                                        Irrecoverable
factory                             1,901,383.56          1,901,383.56        100.00%
Jinguang      industrial
                                                                                        Irrecoverable
company                             1,752,100.00          1,752,100.00        100.00%
Beijing jiubo                                                                           According   to   the
cultural development
co. LTD                                                                                 expected    amount
                                                                                        provision shall not
                                    3,680,000.00          1,528,513.18         41.54%   withdraw
Shenzhen pearl real
                                                                                        Irrecoverable
estate company                      1,550,278.23          1,550,278.23        100.00%
Shenzhen          guoan
                                                                                        Irrecoverable
securities co. LTD                  1,409,934.28          1,409,934.28        100.00%
Haikou         industrial
development import
                                                                                        Irrecoverable
and export trade co.
LTD                                 1,392,430.00          1,392,430.00        100.00%
Xinhua dawn aviation
                                                                                        Irrecoverable
decoration company                  1,208,804.70          1,208,804.70        100.00%
Hainan        deep-sea
                                                                                        Irrecoverable
property co. LTD                    1,029,850.32          1,029,850.32        100.00%
Hainan Yangtze river
                                                                                        Irrecoverable
travel industry                     1,000,000.00          1,000,000.00        100.00%
                                                               Closing Balance
        Name                                                                         Rate
                                                      Provision for Bad                                   Reasons of
                              Other Receivables                                   Chargeable
                                                          Account                                         Withdrawal
                                                                                    (%)
Land          property
administration      of                                                                                Irrecoverable
sanya city                            1,000,000.00              1,000,000.00             100.00%

        Total                                                                            —
                                    411,091,072.35            139,476,136.40

(2) Other receivables with non-significant single amount and individual provision for bad debts at
the end of period

                                                                    Closing Balance
               Name                                                          Rate
                                       Other           Provision for
                                                                           Chargea                Reasons of Withdrawal
                                     Receivables       Bad Account
                                                                           ble(%)
Sell Dabao cement        on    a
                                         560,610.00           560,610.00        100.00                Irrecoverable
commission basis
Hainan Development Bank                  440,000.00           440,000.00        100.00                Irrecoverable
Hainan Sanli Industry and
                                         283,478.62           283,478.62        100.00                Irrecoverable
Trade Company
Chamber of Commerce of
                                         270,000.00           270,000.00        100.00                Irrecoverable
Hainan Province
Telephone rate of customers of
                                         268,542.54           268,542.54        100.00                Irrecoverable
PEARL RIVER Square
China    Construction     Sixth
                                         260,335.00           260,335.00        100.00                Irrecoverable
Engineering Division Group, Ltd
Huazhou Jianan Company                   200,000.00           200,000.00        100.00                Irrecoverable
PEARL RIVER Advertisement
                                         184,911.62           184,911.62        100.00                Irrecoverable
Company
Initial installation charge of
                                         156,271.60           156,271.60        100.00                Irrecoverable
telephone
Amount below RMB150000(23
                                       1,339,213.08       1,339,213.08          100.00                Irrecoverable
units)
               Total                   3,963,362.46       3,963,362.46          —

 (3) Other receivables in the combination which adopts aging analysis method to determine
 provision for bad debt:

                                                                    Closing Balance
               Aging                                               Provision for Bad
                                      Other Receivables                                             Rate Chargeable(%)
                                                                       Account

Within 1 year                                                                                              2.00%
                                             104,409,283.75                    2,087,520.28

1-2 years                                                                                                 5.00%
                                              32,373,620.00                    1,618,681.00

2-3 years
                                                          -                                   -

3-4 years                                                                                                 20.00%
                                              30,000,000.00                    6,000,000.00

4-5 years                                                                                                 30.00%
                                              77,455,266.00                23,236,579.80

Over 5 years                                                                                               50.00%
                                             113,607,928.00                56,806,744.50
                Total                                                                                        -----
                                                            Closing Balance
               Aging                                        Provision for Bad
                                Other Receivables                                     Rate Chargeable(%)
                                                                Account
                                      357,846,097.75                89,749,525.58


Continued:

                                                            Opening Balance
               Aging                                        Provision for Bad
                                Other Receivables                                     Rate Chargeable(%)
                                                                Account
Within 1 year                         166,613,450.01                3,332,269.00                        2.00%
1-2 years                             20,000,000.00                1,000,000.00                        5.00%
2-3 years
3-4 years                             30,085,000.00                6,017,000.00                       20.00%
4-5 years                             77,370,266.00               23,211,079.80                       30.00%
Over 5 years                          123,613,489.00               61,806,744.50                       50.00%
                Total                 417,682,205.01               95,367,093.30               -----

 In the company portfolio, except that the subsidiaries, such as Mudanjiang River Group
 Company, Jiubo Company and HebeiZhengshiQinghui Company within the scope of company
 merger conduct calculation and withdrawal of the bad-debt reserves, the accounts receivable
 among the companies within other merger scope do not conduct the calculation and withdrawal
 of bad-debt reserves.
2) Situation of the current bad debt provision withdrawn, recovered or reversed
The amount of current bad debt provision withdrawn was RMB5,617,567.72

3) Category of other receivables under the natures of accounts

                  Item                    Closing Balance                           Opening Balance
Investment                                             240,400,000.00                          250,400,000.00
Recievable Related Parties                             368,683,164.43                          403,157,641.37
Borrowing and Interest                                  16,981,016.24                           16,981,016.24
Other Recievable                                       103,720,000.00                          118,720,000.00
Deposit                                                  7,334,364.05                             7,334,364.05
Mortgage Guarantee                                       5,917,801.10                             5,917,801.10
Dividends Receivable                                     1,849,934.28                             1,849,934.28
Other                                                   28,157,491.28                           26,231,057.72
                  Total                                773,043,771.38                          830,591,814.76

4) There is no money owed by the shareholders who hold more than 5% (5% is included) of
voting shares of the Company in the closing other receivables.
5) Top 5 units of other receivables of the closing balance gathered on the basis of parties which
owe the money:
                                                                                                      Ratio in
                                                                                                      Closing             Closing
                                  Nature of                                                         Amount of         Balance of Bad
          Name                                    Closing Balance               Aging
                                   Money                                                               Other               Debt
                                                                                                    Receivables         Provisions
                                                                                                        (%)
Mudanjiang          Pearl
River Wanjia Tourism                                                    1-5years 、over 5
                              Borrowing            246,195,408.23                                       31.85%          70,855,952.42
Investment                                                                      years
Development Group
                              Money for
Beijing           Kangtai
                              Project                                   4-5years、over 5
Xingye      Investment                                                                                  12.94%          42,000,000.00
                              Combinatio           100,000,000.00               years
Co.,Ltd
                              n
Beijing           runshun
                              Intercourse
technology                                                                     1-2years                 12.64%           1,954,400.00
                              Funds                 97,720,000.00
development co. LTD
                              Money for
Zhonghe investment            Cooperatio                                4-5years、over 5
                                                                                                        11.69%          37,800,000.00
co. LTD                       n         with        90,400,000.00               years
                              Project
Shanghai rongxin real         Intercourse                               1-5 years、over 5
estate co. LTD                                                                                           8.90%           1,882,525.99
                              Funds                 68,810,525.99               years

          Total                                                                                         78.02%        154,492,878.41
                                                   603,125,934.22

Note 3 Long-term Equity Investment

                                        Closing Balance                                       Opening Balance
   Nature of
                                            Impairment                                              Impairment
     Money              Book Balance                          Book Value Book Balance                                  Book Value
                                              Provision                                              Provision
Investment         in
subsidiaries            179,420,000.00 110,100,000.00          69,320,000.00 179,420,000.00 110,100,000.00              69,320,000.00
Investment         in
associated
companies                31,464,906.50                    -    31,464,906.50    32,393,800.55                     -     32,393,800.55

       Total
                        210,884,906.50 110,100,000.00 100,784,906.50 211,813,800.55 110,100,000.00 101,713,800.55

1) Investment in subsidiaries
                                                                                                         Current       The
                                                              Current                                  Impairmen Impairment
                             Initial           Opening                 Current            Closing      t Provision Prepares the
     Investee                                                 Increas
                        Investment Cost        Balance                Decrease            Balance      Withdrawn
                                                                 e                                                    Ending
                                                                                                                     Balance
Shanghai      rongxin
real estate co. LTD         40,000,000.00     40,000,000.00                          40,000,000.00                      40,000,000.00
Hainan pearl river
property     hotel
management     co.           4,900,000.00      4,900,000.00                             4,900,000.00
LTD
                                                                                                     Current       The
                                                            Current                                Impairmen Impairment
                              Initial        Opening                 Current        Closing        t Provision Prepares the
      Investee                                              Increas
                         Investment Cost     Balance                Decrease        Balance        Withdrawn
                                                               e                                                  Ending
                                                                                                                 Balance
Hubei zhujiang real
estate development
co. LTD                    64,420,000.00    64,420,000.00                        64,420,000.00
Mudanjiang wanjia
tourism investment
development group          60,000,000.00    60,000,000.00                        60,000,000.00                    60,000,000.00
co. LTD
Beijing jiubo cultural
development        co.
LTD                         5,000,000.00     5,000,000.00                           5,000,000.00                     5,000,000.00
Hebei      zhengshi
qinghui real estate
development     co.         5,100,000.00     5,100,000.00                           5,100,000.00                     5,100,000.00
LTD

        Total
                          179,420,000.00 179,420,000.00                        179,420,000.00                    110,100,000.00

2) Investment in cooperative enterprises and associated enterprises

                                                                           Current Increase or Decrease
                                           Opening                                            Investment   Adjustment of
            Investee                                         Additional    Contribution         Results        Other
                                           Balance
                                                            Contribution     Reduced         Recognized by Comprehensiv
                                                                                             Equity Method   e Income

1. Associated Enterprises

2. Sanya Wanjia Industry Co.,
     Ltd.                              32,393,800.55                                               -928,894.05

                Total
                                       32,393,800.55                   -                 -         -928,894.05

      Continued:

                                                  Current Increase or Decrease
                                                                                                                     Closing
                                                       Declared to                                                 Balance of
            Investee                  Change of                        Impairment                  Closing Balance
                                                        grant cash                                                 Impairme
                                        Other                           Provision      Other
                                                       dividends or                                                nt Reserve
                                       Equities                        Withdrawn
                                                          profits

3. Associated Enterprises


Sanya Wanjia Industry Co.,
Ltd.                                                                                                 31,464,906.50


                Total
                                                                                                     31,464,906.50              -


Note 4 Operating income and operating cost
1) Operating income and operating cost
                                        Current Amount                                 Previous Amount
        Item
                               Income                    Cost                    Income                     Cost

Other Business                                                                      620,935.59                173,367.05
                                       2,857.14            151,218.30
         Total
                                       2,857.14            151,218.30               620,935.59                173,367.05


Note 5 Investment income

                                Item                                       Current Amount           Previous Amount

Investment Income from the Long-term Equity Measured Under
Equity Method                                                                      -928,894.05                -159,255.52

Other
                                                                                 75,820,000.00                            -

                                Total
                                                                                 74,891,105.95                -159,255.52
XVI. Supplementary information

1) Breakdown of non-recurring profit or loss

                                    Items                                             Amount                Description
Profit and loss on disposal of non-current assets                                             149,535.63
Fund occupation fee from non-financial enterprises included in the
                                                                                            1,031,643.09
current profit and loss
In addition to the normal operation of the same business related
effective hedging business, holding the fair value of financial assets
transaction, transaction financial liabilities generated by the movement
of the profit and loss, and the disposal of trading financial assets,
financial liabilities held for trading and available for sale financial assets
to obtain investment income
Others non-operating income and expenses excluded as above                                  -1,143,672.86
Enterprise restructuring charges                                                            -1,367,924.53
Other satisfies the definition of non-recurring gains and losses and losses
of the project
Income tax influence the forehead                                                              41,265.54
Rights and interests of minority shareholders influence the forehead
(after tax)                                                                                      6,065.97
                                    Total                                                   -1,377,750.18


2) Return on equity (ROE) and earnings per share ("EPS")

                                                                                    Earnings per share
                                               Weighted average return on
        Profit During Report Period                                       Basic earnings per Diluted earnings per
                                                     net assets (%)
                                                                                share                share
Net profit attributable to ordinary
                                                         23.37%                      0.04                   0.04
shareholders of the Company
Net profit after deduction of
non-recurring profits or losses attributable             25.24%                      0.04                   0.04
to ordinary shareholders of the Company

3) Abnormal financial statements items ("F/S items") and description of reasons
(1) Consolidated balance sheet of consolidated financial statements
                                              December 31,       Ratio of
          Item           June 30, 2017                                                       Reason of Change
                                                  2016           Change
Monetary fund                                                   The principal is to repay the loan of this period
                                                                and to return the advanced payment of
                                                        -31.91%
                          167,840,121.26 246,504,351.39         Zhongsenhua by the subsidiary Hubei Pearl
                                                                River.
inventory                                                       The principal is to carry forward cost of the
                                                        -46.95% unsold inventory of homes by the subsidiary
                          158,016,371.89 297,867,807.05         Hubei Pearl River.
Other current assets                                                        The principal is the prepaid related taxes and
                                                                 65.38%
                           14,411,010.80        8,714,139.07                fees of the subsidiary Hubei Pearl River.
Long-term deferred                                                          The principal is caused by the amortization of
expenses                                                         -46.57%
                            1,113,550.80        2,083,962.89                this period.
Deferred tax assets                                                   The principal is to transfer back to deferred
                                                             -100.00% income tax assets by the subsidiary Hubei Pearl
                                          -     4,985,486.50          River.
Advance payment                                                             The principal is from the income from the sales
                                                                 -36.87%
                          230,886,723.58 365,746,868.16                     of the subsidiary Hubei Pearl River.
Payable taxes                                                        The principal is to pay enterprise income tax
                                                             -48.52% and to pay the related taxes and fees of Hubei
                           43,455,350.36       84,404,890.27         Pearl River.
Non-current
                                                                            The principal is to return the loan from the
liabilities due within                                          -100.00%
one year                                  -    78,710,181.59                subsidiary Mudanjiang Tourism Group.

Long-term                                                                   The principal is to return the loan from the
borrowing                                                        -93.21%
                            5,000,000.00       73,666,666.66                subsidiary Mudanjiang Tourism Group.
Minority interests                                                          The principal is to make dividends by the
                                                                -143.17%
                            -9,962,656.83       -4,096,952.76               subsidiary Hubei Pearl River.

 (2) Consolidated Profit Statement and Cash Flow Statement
                       January to June         January to June        Ratio of
       Item                                                                                        Reason of Change
                            2017                    2016              Change
                                                                                   The principal is to gain the income of the
   Operating
                         393,836,785.57          149,032,528.40       164.26%      housing sales by the subsidiary Hubei Pearl
   income
                                                                                   River.
                                                                                   The principal is to gain the income of the
   Operating
                         288,602,024.02          122,029,925.99       136.50%      housing sales by the subsidiary Hubei Pearl
   cost
                                                                                   River.
                                                                                   The principal is to provision related taxes and
   Taxes      and
                          16,524,745.23           10,405,923.57       58.80%       frees of the housing sales by the subsidiary
   surcharges
                                                                                   Hubei Pearl River.
   Financial                                                                       The principal is to repay the loan and to reduce
                           7,378,082.80           48,791,814.72       -84.88%
   expenses                                                                        the financial cost in this period
   Impairment                                                                      The principal is to withdraw the partial
                          -4,139,548.16            1,995,276.66      -307.47%
   of assets                                                                       receivables depreciated.
                                                                                   The principal is to transfer the shareholders of
                                                                                   the subsidiary Heilongjiang Hongshi owed by
   Investment             -1,095,372.42           37,928,898.30      -102.89%
                                                                                   Mudanjiang Tourism Group in the previous
                                                                                   period.
   Non-operati                                                            The principal is to deal with fixed assets to
                          623,290.84           2,651,492.34    -76.49%
   ng income                                                              generate income in the previous period

   Operating                                                              The principal is to apply for scrap part of fixed
                        1,617,428.07           3,278,378.77    -50.66%
   expenses                                                               assets in the previous period.

                                                                          The principal is to provision income taxes by the
   Income tax
                        7,201,670.33             183,697.96    3820.39%   subsidiaries Hubei Pearl River and Zhujiang
   expense
                                                                          Property.
   Minority
                                                                          The principal is to make a profit by the
   gains      and       3,314,295.93           -3,798,646.47   187.25%
                                                                          subsidiary Hubei Pearl River.
   losses
   Net      cash
   flow
   generated                                                              The principal is that prepaid housing funds of
                      -69,730,210.02       161,345,565.54      -143.22%
   by                                                                     Hubei Pearl River reduces in this period.
   operating
   activities
   Net      cash
   flow
                                                                          The principal is to withdraw the partial
   generated
                       53,311,113.89           5,447,324.96    878.67%    investment and sell some fixed assets to receive
   by
                                                                          cash
   investment
   activities
   Net      cash
                                                                          The principal is to receive the payback of the
   flows from
                      -62,245,134.00      -229,444,811.25      72.87%     loan for the increase in borrowing in this period.
   financing
   activities



Legal representative: Wang Chunli
Principal in charge of accounting: Guan Ying
Head of the accounting department: Wu Xiukun




                                                       Hainan Pearl River Holding Company Limited
                                                                                      23 August 2017