Hainan Dadonghai Tourism Centre
(Holdings) Co., Ltd.
Financial Report & Statement
Semi-Annual 2018
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2
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Financial Report & Financial Statement
(1 January 2018-30 June 2018)
Content Page
I Financial statement
Balance Sheet 3-4
Profit Statement 5
Statement of Cash Flow 6
Statement of Changes in Owners’ Equity 7-8
II Notes to Financial Statement 9-40
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Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Balance Sheet
2018-6-30
(Expressed in Renminbi unless otherwise stated)
Item Ending balance Beginning balance
Current assets:
Monetary funds 10,751,658.64 9,681,607.16
Notes receivable
Accounts receivable 266,236.51 594,130.89
Prepayments 43,206.84 49,530.21
Interests receivable
Dividends receivable
Other receivables 800,136.44 139,561.29
Inventories 264,620.69 227,005.11
Non-current assets maturing within one year 716,972.51 1,173,597.68
Other current assets 2,195,699.54 1,957,863.56
Total current assets 15,038,531.17 13,823,295.90
Non-current assets:
Long-term equity investments 1,000,000.00
Investment property 8,621,742.21 8,859,003.99
Fixed assets 38,017,199.39 39,088,708.83
Construction in progress
Project materials
Disposal of fixed assets
Intangible assets 22,611,442.62 23,017,636.20
Development expenses
Goodwill
Long-term deferred expenses 2,678,016.88 2,678,016.88
Deferred income tax assets
Other non-current assets
Total non-current assets 72,928,401.10 73,643,365.90
Total assets 87,966,932.27 87,466,661.80
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Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Balance Sheet (Cont’)
2018-6-30
(Expressed in Renminbi unless otherwise stated)
Current liabilities:
Short-term borrowings
Notes payable
Accounts payable 1,651,770.31 2,161,172.26
Accounts received in advance 1,057,513.07 1,271,174.12
Employee benefits payable 1,984,463.35 2,459,015.93
Taxes and surcharges payable 471,349.26 539,023.76
Interests payable
Dividends payable
Other payables 2,894,571.56 2,411,176.59
Non-current liabilities maturing within one year
Other current liabilities
Total current liabilities 8,059,667.55 8,841,562.66
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Estimated liabilities 1,489,685.04 1,489,685.04
Other non-current liabilities
Total non-current liabilities 1,489,685.04 1,489,685.04
Total liabilities 9,549,352.59 10,331,247.70
Owners 'equity:
Share capital 364,100,000.00 364,100,000.00
Capital reserves 54,142,850.01 54,142,850.01
Surplus reserves
Undistributed profit -339,825,270.33 -341,107,435.91
Total equity attributable to owners of parent company 78,417,579.68 77,135,414.10
Minority’s equity
Total owners 'equity 78,417,579.68 77,135,414.10
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Total liabilities and owners 'equity 87,966,932.27 87,466,661.80
Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Profit Statement
1 Jan. 2018-30 Jun. 2018
(Expressed in Renminbi unless otherwise stated)
Item Current period Last period
I. Total operating income 16,173,929.32 15,096,273.42
Including: Operating income 16,173,929.32 15,096,273.42
Interest income
Earned premium
Fee and commission income
II. Total operating const 14,891,558.76 13,377,279.62
Including: Operating cost 6,000,063.36 5,256,112.51
Interest cost
Tax and surcharge 716,520.90 754,244.27
Selling expenses 2,800,956.10 2,458,144.93
Administrative expenses 5,356,455.21 5,089,450.57
Financial expenses 17,563.19 -180,672.66
Losses from asset impairment
Investment income ("- " for loss)
III. Operating profits ("-" for losses) 1,282,370.56 1,718,993.80
Plus: non-operating income 273.00 260.00
Less: non-operating expenses 477.98
IV. Total profits ("-" for total losses) 1,282,165.58 1,719,253.80
Less: income tax expenses
V. Net profit ("-" for net loss) 1,282,165.58 1,719,253.80
Net profit attributable to owners of parent company 1,282,165.58 1,719,253.80
Minority’s gains/losses
VI. Net amount of other comprehensive income after-tax
VII. Total comprehensive income 1,282,165.58 1,719,253.80
Total comprehensive income attributable to owners of parent
1,282,165.58 1,719,253.80
company
Total comprehensive income attributable to minority
6
VIII. Earnings per share:
(I) Basic earnings per share 0.0035 0.0047
(II) Diluted earnings per share 0.0035 0.0047
Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Cash Flow Statement
1 Jan. 2018-30 Jun. 2018
(Expressed in Renminbi unless otherwise stated)
Item Current period Last period
I. Cash flows from operating activities
Cash received from sale of goods and rendering of services 17,460,137.72 15,736,183.76
Refunds of taxes and surcharges
Cash received from other operating activities 684,152.64 677,415.38
Sub-total of cash inflows from operating activities 18,144,290.36 16,413,599.14
Cash paid for goods purchased and services received 5,026,699.13 3,826,391.38
Cash paid to and on behalf of employees 6,741,602.32 5,608,808.99
Cash paid for taxes and surcharges 1,590,739.15 1,610,025.50
Cash paid for other operating activities 1,674,572.16 2,137,300.17
Sub-total of cash outflows from operating activities 15,033,612.76 13,182,526.04
Net cash flows from operating activities 3,110,677.60 3,231,073.10
II. Cash flows from investing activities
Cash received from disposal of investments
Sub-total of cash inflows from investing activities
Cash paid to acquire and construct fixed assets, intangible assets and
1,040,626.12 1,333,145.20
other long-term assets
Cash paid for investments 1,000,000.00
Cash paid for other investing activities 9,000,000.00
Sub-total of cash outflows from investing activities 2,040,626.12 10,333,145.20
Net cash flows from investing activities -2,040,626.12 -10,333,145.20
III. Cash flows from financing activities
Cash received from other financing activities 19,810,000.00
Sub-total of cash inflows from financing activities 19,810,000.00
Cash paid for other financing activities 29,810,000.00
Sub-total of cash outflows from financing activities 29,810,000.00
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Net cash flows from financing activities -10,000,000.00
IV. Effect of fluctuation on exchange rate on cash and cash
equivalents
V. Net increase in cash and cash equivalents 1,070,051.48 -17,102,072.10
Plus: balance of cash and cash equivalents at the beginning of the
9,681,607.16 27,210,248.01
period
VI. Balance of cash and cash equivalents at the end of the period 10,751,658.64 10,108,175.91
Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Statement of Changes in Owners’ Equity
1 Jan. 2018-30 Jun. 2018
(Expressed in Renminbi unless otherwise stated)
Current period
Equity attributable to owners of parent company
Other Oth
equity er
co
instrument Gen Min
Les mpr
s: ehe eral orit
Item Per Spe Sur Total owner's
Capital trea nsiv y’s
pet cial plus risk Undistributed equity
Share capital Pref sur e
ual reserve rese rese pro profit equ
erre y inc
capi Oth rve rves ity
d stoc om visi
tal er k
stoc e on
sec
k
uriti
es
54,142,850.0 77,135,414.1
I. Balance as at the 364,100,000.00 -341,107,435.91
end of last year 1 0
Plus: Changes in
accounting
policies
II. Balance as at
54,142,850.0 77,135,414.1
the beginning of 364,100,000.00 -341,107,435.91
1 0
year
III.
Increases/decrease
1,282,165.58 1,282,165.58
s in the period (“-”
for decreases)
(I) Total
comprehensive 1,282,165.58 1,282,165.58
income
(II) Capital
contributed or
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reduced by owners
1. Ordinary shares
contributed by
owners
(III) Profit
distribution
1. Withdrawal of
surplus reserves
(IV) Internal
carry-forward of
owners' equity
1. Conversion of
capital reserves
into paid-in capital
(or share capital)
(V) Special
reserves
1. Withdrawal in
the period
2. Use in the
period
(VI) Others
IV. Balance as at
54,142,850.0 78,417,579.6
the end of the 364,100,000.00 -339,825,270.33
1 8
period
Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd.
Statement of Changes in Owners’ Equity (Cont’)
1 Jan. 2018-30 Jun. 2018
(Expressed in Renminbi unless otherwise stated)
Last period
Equity attributable to owners of parent company
Other Oth Gen Min
Les
equity er orit
Item s: eral
co Spe Sur Total owner's
instrument trea y’s
Capital mpr cial plus risk Undistributed
equity
Share capital sur
reserve ehe rese rese pro profit equ
Pref Per y
Oth nsiv rve rves ity
erre pet stoc visi
er e
d ual k on
inc
9
stoc capi om
k tal e
sec
uriti
es
54,142,850.0 74,276,415.4
I. Balance as at the 364,100,000.00 -343,966,434.57
end of last year 1 4
Plus: Changes in
accounting
policies
II. Balance as at
54,142,850.0 74,276,415.4
the beginning of 364,100,000.00 -343,966,434.57
1 4
year
III.
Increases/decrease
1,719,253.80 1,719,253.80
s in the period (“-”
for decreases)
(I) Total
comprehensive 1,719,253.80 1,719,253.80
income
(II) Capital
contributed or
reduced by owners
1. Ordinary shares
contributed by
owners
(III) Profit
distribution
1. Withdrawal of
surplus reserves
(IV) Internal
carry-forward
of owners'
equity
1. Conversion of
capital reserves
into paid-in
capital (or share
capital)
(V) Special
reserves
1. Withdrawal in
the period
2. Use in the
period
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(VI) Others
IV. Balance as at 54,142,850.0 75,995,669.2
the end of the 364,100,000.00 -342,247,180.77
1 4
period
Legal Representative: Yuan Xiaoping Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
NOTES TO FINANCIAL STATEMENT
SEMI-ANNUAL 2018
1. Company basic information
Hainan Dadonghai Tourism Center (Holdings) Co., Ltd. (hereinafter referred to as “the Company”),
was founded as a standardized LLC on April 26, 1993, reorganized and incorporated on the basis of
the former Hainan Sanya Dadonghai Tourism Center Development Ltd. and approved by the Hainan
Provincial Stock System Experimentation Leading Team Office with a document of Qiong Gu Ban Zi
[1993] No. 11. On May 6, 1996, the Company underwent a restructuring and a corresponding division
under the approval of the Hainan Provincial Securities Administration Office with a document of
Qiong Zheng Ban [1996] No. 58. On October 8, 1996 and January 28, 1997, the Company, with duly
approval, went public by issuing 80 million shares of B stock and 14 million shares of A stock
respectively on Shenzhen Security Exchange. On June 20, 2007, the Company experienced a reform
of non-tradable shares, through which non-tradable share holders of the Company got circulating right
of their shares by paying shares to tradable share holders, and tradable share holders got paid three
shares for every ten of their shares. The Company operates business in the industry of tourism and
catering services.
As at 30 June 2018, the Company's accumulative total issued capital was 364.1 million shares and the
Company's registered capital was RMB 364.1 million. Legal representative: Yuan Xiaoping. Unified
social credit code: 91460000201357188U. Domicile: Dadonghai, Hedong District, Sanya. Business
scope: Accommodation and catering industry (limited to branches); photography; flower bonsai,
knitwear, general merchandise, hardware, chemical products (except franchised operations), daily
necessities, industrial means of production (except franchised operations), metal materials, machinery
equipment; sales of train, bus, vehicle tickets on an agent basis etc. The Company's largest
shareholder is Luoniushan Co., Ltd.
The financial statements were approved by the board of directors of the Company on 9 August 2018
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for disclosure.
2. Basis of preparation of the financial statements
2.1. Preparation basis
Based on going concern and according to actually occurred transactions and events, the Company prepared
financial statements in accordance with the Accounting Standards for Business Enterprises — Basic
Standards and the specific accounting standards, Application Guidance to the Accounting Standards for
Business Enterprises, the interpretation of the Accounting Standards for Business Enterprises and other
relevant provisions (hereinafter referred to collectively as the "Accounting Standards for Business
Enterprises"), as well as the disclosure provisions of the Rules for the Compilation and Submission of
Information Disclosure by Companies Offering Securities to the Public No.15 - General Requirements for
Financial Reports (Revised in 2014).
2.2 Going concern
The Company currently has sufficient working capital and normal operating conditions. It is estimated that
the operating activities of the Company will continue in the next 12 months.
3. Significant accounting policies and accounting estimates
Main accounting policies and accounting estimates have no changes in the period
3.1 Statement on compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Company comply with the requirements of the Accounting
Standards for Business Enterprises, and truly and completely present the financial position, operating
results, cash flows of the Company and other related information.
3.2 Accounting period
The accounting year is from January 1 to December 31 in calendar year.
3.3 Operating cycle
The Company's operating cycle is 12 months.
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3.4 Reporting currency
The Company adopts RMB as its reporting currency.
3.5 Scope of consolidation (aggregation) of financial statements
As of 30 June 2018, the scope of consolidation (aggregation) of financial statement including the
independent accounting of the non-legal person - South China Grand Hotel of Hainan Dadonghai
Tourism Center (Holdings) Co., Ltd
3.6 Recognition criteria of cash and cash equivalents
For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash on
hand and the unrestricted deposit. The term “cash equivalents” refers to short-term (maturing
within three months from acquisition) and highly liquid investments that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of change in value.
3.7 Foreign currency transactions and conversion for statement in foreign languages
Foreign currency transactions are converted into RMB for recording purpose at the spot exchange
rate on the date when the transaction occurs.
Balances of foreign currency monetary items are measured at the spot exchange rate on the
balance sheet date. The exchange difference arising wherefrom shall be included in the current
profit and loss, except that those exchange differences arising from the special borrowings of
foreign currency related to the acquired and constructed assets qualified for capitalization shall be
dealt with according to the principle of borrowing cost capitalization. Foreign currency
non-monetary items measured at historical costs shall still be converted at the spot exchange rates
on the date when the transactions occur, and the amount in functional currency shall remain
unchanged. Foreign currency non-monetary items measured at fair value shall be translated at the
spot exchange rates on the date when the fair value is determined. The exchange difference arising
wherefrom shall be included in the current profit and loss or capital reserves.
3.8 Financial instruments
Financial instruments include financial assets, financial liabilities and equity instruments.
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3.8.1 Classification of financial instruments
Financial assets and liabilities are classified into the following categories according to the
purpose of acquisition: financial assets or financial liabilities measured at fair value and
whose variation is included in the current profit and loss, including financial assets or
financial liabilities held for trading and financial assets or financial liabilities directly
designated to be measured at fair value through current profit and loss, held-to-maturity
investments, accounts receivables, available-for-sale financial assets and other financial
liabilities, etc.
3.8.2 Recognition basis and measurement method of financial instruments
(1) Financial assets (financial liabilities) measured at fair value and whose variation is
included in the current profit and loss
Financial assets (financial liabilities) are initially recorded at fair values when acquired
(deducting cash dividends that have been declared but not distributed and bond
interests that have matured but not been drawn). Relevant transaction expenses are
included in the current profit and loss.
The interests or cash dividends to be received during the holding period are recognized
as investment income. Change in fair values is included in the current profit and loss at
the end of the period.
Difference between the fair value and initial book-entry value is recognized as
investment income upon disposal; meanwhile, adjustment is made to gains or losses
from changes in fair values.
(2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at fair values plus the related trade
expenses when acquired (deducting bond interests that have matured but not been
drawn).
The interest revenue calculated at amortization cost and effective interest rate (nominal
interest rate is adopted when the difference between the actual interest rate and the
nominal interest rate is minor) during the holding period is recognized as investment
income. Effective interest is recognized when obtained, and remains unchanged in the
predictable holding period or applicable shorter period.
The difference between the amount received and the book value of the investment is
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included in the investment profit and loss upon disposal.
(3) Accounts receivable
For creditor’s rights receivable arising from external sales of goods or rendering of
service by the Company and other creditor's rights of other enterprises (excluding
liability instruments quoted in an active market) held by the Company, including
accounts receivable, other receivables, notes receivable and prepayments, etc., the
initial recognition amount shall be the contract price or agreement price receivable
from purchasing party. Accounts receivable with financing nature are initially
recognized at their present values.
The difference between the amount received and the book value of the accounts
receivable is included in the current profit and loss upon recovery or disposal.
(4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at fair values plus the related
trade expenses when acquired (deducting cash dividends that have been declared but
not been paid or bond interests that have matured but not been drawn).
The interests or cash dividends to be received during the holding period are recognized
as investment income. It is measured in fair value at the end of the period and change
in fair values is included in other comprehensive income at the end of the period.
However, the equity instrument investments unquoted in an active market and whose
fair value cannot be measured reliably, and the derivative financial assets which are
connected with the said equity instrument and must be settled by delivering the said
equity instrument shall be measured on the costs basis.
The difference between the amount received and the book value of the financial asset is
included in the investment profit and loss upon disposal. Meanwhile, the corresponding
part of fair value accumulated change accounted as other comprehensive income is
transferred into investment profit or loss.
(5) Other financial liabilities
Other financial liabilities are initially recognized at the sum of fair value and
transaction expenses and subsequently measured at amortized costs.
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3.8.3 Recognition basis and measurement method of transfer of financial assets
When transfer of financial assets occurs, if nearly all of the risks and rewards of ownership
of the financial assets have been transferred to the transferee, the Company derecognizes
the financial assets; if nearly all of the risks and rewards of ownership of the financial
assets are retained, the Company shall not derecognize the financial assets.
The principle of substance over form is adopted to determine whether the transfer of a
financial asset satisfies the criteria as described above for derecognition of a financial asset.
The Company shall classify the transfer of a financial asset into the entire transfer and the
partial transfer of financial asset. If the entire transfer of financial asset satisfies the criteria
for derecognition, the difference between the amounts of the following two items shall be
included in the current profit and loss:
(1) The book value of the transferred financial asset;
(2) The sum of the consideration received from the transfer and the accumulated amount
of the changes in fair value originally and directly included in owners’ equity (the
situation where the financial asset transferred is an available-for-sale financial asset is
involved in)
If the partial transfer of financial asset satisfies the criteria for derecognition, the entire
book value of the transferred financial asset shall be split into the derecognized and
recognized part according to their respective fair value and the difference between the
amounts of the following two items shall be included in the current profit and loss:
(1) The book value of derecognized part;
(2) The sum of the consideration for the derecognized part and the portion of
derecognition corresponding to the accumulated amount of the changes in fair value
originally and directly included in owners’ equity (the situation where the financial
asset transferred is an available-for-sale financial asset is involved in).
If the transfer of financial assets does not meet the derecognition criteria, the financial
assets shall continue to be recognized, and the consideration received will be
recognized as a financial liability.
3.8.4 Derecognition criteria of financial liabilities
A financial liability shall be totally or partly derecognized if its present obligations are
totally or partly dissolved. Where the Company enters into an agreement with a creditor so
as to substitute the existing financial liabilities with any new financial liability, and the new
financial liability is substantially different from the contractual stipulations regarding the
16
existing financial liability, it shall derecognize the existing financial liability, and shall at
the same time recognize a new financial liability.
Where substantial revisions are made to some or all of the contractual stipulations of the
existing financial liability, the Company shall derecognize the existing financial liability
totally or partly, and at the same time recognize the financial liability with revised
contractual stipulations as a new financial liability.
Upon total or partial derecognition of financial liabilities, the difference between the book
value of the financial liabilities derecognized and the consideration paid (including
non-cash assets surrendered or new financial liabilities assumed) shall be included in the
current profit and loss.
Where the Company redeems part of its financial liabilities, it shall, on the redemption date,
allocate the entire book value of whole financial liabilities according to the comparative fair
value of the part that continues to be recognized and the de-recognized part. The difference
between the book value allocated to the derecognized part and the considerations paid
(including non-cash assets surrendered and the new financial liabilities assumed) shall be
included in the current profit and loss.
3.8.5 Method of determining the fair value of financial assets and financial liabilities
For financial instruments with active market, their fair values are determined with quoted
market price. For financial instruments without active market, their fair values are
determined by using valuation technique. During the valuation, the Company use valuation
techniques that are appropriate in the circumstances and for which sufficient data and other
information are available to measure fair value, select inputs that are consistent with the
characteristics of the asset or liability that market participants would take into account in a
transaction for the asset or liability, and give priority to the use of relevant observable
inputs. Unobservable inputs are only adopted when relevant observable inputs cannot be
obtained or are impracticable to obtain.
3.8.6 Providing of impairment provision on financial assets (exclude receivable
accounts)
The Company performs inspection on the book value of financial assets apart from those
financial assets measured at fair value through current profit and loss on the balance sheet
17
date. Impairment provision is required if objective evidences of impairment occurs to the
financial assets.
(1) Impairment provision of available-for-sale financial assets:
If there is a serious decline in fair value of the available-for-sale financial assets at the
end of the period, or such decline is not temporary after considering various factors, the
impairment shall be confirmed, the accumulated losses due to decreases in fair value
previously included in owner’s equity shall be reversed, and the impairment loss shall
be recognized.
If, in a subsequent period, the carrying amount of available-for-sale debt instruments
investments increases and the increase can be related objectively to an event occurring
after the impairment was recognized, the previously recognized impairment losses are
reversed, included in current profit or loss.
The impairment losses of available-for-sale equity instruments cannot be reversed
through profit or loss.
(2) Impairment provision of held-to-maturity investment:
Measurement of held-to-maturity investment impairment loss is governed by
measurement of account receivables impairment loss.
3.9 Account receivable
3.9.1 Account receivable with individually significant amount and with bad debt
provision accrual independently
Basis and standard for "individually Top 5 accounts receivable and other receivables by individual
significant" amount at the end of the year
The Company will separately conduct an impairment test on an
individual basis and the allowance for bad debts will be made at
the lower of the present value of the expected future cash flow
Methods for provision for bad debts of and the book value thereof and included in current profit and loss.
receivables with individually Those do not impair after the separate test shall be included into
significant amount: corresponding portfolio for provision for bad debts. If separate
test indicates that there is impairment of receivables, they shall
not be included the receivables portfolio with similar risk credit
characteristics for an impairment test.
3.9.2 Receivables with bad debt provision accrual by credit portfolio:
Portfolio Methods for provision for bad debts
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Receivables provided for bad debts on a
Aging analysis
portfolio basis
Proportion ratio for other
Aging Provision ratio for receivables
receivables
Within 1 year (inclusive) 0.00% 0.00%
1-2 years 5.00% 5.00%
2-3 years 15.00% 15.00%
3-4 years 25.00% 25.00%
4-5 years 50.00% 50.00%
Over 5 years 100.00% 100.00%
3.9.3 Accounts receivable with individually insignificant amounts and individual
allowance for bad debt
At the end of the year, there are objective evidences showing
that the individual balances below top five are impaired; for
Reasons for separate provision of allowance
example, the debtor is dissolved, bankrupts or dies, and
for bad debts
therefore the receivables cannot be recovered after the
bankruptcy property or the estate is repaid.
if there is an objective evidence that the impairment on
receivables has occurred, such receivables shall be separated
from relevant portfolio to conduct impairment test separately,
Provision method of allowance for bad
based on which the impairment losses are recognized.
debts
Receivables other than accounts receivable and other
receivables are subject to impairment provision by using the
specific identification methods.
3. 10 Inventories
3.10.1 Classification
Inventories are classified into: raw materials, stock commodities, low-cost consumables,
good materials, fuel, etc.
3.10.2 Valuation method of inventories dispatched
Stock commodity is accounted for at the selling price and the difference between the
purchase and sale prices are adjusted on a monthly basis by using the integrated price
difference rate. The purchase and storage of all materials of inventories is measured at
actual cost, and by using the first-in first-out method when applied for use. Low-cost
consumables are amortized at lump-sum method when applied for use.
3.10.3. Determining basis of the net realizable value of inventories and method for inventory
19
impairment provision
After the comprehensive inventory count at the end of the period, provisions for inventory depreciation reserve
are made or adjusted at the lower of their costs or net realizable values.
For merchandise inventories for direct sale, including stock commodities, goods in progress and materials
for sale, during normal operations, their net realizable values are recognized at the estimated selling prices
minus the estimated selling expenses and the relevant taxes and surcharges; for material inventories held
for production, their net realizable values are recognized at the estimated selling prices of finished goods
minus estimated costs until completion, estimated selling expenses and relevant taxes and surcharges.
The provisions for inventory depreciation reserve are made on an individual basis at the end of the period;
for inventories with large quantities and relatively low unit prices, the provisions for inventory
depreciation reserve are made on a category basis. For inventories related to the product portfolios
manufactured and sold in the same area, and of which the final usage or purpose is identical or similar
thereto, and which is difficult to separate from other items for measurement purposes, the provisions for
inventory depreciation reserve are made on a portfolio basis.
Where the previous factors affecting the written-down of the value of inventory have disappeared, the
amount of write-down shall be resumed and be reversed from the original provision for inventory
devaluation with the reversal being included in current profit and loss.
3.10.4. Inventory system
The perpetual inventory system is adopted for accounting.
3.10.5.Amortization methods for low-cost consumables and packaging materials
(1) Low-cost consumables are amortized at lump-sum method;
(2) Packaging materials: lump-sum write-off method.
3.11 Long-term equity investments
3.11.1. Judgment criteria for common control and significant influence
Joint control refers to the control shared over an arrangement in accordance with the relevant stipulations,
and the decision-making of related activities of the arrangement should not be made before the party
sharing the control right agrees the same. Where the Company exercises joint control over the investee
together with other parties to the joint venture and enjoys the right on the investee's net assets, the investee
is a joint venture of the Company.
20
Significant influence refers to the power to participate in making decisions on the financial and operating
policies of an enterprise, such as appointing representative to the board of directors or similar organs of
authority of the investee, but not the power to control the investee, or jointly control, the formulation of
such policies with other parties. Where an investor is able to have significant influences on an investee, the
investee shall be the Company's associate.
3.11.2. Determining of initial investment cost
(1) Long-term equity investment acquired from business combination
Business combination under the common control: if the Company pays a consideration to the combinee in
cash, by transferring non-cash assets or by assuming debts, the share of book value of its owners' equity in
the combinee in the consolidated financial statements of the ultimate controlling party shall be regarded,
on the merger date, as the initial investment cost of the long-term equity investment. If there is a difference
between the initial investment cost of the long-term equity investment and the total of book values of the
paid cash, transferred non-cash assets and of assumed debts as well as the face value of issued share, the
difference shall be used to adjust the share premium in the capital reserve; and if the share premium in the
capital reserve is insufficient to be offset, retained earnings shall be adjusted.
In case the Company can exercise control over the investee under common control for additional
investment or other reasons, the initial investment cost of long-term equity investments is recognized at
the share of book value of net asset of the acquiree after the combination in the consolidated financial
statements of the ultimate controller on the combination date. The stock premium should be adjusted at the
difference between the initial investment cost of long-term equity investments on the combination date and
the book value of long-term equity investments before the combination plus the book value of
consideration paid for additional shares; if there is no sufficient stock premium for write-downs, the
retained earnings are adjusted.
Business combination not under the common control: the Company recognizes the combination cost
determined on the combination date as the initial cost of long-term equity investments. Where the
Company can control the investee not under common control from additional investments, the initial
investment cost should be changed to be accounted for under the cost method and recognized at the sum of
the book value of equity investments originally held and newly increased investment cost. Under business
combination not under the common control, the auditing, legal services, consulting and other intermediary
fees and other related administrative expenses for business combination will be included into current profit
and loss upon occurrence; the transaction costs for the issuance of equity securities or debt securities shall
be included into the initial recognition amount of equity securities or debt securities.
(2) Long-term equity investments obtained by other means
For long-term equity investments acquired from making payments in cash, the initial cost is the actually
paid purchase cost.
For long-term equity investments acquired from issuance of equity securities, the initial investment cost is
the fair value of the issued equity securities.
21
If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out
and traded in can be measured reliably, the initial cost of long-term equity investment traded in with
non-monetary assets are determined based on the fair values of the assets traded out and the relevant taxes
and surcharges payable unless there is any conclusive evidence that the fair values of the assets traded in
are more reliable; if the exchange of non-monetary assets does not meet the above criteria, the book value
of the assets traded out and the relevant taxes and surcharges payable are recognized as the initial cost of
long-term equity investment traded in.
For long-term equity investment acquired from debt restructuring, the initial cost is determined based on
the fair value.
3.11.3. Subsequent measurements and recognition of gain or loss
(1) Long-term equity investment under cost method
Long-term equity investments in subsidiaries are accounted for under the cost method. Except for the
actual price paid for acquisition of investment or the cash dividends or profits contained in the
consideration which have been declared but not yet distributed, the Company recognizes the investment
income in the current year at the cash dividends or profits declared by the investee.
(2) Long-term equity investment accounted for in the equity method
The Company's long-term equity investments in associates and joint ventures are accounted for by using
the equity method. If the initial cost is more than the share of the fair value of the investee' identifiable net
asset to which the Company shall be entitled when investing, the initial cost of the long-term equity
investment will not be adjusted. If the initial cost of a long-term equity investment is less than the share of
the fair value of the investee's identifiable net asset to which the Company shall be entitled when investing,
the difference shall be included in the current profit or loss.
The Company respectively recognizes the investment income and other comprehensive income according
to the shares of net profit or loss and other comprehensive income realized by the investee that should
enjoyed or assumed by the Company, and adjusts the book value of long-term equity investment;
according to the profit declared to be distributed by the investee or the part shall be enjoyed cash dividends
calculation, to reduce the book value of long-term equity investment correspondingly; for other changesin
owners' equity excepting for ex all profit or loss of the investee, other comprehensive income and profit
distribution, the book value of long-term equity investment shall be adjusted and included in the owners'
equity.
When recognizing the share of net profit or loss of the investee that the Company shall enjoy, based on fair
value of various identifiable assets and others of the investee on acquisition and according to accounting
policies and accounting periods of the Company, the Company shall recognize such share after making
adjustments to net profit of the investee. When holding the investment, the investee should prepare the
22
consolidated financial statements, it shall account for the investment income based on the net profit, other
comprehensive income and the changes in other owner's equity attributable to the investee.
The Company shall write off the part of incomes from internal unrealized transactions between the
Company and associates and joint ventures which are attributable to the Company according to the
corresponding ratio and recognize the profit and loss on investments on such basis. Where the losses from
internal transactions between the Company and the investee fall into the scope of assets impairment loss,
the full amount of such losses should be recognized. For transactions on investments or sales of assets
between the Company and associates and joint ventures, where such assets constitute business, they should
be accounted for according to the relevant policies.
When the Company recognizes its share of loss incurred to the investee, treatment shall be done in the
following sequence: firstly, the book value of the long-term equity investment shall be reduced; secondly,
where the book value thereof is insufficient to cover the share of losses, investment losses are recognized
to the extent of book value of other long-term equities which form net investment in the investee in
substance and the book value of long term receivables shall be reduced. Finally, after all the above
treatments, if the Company is still responsible for any additional liability in accordance with the provisions
stipulated in the investment contracts or agreements, provisions are recognized and included into current
investment loss according to the obligations estimated to undertake. An investing party shall recognize the
net loss incurred by the invested entity until the book value of the long-term equity investment and other
long-term interests which substantially form the net investment in the invested entity are reduced to zero,
unless the investing party is obliged to undertake extra losses. If the invested entity realizes any net profit
later, the investing party shall, after the amount of its attributable share of profits offsets its attributable
share of the unrecognized losses, resume recognizing its attributable share of profits.
(3) Disposal of long-term equity investments
For disposal of long-term equity investments, the difference between the book value and the actual price
shall be included into the current profit or loss.
Where a long-term equity investment is accounted for under the equity method, accounting treatment
should be made on the part which is originally included in other comprehensive income according to
corresponding ratio by using the same basis for the investee to directly dispose of the relevant assets or
liabilities when the investments are disposed of. Owner's equity recognized from the investee's changes in
other owner's equity other than net profit or loss, other comprehensive income and profit distribution
should all transferred to the current profit and loss in proportion.
In case the joint control or significant influence over the investee is lost for disposing part of equity
investments or other reasons, the remaining equity will be changed to be accounted for according to the
23
recognition and measurement principles of financial instruments. The difference between the fair value
and the book value on the date of the loss of joint control or significant influence should be included in the
current profit and loss. As to other comprehensive income recognized based on measurement of the
original equity investment under the equity method, accounting treatment shall be made on the same basis
as would be required if the investee had directly disposed of the assets or liabilities related thereto when
measurement under the equity method is terminated. Owner's equity recognized from the investee's
changes in other owner's equity other than net profit or loss, other comprehensive income and profit
distribution should all transferred to the current profit and loss when the equity method confirmed is no
longer adopted.
Where the Company loses the control over the investee due to disposal of partial equity investments or
other reasons, when it prepares separate financial statements, the remaining equity after disposal that can
jointly control or have significant influence on the investee will be measured at the equity method, and the
remaining equity should be deemed to have been adjusted at equity method on acquisition;
If the remaining equity after disposal cannot exercise joint control or significant influence on the investee,
such investments should be accounted for according to the provisions on the recognition and measurement
of financial instruments and the difference between fair value and book value on the date of loss of the
control should be included in the current profit and loss.
Where the disposed equities are acquired by the enterprise combination due to the reasons such as
additional investment, the remaining equities after the disposal are calculated based on the cost method or
equity method in preparing the individual financial statements, and other comprehensive income and other
owners' equity recognized because of the equity method adopted for the calculation of the equity
investment held prior to the purchase date are carried forward in proportion; the remaining equities after
the disposal are changed to be made in accordance with the relevant provisions in the recognition and
measurement criteria of financial instruments while other comprehensive income and other owners' equity
are carried forward in full.
3.12 Investment property
Measurement mode
Measured by cost method
Depreciation or amortization method
Investment properties are properties to earn rentals or for capital appreciation or both. Examples include
land leased out under operating leases, land held for long-term capital appreciation, buildings leased out
under operating leases, (including buildings that have been constructed or developed for future lease out
under operating leases, and buildings that are being constructed or developed for future lease out under
operating leases).
24
The Company measures the existing investment properties by using the cost model. For investment
property measured by using the cost model, the buildings for lease shall be depreciated by using policies
the same as used for fixed assets of the Company, and the land use rights for lease shall be amortized by
using the same policies as applicable to intangible assets.
3.13 Fixed assets
3.13.1 Recognition criteria of fixed assets
Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services,
renting or business management with useful lives exceeding one year. Fixed assets are recognized when
they simultaneously meet the following conditions:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company;
and
(2) The costs of the fixed asset can be measured reliably.
3.13.2 Depreciation method of fixed assets
Year for Residual Yearly depreciation
Asset type Depreciation method
depreciation value rate rate
Houses and buildings Straight-line method 20-40 5 4.75-2.37
Mechanical equipment Straight-line method 8-20 5 11.87-4.75
Entertainment equipment Straight-line method 5-16 5 19-5.93
Transportation
Straight-line method 7-12 5 13.57-7.91
equipment
3.14 Construction in progress
The book-entry values of the fixed assets are stated at total expenditures incurred before reaching working
condition for their intended use. For construction in progress that has reached working conditions for its
intended use but for which the completion of settlement has not been handled, it shall be transferred into
fixed assets at the estimated value according to the project budget, construction price or actual cost, etc.
from the date when it reaches the working conditions for its intended use. The fixed assets shall be
depreciated in accordance with the Company’s policy on fixed asset depreciation. Adjustment shall be
made to the originally and provisionally estimated value based on the actual cost after the completion of
settlement is handled, but depreciation already provided will not be adjusted.
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3.15 Borrowing costs
3.15.1. Recognition principles of capitalization of borrowing costs
Borrowing costs include the interest of borrowings, the amortization of discount or premium, auxiliary
expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction
or production of assets eligible for capitalization should be capitalized and recorded into relevant asset
costs; other borrowing costs should be recognized as costs according to the amount incurred and be
included into the current profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets
which may reach their intended use or sale status only after long-time acquisition and construction or
production activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
(1) Asset disbursements, which include those incurred by cash payment, the transfer of non-cash assets
or the undertaking of interest-bearing debts for acquiring and constructing or producing assets eligible for
capitalization, have already been incurred;
(2) Borrowing costs have already been incurred;
(3) Purchase, construction or manufacturing activities that are necessary to prepare the assets for their
intended use are in progress.
3.15.2. Capitalization period of borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its
cessation; period of suspension for capitalization is excluded.
Capitalization of borrowing costs should cease when the acquired and constructed or produced assets
eligible for capitalization have reached the working condition for their intended use or sale.
When some projects among the acquired and constructed or produced assets eligible for capitalization are
completed and can be used separately, the capitalization of borrowing costs of such projects should be
ceased.
If all parts of the acquired and constructed or produced assets are completed but the assets cannot be used
or sold externally until overall completion, the capitalization of borrowing costs should be ceased at the
time of overall completion of the said assets.
3.15.3. Period of suspension for capitalization
If the acquisition and construction or production activities of assets eligible for capitalization are
abnormally interrupted and such condition lasts for more than three months, the capitalization of
borrowing costs should be suspended; if the interruption is necessary procedures for the acquired,
constructed or produced assets eligible for capitalization to reach the working conditions for its intended
use or sale, the borrowing costs continue to be capitalized. Borrowing costs incurred during the
interruption are recognized as the current profit and loss and continue to be capitalized until the acquisition,
construction or production of the asset restarts.
26
3.15.4. Calculation of capitalization amount of borrowing costs
As for special borrowings borrowed for acquiring and constructing or producing assets eligible for
capitalization, borrowing costs of special borrowing actually incurred in the current period less the interest
income of the borrowings unused and deposited in bank or return on temporary investment should be
recognized as the capitalization amount of borrowing costs.
As for general borrowings used for acquiring and constructing or producing assets eligible for
capitalization, the interest of general borrowings to be capitalized should be calculated by multiplying the
weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special
borrowings at end of each month by the capitalization rate of used general borrowings. The capitalization
rate is calculated by weighted average interest rate of general borrowings.
As for borrowings with discount or premium, the to-be-amortized discount or premium in each accounting
period should be recognized by effective interest rate method, and the interest for each period should be
adjusted.
3.16 Intangible assets
3.16.1．Valuation method of intangible assets
(1) The Company initially measures intangible assets at cost on acquisition;
The costs of externally purchased intangible assets include purchase prices, relevant taxes and surcharges
and other directly attributable expenditures incurred to prepare the assets for their intended use. If the
payment for an intangible asset is delayed beyond the normal credit conditions and it is of the financing
nature, the cost of the intangible asset shall be determined on the basis of the current value of the purchase
price.
For an intangible asset obtained in debt restructuring by a debtor for the settlement of relevant liability, the
book-entry value shall be initially recognized based on the fair value of the intangible asset. Difference
between the book value of restructured debts and the fair value of the intangible asset used for debt off-set
shall be included in the current profit or loss;
On the premise that non-monetary assets trade is of commercial nature and the fair value of the assets
traded in or out can be measured reliably, the intangible assets traded in with non-monetary assets should
be recognized at the fair value of the assets traded out, unless any unambiguous evidence indicates that the
fair value of the assets traded in is more reliable; as to the non-monetary assets trade not meeting the
aforesaid premise, the book value of the assets traded out and related taxes and surcharges payable should
be recognized as the cost of the intangible assets, with gains or losses not recognized.
For intangible assets acquired from business combination under common control, the initial book value are
initially recognized at the book value of the combinee; for intangible assets acquired from business
combination not under common control, the initial book value are initially recognized at the fair value.
Costs of intangible assets developed internally and independently include: the costs of materials and labor
services used to develop the intangible assets, the registration fee, the amortization of other patents and
franchise used in the process of development, the interest expenses meeting the condition for capitalization,
and other direct expenses for preparing the intangible assets for their intended use.
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(2) Subsequent measurement
The useful lives of the intangible assets are analyzed and determined on their acquisition.
For intangible assets with definite useful lives, the Company shall adopt the straight-line method for
amortization within the period during which they can bring economic benefits to the Company; where the
period during which they can bring economic benefits to the Company cannot be forecast, those intangible
assets shall be deemed as assets with indefinite lives and no amortization will be made.
3.16.2. Estimates of useful lives of intangible assets with definite useful lives
Item Estimated useful lives Basis
Land use rights 50 years Use term for the land use
right title
3.16.3. Judgment basis for intangible assets with indefinite useful lives
As at the balance sheet date, the Company has no intangible assets with indefinite useful lives.
3.17 Impairment of long-term assets
For the long-term equity investments, investment properties, fixed assets, construction in progress,
intangible assets, and other long-term assets measured at cost model, if there are signs of impairment, an
impairment test will be conducted on the balance sheet date. If impairment test results indicate that the
recoverable amounts of the assets are lower than their book value, the provision for impairment is made
based on the differences, which are recognized as impairment losses. The recoverable amounts of
intangible assets are the higher of their fair values less costs to sell and the present values of the future
cash flows expected to be derived from the assets. The assets impairment provision is calculated and made
on an individual basis. If it is difficult for the Company to estimate the recoverable amount of the
individual asset, the recoverable amount of an asset group to which the said asset belongs to will be
determined. Asset group is the minimum combination of assets that can independently generate cash
inflows.
After the losses from asset impairment are recognized, they are not reversed in subsequent periods.
3.18 Long-term deferred expenses
Long-term deferred expenses refer to various expenses which have been already incurred but will be born
in the reporting period and in the future with an amortization period of over one year.
3.18.1. Amortization method
Long-term deferred expenses are evenly amortized over the beneficial period
3.18.2. Amortization period
Item Amortization period
Hotel exterior decoration 4-year
Fire stairs renovation 4-year
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C FLOOR ROOM RENOVATION 5-year
Villa renovation 5-year
Swimming pool renovation 5-year
3.19 Employee compensation
3.19.1 Accounting method for short-term compensation
During the accounting period when employees serve the Company, the actual short-term compensation is
recognized as liabilities and included in current profit and loss or costs associated with assets.
The appropriate amount of employee compensation payable will be determined during the accounting
period when the employees provide services for the Company based on the medical insurance, work injury
insurance and maternity insurance and other social insurance and housing fund paid by the Company for
employees, as well as trade union funds and employee education funds withdrawn according to provisions
at the accrual basis and accrual ratio.
The employee benefits in the non-monetary form shall be measured at fair value.
3.19.2 Accounting method for post-employment benefits
The Company will pay basic old-age insurance and unemployment insurance in accordance with relevant
provisions of the local government for employees. During the accounting period when they provide
services for the Company, the amount payable will be calculated at the basis and proportion specified by
local authorities, recognized as a liability and charged into current profit and loss or costs associated with
assets.
3.19.3 Accounting method for dismiss welfare
Where the Company cannot unilaterally withdraw the dismissal welfare offered in view of the cancellation
of the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to the restructuring
involving the payment of dismissal welfare (whichever is earlier), the employee compensation arising
from the dismissal welfare should be recognized as the liabilities and charged to the current profit or loss.
3.20 Estimated liabilities
When the Company is involved in litigation, debt guarantees, loss-making contract, reorganization matters,
if such matters are likely to be satisfied by delivery of assets or provision of services in the future and the
amount can be measured reliably, they shall be recognized as estimated liabilities.
3.20.1. Recognition criteria for estimated liabilities
When an obligation relating to a contingency meets all the following conditions at the same time, it is
recognized as an estimated liability:
(1) Such obligation is a present obligation of the Company;
(2) The performance of such obligation may well cause outflows of economic benefits from the
Company; and
(3) The amount of such obligation can be measured reliably.
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3.20.2. Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required
for the performance of relevant present obligations.
When the Company determines the best estimate, it should have a comprehensive consideration of risks
with respect to contingencies, uncertainties and the time value of money. If the time value of money is
significant, the best estimates will be determined after discount of relevant future cash outflows.
The best estimates shall be treated as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all
the outcomes within this range are equal, the best estimates will be determined at the average amount of
upper and lower limits within the range.
If there is no continuous range (or interval) for the necessary expenses, or probabilities of occurrence of all
the outcomes within this range are unequal despite such a range exists, in case that the contingency
involves a single item, the best estimate shall be determined at the most likely outcome; if the contingency
involves two or more items, the best estimate should be determined according to all the possible outcomes
with their relevant probabilities.
When all or part of the expenses necessary for the settlement of estimated liabilities of the Company are
expected to be compensated by a third party, the compensation shall be separately recognized as an asset
only when it is virtually certain to be received. The compensation recognized shall not exceed the book
value of the estimated liabilities.
3.21. Revenue
3.20.1. Recognition and measurement principles for revenues from sale of goods
(1) General recognition and measurement principles for revenue from sales of goods
Income from sales of goods is recognized when the Company has transferred to the buyer the significant
risks and rewards of ownership of the goods; the Company retains neither continuous management rights
associated with ownership of the goods sold nor effective control over the goods sold; the relevant amount
of income can be measured reliably; it is highly likely that the economic benefits associated with the
transaction will flow into the Company; and the relevant amount of cost incurred or to be incurred can be
measured reliably.
(2) Recognition criteria and time of revenue from sale of goods of the Company
In the provision of hotel housing services at the same time, the Company provides goods to customers and
will prepare daily sales list after confirming with the Rooms Department and the hotel front desk. Based
on the sales list, the finance department confirms that the major risks and rewards of ownership of the
goods have been transferred to the customer and then the sales revenue is recognized.
3.20.2. Recognition and measurement principles of revenue from rendering of service
(1) For the hotel rooms, catering (breakfast) and other services to be provided by the Company, after
they are provided, and the Company checks with the sales department and the front check, the Company
will prepare the daily sales reports and accounts receivable list to the finance department, which will
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review the same, after which, the revenue will be recognized.
(2) For the revenue from restaurants and venues contracted out, they will be recognized in accordance
with the period stipulated in the contract or agreement and the collection timing.
3.20.3. Recognition basis for revenue from transfer of right to use assets
When the economic benefit related to the transaction is probably to flow into the Company and the
relevant revenue can be reliably measured, the revenue from transfer of the asset use right is determined as
follows: the revenue from transferring use right of assets shall be recognized based on the following
circumstances:
(1) The amount of interest income is determined based on the time and effective interest rate for others
to use the monetary funds of the Company.
(2) The amount of revenue from usage is determined based on the charging time and method as agreed
in relevant contract or agreement.
3.22 Government subsidies
3.22.1 Judgment criteria and accounting method for government subsidies related to assets
Set off the book value of related assets or be recognized as deferred income. Government subsidies related
to assets are recognized as deferred income to be evenly distributed over the useful lives of the relevant
assets and shall be recorded in current profit or loss by stages in a reasonable and systematic manner.
Government subsidies measured in nominal amounts, are directly included in current profits and losses.
Where relevant assets are sold, transferred, scraped or damaged before the end of their lives, balance of
the unallocated deferred income is transferred to the current profit and loss on asset disposal.
3.22.2 Judgment criteria and accounting method for government subsidies related to income
1) To be used as compensation for future costs, expenses or losses are recognized as deferred income
and are recorded in current profits and losses or used to write off the related costs where the relevant costs,
expenses or losses are recognized.
2) To be used to compensate the related costs, expenses or losses incurred by the Company are
directly included in current profit and loss or used to write off the related costs.
3) Accounting treatment will be conducted for government subsidies that at the same time include
those associated with assets and income by different parts: if it is difficult to distinguish, they will be
deemed as government subsidies associated with income.
3.23. Major accounting policies and estimtes changes
The Company’s major accounting policies and estimtes have no changes in the period
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4. Taxation
Major tax types and tax rates applicable to the Company
Taxation type Basis of tax assessment Tax rate
Output VAT is calculated based on taxable sales revenue
and service revenue calculated in accordance with tax
Value added tax
laws and VAT payable or taxable sales revenue shall be 5%, 6%, 11%, 17%
(VAT)
the difference after deducting the input VAT deductible
in the same period
Urban
maintenance and Levied based on VAT payable 7%
construction tax
Education surtax Levied based on VAT payable 3%
Local educational
Levied based on VAT payable 2%
surcharge
Remaining value after deducting 30% from the original
Housing property
value of the house (including the occupied land price) 1.2%、12%
tax
and rental income
Land use tax Land area
Enterprise income
Levied based on taxable income 25%
tax
5. Notes to the items of financial statements
(The monetary unit refers to RMB/CNY unless specified)
5.1 Monetary fund
Item Ending balance Beginning balance
Stock cash 383,507.23 264,156.33
Bank Deposit 3,368,151.41 9,417,450.83
Other monetary fund 7,000,000.00
Total 10,751,658.64 9,681,607.16
Other notes: The closing balance is unsecured, unfrozen or doesn’t have other restrictions on realization or the
32
funds deposit in the overseas, or have potential recovery risks.
5.2 Accounts receivable
5.2.1 Accounts receivable by type
Ending balance Beginning balance
Provision for Provision for
Book balance Book balance
bad debts bad debts
Type
Pro Book Pro Book
Accru Value Accru Value
port port
Amount Amount al Amount Amount al
ion ratio ion ratio
% %
Accounts
receivable with
significant
single amount
subject to
provision for
bad debts on a
single basis
Accounts
receivable with
68,520.2 68,520.2 594,130.8
provision for 334,756.76 100 20.47 266,236.51 662,651.14 100 10.34
5 5 9
bad debts based
on portfolios
Accounts
receivable with
insignificant
single amount but
accrued for
provision of bad
debt on a single
basis
68,520.2 68,520.2 594,130.8
Total 334,756.76 100 20.47 266,236.51 662,651.14 100 10.34
5 5 9
Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio:
Aging Ending balance
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Accounts Provision for Proportion of
receivable bad debts provision
Within 1 year 244,368.96
1-2 years 785.00 39.25 5.00%
2-3 years 18,633.00 2,794.95 15.00%
3-4 years 3,397.00 849.25 25.00%
4-5 years 5,472.00 2,736.00 50.00%
More than five years 62,100.80 62,100.80 100.00%
Total 334,756.76 68,520.25 20.47%
5.2.2 Top five accounts receivable
Relationship Proportion in
Name with the Book balance Aging total accounts
receivable (%)
Company
Shanghai Hitz International Travel Non related
96,490.00 Within 1 year 28.82%
Agency Co., Ltd. party
Non related
Luoniushan Co., Ltd. party by 65,420.00 Within 1 year 19.54%
combination
Non related More than five
Guangzhou Design Institute 38,980.00 11.64%
party years
Beijing Tongcheng Huading International Non related
35,479.00 Within 1 year 10.60%
Travel Agency Co., Ltd. party
Non related
Tianjin Watermelon Tourism Co., Ltd. 33,104.96 Within 1 year 9.89%
party
Total 269,473.96 80.50%
5.3 Prepayments
5.3.1 Aging analysis of repayment
Ending balance Beginning balance
Aging
Amount Proportion Amount Proportion
Within 1 year 43,206.84 100.00% 49,530.21 100.00%
Total 43,206.84 100.00% 49,530.21 100.00%
5.3.2 Top five prepayment collected by objects at ending balance
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Proportion in total
Unit Ending balance
prepayment (%)
18,322.73 42.41
Sunshine Property Insurance Co., LTD Hainan Branch
12,103.50 28.01
China Petrochemical Marketing Co. Ltd Sanya Branch
China Post Group Corporation Sanya Branch 5,400.00 12.50
Sanya Daily Office 4,864.87 11.26
Hangzhou XR Information Technology Co., Ltd. 2,515.74 5.82
Total 43,206.84 100.00
5.4 Other receivables
5.4.1 Other receivables by type:
Ending balance Beginning balance
Provision for Provision for
Book balance Book balance
bad debts bad debts
Type
Pro Book Pro Book
Accru Value Accru Value
port port
Amount Amount al Amount Amount al
ion ratio ion ratio
% %
Other
receivables with
significant
single amount
and individual
allowance for
bad debts
Other
receivables with
21,147.9 21,147.9 139,561.2
provision for 821,284.34 100 2.57 800,136.44 160,709.19 100 13.16
0 0 9
bad debts based
on portfolio
Other
receivables with
insignificant
single amount
but accrued for
provision of bad
debt on a single
basis
35
21,147.9 21,147.9 139,561.2
Total 821,284.34 100 2.57 800,136.44 160,709.19 100 13.16
0 0 9
Other receivables with provision for bad debts made by aging analysis method in portfolios:
Ending balance
Aging Account Provision for Provision
receivables bad debt proportion
Within 1 year 799,686.44
1-2 years
2-3 years
3-4 years 600.00 150.00 25.00%
4-5 years
Over 5 years 20,997.90 20,997.90 100.00%
Total 821,284.34 21,147.90
5.4.2 Classification of other receivables by the nature of payment
Nature of Payment Ending book balance Beginning book balance
Guarantee deposit 600.00 600.00
Pretty cash 20,000.00 49,281.48
Utilities 197,820.63 70,809.03
Personal social security, Accumulation fund 28,120.04 40,018.68
Staff borrowings 288,543.31
Sun Hongjie 286,200.36
Total 821,284.34 160,709.19
5.4.3 Top five other account receivables collected by arrears party at ending balance
Ending
Proportio balanc
n in total e of
Company name Nature of money Ending balance Aging other bad
receivabl debt
es provisi
on
Sun Hongjie Advance 286,200.36 1 年以内 34.85%
36
payment
Advance
Wen Ping 185,292.04 1 年以内 22.56%
payment
Hainan Hangpai Catering Co., Ltd. Utilities 110,620.65 1 年以内 13.47%
Staff borrowings
Yang Yunhui ready for 65,525.00 1 年以内 7.98%
settlement
Peng Guoxing Utilities 54,649.64 1 年以内 6.65%
Total 702,287.69 85.51%
5.5 Inventories
5.5.1 Classification of inventories
Ending balance Beginning balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserve reserve
Stock materials 925,333.68 735,181.58 190,152.10 880,621.58 735,181.58 145,440.00
Stock commodities 22,771.38 11,102.41 11,668.97 22,771.38 11,102.41 11,668.97
Food and beverages 38,544.22 38,544.22 45,640.74 45,640.74
Fuels 24,255.40 24,255.40 24,255.40 24,255.40
Total 1,010,904.68 746,283.99 264,620.69 973,289.10 746,283.99 227,005.11
5.5.2 Inventory depreciation reserve
Increased in the period Decrease in the Period
Beginning Ending
Item Reversal or
balance Withdrawing Other Other balance
Write-off
Raw material 735,181.58 735,181.58
Stock commodities 11,102.41 11,102.41
Total 746,283.99 746,283.99
5.6 Non-current assets maturing within one year
Item Ending balance Beginning balance
Long-term deferred expenses needed to be amortized
716,972.51 1,173,597.68
within one year
Total 716,972.51 1,173,597.68
37
5.7 Other current assets
Item Ending balance Beginning balance
Prepay corporate income tax 1,702,702.80 1,702,702.80
Pending deducted VAT on purchase 492,996.74 255,160.76
Total 2,195,699.54 1,957,863.56
5.7 Long-term equity investments
Changes (+,-)
Other Accr Ending
Gain/los
compr ual balance
Begin s of Cash
Negat ehensi Other of of
ning investme dividend Ot Ending
Investee Additional ive ve equity impa impair
balanc nt or profit he balance
investment invest incom chang irme ment
e recogniz distribute r
ment e es nt provisi
ed by d
adjust provi on
Equity
ment sion
Hainan
Wengao
Tourism 1,000,000.0
1,000,000.00
Resources 0
Development
Co., Ltd.
1,000,000.0
Total 1,000,000.00
0
38
5.8 Investment real estate
Houses and
Item Land use right Total
buildings
I. Original book value:
1. Beginning balance 18,856,504.44 5,662,740.59 24,519,245.03
2. Increase in Period
3. Decrease in Period
4. Ending balance 18,856,504.44 5,662,740.59 24,519,245.03
II. Accumulated depreciation and accumulated
amortization
1. Beginning balance 10,189,399.98 2,163,386.45 12,352,786.43
2. Increase in Period 209,091.78 28,170.00 237,261.78
(1) Withdraw or amortize 209,091.78 28,170.00 237,261.78
4. Ending balance 10,398,491.76 2,191,556.45 12,590,048.21
III. Depreciation reserve
1. Beginning balance 1,404,400.47 1,903,054.14 3,307,454.61
2. Increase in Period
3. Decrease in Period
4. Ending balance 1,404,400.47 1,903,054.14 3,307,454.61
IV．Book value
1. Book value at the end of the period 7,053,612.21 1,568,130.00 8,621,742.21
2. Book value at the beginning of the period 7,262,703.99 1,596,300.00 8,859,003.99
39
5.9 Fixed assets
Buildings and Electronic
Item Machines Vehicles Others Total
Constructions Equipments
I. Original book
value:
1.Beginning 136,789,501. 13,279,932.5 157,097,840.8
2,345,074.91 2,623,443.45 2,059,888.17
balance 82 4 9
2. Increase in
3,200.00 274,545.79 111,006.47 388,752.26
Period
(1) Purchase 3,200.00 274,545.79 111,006.47 388,752.26
3. Decrease in
12,800.00 12,800.00
Period
(1) Disposal
12,800.00 12,800.00
or scrap
136,789,501. 13,283,132.5 157,473,793.1
4.Ending balance 2,345,074.91 2,885,189.24 2,170,894.64
82 4 5
II. Accumulated
depreciation
1.Beginning 70,320,351.5
9,371,050.71 1,415,798.92 2,012,775.79 1,288,515.64 84,408,492.63
balance 7
2. Increase in
1,066,369.14 144,249.45 85,613.46 81,819.17 81,732.50 1,459,783.72
Period
(1) Withdraw 1,066,369.14 144,249.45 85,613.46 81,819.17 81,732.50 1,459,783.72
3. Decrease in
12,322.02 12,322.02
Period
(1) Disposal
12,322.02 12,322.02
or scrap
71,386,720.7
4.Ending balance 9,515,300.16 1,501,412.38 2,082,272.94 1,370,248.14 85,855,954.33
1
III．Depreciation
reserve
1.Beginning 31,072,788.1
2,527,851.26 33,600,639.43
balance 7
2. Increase in Period
3. Decrease in
40
Period
31,072,788.1
4.Ending balance 2,527,851.26 33,600,639.43
7
IV．Book value
(1) Book value at the 34,329,992.9
1,239,981.12 843,662.53 802,916.30 800,646.50 38,017,199.39
end of the period 4
(2) Book value at the
35,396,362.0
beginning of the 1,381,030.57 929,275.99 610,667.66 771,372.53 39,088,708.83
8
period
5.10 Intangible assets
Item Land use right Patent Total
I. Original book value
81,653,137.15 81,653,137.15
1. Beginning balance
2. Increase in the period
（1）purchasing
（2）internal R&D
（3）increased for enterprise combined
3. Decrease in the period
（1）disposal
4. Ending balance 81,653,137.15 81,653,137.15
II. Accumulated amortization
31,194,664.11 31,194,664.11
1. Beginning balance
406,193.58 406,193.58
2. Increase in the period
（1）accrual 406,193.58 406,193.58
3. Decrease in the period
41
（1）disposal
4. Ending balance 31,600,857.69 31,600,857.69
III. Depreciation reserve
27,440,836.84 27,440,836.84
1. Beginning balance
2. Increase in the period
（1）accrual
3. Decrease in the period
（1）disposal
4. Ending balance 27,440,836.84 27,440,836.84
IV. Booking value
22,611,442.62 22,611,442.62
1. Ending book value
23,017,636.20 23,017,636.20
2. Beginning book value
5.11 Long-term deferred expenses
Increase in Amortization in Other decreased
Item Beginning balance Ending balance
amount
Period Period
Hotel exterior wall
486,974.55 486,974.55
coating project
Fire staircase
45,695.16 45,695.16
renovation
Swimming pool
224,969.28 224,969.28
renovation
Guest room
renovation in C 721,297.31 721,297.31
building
Villa renovation 1,199,080.58 1,199,080.58
Total 2,678,016.88 2,678,016.88
42
5.12 Accounts payable
Item Ending balance Beginning balance
Inventory temporary warehousing 700,275.98 738,044.28
Sanya Yunwang Food Distribution Co., Ltd. 449,301.47 743,186.25
Hainan Huanyu Decoration Design Engineering Co.,
134,274.10 134,274.10
Ltd.
Sanya Zhengzhuang Industrial Co., Ltd. 111,340.86 115,247.50
Sanya Sino French Water 56,002.63 47,698.36
Other 66,274.13 248,420.63
Over 3 years 134,301.14 134,301.14
Total 1,651,770.31 2,161,172.26
5.13 Accounts received in advance
5.13.1 Accounts received in advance
Item Ending balance Beginning balance
Housing & catering charge 1,057,513.07 1,271,174.12
Total 1,057,513.07 1,271,174.12
5.13.2 Accounts received in advance with major amount and aging of over one year
Item Ending balance Beginning balance
Guangzhou South Holiday International Travel Service
101,244.00 No settlement
Co., Ltd. Sanya Branch
PEGAS Zheng Qingbo 32,243.02 No settlement
Hainan QiongZhong Ecological Investment Guarantee
27,519.00 No settlement
Co., Ltd.
Sanya Public Security Fire Control Team 19,420.88 No settlement
Project department of Tianhong Group Wuzhizhou 9,894.00 No settlement
Total 190,320.90
5.14 Employee compensation payable
5.14.1 Classification of employee compensation payable
43
Beginning Increase in Decrease in
Item Ending balance
balance
Period Period
1. Short-term employee benefits 2,459,015.93 6,463,131.41 6,937,683.99 1,984,463.35
2. Post-employment benefits - defined
499,680.13 499,680.13
contribution plans
3. Termination benefits
4. Other benefits due within one year
Total 2,459,015.93 6,962,811.54 7,437,364.12 1,984,463.35
5.14.2 Short-term employee benefits
Beginning Increase in Decrease in
Item Ending balance
balance
Period Period
1.Salary, bonus, allowance and subsidy 1,479,102.46 5,272,790.73 5,774,948.39 976,944.80
2.Employee welfare 714,640.46 714,640.46
3.Social insurance premium 224,827.47 224,827.47
Of which: including: medical
204,995.27 204,995.27
insurance expenses
Work injury insurance expenses 7,021.13 7,021.13
Maternity insurance 12,811.07 12,811.07
4.Housing provident funds 78,478.00 65,620.00 12,858.00
5.Labor union expenditures and
979,913.47 172,394.75 157,647.67 994,660.55
employee education expenses
6.Short-term paid absences
7. Short-term profit sharing plan
Total 2,459,015.93 6,463,131.41 6,937,683.99 1,984,463.35
5.14.3 Details of defined contribution plans
Beginning Increase in Decrease in
Item Ending balance
balance Period Period
1.Basic endowment insurance
486,869.06 486,869.06
expenses
2.Unemployment insurance expenses 12,811.07 12,811.07
44
Total 499,680.13 499,680.13
5.15Tax payable
Item Ending balance Beginning balance
VAT 147,972.15 222,989.34
Individual income tax -0.01
Urban maintenance and construction tax 839.27 7,782.70
Educational surtax 359.68 3,335.43
Local educational surtax 239.80 2,223.64
Security for disabled person 19,245.72
Land use tax 108,590.91 108,590.91
Property tax 194,101.74 194,101.74
Total 471,349.26 539,023.76
5.16 Other payables
5.16.1 Other payables by fund quality
Item Ending balance Beginning balance
Margin 868,000.00 711,046.99
Rental of staff dormitory 528,000.00 521,534.64
Audit fee 285,003.21 285,003.21
Engineering quality retention money 123,029.67 193,066.10
Staff deposit 86,520.00 166,200.90
Project funds 331,111.03 162,569.78
Collection and payment 68,346.68 100,036.07
Pretty cash 28,446.80
Phone charge withholding 20,472.00 20,700.00
Personal fund accounts 1,364.00
Announcement charge withholding 441,208.10 221,208.10
45
Other 142,880.87
Total 2,894,571.56 2,411,176.59
5.16.2 Other payables with large amount and aging of over one year
Reason for
Item Ending balance non-repayment/ carried
forward
Hong Kong Deloitte & Touche LLP 285,003.21 No settlement
Sanya Shuxin Building Waterproofing Co. Ltd 170,000.00 No settlement
China Building Decoration Company Hannan Branch 161,111.03 No settlement
Total 616,114.24
5.17 Estimates liabilities
Item Ending balance Beginning balance Cause
Offering guarantee external
Pending action
Accrual the un-payment
Other 1,489,685.04 1,489,685.04
electricity account
Total 1,489,685.04 1,489,685.04
Other note:
On May 26,2016，the Company received lawyer’s letter of Hainan Yunfan law firm which is entrusted by
Hainan Power Grid Co., LTD Sanya Power Supply Bureau (hereinafter referred to as the "Sanya Power Supply
Bureau"), the letter claims that Sanya Power Supply Bureau found that the Company’s subsidiary South China
Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd’s the amount of CT is different with its
marketing management system record. The inconformity time is July, 2006, and the hotel’s CT is changing on
April, 2016. Therefore, undercounted electricity consumption amount is 10,313,373.00 kilowatt-hours, and
estimated cost is 7,200,165.75 Yuan as various electricity prices and charges.
46
According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute between South China
Grand Hotel and Sanya Power Supply Bureau” issued by Beijing Junhe (Haikou) Law Firm on December 20,
2016, which claims that Sanya Power Supply Bureau has responsibility for CT to purchase, install, enseal,
unseal and change, therefore, the responsibility of the guilty party for undercounted electricity consumption of
South China Grand Hotel is Sanya Power Supply Bureau. According to the one hundred and thirty-five item of
“General Rule of Civil Law”, this item claims that limitation of action is two years if accuser request people's
court’s protection, except situations provided by law. The Company has withheld the undercounted electricity
consumption cost in 2016 which is about 1,489,685.04 Yuan during the period from April, 2014 to April, 2016.
5.18 Share capital
Increase or decrease (＋, －)
Share capital
Shares
Item Beginning balance converted Other Sub-tot Ending balance
New issue grante
from reserve s al
d
fund
Total share capital 364,100,000.00 364,100,000.00
5.19 Capital reserves
Beginning Increase in Decrease in
Item Ending balance
balance
Period Period
Capital (share capital) premium 33,336,215.58 33,336,215.58
Other capital reserves 20,806,634.43 20,806,634.43
Total 54,142,850.01 54,142,850.01
5.20 Undistributed profit
Item Current period Last period
Undistributed profits at the end of last year before
-341,107,435.91 -343,966,434.57
adjustment
Total undistributed profit at beginning of the adjustment
period (+ for increased, - for decreased)
Undistributed profits at the beginning of the year after
-341,107,435.91 -343,966,434.57
adjustment
Plus: net profit attributable to owner of parent company
1,282,165.58 1,719,253.80
in Period
47
Less: appropriation of statutory surplus reserves
Appropriation of discretionary surplus reserve
Appropriation of general risk reserve
Ordinary share dividends payable
Ordinary share dividends transferred to share
capital
Undistributed profits as at June 30, 2016 -339,825,270.33 -342,247,180.77
5.21 Operating income and operating cost
Current period Last period
Item
Income Cost Income Cost
Main business 14,615,148.37 5,762,801.58 13,518,444.89 5,018,862.48
Other business 1,558,780.95 237,261.78 1,577,828.53 237,250.03
Total 16,173,929.32 6,000,063.36 15,096,273.42 5,256,112.51
5.22 Business tax and surcharges
Item Current period Last period
Consumption tax
Urban maintenance and construction tax 37,515.65 52,296.64
Educational surtax 26,796.89 37,289.14
Property tax 431,174.78 441,630.64
Land use tax 217,181.82 217,184.65
Vehicle and vessel use tax 3,669.06 4,980.00
Stamp tax 182.70 863.20
Total 716,520.90 754,244.27
5.23 Selling expenses
Item Current period Last period
1,841,236.40 1,532,804.73
Staff wages and benefits
285,734.45 224,176.69
Social workers insurance expenses
48
Depreciation 256,486.12 245,942.02
Water and electricity fees 84,101.36 83,061.58
Repair charges 58,716.18 65,649.32
Other expenses 274,681.59 306,510.59
Total 2,800,956.10 2,458,144.93
5. 24 Administrative expenses
Item Current period Last period
Staff wages and benefits 2,809,454.64 2,630,309.99
266,303.18 325,482.11
Social workers insurance expenses
Business entertainment 496,075.07 402,028.00
Travel expenses 68,678.82 97,189.95
Amortization for the depreciation and land use right 550,590.01 552,843.49
Announcement fee and agency charge 656,245.72 640,800.00
Other 509,107.77 440,797.03
Total 5,356,455.21 5,089,450.57
5. 25 Financial expenses
Item Current period Last period
Handling charges 40,293.06 24,107.51
Less: interest income -22,729.87 -204,780.17
Total 17,563.19 -180,672.66
5.26 Non-operating income
Amount included in
Item Current period Last period current non-recurring
profits or losses
Other 273.00 260.00 273.00
Total 273.00 260.00 273.00
5.27. Non-operating expenditure
Amount included in
Item Current period Last period
current non-recurring
49
profits or losses
Loss from disposal of
477.98 -477.98
non-current assets
Total 477.98 -477.98
5.28. Notes to statement of cash flow
5.28.1 Other cash receipts related to operating activities
Item Current period Last period
Interest income 22,729.87 204,780.17
Other 661,422.77 472,635.21
Total 684,152.64 677,415.38
5.28.2 Cash paid for other operating activities
Item Current period Last period
Business entertainment expenses 497,075.07 402,028.00
Audit fee 400,000.00 400,000.00
Announcement fee 220,000.00 60,000.00
Traveling expenses 72,159.01 109,715.87
Promotion expenses 26,619.18 21,162.60
Repair charge 98,889.97 100,191.70
Directors and supervisors membership dues 354,000.00
Others 359,828.93 690,202.00
Total 1,674,572.16 2,137,300.17
5.28.3 Cash paid with other investment activities concerned
Item Current period Last period
Wuhan AEjia Co., Ltd. 9,000,000.00
Total 9,000,000.00
5.28.4 Cash received with other financing activities concerned
50
Item Current period Last period
LUONIUSHAN Group Co. Ltd. 19,810,000.00
Total 19,810,000.00
5.28.5 Cash paid with other financing activities concerned
Item Current period Last period
LUONIUSHAN Group Co. Ltd. 10,000,000.00
CSRC 19,810,000.00
Total 29,810,000.00
5.29 Supplementary information to statement of cash flows
5.29.1 Supplementary information to statement of cash flows
Supplementary information Current period Last period
(1) Net profit adjusted to cash flows from operating
-- --
activities
Net profit 1,282,165.58 1,719,253.80
Plus: provision for asset impairment
Depreciation of fixed assets, gas and oil assets and
1,799,584.50 1,591,987.78
productive biological assets
Amortization of intangible assets 434,363.58 434,363.58
Amortization of long-term deferred expenses 609,770.58 292,184.70
Loss on disposals of fixed assets, intangible assets and
other long-term assets
Loss on write-off of fixed assets ("-" for gains) 477.98
Losses from the changes in fair value ("-" for gains)
Financial expenses ("-" for gains)
Investments loss ("-" for gains)
Decrease in deferred income tax assets ("-" for increases)
Increase in deferred income tax liabilities ("-" for
decreases)
51
Decrease in inventories ("-" for increases) -37,615.58 -34,035.33
Decrease in operating receivables ("-" for increases) -326,357.40 159,732.97
Increase in operating payables ("-" for decreases) -651,711.64 -932,414.40
Others
Net cash flows from operating activities 3,110,677.60 3,231,073.10
2. Significant investing and financing activities not
-- --
involving cash receipts and payments
Conversion of debt into capital
Convertible corporate bonds maturing within one year
Fixed assets under financial lease
3. Net changes in cash and cash equivalents -- --
Ending balance of cash 10,751,658.64 10,108,175.91
Less: Beginning balance of cash 9,681,607.16 27,210,248.01
Plus: Ending balance of cash equivalents
Less: Beginning balance of cash equivalents
Net increase in cash and cash equivalents 1,070,051.48 -17,102,072.10
5.29.2 Breakdowns of cash and cash equivalents:
In RMB
Item Ending balance Beginning balance
1. Cash 10,751,658.64 9,681,607.16
Including: cash on hand 383,507.23 264,156.33
Bank deposit available for payment at any time 10,368,151.41 9,417,450.83
Other monetary funds available for payment at any time
Deposits in the central bank available for payment
Deposits with banks and other financial institutions
Loans to banks and other financial institutions
2. Cash equivalents
Including: Bond investment due within three months
52
3. Ending balance of cash and cash equivalents 10,751,658.64 9,681,607.16
6 . Business combination and consolidated financial statements
6.1 Scope of consolidation (aggregation) of financial statements
The scope of consolidation (aggregation) of financial statements covers the headquarter of the
Company and the subsidiary South China Grand Hotel of Hainan Dadonghai Tourism Center
(Holdings) Co., Ltd., which is subject to independent accounting.
6.2 Changes in scope of consolidation (aggregation) of financial statements:
There is no change in scope of consolidation (aggregation) of the financial statements of the
Company in the year.
7. Risks relating to financial instruments
The Company faces a variety of financial risks in business process: credit risk, market risk and liquidity
risk. The Company’s Board of Directors is overall responsible for risk management objectives and
determining policies, and bears the ultimate responsibility for risk management objectives and policies, but
the board has authorized the Company’s enterprise management department to design and executive the
procedure which could guarantee the effective implementation of risk management objectives and policies.
The Company’s internal auditors will audit the policies and procedures of risk management as well, and
will report the discovery to Audit Committee.
The overall objective of the Company’s risk management is to set the risk management policies to
reduce risks as possible without giving excessive influence to competitiveness and strain capacity of the
Company.
7.1.Credit risk
Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of
another party to meet its obligations. The Company mainly faces credit risk generated from
customers through credit sales. The Company will understand and assess the credit risk of the new
customer before signing the new contract. The Company makes credit rating for existing
53
customers and aging analysis of accounts receivable to ensure the Company’s overall credit risk
falls within a controllable range.
7.2 Market risk
Market risk is the risk of financial instruments’ fair value and future cash flow fluctuating due
to change of market price, including currency risk, interest risk and other pricing risk.
7.3 Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in
fulfilling the obligations when paying cash or settle in way of other financial assets. The
policy of the Company is to ensure there are enough cash to pay back mature debts. The
liquidity risk is centralized controlled by the Company’s accounting department. The
accounting department ensures the Company to possess enough cash to pay back the debts in
all reasonable foreseeable circumstances through monitor the balance of cash, monitor the
securities that can be converted into cash at any time and rolling forecasts of future cash
flows in twelve months.
8. Related parties and related party transactions
8.1. Parent company
Voting ratio
Shareholding
Registered
Registered Nature of in the
Parent company ratio in the
place Business Capital
Company
(RMB 0’000) Company (%)
(%)
Plant and
Luoniushan Co., Ltd. Haikou City 115,115.00 17.55% 19.80%
culturing
Note: As of 30 June 2018, Luoniushan Co., Ltd. (hereinafter referred to as Luoniushan) and its wholly-owned
subsidairy Hainan Ya’anju Property Service Co., Ltd. holds 72,091,780 shares of the Company under A-stock,
totally takes 19.80% in total share capital of the Compamy, and it is the first largest shareholder of the
Company.
8.2. Related party transactions
8.2.1 Transaction with goods purchasing ,labor service offering/receiving concerned
Contents of related
Related party The Period Last period
party transactions
Housing &
Luoniushan Co., Ltd. 176,779.00 252,303.00
catering costs
54
Total 176,779.00 252,303.00
2）Receivables and payables of related parties
Ending balance Beginning balance
Name Related party Bad debt Bad debt
Book balance Book balance
provision provision
Account receivable Luoniushan Co., Ltd. 65,420.00 166,412.00
9. Commitment and contingency
9.1 Important commitments
The Company has no commitmetns that need to disclosed up to balance sheet date
2. Contingencies
Major contingency on balance sheet date
On 26 May 2016, the Company received lawyer’s letter of Hainan Yunfan law firm which is entrusted by
Hainan Power Grid Co., LTD Sanya Power Supply Bureau (hereinafter referred to as the "Sanya Power
Supply Bureau"), the letter claims that Sanya Power Supply Bureau found that the Company’s subsidiary
South China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd’s the amount of CT is
different with its marketing management system record. The inconformity time is July 2006, and the
hotel’s CT is changing on April 2016. Therefore, undercounted electricity consumption amount is
10,313,373.00 kilowatt-hours, and estimated cost is 7,200,165.75 Yuan as various electricity prices and
charges.
According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute between South
China Grand Hotel and Sanya Power Supply Bureau” issued by Beijing Junhe (Haikou) Law Firm on
December 20, 2016, which claims that Sanya Power Supply Bureau has responsibility for CT to purchase,
install, enseal, unseal and change, therefore, the responsibility of the guilty party for undercounted
electricity consumption of South China Grand Hotel is Sanya Power Supply Bureau. According to the one
hundred and thirty-five item of “General Rule of Civil Law”, this item claims that limitation of action is
two years if accuser request people's court’s protection, except situations provided by law. The Company
has withheld the undercounted electricity consumption cost in 2016 which is about 1,489,685.04 Yuan
during the period from April, 2014 to April, 2016. The event has no further progress up to 31 December
2017.
10. Event after balance sheet date
The Company has no major events after balance sheet date up to balance sheet date
11. Notes to other significant events
1. Correction of accounting errors in previous period
1）Retrospective restatement method
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There is no correction of accounting errors using retrospective restatement method in previous
period.
2）Prospective application method
There is no correction of accounting errors using prospective application method in previous period
2. Others
In accordance with the requirements of the Regulatory Guidelines of Listed Companies No. 4 - Actual
Controller, Shareholders, Related Parties, Purchaser and Commitments and Fulfillment of Listed
Companies (CSRC Announcement No. [2013] 55) of China Securities Regulatory Commission, on June 7,
2014, Luoniushan Co., Ltd. (hereinafter referred to as “Luoniushan”) sent out the Letter about Changing
the Commitments of Luoniushan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. to
the Company, and made commitments that Luoniushan shall actively seek reorganization party to
reorganize the assets of Dadonghai within three years from the date the Company’s general meeting of
shareholders considered and approved this commitment. The above matters have been considered and
approved by the general meeting of shareholders of Dadonghai on June 27, 2014.
On February 22, 2017, the Company received from Luoniushan a Letter on Progress in the Planning of
Commitment Implementation, in which Luoniushan intended to transfer 100% of the equity it held in the
Industrial Company, a wholly-owned subsidiary (specifically, the Industrial Company will first be
transferred with part of financial assets equity held by Luniushan and of 6.91% equity of Sanya Rural
Commercial Bank Co., Ltd.) to the Company, the transaction was made in cash with transaction amount of
about RMB300 million. The proposal was not adopted at the 11th extraordinary meeting of the eighth board
of directors of the Company due to the Company's lack of sufficient debt repayment ability.
On June 23, 2017, Luoniushan issued to the Company a Letter on Change in Term of Commitment by
Luoyunshan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd., extending Luoniushan's
performance period of the above restructuring commitment of the Company by 6 months, whichmeans the
deadline for the fulfillment of reorganization commitment was changed to December 27, 2017.As the
reorganization would take a certain amount of time, on November29, 2017, Luoniushan again applied to
extend the performance period of the reorganization commitment for two years, that is, the performance
deadline of the reorganization commitment was changed from December 27, 2017 to December 26, 2019,
which was not approved at the fourth extraordinary general meeting of shareholders of the Company in
2017.
12. Supplementary information
1. Details of current non-recurring profits and losses
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Item Amount Note
Loss from fixed assets
Profits or losses from disposal of non-current assets -477.98
scrapping
Other non-operating income and expense other than the
273.00 Refund of vehicle tolls
abovementioned ones
Total -204.98
2. Return on net assets and earnings per share
Weighted Earnings per share (RMB)
average return Diluted
Profit during the reporting period Basic earnings
on net assets earnings per
per share
(%) share
Net profits attributable to ordinary shareholders of the
1.65% 0.0035 0.0035
Company
Net profits attributable to ordinary shareholders of the
1.65% 0.0035 0.0035
Company after deduction of non-recurring profits or losses
3. Accounting difference between IFRS and CAS
There are no accounting differences between IFRS and CAS.
(No text)
HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD
9 August 2018
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