东沣科技集团股份有限公司 2019 年半年度财务报告 Dongfeng Sci-Tech Group CO., LTD Semi-Annual Financial Report 2019 I. Audit reports Whether the semi-annual report was audited or not □ Yes √ No The financial report of this semi-annual report was unaudited II. Financial statements Units in Notes of Financial Statements is RMB 1. Consolidated balance sheet Prepared by Dongfeng Sci-Tech Group CO., LTD. 2019-06-30 In RMB Item 2019-6-30 2018-12-31 Current assets: Monetary funds 55,053,763.21 36,306,825.10 Settlement provisions Capital lent Tradable financial assets Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets Note receivable Account receivable 11,171.25 11,171.25 Receivable financing Accounts paid in advance 65,536,585.91 61,099,009.67 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable 1 东沣科技集团股份有限公司 2019 年半年度财务报告 Other account receivable 12,868,921.61 8,588,597.44 Including: Interest receivable Dividend receivable Buying back the sale of financial assets Inventories 138,341,067.72 151,585,557.50 Contractual assets Assets held for sale Non-current asset due within one year Other current assets 17,257,840.46 37,786,874.66 Total current assets 289,069,350.16 295,378,035.62 Non-current assets: Loans and payments on behalf Debt investment Finance asset available for sales 16,331,037.08 Other debt investment Held-to-maturity investment Long-term account receivable Long-term equity investment Investment in other equity 16,331,037.08 instrument Other non-current financial assets Investment real estate Fixed assets 17,398,133.22 17,302,279.65 Construction in progress 108,179,114.15 101,650,833.16 Productive biological asset 77,262.50 121,437.50 Oil and gas asset Right-of-use assets Intangible assets 55,660,162.47 56,686,960.59 Expense on Research and 21,630,362.80 13,346,410.47 Development Goodwill 1,543,786.41 1,543,786.41 Long-term expenses to be 244,302.74 266,884.56 apportioned 2 东沣科技集团股份有限公司 2019 年半年度财务报告 Deferred income tax asset Other non-current asset 186,853,053.40 121,743,152.36 Total non-current asset 407,917,214.77 328,992,781.78 Total assets 696,986,564.93 624,370,817.40 Current liabilities: Short-term loans Loan from central bank Capital borrowed Transactional financial liability Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Note payable Account payable 3,626,056.85 6,668,789.67 Accounts received in advance 60,155,267.41 16,269,319.99 Selling financial asset of repurchase Absorbing deposit and interbank deposit Security trading of agency Security sales of agency Wage payable 1,078,748.82 981,089.59 Taxes payable 318,487.97 921,967.58 Other account payable 114,627,139.72 118,570,218.85 Including: Interest payable 193,333.41 Dividend payable Commission charge and commission payable Reinsurance payable Contractual liability Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 179,805,700.77 143,411,385.68 3 东沣科技集团股份有限公司 2019 年半年度财务报告 Non-current liabilities: Insurance contract reserve Long-term loans 172,210,000.00 101,710,000.00 Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 172,210,000.00 101,710,000.00 Total liabilities 352,015,700.77 245,121,385.68 Owner’s equity: Share capital 706,320,000.00 706,320,000.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital public reserve 463,681,309.55 463,681,309.55 Less: Inventory shares 28,826,485.70 19,718,613.55 Other comprehensive income Reasonable reserve Surplus public reserve 76,791,550.17 76,791,550.17 Provision of general risk Retained profit -899,898,115.99 -875,480,247.09 Total owner’ s equity attributable to 318,068,258.03 351,593,999.08 parent company Minority interests 26,902,606.13 27,655,432.64 Total owner’ s equity 344,970,864.16 379,249,431.72 Total liabilities and owner’ s equity 696,986,564.93 624,370,817.40 4 东沣科技集团股份有限公司 2019 年半年度财务报告 Legal Representative: Zhao Yongsheng Person in charge of Accounting Works: Zhao Yongsheng Person in charge of Accounting Institution: Liu Fengguo 2. Balance Sheet of Parent Company In RMB Item 2019-6-30 2018-12-31 Current assets: Monetary funds 48,271,650.80 28,933,135.09 Transactional financial assets Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets Note receivable Account receivable Receivable financing Accounts paid in advance 63,394,718.20 60,821,190.73 Other account receivable 18,975,344.61 80,991,042.06 Including: Interest receivable Dividend receivable Inventories 137,311,380.72 150,581,753.98 Contractual assets Assets held for sale Non-current assets maturing within one year Other current assets 1,195,788.49 24,163,071.63 Total current assets 269,148,882.82 345,490,193.49 Non-current assets: Debt investment Available-for-sale financial assets 16,331,037.08 Other debt investment Held-to-maturity investments Long-term receivables 5 东沣科技集团股份有限公司 2019 年半年度财务报告 Long-term equity investments 372,803,036.40 272,803,036.40 Investment in other equity 16,331,037.08 instrument Other non-current financial assets Investment real estate Fixed assets 1,398,249.69 1,551,517.36 Construction in progress Productive biological assets Oil and natural gas assets Right-of-use assets Intangible assets Research and development costs Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets Total non-current assets 390,532,323.17 290,685,590.84 Total assets 659,681,205.99 636,175,784.33 Current liabilities Short-term borrowings Transactional financial liability Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable Account payable 2,971,984.67 6,263,184.67 Accounts received in advance 59,853,495.75 14,427,450.03 Contractual liability Wage payable 295,130.64 257,362.42 Taxes payable 104,058.87 125,482.71 Other accounts payable 441,038,568.55 432,985,336.27 Including: Interest payable Dividend payable Liability held for sale 6 东沣科技集团股份有限公司 2019 年半年度财务报告 Non-current liabilities due within one year Other current liabilities Total current liabilities 504,263,238.48 454,058,816.10 Non-current liabilities: Long-term loans Bonds payable Including: preferred stock Perpetual capital securities Lease liability Long-term account payable Long term employee compensation payable Accrued liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 504,263,238.48 454,058,816.10 Owners’ equity: Share capital 706,320,000.00 706,320,000.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 456,569,124.55 456,569,124.55 Less: Inventory shares 28,826,485.70 19,718,613.55 Other comprehensive income Special reserve Surplus reserve 76,791,550.17 76,791,550.17 Retained profit -1,055,436,221.51 -1,037,845,092.94 Total owner’s equity 155,417,967.51 182,116,968.23 Total liabilities and owner’s equity 659,681,205.99 636,175,784.33 7 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Consolidated Profit Statement In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Total operating income 33,371,413.48 79,815,868.78 Including: Operating income 33,371,413.48 79,815,868.78 Interest income Insurance gained Commission charge and commission income II. Total operating cost 58,707,615.78 88,084,229.50 Including: Operating cost 28,218,727.77 71,967,495.21 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Tax and extras 1,081,527.55 2,769,249.06 Sales expense 9,979,002.00 4,902.12 Administrative expense 19,348,119.51 14,487,054.73 R&D expense Financial expense 80,238.95 -1,144,471.62 Including: Interest expenses Interest income 26,346.24 894,404.17 Add: other income 2,890,000.00 Investment income (Loss is 198,770.44 133,320.88 listed with “-”) Including: Investment income on affiliated company and joint venture The termination of income recognition for financial assets measured 8 东沣科技集团股份有限公司 2019 年半年度财务报告 by amortized cost(Loss is listed with “-”) Exchange income (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) Income from change of fair value (Loss is listed with “-”) Loss of credit impairment (Loss is listed with “-”) Losses of devaluation of asset -474,939.83 (Loss is listed with “-”) Income from assets disposal 831,663.08 -18,684.68 (Loss is listed with “-”) III. Operating profit (Loss is listed with -24,780,708.61 -5,263,724.52 “-”) Add: Non-operating income 864.03 3,121.00 Less: Non-operating expense 390,850.83 2,607.78 IV. Total profit (Loss is listed with “-”) -25,170,695.41 -5,263,211.30 Less: Income tax expense 110,309.68 V. Net profit (Net loss is listed with “-”) -25,170,695.41 -5,373,520.98 (i) Classify by business continuity 1.continuous operating net profit -25,170,695.41 -5,373,520.98 (net loss listed with ‘-”) 2.termination of net profit (net loss listed with ‘-”) (ii) Classify by ownership 1.Net profit attributable to owner’s -24,417,868.90 -5,210,758.22 of parent company 2.Minority shareholders’ gains and -752,826.51 -162,762.76 losses VI. Net after-tax of other comprehensive income Net after-tax of other comprehensive income attributable to owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 9 东沣科技集团股份有限公司 2019 年半年度财务报告 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (ii) Other comprehensive income items which will be reclassified subsequently to profit or loss 1.Other comprehensive income under equity method that can transfer to gain/loss 2.Change of fair value of other debt investment 3.gain/loss of fair value changes for available-for-sale financial assets 4.Amount of financial assets re-classify to other comprehensive income 5.Gain/loss of held-to-maturity investments that re-classify to available-for-sale financial asset 6.Credit impairment provision for other debt investment 7.Cash flow hedging reserve 8.Translation differences arising on translation of foreign currency financial statements 9.Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income -25,170,695.41 -5,373,520.98 10 东沣科技集团股份有限公司 2019 年半年度财务报告 Total comprehensive income -24,417,868.90 -5,210,758.22 attributable to owners of parent Company Total comprehensive income -752,826.51 -162,762.76 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share -0.035 -0.007 (ii) Diluted earnings per share -0.035 -0.007 Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and realized 0 Yuan at last period for combined party Legal Representative: Zhao Yongsheng Person in charge of Accounting Works: Zhao Yongsheng Person in charge of Accounting Institution: Liu Fengguo 4. Profit Statement of Parent Company In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Operating income 30,461,034.34 76,981,775.06 Less: Operating cost 25,343,639.52 68,854,852.81 Taxes and surcharge 576,407.59 2,330,768.90 Sales expenses 9,972,717.45 Administration expenses 11,730,063.17 5,464,817.12 R&D expenses Financial expenses -30,943.47 -1,783.91 Including: interest expenses Interest income Add: other income 2,890,000.00 Investment income (Loss is 148,717.94 36,288,157.57 listed with “-”) Including: Investment income on affiliated Company and joint venture The termination of income recognition for financial assets measured by amortized cost (Loss is listed with “-”) Net exposure hedging income (Loss is listed with “-”) 11 东沣科技集团股份有限公司 2019 年半年度财务报告 Changing income of fair value (Loss is listed with “-”) Loss of credit impairment (Loss is listed with “-”) Losses of devaluation of asset -357,903.38 1,221,802.00 (Loss is listed with “-”) Income on disposal of assets (Loss is listed with “-”) II. Operating profit (Loss is listed with -17,340,035.36 40,733,079.71 “-”) Add: Non-operating income Less: Non-operating expense 251,093.21 2,301.69 III. Total Profit (Loss is listed with “-”) -17,591,128.57 40,730,778.02 Less: Income tax IV. Net profit (Net loss is listed with -17,591,128.57 40,730,778.02 “-”) (i)continuous operating net profit -17,591,128.57 40,730,778.02 (net loss listed with ‘-”) (ii) termination of net profit (net loss listed with ‘-”) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1.Changes of the defined benefit plans that re-measured 2.Other comprehensive income under equity method that cannot be transfer to gain/loss 3.Change of fair value of investment in other equity instrument 4.Fair value change of enterprise's credit risk 5. Other (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1.Other comprehensive 12 东沣科技集团股份有限公司 2019 年半年度财务报告 income under equity method that can transfer to gain/loss 2.Change of fair value of other debt investment 3.gain/loss of fair value changes for available-for-sale financial assets 4.Amount of financial assets re-classify to other comprehensive income 5.Gain/loss of held-to-maturity investments that re-classify to available-for-sale financial asset 6.Credit impairment provision for other debt investment 7.Cash flow hedging reserve 8.Translation differences arising on translation of foreign currency financial statements 9.Other VI. Total comprehensive income -17,591,128.57 40,730,778.02 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 71,181,446.41 41,330,719.96 services Net increase of customer deposit and interbank deposit Net increase of loan from central 13 东沣科技集团股份有限公司 2019 年半年度财务报告 bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Net cash received by agents in sale and purchase of securities Write-back of tax received 19,411.90 Other cash received concerning 38,650,193.44 45,480,140.88 operating activities Subtotal of cash inflow arising from 109,831,639.85 86,830,272.74 operating activities Cash paid for purchasing commodities and receiving labor 23,741,457.32 2,393,155.64 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Net increase of financial assets held for transaction purposes Net increase of capital lent Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 11,686,149.72 11,135,618.06 14 东沣科技集团股份有限公司 2019 年半年度财务报告 Taxes paid 2,872,965.62 28,912,052.61 Other cash paid concerning 57,283,036.08 10,464,153.41 operating activities Subtotal of cash outflow arising from 95,583,608.74 52,904,979.72 operating activities Net cash flows arising from operating 14,248,031.11 33,925,293.02 activities II. Cash flows arising from investing activities: Cash received from recovering 56,900,000.00 8,900,000.00 investment Cash received from investment 153,949.66 47,503.07 income Net cash received from disposal of fixed, intangible and other long-term 623,640.00 29,254,000.00 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 57,677,589.66 38,201,503.07 activities Cash paid for purchasing fixed, 71,861,360.83 118,301,007.55 intangible and other long-term assets Cash paid for investment 36,000,000.00 Net increase of mortgaged loans Net cash received from -6,612,924.37 subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 107,861,360.83 111,688,083.18 activities Net cash flows arising from investing -50,183,771.17 -73,486,580.11 activities III. Cash flows arising from financing activities Cash received from absorbing investment 15 东沣科技集团股份有限公司 2019 年半年度财务报告 Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans 72,500,000.00 Cash received from issuing bonds Other cash received concerning 1,468,200.00 2,558,600.00 financing activities Subtotal of cash inflow from financing 73,968,200.00 2,558,600.00 activities Cash paid for settling debts 2,000,000.00 Cash paid for dividend and profit 6,712,514.69 distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning 9,130,072.15 534,800.00 financing activities Subtotal of cash outflow from financing 17,842,586.84 534,800.00 activities Net cash flows arising from financing 56,125,613.16 2,023,800.00 activities IV. Influence on cash and cash equivalents due to fluctuation in 266,016.60 exchange rate V. Net increase of cash and cash 20,189,873.10 -37,271,470.49 equivalents Add: Balance of cash and cash 33,512,916.99 68,107,388.69 equivalents at the period -begin VI. Balance of cash and cash 53,702,790.09 30,835,918.20 equivalents at the period -end 6. Cash Flow Statement of Parent Company In RMB Item Semi-annual of 2019 Semi-annual of 2018 I. Cash flows arising from operating activities: Cash received from selling 69,729,459.05 39,669,174.08 commodities and providing labor 16 东沣科技集团股份有限公司 2019 年半年度财务报告 services Write-back of tax received 19,411.90 Other cash received concerning 138,321,012.21 92,306,663.50 operating activities Subtotal of cash inflow arising from 208,050,471.26 131,995,249.48 operating activities Cash paid for purchasing commodities and receiving labor 12,747,914.55 7,056,722.87 service Cash paid to/for staff and workers 4,622,640.41 3,152,939.13 Taxes paid 1,734,963.45 7,392,154.60 Other cash paid concerning 78,906,698.00 117,720,242.64 operating activities Subtotal of cash outflow arising from 98,012,216.41 135,322,059.24 operating activities Net cash flows arising from operating 110,038,254.85 -3,326,809.76 activities II. Cash flows arising from investing activities: Cash received from recovering 52,300,000.00 investment Cash received from investment 148,717.94 47,503.07 income Net cash received from disposal of fixed, intangible and other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing 52,448,717.94 47,503.07 activities Cash paid for purchasing fixed, 4,604,858.63 intangible and other long-term assets Cash paid for investment 128,300,000.00 Net cash received from subsidiaries and other units obtained Other cash paid concerning 17 东沣科技集团股份有限公司 2019 年半年度财务报告 investing activities Subtotal of cash outflow from investing 132,904,858.63 activities Net cash flows arising from investing -80,456,140.69 47,503.07 activities III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans Cash received from issuing bonds Other cash received concerning 1,468,200.00 2,558,600.00 financing activities Subtotal of cash inflow from financing 1,468,200.00 2,558,600.00 activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Other cash paid concerning 10,268,863.46 534,800.00 financing activities Subtotal of cash outflow from financing 10,268,863.46 534,800.00 activities Net cash flows arising from financing -8,800,663.46 2,023,800.00 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 20,781,450.70 -1,255,506.69 equivalents Add: Balance of cash and cash 26,139,226.98 5,394,019.29 equivalents at the period -begin VI. Balance of cash and cash 46,920,677.68 4,138,512.60 equivalents at the period -end 7. Statement of Changes in Owners’ Equity (Consolidated) This Period In RMB Item Semi-annual of 2019 18 东沣科技集团股份有限公司 2019 年半年度财务报告 Owners’ equity attributable to parent company Other equity instrument Other Minori Total Perpe Less: compr Provisi ty owners Share Reaso Surplu Retain tual Capital Invent ehensi on of Subtot interes ’ capita Prefe nable s ed Other capit reserve ory ve genera al ts equity l rred Other reserve reserve profit al shares incom l risk stock secur e ities I. Balance at the 706,3 463,68 19,718 76,791 -875,4 351,59 27,655 379,24 end of the last 20,00 1,309. ,613.5 ,550.1 80,247 3,999. ,432.6 9,431. year 0.00 55 5 7 .09 08 4 72 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at 706,3 463,68 19,718 76,791 -875,4 351,59 27,655 379,24 the beginning of 20,00 1,309. ,613.5 ,550.1 80,247 3,999. ,432.6 9,431. this year 0.00 55 5 7 .09 08 4 72 III. Increase/ Decrease in this -24,41 -33,52 -34,27 9,107, -752,8 year (Decrease 7,868. 5,741. 8,567. 872.15 26.51 is listed with 90 05 56 “-”) (i) Total -24,41 -24,41 -25,17 -752,8 comprehensive 7,868. 7,868. 0,695. 26.51 income 90 90 41 (ii) Owners’ devoted and 9,107, -9,107, -9,107, decreased 872.15 872.15 872.15 capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 19 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Amount reckoned into owners equity with share-based payment 9,107, -9,107, -9,107, 4. Other 872.15 872.15 872.15 (III) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal 20 东沣科技集团股份有限公司 2019 年半年度财务报告 in the report period 2. Usage in the report period (VI)Others IV. Balance at 706,3 463,68 28,826 76,791 -899,8 318,06 26,902 344,97 the end of the 20,00 1,309. ,485.7 ,550.1 98,115 8,258. ,606.1 0,864. report period 0.00 55 0 7 .99 03 3 16 Last Period In RMB Semi-annual of 2018 Owners’ equity attributable to parent company Other equity instrument Other Minorit Perp Less: compr Provisi Total Item y Share Reaso Surplu Retain owners’ etual Capital Invent ehensi on of Subtot interest capita Prefe nable s ed Other equity capit reserve ory ve genera al s l rred Other reserve reserve profit al shares incom l risk stock secur e ities I. Balance at 706,3 463,68 76,791 -882,8 363,92 18,855, 382,783 the end of the 20,00 1,309. ,550.1 64,082 8,776. 204.34 ,981.21 last year 0.00 55 7 .85 87 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at 706,3 463,68 76,791 -882,8 363,92 18,855, 382,783 the beginning 20,00 1,309. ,550.1 64,082 8,776. 204.34 ,981.21 of this year 0.00 55 7 .85 87 III. Increase/ Decrease in this -5,210, -5,210, 9,464,0 4,253,3 year (Decrease 758.22 758.22 62.33 04.11 is listed with “-”) (i) Total -5,210, -5,210, -162,76 -5,373, comprehensive 21 东沣科技集团股份有限公司 2019 年半年度财务报告 income 758.22 758.22 2.76 520.98 (ii) Owners’ devoted and 9,626,8 9,626,8 decreased 25.09 25.09 capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 9,626,8 9,626,8 4. Other 25.09 25.09 (III) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (or shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 22 东沣科技集团股份有限公司 2019 年半年度财务报告 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 706,3 463,68 76,791 -888,0 358,71 28,319, 387,037 the end of the 20,00 1,309. ,550.1 74,841 8,018. 266.67 ,285.32 report period 0.00 55 7 .07 65 8. Statement of Changes in Owners’ Equity (Parent Company) This Period In RMB Semi-annual of 2019 Other equity instrument Perpet Other Capital Less: Reasona Total Item Share Preferr ual compreh Surplus Retaine public Inventor ble Other owners’ capital ed capital Other ensive reserve d profit reserve y shares reserve equity stock securiti income es I. Balance at the 706,32 456,569, 19,718,6 76,791,5 -1,037, 182,116,96 end of the last 0,000.0 845,09 124.55 13.55 50.17 8.23 year 0 2.94 Add: Changes of accounting policy Error correction of the last period Other 23 东沣科技集团股份有限公司 2019 年半年度财务报告 II. Balance at the 706,32 456,569, 19,718,6 76,791,5 -1,037, 182,116,96 beginning of this 0,000.0 845,09 124.55 13.55 50.17 8.23 year 0 2.94 III. Increase/ Decrease in this 9,107,87 -17,591 -26,699,00 year (Decrease is 2.15 ,128.57 0.72 listed with “-”) (i) Total -17,591 -17,591,12 comprehensive ,128.57 8.57 income (ii) Owners’ 9,107,87 -9,107,872 devoted and 2.15 .15 decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 9,107,87 -9,107,872 4. Other 2.15 .15 (III) Profit distribution 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying 24 东沣科技集团股份有限公司 2019 年半年度财务报告 loss with surplus reserve 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 706,32 -1,055, 456,569, 28,826,4 76,791,5 155,417,9 the end of the 0,000.0 436,22 124.55 85.70 50.17 67.51 report period 0 1.51 Last period In RMB Semi-annual of 2018 Other equity instrument Other Perpet Capital Less: Total Item Share compre Reasonab Surplus Retained Preferr ual public Inventor Other owners’ capital hensive le reserve reserve profit ed capital Other reserve y shares equity income stock securit ies I. Balance at the 706,32 456,569 76,791, -1,101,45 138,230,15 end of the last 0,000. ,124.55 550.17 0,517.19 7.53 year 00 Add: Changes of accounting policy Error correction of the last period Other II. Balance at 706,32 456,569 76,791, -1,101,45 138,230,15 the beginning 0,000. ,124.55 550.17 0,517.19 7.53 of this year 00 25 东沣科技集团股份有限公司 2019 年半年度财务报告 III. Increase/ Decrease in this 40,730,77 40,730,778. year (Decrease 8.02 02 is listed with “-”) (i) Total 40,730,77 40,730,778. comprehensive 8.02 02 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 26 东沣科技集团股份有限公司 2019 年半年度财务报告 4.Carry-over retained earnings from the defined benefit plans 5.Carry-over retained earnings from other comprehensive income 6. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at 706,32 456,569 76,791, -1,060,71 178,960,93 the end of the 0,000. ,124.55 550.17 9,739.17 5.55 report period 00 III. Company profile (i) Registered place, organization structure and head office of the Company Dongfeng Sci-Tech. Group Co., Ltd. (Hereinafter referred to as Dongfeng Sci-Tech. Group or the Company) was formerly known as Chengde Dixian Knitting Co., Ltd., and was reorganized on 3 November 1999 by sponsorship, approved by the People's Government of Hebei Province with the issue of Ji Gu Ban [1999] No.: 36 with license of the business corporation obtained from Hebei Administration for Industry & Commerce; registered capital while established amounting as RMB 100,000,000, and RMB 1.00 per share. Among the abovementioned, RMB 85.10 million contributed by Wang Shuxian, representing 7.56 percent of the registered capital; Wang Zhengsong invested RMB 5.4444 million with 5.44 percent in total registered capital presented; Chengde Longfeng Cosmetics Co., Ltd. contributed RMB 0.9456 million, a 0.95 percent in registered capital and RMB 0.9456 million contributed by Chengde Xiabancheng Hongxing Plastics Products Plant with 0.95 percent in registered capital presented. On 29 August 2000, according to the Zheng Jian Fa Xing Zi [2000] No.: 121 issued by the China Securities Regulatory Commission, the Company issued 100,000,000 domestically listed foreign shares in Shenzhen Stock Exchange dated 19 September 2000; and excised the over-allotment option to increase issuing 15,000,000 B shares from September 29, 2000 to October 29, 2000. The registered capital of the Company after the issuance of B shares was RMB 215,000,000 with one Yuan of face value per share. According to the resolution of the shareholder’s general meeting on March 12, 2002, the Company allotted 43,000,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every 10 shares, 27 东沣科技集团股份有限公司 2019 年半年度财务报告 and meanwhile increased 107,500,000 shares to all of the shareholding by transferring from capital reserve according to 5 shares free for every 10 shares. The registered capital of the company was changed to RMB 365,500,000 after it allotted bonus shares and increased by transferring. According to the resolution of the shareholder’s general meeting on July 22, 2003, the Company allotted 73,100,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every 10 shares, and the registered capital of the company was changed to RMB 438,600,000 after such bonus shares were allotted. On March 11, 2004, approved by the Ministry of Commerce of the People's Republic of China, the Company was allowed to be changed as a foreign investment limited liability company. In July 2004, the Company increased 150,000,000 B shares directionally, during which 91,300,000 shares were subscribed in HK$, and another 58,700,000 shares were subscribed in RMB, upon check by China Securities Regulatory Commission with the issue [2004] No.101. According to the resolution of the shareholder’s general meeting on June 8, 2006, the Company allotted 117,720,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every 10 shares, On August 4, 2008, according to the judgment ruled by Shenzhen Intermediate People's Court, 112,324,800 sponsor shares held by Wang Shuxian was compensated to Chen Rong for 45,491,544 Yuan, and on August 15, 2008, 96,000,000 sponsor shares held by Wang Shuxian was compensated to Chen Rong for 38,880,000 Yuan according to the judgment ruled by Dalian Intermediate People's Court. On November 11, 2009, according to “reply to the approval of capital increase, and change of share as well as name of Chengde Dixian Knitting Co., Ltd” with No.143 [2009] by Bureau of Commerce of Hebei Province, it agreed that the Company increased 150,000,000 domestically listed foreign shares in 2004 and allotted 2 bonus shares free for every 10 shares in 2006; and it agreed that 208,324,800 shares of Dixian stock held by Wang Shuxian was changed to Chen Rong ; as well as the name of the Company changed to Chengde Dalu Co., Ltd. Total share capital of the Company was 706,320,000 shares and the registered capital of the Company was 706,320,000 Yuan after the Company’s share increased and allotted, On 23 August 2011, the Company received the enterprise corporate business license issued from Chengde Administration for Industry and Commerce, register serial was No.: 130000400001225; registered capital and paid-up capital was 706.32 million Yuan with corporate type of limited liability company (Sino-foreign joint venture, listed) On April 6, 2012, Chen Rong, shareholder of Company, signed a share transfer agreement with Mr. Wang Dong for transferred all of the 208,324,800 shares held by himself (accounting for 29.49% of total capital of the Company) to Mr. Wang Dong; After equity transfer the above mentioned, capital contribution proportion of the shareholders of the Company were: 208.3248 million Yuan invested by Wang Dong, representing 29.49 percent of the register capital; 18517651 Yuan contributed by Hebei Chengde Northern Industrial Corporation, representing 2.62 percent of the register capital; 13327891 Yuan invested by Wang Zhengsong, a 0.33 percent in register capital; 2314829 Yuan invested by Chengde Xiabancheng Hongxing Plastics Products Plant, a 0.33 percent in register capital and 461.52 million Yuan contributed by shareholders of domestically listed foreign shares, representing 65.34 percent 28 东沣科技集团股份有限公司 2019 年半年度财务报告 of the register capital. On 19 September 2012, being verified and approved by Chengde Administration for Industry and Commerce, the Company’s name changed as Chengde Nanjiang Co., Ltd. On 15 May 2017, being verified and approved by Chengde Administration for Industry and Commerce, the Company’s name changed as Dongfeng Sci-Tech Group Co., Ltd Over the years of bonus issue, rights issue and capitalization, up to 31st December 2017, the issued shares totally amounting to 706.32 million shares, registered capital of the Company was 706.32 million Yuan; registered address: Xiabancheng Town, Chengde County, Hebei Province; HQ: Xiabancheng Town, Chengde County, Hebei Province. The Company has no parent company and Mr. Wang Dong is the first largest shareholder of the Company and also is the controller of the Company. (ii) Business scope R&D and sales of new energy, and new material products as well as technology promotion and technical service; scientific research of modern ecological agriculture and technology promotion service, wholesales of ecological agriculture products; import and export trade of goods and technology; Engage in the real estate development and management in the scope approved by the qualification certificates; property management. (iii) Business nature and main operating activities of the Company Dongfeng Sci-Tech Group belongs to the development operation of real estate business, subsidy engaged in new energy, new materials, property management and agricultural farming and breeding (iv) Report approval for the financial statement The statement has been approved by all Directors of the Company dated 28 August 2019 for reporting. Totally 16 subjects are included in consolidate financial statement, mainly including the follow except the Company: Subsidiaries Type Level Shareholding ratio (%) Voting rights ratio (%) Chengde Kefeng Engineering Project Management Co. Wholly-owned 1 100.00 100.00 Ltd.(hereinafter referred to as “Kefeng Engineering”) subsidiary Chengde Dongfeng Investment Co., Ltd(hereinafter Wholly-owned 1 100.00 100.00 referred to as “Dongfeng Investment ”) subsidiary Nanjiang Asia Investment Co., Ltd(hereinafter referred to Wholly-owned 1 100.00 100.00 as “Nanjiang Asia ”) subsidiary Chengde Kefeng Trading Co., Ltd.(hereinafter referred to Wholly-owned 1 100.00 100.00 as “Kefeng Trading ”) subsidiary Hangzhou Dongfeng Technology Co. Ltd(hereinafter Wholly-owned 1 100.00 100.00 referred to as “Hangzhou Dongfeng”) subsidiary Dongguan Dongfeng Technology Development Co., Controlling 1 100.00 100.00 Ltd(hereinafter referred to as “Dongguan Dongfeng subsidiary Technology ”) 29 东沣科技集团股份有限公司 2019 年半年度财务报告 Chengde Kefeng Aerospace Technology Development Co. Wholly-owned 1 100.00 100.00 Ltd(hereinafter referred to as “Kefeng Aerospace ”) subsidiary Dongguan Dongfeng Power Tech. Co., Ltd.(hereinafter Controlling 1 100.00 100.00 referred to as “Dongfeng Power ”) subsidiary Chengde Dongfeng Ecological Agriculture Co., Wholly-owned 2 100.00 100.00 Ltd(hereinafter referred to as “Ecological Agriculture”) sub-subsidiary Chengde Nanjiang Technology Co. Ltd(hereinafter referred Wholly-owned 2 100.00 100.00 to as “Nanjiang Technology ”) sub-subsidiary Chengde Huijing Property Services Co., Ltd(hereinafter Wholly-owned 2 100.00 100.00 referred to as “Huijing Property ”) sub-subsidiary Dongguan Zhongchuang New Energy Technology Co., Controlling 2 60.98 60.98 Ltd(hereinafter referred to as “Zhongchuang New Energy”) sub-subsidiary Dongguan Dongfeng Intelligent Technology Co., Wholly-owned 2 100.00 100.00 Ltd(hereinafter referred to as “Dongguan Dongfeng sub-subsidiary Intelligent ”) Dongguan Aolin New Materials Co., Ltd.(hereinafter Controlling 2 62.00 62.00 referred to as “Aolin New Materials ”) sub-subsidiary Dongguan Haizhuo Energy Technology Co., Controlling 2 62.00 62.00 Ltd(hereinafter referred to as “Haizhuo Energy ”) sub-subsidiary IV. Basis of preparation of financial statements 1. Preparation basis The Company conducts recognition and measurement according to actual occurrence of transactions and issues, pursuant to the Accounting Standards for Business Enterprises- Basic Standard and specific accounting principle as well as the application guidance for the accounting principles for enterprise, interpretation to the accounting principles for enterprise and other related requirements (hereinafter referred to as Enterprise Accounting Principles) issued by the ministry of finance, on that basis, combining the Information Disclosure Preparation Rules for Company Public Issuing Securities No.15-General Rules for Financial Report (amended in 2014) of the CSRC for statement preparation. 2. Going concern We evaluated the sustainable management ability for 12 months since end of the period, and found out that there was a significant doubt on sustainable management ability of the associated enterprise Runhua RW, while no impact on other entity in consolidation scope. Therefore, the financial statement is prepared based on the continuing operation assumption V. Major accounting policy and accounting estimation Notice of specific accounting policy and estimation: Nil 30 东沣科技集团股份有限公司 2019 年半年度财务报告 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises; truthfully and completely reflect the financial status, operation results and cash flow etc. of the Company. 2. Fiscal period The fiscal year of the Company is from 1 January to 31 December on basis of Gregorian calendar. 3. Operating cycle Except for the real estate business, operating cycle of other business is 12 months; The operating cycle of real estate is determined by the development conditions. Generally has over 12 months from development, sales to the completion of delivery. 4. Standard currency The Company and its subsidiaries take RMB as the standard currency for bookkeeping. 5. Accounting treatment for business combinations under the same control and those not under the same control 1. If the terms, conditions, and economic impact of each transaction involved in business combination achieved in stages fall within one or more of the following situations, such transactions will be accounted for as a package deal: (1) Such transactions are entered into simultaneously or in the case of considering the impact of each other; (2) Such transactions as a whole in order to reach a complete business results; (3) The occurrence of a transaction subject to that of at least one other transaction; (4) One transaction alone is not economic, but otherwise when considered with other transactions. 2. Business combination under the same control The Company’s assets and liabilities acquired in a business combination are measured by the book value in the consolidated financial statements of ultimate controlling party in accordance with the assets and liabilities (including the goodwill formed by the ultimate controlling party’s acquisition to the combined party) of combined party on combining date. If there is balance between the book value of net assets obtained in merger and the book value of paid merger consideration (or total face value of issued shares), adjust the stock premium in capital reserve, and adjust the retained earnings if the stock premium in capital reserve is not enough for writing down. If there is a contingent consideration needs to confirm the expected liabilities or assets, and there is balance between the expected liabilities or assets amount and the settlement amount of follow-up contingent consideration, adjust the capital reserve (capital premium or stock premium), and adjust the retained earnings if the capital reserve is not enough. As for business combination realized through numbers of transactions, and if these transactions belong to a bundle 31 东沣科技集团股份有限公司 2019 年半年度财务报告 of transactions, then each of them shall be accounted as a transaction to acquire controlling right; and if not belong to a bundle of transactions, then the difference between the initial investment cost of the long term equity investment as of the date on which the Company obtains controlling right and the carrying value of the long term equity investment prior to combination plus the carrying value of the new consideration paid for further acquisition of shares as of the combination date shall be used to adjust capital reserve; in case of insufficient capital reserve, adjust retained earnings. For equity investment held prior to the combination date, the other comprehensive income recognized due to calculation by equity method or based on recognition and measurement principles for financial instruments would not be accounted for temporarily until the Company disposes of this investment on the same basis as the invested enterprise directly disposes of relevant assets or liabilities; other changes of owners’ equity in the net assets of invested enterprise as recognized under equity method, except for net profit or loss, other comprehensive income and profit distribution, shall not be accounted for until being transferred to current profit or loss when this investment is disposed of. 3. Business combination not under the same control An acquisition date represents the date when the Company obtains the actual control of the acquiree, which means the date when the net assets or the right of control in relation to production or operation decisions of the acquiree transfer to the Company. In general, the Company will be deemed to materialize transfer of right of control upon satisfaction of the following conditions: ①the contracts or agreements relating to business combination has been approved by the internal authority of the Company. ②consent from the national competent authorities relating to business combination, if required, has been obtained. ③necessary property transfer procedure has been completed. ④the Company has paid a majority of the consolidated consideration, and it is capable of and scheduled to pay the outstanding balance. ⑤the Company has actually controlled the financing and operating policies of the acquiree, and is entitled to share relevant benefits and assume relevant risks. The assets paid and liabilities occurred or assumed by the Company on the acquisition data as the consideration of the business combination shall be measured at fair value, and the difference between the fair value and its carrying value shall be included in profit or loss for the period. The Company confirms the balance that the combined cost is greater than the fair value shares of acquiree’s recognizable net assets obtained in the combination as the goodwill; the balance that the combined cost is less than the fair value shares of acquiree’s net identifiable assets obtained in the combination is included in the current profit and loss after re-checking. As for the business combination not under the same control realized through several exchange transactions step by step, part of the package deal, than carrying accounting treatment on transactions with controlling rights obtained through vary transactions; for equity investment held prior to combination date which is calculated under equity method, the sum between carrying value of the equity investment prior to acquisition date and cost of additional investment made on the acquisition date is deemed to be the initial investment cost of this investment. Other comprehensive income recognized for equity investment held prior to combination date under equity method shall be accounted for when the Company disposes of this investment on the same basis as the invested enterprise directly disposes of relevant assets or liabilities. In case that equity investment held prior to combination date is 32 东沣科技集团股份有限公司 2019 年半年度财务报告 calculated based on recognition and measurement principles for financial instruments, then the fair value of this equity investment as of combination date plus new investment cost shall be deemed as initial investment cost. The difference between fair value and carrying value of the originally held equity interests and the accumulated fair value movements as originally recorded in other comprehensive income shall be all transferred to investment income of the period in which the combination date falls. 4. Relevant expenses from combination The intermediate expenses occurred for business combination such as audit, legal service and appraisal consultation expenses and other related expenses shall be recorded in current gains and losses when occurred; the trading expenses for equity securities offering shall be excluded while reckoned into equity transaction directly. 6. Methods for preparation of consolidated financial statements 1. Consolidated scope The consolidation scope of the consolidated financial statements of the Company is fixed on the basis of control, and all subsidiaries (including the independent subject control by the Company) have been consolidated. 2. Consolidated procedure Based on financial statements of its own and the subsidiaries, the Company establishes the consolidated financial statements according to other relevant data. The consolidated financial statements established by the Company regard the whole enterprise group as an accounting subject, and reflect the overall financial situation, operating results and cash flow of the enterprise group by the uniform accounting policies in accordance with the relevant confirmation, measurement and presentation requirements of accounting standards. The accounting policies and accounting period adopted by the subsidiaries taken into account of the consolidation scope are in line with the Company. If it is not the same as the Company, necessary adjustments will be made when preparing consolidated financial statements according to the accounting policy and accounting period of the Company. When consolidating financial statements, the Company shall offset all effects upon consolidated balance sheet, consolidated profit statement, consolidated cash flow statement and consolidated statement of changes in equity arising from the internal transactions between the Company and each subsidiary and between various subsidiaries. If there is difference between the point of view of consolidated financial statements of enterprise group and the affirmation to the same transaction by taking the Company or its subsidiaries as the accounting subject, adjust the transaction from the enterprise group’s point of view. The ownership interests of subsidiaries, current net profits or losses and shares of current comprehensive income belonging to minority shareholders are respectively and separately listed under the ownership interest item of consolidated balance sheet, the net profit item of consolidated profit statement and the total comprehensive income item. The balance that the current losses shared by the subsidiary's minority shareholders is greater than the shares in the ownership interests held by the minority shareholders in the beginning period of this subsidiary offsets against the minority stockholders' interests. For the subsidiaries acquired through business combination under the same control, take the fair value of its assets and liabilities (including the goodwill formed by the ultimate controlling party’s acquisition to the combined party) in the financial statements of ultimate controlling party as a basis to adjust its financial statements. For the subsidiaries acquired through business combination not under the same control, take the fair value of net identifiable assets on acquisition date to adjust its financial statements. (1) Increase subsidiaries or businesses During the reporting period, if there are subsidiaries or businesses increased by the business combination under the same control, adjust the opening balance of consolidated balance sheet; include the income, expenses and profits 33 东沣科技集团股份有限公司 2019 年半年度财务报告 of the subsidiaries or business combination from the beginning of the period to the end of the reporting period into the consolidated profit statement; include the cash flow of the subsidiaries or business combination from the beginning of the period to the end of the reporting period into the consolidated statement of cash flows, adjust the relevant items of comparative statements at the same time, and regard that the reporting entity after combination has been exiting since the ultimate controller starts controlling. If the control can be implemented to the invested enterprises under the same control due to the additional investment, it can be regarded that all partied in the combination can be adjusted when the ultimate controller starts controlling, i.e. by the current status and existence. For the equity investment held before obtaining the control power of combined party, the relevant profit and loss, other comprehensive income and other changes in net assets from the later date between the acquisition date of original stock right and the date when the combining party and combined party are under the same control to the combination date respectively offset against the retained earnings at the beginning of the period or the current profit and loss in the comparative statement period. During the reporting period, if there are subsidiaries or businesses increased by the business combination not under the same control, don’t adjust the opening balance of consolidated balance sheet; include the income, expenses and profits of the subsidiaries or business combination from the purchase date to the end of the reporting period into the consolidated profit statement; include the cash flow of the subsidiaries or business combination from the purchase date to the end of the reporting period into the consolidated statement of cash flows. If the control can be implemented to the invested enterprises not under the same control due to the additional investment, the Company re-measures the stock right of acquiree held before the purchase date according to the fair value of this stock right on the purchase date, the balance between fair value and its book value is included in the current investment income. Other comprehensive income that the stock right of acquiree held before the purchase date involving in equity method business accounting and other changes in ownership interest except for net profit or loss, other comprehensive income and profits distribution, together with its relevant other comprehensive income and other changes in ownership interest are transferred into the current investment income attributable to the purchase date, besides the other comprehensive income generated by the changes in the net indebtedness and net assets re-measured and defined benefit plans by invested enterprises. (2) Disposal of subsidiaries or businesses 1) General approaches During the reporting period, if the Company disposes a subsidiary or business, the income, expense and profit of this subsidiary or business from the beginning of the period to the disposal date are included in the consolidated income statement; the cash flow of this subsidiary or business from the beginning of the period to the disposal date are included in the consolidated statement of cash flows. When control power over invested enterprises are lost due to disposal of some equity investment or other reasons, the Company re-measure the remaining equity investment after disposal in accordance with its fair value on the date to lose the control power. The balance by subtracting the sum of consideration obtained by disposing stock right and fair value of residual equity from the sum of the shares of net assets continuously calculated according to the original shareholding ratio since the purchase date or combination date of the original subsidiary and the goodwill are included in the investment income of the current period of losing control power. Other comprehensive income related to the equity investment of original subsidiary and other changes in ownership interest except for other net profit and loss, other comprehensive income and profits distribution are transferred into current investment income when losing the control power, besides the other comprehensive income generated by the changes in the net indebtedness and net assets re-measured and defined benefit plans by invested enterprises. 2) Dispose subsidiaries step by step Dispose a subsidiary's equity investment until losing the control power step by step through multiple transactions, 34 东沣科技集团股份有限公司 2019 年半年度财务报告 if the terms, conditions and economic impact of the disposal to various transactions of the subsidiary's equity investment conform to following one or various conditions, it means that the multiple transactions should have accounting treatment as a package deal: A. These transactions are made by considering each other’s impacts; B. These transactions can only reach a complete business result as a whole; C. The occurrence of one transaction depends on the occurrence of at least one other transaction; D. One transaction alone is not economical, but it is economical when it is considered together with other transactions. The various transactions that dispose a subsidiary's equity investment until losing the control power belong to a package deal, the Company handles accounting treatment to various transactions by taking them as a transaction disposing a subsidiary's equity investment and losing the control power; however, the balance between every disposal price before losing control power and net asset shares of the subsidiary corresponding to disposal of investment should be confirmed as other comprehensive income in the consolidated financial statements and transferred into the profit and loss of the current period of losing control power when losing the control power. The various transactions that dispose a subsidiary's equity investment until losing the control power and don’t belong to a package deal, before losing control power, are handled with accounting treatment according to relevant policies which used to partly dispose the subsidiary's equity investment on the condition of not losing the control power; when losing the control power, they are handled with accounting treatment according to the general handling methods used to dispose the subsidiary. (3) Purchase the minority shareholding of a subsidiary If there is balance between the Company’s long-term equity investment newly obtained by purchasing the minority shareholding and the net asset shares of the subsidiary continuously calculated from the acquisition date (or combination date) according to the newly increased shareholding ratio, adjust the capital stock premium in capital reserve on consolidated balance sheet, if the capital stock premium in capital reserve is not enough for offset, adjust the retained earnings. (4) The partial disposal of equity investments in subsidiaries without losing the control power If there is balance between the disposal price obtained by the partial disposal of long-term equity investments in subsidiaries without losing the control power and the net asset shares of the subsidiary continuously calculated from the acquisition date or combination date corresponding to the disposal of long-term equity investments, adjust the capital stock premium in capital reserve on consolidated balance sheet, if the capital stock premium in capital reserve is not enough for offset, adjust the retained earnings. 7. Classification of joint arrangement and accounting for joint operations 1. Classification of joint arrangement The Company classifies joint venture arrangement into joint operations and joint ventures based on the structure, legal form, agreed terms of the arrangement and other related facts and conditions. Joint venture arrangement not concluded through separate entity is classified as joint operation; and those concluded through separate entity are generally classified as joint ventures. However, joint venture arrangement which meets any of the following conditions as proven by obvious evidence and satisfies relevant laws and rules is grouped as joint operation: 1. The legal form of the arrangement shows that parties to the arrangement are entitled to and assume rights and obligations in respect of the relevant assets and liabilities. 2. It is agreed by the terms of the arrangement that parties to the arrangement are entitled to and assume rights and obligations in respect of the relevant assets and liabilities. 35 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Other related facts and conditions show that parties to the arrangement are entitled to and assume rights and obligations in respect of the relevant assets and liabilities. For instance, joint parties are entitled to almost all the output related to joint venture arrangement and settlement of the liabilities under the arrangement continues to rely on supports from the joint parties. 2. Accounting for joint operations The Company recognizes its proportion of interests in joint operation as related to the Company, and accounts for under relevant business accounting principles: 1. To recognize separately-assumed liabilities and jointly-assumed liabilities under its proportion; 2. To recognize revenue from disposal of the output which the Company is entitled to under the proportion; 3. To recognize separately-held assets and jointly-held assets under its proportion; 4. To recognize revenue from disposal of the output under the proportion; 5. To recognize separately occurred expenses, and to recognize expenses occurred for joint operations under its proportion. For injection to or disposal of assets of joint operations (other than those assets constituting business operation), gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint operation before the joint operation is sold to any third party. In case those assets injected or disposed satisfy the condition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes this loss in full. For acquisition of assets from joint operations (other than those assets constituting business operation), gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint operation before the relevant assets are sold to any third party. In case that the acquired assets satisfy the condition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes relevant loss according to the proportion it assumes. The Company exercises no common control over joint operations. If the Company is entitled to relevant assets of the joint operation and assure relevant liabilities, it shall be accounted for under the above principle, otherwise it would be accounted for under the relevant business accounting principles. 8. Recognition standards for cash and cash equivalents When preparing cash flow statement, the Company recognized the stock cash and deposits available for payment at any time as cash, and investments featuring with the following four characters at the same time as cash equivalents: short term (expire within 3 months commencing from purchase day), active liquidity, easy to convert to already-known cash, and small value change risks. 9. Foreign currency business and conversion of foreign currency statement 1. Foreign currency business For the foreign currency business, the Company converts the foreign currency into RMB for book-keeping based on spot exchange rate at date of trading occurred while initially recognized. On balance sheet date, balance of foreign currency monetary items shall be converted based on the spot rate as at the balance sheet date, and the arising exchange difference shall be recorded in current gains and losses other than those arising from the special foreign currency borrowings related to purchasing assets qualifying for capitalization which is treated under the principle of borrowing expense capitalization. As for the foreign currency non-monetary items measured in historical cost, conversion is still conducted with the spot rate as at the transaction date, without any change to its functional currency. 36 东沣科技集团股份有限公司 2019 年半年度财务报告 As for the foreign currency non-monetary items measured in fair value, conversion is conducted with the spot rate as at the date for determination of fair value, and the arising exchange difference shall be recorded in current gains and losses as the changes of fair value. if the foreign currency non-monetary items belong to foreign currency available for sale, the arising exchange difference shall be recorded in other comprehensive income. 2. Translation of foreign currency financial statement Assets and liabilities in balance sheet are translated at the spot exchange rate at the balance sheet date. Equity items, excluding “undistributed profit”, are translated at the spot exchange rates at the transaction dates. As for those translated at the spot exchange rates at the transaction dates or those recognized in line with the reasonable method in system, translated at the similar exchange rate as at the transaction date. The resulting translation differences are recognized in other comprehensive income. When disposing overseas operations, the foreign currency financial statement translation differences listed under items of other comprehensive income in balance sheet and which are directly related to the overseas operations are transferred to profit or loss in the period when the overseas operation is disposed; In case of partial disposal or the overseas business, which has lower operation ratio overseas without operation controlling loss due to other reason, the translation differences related to disposal part shall including in equity of minority shareholders, no need to transfer into current gains/losses. In case of partial disposal of associated or joint venture, foreign currency translation differences shall be calculated in respect of the disposed part under disposal proportion and transferred to profit or loss in the period when the overseas operation is disposed. 10. Financial instruments Financial instrument is the contract that taken shape of the financial asses for an enterprise and of the financial liability or equity instrument for other units. A financial asset or liability is recognized when the group becomes a party to a financial instrument contract. Financial instrument of the Company including monetary funds, account receivable, the equity investment except for long-term equity investment, trading financial assets, derivative financial instrument, account payable, loans, bond payable and share capital etc. (1) Classification and follow-up measurement of financial assets 1) Classification: According to the business model of managing financial assets and the contractual cash flow characteristics of financial assets, at initial recognition, the Company classifies the financial assets into different types: the financial assets measured at amortized cost, the financial assets measured at fair value and whose changes are included in other comprehensive income, and the financial assets measured at fair value and whose changes are included in current profit or loss. The financial assets meet the following conditions simultaneously and such assets are not designated as the financial assets measured at fair value and whose changes are included in current gains/losses, are classified as the financial assets measured at amortized cost: ①The business mode for such financial assets are managed aims to collect contractual cash flows; ②as regulated in the contract, the cash flows generated on a specific date are only the payment for the principal and the interest based on the outstanding principal amount. The financial assets meet the following conditions simultaneously and such assets are not designated as the financial assets measured at fair value and whose changes are included in current gains/losses, are classified as the financial 37 东沣科技集团股份有限公司 2019 年半年度财务报告 assets measured at fair value and whose changes are included in other comprehensive income: ①The Company's business model for managing such financial assets is to target at both the collection of contractual cash flows and the sale; ②as regulated in the contract, the cash flows generated on a specific date are only the payment for the principal and the interest based on the outstanding principal amount. At initial recognition, the Company irrevocably designated the investment of non-trading equity instrument as the financial assets measured at fair value and whose changes are included in other comprehensive income. Once the designation has been made, it shall not be revoked. Except for the above financial assets measured at amortized cost and measured at fair value and whose changes are included in other comprehensive income, the Company classifies all other financial assets as financial assets measured at fair value and whose changes are included in current profit or loss. In the initial recognition, if the accounting mismatch can be eliminated or significantly reduce, the Company irrevocably designated the financial assets as the financial assets measured at fair value and whose changes are included in current gains/losses. For the debt instrument and derivative financial assets held without measured at amortized cost and measured at fair value and whose changes are included in other comprehensive income, the Company listed them as the trading financial assets, measured at fair value and with its variation included in current gains/losses. If the assets maturity exceed one year since the balance sheet date and expected to holds for over one year, it shall be listed as other non-current financial assets. 2) Follow-up measurement of the financial assets ① Financial assets measured at fair value and with its variation included in current gains/losses After initial recognition, follow-up measurement of such financial assets are made at fair value. The gains or losses (interest and dividend revenue included) are reckoned into current gains/losses, unless the financial asset is part of the hedging relationship. ②Equity instrument investment measured at fair value and with its variation included in other comprehensive income After initial recognition, follow-up measurement of such financial assets are made at fair value.The dividend revenue is reckoned into gains/losses and other gains or losses are reckoned into other comprehensive income. When being derecognized, the accumulated gains or losses previously recognized in other comprehensive income are transferred from other comprehensive income and recognized in current profit and loss. ③ Financial assets measured at amortized cost After initial recognition, such financial assets are measured at amortized cost by using the effective interest method. Gains or losses arising from financial assets which are measured at amortized cost and are not a component of any hedging relationship are included in current profit or loss when being derecognized, amortized by effective interest method, or impaired and reckoned into current gains/losses. (2) Classification and follow-up measurement of financial liability The Company classified the financial liability to financial liability measured at fair value and whose changes are included in current gains/losses and those measured by amortized costs. 1) Financial liability measured at fair value and whose changes are included in current gains/losses Such financial liabilities include trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated to be measured at fair value and whose changes are included in current gain and loss. 38 东沣科技集团股份有限公司 2019 年半年度财务报告 After the initial recognition, such financial liabilities are subsequently measured at fair value, in addition to relevant to the hedge accounting, the gains or losses (including interest expenses) arising from changes in the fair value of the financial liabilities are included in current profit and loss. 2)Financial liabilities measured at amortized cost After initial recognition, such financial liabilities are measured at amortized cost by using the effective interest method. (3) Presentation of financial assets and financial liabilities Financial assets and financial liabilities are presented separately in the balance sheet and are not offset by each other. However, when meeting the following conditions, the net amount offset by each other shall be presented in the balance sheet: ① The Company has statutory powers to offset the confirmed amount, and such statutory powers are currently enforceable; ② The Company plans to settle by net assets, or realize the financial assets and liquidate the financial liabilities at the same time. (4) Termination of recognition for financial assets and financial liability The financial assets shall be terminated for recognition if meets one of the following conditions: ① the contractual right to receive the cash flow of the financial asset is terminated; ②the financial asset has been transferred, and the Company has transferred almost all the risks and remuneration of ownership of the financial assets to the transferee ; ③the financial asset has been transferred., although the Company has neither transferred nor retained almost all remuneration of the financial assets, it does not retain control over the financial asset. (5) Impairment Based on the expected credit losses, the Company performs impairment accounting treatment on financial assets measured at amortized cost and confirms the loss provision. Other financial assets measured at fair value held by the Company are not applicable to the expected credit loss model, including the equity instrument investments measured at fair value and whose changes are included in current profit and loss, the equity instrument investments designated to be measured at fair value and whose changes are included in other comprehensive income, and the derivative financial assets. 1) Measurement of expected credit losses Expected credit loss refers to the weighted average of credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between all contractual cash flows that the Company discounts at the original actual interest rate and are receivable in accordance with contract and all cash flows expected to be received, that is, the present value of all cash shortages. For accounts receivable, the Company always measures the loss provisions based on the amount of expected credit loss for the entire duration. The Company calculates the expected credit losses of the above financial assets based on historical credit loss experience. Relevant historical experience is adjusted based on the specific factors of the receivables on the balance sheet date and the assessment of current conditions and future economic conditions. Except for accounts receivable, the Company measures the loss provisions for financial instruments that meet the following conditions in accordance with the amount of expected credit losses in the next 12 months, and measures 39 东沣科技集团股份有限公司 2019 年半年度财务报告 the loss provisions for other financial instruments in accordance with the amount of expected credit losses for the entire duration. ① The financial instrument only has a lower credit risk on the balance sheet date; ② The credit risk of the financial instrument has not increased significantly since the initial recognition. 2) Lower credit risk If the risk of default on a financial instrument is low, the borrower’s ability to perform its contractual cash flow obligations in the short term is strong, and even if the economic situation and operating environment have adverse changes over a long period of time, it may not necessarily reduce the receivables’ ability of performing their contractual cash flow obligations, the financial instrument shall be considered to have a lower credit risk. 3) Significant increase in credit risk The Company compares the risk of default of the financial instruments on the balance sheet date with the risk of default on the initial recognition date to determine the relative change in default risk of the financial instruments during the expected duration, and to assess whether the credit risk of the financial instruments has increased significantly since initial recognition. When determining whether the credit risk has increased significantly since the initial recognition, the Company considers reasonable and evidence-based information that can be obtained without unnecessary additional costs or efforts, including forward-looking information. If the overdue period exceeds 30 days, the Company shall determine that the credit risk of financial instruments has increased significantly. 4) Financial assets with credit impairment On the balance sheet date, the Company assesses whether the financial assets measured at amortized cost have credit impairment. When one or more events that adversely affect the expected future cash flows of a financial asset occur, the financial asset becomes a financial asset that has suffered credit impairment. Evidence that credit impairment has occurred in financial assets includes the following observable information: ① The issuer or the debtor has significant financial difficulties. ② The debtor breaches the contract, such as repayment of interest or principal default or overdue. ③ The Company gives concessions to the debtor which will not be made in any other circumstances for economic or contractual considerations relating to the financial difficulties of the debtor. ④ The debtor is likely to go bankrupt or carry out other financial restructuring. ⑤ The financial difficulties of the issuer or the debtor have caused the active market of the financial assets to disappear. ⑥ Purchase or originate a financial asset at a substantial discount, and the discount reflects the fact that credit losses have occurred. 5) Financial instrument portfolios According to the nature of financial instruments, the Company evaluates the expected credit loss information based on a single financial instrument or a financial instruments portfolio. The basis for the determination of a single financial instrument and a financial instruments portfolio is as follows: 40 东沣科技集团股份有限公司 2019 年半年度财务报告 Portfolio Basis and accrual method of the credit loss impairment Loss impairment of financial If there is evidence that the credit risk of a single receivable is large, the loss provision shall instrument accrual on single basis be separately made for the receivable, and the loss provision is made based on the difference between the present value of its future cash flow and its book value. Financial instrument Portfolio I The portfolio is divided according to the credit risk characteristics of the debt unit, mostly the accounts receivables from the related parties of the Company that have not been impaired after being tested separately, and the possibility of credit loss of such receivables is extremely small. This portfolio makes loss provisions by zero to one thousandth. Financial instrument Portfolio II This portfolio is the part other than the portfolio one and the receivables making a single provision for loss. This portfolio makes loss provisions for receivables based on historical loss experience and aging analysis method. 6) Presentation of the expected credit loss provision In order to reflect the changes in the credit risk of financial instruments since the initial recognition, the Company re-measures the expected credit losses on each balance sheet date, and the increase or reversal amount of the loss provisions resulting from this shall be treated as impairment losses or gains and included in the current profit. For a financial asset measured at amortized cost, the loss provision offsets the book value of the financial assets shown in the balance sheet. 7) Charge-off If the Company no longer reasonably expects that the financial asset contract cash flow can be fully or partially recovered, the book balance of the financial asset shall be directly written down. Such write-downs constitute the derecognition of related financial assets. This situation usually occurs when the Group determines that the debtor has no assets or sources of income to generate sufficient cash flow to cover the amount that will be written down. However, according to the Company's procedures for recovering the due fund, the financial assets that have been written down may still be affected by the execution activities. If the financial assets that have been written down are recovered in the future, they shall be taken as the reversal of the impairment loss and be included in the profit or loss of the current period. 11. Note receivable 12. Account receivable 1.Account receivable with single significant amount and withdrawal bad debt provision on single basis: Recognition criteria: Specific standards for single significant account: the amount has over one million Yuan. Accrual method for bad debt provision of account receivable with single significant amount: Conducted impairment testing separately, balance between the present value of future cash flow and its carrying value, bad debt provision withdrawal and reckoned into current gains/losses. As for the receivable without impairment being out in test, accrual bad debt provision in corresponding group 2. Account receivable with bad debt provision accrual on portfolio (1) Accrual method recognized according to the credit risk characteristic portfolio: Bad debt provision accrual by aging analysis: 41 东沣科技集团股份有限公司 2019 年半年度财务报告 Account age Accrual ratio for account receivable(%) Accrual ratio for other account receivable(%) Within one year (one year included) 5 5 1-2 years 20 20 2-3 years 50 50 Over 3 years 100 100 Determine basis for credit risk characteristic: Receivables with insignificant single amount are divided into several portfolios together with the receivables with significant single amount that have not been impaired after the separate test according to the credit risk characteristics, the company determines the bad debt provisions to be made based on the actual loss rate of the receivables portfolio with similar credit risk characteristics in previous years and combined with the current situation. (2)Accrual method recognized according to the credit risk characteristic portfolio: Basis for determining the portfolio: Portfolio Accrual method Basis for determining the portfolio Related parties in Without bad debt provision accrual The related parties included in consolidate scope consolidate scope No risks Without bad debt provision accrual According to the nature of the business, it is determined that there is no credit risk, mainly including employee borrowings and payments from relevant government functional departments. 3.Account receivable with single minor amount but with bad debt provision accrual on single basis, disclosed the reasons and accrual method etc. for accrual on single basis (1) Determining basis on account receivable with single minor amount but with bad debt provision accrual on single basis: There is an objective evidence of impairment which is probably about to occurred, such as revocation from the debtor, bankruptcy or dead, and still able to recover after liquidated by the bankruptcy property or heritage as well as serious insufficient cash flow etc. (2) Accrual method for account receivable with single minor amount but with bad debt provision accrual on single basis: For those account receivable with objective evidence of impairment been found, separated them from the relevant groups for impairment testing independently, and impairment losses shall recognized and withdrawal bad debt reserves on the difference between the present values of estimated future cash flow which is lower than its carrying value. 13. Account receivable financing 14. Other account receivable Determining method and accounting treatment on the expected credit loss of other account receivable 42 东沣科技集团股份有限公司 2019 年半年度财务报告 15. Inventory Whether the company needs to comply with the disclosure requirements of the particular industry No 1. Classification of inventories Inventories are categorized into development cost, development products, relocation housing animals & plants aquaculture plant products, finished goods of polyethylene and low value consumables etc. 2. Valuing of inventory The Company adopts the historical cost for obtaining or the planned cost to value the inventory according to its actual situation, and specific identification method for the development projects. Specific valuation method for consumptive biological assets found more in the biological assets listed in Note IV(18) 3. Confirmation of net realizable value for the inventory and provision for inventory impairment The ending inventory is measured at the lower of cost and net realizable value. Provision for impairment of inventory is determined at the excess amount of the single cost of the inventory over its net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. In case the influencing factor for write-down of the inventory values has disappeared, the amount which has been written down can be recover, and shall switch back within the inventory falling price reserves which has been accrual originally, the amount switch back shall reckoned into current gains/losses. 4. Inventory System Perpetual inventory system 5. Amortization method for low-value consumables and wrappage (1) Low-value consumables are amortized on one-off amortization method 6. Relocation housing refers to the house for turnover purpose to arrange for relocation of residents, and amortized evenly in 50 years. 7. Calculation method of the lands for development purpose As for the pure land development project, the costs constitute costs of the land development; the project develops along with the real estate, costs with clear burden of objects shall split into commercial house costs with actual area. 8. Calculation method of the expenses of public supporting facilities Public supporting facilities cannot be transfer with compensation: reckoned into commercial house costs by the benefit ratio; Public supporting facilities can transfer with compensation: take all supporting facilities as the cost calculation subject, summarize the costs occurred. 9.Accounting for maintenance funds According to the relevant provisions at the location of the developed projects, the maintenance funds should be collected from the house buyer or withdrawn and stated by the Company as development costs of relevant developed projects at the time of sale (presale) of the developed projects and uniformly turned in to the maintenance fund management department. 10.Accounting for quality assurance funds The quality assurance funds should be deducted from the project payment for the construction unit according to the construction contracts. Maintenance expense incurred in the warranty period of the developed projects should be written down by the quality assurance funds. The balance of the quality assurance funds should be returned to the 43 东沣科技集团股份有限公司 2019 年半年度财务报告 construction unit upon expiry of the specified warranty period of the developed projects. 16. Contract assets 17. Contract cost 18. Assets held for sale 19. Creditors’ investment 20. Other creditors’ investment 21. Long-term account receivable 22. Long-term equity investment 1. Recognition of investment cost (1) As for the long-term equity investment formed from business combination under the same control, accounting policy found in (IV) Accounting method for business combination (not) under the same control of Note IV (2) Long-term equity investment obtained by other means For long-term equity investments obtained through payment with cash, then the actual payment shall be viewed as initial investment cost. Initial investment cost including the expenses, taxes and other necessary costs that directly concerned with the long-term equity investment that acquired. For long-term equity investments obtained through issuance of equity securities, then the fair value of such securities shall be viewed as initial investment cost; for transaction expenses from issuing or own equity instrument acquired, it can be deducted from the equity when such expenses attributable directly to equity transaction. Under the precedent condition that non-monetary assets exchanges are featured with commercial nature and fair values of exchange-in or exchange-out assets can be reliably measured, long-term equity investment exchange-in through non-monetary assets exchange shall be recognized with initial investment cost on the basis of the fair value of the assets exchange-out, unless there is obvious evidence showing that fair value of exchange-in assets is more reliable; as for non-monetary assets exchanges not satisfying such precedent condition, initial investment cost of exchange-in long-term equity investment falls to the carrying value of exchange-out assets and relevant taxes payable. For long-term equity investments obtained through debt reorganization, its initial investment cost is recognized based on fair value. 2. Subsequent measurement and recognition of gains and losses (1) Cost method The long-term equity investment control by invested entity shall counted by cost method, and pricing on initial investment cost, cost of the long-term equity investment shall be adjusted while additional investment or dis-investment. Other than payment actually paid for obtaining investment or cash dividend or profit included in consideration which has been declared while not granted yet, the Company recognizes investment income according to its share in the cash dividend or profit declared for grant by the invested unit. (2) Equity method 44 东沣科技集团股份有限公司 2019 年半年度财务报告 The Company calculates long term equity investment in associates and joint ventures under equity method. For certain equity investments in associates indirectly held through risk investment institutions, joint funds, trust companies or similar entities including investment linked insurance fund, the Company measures the investment at fair value through profit or loss. Where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of the invested enterprise’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s share of the fair value of the invested enterprise’s identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period. Return on investments and other comprehensive income is recognized respectively by shares of net gains and losses realized by the invested company and other comprehensive income after acquisition of long-term equity, and book value of such investment is adjusted accordingly. Profit or cash dividends pro rata distributed by the invested company are to minus book value of the relative long-term investment. Book value of long-term investment is adjusted when changes occur other than net gains and losses, other comprehensive income and profit distribution of the invested company, and is to reported in owners’ equity accordingly The Company should recognized net profit of invested unit after adjustment, based on fair value of vary identifiable assets of invested unit while obtained investment, while recognized net profit or net losses of invested units that should be enjoy by investment enterprise. the un-realized transaction gains/losses attributable to investment enterprise, internally occurred between the Company, affiliated units and joint-ventures should calculated by proportion of shares-holding which should be offset, than recognized investment gains/losses. When the Company is confirmed to share losses of the invested units, the following order shall prevail for disposal: first of all, offset carrying value of long-term equity investment. Second, for long-term equity investment whose carrying value is not enough for offset, investment loss should be continued to recognize within the limit of carrying value of other long-term equity which substantially forms net investment to invested units, to offset carrying value of long-term items receivable. At last, after the aforesaid treatment, if enterprise still bears additional duties according to investment contract or agreement, projected liabilities are recognized in accordance to the obligations which are expected to undertake, and then recorded in current gains and losses. In the event that the invested unit realizes profit in later periods, the Company will adopt disposal adverse to the above order after deduction the unrecognized share of loss, i.e. write off the carrying value of the recognized projected liabilities, recover carrying value of long-term equity which substantially forms net investment to invested unit and long-term equity investment, and recognize investment income at the same time. 3. Transfer of calculation for long term equity investment (1) Measure at fair value transfer to equity method For the equity investment originally held by the Company in which it has no control, common control or significant influence over the invested enterprise and which is accounted for under recognition and measurement principle as financial assets, in case that the Company becomes able to exercise significant influence or common control upon the invested enterprise due to additional investment while no control is reached, the sum of fair value of the originally held equity investment as determined under Accounting Standards for Business Enterprise No.22- Recognition and Measurement of Financial Instrument plus cost of the new investment shall be deemed as the initial investment cost upon calculation under equity method. If the originally held equity investment is classified as available for sale financial assets, the difference between its fair value and carrying value and the accumulated fair value movement which is originally included in other comprehensive income shall be transferred to current period gains and losses under equity method. In case that the initial investment cost under equity method is lesser than share of fair value of the invested enterprise’s net identifiable assets as of the date when additional investment is made as calculated based on the 45 东沣科技集团股份有限公司 2019 年半年度财务报告 latest shareholding proportion upon additional investment, carrying value of the long term equity investment shall be adjusted against such difference which is included in current period non-operating income. (2) Measure at fair value or calculation under equity method transfer to calculation under cost method For the equity investment originally held by the Company in which it has no control, common control or significant influence over the invested enterprise and which is accounted for under recognition and measurement principle as financial instrument, or for long term equity investment originally held in associates or joint ventures, in case that the Company becomes able to exercise control over invested enterprise not under common control due to additional investment, the sum of fair value of the originally held equity investment plus cost of the new investment shall be deemed as the initial investment cost upon calculation under cost method when preparing separate financial statement. For other comprehensive income as recognized under equity method in respect of equity investment held prior to acquisition date, when the Company disposes this investment, the aforesaid income shall be accounted for on the same basis as the invested enterprise would otherwise adopt when it directly disposes relevant assets or liabilities. For equity investment held prior to acquisition date which is accounted for under Business Accounting Principles No.22- Recognition and Measurement of Financial Assets, the accumulated fair value movement which originally included in other comprehensive income shall be transferred to current period gains and losses upon calculation under cost method. (3) Calculation under equity method transfer to fair value measurement In case that the Company lost common control or significant influence upon invested enterprise due to disposal of part equity investment, the remaining equity investment shall be calculated under Accounting Standards for Business Enterprise No.22- Recognition and Measurement of Financial Instrument, and the difference between its fair value and carrying value as of the date when the Company lost common control or significant influence shall be included in current period gains and losses. For other comprehensive income as recognized under equity method in respect of the original equity investment, when the Company ceases calculation under equity method, the aforesaid income shall be accounted for on the same basis as the invested enterprise would otherwise adopt when it directly disposes relevant assets or liabilities. (4) Cost method transfer to equity method In case that the Company lost control upon invested enterprise due to disposal of part equity investment, and if the remaining equity investment can exercise common control or significant influence over the invested enterprise, equity method shall be adopted when preparing separate financial statement, and the remaining equity investment shall be adjusted as if it had been stated under equity method since the acquisition. (5) Cost method transfer to fair value measure In case that the Company lost control upon invested enterprise due to disposal of part equity investment, and if the remaining equity investment cannot exercise common control or significant influence over the invested enterprise, Accounting Standards for Business Enterprise No.22- Recognition and Measurement of Financial Instrument shall be adopted for accounting treatment when preparing separate financial statement, and the fair value and carrying value as of the date when control is lost shall be included in current period gains and losses. 4. Disposal of long term equity investment Difference between carrying value and actual acquisition price in respect of disposal of long term equity investment shall be included in current period gains and losses. For long term equity investment under equity method, the Company shall adopt the same basis as the invested enterprise directly disposes relevant assets or liabilities when disposing this investment, and account for the part originally included in other comprehensive income under appropriate proportion. If the terms, conditions and economic impact of each transaction involved in the disposal by steps of investment in subsidiaries fall into one or more of the following situations, such transactions will be accounted for as a package 46 东沣科技集团股份有限公司 2019 年半年度财务报告 deal: 1. Such transactions are entered into simultaneously or in the case of considering the impact of each other; 2. Such transactions as a whole in order to reach complete commercial results; 3. The occurrence of one transaction is subject to that of at least one other transaction; 4. A transaction alone is not economic, but otherwise when considered with other transactions. Enterprises that lose control of their original subsidiaries due to the disposal of partial equity investment or otherwise, and therefore disqualify a package deal, should prepare the relevant accounting treatment in differentiation with individual financial statements and consolidated financial statement: (1) In separate financial statement, as for disposal of equity interest, difference between carrying value and actual acquisition price shall be included in current period gains and losses. In case that the remaining equity interests can exercise common control or significant influence over invested enterprise, it shall be stated under equity method in stead, and shall be adjusted as if the remaining equity interests had been stated under equity method since the acquisition. In case that the remaining equity interests cannot exercise common control or significant influence over invested enterprise, it shall be accounted for under Business Accounting Principles No.22- Recognition and Measurement Principle of Financial Instruments, and the difference between its fair value and carrying value as of the date then the Company lost control shall be included in current period gains and losses. (2) In consolidated financial statement, for those transactions occurred before lost of control in subsidiaries, the difference between disposal price and share of net assets of subsidiaries since purchase date or combination date shall be used to adjust capital reserve (equity premium), and if capital reserve is insufficient to offset, then it shall adjust retained earnings; when the Company lost control in a subsidiary, the remaining equity interests would be re-measured at the fair value as of the control-lost date. The sum of consideration gained from the disposal of equity and the fair value of remaining equity minus the share of net assets of original subsidiaries since the day of purchase and based on its original shareholding ratio is credited into investment gain for the current period, and off-set the goodwill at the same time. Other comprehensive income in relation to equity investments of original subsidiaries should be transferred to investment gain for the period at the time of loss of control. Each transaction involved in the disposal of equity investments of subsidiaries until loss of control falls into a package deal, carrying accounting treatment on transaction of losing control rights and disposing the company, and should be accounted for accordingly in differentiation with individual financial statements and consolidated financial statements: (1) In consolidated financial statements, difference between each payment from disposal of an equity and the book value of such long-term equity investment before the loss of control should be recognized as other comprehensive income and at the time of loss of control, transferred to profit or loss for the current period. (2) In consolidated financial statements, difference between each payment from disposal of a subsidiary and the share of its net assets through investment before the loss of control should be recognized as other comprehensive income and at the time of loss of control, transferred to profit or loss for the current period. 5. Criteria for common control and significant influence Where the Company jointly controls an arrangement with other participators under agreed terms, and decisions which materially affect return of such arrangement can only exist when other participators unanimously agree on the decisions, the Company is deemed to jointly control this arrangement with other participators, and the arrangement belongs to joint venture arrangement. In case of a joint venture arrangement concluded through separate entity, when the Company is judged to be entitled to the net assets of the separate entity under relevant agreements, the entity shall be viewed as a joint venture under equity method. However, when the Company is judged to be not entitled to the net assets of the separate entity under relevant agreements, the entity shall be viewed as a joint operation, in which case, the 47 东沣科技集团股份有限公司 2019 年半年度财务报告 Company recognizes items relating to its share of interests from the joint operation and accounts for according to relevant business accounting rules. Significant influence refers to that investor has right to participate in making decisions relating to the financial and operational policies of the invested enterprise, while not able to control or jointly control (with others) establishment of these policies. The following one or more conditions are based to judge whether the Company has significant influence over invested enterprise with consideration of all facts and situations: (1) Has delegate in the board of directors or similar authority organs of invested enterprise; (2) Participate in establishing financial and operational policies of the invested enterprise; (3) Occur material transactions with the invested enterprise; (4) Delegate management to the invested enterprise; (5) Provide key technical data to the invested enterprise. 23. Investment real estate Measurement model of investment real estate Measure by cost Depreciation or amortization method Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including the rented land use rights and the land use rights which are held and prepared for transfer after appreciation, the rented buildings. Besides, in respect of any vacant building held by the Company ready for operation lease, if the Board passed a written resolution to expressly indicate that the building will be used for operation lease and the intention of such hold will not change in a short run, the building shall be presented as investment property either. The investment property of the Company is accounted at its cost. Cost of investment property purchased from the external sources includes purchase payment, related taxes and other expenditures which can be directly attributable to such assets; Cost of investment property constructed by the Company comprise of the necessary expenditure occurred during the construction for reaching the condition of planned use. Consequent measurement of investment estate shall be measured by cost method. Depreciation and amortization are provided to the buildings and land use right pursuant to the predicted service life and net rate of salvage value. The predicted service life and net rate of salvage value and annual depreciation (amortization) are listed as follows: Type Expected operating life (year) Predicted rate of net salvage value Yearly depreciation (amortization) Land Use Right 50 0%-10% 1.80%-2.00% House and buildings 20-28 0%-10% 3.56%-4.50% When investment real estate turns to be used by holders, it shall switch to fixed assets or intangible assets commencing from the date of such turning. And when self-used real estate turns to be leased out for rental or additional capital, the fixed assets or intangible assets shall switch to investment real estate commencing from the date of such turning. In situation of switch, the carrying value before the switch shall be deemed as the credit value after the switch. Indication of impairment is assessed, the recoverable amount shall be estimated and the impairment shall be recognizing while the recoverable amount lower than its book value. Impairment loss once recognized shall not be reversed. When investment is disposed, or out of utilization forever and no economic benefit would be predicted to obtain through the disposal, the Company shall terminate recognition of such investment real estate. The amount of 48 东沣科技集团股份有限公司 2019 年半年度财务报告 income from disposal, transfer, discarding as scrap or damage of investment real estate after deducting the asset’ s carrying value and relevant taxation shall be written into current gains and losses. 24. Fixed assets (1) Recognition Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation & management, and have more than one year of service life. Fixed assets should be recognized for qualified the followed conditions at the same time: (1) It is probable that the economic benefits associated with the assets will flow into the Company; and (2) The cost of the assets can be measured reliably. (2)Depreciation method Category Method Years for depreciation Residual rate Annual depreciation rate Houses and buildings Straight-line method 20.00-28.00 5.00 3.39%-4.75% Machinery equipment Straight-line method 4.00-5.00 5.00 19.00%-23.75% Transportation Straight-line method 5.00-20.00 5.00 4.75%-19.00% equipment Other equipment Straight-line method 3.00-5.00 5.00 19.00-31.67% (3) Basis of asserting, pricing and depreciation method on fixed assets under financing lease A fixed asset leased by the Company is recognized as the fixed asset held under finance lease if one or more of the following criteria are met: (1) Upon the expiry of the lease term, the ownership is transferred to the Company. (2) The Company has the option to purchase the leased asset at a predetermined price that is expected to be much lower than the fair value of the leased assets when the option is exercised. Therefore, it can be reasonably determine that the company will exercise this option on the lease start date. (3) The lease term approximates the useful life of the relevant asset even if the ownership is not transferred. (4) At the inception of the lease, the present value of the minimum lease payments is substantially equivalent to the fair value of the leased asset. (5) The leased assets are of such a specialized nature that only the Company can use them without major modification. A fixed asset held under finance lease is initially recognized at the lower of fair value of the leased asset and the present value of the minimum lease payments, while the amount of the minimum lease payments will be recognized as the entry value of long-term account payable, the difference between them will be recognized as unrecognized financing costs. The initial direct costs such as commissions, attorney’s fees, and travelling expenses, stamp duties attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value. Unrealized finance costs will be amortized using actual interest rate method over each period during the lease terms. The Company adopts depreciation policies for leased assets consistent with those of self-owned fixed assets for the purpose of calculating the depreciation of a leased asset. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life. 49 东沣科技集团股份有限公司 2019 年半年度财务报告 25. Construction in process 1. Classification of constructions under progress The construction in progress constructed by the Company on its own shall be measured at the actual cost which comprises of all the necessary expenses occurred to enable the asset to meet such conditions as required for expected purpose, including engineering materials cost, labor cost, relevant tax payment, loan expenses which should be capitalized and indirect expenses which should be amortized, etc. 2. Standard and point of time for construction in process carrying forward to fixed assets Fixed asset is booked with the entire expenditures occurred in the construction in process till it arrives at predicted state for use. For those constructions in process of fixed assets which have already arrived at the predicted state for use, while still with absence of completion settlement, they shall be carried forward to fixed assets at the estimated value based on engineering budget, construction cost or actual cost commencing from the date of arrival of the predicted state for use. Meanwhile, they shall be also subject to the depreciation policies applicable to fixed assets of the Company for provision of depreciation. Once completion settlement is made, the original temporary estimated value shall be adjusted at the effective cost. However, the original provision of depreciation remains unchanged. 3. Impairment test and impairment provision for construction in process The Company determines whether there is evidence of impairment that may occur upon construction in progress at end of each period. If there is indication of impairment of construction in progress, the Company shall estimate its recoverable amount. The recoverable amount is to be determined by the higher between the net price of the fair value of construction in progress after subtracting costs of disposal and the present value of expected future cash flow from construction in progress. When the recoverable amount of construction in progress is below their book value, the book value of construction in progress shall be written down to its recoverable amount, and the amount of write-down shall recognized as impairment loss of construction in progress, and included into current profits and losses. At the same time, the provision for depreciation of construction in progress shall be accrued. After the recognition, the impairment loss of construction in progress shall not be reversed in subsequent accounting period. If there are indications showing that impairment of certain construction in progress is possible, the Company shall estimate its recoverable amount based on individual construction. If difficult to do so, the Company shall determine the recoverable amount of the assets group on basis of the asset groups to which the construction in progress belongs. 26. Borrowing expenses 1. Recognition of the borrowing expenses capitalization Borrowing expenses that attributed for purchasing or construction of assets that are complying with capitalizing conditions start to be capitalized and counted as relevant assets cost; other borrowing expenses, reckoned into current gains and losses after expenses recognized while occurred. Assets satisfying the conditions of capitalization are those assets of fixed, investment real estate etc. which need a long period of time to purchase, construct, or manufacturing before becoming usable. Capitalizing for borrowing expenses by satisfying the followed at same time: (1) Assets expense occurred, and paid as expenses in way of cash, non-cash assets transfer or debt with interest 50 东沣科技集团股份有限公司 2019 年半年度财务报告 taken for purchasing, constructing or manufacturing assets that complying with capitalizing condition; (2) Borrowing expenses have occurred; (3) Necessary activities occurred for reaching predicted usable statues or sale-able status for assets purchased, constructed or manufactured. 2. Period of capitalization Capitalizing period was from the time star capitalizing until the time of suspended capitalization. The period for borrowing expenses suspended excluded in the period. If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization reached its predicted usable status or sale-able status, capitalization suspended for borrowing expenses. If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization completed projects and usable independently for part of the projects, borrowing expenses for this kind of assets shall suspended capitalization. If the assets have been completed in every part, but can be reached the useful status or sale-able status while completed entirely, the borrowing expense shall be suspended for capitalization while the assets completely finished in whole. 3. Period of suspended If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization is suspended abnormally for over 3 months, capitalizing of borrowing expenses shall be suspended; the suspended assets that satisfying the conditions of capitalization meets the necessary procedure of reaching predicted usable status or saleable status, capitalizing of borrowing expenses shall be resumed. The borrowing expenses occurred during the period of suspended shall reckon into current gains and losses until the purchasing, construction, or manufacturing process is resumed for capitalizing. 4. Calculation for capitalization amount Interest expenses practically occurred at the current term of a special borrowing are capitalized after deducting of the bank saving interest of unused borrowed fund or provisional investment gains Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of accumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common borrowings adopted. Capitalization rates are decided by the weighted average of common borrowings. For those expenses with discount or premium, determined the amortizable discount or premium in every fiscal year by effective interest method, than adjusted interest amount in every period 27. Biological assets 1. Classification The biological assets of the Company refer to consumptive biological assets and productive biological assets. The consumptive biological assets including young and livestock etc., productive biological assets including eggs etc. Biological assets are recognized upon satisfaction of the following conditions: (1) The company owns or controls the biological asset due to the past transaction or proceeding; (2) The economic benefits or service potential related to the biological assets are likely to flow into the company; (3) Cost of the biological assets can be measured reliably. 2.Initial measurement of biological assets Biological assets acquired by the Company is initially measured at the acquired cost. Cost of purchasing biological assets comprises of purchase price, relevant tax, delivery expense, insurance premium and other expenditure directly attributable to purchase of such asset. Biological assets injected by investors are accounted for with the 51 东沣科技集团股份有限公司 2019 年半年度财务报告 value set out in the investment contract or agreement plus tax payable as the carrying value of the assets. However, if the value set out in the contract or agreement is not fair, the actual cost shall be determined at fair value. 3.Subsequent measurement of biological assets (1)Subsequent expenditure The cost of a consumptive biological asset that is propagated or bred by the Company itself is determined according to the necessary expenses, such as the feed fee, the labor cost and the indirect cost that should be allocated before the sale. Cost of the self propagating productive biological assets is determined according to the necessary expenses, such as the feed fee, the labor cost and the indirect cost that should be allocated before the asset satisfies the expected production and operation purposes. The subsequent expenditures of biological assets occurred after the asset satisfies the expected production and operation purposes, such as management and maintenance, raising expenses, etc, are recorded in current profits and losses. (2)Depreciation of productive biological assets For such productive biological assets as satisfy their expected production and operation purposes, the Company makes provision of depreciation over their periods on an average basis. The Company determines its service life and anticipated net residual value according to the nature and service condition of the productive biological assets and the anticipated implementation way of the related economic interests. At the end of the year, the Company re-checks the service life, anticipated net residual value and depreciation method of the productive biological assets, and adjusts correspondingly if it differs from the original assessment. The expected service life, anticipated net residual value and yearly depreciation of the productive biological assets of the Company are as follows: Category Estimated useful life (Year) Estimated residual rate Yearly depreciation rate Eggs 1 5% 95% Sheep and pigs 3 5% 31.67% (3)Disposal of biological assets The Company adopts weighted average method to carry forward cost of consumptive biological assets when acquiring or disposing such asset; cost of a biological asset after change of purpose is determined based on the carrying value as of such change; for sale, destroy or deficit of a biological asset, the balance between the disposal income less carrying value and relevant taxes should be recorded in current profit or loss. 4. Impairment of biological assets The Company conducts inspection of consumptive and productive biological assets at least once at the end of each year. If there is any evidence proving that the net realizable value of consumptive biological assets or recoverable amount of productive biological assets is less than carrying value due to natural disaster, disease or insect pests, animal epidemic disease invasion or market demand change, the assets shall be measured at net realizable value or recoverable amount. For any difference lower than the carrying value, the Company makes devaluation provision or impairment provision for biological assets and records in current profit or loss. In case that the factors affecting impairment of consumptive biological assets disappear, the reduced amount shall be restored and reverted from the devaluation provision previously made with the amount reverted recorded in current profit or loss. However, impairment provision for productive biological assets, once made, will be reverted in no way. 52 东沣科技集团股份有限公司 2019 年半年度财务报告 28. Oil and gas assets 29. Right-of-use assets 30. Intangible assets (1) Pricing method, service life and impairment test An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company, including land use right and non-patented technology etc. 1. Initial measurement of intangible assets For those intangible assets purchased from outside, the purchase value, relevant taxes and other payments attributable to predicted purpose obtained should recognized as cost for this assets. For those purchased amount that paid overdue exceeded the normal credit condition, owns financing natures actually, the cost should be recognized based on the current value while purchased As for the intangible assets acquired from the debtor in debt restructuring for the purpose of settlement of debt, the fair value of the intangible assets shall be based to determine the accounting value. The difference between the carrying value of restructured debt and the fair value of the intangible assets use for settlement of debt shall be recorded in current gains and losses. With the preceding conditions that non-monetary assets exchange has commerce nature and the fair value of the assets exchanged in or out can be measured reliably, the intangible assets exchanged in through non-monetary assets exchange are accounted at the value based on the fair value of assets exchanged out, unless there is obvious evidence showing the fair value of assets exchanged in is more reliable; for non-monetary assets exchange not qualifying for the preceding conditions, the carrying value of assets exchanged out and related taxes payable shall be viewed as the cost of intangible assets exchanged in, without recognition of gains and losses. Intangible assets obtained by means of enterprise combined under common control, recognized book-keeping value by the book value of combined party; Intangible assets obtained by means of enterprise combined under different control, recognized book-keeping value by the its fair value. For those cost of intangible assets development internally including: the used materials, labor cost and register charge for development; amortization for other patent and concession used and interest expense satisfying the capitalization condition during process of development; other directly expense before reached its predated useful purpose. 2. Subsequent measurement Analysis and determined the service life for intangible assets while obtained. And classified into intangible assets with limited useful life and assets without certain service life (1) Intangible assets with limited useful life Those intangible assets with limited useful life are evenly amortized on straight basis from the date when they become useful to the end of expected useful life. Particular about the estimation on intangible assets with limited service life: Item Predicted useful life Basis Patent right, trademark right, non-patents and 5-year Within the terms of contractual rights or other statutory outsourcing software rights 53 东沣科技集团股份有限公司 2019 年半年度财务报告 Land Use Right 50-year Within the terms of contractual rights or other statutory rights At end of year, revising will be performed on the useful life of intangible assets with limited useful life and the methods of amortizing, if there is a difference with the original estimation, adjustment shall be implemented correspondingly Being revised, the useful life of intangible assets and amortization method at period-end shows the same as previous (2) Judgment basis of criterion for intangible assets without certain service life Intangible assets for which it is impossible to predict the term during which the assets can bring in economic benefits are viewed as intangible assets with indefinite life. Intangible assets with indefinite life are not amortized during the holding period, and useful life is re-reviewed at the end of each accounting period. In case that it is still determined as indefinite after such re-review, then impairment test will be conducted continuously in every accounting period. At end of year, revising will be performed on the useful life of intangible assets with uncertain life. The Company has no such intangible assets without certain service life after review. (2) Accounting policy for expenditure of internal R&D 1. Detail standard for classification on research stage and exploitation stage Research stage: stage of a planned investigation or research activity designed to acquire and understand new scientific or technological knowledge. Exploitation stage: stage of the activities that produced new or material advance materials, devices and products that by research results or other knowledge adoption in certain plan or design before the commercial production or usage. The expenditure of the research stage in R&D project internally shall reckon into current gains and losses while occurred. 2. Standards for capitalization satisfaction of expenditure in exploitation state Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time: (1) Owes feasibility in technology and completed the intangible assets for useful or for sale; (2) Owes the intention for completed the intangible assets and for sale purpose; (3) The way in which intangible assets generate economic benefits include proving that the products produced by the intangible assets exist in the market or that the intangible assets them selves exist in the market, that the intangible assets will be used internally and that their usefulness can be proved; (4) Possess sufficient technique, financial resources and other resources for the development of kind of intangible assets and has the ability for used or for sale; (5) The expenditure attributable to the exploitation stage for intangible assets could be measured reliably. 31. Impairment of long term assets Long term asset is judged whether for which there is indication of impairment on balance sheet date. If there is indication of impairment, the Company would estimate its recoverable amount based on single asset; if it is difficult to estimate the recoverable amount of single asset, then the assets group which the single asset belongs to is based to determine the recoverable amount of the assets group. 54 东沣科技集团股份有限公司 2019 年半年度财务报告 Recoverable amount of an asset is determined at the higher of its fair value less disposal fee and present value of its predicted future cash flow. If measurement of recoverable amount shows that the recoverable amount of long term asset is lower than carrying value, and then the carrying value shall be deducted to recoverable amount, with the deducted amount recognized as impairment loss which is included in current period gains and losses, meanwhile, asset impairment provision shall be made accordingly. Once recognized, asset impairment loss would not be reversed in future accounting period. Once an asset is recognized for impairment loss, its depreciation or amortization expense would be adjusted in future periods, so as to systematically allocate the adjusted asset carrying value (after deduction of predicted net residual value) during the remaining useful life. Goodwill arising from business combination and intangible assets with indefinite useful life shall be tested annually for impairment whether or not there is indication of impairment. Goodwill is tested for impairment with the related assets group. When conducting impairment test for relevant asset group with inclusion of goodwill, in case that there is indication of impairment for such asset group, impairment test would be firstly conducted in respect of the asset groups without inclusion of goodwill. Then, it shall calculate the recoverable amount and determine the corresponding impairment loss as compared to its carrying value. Second, asset group with inclusion of goodwill would be tested for impairment. If it is found after comparison between the carrying value and recoverable amount of the asset group that the recoverable amount is less than carrying value, the Company would recognize impairment loss for goodwill. 32. Long-term expenses to be apportioned 1. Amortization method Long term prepaid expense represents the expense which the Company has occurred and shall be amortized in the current and later periods with amortization period exceeding one year. Long term prepaid expense amortized on straight-line method by stages in benefit period. 2. Amortization term Amortized equally during the benefit period for those long-term expenses whose has a defined benefit period, for those without a defined benefit period, amortized equally within 5 years. 33. Contract liability 34. Employee compensation (1) Accounting treatment of short-term remuneration Short term remuneration refers to all the staff remuneration payable by the Company to its staff within 12 months after the end of annual reporting period in which staff provides relevant services, other than post office benefit and dismissal benefits. The Company recognizes short term remuneration payable as liabilities during the accounting period during which staff provides services, and includes in cost and expense of relevant asset according to the beneficial parties of such services. 55 东沣科技集团股份有限公司 2019 年半年度财务报告 (2) Accounting treatment of post office benefits Post office benefits refer to kinds of remuneration or benefits granted by the Company to staff for their provision of service upon retirement or release of employment, other than short term remuneration and dismissal benefits. Post benefit plan is categorized as defined withdraw plan and defined benefit plan. Defined withdraw plan under post office benefit mainly represents participation into social basic pension insurance and unemployment insurance operated by labor and social security authorities. During the accounting period when employee provides services for the Company, the contribution calculated under defined withdraw plan would be recognized as liabilities and included in current gains and losses or relevant asset cost. Defined benefit plans for post-employment benefits are primarily clear and standard outside-plan welfare to pay the retirees and pay the living expenses for the deceased employees’ family members. For the obligation assumed in the defined benefit plans, the independent actuaries will accurately calculate by using the expected cumulative actuarial unit credit method on the balance sheet date, attribute the benefit obligations arising from defined benefit plan to the period of employee providing services, and include in the current profit or loss or associated asset cost, thereinto, unless other accounting standards require or allow the employee benefits costs to be included in the asset cost, the service costs of defined benefit plans and the net interest of net indebtedness and net assets of defined benefit plans should be included in the current profit and loss in the current occurrence period; changes in the net indebtedness and net assets of re-measured defined benefit plans should be included in the other comprehensive income in the current occurrence period, and are not allowed to switch back to profit and loss in the follow-up accounting period. (3) Accounting treatment of dismissal benefit Dismissal benefit represents compensation paid to employees for release of employment before expiration or as compensation for their willing of cut, if the Company cannot recall the dismissal unilaterally or re-organization-related costs with dismissal benefit involved in cutting down, the liability arising from compensation for recognition of labor relationship released, reckoned into current gains/losses at the same time. (4) Accounting treatment of other long term staff benefits 35. Lease liability 36. Accrual liability When the Company is involved in proceedings, debt guarantees, onerous contracts and reorganization events, if such events may require delivery of assets or rendering of services in the future and the amounts of such events can be reliably measured, accrued liabilities are recognized. 1. Recognition criteria of accrued liability The Company recognizes the accrued liabilities when obligations related to contingencies satisfy all the following conditions: This obligation is a present obligation of the Company; The performance of such obligation is likely to result in outflow of economic benefits from the Company; and The amount of the obligation can be measured reliably. 56 东沣科技集团股份有限公司 2019 年半年度财务报告 2. Method of measuring of accrued liabilities Accrued liabilities shall be initially measured at the best estimate of the expenditure required to settle the related present obligation. The Company, when determining the best estimate, has had 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 estimate shall be determined after discounting the relevant future outflow of cash. The best estimate will be dealt with separately in the following circumstances: The expenses required have a successive range (or band), in which the possibilities of occurrence of each result are the same, and the best estimate should be determined as the middle value for the range, i.e. the average of the upper and lower limit. The expenses required does not have a successive range (or band), or although there is a successive range (or band), the possibilities of occurrence of each result are not the same, if the contingency is related to individual item, the best estimate should be determined as the most likely amount; where the contingency is related to a number of items, the best estimate should be calculated and determined according to the possible results and the relevant possibilities. When all or part of the expenses necessary for the settlement of an estimated liability of the Company is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the compensation will be received. The amount recognized for the compensation should not exceed the book value of the estimated liability. 37. Share-based payment 1. Category of share-based payment Share-based payment of the Company divided into share-based payment settled by equity and by cash 2. Determination of fair value of equity instruments If there is an active market for an equity instrument granted such as share option, the quoted price in the active market is used to establish the fair value of the equity instrument. If there is no active market for the equity instrument granted such as share option, the option pricing model is used to determine the fair value. Option pricing model is elected after taking into account the following factors: (1) Exercise price of the option; (2) Effective period of the option; (3) Prevailing price of the subject shares; (4) Predicted fluctuation rate of share prices; (5) Predicted dividend of shares; (6) Risk-free interest rate of the option in effective period. When determining fair value of equity instruments on the date of grant, influences from market conditions among conditions available for exercising rights and those not available for exercising rights as provided in share-based payment agreement should be considered. If there is condition not available for exercising rights in respect of share-based payment, cost expenses attributable to services received can be recognized provided that employees or other parties satisfy all the non-market conditions among conditions available for exercising rights (such as service term). 3. Bases for determining the best estimate for equity instruments with feasible rights On each balance sheet date during the vesting period, best estimate shall be made based on the latest available information on change of employees who are entitled to exercise right, and number of equity instruments of the feasible rights shall be amended accordingly. On the feasible date, the number of instruments of the feasible rights and interests is eventually predicted to be the same as the actual number of feasible rights. 4. Accounting treatment method Equity-settled share-based payment is measured at fair value of equity instruments granted to staff. For equity instruments which are exercise immediately upon grant, they are included in relevant costs or expenses at fair 57 东沣科技集团股份有限公司 2019 年半年度财务报告 value of the instruments as of the date of grant, with increase of capital reserve accordingly. For instruments for which exercise is conditional upon completion of service in vesting period or satisfaction of required results, services received in current period are included in relevant costs or expenses and capital reserve at the fair value of the equity instrument as of the date of grant based on the best estimate of the feasible rights of equity instruments on each balance sheet date during the vesting period. Recognized relevant costs or expense and total owners’ equity will not be adjusted after the exercise date. The cash-settled share-based payment shall be measured at the fair value of liabilities identified on the basis of shares or other equity instruments undertaken by the Group. For the instruments that may be exercised immediately after the grant, the fair value shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For instruments that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the feasible rights, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Group. The Group shall, on each balance sheet date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the profit or loss for the period. 5. Amendment and relevant accounting treatment for those with amendment clauses and condition concerned During the vesting period, where an equity instrument award is canceled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is included immediately into the profit or loss for the period and capital reserve is recognized. Where employees or other parties are permitted to choose to fulfill non-vesting conditions but have not fulfilled during the vesting period, equity instrument award are deemed canceled. 38. Other financial instrument as preferred stock and perpetual capital securities 39. Revenue Whether the company needs to comply with the disclosure requirements of the particular industry No Whether implemented the new revenue standards □Yes √No Revenue of the Company mainly including revenue from goods selling, sale of real estate, and revenue from property rent-out and labor service revenue etc. 1. Recognition standards of income from commodity sales: When main risks and rewards attached to the ownership of goods have been transferred to the buyer, reserved neither continuous management power nor effective control over the goods, incoming payment can be measured reliably, relative financial benefit possibly inflow to the company, cost occurred or will occur can be reliably measured, sales income of goods is recognized. 2. Sales revenue recognition for property industry: (1) Construction completion and qualified acceptance of properties; (2) Commercial property pre-sale license granted by relevant state resources and housing bureau; (3) Enter into sales contract; 58 东沣科技集团股份有限公司 2019 年半年度财务报告 (4) Sales contract has been certified and confirmed by property exchange center; (5) Receive property price or obtain payment certificate from buyers; (6) Complete deliver procedure for commercial properties. Upon satisfaction of all the above conditions, the Company recognizes sales revenue 3. Recognition of property leasing revenue: Property leasing revenue is recognized when the Company receives rental or obtain payment certificate from buyers based on the payment date and rental amount to be paid by lessee as provided in the contract or agreement entered into between the Company and the lessee. 4. Labor service revenue (1) Income of the contract can be measured reliably (2) Financial benefit attached to the contract is possibly inflow to the company (3) Schedule of the contracted project can be determined reliably; (4) And the relevant amount of cost incurred or to be incurred can be measured reliably 5. Recognition basis of revenue from transferring the use right of assets The economic benefits related to transactions are probable to flow into the Company; and amount of revenue can be measured reliably. 40. Government grants 1. Type Government grant represents the monetary and non-monetary assets of the Company obtained from government agencies for free. Depending on the grantees under relevant government documents, government grant is classified into grant related to assets and income, respectively. For such government grant under which no specific grantee is defined, it is classified as grant related to assets or income depending on the actual grantee. The details relating to relevant judgment reference is set out in note VI to this financial statement - deferred income/non-operating income. Government grant related to assets refers to that obtained by the Company for the purpose of acquiring or otherwise forming long term assets. Government grant related to income refers to that other than that related to assets. 2.Realization of government grant Where there are evidences showing that the Company meets the requirements of the financial supporting policies and it is expected that the financial supporting funds will be received, the government grant is recognized on the receivables. Otherwise, the government grant is recognized when actually received. The grant is measured as the amount received or receivable where it takes the form of a cash asset, or at fair value where it is not a cash asset. Where the fair value cannot be reliably obtained, it should be measured at the nominal value (RMB1.00). government grants measured at nominal value will be recorded in profit or loss for the period directly. 3.Accounting treatment Government grant related to assets constructed or purchased is realized as deferred income, and included in profit or loss by stages over the assets’ useful life in a reasonable and systematic manner; Government grant related to income, if it is used to compensate relevant expense or loss of a company to be occurred in future periods, shall be recognized as deferred income and included in profit or loss during the period in which the above expense or loss is recognized; if it is used to compensate relevant expense or loss of a company 59 东沣科技集团股份有限公司 2019 年半年度财务报告 incurred, it shall be included in profit or loss upon acquisition. Government grant related to a company’s normal operation is recognized as other income, and otherwise, as non-operating income or expense. Borrowing expense shall be reduced against the government grant received by a company provided that the grant is related to policy preferential loan discount. If the Company is granted by lending bank with policy preferential loan interest, the amount of borrowing actually received shall be taken as the carrying value of the borrowing with borrowing expense calculated based on principal of the borrowing and such policy preferential loan interest. If a government grant recognized is required to return, carrying value of the asset shall be adjusted if the carrying value is written down at initial recognition; balance of carrying value of deferred income shall be written down if there such balance exists with the amount of excess included in current profit or loss; it shall be directly included in current profit or loss if no relevant deferred income exists. 41. Deferred income tax assets / Deferred income tax liabilities Deferred tax assets and deferred tax liabilities are calculated and recognized according to the balance between the tax base and the book value of assets and liabilities (temporary differences). At the balance sheet date, the deferred tax assets and deferred tax liabilities are measured by the applicable tax rate during the period of expected recovery of assets or clearing off the liability. 1. The basis for confirming deferred tax assets The Company takes the taxable income which is likely to be obtained for deducting the deductible temporary differences and can carry over the deductible loss and tax credits as the limit to confirm the deferred income tax assets generated by deductible temporary differences. However, the deferred income tax assets generated by the initial recognition of assets or liabilities in the transactions with following characteristics shall not be recognized: (1) The transaction is not a business combination; (2) The occurrence of transaction affects neither the accounting profit nor the taxable income or deductible loss. For the deductible temporary differences associated with investments in associated enterprises and satisfying the following conditions, confirm the corresponding deferred income tax assets: temporary difference is likely to be reversed back in the foreseeable future, and it is likely to obtain the taxable income used for deducting the deductible temporary differences in the future. 2. The basis for confirming deferred tax liabilities The company recognizes the currently and previously payable but not paid taxable temporary differences as the deferred income tax liabilities. But not including: (1) The temporary differences formed in the initial recognition of goodwill; (2) Transactions or events formed by non-business combination, and it affects neither the accounting profit nor the temporary differences formed by taxable income (or deductible loss) when the transactions or events occur; (3) For the taxable temporary differences related to the subsidiary companies and investments in associated enterprises, the reversal time of this temporary difference can be controlled and this temporary difference is unlikely to be reversed back in the foreseeable future. 3. Deferred tax assets and liabilities are offset if all the following conditions are met (1) An enterprise has the legal rights to settle the income tax assets and income tax liabilities for the current period by net amount; (2) They relate to income taxes levied by the same tax authority on either the taxable entity has a legally enforceable right or set off current income tax assets against current income tax liabilities, and different taxable entities which either intend to settle the current income tax liabilities and assets on a net basis, or to realize the 60 东沣科技集团股份有限公司 2019 年半年度财务报告 assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. 42. Lease (1) Accounting treatment of operation lease (1) Assets under operation lease-in The lease payment paid for leasing assets is amortized under straight line method in the entire lease period without deduction of lease-for-free period, and is recorded in current expenses. The initial direct expenses paid by the Company related to lease transactions shall be recorded in current expenses. If asset leaser assumes the lease related expenses which shall be assumed by the Company, the Company shall deduct such expenses from the total rental and amortize based on the deducted rental expenses during the lease period and record in current expenses. (2) Assets under operation rent-out The lease fee collected by the Company for assets lease is amortized under straight line method in the entire lease period without deduction of lease-for-free period, and is realize as lease income. The initial direct expenses paid by the Company related to lease transactions shall be recorded in current expenses; for significant amount, it shall be capitalized and recorded in current income in phases under the same basis as realization of lease income in the entire lease period. If the Company assumes the lease related expenses which shall be assumed by the lessee, the Company shall deduct such expenses from the total rental income and allocate based on the deducted rental expenses during the lease period. (2) Accounting treatment of financing lease (1) Assets leased by financing lease: the Company accounts the leased assets at the lower of the fair value of leased assets and present value of the minimum lease payment on the inception date of the lease, and the minimum lease payment is deemed as the accounting value of long term account payable, and the difference is taken as unrealized financing expenses. The identification basis, evaluation and depreciation method for assets leased by financing lease found more in the Fixed assets in Note IV (15) The Company amortizes the unrealized financing expenses at effective interest rate method in the asset lease period and records in finance expenses. (2) Assets leased out by financing lease: at the beginning of the lease, the Company recognizes the difference between the sum of financial lease receivable and the unsecured residual value and its present value as unrealized financing income, and recognized as rental income during the period of rents accepted; the initial direct expenses incurred by the Company in connection with the lease transaction are included in the initial measurement of financial lease receivable and the amount of revenue recognized during the lease period is reduced. 43. Other important accounting policies and accounting estimates Discontinued operation The Company recognizes a component as discontinued operation component if it meets any of the following conditions, it has been treated or classified as held for sale and can be distinguished from others: (1)the component represents an independent major business or a separate major operation region. (2)the component is a part of a related plan proposed for the purpose of treatment of an independent major business or a separate major operation region. 61 东沣科技集团股份有限公司 2019 年半年度财务报告 (3)the component is a subsidiary particularly acquired for resale. Impairment loss, reverted amount and other operating gains and losses or disposal gains and losses of discontinued operation are presented in profit statement as profit or loss from discontinued operation. 44. Changes of main accounting policy and estimate (1)Changes of accounting policies □ Applicable √ Not-applicable (2)Changes in important accounting estimates □ Applicable √ Not-applicable (3)Adjustment the financial statements at the beginning of the first year of implementation of new financial instrument standards, new revenue standards and new leasing standards √ Applicable □ Not-applicable Consolidate balance sheet In RMB Item 2018-12-31 2019-01-01 Adjustment Current assets: Monetary fund 36,306,825.10 36,306,825.10 Settlement provisions Capital lent Trading financial assets Financial assets measured on fair value and with its changes reckoned into the current loss/gain Derivative financial assets Note receivable Account receivable 11,171.25 11,171.25 Receivables financing Accounts paid in 61,099,009.67 61,099,009.67 advance Insurance receivable Reinsurance receivables 62 东沣科技集团股份有限公司 2019 年半年度财务报告 Contract reserve of reinsurance receivable Other account 8,588,597.44 8,588,597.44 receivable Including: interest receivable Dividend receivable Buying back the sale of financial assets Inventory 151,585,557.50 151,585,557.50 Contract assets Assets held for sale Non-current asset due within one year Other current assets 37,786,874.66 37,786,874.66 Total current assets 295,378,035.62 295,378,035.62 Non-current assets: Loans and payments on behalf Creditors’ investment Financial assets 16,331,037.08 -16,331,037.08 available for sale Other creditors’ investment Held-to-maturity investment Long-term account receivable Long-term equity investments Other equity instrument 16,331,037.08 16,331,037.08 investment Other non-current financial assets Investment real estate Fixed assets 17,302,279.65 17,302,279.65 63 东沣科技集团股份有限公司 2019 年半年度财务报告 Construction in process 101,650,833.16 101,650,833.16 Productive biological 121,437.50 121,437.50 asset Oil and gas asset Right-of-use asset Intangible assets 56,686,960.59 56,686,960.59 Expense on Research 13,346,410.47 13,346,410.47 and Development Goodwill 1,543,786.41 1,543,786.41 Long-term prepaid 266,884.56 266,884.56 expenses Deferred income tax asset Other non-current asset 121,743,152.36 121,743,152.36 Total non-current asset 328,992,781.78 328,992,781.78 Total assets 624,370,817.40 624,370,817.40 Current liabilities: Short-term loans Loan from central bank Capital borrowed Trading financial liability Financial liabilities measured on the fair value and with its changes reckoned into the current loss/gain Derivative financial liability Notes payable Accounts payable 6,668,789.67 6,668,789.67 Accounts received in 16,269,319.99 16,269,319.99 advance Selling financial asset of repurchase Absorbing deposit and interbank deposit 64 东沣科技集团股份有限公司 2019 年半年度财务报告 Security trading of agency Security sales of agency Wage payable 981,089.59 981,089.59 Taxes payable 921,967.58 921,967.58 Other accounts payable 118,570,218.85 118,570,218.85 Including: Interest 193,333.41 193,333.41 payable Dividend payable Commission charge and commission payable Reinsurance payable Contract liability Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 143,411,385.68 143,411,385.68 Non-current liabilities: Insurance contract reserve Long-term loans 101,710,000.00 101,710,000.00 Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax liabilities 65 东沣科技集团股份有限公司 2019 年半年度财务报告 Other non-current liabilities Total non-current liabilities 101,710,000.00 101,710,000.00 Total liabilities 245,121,385.68 245,121,385.68 Owners’ equity: Share capital 706,320,000.00 706,320,000.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital reserve 463,681,309.55 463,681,309.55 Less: treasury stock 19,718,613.55 19,718,613.55 Other comprehensive income Reasonable reserve Surplus reserve 76,791,550.17 76,791,550.17 Provision of general risk Retained profit -875,480,247.09 -875,480,247.09 Total owner’s equity attributable to parent 351,593,999.08 351,593,999.08 company Minority interests 27,655,432.64 27,655,432.64 Total owner’s equity 379,249,431.72 379,249,431.72 Total liabilities and owner’s 624,370,817.40 624,370,817.40 equity Explanation Balance sheet of parent company In RMB Item 2018-12-31 2019-01-01 Adjustment Current assets: Monetary fund 28,933,135.09 28,933,135.09 Trading financial assets Financial assets measured on fair value and with its changes reckoned into the current loss/gain 66 东沣科技集团股份有限公司 2019 年半年度财务报告 Derivative financial assets Note receivable Account receivable Receivables financing Accounts paid in 60,821,190.73 60,821,190.73 advance Other account 80,991,042.06 80,991,042.06 receivable Including: interest receivable Dividend receivable Inventory 150,581,753.98 150,581,753.98 Contract assets Assets held for sale Non-current asset due within one year Other current assets 24,163,071.63 24,163,071.63 Total current assets 345,490,193.49 345,490,193.49 Non-current assets: Creditors’ investment Financial assets 16,331,037.08 -16,331,037.08 available for sale Other creditors’ investment Held-to-maturity investment Long-term account receivable Long-term equity 272,803,036.40 272,803,036.40 investments Other equity instrument 16,331,037.08 16,331,037.08 investment Other non-current financial assets Investment real estate 67 东沣科技集团股份有限公司 2019 年半年度财务报告 Fixed assets 1,551,517.36 1,551,517.36 Construction in process Productive biological asset Oil and gas asset Right-of-use asset Intangible assets Expense on Research and Development Goodwill Long-term prepaid expenses Deferred income tax asset Other non-current asset Total non-current asset 290,685,590.84 290,685,590.84 Total assets 636,175,784.33 636,175,784.33 Current liabilities: Short-term loans Trading financial liability Financial liabilities measured on the fair value and with its changes reckoned into the current loss/gain Derivative financial liability Notes payable Accounts payable 6,263,184.67 6,263,184.67 Accounts received in 14,427,450.03 14,427,450.03 advance Contract liability Wage payable 257,362.42 257,362.42 Taxes payable 125,482.71 125,482.71 Other accounts payable 432,985,336.27 432,985,336.27 Including: Interest 68 东沣科技集团股份有限公司 2019 年半年度财务报告 payable Dividend payable Liability held for sale Non-current liabilities due within one year Other current liabilities Total current liabilities 454,058,816.10 454,058,816.10 Non-current liabilities: Long-term loans Bonds payable Including: Preferred stock Perpetual capital securities Lease liability Long-term account payable Long-term wages payable Accrual liability Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 454,058,816.10 454,058,816.10 Owners’ equity: Share capital 706,320,000.00 706,320,000.00 Other equity instrument Including: Preferred stock Perpetual capital securities Capital reserve 456,569,124.55 456,569,124.55 Less: treasury stock 19,718,613.55 19,718,613.55 69 东沣科技集团股份有限公司 2019 年半年度财务报告 Other comprehensive income Reasonable reserve Surplus reserve 76,791,550.17 76,791,550.17 Retained profit -1,037,845,092.94 -1,037,845,092.94 Total owner’s equity 182,116,968.23 182,116,968.23 Total liabilities and owner’s 636,175,784.33 636,175,784.33 equity Explanation (4)Retrospective adjustment of early comparison data description when initially implemented the new financial instrument standards and new leasing standards √ Applicable □ Not-applicable 1) The Company prepared the 2019 annual financial statement in accordance with the Ministry of Finance's Notice on Amending the 2019 Annual Financial Statement Form of General Enterprises (CK [2019] No. 6) and the Accounting Standards for Business Enterprises, this accounting policy change adopted the retrospective adjustment method. Report items and amounts of the 2018 Annual Financial Statement that were significantly affected are as follows: Former items and amount New items and amount Note receivable and account 11,171.25 Note receivable receivable Account receivable 11,171.25 Notes payable and accounts 6,668,789.67 Notes payable payable Accounts payable 6,668,789.67 2)The revised Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, the Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets, Accounting Standards for Business Enterprises No. 24 - Hedge Accounting and Accounting Standards for Business Enterprises No. 37 – Financial Instruments Presentation (hereinafter referred to as new financial instrument standards)are implemented by the Company since 1st January 2019. According to the relevant convergence rules for new and old standards, the information of the comparable period will not be adjusted. The difference between the implementation of the new standard and the original standard on the first implementation date is retrospectively adjusted to the retained earnings or other comprehensive income at the beginning of the reporting period. ① Impact on the financial statement as of 1st Jan. 2019 by implementation of new financial instrument standards: Item Balance sheet 2018 - 12 - 31 Adjustment under new financial 2019 - 1 - 1 instrument standards Financial assets available for 16,331,037.08 -16,331,037.08 sale Other equity instrument 16,331,037.08 16,331,037.08 70 东沣科技集团股份有限公司 2019 年半年度财务报告 investment ② Contrast of the classification and measurement of the financial assets and liability under new financial instrument standards with those under former financial instrument standards on 1 st Jan. 2019: Item Former financial instrument standards New financial instrument standards Measurement type Book value Measurement type Book value Financial assets available Measured at cost 16,331,037.08 for sale Other equity instrument Measured at cost 16,331,037.08 investment 45. Other VI. Taxes 1. Main tax and tax rate Taxes Basis Rate Sales of goods, taxable sales service VAT 5%, 9%, 13% income, intangible assets or real property Urban maintenance and construction tax Turnover tax payable 5% Enterprise income tax Taxable income 25% Educational surtax Turnover tax payable 3% Local educational surtax Turnover tax payable 2% Rental income or original value of the Property tax 12% or 1.2% property As for the taxpaying body with different tax rate for enterprise income tax, disclosed explanations: Taxpaying body Rate for income tax Dongfeng Sci-Tech Group 25% Kefeng Engineering 25% Dongfeng Investment 25% Nanjiang Asia 16.5% Kefeng Trading 25% Hangzhou Dongfeng 25% Dongguan Dongfeng Technology 25% Kefeng Aerospace 25% Dongfeng Power 25% Ecological Agriculture 25% 71 东沣科技集团股份有限公司 2019 年半年度财务报告 Nanjiang Technology 25% Huijing Property 25% Zhongchuang New Energy 25% Dongguan Dongfeng Intelligent 25% Aolin New Materials 25% Haizhuo Energy 25% 2. Tax preference 3. Other Nanjiang Asia paying taxes in Hong Kong Special Administrative Region (HKSAR) with income tax rate of 16.5% VII. Notes to the main items of consolidate financial statements 1. Monetary fund In RMB Item Ending balance Opening balance Cash in stock 181,507.39 368,614.69 Bank deposit 53,521,282.70 12,986,115.85 Other monetary fund 1,350,973.12 22,952,094.56 Total 55,053,763.21 36,306,825.10 Including: total amount deposit aboard 134,845.32 5,626,045.88 Other explanation Monetary fund with restrictions: Item Ending balance Opening balance Margin of housing mortgage 1,350,973.12 2,793,908.11 Total 1,350,973.12 2,793,908.11 2. Account receivable (1)By category In RMB Category Ending balance Opening balance 72 东沣科技集团股份有限公司 2019 年半年度财务报告 Book balance Bad debt provision Book balance Bad debt provision Book Proportio Accrual Proportio Accrual Book value Amount value Amount Amount Amount ratio ratio n n Account receivable with bad debt 2,364,21 2,364,21 2,364,219 2,364,219 96.65% 100.00% 96.65% 100.00% provision accrual on 9.40 9.40 .40 .40 single basis Including: Account receivable with bad debt 82,138.8 70,967.6 3.36% 86.40% 11,171.25 82,138.85 3.36% 70,967.60 86.40% 11,171.25 provision accrual on 5 0 portfolio Including: 2,446,35 2,435,18 2,446,358 2,435,187 Total 100.00% 99.54% 11,171.25 100.00% 99.54% 11,171.25 8.25 7.00 .25 .00 Accrual of bad debt provision on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Reasons of accrual Beijing Xiangeqing Industrial & Trade Co., 2,320,047.40 2,320,047.40 100.00% Unrecoverable Ltd. Total 2,320,047.40 2,320,047.40 -- -- Accrual of bad debt provision on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Reasons of accrual Inner Mongolia Ajinnai Horse Culture 44,172.00 44,172.00 100.00% Unrecoverable Development Co., Ltd. Total 44,172.00 44,172.00 -- -- Accrual of bad debt provision on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Reasons of accrual Accrual of bad debt provision on portfolio: In RMB 73 东沣科技集团股份有限公司 2019 年半年度财务报告 Ending balance Name Book balance Bad debt provision Accrual ratio Account age 82,138.85 70,967.60 86.40% Total 82,138.85 70,967.60 -- Explanation on portfolio basis: Accrual of bad debt provision on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: If the provision for bad debts of account receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □ Applicable √ Not-applicable By account age In RMB Account age Ending balance 1-2 years 10,150.00 2-3 years 6,102.50 Over 3 years 65,886.35 3-4 years 65,886.35 Total 82,138.85 (2)Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Ending balance Accrual Collected or reversal Charge-off Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way (3) Account receivables actually charge-off during the reporting period In RMB 74 东沣科技集团股份有限公司 2019 年半年度财务报告 Item Amount charge-off Including major account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes related transactions charge-off or not (Y/N) Explanation on account receivable charge-off (4)Top five account receivables collected by arrears party at ending balance Enterprise Ending balance Ratio in total account Bad debt provision accrual receivable at period-end(%) Beijing Xiangeqing Industrial & Trade Co., 2,320,047.40 94.84 2,320,047.40 Ltd. Electricity Authority of Chengde County 82,138.85 3.36 70,967.60 Inner Mongolia Ajinnai Horse Culture 44,172.00 1.80 44,172.00 Development Co., Ltd. Total 2,446,358.25 100.00 2,435,187.00 (5)Account receivable de-recognition due to financial assets transfer (6)Assets and liabilities resulted by account receivable transfer and continues involvement Other explanation: 3. Receivables financing In RMB Item Ending balance Opening balance Change of receivables financing and fair value in the period □ Applicable √ Not-applicable If the provision for bad debts of receivable financing is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □ Applicable √ Not-applicable Other explanation: 75 东沣科技集团股份有限公司 2019 年半年度财务报告 4. Accounts paid in advance (1)By account age In RMB Ending balance Opening balance Account age Amount Ratio Amount Ratio Within one year 65,526,254.96 99.98% 61,088,678.72 99.98% 1-2 years 3,431.50 0.01% 3,431.50 0.01% 2-3 years 6,899.45 0.01% 6,899.45 0.01% Total 65,536,585.91 -- 61,099,009.67 -- Explanation on accounts paid in advance with over one year in age and reasons of un-settle: (2)Top 5 account paid in advance collected by objects at ending balance Enterprise Ending amount Ratio in total account Time of repayment Un-settle reasons paid in advance(%) Chengde Wanxuan Construction 57,201,340.00 87.28% Within one year Not in settlement period Engineering Co., Ltd. Chengde Wanrong Real Estate 4,232,226.00 6.46% Within one year Not in settlement period Development Co., Ltd. Beijing Jianyan Lianhe Architectural 1,900,000.00 2.90% Within one year Not in settlement period Design Consulting Co., Ltd. Elfa International Supply Chain 999,150.00 1.52% Within one year Not in settlement period Management Co., Ltd. Beijing Tiangao Diaphragm 494,000.00 0.75% Within one year Not in settlement period Compressor Co., Ltd. Total 64,826,716.00 98.92% --- --- Other explanation: 5. Other account receivable In RMB Item Ending balance Opening balance Other account receivable 12,868,921.61 8,588,597.44 Total 12,868,921.61 8,588,597.44 76 东沣科技集团股份有限公司 2019 年半年度财务报告 (1)Interest receivable 1)Category In RMB Item Ending balance Opening balance 2)Major overdue interest In RMB Whether has impairment Borrower Ending balance Overdue time Causes occurred and determination basis Other explanation: 3)Accrual of bad debt provision □ Applicable √ Not-applicable (2)Dividend receivable 1)Category In RMB Item (or invested company) Ending balance Opening balance 2)Major dividend receivable with over one year aged In RMB Whether has impairment Item (or invested Causes of failure for Ending balance Account age occurred and company) collection determination basis 3)Accrual of bad debt provision □ Applicable √ Not-applicable Other explanation: (3)Other account receivable 1)By nature In RMB Nature Ending book balance Opening book balance Debt auction 1,209,273.00 1,209,273.00 Margin 1,577,000.00 1,520,000.00 Petty cash 1,249,317.09 1,485,155.23 Refund of the VAT of land 4,942,346.42 4,942,346.42 Other 9,690,551.35 4,757,292.48 Total 18,668,487.86 13,914,067.13 77 东沣科技集团股份有限公司 2019 年半年度财务报告 2)Accrual of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on Jan. 1, 2019 5,325,469.69 5,325,469.69 Balance of Jan. 1, 2019 —— —— —— —— in the period Accrual in the period 474,939.83 474,939.83 Balance on Jun. 30, 2019 5,800,409.52 5,800,409.52 Change of book balance of loss provision with amount has major changes in the period □ Applicable √ Not-applicable By account age In RMB Account age Ending balance Within one year (one year included) 18,272,550.49 Within one year (one year included) 18,272,550.49 1-2 years 30,211.71 2-3 years 38,380.00 Over 3 years 327,345.66 4-5 years 327,345.66 Total 18,668,487.86 3)Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Ending balance Accrual Collected or reversal Bad debt provision 5,325,469.69 474,939.83 5,800,409.52 Total 5,325,469.69 474,939.83 5,800,409.52 Important amount of bad debt provision switch-back or collection in the period: In RMB Enterprise Amount switch-back or collection Collection way 4)Other account receivables actually charge-off during the reporting period In RMB Item Amount charge-off 78 东沣科技集团股份有限公司 2019 年半年度财务报告 Including major other account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Other Nature Amount charge-off Causes related transactions charge-off or not (Y/N) Other Explanation on account receivable charge-off 5)Top 5 other account receivable collected by arrears party at ending balance In RMB Proportion in total other account Ending balance of Enterprise Nature Ending balance Account age receivables at bad debt provision period-end LIMITED Other 5,387,150.65 Within one year 28.87% Tax Bureau of VAT for lands rebate 4,942,346.42 Within one year 26.49% 247,117.32 Chengde County Non-Taxable Revenue Authority Margin 1,500,000.00 Over 3 years 8.04% 1,500,000.00 of Chengde County Auction bonds Debt auction 1,209,273.00 Over 5 years 6.48% 1,209,273.00 Zhou Haihong Other 642,689.25 4-5 years 3.44% 642,689.25 Total -- 13,681,459.32 -- 73.32% 3,599,079.57 6)Account receivables related to government grant In RMB Account age at Time and amount Enterprise Government grant Ending balance period-end collected and basis 7)7)Other receivable for termination of confirmation due to the transfer of financial assets 8)The amount of assets and liabilities that are transferred other receivable and continued to be involved Other explanation: 6. Inventory Whether implemented the new revenue standards □Yes √No (1)Category In RMB Ending balance Opening balance Item Book balance Depreciation Book value Book balance Depreciation Book value 79 东沣科技集团股份有限公司 2019 年半年度财务报告 reserve reserve Raw materials 45,246.59 45,246.59 53,653.93 53,653.93 Goods in process 2,281,965.20 2,281,965.20 1,442,179.44 1,442,179.44 Stock products 112,228.19 112,228.19 933,817.53 933,817.53 Revolving 16,213.23 16,213.23 118.83 118.83 materials Production costs 119,146,389.54 119,146,389.54 107,073,123.28 107,073,123.28 Development 16,739,024.97 16,739,024.97 42,082,664.49 42,082,664.49 products Total 138,341,067.72 138,341,067.72 151,585,557.50 151,585,557.50 Does the Company comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange No.4 – Listed Companies Engaged in Seed Industry and Planting Business” or not No (2)Inventory depreciation reserve In RMB Current increased Current decreased Item Opening balance Switch back or Ending balance Accrual Other Other charge-off (3)Explanation on capitalization of borrowing costs in ending balance of inventory (4)Assets completed without settle resulted by construction contract at period-end In RMB Item Amount Other explanation: 7. Contract assets In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Book value of contract assets have major changes and causes: In RMB Item Amount changes Causes If the provision for bad debts of contract asset is made in accordance with the general model of expected credit losses, 80 东沣科技集团股份有限公司 2019 年半年度财务报告 please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □ Applicable √ Not-applicable Accrual of impairment provision in the period In RMB Reversal/Charge-off in Item Accrual in the period Switch-back in the period Causes the period Other explanation: 8. Assets held for sale In RMB Ending book Impairment Ending book Expected disposal Expected disposal Item Fair value balance provision value expenses time Other explanation: 9. Non-current asset due within one year In RMB Item Ending balance Opening balance Important creditors’ investment/Other creditors’ investment In RMB Ending balance Opening balance Creditor's rights Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Other explanation: 10. Other current assets Whether implemented the new revenue standards □Yes √No In RMB Item Ending balance Opening balance Taxes paid in advance 12,657,840.46 10,986,874.66 Financial products 4,600,000.00 26,800,000.00 Total 17,257,840.46 37,786,874.66 Other explanation: 11. Other creditors’ investment In RMB 81 东沣科技集团股份有限公司 2019 年半年度财务报告 Cumulative loss Change of Cumulative impairment Opening Accrued Ending Item fair value in Cost changes of recognized in Note balance interest balance the period fair value other comprehensi ve income Important other creditors’ investment In RMB Ending balance Opening balance Other creditor's rights Face value Coupon rate Actual rate Due date Face value Coupon rate Actual rate Due date Accrual of impairment provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance of Jan. 1, 2019 —— —— —— —— in the period Change of book balance of loss provision with amount has major changes in the period □ Applicable √ Not-applicable Other explanation: 12. Long-term account receivable (1)Long-term account receivable In RMB Ending balance Opening balance Discount rate Item Bad debt Bad debt Book balance Book value Book balance Book value interval provision provision Impairment of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance of Jan. 1, 2019 —— —— —— —— in the period 82 东沣科技集团股份有限公司 2019 年半年度财务报告 Change of book balance of loss provision with amount has major changes in the period □ Applicable √ Not-applicable (2)Long-term account receivable derecognized due to financial assets transfer (3)Assets and liabilities resulted by long-term account receivable transfer and continues involvement Other explanation 13. Long-term equity investments In RMB Changes in the period (+,-) Ending Other Cash Opening Investme Ending balance The Additiona comprehe dividend Accrual balance(B nt gains Other balance(B of invested l Capital nsive or profit Impairme ook recognize equity Other ook impairme entity investmen reduction income announce nt value) d under change value) nt t adjustmen d to provision equity provision t issued I. Joint venture II. Associated enterprise Runhua Rural Water 9,170,370 9,170,370 9,170,370 (Tianjin) .00 .00 .00 Internatio nal Trade Co., Ltd. 9,170,370 9,170,370 9,170,370 Subtotal .00 .00 .00 9,170,370 9,170,370 9,170,370 Total .00 .00 .00 Other explanation 14. Other equity instrument investment In RMB Item Ending balance Opening balance Dongguan Dongfeng New Energy 16,331,037.08 16,331,037.08 Technology Co., Ltd 83 东沣科技集团股份有限公司 2019 年半年度财务报告 Total 16,331,037.08 16,331,037.08 Itemized the non-tradable equity instrument investment in the period In RMB Causes of those that designated Retained earnings measured by fair Cause of retained transfer from value and with its earnings transfer Dividend income Cumulative Item Cumulative gains other variation from other recognized losses comprehensive reckoned into comprehensive income other income comprehensive income Other explanation: The items are listed for the investment of Dongguan Dongfeng New Energy Technology Co., Ltd, and the opening balance of 2019 are being adjusted according to the new financial instrument standards, found more in 44 of section V 15. Other non-current financial assets In RMB Item Ending balance Opening balance Other explanation: 16. Investment real estate (1)Investment real estate measured at cost □ Applicable √ Not-applicable (2)Investment real estate measured by fair value □ Applicable √ Not-applicable (3)Investment real estate without property rights certificate held In RMB Reasons for failure to handle the property Item Book value right certificate Other explanation 84 东沣科技集团股份有限公司 2019 年半年度财务报告 17. Fixed assets In RMB Item Ending balance Opening balance Fixed assets 17,398,133.22 17,302,279.65 Total 17,398,133.22 17,302,279.65 (1)Fixed assets In RMB Houses and Machinery Transportation Item Other equipment Total buildings equipment equipment I. Original book value: 1.Opening balance 13,042,545.23 2,285,732.82 5,356,248.36 3,058,011.88 23,742,538.29 2.Current 87,000.00 2,492,468.30 2,579,468.30 increased (1) Purchase (2)Transferred from construction in process (3)Increased by enterprise combination 3.Current 1,049,963.56 42,255.00 1,092,218.56 decreased (1)Disposal or 1,049,963.56 42,255.00 1,092,218.56 scrap 4.Ending balance 11,992,581.67 2,285,732.82 5,443,248.36 5,508,225.18 25,229,788.03 II. Accumulated depreciation 1.Opening balance 1,398,665.54 1,365,589.47 2,581,576.74 1,094,426.89 6,440,258.64 2.Current 663,590.91 51,644.34 362,112.60 447,898.41 1,525,246.26 increased (1)Accrual 663,590.91 51,644.34 85 东沣科技集团股份有限公司 2019 年半年度财务报告 3.Current 110,983.30 22,866.79 133,850.09 decreased (1)Disposal or 110,983.30 22,866.79 133,850.09 scrap 4.Ending balance 1,951,273.15 1,417,233.81 2,943,689.34 1,519,458.51 7,831,654.81 III. Impairment provision 1.Opening balance 2.Current increased (1)Accrual 3.Current decreased (1)Disposal or scrap 4.Ending balance IV. Book value 1.Ending book 10,041,308.52 868,499.01 2,499,559.02 3,988,766.67 17,398,133.22 value 2.Opening book 11,643,879.69 920,143.35 2,774,671.62 1,963,584.99 17,302,279.65 value (2)Temporarily idle fixed assets In RMB Accumulated Impairment Item Original book value Book value Note depreciation provision (3)Fixed assets leasing-in by financing lease In RMB Accumulated Item Original book value Impairment provision Book value depreciation 86 东沣科技集团股份有限公司 2019 年半年度财务报告 (4)Fixed assets leasing-out by operational lease In RMB Item Ending book value (5)Fixed assets without property certificates In RMB Reasons for failure to handle the property Item Book value right certificate Other explanation (6)Disposal of fixed assets In RMB Item Ending balance Opening balance Other explanation 18. Construction in process In RMB Item Ending balance Opening balance Construction in process 108,179,114.15 101,650,833.16 Total 108,179,114.15 101,650,833.16 (1)Construction in process In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Industrialization of equipment of 108,179,114.15 108,179,114.15 101,650,833.16 101,650,833.16 the Dongfeng New Energy Total 108,179,114.15 108,179,114.15 101,650,833.16 101,650,833.16 (2)Changes of major projects under construction In RMB 87 东沣科技集团股份有限公司 2019 年半年度财务报告 Includin Cumulati Proporti g: Fixed ve Interest on of amount assets Other amount capitaliz Opening Current Ending project of Source Item Budget transfer-i decrease Progress of ation rate balance increased balance investme interest of funds n in the in Period interest of the nt in capitaliz Period capitaliz year (%) budget ation in ed Period Industria lization of Financial equipme 380,000, 101,650, 6,528,28 108,179, 7,651,62 5,380,38 97.00% 97.00 100.00% institutio nt of the 000.00 833.16 0.99 114.15 3.62 9.97 ns loans Dongfen g New Energy 380,000, 101,650, 6,528,28 108,179, 7,651,62 5,380,38 Total -- -- 100.00% -- 000.00 833.16 0.99 114.15 3.62 9.97 (3)provision for impairment of construction in process in the period In RMB Item Accrual in the period Accrual Causes Other explanation (4)Engineering material In RMB Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Other explanation: 19. Productive biological asset (1)Productive biological asset measured by cost √ Applicable □ Not-applicable In RMB Item Plantation Livestock Forestry Aquaculture Total 88 东沣科技集团股份有限公司 2019 年半年度财务报告 I. Original book value 1.Opening balance 201,000.00 201,000.00 2.Current increased (1)Outsourcing (2)Self-cultivation 3.Current decreased (1) Disposal (2)Other 4.Ending balance 201,000.00 201,000.00 II. Accumulated depreciation 1.Opening balance 79,562.50 79,562.50 2.Current 44,175.00 44,175.00 increased (1)Accrual 44,175.00 44,175.00 3.Current decreased (1) Disposal (2)Other 4.Ending balance 123,737.50 123,737.50 III. Impairment provision 1.Opening balance 2.Current increased (1)Accrual 3.Current 89 东沣科技集团股份有限公司 2019 年半年度财务报告 decreased (1) Disposal (2)Other 4.Ending balance IV. Book value 1.Ending book 77,262.50 77,262.50 value 2.Opening book 121,437.50 121,437.50 value (2)Productive biological asset measured by fair value □ Applicable √ Not-applicable 20. Oil and gas asset □ Applicable √ Not-applicable 21. Right-of-use asset In RMB Item Total Other explanation: 22. Intangible assets (1)Intangible assets In RMB Non-patent Item Land Use Right Patent right Total technology I. Original book value 1.Opening 59,358,148.89 59,358,148.89 balance 2.Current increased (1) Purchase 90 东沣科技集团股份有限公司 2019 年半年度财务报告 (2)Internal R&D (3)Increased by enterprise combination 3.Current decreased (1) Disposal 4.Ending 59,358,148.89 59,358,148.89 balance II. Accumulated amortization 1.Opening 2,671,188.30 2,671,188.30 balance 2.Current 1,026,798.12 1,026,798.12 increased (1)Accrual 3.Current decreased (1) Disposal 4.Ending 3,697,986.42 3,697,986.42 balance III. Impairment provision 1.Opening balance 2.Current increased (1)Accrual 3.Current decreased (1) Disposal 91 东沣科技集团股份有限公司 2019 年半年度财务报告 4.Ending balance IV. Book value 1.Ending book 55,660,162.47 55,660,162.47 value 2.Opening book 56,686,960.59 56,686,960.59 value Ratio of the intangible assets resulted by internal R&D in balance of the intangible assets at period (2)Failure to handle the property right certificate In RMB Reasons for failure to handle the property Item Book value right certificate Other explanation: 23. Expense on Research and Development In RMB Opening Ending Item Current increased Current decreased balance balance Air-cooled hydrogen fuel cell power 3,096,125.13 3,143,275.24 6,239,400.37 system for vehicle used ZS01 4,839,555.82 3,161,053.46 8,000,609.28 alumina fiber Real-time hydrogen 5,410,729.52 1,979,623.63 7,390,353.15 production equipment 13,346,410.4 21,630,362.8 Total 8,283,952.33 7 0 Other explanation The capitalization start point of air-cooled hydrogen fuel cell power system for vehicle used was September 26, 2017, the project has a total of four stages, by the end of the period, the research and development phase has been completed to the third stage; the capitalization start point of real-time hydrogenation equipment was September 26, 2017, the project has a total of four stages, as of the end of the period, the research and development phase has been completed to the third stage; the capitalization start point of ZS01 alumina fiber was September 26, 2017, the 92 东沣科技集团股份有限公司 2019 年半年度财务报告 project has a total of three stages, as of the end of the period, the research and development phase has been completed to the third stage, and the specific basis for its capitalization include: 1. The intangible assets have been completed to enable them to be used or sold and technically possess feasibility; 2. The intangible assets have been completed to enable them to be used or sold and technically possess feasibility; 3. The way in which intangible assets generate economic benefits, including the proof that the products produced by using the intangible assets have markets or the intangible assets have markets themselves; if intangible assets are to be used internally, it should prove its usefulness; 4. There are enough technical and financial resources and other resources to support to complete the development of the intangible assets, and have ability to use or sell the intangible assets; 5. The expenditure attributable to the development phase of the intangible assets can be reliably measured. 24. Goodwill (1)Original book value of goodwill In RMB Name of invested company or items Opening balance Current increased Current decreased Ending balance formed goodwill Aolin New 1,294,711.56 1,294,711.56 Materials Haizhuo Energy 249,074.85 249,074.85 Total 1,543,786.41 1,543,786.41 (2)Impairment provision of goodwill In RMB Name of invested company or items Opening balance Current increased Current decreased Ending balance formed goodwill Assets group with the goodwill involved or portfolio information Aolin New Materials, the subsidiary operates as an independent economic entity after the merger, and the cash inflow generated by it is basically independent of other assets or asset groups, so it is regarded as an asset group during the impairment test, and the carrying amount (including goodwill) is 21,840,175.96 Yuan and the asset group or asset group combination is consistent with the asset group or asset group combination determined on the date of purchase. Haizhuo Energy, the subsidiary operates as an independent economic entity after the merger, and the cash inflow generated by it is basically independent of other assets or asset groups, so it is regarded as an asset group during the impairment test, and the carrying amount (including goodwill) is 24,387,755.86 Yuan and the asset group or asset group combination is consistent with the asset group or asset group combination determined on the date of purchase. 93 东沣科技集团股份有限公司 2019 年半年度财务报告 Instructions for goodwill impairments test process and key parameters (such as the forecast period growth rate, stable period growth rate, profit rate, discount rate, and forecast period when estimating the present value of the future cash flow), and the method of confirming the impairment loss of goodwill: The company conducted impairment test for the asset group related to goodwill at the end of the period, when conducting the impairment test, the book value of goodwill was apportioned to the asset group or asset group combination expected to benefit from the synergy of business combination, and then compared the book value of the asset group with the recoverable amount so as to determine whether the asset group (including goodwill) had been impaired. The test results showed that the recoverable amount of the asset group including the apportioned goodwill was lower than the book value, and the corresponding impairment loss was confirmed. The specific test process was as follows: The recoverable amount of the asset group was a five-year forecast prepared by the company’s management based on the future development trend and business plan, which was calculated by using the future cash flow to convert into the present value. After testing, the recoverable amount of Aolin New Materials was 35,341,494.01 Yuan, which was greater than the book value (including goodwill) of 21,840,175.96 Yuan, and the recoverable amount of Haizhuo Energy was 34,721,467.79 Yuan, which was greater than the book value (including goodwill) of 24,387,755.86 Yuan. Asset groups including goodwill predicted by the management were not impaired and no impairment provision was required. Impact of goodwill impairment test Other explanation 25. Long-term prepaid expenses In RMB Amortized in current Item Opening balance Current increased Other decrease Ending balance period Office remodeling 20,555.48 20,555.48 costs Fire protection 10,000.00 10,000.00 engineering Plant decoration 141,061.31 25,807.98 115,253.33 Floor pain engineering of the 95,267.77 56,660.00 22,878.36 129,049.41 plant in Eco-Park Total 266,884.56 56,660.00 79,241.82 244,302.74 Other explanation 94 东沣科技集团股份有限公司 2019 年半年度财务报告 26. Deferred income tax asset /Deferred income tax liabilities (1)Deferred income tax assets without offset In RMB Ending balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference asset difference asset (2)Deferred income tax liabilities without offset In RMB Ending balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax differences liabilities differences liabilities (3)Deferred income tax assets and deferred income tax liabilities listed after off-set In RMB Ending balance of Trade-off between the Opening balance of Trade-off between the deferred income tax deferred income tax deferred income tax Item deferred income tax assets or liabilities after assets and liabilities at assets or liabilities after assets and liabilities off-set period-begin off-set (4)Details of unrecognized deferred income tax assets In RMB Item Ending balance Opening balance Deductible temporary difference 25,599,989.61 Deductible losses 170,596,238.50 144,594,924.49 Total 170,596,238.50 170,194,914.10 (5)Deductible losses of un-recognized deferred income tax assets expired on the followed year In RMB Year Ending amount Period-begin Note 2019 30,576,125.82 30,576,125.82 2014 2020 33,429,382.84 33,429,382.84 2015 2021 19,481,015.78 19,481,015.78 2016 95 东沣科技集团股份有限公司 2019 年半年度财务报告 2022 52,327,940.32 52,327,940.32 2017 2023 8,780,459.73 8,780,459.73 2018 2024 26,001,314.01 2019 Total 170,596,238.50 144,594,924.49 -- Other explanation: 27. Other non-current asset Whether implemented the new revenue standards □Yes √No In RMB Item Ending balance Opening balance Engineering amount paid in advance 184,910,000.00 120,392,369.00 Equipment amount paid in advance 1,943,053.40 1,350,783.36 Total 186,853,053.40 121,743,152.36 Other explanation: 28. Short-term loans (1)Category In RMB Item Ending balance Opening balance Explanation on category of short-term loans: (2)Short-term loans un-paid by expired Total short-term loans un-paid by expired at end of the Period was 0 Yuan, including important short-term loans are as: In RMB Borrower Ending balance Loans rate Overdue time Overdue interest rate Other explanation: 29. Trading financial liability In RMB Item Ending balance Opening balance Including: Including: 96 东沣科技集团股份有限公司 2019 年半年度财务报告 Other explanation: 30. Derivative financial liability In RMB Item Ending balance Opening balance Other explanation: 31. Notes payable In RMB Category Ending balance Opening balance Totally Yuan due note payable are paid at period-end. 32. Accounts payable (1)Accounts payable In RMB Item Ending balance Opening balance Account payable for engineering 3,513,799.08 6,596,413.67 Account payable for materials 31,596.00 33,996.00 Account payable for equipment 60,909.00 20,200.00 Other 19,752.77 18,180.00 Total 3,626,056.85 6,668,789.67 (2)Important account payable with over one year account age In RMB Item Ending balance Reasons for non-repayment or carry-over Chengde Great Wall Construction Group 1,153,100.46 Engineering amount Co., Ltd. Chengde Licheng Construction & 546,900.24 Engineering amount Installation Engineering Co., Ltd. Chengde Yongwang Construction 417,887.22 Engineering amount Engineering Co., Ltd. Handan Hanyi Construction Engineering 400,000.00 Engineering amount Co., Ltd. Chengde County Xingcheng Construction 274,499.03 Engineering amount & Installation Company 97 东沣科技集团股份有限公司 2019 年半年度财务报告 Total 2,792,386.95 -- Other explanation: 33. Accounts received in advance Whether implemented the new revenue standards □Yes √No (1)Accounts received in advance In RMB Item Ending balance Opening balance Account received in advance for property 59,853,495.75 14,427,450.03 Account received in advance for goods 75,050.00 64,400.00 Resident heating fees received in advance 14,790.89 1,561,464.19 Other 211,930.77 216,005.77 Total 60,155,267.41 16,269,319.99 (2)Major account received in advance for over one year age In RMB Item Ending balance Reasons for non-repayment or carry-over (3)Project closed for account without complete in construction from construction contract at period-end In RMB Item Amount Other explanation: 34. Contract liability In RMB Item Ending balance Opening balance Book value has major changes in the period and causes In RMB Item Amount changes Causes 98 东沣科技集团股份有限公司 2019 年半年度财务报告 35. Wage payable (1)Wage payable In RMB Item Opening balance Current increased Current decreased Ending balance I. Short-term employee 951,151.59 11,444,982.88 11,332,729.75 1,063,404.72 benefits II. Post-employment benefits-defined 29,938.00 767,926.57 782,520.47 15,344.10 contribution plans Total 981,089.59 12,212,909.45 12,115,250.22 1,078,748.82 (2)Short-term employee benefits In RMB Item Opening balance Current increased Current decreased Ending balance 1. Salary, bonus, 924,301.59 10,387,187.60 10,264,905.59 1,046,583.60 allowance and subsidy 2. Employee welfare 204,620.56 204,620.56 0.00 3. Social insurance 17,470.00 450,191.85 457,748.95 9,912.90 Including: medical 15,475.00 384,799.10 391,439.10 8,835.00 insurance expenses Work injury insurance 437.00 26,056.37 26,345.47 147.90 expenses Maternity 1,558.00 39,336.38 39,964.38 930.00 insurance 4. Housing provident 9,380.00 399,391.15 402,261.15 6,510.00 funds 5. Labor union expenditures and 3,591.72 3,193.50 398.22 employee education expenses Total 951,151.59 11,444,982.88 11,332,729.75 1,063,404.72 99 东沣科技集团股份有限公司 2019 年半年度财务报告 (3)defined contribution plans In RMB Item Opening balance Current increased Current decreased Ending balance 1.Basic endowment 29,120.00 751,010.44 765,251.34 14,879.10 insurance expenses 2.Unemployment 818.00 16,916.13 17,269.13 465.00 insurance expenses Total 29,938.00 767,926.57 782,520.47 15,344.10 Other explanation: 36. Taxes payable In RMB Item Ending balance Opening balance VAT 111,090.89 364,882.08 Individual income tax 15,759.93 12,830.10 Urban maintenance and construction tax 3,293.69 20,216.47 Land VAT 468,597.56 Educational surtax 1,976.21 12,129.88 Local educational surtax 1,317.47 8,086.59 Stamp tax 29,221.50 35,224.90 Urban land use tax 155,828.28 Total 318,487.97 921,967.58 Other explanation: 37. Other accounts payable In RMB Item Ending balance Opening balance Interest payable 193,333.41 Other accounts payable 114,627,139.72 118,376,885.44 Total 114,627,139.72 118,570,218.85 (1)Interest payable In RMB 100 东沣科技集团股份有限公司 2019 年半年度财务报告 Item Ending balance Opening balance Interest of the long-term loans repayment 193,333.41 of principal due in installments Total 193,333.41 Important interest overdue without paid: In RMB Borrower Amount overdue Causes Other explanation: (2)Dividend payable In RMB Item Ending balance Opening balance Other explanation, including dividends payable with over one year age and disclosure un-payment reasons: (3)Other accounts payable 1)By nature In RMB Item Ending balance Opening balance Non-financial corporate borrowing 64,030,000.00 79,143,616.44 Quality guarantee deposit 18,000,000.00 18,000,000.00 Intercourse fund 26,516,666.66 16,327,166.66 Deposit and margin 509,600.00 971,041.20 Agency fee 400,000.00 309,178.00 Tax withholding 5,634.15 10,679.28 Other 5,165,238.91 3,615,203.86 Total 114,627,139.72 118,376,885.44 2)Significant other payable with over one year age In RMB Item Ending balance Reasons for non-repayment or carry-over Dongguan Dongfeng New Energy 15,500,000.00 Intercourse fund 项 Technology Co., Ltd Total 15,500,000.00 -- Other explanation 101 东沣科技集团股份有限公司 2019 年半年度财务报告 38. Liability held for sale In RMB Item Ending balance Opening balance Other explanation: 39. Non-current liabilities due within one year In RMB Item Ending balance Opening balance Other explanation: 40. Other current liabilities Whether implemented the new revenue standards □Yes √No In RMB Item Ending balance Opening balance Changes of short-term bond payable: In RMB Accrual Premium/ Balance Face Release Bond Issuing Opening Issued in interest discount Paid in at Bond value date period amount balance the Period by face amortizati the Period period-en value on d Other explanation: 41. Long-term loans (1)Category In RMB Item Ending balance Opening balance Mortgage loans 172,210,000.00 101,710,000.00 Total 172,210,000.00 101,710,000.00 Explanation on category of long-term loans: Other explanation, including interest rate section: Dongguan Dongfeng Intelligent Technology Co., Ltd. signed a contract Dongyin (3900) 2018 NGDZ No. 016477 with Dongguan Bank Songshan Lake Technology Sub-branch, the total contract loan amount was RMB 200 million. Dongfeng Technology Group Co., Ltd., Dongguan Dongfeng Technology Development Co., Ltd., Dongguan Zhongchuang New Energy Technology Co., Ltd., Dongguan Aolin New Materials Co., Ltd., and Dongguan 102 东沣科技集团股份有限公司 2019 年半年度财务报告 Haizhuo Energy Technology Co., Ltd. guaranteed with the joint liability warranty; and the collaterals were the land use rights and above-ground buildings of Yue ( 2017) Dongguan Real Property No. 0121786; the pledge was 100% equity of Dongguan Dongfeng Intelligent Technology Co., Ltd. held by Dongguan Dongfeng Technology Development Co., Ltd. As of June 30, 2019, the company obtained the long-term loan balance of RMB 172.21 million from Bank of Dongguan Co., Ltd. Songshan Lake Technology Sub-branch, and the borrowing was limited to the follow-up construction of the equipment industrialization project of Dongfeng New Energy 42. Bonds payable (1)Bonds payable In RMB Item Ending balance Opening balance (2)Changes of bonds payable (not including the other financial instrument of preferred stock and perpetual capital securities that classify as financial liability) In RMB (3)Convertible conditions and time for shares transfer for the convertible bonds (4) Other financial instruments classify as financial liability Basic information of the outstanding preferred stock and perpetual capital securities at period-end Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Current increased Current decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Basis for financial liability classification for other financial instrument Other explanation 43. Lease liability In RMB Item Ending balance Opening balance Other explanation 44. Long-term account payable In RMB 103 东沣科技集团股份有限公司 2019 年半年度财务报告 Item Ending balance Opening balance (1) By nature In RMB Item Ending balance Opening balance Other explanation: (2)Special payable In RMB Item Opening balance Current increased Current decreased Ending balance Causes of formation Other explanation: 45. Long-term wages payable (1)Long-term wages payable In RMB Item Ending balance Opening balance (2)Changes of defined benefit plans Present value of the defined benefit plans: In RMB Item Current period Last period Scheme assets: In RMB Item Current period Last period Net liability (assets) of the defined benefit plans In RMB Item Current period Last period Content of defined benefit plans and relevant risks, impact on future cash flow of the Company as well as times and uncertainty: Major actuarial assumption and sensitivity analysis: Other explanation: 46. Accrual liability Whether implemented the new revenue standards 104 东沣科技集团股份有限公司 2019 年半年度财务报告 □Yes √No In RMB Item Ending balance Opening balance Causes of formation Other explanation, including relevant important assumptions and estimation: 47. Deferred income In RMB Item Opening balance Current increased Current decreased Ending balance Causes of formation Item with government grants involved: In RMB Amount Amount Cost Assets-relate Balance at New grants reckoned in Other Balance at Liability reckoned in reduction in d/income period-begin in the Period non-operatio changes period-end other income the period related n revenue Other explanation: 48. Other non-current liabilities Whether implemented the new revenue standards □Yes √No In RMB Item Ending balance Opening balance Other explanation: 49. Share capital In RMB Changes in the period (+,-) Shares Opening New shares transferred Ending balance balance Bonus share Other Subtotal issued from capital reserve Total shares 706,320,000.00 706,320,000.00 Other explanation: 105 东沣科技集团股份有限公司 2019 年半年度财务报告 50. Other equity instrument (1)Basic information of the outstanding preferred stock and perpetual capital securities at period-end (2) Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Current increased Current decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Changes of other equity instrument, change reasons and relevant accounting treatment basis: Other explanation: 51. Capital reserve In RMB Item Opening balance Current increased Current decreased Ending balance Capital premium (share 397,808,090.32 397,808,090.32 premium) Other capital reserve 65,873,219.23 65,873,219.23 Total 463,681,309.55 463,681,309.55 Other explanation, including changed in Period as well as reasons for changes: 52. Treasury stock In RMB Item Opening balance Current increased Current decreased Ending balance Implement the equity 19,718,613.55 9,107,872.15 28,826,485.70 incentive buyback Total 19,718,613.55 9,107,872.15 28,826,485.70 Other explanation, including changed in Period as well as reasons for changes: 53. Other comprehensive income In RMB Current period Account Less: written Less: Belong to Belong to Opening Ending Item before in other written in Less : income parent minority balance balance income tax comprehensi other tax expense company shareholders in the ve income in comprehe after tax after tax 106 东沣科技集团股份有限公司 2019 年半年度财务报告 period previous nsive period and income in carried previous forward to period and gains and carried losses in forward to current retained period earnings in current period Other explanation, including the active part of the hedging gains/losses of cash flow transfer to initial recognization adjustment for the arbitraged items: 54. Reasonable reserve In RMB Item Opening balance Current increased Current decreased Ending balance Other explanation, including changed in Period as well as reasons for changes: 55. Surplus reserve In RMB Item Opening balance Current increased Current decreased Ending balance Statutory surplus 76,791,550.17 76,791,550.17 reserves Total 76,791,550.17 76,791,550.17 Explanation on surplus reserve, including changed in Period as well as reasons for changes: 56. Retained profit In RMB Item Current period Last period Retained profits at the end of last period before -875,480,247.09 -882,864,082.85 adjustment Retained profits at the beginning of the period -875,480,247.09 -882,864,082.85 after adjustment Add: The net profits belong to owners of patent -25,095,405.50 -5,210,758.22 company of this period Retained profits at the end of the period -899,898,115.99 -888,074,841.07 Details about adjusting the retained profits at the beginning of the year: 107 东沣科技集团股份有限公司 2019 年半年度财务报告 1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the undistributed profits at the beginning of the year amounting to Yuan. 2) The changes in accounting policies affect the undistributed profits at the beginning of the year amounting to Yuan. 3) The major accounting error correction affects the undistributed profits at the beginning of the year amounting to Yuan. 4) Merge scope changes caused by the same control affect the undistributed profits at the beginning of the year amounting to Yuan. 5) Other adjustments affect the undistributed profits at the beginning of the year amounting to Yuan. 57. Operating income and operating cost In RMB Current period Last period Item Income Cost Income Cost Main business 33,371,413.48 28,218,727.77 79,815,868.78 71,967,495.21 Total 33,371,413.48 28,218,727.77 79,815,868.78 71,967,495.21 Whether implemented the new revenue standards □Yes √No Other explanation 58. Tax and extras In RMB Item Current period Last period Urban maintenance and construction tax 47,977.16 156,332.31 Educational surtax 47,977.11 156,332.33 Property tax 62,834.78 41,701.98 Land use tax 273,878.99 455,907.91 Vehicle and vessel use tax 2,280.00 3,880.00 Stamp tax 72,115.00 68,045.30 Lands VAT 574,464.51 1,339,218.78 Business tax 547,830.45 Total 1,081,527.55 2,769,249.06 Other explanation: 59. Sales expense In RMB 108 东沣科技集团股份有限公司 2019 年半年度财务报告 Item Current period Last period Agency fee 9,682,562.68 Salary 112,940.00 Production costs 96,084.93 Social insurance premium 41,477.64 Advertising fees 25,471.70 Other 20,465.05 4,902.12 Total 9,979,002.00 4,902.12 Other explanation: 60. Management expense In RMB Item Current period Last period Remuneration 6,053,677.92 5,401,164.10 Business entertainment 3,882,091.74 2,027,808.43 Agency fee 2,639,780.12 101,587.29 Depreciation and amortization 2,128,930.63 2,649,290.58 Rental fee 2,091,244.78 5,700.00 Business-travel expense 676,087.98 658,480.06 Office allowance 385,719.63 177,410.63 Repair charge 303,831.99 318,588.09 Travelling expenses 258,951.87 25,676.47 Welfare charges 194,601.54 572,380.68 Material consumption 101,772.31 149,022.03 Electricity and water fees 83,104.17 46,009.05 Premium 67,986.49 55,866.08 Long-term deferred expenses 25,807.98 6,075.00 Union due 3,591.72 2,112.98 Amortization of low value consumables 1,941.26 107,303.84 Other 448,997.38 2,182,579.42 Total 19,348,119.51 14,487,054.73 Other explanation: 109 东沣科技集团股份有限公司 2019 年半年度财务报告 61. R&D expense In RMB Item Current period Last period Other explanation: 62. Financial expense In RMB Item Current period Last period Interest expense Less: Interest income 26,346.24 903,639.76 Profit/loss on exchange 63,282.68 -266,016.60 Bank handling charges 43,302.51 25,184.74 Total 80,238.95 -1,144,471.62 Other explanation: 63. Other income In RMB Sources of other income Current period Last period Renewable energy subsidy 2,890,000.00 64. Investment income In RMB Item Current period Last period Investment income from financial products of 198,770.44 133,320.88 the Bank Total 198,770.44 133,320.88 Other explanation: 65. Net exposure hedge gains In RMB Item Current period Last period Other explanation: 110 东沣科技集团股份有限公司 2019 年半年度财务报告 66. Income of fair value changes In RMB Source Current period Last period Other explanation: 67. Credit impairment loss In RMB Item Current period Last period Other explanation: 68. Asset impairment loss Whether implemented the new revenue standards □Yes √No In RMB Item Current period Last period I. Bad debt losses -474,939.83 Total -474,939.83 Other explanation: 69. Income from assets disposal In RMB Income from assets disposal Current period Last period Gains/losses from fixed assets disposal 831,663.08 Gains/losses from biological assets -18,684.68 disposal 70. Non-operating revenue In RMB Amount reckoned into current Item Current period Last period non-recurring gains/losses Other 864.03 3,121.00 Total 864.03 3,121.00 Government grants reckoned into current gains/losses: In RMB 111 东沣科技集团股份有限公司 2019 年半年度财务报告 Impact on Assets-relate Distributed current Special Current d Item Reasons Nature Last Period by gains/losses grants (Y/N) Period /income-relat (Y/N) ed Other explanation: 71. Non-operating expenditure In RMB Amount reckoned into current Item Current period Last period non-recurring gains/losses Donating 230,605.00 Other 160,245.83 2,607.78 Total 390,850.83 2,607.78 Other explanation: 72. Income tax expense (1)Income tax expense In RMB Item Current period Last period Current income tax 110,309.68 Total 110,309.68 (2)Adjustment on accounting profit and income tax expenses In RMB Item Current period Total profit -25,170,695.41 Income tax measured by statutory/applicable tax rate -6,462,058.00 Impact on different tax rate for subsidiary 8,874.05 The deductible temporary differences or deductible losses of the 6,453,183.95 un-recognized deferred income tax assets in the Period Other explanation 73. Other comprehensive income Found more in Note 112 东沣科技集团股份有限公司 2019 年半年度财务报告 74. Notes to statement of cash flow (1)Other cash received in relation to operation activities In RMB Item Current period Last period Intercourse fund 38,250,000.00 41,000,000.00 Subsidy income 0.00 2,890,000.00 Interest income 26,346.24 894,404.17 Other 373,847.20 695,736.71 Total 38,650,193.44 45,480,140.88 Explanation on other cash received in relation to operation activities: (2)Other cash paid in relation to operation activities In RMB Item Current period Last period Disbursement costs 15,459,821.08 7,500,856.76 Intercourse fund 40,720,000.00 2,260,000.00 Other 1,103,215.00 703,296.65 Total 57,283,036.08 10,464,153.41 Explanation on other cash paid in relation to operation activities: (3)Cash received from other investment activities In RMB Item Current period Last period Explanation on cash received from other investment activities: (4)Cash paid related with other investment activities In RMB Item Current period Last period Explanation on cash paid related with other investment activities: (5)Cash received from other financing activities In RMB 113 东沣科技集团股份有限公司 2019 年半年度财务报告 Item Current period Last period Housing mortgage loans refund 1,468,200.00 2,558,600.00 Total 1,468,200.00 2,558,600.00 Explanation on cash received from financing activities: (6)Cash paid related with other financing activities In RMB Item Current period Last period Housing mortgage loans paid 22,200.00 534,800.00 Share buyback funds 9,107,872.15 Total 9,130,072.15 534,800.00 Explanation on cash paid related with other financing activities: 75. Supplementary information to statement of cash flow (1)Supplementary information to statement of cash flow In RMB Supplementary information Current Period Last Period 1. Net profit adjusted to cash flow of -- -- operation activities: Net profit -25,170,695.41 -5,373,520.98 Add: Preparations of assets depreciation 474,939.83 Depreciation of fixed assets, consumption of oil assets and depreciation of productive 1,102,132.51 830,843.55 biology assets Amortization of intangible assets 1,026,798.12 1,926,524.57 Amortization of long-term deferred expenses 25,807.98 97,741.68 Loss from disposal of fixed assets, intangible assets and other long-term assets(gain is -831,663.08 18,684.68 listed with “-”) Decrease of inventory (gain is listed with 13,244,489.78 64,800,311.47 “-”) Decrease of operating receivable accounts -12,018,093.71 27,243,279.39 (gain is listed with “-”) Increase of operating payable accounts (loss 36,394,315.09 -55,618,571.34 is listed with “-”) 114 东沣科技集团股份有限公司 2019 年半年度财务报告 Net cash flow arising from operating 14,248,031.11 33,925,293.02 activities 2. Material investment and financing not -- -- involved in cash flow 3. Net change of cash and cash equivalents: -- -- Balance of cash at period end 53,702,790.09 30,835,918.20 Less: Balance of cash equivalent at 33,512,916.99 68,107,388.69 year-begin Net increase of cash and cash equivalents 20,189,873.10 -37,271,470.49 (2)Net cash payment for the acquisition of a subsidiary of the current period In RMB Amount Including: -- Including: -- Including: -- Other explanation: (3)Net cash received from the disposal of subsidiaries In RMB Amount Including: -- Including: -- Including: -- Other explanation: (4)Constitution of cash and cash equivalent In RMB Item Ending balance Opening balance Ⅰ. Cash 53,702,790.09 33,512,916.99 Including: Cash in stock 181,507.39 368,614.69 Bank deposit available for payment at 53,521,282.70 33,144,302.30 any time Ⅲ. Balance of cash and cash equivalent at 53,702,790.09 33,512,916.99 period-end 115 东沣科技集团股份有限公司 2019 年半年度财务报告 Other explanation: Balance of cash and cash equivalent dated 30 th June 2019 amounted as 53,702,790.09 Yuan, monetary fund has 55,053,763.21 Yuan at end of the period, which has 1,350,973.12 Yuan in difference, mainly because among the ending balance of monetary fund, there is a margin of housing mortgage that can not be free in three months, and same as the opening balance amount 76. Notes of changes of owners’ equity Explain the name and adjusted amount in “Other” at end of last period: 77. Assets with ownership or use right restricted In RMB Item Ending book value Restriction reasons Monetary fund 1,350,973.12 Margin of housing mortgage Total 1,350,973.12 -- Other explanation: 78. Foreign currency monetary items (1)Foreign currency monetary items In RMB Ending foreign currency Item Convert rate Ending RMB balance converted balance Monetary fund -- -- Including: USD 19,614.72 6.8747 134,845.32 EURO HKD Account receivable -- -- Including: USD EURO HKD Long-term loans -- -- Including: USD EURO 116 东沣科技集团股份有限公司 2019 年半年度财务报告 HKD Other explanation: (2)Explanation on foreign operational entity, including as for the major foreign operational entity, disclosed main operation place, book-keeping currency and basis for selection; if the book-keeping currency changed, explain reasons □ Applicable √ Not-applicable 79. Hedging Disclosed hedging items and relevant hedging instrument based on hedging’s category, disclosed qualitative and quantitative information for the arbitrage risks: 80. Government grants (1)Government grants In RMB Amount reckoned into current Category Amount Item gains/losses (2)Government grants rebate □ Applicable √ Not-applicable Other explanation: 81. Other VIII. Changes of consolidation range 1. Enterprise combined not under the same control (1)Enterprise combined under different control in the Period In RMB Income of Net profit of Standard to Time point Cost of Ratio of Acquired acquiree from acquiree from Purchasing determine the Acquiree for equity equity equity way Equity purchasing purchasing date purchasing obtained obtained obtained obtained way date to date to date period-end period-end Other explanation: 117 东沣科技集团股份有限公司 2019 年半年度财务报告 (2)Combination cost and goodwill In RMB Combination cost Determination method for fair value of the combination cost and contingent consideration and changes: Main reasons for large goodwill resulted: Other explanation: (3) Identifiable assets and liability on purchasing date under the acquiree In RMB Fair value on purchasing date Book value on purchasing date Determination method for fair value of the identifiable assets and liabilities: Contingent liability of the acquiree bear during combination: Other explanation: (4) Gains or losses arising from re-measured by fair value for the equity held before purchasing date Whether it is a business combination realized by two or more transactions of exchange and a transaction of obtained control rights in the Period or not □Yes √No (5)On purchasing date or period-end of the combination, combination consideration or fair value of identifiable assets and liability for the acquiree are un-able to confirm rationally (6)Other explanation 2. Enterprise combined under the same control (1) Enterprise combined under the same control in the Period In RMB Income of the Net profit of combined the combined Income of the Net profit of Basis of Standard to party from party from combined the combined Equity ratio Combined combined Combination determine the period-begin period-begin party during party during obtained in party under the date combination of of the the combination same control date combination combination comparison comparison to the to the period period combination combination 118 东沣科技集团股份有限公司 2019 年半年度财务报告 date date Other explanation: (2)Combination cost In RMB Combination cost Explanation on contingent consideration and its changes: Other explanation: (3) Assets and liability of the combined party on combination date In RMB Combination date At end of last period Contingent liability of the combined party bear during combination: Other explanation: 3. Counter purchase Basic transaction information, basis of counter purchase, whether making up business due to the assets and liability reserved by listed company and basis, determination of combination cost, amount and calculation on adjusted equity by equity transaction 4. Subsidiary disposal Whether there is a single disposal of the investment in subsidiaries that is the loss of control □Yes √No Whether there is disposal of the investment in subsidiaries through multiple transactions step by step and loss of control in the current period □Yes √No 119 东沣科技集团股份有限公司 2019 年半年度财务报告 5. Other reasons for consolidation range changed Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.) and relevant information: 6. Other IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main operation Share-holding ratio Subsidiaries Registered place Business nature Acquired way place Directly Indirectly Management and Kefeng consultant of Chengde Chengde 100.00% Establishment Engineering engineering project Dongfeng Industrial Chengde Chengde 100.00% Establishment Investment investment International Nanjiang Asia Chengde Chengde 100.00% Establishment investment Kefeng Trading Chengde Chengde Commercial trade 100.00% Establishment Hangzhou High-tech Hangzhou Hangzhou 100.00% Establishment Dongfeng development Dongguan Technology Dongfeng Dongguan Dongguan Development of 100.00% Establishment Technology new materials Technology Kefeng Development of Chengde Chengde 100.00% Establishment Aerospace aerospace products Technology Enterprise Dongfeng Power Dongguan Dongguan Development of 100.00% combined under clean energy the same control Ecological Animal Chengde Chengde 100.00% Establishment Agriculture husbandry Inflatable Nanjiang Chengde Chengde capsule, 100.00% Establishment Technology production and 120 东沣科技集团股份有限公司 2019 年半年度财务报告 sale of Grapheme Property Huijing Property Chengde Chengde 100.00% Establishment management Enterprise Technology Zhongchuang combined not Dongguan Dongguan Development of 60.98% New Energy under the same new energy control Technology Dongguan Enterprise Development in Dongfeng Dongguan Dongguan 100.00% combined under field of Intelligent the same control technology Enterprise Nano metric Aolin New combined not Dongguan Dongguan technology 62.00% Materials under the same material control Enterprise Technology combined not Haizhuo Energy Dongguan Dongguan Development of 62.00% under the same new materials control Explanation on share-holding ratio in subsidiary different from ratio of voting right: Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over half and over voting rights: Controlling basis for the structuring entity included in consolidated range: Basis on determining to be an agent or consignor: Other explanation: *1 Dongfeng Investment was established by Nanjiang Real Estate dated 9 October 2012, original registered capital was 50 million Yuan, shareholder Nanjiang Real Estate contribute 50 million Yuan, presenting 100 percent of the registered capital; on 21 December 2012, the 100 percent equity held by Nanjiang Real Estate are transferred to Nanjiang Company with 50 million Yuan, after transferred, Dongfeng Sci-Tech Group holds total equity of the Dongfeng Investment; on 6 January 2013, Dongfeng Sci-Tech Group increase capital 40 million Yuan to Nanjiang Investment, and registered capital comes to 90 million Yuan after capital increased. On 25 October 2017, the enterprise name of Dongfeng Investment changed to Chengde Dongfeng Investment Co., Ltd instead of Chengde Nanjiang Investment Co., Ltd *2 Ecological Agriculture was established by Dongfeng Investment on 24 October 2012, original registered capital was 5 million Yuan, shareholder Dongfeng Investment contributes 5 million Yuan with 100 percent held in total registered capital. On 18 April 2013, Dongfeng Investment increase 5 million Yuan to Ecological Agriculture and the registered capital turns to 10 million Yuan after increased. On 21 June 2017, the enterprise name of Ecological Agriculture changed to Chengde Dongfeng Ecological Agriculture Co., Ltd instead of Chengde Nanjiang Ecological Agriculture Co., Ltd *3 Nanjiang Asia was founded by Dongfeng Sci-Tech Group on 14th Nov. 2013, located in Hong Kong, with 121 东沣科技集团股份有限公司 2019 年半年度财务报告 register capital of US$ 20 million, the paid-up was US$ 797, 538.34. *4 Nanjiang Technology was founded jointly by Dongfeng Investment and Ningbo Morsh Technology on 24th Jan. 2013 with register capital of 50 million Yuan, including Dongfeng Investment invested 45 million Yuan taking up 90% of the total investment; Ningbo Morsh Technology invested 5 million Yuan taking up 10%. On 4 th July 2016, the Dongfeng Technology entered into an equity transfer agreement with Ningbo Morsh Technology, the 10% shares held by Ningbo Morsh Technology are transferred to Dongfeng Investment, after equity transfer, 100% equity of Nanjiang Technology are held by Dongfeng Investment. *5 Huijing Property was founded by Dongfeng Investment on 18th Nov. 2013 with register capital of 500,000 Yuan. Shareholder Dongfeng Investment invested 500, 000 Yuan wholly owning it. *6 Dongfeng Power was established by Tibet Dongfeng Investment Co., Ltd. on April 7, 2016 with a registered capital of RMB 70 million and an actual capital contribution of RMB 0. On August 28, 2018, it signed an equity transfer agreement with Dongguan Dongfeng Technology to transfer the 100% equity to Dongguan Dongfeng Technology at 0 yuan. On December 25, 2018, Dongguan Dongfeng Technology transferred its 100% equity to the Company at 0.00 yuan. As of 30th June 2019, it has not actually invested. *7 Hangzhou Dongfeng established on 21 September 2016 by Dongfeng Sci-Tech Group, registered capital was 50 million Yuan; actually paid-in capital was 30 million Yuan. On 5 June 2017, the enterprise name of Hangzhou Dongfeng changed to Hangzhou Dongfeng Technology Co. Ltd instead of Hangzou Hangfeng Technology Co., Ltd *8 Kefeng Aerospace established on 12 December 2016 by Dongfeng Sci-Tech Group, registered capital was 30 million Yuan, no funds actually paid-up ended as 30th June 2019. *9 Kefeng Engineering and Kefeng Trading are the new enterprise derivative split from Dongfen Trade and Business on 6 March 2017, registered capital amounted as 0.5 million Yuan and 8.5 million Yuan respectively. Totally 100% of the registered capital are taken by Dongfeng Sci-Tech Group. *10 Dongguan Dongfeng Technology established on 17 August 2017 with registered capital of 100 million Yuan. Dongfeng Sci-Tech Group invested 100 million Yuan on 20 September 2017, a 100% of the registered capital takes. *11 Zhongchuang New Energy established on 4 July 2017 with registered capital of 24.6 million Yuan. On 5 September 2017, the Dongguang Dongfeng Technology Development entered into a capital increase agreement with Dongguang Hangda Venture Investment, registered capital goes to 24.6 million Yuan from one million Yuan. Among them, Dongguang Dongfeng Technology Development contributes 15 million Yuan in monetary, a 60.98% in total shares. Dongguang Dongfeng Technology contributed 15 million Yuan on 24 October 2017 *12 Dongguan Dongfeng Intelligent established on 14 February 2017 with registered capital of 60 million Yuan. On 5 December 2017, Dongfeng Technology Development entered into an equity transfer agreement with Dongguan Dongfeng New Energy with consideration of 15 million Yuan. Registered capital of 45 million are paid 122 东沣科技集团股份有限公司 2019 年半年度财务报告 on 27 December 2017 with totally 100% holds in shares *13 Aolin New Material established on 23 October 2015 with registered capital of 25 million Yuan. On 4 December 2017, Aolin entered into a capital increase agreement with Dongguang Dongfeng Technology, registered capital comes to 25 million Yuan from 9.5 million Yuan. In line with the agreement between Dongguang Hangda Venture Investment Co., ltd. and Dongfeng Technology Development, increasing capital of 16.4025 million Yuan to Aolin New Material, among which, 15.5 million Yuan will increased for registered capital, the 902,500 Yuan will reckoned into the capital reserves of Aolin New Material. On 29 December 2017, Dongguang Dongfeng Technology invested 15.5 million Yuan, a 62% in total registered capital. *14 Haizhuo Energy established on 15 September 2015 with registered capital of 25 million Yuan. On 28 December 2017, Haizhuo Energy entered into a capital increase agreement with Dongguan Dongfeng Technology, registered capital comes to 25 million Yuan from 9.5 million Yuan. In line with the agreement between Dongguan Hangda Venture Investment Co., ltd. and Dongfeng Technology Development, increasing capital of 15.956 million Yuan to Haizhuo Energy, among which, 15.5 million Yuan will increased for registered capital, the 456,000 Yuan will reckoned into the capital reserves of Haizhuo Energy. On 6 March 2018, Dongguan Dongfeng Technology invested 15.5 million Yuan, a 62% in total registered capital. (2)Important non-wholly-owned subsidiary In RMB Dividend announced to Share-holding ratio of Gains/losses attributable Ending equity of Subsidiaries distribute for minority in minority to minority in the Period minority the Period Zhongchuang New 39.02% -138,465.33 0.00 9,335,992.04 Energy Aolin New Materials 38.00% -431,783.72 0.00 8,299,266.86 Haizhuo Energy 38.00% -182,577.46 0.00 9,267,347.23 Explanation on share-holding ratio of minority different from ratio of voting right: Other explanation: (3)Main finance of the important non-wholly-owned subsidiary In RMB Ending balance Opening balance Subsidia Non-curr Non-curr Non-curr Non-curr Current Total Current Total Current Total Current Total ries ent ent ent ent assets assets liabilities liabilities assets assets liabilities liabilities assets liabilities assets liabilities Zhongch 16,779,5 7,415,32 24,194,9 271,431. 271,431. 21,246,0 3,327,16 24,573,2 294,923. 294,923. 0.00 uang 84.24 7.05 11.29 67 67 51.26 9.17 20.43 40 40 123 东沣科技集团股份有限公司 2019 年半年度财务报告 New Energy Aolin 11,681,3 10,544,9 22,226,2 386,095. 386,095. 16,870,1 6,351,54 23,221,7 245,271. 245,271. New 0.00 63.95 07.96 71.91 95 95 73.43 7.29 20.72 82 82 Materials Haizhuo 16,371,0 8,184,52 24,555,5 167,810. 167,810. 18,877,6 6,154,48 25,032,1 163,935. 163,935. 0.00 Energy 43.76 2.44 66.20 34 34 69.29 8.91 58.20 34 34 In RMB Current period Last period Cash flow Cash flow Total Total Subsidiaries Operation from Operation from Net profit comprehensi Net profit comprehensi revenue operation revenue operation ve income ve income activity activity Zhongchuang -23,861,349.7 0.00 -354,817.41 -354,817.41 0.00 1,560.94 1,560.94 New Energy 7 Aolin New -19,670,168.1 0.00 -1,136,272.94 -1,136,272.94 0.00 -360,674.69 -360,674.69 Materials 5 Haizhuo 0.00 -480,467.00 -480,467.00 0.00 -69,251.22 -69,251.22 -8,698,314.81 Energy Other explanation: (4)Major restriction on using corporate assets and liquidate corporate debts (5)Financial or other supporting provided to structuring entity that included in consolidated financial statement Other explanation: 2. Transaction that has owners equity shares changed in subsidiary but still with controlling rights (1) Owners equity shares changed in subsidiary (2) Impact on minority’s interest and owners’ equity attributable to parent company In RMB Other explanation 124 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Equity in joint venture and associated enterprise (1)Important joint venture and associated enterprise Share-holding ratio Accounting treatment on Joint venture and Main operation investment for associated Registered place Business nature place Directly Indirectly joint venture and enterprise associated enterprise Runhua Rural Water (Tianjin) International Tianjin Tianjin 30.00% Equity method International Trading Trade Co., Ltd. Share-holding ratio or shares enjoyed different from voting right ratio: Basis of the voting rights with 20% below but with major influence, or without major influence but with over 20% (20% included) voting rights hold: (2)Main financial information of the important joint venture In RMB Ending balance/Current period Opening balance/Last period Other explanation (3)Main financial information of the important associated business In RMB Ending balance/Current period Opening balance/Last period Other explanation (4)Financial summary for non-important Joint venture and associated enterprise In RMB Ending balance/Current period Opening balance/Last period Joint venture: -- -- Total on below item by shareholding ratio -- -- Associated enterprise: -- -- Total on below item by shareholding ratio -- -- 125 东沣科技集团股份有限公司 2019 年半年度财务报告 Other explanation (5) Major limitation on capital transfer ability to the Company from joint venture or affiliates (6) Excess loss occurred in joint venture or associated In RMB Losses un-determined in the Associated enterprise and joint Accumulated previous losses Accumulated losses Period(net profit share in the venture determined un-determined at period-end Period) Other explanation (7) Unconfirmed commitment with joint venture investment concerned (8) Intangible liability with joint venture or affiliates investment concerned 4. Major conduct joint operation Shareholding ratio/quota enjoy Joint operation Main operation place Registered place Business nature Directly Indirectly Explanation on shareholding ratio or quota enjoy in joint operation different from voting rights: If the joint operation was the independent body, basis of classification of joint operation: Other explanation 5. Structured body excluding in consolidate financial statement Relevant explanation: 6. Other X. Risk related with financial instrument XI. Disclosure of fair value 1. Ending fair value of the assets and liabilities measured by fair value In RMB Ending fair value Item First-order Second-order Third-order Total 126 东沣科技集团股份有限公司 2019 年半年度财务报告 I. Sustaining measured by -- -- -- -- fair value II. Non-sustaining -- -- -- -- measured by fair value 2. Recognized basis for the market price sustaining and non-persistent measured by fair value on first-order 3. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on second-order 4. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on third-order 5. Adjustment information and sensitivity analysis of unobservable parameters for the fair value measure sustaining and non-persistent on third-order 6. Sustaining items measured by fair value, as for the conversion between at all levels, reasons for conversion and policy for conversion time point 7. Changes of valuation technique in the Period 8. Financial assets and liability not measured by fair value 9. Other XII. Related party and related transactions 1. Parent company of the enterprise Share-holding ratio Voting right ratio on Parent company Registration place Business nature Registered capital on the enterprise for the enterprise parent company Explanation on parent company of the enterprise The Company has no parent company; controller refers to the first largest shareholder Mr. Wang Dong, who holds 29.49% equity of the Company. Ultimate controller of the Company is Mr. Wang Dong Other explanation: 2. Subsidiary of the Enterprise Found more in Note for subsidiary . 127 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Associated enterprise and joint venture Found more in Note Other associated enterprise and joint venture that have related transaction with the Company in the Period or occurred in previous period: Associated enterprise and joint venture Relationship with the Enterprise Runhua Rural Water (Tianjin) International Trade Co., Ltd. Associated enterprise Other explanation 4. Other related party Other related party Relationship with the Enterprise Runhua RW Industrial Development Company Controller of the associated enterprise of the Company Shanxi Products Minfeng Chemical Co., Ltd. Controller of the associated enterprise of the Company Dongguan Hangda Venture Investment Co., Ltd. Non-controlling shareholder of the subsidiary of the Company Other explanation 5. Related transaction (1) Goods purchasing, labor service providing and receiving Goods purchasing/labor service receiving In RMB Whether over the Related party Content Current period Amount approved Last period transaction limit Goods sold/labor service providing In RMB Related party Content Current period Last period Explanation on goods purchasing, labor service providing and receiving (2) Related trusteeship management/contract & entrust management/ outsourcing Trusteeship management/contract: In RMB Termination date Trusteeship/contr Entrusting Type of Starting date of Pricing basis of Trustee/ of acting income party/outsourcing trusteeship/contra trusteeship/contra trusteeship/contra Contractor trusteeship/contra recognized in the party cted assets ct cting income ct period Explanation on related entrust/contract 128 东沣科技集团股份有限公司 2019 年半年度财务报告 Entrust management/ outsourcing: In RMB Termination date Entrusted/outsour Entrusting Type of Starting date of Pricing basis of Trustee/ of cing expenses party/outsourcing entrusted/outsour entrusted/outsour entrusted/outsour Contractor entrusted/outsour recognized in the party cing assets cing cing expenses cing period Explanation on related management/outsourcing (3)Related leasing As a lessor for the Company: In RMB Lease income recognized in the Lease income recognized in last Lessee Assets type Period Period As a lessee for the Company: In RMB Rental fee recognized in the Rental fee recognized in last Lessor Assets type Period Period Dongguan Hangda Venture Warehouse and dormitory 1,540,108.02 0.00 Investment Co., Ltd. Explanation on related lease Leasing factory: The factory that Dongguan Hangda Venture Capital Co., Ltd. rented out to Dongguan Aolin New Materials Co., Ltd., Dongguan Haizhuo Energy Technology Co., Ltd., and Dongguan Zhongchuang New Energy Technology Co., Ltd. is located at Room 101—102, Building No. 6, Modern Enterprise Accelerator No. 24, Gongye East Road, Songshan Lake High-tech Industrial Development Zone, Dongguan with total building area of 6,399.60 square meters, of which Dongguan Aolin New Materials Co., Ltd. leased building area of 3,226.95 square meters, Dongguan Haizhuo Energy Technology Co., Ltd. leased building area of 2,008.20 square meters, and Dongguan Zhongchuang New Energy Technology Co., Ltd. leased building area of 1,164.45 square meters; of which the factory rent standard (including property management fee) was 36.00 yuan / ㎡/ month (including tax). and the rent standard for factory adjusted to 39.5 yuan / ㎡/ month (including tax) since March 2019. Leasing dormitory: The dormitory that Dongguan Hangda Venture Capital Co., Ltd. rented out to Dongguan Aolin New Materials Co., Ltd., Dongguan Haizhuo Energy Technology Co., Ltd., and Dongguan Zhongchuang New Energy Technology Co., Ltd. is located at the 7 th Floor, Dormitory No. 8, Modern Enterprise Accelerator No. 24, Gongye East Road, Songshan Lake High-tech Industrial Development Zone, Dongguan, a total of 19 suites of single suite. Among them, Dongguan Aolin New Materials Co., Ltd. leased 8 suites of dormitory including Room 706, 707, 708, 709, 710, 711, 712, 713; Dongguan Haizhuo Energy Technology Co., Ltd. leased 8 suites of dormitory, including Room 714, 715, 717, 718, 719, 720, Dongguan Zhongchuang New Energy Technology Co., Ltd. leased 5 suites of dormitory, including Room 701, 702, 703, 704, 705, the dormitory rental standard (including property management fees) for a single suite was 620 yuan / suite / month (including tax). 129 东沣科技集团股份有限公司 2019 年半年度财务报告 (4)Related guarantee The Company acts as a secured party In RMB Whether the guarantee Secured party Guarantee amount Start date Expiry date implemented or not Dongguan Dongfeng Intelligent Technology 20,000.00 2018-07-02 2023-07-02 N Co., Ltd As a secured party by the Company In RMB Whether the guarantee Guarantor Guarantee amount Start date Expiry date implemented or not Explanation on related guarantee In order to meet the operation and development needs of Dongguan Dongfeng Intelligent Technology Co., Ltd. (hereinafter referred to as “Dongfeng Intelligent”), which is the holding sub-subcompany of Dongfeng Technology Group, Dongfeng Intelligent intended to apply for a comprehensive credit of the amount of not more than 200 million Yuan from Dongguan Bank Songshan Lake Technology Sub-branch, with a credit period of two years and a single-use period of no more than five years, the special project was dedicated to the construction of the equipment industrialization project of Dongfeng New Energy located at the east side of Fuxing Road, Dongguan Ecological Park, which took the 100% equity of Dongfeng Intelligent held by Dongguan Dongfeng Technology Development Co., Ltd. (hereinafter referred to as “Technology Development”), a holding subsidiary of the company, as the pledge guarantee, and Dongfeng Intelligent used its own land and above-ground buildings as collateral guarantee, Dongfeng Technology Group, Technology Development, Dongguan Zhongchuang New Energy Technology Co., Ltd., Dongguan Haizhuo Energy Technology Co., Ltd., and Dongguan Aolin New Materials Co., Ltd. guaranteed with the joint liability warranty; and the guarantee period was 5 years As of 30th June 2019, Dongfeng Intelligent obtained the long-term loan balance from Bank of Dongguan Co., Ltd. Songshan Lake Technology Sub-branch of 172.21 million Yuan, the borrowing was limited to the follow-up construction of the equipment industrialization project of Dongfeng New Energy. Dongfeng Technology Group Co., Ltd., Dongguan Dongfeng Technology Development Co., Ltd., Dongguan Zhongchuang New Energy Technology Co., Ltd., Dongguan Aolin New Materials Co., Ltd., and Dongguan Haizhuo Energy Technology Co., Ltd. guaranteed with the joint liability warranty; and the collaterals were the land use rights and above-ground buildings of Yue ( 2017) Dongguan Real Property No. 0121786; the pledge was 100% equity of Dongguan Dongfeng Intelligent Technology Co., Ltd. held by Dongguan Dongfeng Technology Development Co., Ltd. (5)Borrowed funds from related party In RMB Related party Borrowing amount Start date Expiry date Note Borrowing funds 130 东沣科技集团股份有限公司 2019 年半年度财务报告 Funds lent (6)Related party’s assets transfer and debt reorganization In RMB Related party Content Current period Last period (7)Remuneration of key management personnel In RMB Item Current period Last period Remuneration of key management 996,015.00 797,313.00 personnel (8)Other related transaction 6. Account receivable/payable from/to related party (1)Receivable item In RMB Ending balance Opening balance Item Related party Book balance Bad debt provision Book balance Bad debt provision (2)Payable item In RMB Item Related party Ending book balance Opening book balance 7. Commitment of related party 8. Other XIII. Share-based payment 1. Share-based payment □ Applicable √ Not-applicable 2. Share-based payment settled by equity □ Applicable √ Not-applicable 131 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Share-based payment settled by cash □ Applicable √ Not-applicable 4. Modification and termination of the share-based payment 5. Other XIV. Commitment and contingency 1. Important commitment Important commitment on balance sheet date 2. Contingency (1) Important contingency on balance sheet date As of 30th June 2019, as for the mortgage loans from the owner of commercial property, balance for guarantee providing amounted as 39.43 million Yuan. (2) If the Company has no important contingency need to disclosed, explain reasons The Company has no important contingency that need to disclose. 3. Other XV. Events after balance sheet date 1. Important non adjustment matters In RMB Impact on financial status and Reasons of fails to estimate the Item Content operation results impact 2. Profit distribution In RMB 132 东沣科技集团股份有限公司 2019 年半年度财务报告 3. Sales return 4. Other events after balance sheet date XVI. Other important events 1. Previous accounting errors collection (1)Retrospective restatement In RMB Items impact during vary Content Treatment procedure Accumulated impact comparative period (2)Prospective application Content Approval procedure Reasons 2. Debt restructuring 3. Assets exchange (1)Exchange of non-monetary assets (2)Other assets exchange 4. Pension plan 5. Discontinuing operation In RMB Profit of discontinuing Income tax operation Item Revenue Expenses Total profit Net profit expenses attributable to owners of parent company Other explanation 133 东沣科技集团股份有限公司 2019 年半年度财务报告 6. Segment (1)Recognition basis and accounting policy for reportable segment (2)Financial information for reportable segment In RMB Item Offset between segment Total (3)The Company has no segment, or unable to disclose total assets and liability of the segment, explain reasons (4)Other explanation 7. Other major transaction and events makes influence on investor’s decision 8. Other XVII. Principle notes of financial statements of parent company 1. Account receivable (1)Category In RMB Ending balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Category Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Including: Including: Accrual of bad debt provision on single basis: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Reasons of accrual Accrual of bad debt provision on portfolio: In RMB Ending balance Name Book balance Bad debt provision Accrual ratio Explanation on portfolio basis: 134 东沣科技集团股份有限公司 2019 年半年度财务报告 If the provision for bad debts of account receivable is made in accordance with the general model of expected credit losses, please refer to the disclosure of other account receivable to disclose related information about bad-debt provisions: □ Applicable √ Not-applicable By account age In RMB Account age Ending balance Total 0.00 (2)Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Ending balance Accrual Collected or reversal Charge-off Including important amount of bad debt provision collected or reversal in the period: In RMB Enterprise Amount collected or reversal Collection way (3) Account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Nature Amount charge-off Causes related transactions charge-off or not (Y/N) Explanation on account receivable charge-off (4)Top five account receivables collected by arrears party at ending balance (5)Account receivable de-recognition due to financial assets transfer (6)Assets and liabilities resulted by account receivable transfer and continues involvement Other explanation: 135 东沣科技集团股份有限公司 2019 年半年度财务报告 2. Other account receivable In RMB Item Ending balance Opening balance Other account receivable 18,975,344.61 80,991,042.06 Total 18,975,344.61 80,991,042.06 (1)Interest receivable 1)Category In RMB Item Ending balance Opening balance 2)Major overdue interest Whether has impairment Borrower Ending balance Overdue time Causes occurred and determination basis Other explanation: 3)Accrual of bad debt provision □ Applicable √ Not-applicable (2)Dividend receivable 1)Category In RMB Item (or invested company) Ending balance Opening balance 2)Major dividend receivable with over one year aged In RMB Whether has impairment Item (or invested Causes of failure for Ending balance Account age occurred and company) collection determination basis 3)Accrual of bad debt provision □ Applicable √ Not-applicable Other explanation: (3)Other account receivable 1) By nature In RMB Nature Ending book balance Opening book balance 136 东沣科技集团股份有限公司 2019 年半年度财务报告 Intercourse fund 28,192,271.14 89,225,891.04 Petty cash 1,279,800.89 1,399,398.05 VAT for lands rebate 4,942,346.42 4,942,346.42 Other 2,096,712.03 2,601,289.04 Total 36,511,130.48 98,168,924.55 2)Accrual of bad debt provision In RMB Phase I Phase II Phase III Expected credit Expected credit losses for Expected credit losses for Bad debt provision Total losses over next 12 the entire duration (without the entire duration (with months credit impairment occurred) credit impairment occurred) Balance on Jan. 1, 2019 17,177,882.49 17,177,882.49 Balance of Jan. 1, 2019 —— —— —— —— in the period Accrual in the period 357,903.38 357,903.38 Balance on Jun. 30, 2019 17,535,785.87 17,535,785.87 Change of book balance of loss provision with amount has major changes in the period □ Applicable √ Not-applicable By account age In RMB Account age Ending balance Within one year (one year included) 36,375,062.05 Within one year (one year included) 36,375,062.05 1-2 years 17,447.43 2-3 years 28,200.00 Over 3 years 90,421.00 3-4 years 90,421.00 Total 36,511,130.48 3)Bad debt provision accrual, collected or reversal in the period Accrual of bad debt provision in the period: In RMB Current changes Category Opening balance Ending balance Accrual Collected or reversal Bad debt provision 17,177,882.49 357,903.38 17,535,785.87 Total 17,177,882.49 357,903.38 17,535,785.87 Important amount of bad debt provision switch-back or collection in the period: 137 东沣科技集团股份有限公司 2019 年半年度财务报告 In RMB Enterprise Amount switch-back or collection Collection way 4)Other account receivables actually charge-off during the reporting period In RMB Item Amount charge-off Including major other account receivables charge-off: In RMB Amount cause by Procedure for Enterprise Other Nature Amount charge-off Causes related transactions charge-off or not (Y/N) Other Explanation on account receivable charge-off 5)Top 5 other account receivable collected by arrears party at ending balance In RMB Proportion in total other account Ending balance of Enterprise Nature Ending balance Account age receivables at bad debt provision period-end Nanjiang Ecological Within one year,1-2 Intercourse fund 16,818,186.90 46.06% 16,818,186.90 Agriculture years and 2-3 years Within one year,1-2 Huijing Property Intercourse fund 9,146,732.92 25.05% years and 2-3 years Tax Bureau of Intercourse fund 4,942,346.42 Within one year 13.54% 247,117.32 Chengde County Dongguan Dongfeng Intercourse fund 2,000,000.00 Within one year 5.48% Technology Zhang Dongjun Petty cash 359,378.76 Within one year 0.98% Total -- 33,266,645.00 -- 91.11% 17,065,304.22 6)Account receivables related to government grant In RMB Account age at Time and amount Enterprise Government grant Ending balance period-end collected and basis 7)7)Other receivable for termination of confirmation due to the transfer of financial assets 8)The amount of assets and liabilities that are transferred other receivable and continued to be involved Other explanation: 3. Long-term equity investments In RMB 138 东沣科技集团股份有限公司 2019 年半年度财务报告 Ending balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Investment for 372,803,036.40 0.00 372,803,036.40 272,803,036.40 0.00 272,803,036.40 subsidiary Investment for joint venture and 9,170,370.00 9,170,370.00 0.00 9,170,370.00 9,170,370.00 0.00 associated enterprises Total 381,973,406.40 9,170,370.00 372,803,036.40 281,973,406.40 9,170,370.00 272,803,036.40 (1)Investment for subsidiary In RMB Changes in the period (+,-) Opening Ending Ending balance The invested Accrual balance(Book Additional Capital balance(Book of impairment entity Impairment Other value) investment reduction value) provision provision Dongfeng 90,000,000.00 90,000,000.00 Investment Nanjiang Asia 5,000,166.64 5,000,166.64 Hangzhou 30,000,000.00 30,000,000.00 Dongfeng Kefeng Trading 45,147,154.77 45,147,154.77 Kefeng 2,655,714.99 2,655,714.99 Engineering Dongguan 100,000,000.0 100,000,000.0 Dongfeng 200,000,000.00 0 0 Technology Dongfeng Power 272,803,036.4 100,000,000.0 Total 372,803,036.40 0.00 0 0 (2) Investment for joint venture and associated enterprise In RMB Opening Changes in the period (+,-) Ending Ending Invested balance(B balance(B balance company Additiona Capital Investme Other Other Cash Accrual Other ook ook of 139 东沣科技集团股份有限公司 2019 年半年度财务报告 value) l reduction nt gains comprehe equity dividend Impairme value) impairme investmen recognize nsive change or profit nt nt t d under income announce provision provision equity adjustmen d to t issued I. Joint venture II. Associated enterprise Tianjin 9,170,370 Runhua .00 RW 9,170,370 Subtotal .00 9,170,370 Total 0.00 0.00 .00 (3)Other explanation 4. Operation income and operation cost In RMB Current period Last period Item Income Cost Income Cost Main business 30,461,034.34 25,343,639.52 76,981,775.06 68,854,852.81 Total 30,461,034.34 25,343,639.52 76,981,775.06 68,854,852.81 Whether implemented the new revenue standards □Yes √No Other explanation: 5. Investment income In RMB Item Current period Last period Long-term equity investment measured by 36,240,654.50 cost Other 148,717.94 47,503.07 Total 148,717.94 36,288,157.57 140 东沣科技集团股份有限公司 2019 年半年度财务报告 6. Other XVIII. Supplementary information 1. Details of current non-recurring profits/gains and losses √ Applicable □ Not-applicable In RMB Item Amount Note Gains/losses from the disposal of 831,663.08 non-current asset Except for the effective hedging business relevant with normal operations of the Company, the gains/losses of the fair value by holding the trading financial assets, derivative financial assets, trading financial liability and derivative financial liability, as 198,770.44 Financial products income well as the investment income from disposal of the trading financial assets, derivative financial assets, trading financial liability, derivative financial liability and other creditors’ investment Other non-operating income and expense -389,986.80 other than the above mentioned ones Total 640,446.72 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □ Applicable √ Not-applicable 2. ROE and earnings per share Earnings per share Profits during report period Weighted average ROE Diluted EPS Basic EPS (Yuan/share) (Yuan/share) Net profits belong to common stock -7.36% -0.035 -0.035 stockholders of the Company Net profits belong to common stock -7.38% -0.035 -0.035 stockholders of the Company after 141 东沣科技集团股份有限公司 2019 年半年度财务报告 deducting nonrecurring gains and losses 3. Difference of the accounting data under accounting rules in and out of China (1) Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not-applicable (2)Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not-applicable (3)Explanation on data differences under the accounting standards in and out of China; as for the differences adjustment audited by foreign auditing institute, listed name of the institute 4. Other 142