深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Financial Report 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 Shenzhen China Bicycle Company (Holdings) Limited 2017-06-30 In RMB Item Closing balance Opening balance Current assets: Monetary funds 15,177,305.48 24,015,287.71 Settlement provisions Capital lent Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable 5,139,578.00 2,220,000.00 Accounts receivable 10,621,799.74 12,371,386.82 Accounts paid in advance 1,496,894.88 1,867,424.89 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable Dividend receivable Other receivables 593,588.25 658,754.09 Purchase restituted finance asset 1 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Inventories 6,085,173.94 3,118,440.26 Divided into assets held for sale Non-current asset due within one year Other current assets 2,555,611.75 2,050,830.55 Total current assets 41,669,952.04 46,302,124.32 Non-current assets: Loans and payments on behalf Finance asset available for sales Held-to-maturity investment Long-term account receivable Long-term equity investment Investment property Fixed assets 3,615,758.14 3,728,955.11 Construction in progress Engineering material Disposal of fixed asset Productive biological asset Oil and gas asset Intangible assets 2,635,500.00 3,012,000.00 Expense on Research and Development Goodwill Long-term expenses to be apportioned Deferred income tax asset 633,566.88 645,196.29 Other non-current asset 400,000.00 400,000.00 Total non-current asset 7,284,825.02 7,786,151.40 Total assets 48,954,777.06 54,088,275.72 Current liabilities: Short-term loans Loan from central bank Absorbing deposit and interbank deposit Capital borrowed Financial liability measured by fair value and with variation reckoned into current gains/losses 2 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Derivative financial liability Notes payable Accounts payable 11,751,606.32 9,751,977.78 Accounts received in advance 2,031,423.43 4,321,059.83 Selling financial asset of repurchase Commission charge and commission payable Wage payable 641,747.85 770,985.97 Taxes payable 419,444.08 1,565,153.77 Interest payable Dividend payable Other accounts payable 18,956,010.14 20,397,287.32 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Divided into liability held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 33,800,231.82 36,806,464.67 Non-current liabilities: Long-term loans Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable Special accounts payable Projected liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 33,800,231.82 36,806,464.67 3 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Owner’s equity: Share capital 551,347,947.00 551,347,947.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 32,673,227.01 32,673,227.01 Provision of general risk Retained profit -1,199,178,166.72 -1,197,486,788.28 Total owner’s equity attributable to 12,677,305.14 14,368,683.58 parent company Minority interests 2,477,240.10 2,913,127.47 Total owner’s equity 15,154,545.24 17,281,811.05 Total liabilities and owner’s equity 48,954,777.06 54,088,275.72 Legal Representative: Li Hai Person in charge of Accounting Works: Sun Longlong Person in charge of Accounting Institution: Zhong Xiaojin 2. Balance Sheet of Parent Company In RMB Item Closing balance Opening balance Current assets: Monetary funds 1,391,537.61 1,143,418.29 Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable Accounts receivable Account paid in advance 16,000.00 Interest receivable Dividends receivable 4 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Other receivables 7,035,631.74 9,364,086.29 Inventories Divided into assets held for sale Non-current assets maturing within one year Other current assets 2,391,678.18 2,050,830.55 Total current assets 10,818,847.53 12,574,335.13 Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments 10,379.73 10,379.73 Investment property Fixed assets 3,410,303.75 3,528,684.59 Construction in progress Project materials Disposal of fixed assets Productive biological assets Oil and natural gas assets Intangible assets 2,635,500.00 3,012,000.00 Research and development costs Goodwill Long-term deferred expenses Deferred income tax assets Other non-current assets 400,000.00 400,000.00 Total non-current assets 6,456,183.48 6,951,064.32 Total assets 17,275,031.01 19,525,399.45 Current liabilities: Short-term borrowings Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable Accounts payable 7,440.00 5 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Accounts received in advance 1,086,507.70 Wage payable 112,724.95 112,700.06 Taxes payable 78,934.95 81,512.92 Interest payable Dividend payable Other accounts payable 10,168,473.15 10,662,912.89 Divided into liability held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 10,367,573.05 11,943,633.57 Non-current liabilities: Long-term loans Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable Special accounts payable Projected liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 10,367,573.05 11,943,633.57 Owners’ equity: Share capita 551,347,947.00 551,347,947.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 627,834,297.85 627,834,297.85 Less: Inventory shares Other comprehensive income 6 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Reasonable reserve Surplus reserve 32,673,227.01 32,673,227.01 Retained profit -1,204,948,013.90 -1,204,273,705.98 Total owner’s equity 6,907,457.96 7,581,765.88 Total liabilities and owner’s equity 17,275,031.01 19,525,399.45 3. Consolidated Profit Statement In RMB Item Current Period Last Period I. Total operating income 48,929,676.27 65,774,013.33 Including: Operating income 48,929,676.27 65,774,013.33 Interest income Insurance gained Commission charge and commission income II. Total operating cost 51,337,023.25 65,399,767.36 Including: Operating cost 45,686,272.83 60,321,233.37 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 Operating tax and extras 91,353.05 71,125.39 Sales expenses 2,468,701.87 3,228,182.36 Administration expenses 3,339,531.50 2,348,640.07 Financial expenses -201,564.91 -544,525.55 Losses of devaluation of asset -47,271.09 -24,888.28 Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is listed 7 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 with “-”) Including: Investment income on affiliated company and joint venture Exchange income (Loss is listed with “-”) Other income III. Operating profit (Loss is listed with -2,407,346.98 374,245.97 “-”) Add: Non-operating income 291,710.58 342,089.82 Including: Disposal gains of non-current asset Less: Non-operating expense 1,509.00 Including: Disposal loss of non-current asset IV. Total Profit (Loss is listed with “-”) -2,115,636.40 714,826.79 Less: Income tax expense 11,629.41 195,895.21 V. Net profit (Net loss is listed with “-”) -2,127,265.81 518,931.58 Net profit attributable to owner’s of -1,691,378.44 448,356.29 parent company Minority shareholders’ gains and -435,887.37 70,575.29 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 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified 8 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income -2,127,265.81 518,931.58 Total comprehensive income -1,691,378.44 448,356.29 attributable to owners of parent Company Total comprehensive income -435,887.37 70,575.29 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share -0.0031 0.0008 (ii) Diluted earnings per share -0.0031 0.0008 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: Li Hai Person in charge of Accounting Works:Sun Longlong Person in charge of Accounting Institution: Zhong Xiaojin 4. Profit Statement of Parent Company In RMB Item Current Period Last Period 9 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 I. Operating income 3,228,905.96 3,476,770.26 Less: Operating cost 1,994,075.80 2,092,043.56 Operating tax and extras 27,518.91 Sales expenses Administration expenses 2,165,755.45 1,314,903.41 Financial expenses 2,461.63 172.23 Losses of devaluation of asset Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is listed with “-”) Including: Investment income on affiliated company and joint venture Other income II. Operating profit (Loss is listed -933,386.92 42,132.15 with “-”) Add: Non-operating income 259,079.00 337,615.00 Including: Disposal gains of non-current asset Less: Non-operating expense 1,509.00 Including: Disposal loss of non-current asset III. Total Profit (Loss is listed with -674,307.92 378,238.15 “-”) Less: Income tax expense 94,557.55 IV. Net profit (Net loss is listed with -674,307.92 283,680.60 “-”) 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 as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method 10 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other VI. Total comprehensive income -674,307.92 283,680.60 VII. Earnings per share: (i) Basic earnings per share -0.0012 0.0005 (ii) Diluted earnings per share -0.0012 0.0005 5. Consolidated Cash Flow Statement In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 23,451,451.79 26,522,475.87 services Net increase of customer deposit and interbank deposit 11 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Net increase of loan from central 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 Net increase of amount from disposal financial assets that measured by fair value and with variation reckoned into current gains/losses Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Write-back of tax received Other cash received concerning 2,324,298.02 3,684,052.35 operating activities Subtotal of cash inflow arising from 25,775,749.81 30,206,528.22 operating activities Cash paid for purchasing commodities and receiving labor 23,835,363.39 25,154,241.71 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 3,517,233.68 3,469,307.38 Taxes paid 1,649,135.49 1,339,712.12 12 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Other cash paid concerning 5,580,059.48 4,991,881.79 operating activities Subtotal of cash outflow arising from 34,581,792.04 34,955,143.00 operating activities Net cash flows arising from operating -8,806,042.23 -4,748,614.78 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment 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 activities Cash paid for purchasing fixed, 31,940.00 2,959,824.00 intangible and other long-term assets Cash paid for investment Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 31,940.00 2,959,824.00 activities Net cash flows arising from investing -31,940.00 -2,959,824.00 activities III. Cash flows arising from financing activities Cash received from absorbing investment Including: Cash received from absorbing minority shareholders’ 13 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 investment by subsidiaries Cash received from loans Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning financing activities Subtotal of cash outflow from financing activities Net cash flows arising from financing activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -8,837,982.23 -7,708,438.78 equivalents Add: Balance of cash and cash 24,015,287.71 26,752,065.66 equivalents at the period -begin VI. Balance of cash and cash 15,177,305.48 19,043,626.88 equivalents at the period -end 6. Cash Flow Statement of Parent Company In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor services Write-back of tax received 14 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Other cash received concerning 4,981,778.23 7,109,161.66 operating activities Subtotal of cash inflow arising from 4,981,778.23 7,109,161.66 operating activities Cash paid for purchasing commodities and receiving labor 32,356.80 service Cash paid to/for staff and workers 1,439,294.18 1,005,191.83 Taxes paid 186,158.39 242,875.18 Other cash paid concerning 3,108,206.34 2,949,997.90 operating activities Subtotal of cash outflow arising from 4,733,658.91 4,230,421.71 operating activities Net cash flows arising from operating 248,119.32 2,878,739.95 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment 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 activities Cash paid for purchasing fixed, 2,959,824.00 intangible and other long-term assets Cash paid for investment Net cash received from subsidiaries and other units Other cash paid concerning investing activities Subtotal of cash outflow from investing 2,959,824.00 15 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 activities Net cash flows arising from investing -2,959,824.00 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 financing activities Subtotal of cash inflow from financing activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Other cash paid concerning financing activities Subtotal of cash outflow from financing activities Net cash flows arising from financing activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 248,119.32 -81,084.05 equivalents Add: Balance of cash and cash 1,143,418.29 1,199,934.09 equivalents at the period -begin VI. Balance of cash and cash 1,391,537.61 1,118,850.04 equivalents at the period -end 7. Statement of Changes in Owners’ Equity (Consolidated) This Period In RMB 16 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 This Period Owners’ equity attributable to parent company Other equity instrument Item Less: Other Provisio Minorit Total Perpet Reason Share Capital Invento compre Surplus n of Retaine y owners’ ual able capital Prefer capita reserve ry hensive reserve general d profit interests equity red Other reserve l shares income risk stock securi ties 551,34 -1,197,4 I. Balance at the 627,834 32,673, 2,913,1 17,281, 7,947. 86,788. end of the last year ,297.85 227.01 27.47 811.05 00 28 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 551,34 627,834 32,673, -1,197,4 2,913,1 17,281, beginning of this 7,947. 86,788. ,297.85 227.01 27.47 811.05 year 00 28 III. Increase/ Decrease in this -1,691,3 -435,88 -2,127,2 year (Decrease is 78.44 7.37 65.81 listed with “-”) (i) Total -1,691,3 -435,88 -2,127,2 comprehensive 78.44 7.37 65.81 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 17 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 payment 4. Other (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. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at the 551,34 -1,199,1 627,834 32,673, 2,477,2 15,154, end of the report 7,947. 78,166. ,297.85 227.01 40.10 545.24 period 00 72 Last Period In RMB Last Period Owners’ equity attributable to parent company Minorit Item Other Less: Other Provisio Total Reason y Share equity instrument Capital Invento compre Surplus n of Retaine interest owners’ able equity capital Prefer Perpet reserve ry hensive reserve general d profit s Other reserve red ual shares income risk 18 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 stock capita l securi ties 551,34 -1,200,0 I. Balance at the 627,834 32,673, 1,625,1 13,390, 7,947. 90,425. end of the last year ,297.85 227.01 85.21 231.32 00 75 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 551,34 -1,200,0 627,834 32,673, 1,625,1 13,390, beginning of this 7,947. 90,425. ,297.85 227.01 85.21 231.32 year 00 75 III. Increase/ Decrease in this 2,603,6 1,287,9 3,891,5 year (Decrease is 37.47 42.26 79.73 listed with “-”) (i) Total 2,603,6 1,287,9 3,891,5 comprehensive 37.47 42.26 79.73 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. Withdrawal of general risk provisions 19 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 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. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at the 551,34 -1,197,4 627,834 32,673, 2,913,1 17,281, end of the report 7,947. 86,788. ,297.85 227.01 27.47 811.05 period 00 28 8. Statement of Changes in Owners’ Equity (Parent Company) This Period In RMB This Period Other equity instrument Other Total Item Share Perpetu Less: Retaine Capital comprehe Reasonab Surplus al Inventory owners’ capital Preferre reserve nsive le reserve reserve d profit capital Other shares equity d stock income securiti es -1,204,2 I. Balance at the 551,347, 627,834,2 32,673,22 7,581,765 73,705. end of the last year 947.00 97.85 7.01 .88 98 20 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 551,347, -1,204,2 627,834,2 32,673,22 7,581,765 beginning of this 73,705. 947.00 97.85 7.01 .88 year 98 III. Increase/ Decrease in this -674,30 -674,307. year (Decrease is 7.92 92 listed with “-”) (i) Total -674,30 -674,307. comprehensive 7.92 92 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 21 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others IV. Balance at the 551,347, -1,204,9 627,834,2 32,673,22 6,907,457 end of the report 48,013. 947.00 97.85 7.01 .96 period 90 Last period In RMB Last period Other equity instrument Other Total Item Perpetu Less: Share Capital comprehe Reasonab Surplus Retaine al Inventory owners’ capital Preferre reserve nsive le reserve reserve d profit capital Other shares equity d stock income securiti es -1,203,8 I. Balance at the 551,347, 627,834,2 32,673,22 7,983,327 72,144. end of the last year 947.00 97.85 7.01 .03 83 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 551,347, -1,203,8 627,834,2 32,673,22 7,983,327 beginning of this 72,144. 947.00 97.85 7.01 .03 year 83 III. Increase/ Decrease in this -401,56 -401,561. year (Decrease is 1.15 15 listed with “-”) 22 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (i) Total -401,56 -401,561. comprehensive 1.15 15 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 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI)Others 23 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 IV. Balance at the 551,347, -1,204,2 627,834,2 32,673,22 7,581,765 end of the report 73,705. 947.00 97.85 7.01 .88 period 98 III. Company Profile 1. History and Reform According to the Approval Document SFBF (1991) No. 888 issued by the People’s Government of Shenzhen, Shenzhen China Bicycle Company (Holdings) Limited (hereinafter referred to as the Company) was reincorporated as the company limited by shares in November 1991. On 28 December 1991, upon the Approval Document SRYFZ(1991) No. 119 issued by Shenzhen Special Economic Zone Branch of the People’s Bank of China, the Company got listed on Shenzhen Stock Exchange. The Company reserves the business license for the enterprise legal person (QGYSZFZ No.101165) [Uniform social credit code: 914403006188304524] and the registered capital of RMB551, 347,947.00. 2. Industry nature The company's industry: machinery manufacturing industry 3. Business scope The production and assembly of various bicycles and spare parts, components, parts, mechanical product, sport machinery, fine chemicals, carbon fiber composites material, household electrical appliance and affiliated components (products management by license excluded). 4. Major products and services provided The Company is specialized in making the middle-top rank bicycles, the main brands are EMMELLE and various electrical bicycles. 5. Business change During the reporting period, the company's main business has not changed. 6. Disclosure date approved The financial statement approved for report has been deliberated by the second meeting of 10th BOD held 28 August 2017 24 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 IV. Compilation Basis of Financial Statement 1. Compilation Basis The financial statement is prepared based on continuing operation assumptions, and according to actual occurrence, in line with relevant accounting rules and follow important accounting policy and estimation. 2. Going concern On 11 May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guocheng Energy Investment Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12 th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guocheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. On the last ten-day of October 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25 th, Oct., 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen ZhengYuan Liquidation Affairs Co., Ltd. as the custodians of the Company. On the same day, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. On 5 November 2013, the Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-6 Civil Ruling Paper judged that approved the reorganization plan of the Company. On 27 December 2013, the Civil Ruling Paper Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-10 ruled that the reorganization plan of CBC was completed and bankruptcy procedures of CBC closed down. The Company has solved the debt problem by reforming, realized the net assets with positive value, the main business of bicycle is able to be maintained and realizes the stable development. The Company has set up the conditions for introducing the recombination party in the reforming plan, and expects to restore the abilities of sustainable operation and sustained profitability by reorganization. The conditions of introducing the recombination party includes: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. The Company doesn’t have the recombination party at the moment. V. Main accounting policy and Accounting Estimate Tips for specific accounting policy and estimate: Nil 1. Declaration on compliance with accounting standards The financial statement prepared by the Company, based on follow compilation basis, is comply with the requirement of new accounting standards for business enterprise issued by Ministry of Finance and its application 25 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 guide, commentate as well as other regulations (called by a joint name as Accounting Standards for Business Enterprise), which is reflect a real and truth financial status of the Company, as well as operation results and cash flow situations. Furthermore, the statement has reference to the listing and disclosure requirement from “Rules Governing the Disclosure of Information for Enterprise with Stock Listed No.15-general regulation of financial report” (2014 Revised) (hereinafter referred to as NO. 15 (2014 Revised) document) 2. Accounting period Calendar year is the accounting period for the Company, that is falls to the range starting from 1 January to 31 December. 3. Business cycles The business period for the Company, that is falls to the range starting from 1 January to 31 December. 4. Recording 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) Accounting treatment for business combinations under the same control and those not under the same control ① The business combination under the same control For a business merger that is under the same control and is achieved by the Company through one single transaction or multiple transactions, assets and liabilities obtained from that business combination shall be measured at their book value at the combination date as recorded by the party being absorbed in the consolidated financial statement of ultimate controlling party. Capital reserve shall be adjusted as per the difference between the book value of obtained net assets and the book value of paid consolidated consideration (or the nominal value of the issued shares) of the Company; retained earnings shall be adjusted if the capital reserve is not sufficient for offset. The asset or liability items of consolidated party are measured at their carrying value in the consolidated balance sheet as of the consolidation date. Consolidated Profit and Loss include all items of income, expenditures and profit from beginning till end of the period of the consolidated party(ies). Net profit made by the consolidated company should be listed exclusively in the consolidated Profit and Loss. Cash flows from beginning till end of the period of all consolidated parties are taken into the consolidated Cash Flow. ②The business combinations not involving enterprises under common control The Company will validate the difference that the combined cost is more than the fair value of the net identifiable 26 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 assets gained from the acquiree on the acquisition date as goodwill; where the combined cost is less than the fair value of net identifiable assets gained from the acquiree during business combination, the fair value and combined cost of various identifiable assets, liabilities and contingent liabilities from the acquiree must be rechecked. Where the combined cost is, after the recheck, still less than the fair value of net identifiable assets gained from the acquiree during business combination, the difference shall be charged to current profits and losses. As for business combination not under common control and realized through multiple transactions and by steps, the Company shall make accounting treatment as follows: A. Adjust the initial investment cost of long-term equity investments. As for stock equities held before the acquisition date accounted according to the equity method, re-measurement is carried out according to the fair value of the equity on the acquisition date. The balance between the fair value and the book value is included in the current investment income. If the acquiree’s stock equities held before the acquisition date involves changes of other comprehensive incomes and other owner's equities under accounting with the equity method, the balance between the fair value and the book value is included in the current investment income on the acquisition date, excluding other comprehensive incomes incurred by changes due to re-measurement of net liabilities or net assets of the defined benefit plan. B. Confirm the goodwill (or include the amount in the profits and losses). The initial investment cost of long-term equity investments adjusted in step 1 is compared with the fair value of net identifiable assets of the subsidiary shared on the acquisition date. If the former is greater than the latter, the balance is confirmed as goodwill; if the former is less than the latter, the balance is included in the current profits and losses. (2)Loss of control of a subsidiary in multiple transactions in which it disposes equity interests of its subsidiary in stages ①In determining whether to account for the multiple transactions as a single transaction A parent shall consider all the terms and conditions of the transactions and their economic effects. One or more of the following may indicate that the parent should account for the multiple arrangements as a single transaction: A. Arrangements are entered into at the same time or in contemplation of each other; B. Arrangements work together to achieve an overall commercial effect; C. The occurrence of one arrangement is dependent on the occurrence of at least one other arrangement; D. One arrangement considered on its own is not economically justified, but it is economically justified when considered together with other arrangements. ②Accounting treatment for each of the multiple transactions forming part of a bundled transactions which eventually results in loss of control the subsidiary during disposal of its subsidiary in stages If each of the multiple transactions forms part of a bundled transactions which eventually results in loss of control the subsidiary, these multiple transactions should be accounted for as a single transaction. In the consolidated 27 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 financial statements, the difference between the consideration received and the corresponding percentage of the subsidiary’s net assets in each transaction prior to the loss of control shall be recognized in other comprehensive income and transferred to the profit or loss when the parent eventually loses control of the subsidiary. The remaining equity investment shall be re-measured at its fair value in the consolidated financial statements at the date when control is lost. The difference between the total amount of consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and the share of net assets of the former subsidiary calculated continuously from the acquisition date or combination date based on the previous shareholding proportion, shall be recognized as investment income for the current period when control is lost. The amount previously recognized in other comprehensive income in relation to the former subsidiary’s equity investment should be transferred to investment income for the current period when control is lost ③Accounting treatment for each of the multiple transactions NOT forming part of a bundled transactions which eventually results in loss of control the subsidiary during disposal of its subsidiary in stages If the Company doesn't lose control of investee, the difference between the amount of the consideration received and the corresponding portion of net assets of the subsidiary shall be adjusted to the capital reserve (capital premium) in the consolidated financial statements. If the Company loses control of investee, the remaining equity investment shall be re-measured at its fair value in the consolidated financial statements at the date when control is lost. The difference between the total amount of consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and the share of net assets of the former subsidiary calculated continuously from the acquisition date or combination date based on the previous shareholding percentage, shall be recognized as investment income for the current period when control is lost. The amount previously recognized in other comprehensive income in relation to the former subsidiary’s equity investment should be transferred to investment income for the current period when control is lost. 6. Compilation method of consolidated financial statement Consolidated financial statements are prepared by the Company in accordance with Accounting Standard for Business Enterprise No. 33-Consolidated Financial Statements and based on financial statements of parent company and its subsidiaries and other related information. When consolidating the financial statements, the following items are eliminated: internal equity investment and owners’ equity of subsidiaries, proceeds on internal investments and profit distribution of subsidiaries, internal transactions, internal debts and claim. The accounting policies adopted by subsidiaries are the same as parent company. 28 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 7. Classification of joint venture arrangement and accounting treatment for joint control (1) Affirmation and classification of joint venture arrangement Joint arrangement refers to an arrangement controlled by two or more than two participants. Joint venture arrangement has the following characteristics: 1) Each participant is bound by the arrangement; 2) Two or more participants carry out joint control on implementation of the arrangement. Any participant cannot control the arrangement independently. Any participant for joint control can stop other participants or participant combinations to independently control the arrangement. Joint control refers to the sharing of control over certain arrangement under related agreements, and related activities of the arrangement must be determined only when obtaining the unanimous consent of the parties sharing control. Joint venture arrangement is classified in to joint operation and joint venture. Joint operation refers to an arrangement that a joint party enjoys assets related to the arrangement and bears liabilities related to the arrangement. Joint venture refers to an arrangement that a joint party only has the power governing net assets of the arrangement. (2) Accounting treatment of joint venture arrangement Joint venture participants should confirm the following items related to interest shares in joint venture and carry out accounting settlement according to relevant provisions of the Accounting Standards for Business Enterprises: 1) confirm the assets held separately and confirm the assets held jointly based on shares; 2) confirm the liabilities borne separately and confirm the liabilities borne jointly based on shares; 3) confirm the income incurred after selling its shares in joint venture output; 4) confirm the income after selling the joint venture outputs based on shares; 5) confirm the expenses incurred separately and confirm the expenses incurred in joint venture based on shares. Joint venture participants should carry out accounting settlement for investments of the joint venture according to provisions of Accounting Standards for Enterprises No.2–Long-term Equity Investments. 8. Recognition of cash and cash equivalents Cash equivalents refer to the short-term (generally due within three months since the date of purchase) highly liquid investments that are readily convertible into known amounts of cash and that are subject to an insignificant risk of change in value. 9. Foreign currency transaction and financial statement conversion (1) Conversion for foreign currency transaction When initially recognized, the foreign currency for the transaction shall be converted into CNY amount according 29 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 to the spot exchange rate on the date of transaction. For the foreign currency monetary items, conversion must be based on the spot exchange rate on the balance sheet date and the exchange difference incurred from different exchange rates, except for the exchange difference of principal and interest incurred due to foreign currency loan related to acquisition or construction of assets that qualify for capitalization, shall be charged to current profits and losses; foreign currency non-monetary items measured with historical cost are still converted as per the spot exchange rate on the transaction date and keep the RMB amount unchanged; foreign currency non-monetary items measured with fair value shall be converted as per the spot exchange rate on the date of determining the fair value and the difference shall be charged to current profits and losses or other comprehensive income. (2) Conversion of financial statements presented in foreign currencies The asset and liability items in the balance sheet shall be converted at the spot exchange rate on the balance sheet date; the owner’s equity items, except for the items of “undistributed profit”, shall be converted at the spot exchange rate on the transaction date; the income and expenditure items in the profit statement shall be converted at the spot exchange rate on the transaction date. The translation difference of foreign financial statements conducted as above is recognized as other comprehensive incomes. 10. Financial instruments Financial instruments comprise of financial assets, financial liabilities and equity instruments. (1) Classification of financial instruments Financial assets and financial liabilities are classified as follows by the management based on the purpose of holding or assuming these assets or liabilities: financial assets or financial liabilities at fair value through profit or loss, including financial assets or financial liabilities held for trading and those directly designated as at fair value through profit or loss; held-to-maturity investments; receivables; available-for-sale financial assets and other financial liabilities, etc. (2) Recognition and measurement of financial instruments ①Financial assets and liabilities at fair value through profit and loss The fair value (after deduction of cash dividend to be distributed and bonds interest to be received) of the assets on the acquisition shall be adopted as initial recognized value, and related transaction expenses shall be accounted into current profits and losses. The interests and cash dividend received shall be recognized as investment gain during the period, and the difference of fair value between initial and spot dates shall be accounted into current profits and losses at the end of period. On the disposal of the assets, the difference between the obtained price and the book value of investment shall be recognized as investment gain, and the accumulated fair value profits and losses shall be accordingly adjusted. 30 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 ②Held to maturity investments The fair value (after deduction of bond interests whose period has matured but not charged yet) plus the related transactions fees represents the initial recognition value. During the holding period, the interest income shall be calculated as and included into investment gain in accordance with the amortized costs and the actual interest rate. The actual interest rate is determined at the time of acquisition, and shall remain unchanged during the expected renewal period or any shorter period as applicable. Upon disposal, the difference between the cost of acquisition and the book value of the investment shall be accounted into investment gain. ③Receivable accounts The contract price charged to the buyers shall be recognized as initial value for those receivable accounts which mainly comprise the receivable creditor’s right caused by the sale of goods and the providing of labor services to external customers by the Company, and receivables in other companies excluding debt instruments priced in active markets, includes but is not limited to receivable accounts and other receivables. If characterized as of financing nature, the initial recognition shall be priced at the present value. Upon disposal, the difference between the sale value and the book value of the receivable shall be accounted into current profits and losses on its recovery or disposal. ④Financial assets available for sale The fair value (lower than cash dividend to be distributed and bonds’ interest to be received) and relevant transaction expenses of the assets on the acquisition shall be adopted as initial recognized value. The interests and cash dividend received shall be recognized as investment income during the holding period, and the difference of fair value between initial and spot dates shall be accounted into capital reserve (other capital reserve). Upon disposal, the difference between fair value and initial value shall be recognized as investment profits and losses, and the accumulated changes in fair value from the disposal shall be at the same time transferred from the shareholders’ equity to investment profits and losses. ⑤Other financial liabilities The sum of the fair value and relevant transaction expenses is recognized as the initial recognition amount. The amortized cost is used for subsequent measurement. ⑥Disposal of held-to-maturity investment or reclassification as financial assets available for sale: Where the Company sells its outstanding held-to-maturity investment within the current accounting year or 31 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 re-classifies it as the amount of available-for-sale financial asset, and the amount is considerably large as compared with the amount before such investment is sold or re-classified, the surplus of such investment shall be re-classified as an available-for-sale financial asset. However, the following circumstances shall be excluded: A. The date of sale or re-classification is quite near to the maturity date or the repo date of the said investment (e.g., within 3 months prior to maturity) that any change of the market interest rate will produce little impact upon the fair value of the said investment. B. Enterprise has received almost all the initial principal of the investment according to the provisions on repayment of the contract. C. The sale or re-classification is caused by any independent event that the enterprise cannot control, is predicted not to occur again and is hard to be reasonably predicted. (3) Recognition and measurement of transfer of financial assets With respect to transfer of financial assets, if an enterprise transfers substantially all the risks and rewards of ownership of a financial asset to the transferee, the enterprise shall derecognize the financial assets. If an enterprise retains substantially all the risks and rewards of ownership of a financial asset, the enterprise shall not derecognize the financial asset. When making judgment on whether a transfer of financial assets satisfy the above conditions for derecognition of financial assets, the focus shall be put on substance, instead of the form. The Company shall divide transfer of financial assets into transfer in full or in part. For a transfer of a financial asset in its entirety that satisfies the derecognizing criteria, the difference between the following two amounts shall be recognized in profit or loss for the current period: ①the book value of the financial asset transferred; ②The sum of the consideration received from the transfer and any cumulative gain or loss that had been recognized directly in owner’s equity (applicable to transfer of available-for-sale financial assets). If a part of the transferred financial asset qualifies for derecognizing, the book value of the transferred financial asset in its entirety shall be allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair values of those parts. The difference between the following two amounts shall be included in profit or loss for the current period: ①the book value allocated to the part derecognized; ②the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to it that had been recognized directly in equity (applicable to transfer of available-for-sale financial assets). If a transfer of financial assets do not satisfy the derecognition conditions, the company shall continue to recognize the financial assets, and the consideration received shall be included as financial liabilities. 32 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (4) Conditions for derecognizing financial liabilities If the current obligations of financial liabilities has been lifted in whole or in part, then the Company shall derecognize the financial liabilities in whole or in part thereof; if the Company signs an agreement with creditors in order to take on new ways to replace the existing financial liabilities, and the new liabilities and the existing financial terms are substantially different, the Company shall terminate recognizing the existing financial liabilities, and begin to recognize the new financial liabilities at the same time. If the terms of the contract involving the existing financial liabilities have been made with substantive changes in whole or in part, the Company shall terminate recognizing the existing financial liabilities in whole or in part, and at the same time, adopt the modified version of financial liabilities as a new one. On derecognizing the financial liabilities in whole or in part, the difference between the book value of these financial liabilities and the payment (including the roll-out of non-cash assets or new financial liabilities to be assumed) shall be accounted into current profits and losses. If buying back part of the financial liabilities, on the date of repurchase and in accordance with the comparative fair value of the part to be continuously recognized and to be derecognized, the Company shall allocate the entire financial liabilities. The difference between the part assigned to the derecognized book value and the payment (including the roll-out of non-cash assets or new financial liabilities to be assumed) shall be included into profits and losses of the current period. (5)Determination of fair value of financial assets and liabilities For financial assets and financial liabilities of the Company measured at fair value for which an active market exists, their fair values are determined based on the prices quoted on the actively traded market; for financial assets and financial liabilities for which no active market exists, their fair values are determined using valuation techniques (including by reference to the price adopted by willing parties in their recent transactions or by reference to the prevailing fair value, discount of cash flow method and option pricing model of other financial instruments which are substantially the same); for financial assets initially obtained or derived or financial liabilities assumed, fair value is determined based on market transaction prices. (6) Provision for impairment reserve of financial assets (excluding accounts receivable) On balance sheet date, the carrying amounts of financial assets (except for those measured at fair value through profit or loss of the period) are assessed for impairment. Provision for impairment is made when there exists objective evidence that impairment of a financial asset has occurred. For financial assets, objective evidence of impairment includes, but not limited to: ①significant financial difficulty of the issuer or debtor; ②breach of contract, such as delinquency or default in interest and principal payments made by the debtor; 33 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 ③the creditor, for economic or legal reasons, granting concession to the debtor in financial difficulty; ④it becoming probable that the debtor will enter bankruptcy or financial reorganization; ⑤the disappearance of an active market for that financial asset because of financial difficulties of the issuer; ⑥upon an overall assessment of a group of financial assets, observable data indicates that there is a measurable decrease in the estimated future cash flows from the group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group. Such observable data includes adverse change in the payment status of debtor of the group of assets, or increased unemployment rate in the country or region where the debtor is located, decreased price of collateral in the region where it belongs, recession in the industry, etc.; ⑦significant adverse changes in the technological, market, economic or legal environment in which the issuer of equity instrument operates, indicating that the cost of the equity instrument investment may not be recovered by the investor; ⑧a significant or prolonged decline in the fair value of the investment in equity instrument; Specific method for impairment of financial assets: ①Impairment of available-for-sale financial asset As for available-for-sale financial assets, in case that there is any objective evidence indicating available-for-sale equity instrument investment is impaired (including fair value of equity instrument investment occurs significant or non-temporary decline, impairment shall be recognized. Where an available-for-sale financial asset is impaired, even if the recognition of the financial asset has not been terminated, the accumulative losses arising from the decrease of the fair value of the owner’s equity which was directly included shall be transferred out and recorded into the profits and losses of the current period. The accumulative losses that are transferred out shall be the balance obtained from the initially obtained costs of the sold financial asset after deducting the principals as taken back, the current fair value and the impairment-related losses as was recorded into the profits and losses of the current period. As for the available-for-sale debt instruments whose impairment-related losses have been recognized, if, within the accounting period thereafter, the fair value has risen and are objectively related to the subsequent events that occur after the originally impairment-related losses were recognized, the originally recognized impairment-related losses shall be reversed and be recorded into the profits and losses of the current period. Impairment loss occurred to available-for-sale equity instrument investment shall be reverted through equity when the value of the equity instrument rises up. However, impairment loss in respect of equity instrument investment for which there is no quoted price in an active market and for which fair value could not be measured reliably, or impairment loss in relation to a derivative financial asset linked with the equity instrument for which the settlement shall be subject to 34 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 delivery of the equity instrument, shall not be reverted. ②Provision for impairment of held-to-maturity investments: If there is objective evidence that indicates impairment has occurred on a held-to-maturity investment, the difference between its carrying amount and the present value of its estimated future cash flow is recognized as impairment loss. If there is subsequent evidence to prove that its value has recovered, the originally recognized impairment loss may be reversed and recognized in profit or loss for the period, however the carrying amount so reversed may not exceed the amortization cost of the financial asset at the date of reversal had there been no provision for impairment. 11. Account receivable (1) Account receivable with single significant amount and withdrawal single item bad debt provision Account with single significant amount Over RMB 5 million Conducted impairment testing separately, balance between the present value of future cash flow and its carrying value, bad Withdrawal method for bad debt provision of account debt provision withdrawal and reckoned into current receivable with single significant amount gains/losses. For those without impairment being found after test, collected into relevant combination for accrual. (2) Accounts receivable whose bad debts provision was accrued by combination based on credit risk characteristics portfolio Combination Bad debt provision accrual Aging of accounts group Age analysis method Group with bad debt provision accrual by aging: √ Applicable □ Not applicable Age Accrual ratio Accrual ratio for other receivable Within one year (one year included) 0.30% 0.30% 1-2 years 0.30% 0.30% 2-3 years 0.30% 0.30% Over 3 years 100.00% 100.00% 3-4 years 100.00% 100.00% 4-5 years 100.00% 100.00% Over 5 years 100.00% 100.00% In combination, withdrawal proportion of bad debt provision based on balance proportion □ Applicable √ Not applicable In combination, withdrawal proportion of bad debt provision based on other methods: □ Applicable √ Not applicable 35 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (3) Account receivable with minor single amount but with withdrawal bad debt provision for single item If any objective evidence shows that it may has impaired, such as the debtor revoke, bankruptcy or death, and after liquidate Reasons for provision of bad debt reserve with bankrupt’s estates or heritage, the money still un-collectable, and in sufficient of cash flow As for the receivable with objective evidence shows that it Provision method of bad debt reserve might be impaired, an independent impairment test may be carried out for impairment losses recognized 12. Inventory Whether the company needs to comply with the disclosure requirements of the particular industry No (1) Classification of inventory The inventory of the Company refers to such seven classifications as the raw materials, product in process, goods on hand, wrap page, low value consumables, materials for consigned processing and goods sold. (2) Valuation of inventories Inventories are initially measured at cost upon acquisition, which includes procurement costs, processing costs and other costs. The prices of inventories are calculated using weighted average method when they are delivered. (3) Inventory system Perpetual inventory system is adopted. (4) Provision for inventory impairment When a comprehensive count of inventories is done at the end of the period, provision for inventory impairment is allocated or adjusted using the lower of the cost of inventory and the net realizable value. The net realizable value of stock in inventory (including finished products, inventory merchandize and materials for sale) that can be sold directly is determined using the estimated saleable price of such inventory deducted by the cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of material in inventory that requires processing is determined using the estimated saleable price of the finished product deducted by the cost to completion, estimated cost of sales and relevant taxation over the course of ordinary production and operation. The net realizable value of inventory held for performance of sales contract or labor service contract is determined based on the contractual price; in case the amount of inventory held exceeds the contractual amount, the net realizable value of the excess portion of inventory is calculated using the normal saleable price. Provision for impairment is made according to individual items of inventories at the end of the period; however, for inventories with large quantity and low unit price, the provision is made by categories; inventories of products that are produced and sold in the same region or with the same or similar purpose or usage and are difficult to be 36 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 measured separately are combined for provision for impairment. If the factors causing a previous write-off of inventory value has disappeared, the amount written-off is reversed and the amount provided for inventory impairment is reversed and recognized in profit or loss for the period. 13. Classified as assets held for sale If a non-current asset can be promptly sold at its existing status only according to the practice terms in connection with disposal of this kind of assets, and the Company has already made resolution on disposal of the non-current asset and entered into irrevocable transfer agreement with the transferee, and this transfer will be completed within one year, then the non-current asset would be calculated as non-current asset held for sale which would be not applicable to depreciation or amortization since the date of classification as asset held for sale, and would be measured at the lower of its carrying value less disposal cost and fair value less disposal cost. Non-current asset held for sale consists of single item asset and disposal group. If a disposal group is a group of assets as defined by No.8 of Business Accounting Standards-Assets Impairment, and goodwill arising from business combination shall be allocated to the group of assets under this accounting principle, or the disposal group constitutes one operation of the group of assets, then the disposal group includes the goodwill arising from business combination. For single non-current asset and asset in disposal group classified as assets held for sale, they shall be presented in balance sheet separately as current assets. For liabilities in disposal group relating to the transferred assets classified as assets held for sale, they shall be presented in balance sheet separately as current liabilities. If an asset or disposal group classified as held for sale no longer meets the recognition condition as non-current asset held for sale, the Company will cease such recognition and measure the asset at the lower of (1)the carrying value of the asset or disposal group prior to being classified as held for sale, based on the amount adjusted with the depreciation, amortization or impairment which should have been recognized assuming it had not been classified as held for sale; (2)the recoverable amount on the date when the Company decides to cease disposal. 14. Long-term equity investments (1) Determination of investment costs ①If it is formed by the business combination under the common control, and that the combining party takes cash payment, transfer of non-cash assets, assumption of debts or issuance of equity securities as the consolidation consideration, the shares of the book value of the owner’s equity obtained from the combined party on the date of combination in the ultimate controlling party’s consolidated financial statements shall be recognized as its initial investment cost. Capital reserves shall be adjusted according to the balance between the initial investment cost for long-term equity investment and the book value of paid consolidation consideration or the total face value of issued shares (capital premium or equity premium). If capital reserves are insufficient for offset, retained earnings shall be adjusted. As for business combination under the common control realized by the Company through several transactions, the initial investment cost of the investment shall be determined based on the share of the carrying value of the owners’ equity of the consolidated party as calculated according to the shareholding proportion on the consolidation date. Difference between initial investment cost and the carrying value of long-term equity 37 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 investment before combination and the sum of carrying value of newly paid consideration for additional shares acquired on the date of combination is to adjust capital reserve (capital premium or equity premium). If the balance of capital reserve is insufficient, any excess is adjusted to retained earnings. ②As for long-term equity investment formed from business combination not under common control, the fair value of the consolidated consideration paid shall be deemed as the initial investment cost on the acquisition date. ③Except those ones formed by the business combination, for all items obtained by means of cash payment, actually paid acquisition costs shall be taken as the initial investment cost. For those ones obtained by the issuance of equity securities, the fair value of the issued equity securities shall be taken as the initial investment cost. For those ones invested by investors, the value agreed in the investment contract or agreement shall be taken as the initial investment cost, provided that the value agreed in the contract or agreement shall be fair. (2) Subsequent measurement and profit or loss recognition For a long-term equity investment where the Company can exercise control over the investee, the long-term investment is accounted for using the cost method in the Company’s financial statements. The equity method is adopted when the Group has joint control, or exercises significant influence on the investee. Under cost method, long term equity investment is measured at initial investment cost. Except for the price actually paid for obtaining the investment or the cash dividends or profits declared but not yet distributed which is included in the consideration, the Company recognizes cash dividends or profits declared by the investee as current investment gains, and determine whether there is impairment on long term investment according to relevant assets impairment policies. Under equity method, when the initial investment cost of the long-term equity investment exceeds the share of fair value in the net identifiable assets in the investee, the difference shall be included in initial investment cost of the long-term equity investment. When the initial investment cost is lower than the share of fair value in the net identifiable asset in the investee, such difference is recognized in profit or loss for the period with adjustment of cost of the long-term equity investment. Under equity method, after the Company acquires a long-term equity investment, it shall, in accordance with its attributable share of the net profit or loss realized by the investee, recognize the investment profit or loss and adjust carrying value of the investment. The Group recognizes its share of the investee’s net profits or losses after making appropriate adjustments to the investee’s net profits and losses based on the fair value of the investee’s identifiable assets at the acquisition date, using the Group’s accounting policies and periods, and eliminating the portion of the profits or losses arising from internal transactions with its joint ventures and associates, attributable to the investing entity according to its shareholding proportion (but impairment losses for assets arising from internal transactions shall be recognized in full). The carrying amount of the investment is reduced based on the Group’s share of any profit distributions or cash dividends declared by the investee. The Group’s share of net losses of the investee is recognized to the extent the carrying amount of the investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero, except that 38 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 the Group has the obligations to assume additional losses. The Group adjusts the carrying amount of the long-term equity investment for any changes in owners’ equity of the investee (other than net profits or losses) and includes the corresponding adjustments in the owners’ equity of the Group. (3) Determination of control and significant influence on investee Control is the power over an investee. An investor must have exposure or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor’s returns. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control with other parties over those policies (4) Disposal of long-term equity investment ①Partial disposal of long term investment in which control is retained When long term investment is been partially disposed but control is retained by the company, the difference between disposal proceeds and carrying amount of the proportion being disposed is accounted for through profit or loss. ②Partial disposal of long term investment in which control is lost When long term investment is partially disposed and control is lost as a result, the carrying value of the long term invest on the stock right, the difference between carrying amount of the part being disposed and disposal proceeds should be recognized as profit or loss. The residual part should be treated as long term investment or other financial assets according to their carrying amount. After partial disposal, if the company is able to exert significant influence or common control over the investee, the investment should be measured according to cost method or equity method, in compliance with relevant accounting standards and regulations. (5) Impairment test and provision for impairment If there is objective evidence on the balance sheet date showing investment in subsidiaries, associates and joint ventures is impaired, provision of impairment shall be made against the difference between the carrying amount and the recoverable amount of the investment. 15. Investment property Measurement mode Measured by cost method Depreciation or amortization method Investment property refers to the real estate held with purpose of rent earning, capital appreciation or both of them. Investment properties of the Company include: (1) Land use right which has been rented out; (2) Land use right which is held for transfer upon appreciation; 39 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (3) Buildings which has been rented out. Investment property is initially measured at the cost when acquired. The Company makes subsequent measurement on investment property under cost model on the balance sheet date. Depreciation method for constructions and buildings under the item of fixed assets are the same, and amortization method for land use right and land use right under the item of intangible assets are the same. 16. Fixed assets (1) Confirmation conditions Fixed assets refer to the tangible assets for production of products, provision of labor, lease or operation, and with a service life in excess of 1 financial year. Fixed assets may be recognized unless it simultaneously meets the conditions as follows: ①The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and ②The cost of the fixed assets can be measured reliably. (2) Depreciation methods Yearly depreciation Categories Method Years of depreciation Scrap value rate rate Straight-line Housing buildings 20 10% 4.5% depreciation Machines and Straight-line 10 10% 9% equipment depreciation Straight-line Office equipment 5 10% 18% depreciation Straight-line Electronic equipment 5 10% 18% depreciation Transportation Straight-line 5 10% 18% equipment depreciation Straight-line Other equipment 5 10% 18% depreciation The fixed assets accrued full provisions for diminution in value should no long accrue the depreciation of fixed assets. The fixed assets accrued provisions for diminution in value should deduct the accrued amounts of the provision for impairment of fixed assets, and recalculate and confirm the depreciation rate and depreciation amount according to the useful life. (3) Reorganization basis, valuation and depreciation method for financial lease assets Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of asset ownership to the lessee and titles to the assets may or may not eventually be transferred. For fixed assets acquired under finance leases, the basis for provision of leased assets depreciation is the same as that 40 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 of self-owned fixed assets. When it can be reasonably determined that the ownership of a leased asset will be transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the lease asset is depreciated over the shorter period of the lease term and the period of expected use. 17. Project under Construction (1) Class of construction in progress Construction in progress is measured case by case. (2) Standards and timing of carrying forward construction in progress into fixed assets The initial book values of the fixed assets are stated at total expenditures incurred before construction in progress reaching the working condition for their intended use. For construction in progress that has reached working conditions for its intended use but for which the completion of settlement has not been handled, it shall be transferred into fixed assets at the estimated value according to the project budget, construction price or actual cost, etc. from the date when it reaches the working conditions for its intended use. And the fixed assets shall be depreciated in accordance with the Company’s policy on fixed asset depreciation. Adjustment shall be made to the originally and provisionally estimated value based on the actual cost after the completion of settlement is handled, but depreciation already provided will not be adjusted. 18. Borrowing expenses (1) Principles of recognizing capitalization of borrowing expenses The borrowing expenses of the Company directly attributable to the construction or production of an asset meeting capitalization conditions are capitalized and recognized in relevant asset costs; other borrowing expenses are recognized as expenses based on the amount incurred and recognized in profit or loss for the period. An asset that meets the capitalization conditions refers to fixed assets, real estate investments and inventories that require a considerable amount of time for construction or production to reach the expected usable or saleable condition. Borrowing expenses are capitalized when all of the following conditions are met: ①the asset expense has occurred, which includes expenses in the form of cash paid, nonmonetary asset transferred or interest-bearing obligations assumed for the construction or product of an asset that meets capitalization conditions; ②the borrowing expenses have occurred; ③the necessary construction or production activities for bringing the asset to the expected usable or saleable conditions have started. Capitalization of borrowing expenses is suspended when any abnormal interruption continues for over three months during the construction or production of an asset that meets capitalization conditions. 41 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 When the construction or production of an asset meeting capitalization conditions has reached expected useful or saleable conditions, the capitalization of borrowing expenses is stopped. When the a portion of the construction or production of an asset meeting capitalization conditions has completed and can be used individually, the capitalization of borrowing expenses of such portion of asset is stopped. (2) Capitalization period of borrowing expenses Capitalization period refers to the time starting from the borrowing expenses are capitalized to the time capitalization is stopped, except for the period which capitalization of borrowing expenses is suspended. (3) Calculation of capitalized amount of borrowing expenses Interest expenses of special loans (net of interest income from unutilized loans deposited in bank or investment gain earned from temporary investment) and supplementary expenses incurred for the construction or production of asset that meets capitalization conditions before the asset reaches expected useable or saleable condition are capitalized. The interest amount that should be capitalized on normal borrowings is calculated based on the weighted average of expenses of the aggregate asset exceeding the expenses of the portion of special loan multiplied by the capitalization ratio of the normal borrowings utilized. Capitalization ratio is calculated based on normal weighted average interest rate. 19. Biological assets Nil 20. Oil-and-gas assets Nil 21. Intangible assets (1) Valuation method, service life and impairment test (1) Measurement of intangible assets Intangible assets are accounted at the actual cost when acquired. The cost of externally purchased intangible assets includes the purchase price, relevant taxation and other expenses directly attributable to bringing the asset to expected usage. If payment for the price of intangible assets purchased is delayed beyond normal credit conditions and is in fact financing in nature, the cost of the intangible asset is determined based on the present value of the purchase price. For intangible asset obtained through debt restructuring for offsetting the debt of the debtor, the entry value of the intangible asset is determined based on its fair value, and the difference between the carrying amount of the 42 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 restructured debt and the fair value of the intangible asset used for offsetting the debt is recognized in profit or loss for the period. The entry value of intangible asset received in an exchange for non-monetary asset is based on the fair value of the asset surrendered, provided that the asset received in exchange for non-monetary asset has a commercial substance and the fair value of both the asset received and the asset surrendered can be reliably measured, except there is definite evidence that the fair value of the asset received is more reliable; for exchange of nonmonetary asset that cannot satisfy the above conditions, the cost of the intangible asset received is based on the carrying amount of the asset surrendered and the amount of relevant taxation payable, and no profit or loss is recognized. For intangible asset obtained through business absorption or combination of entities under common control, the entry value is determined by the carrying amount of the combined party; for intangible asset obtained through business absorption or merger of entities not under common control, the entry value is determined by the fair value of the intangible asset. (2) Amortization of intangible assets Intangible asset with a limited life is amortized using straight line method over the term which it brings economic benefit to the Company. If the term of economic benefit the intangible asset can bring to the Company cannot be estimated, it is deemed to be an intangible asset with indefinite life, which shall not be amortized. (3) Regular review of useful life The expected useful life and amortization method for intangible assets with definite useful life are reviewed at the end of each year, and adjusted when necessary. In case that the useful life of an intangible asset is limited, the Company shall estimate the term of the useful life or quantity of output or similar measurement units constituting the useful life. The useful life of intangible assets shall be reviewed annually, and they are also subject to impairment test. At the end of each accounting period, useful life and amortization method for intangible assets with definite useful life are reviewed. Where the useful life and amortization method is different from the previous estimate, the company shall change term and method for amortization. Besides, the company shall also review the useful life of intangible assets with indefinite useful life in each accounting period. if there is any evidence showing that an intangible asset has definite useful life, the company shall estimate the useful life according the above rules. (4) Impairment of intangible assets The Company makes a judgment on whether there is any sign of possible assets impairment on the balance sheet date. With respect to goodwill arising from business combination and intangible assets with indefinite useful life, they are subject to impairment test annually regardless of whether there is any sign of impairment. If there is any sign of impairment, the company shall estimate the recoverable amount which shall be determined at the higher of the net amount of fair value of the asset less disposal costs and the present value of the predicted future cash flow of the asset. In particular, the disposal costs include legal expenses, taxes, delivery expense relating to the asset disposal and other expenses directly occurred to make the asset available for sale. 43 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (2) Internal accounting policies relating to research and development expenditures (1) Categorization of the expenditure in research stage and expenditure in development stage Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time: ①it is technically feasible that the intangible asset can be used or sold upon completion; ②there is intention to complete the intangible asset for use or sale; ③the intangible asset can produce economic benefits, including there is evidence that the products produced using the intangible asset has a market or the intangible asset itself has a market; if the intangible asset is for internal use, there is evidence that there exists usage for the intangible asset; ④there is sufficient support in terms of technology, financial resources and other resources in order to complete the development of the intangible asset, and there is capability to use or sell the intangible asset; ⑤the expenses attributable to the development phase of the intangible asset can be measured reliably. 22. Impairment of long-term assets The Company makes a judgment on whether there is any sign of possible long-term assets impairment on the balance sheet date. Where there is a sign indicating potential impairment, the Company will estimate the recoverable amount. And if the recoverable amount of an asset is less than its carrying value, the carrying value shall be written down to the recoverable amount and the amount written down shall be recognized as impairment loss and included in current profit or loss. Meanwhile, the Company shall make impairment provision for the asset accordingly. No matter whether there is any sign of possible assets impairment, the goodwill formed by the merger of enterprises and intangible assets with uncertain service lives shall be subject to impairment test every year. The estimate of the recoverable amount of the assets are determined at the higher of the net amount of the fair value less the disposal expenses and the present value of the estimated future cash flows. The Group estimates the recoverable amount on an individual basis. If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the asset group to which the asset belongs. Once the asset impairment loss is recognized, it will not be reversed in the subsequent periods. After the loss of asset impairment has been recognized, the depreciation or amortization expenses of the impaired asset shall be adjusted accordingly in the future periods so as to amortize the post-adjustment carrying value of the asset systematically (deducting the expected net residual value) within the residual service life of the asset. 23. Long-term deferred expenses Long-term deferred expenses are those prepaid expenses with an amortization period of more than one year 44 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (excluding one year), such as improvement expense occurred on fixed assets leased under operating leasing arrangement. Long-term deferred expenses are amortized in installment on an average basis over the period which is expected to be benefitted from such expenses. In case that the long-term deferred expenses are not likely to benefit the subsequent accounting periods, the outstanding value of the item to be amortized shall be included in current profit or loss in full. 24. Employee compensation (1) Accounting treatment for short-term compensation During the accounting period when staff providing service to the Company, the actual short-term compensation occurred shall recognized as liabilities and reckoned into current gains/losses or relevant assets costs. The non-monetary welfare is measured by fair value. (2) Accounting treatment for post-employment benefit The post-employment benefit including the defined contribution plans. And defined contribution plans including basic endowment insurance, unemployment insurance and annuity, corresponding payable amount will reckoned into relevant assets costs or current gains/losses while occurred. (3) Accounting for retirement benefits When the Company terminates the employment relationship with employees before the end of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, the Company shall recognize employee compensation liabilities arising from compensation for staff dismissal and included in profit or loss for the current period, when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labor relationship plans and employee redundant proposals; and the Company recognize cost and expenses related to payment of compensation for dismissal and restructuring, whichever is earlier. (4) Accounting for other long-term employee benefits For other long-term employee benefits provided by the Company to its employees, if satisfy with the established withdraw plan, then the benefits are accounted for under the established withdraw plan, otherwise accounted for under defined benefit scheme. 25. Accrued liabilities (1) When the obligations arising from provision of external guarantee, lawsuits, product quality guarantee and contract loss and other contingent issues become the present obligations of the company, the performance of which is likely to result in outflow of benefit from the company and the amount of which can be measured reliably, the company shall recognize such obligations as projected liabilities. (2) Projected liabilities are initially measured at the best estimate on the expenses required to perform the relevant 45 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 present obligation by the Company, and the carrying value of project liabilities are reviewed on each balance sheet date. 26. Share-based payment Share based payment refers to the transactions involving grant of equity instrument or assume liabilities as determined based on equity instrument for the purpose of acquiring services from employees or other parties. Share based payment is divided into the equity settled share based payment and cash settled share based payment. The equity-settled share-based payment in return for employee services shall be measured at the fair value of the equity instruments granted to the employees. The cash-settled share-based payment shall be measured at the fair value of the liability that determined on the basis of shares or other equity instruments undertaken by the enterprise 27. Other financial instruments including senior shares and perpetual bonds (1) Distinguish of senior shares and perpetual bonds The perpetual bonds and senior shares issued by the Company are treated as equity instruments subject to satisfaction of all the below conditions: ①the financial instrument excludes delivery of cash or other financial assets to others, or exchange for contractual obligations on financial assets or financial liabilities with others under potential negative conditions; ②if its own equity instruments are required or may be used to settle the financial instruments, it excludes the contractual obligation to deliver varied numbers of own equity instruments for settlement provided that the financial instruments are non-derivatives; if the financial instruments are derivatives, the Company can only settle the financial instruments by fixed number of own equity instruments for exchange for fixed amount of cash or other financial assets. Other than the financial instruments which can be classified as equity instruments under the above conditions, other financial instruments issued by the Company shall be classified as financial liabilities. In case that financial instruments issued by the Company are compound financial instruments, they shall be recognized as liabilities at the fair value of liabilities portion. The actual amount received less fair value of the liabilities portion shall be recognized as other equity instrument. Transaction expenses occurred in issuance of compound financial instruments are allocated to the portions of liabilities and equities according to their respective proportion to the total issuance price. (2) Accounting for perpetual bonds and senior shares For perpetual bonds and senior shares classified into financial liabilities, their relevant interest, dividends, gains or losses and gains or losses arising from redemption or refinancing are all included in current profit or loss other than those borrowing expenses which meet condition for capitalization (please refer to Note V-18 “borrowing expenses”). For perpetual bonds and senior shares classified into equity instruments, their issuance (including refinancing), repurchase, sale or cancel are treated as change of equity, and relevant transaction fees are also deducted from 46 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 equity. The Company accounts for allocation of holders of equity instruments as profit distribution. The Company dose not recognizes change of fair value of equity instruments. 28. Revenue Whether the company needs to comply with the disclosure requirements of the particular industry No (1) Goods sales Income from sale of goods is recognized when the following conditions are met: (1)the Company has transferred the key risks and return on the ownership of the merchandize to the buyer; (2)the Company has not retained continued management rights associated with ownership and no longer exercises effective control on the merchandize sold; (3)the amount of income can be reliably measured; (4)the relevant economic benefits are very likely to flow to the enterprise; (5)the costs incurred or to be incurred can be reliably measured. (2) Rendering of services When the outcome of the transaction can be estimated reliably (the amount of revenue can be measured reliably, it is probable that the economic benefits will flow to the Company, the percentage of completion of the transaction can be determined reliably, and the costs of the transaction incurred and to be incurred can be measured reliably), revenue from rendering of services is recognized using the percentage of completion method, and the stage of completion is determined at the proportion of costs incurred to the estimated total costs. When the outcome of the transaction cannot be estimated reliably at the balance sheet date, revenue is recognized based on the amount of the costs incurred and the costs incurred are charged off at the same amount when the costs incurred are expected to be recoverable; and no revenue is recognized and the costs incurred are charged off as an expense of the period when the costs incurred are not expected to be recovered. (3) Transfer of asset use right When the economic benefits related to the transaction is likely to flow to the Company and the income amount can be reliably calculated, the Company shall recognize income arising from transfer of asset use right. The income of interests is determined on basis of the time and real interest rate of the Company’s cash funds which is utilized by other persons. The income of royalties is determined on basis of the chargeable time and method fixed under relevant agreement or contract. (4) Interest income Recognized based on the times and real interest rates for the money used by others 29. Government Grants (1)Determination basis for government grant related to assets and accounting treatment thereof 1) Type 47 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Government grant refers to those monetary assets and non-monetary assets received by the Company from government at nil consideration. Based on the grantee as stipulated by the relevant government documents, government grants are classified into those related to assets and those related to income. Government grant related to assets refers to those obtained by the Company for construction or otherwise formation of long term assets. Government grant related to income refers to such government grant other than those related to assets. 2) Recognition of government grant Amount of receivables relating to which there is evidence showing that the Company is able to meet relevant financial supporting policies and is expected to be able for the Company to receive financial supporting funds shall be recognized as government grant as at the end of a specific period, otherwise it shall be recognized upon actual receipt. Where government grant is monetary assets, it shall be measured based on the amount received or receivable. Where government grant is non-monetary assets, it shall be measured at fair value, and if the fair value cannot be measured reliably, it shall be measured at nominal value (RMB1.00). For those government grants measured at nominal value, they shall be recorded in profit and loss for the period directly. 3) Accounting A. Government grant related to assets shall be accounted to offset the carrying value of relevant assets or recognized as deferred income. In case this kind of government grant has been recognized as deferred income, it shall be recorded in profit or loss installment during the service life of the relevant assets under reasonable and systematic methods. Government grant measured at nominal value shall be recorded in profit or loss for the period directly. In case that the relevant assets are disposed of, transferred, regarded as useless or destroyed prior to the end of their service life, the deferred income balance not allocated yet shall be transferred into gains or loss from assets disposal for the period. Government grant associated with a company’s normal operation shall be recorded in other income or used to offset relevant cost expenses based on the substance of economic business. B. It is a common practice for governmental finance authorities to pay an enterprise discounted interests, and the enterprise shall apply the discounted interests to offset relevant borrowing expense. 48 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 C. In respect of recognized government grant which is required to return, it shall be accounted for during the return period based on the following cases: a. in case of offset of relevant assets’ carrying value upon initial recognition, the carrying value shall be adjusted; b. in case of existence of deferred income, carrying balance of deferred income shall be offset, and the surplus portion (if any) shall be recorded in profit or loss for the period. c. otherwise it shall be recorded in profit or loss for the period directly. (2) Determination basis for government grant related to income and accounting treatment thereof Government grant related to income shall be accounted for as follows: 1) recognized as deferred income in case that the grant is used to compensate the relevant cost expense or loss of a company in future periods, and recorded in profit or loss for the period or offset relevant costs during the period when the relevant cost expense or loss is recognized; 2) recorded in profit or loss for the period or offset relevant costs directly in case that the grant is used to compensate the relevant cost expense or loss occurred by a company. In respect of government grant which comprises portions related to assets and income both, different accounting shall be adopted for different portions. Where it is difficult to distinguish these two portions, the grant shall be classified as grant related to income in its entirety. 30. Deferred tax assets / deferred income tax liabilities (1) Deferred tax assets or deferred tax liabilities are calculated and recognized based on the difference between the carrying amount and tax base of assets and liabilities (and the difference of the carrying amount and tax base of items not recognized as assets and liabilities but with their tax base being able to be determined according to tax laws) and in accordance with the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled. (2) A deferred tax asset is recognized to the extent of the amount of the taxable income, which it is most likely to obtain and which can be deducted from the deductible temporary difference. At the balance sheet date, if there is any exact evidence that it is probable that future taxable profits will be available against which deductible temporary differences can be utilized, the deferred tax assets unrecognized in prior periods are recognized. (3) At the balance sheet date, the carrying amount of deferred tax assets is reviewed. The carrying amount of a deferred tax asset is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the benefit of the deferred tax asset to be utilized. Such reduction is subsequently reversed to the extent that it becomes probable that sufficient taxable income will be available. (4) The income tax and deferred tax for the period are treated as income tax expenses or income through profit or loss, excluding those arising from the following circumstances: ① business combination; and ② the 49 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 transactions or items directly recognized in equity. 31. Lease (1)Accounting for operating lease When the Company is the lessee, lease payments are recognized as cost or profit or loss with straight-line method over the lease term. Initial expenses are recognized directly into profit or loss. Contingent rents are charged as profit or loss in the periods in which they are incurred. When the Company is the lessor, lease income is recognized as profit or loss with straight-line method over the lease term. Initial expenses, other than those with material amount and eligible for capitalization which are recognized as profit or loss by installments, are recognized directly as profit or loss. Contingent rents are charged into profit or loss in the periods in which they are incurred. (2) Accounting for financing lease When the company acts as lessee, at the inception of lease, the lower of fair value of leased assets at the inception of lease and the present value of minimum lease payment is recognized as the value of leased assets. The minimum lease payment is recognized as the value of long-term payable. Their difference is recorded as unrecognized finance costs with any initial direct expense incurred recorded in the value of leased assets. For each period of the lease term, current finance cost is calculated using effective interest method. When the company acts as lessor, at the inception of lease, the sum of minimum lease income at the inception of lease and the initial direct expense is recognized as the value of finance lease payment receivable, with unsecured balance also recorded. The difference between the sum of minimum lease income, initial direct expense and unsecured balance and the sum of their present values is recognized as unrealized finance income. For each period of the lease term, current finance income is calculated using effective interest method. 32. Other important accounting policy and estimation Discontinued operation refers to the operation disposed or classified as held-for-sale by the Company and presented separately under operation segments and financial statements, which has fulfilled one of the following criteria: ① it represents an independent key operation or key operating region; ② it is part of the proposed disposal plan on an independent key operation or proposed disposal in key operating region; or ③ it only establishes for acquisition of subsidiary through disposal. Accounting for discontinued operation is set out in note V-13 “classified as assets held for sale”. 50 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 33. Major accounting policy and changes (1) Main accounting policy changes √ Applicable □Not applicable Content and reasons Approval procedures Note Pursuant to the notice issued by the Ministry of Finance Impact of this change of accounting on 10 May 2017 relating to issuance of the amended policies in our consolidated financial No.16 of Enterprise Accounting Standards – statement is the change of accounting Government Grant (No. CK[2017]15), government item for government grant: government grant associated with a company’s normal operation grant related to our normal operation shall be recorded in “other income” or used to offset shall be recorded as “other income” and relevant cost expenses based on economic substance; reported separately under the item of government grant not associated with a company’s “operating profit” in profit statement. normal operation should be recognized as 2nd Meeting of 10th BOD These adjustments are only made to the non-operating income or expense. These provisions reporting items and structure of profit have come into effect since 12 June 2017. Government statement, with no impact on the grants existed as at 1 January 2017 shall be accounted Company’s profit for the period or for under prospective application method, and those shareholders’ interests, no impact on our new government grants increased between 1 January financial condition and operating results 2017 and the date when the new provision came into and no involvement of the retrospective effect are subject to adjustments under the new adjustment for the previous years. government grant standards. (2) Changes of important accounting estimate □ Applicable √ Not applicable 34. Other Nil VI. Taxes 1. Main tax category and tax rate Tax category Tax calculation evidence Tax rate Sales of goods, taxable labor service Value added tax 17% revenue and taxable income Tax for maintaining and building cities Turnover tax payable 7% Taxable income 25.00% Business income tax 51 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Educational surtax Turnover tax payable 3% Turnover tax payable 2% Local educational surtax Amount of the purchasing and sales Stamp tax 0.03% contract Disclose reasons for different taxpaying body Taxpaying body Income tax rate 2. Tax preference Nil 3. Other Nil VII. Notes to Items in Consolidated Financial Statements 1. Monetary fund In RMB Item Ending balance Opening balance Cash on hand 77,429.04 132,652.06 Cash in bank 15,099,876.44 23,768,774.82 Other monetary fund 113,860.83 Total 15,177,305.48 24,015,287.71 Other explanation Separate explanation is required for accounts with restricted application purposes, deposited overseas and of potential recovery risks arising from pledge, mortgage or frozen. 2. Financial assets measured by fair value and reckoned into current gains/losses with its variation In RMB Item Ending balance Opening balance Other explanation: Nil 3. Derivative financial assets □ Applicable √ Not applicable 52 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 4. Note receivables (1) Classification of notes receivable In RMB Item Ending balance Opening balance Bank acceptance bill 5,139,578.00 2,220,000.00 Total 5,139,578.00 2,220,000.00 (2) Pledge at period-end In RMB Item Amount pledge at period-end Total 0.00 (3) Notes endorsement or discount and undue on balance sheet date In RMB Item Amount derecognition at period-end Amount not derecognition at period-end Bank acceptance bill 25,066,473.00 Total 25,066,473.00 (4) Notes transfer to account receivable due for failure implementation by drawer at period-end In RMB Item Amount transfer to account receivable at period-end Total 0.00 Other explanation There are no notes that transfer to account receivable due for the drawer failure to perform the contract at period-end. 5. Accounts receivable (1) Accounts receivable by 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 53 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Receivables with bad debt provision 10,787,3 1,287,54 9,499,833 12,479, 1,292,617 11,186,420. 85.23% 11.94% 86.34% 10.36% accrual by credit 75.68 2.32 .36 037.76 .31 45 portfolio Accounts with single significant amount 1,869,94 747,977. 1,121,966 1,974,9 789,977.5 1,184,966.3 and bad debts 14.77% 40.00% 13.66% 40.00% 3.96 58 .38 43.96 9 7 provision accrued individually 12,657,3 2,035,51 10,621,79 14,453, 2,082,594 12,371,386. Total 100.00% 16.08% 100.00% 14.41% 19.64 9.90 9.74 981.72 .90 82 Receivable with single significant amount and withdrawal bad debt provision separately at end of period: □ Applicable √ Not applicable In combination, accounts receivable whose bad debts provision was accrued by age analysis: √ Applicable □ Not applicable In RMB Ending balance Age Account receivable Bad debt provision Accrual ratio Within one year Within 1 year 9,006,798.39 27,020.40 0.30% Subtotal within one year 9,006,798.39 27,020.40 0.30% 1-2 years 79,894.08 239.68 0.30% 2-3 years 441,726.15 1,325.18 0.30% Over 3 years 1,258,957.06 1,258,957.06 100.00% Total 10,787,375.68 1,287,542.32 11.94% Explanation on combination determines: According to the business scale, business nature, and customers’ settlement, etc., the account receivable with single significant amount is determined to be RMB 5 million. The account receivable with single significant amount has no depreciation reserve, and the reserve for bad debt provision is withdrawn with age analysis method. In combination, withdrawal proportion of bad debt provision based on balance proportion for account receivable: □ Applicable √ Not applicable In combination, withdrawal proportion of bad debt provision based on other methods for account receivable: Nil (2) Bad debt provision accrual collected or switch back Bad debt provision accrual was 0 Yuan; the amount collected or switches back amounting to 47,075.00 Yuan. Important bad debt provision collected or switch back: 54 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 In RMB Company Collected or switch back amount Collection way Total 0.00 -- Nil (3) Account receivable actual charge off in the Period In RMB Item Amount written off Written-off for the major receivable: In RMB Verification Arising from related Company Nature Amount written off Reason for write-off procedures transaction (Y/N) Total -- 0.00 -- -- -- Explanation for write-off of receivables: There is no actual write off of accounts receivable in Period. (4) Top 5 receivables at ending balance by arrears party Relationship Ratio in tota Account Item with the Amount l receivables Nature age company (%) Within Trade Jinan Yuxintai Sales Co., Ltd. Unrelated party 3,499,296.65 27.65% one year receivable Suzhou Jiaxin Economy and Trade Co., Within Trade Unrelated party 1,457,049.92 11.51% Ltd. one year receivable Within Trade Jinan Daming Kemao Co., Ltd. Unrelated party 1,294,549.38 10.23% one year receivable Shijiazhuang Dasong Technology Co., Within Trade Unrelated party 1,278,283.50 10.10% Ltd. one year receivable Over 3 y Trade Hebei Branch of CBC Group Unrelated party 1,144,690.91 9.04% ears receivable Total - 8,673,870.36 - 68.53% - (5) Receivable derecognition due to transfer of financial assets Note: explain the transfer way for financial assets, amount of receivable that re-recognized, and gains/losses while re-recognized. 55 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (6) Assets and liability resulted by receivable transfer and continuous involvement Note: explain the transfer way for financial assets, and amount of assets or liabilities continuous involvement item by item Other explanation: 6. Advance payment (1) Listed by account age In RMB Ending balance Opening balance Age Amount Ratio Amount Ratio Within one year 1,296,894.88 89.20% 1,667,424.89 89.29% 1- 2 years 200,000.00 10.80% 200,000.00 10.71% 2-3 years Over 3 years Total 1,496,894.88 -- 1,867,424.89 -- Explanation on un-settlement in time for advance payment with over one year account age and major amounts: The subscription 200,000.00 Yuan paid to Huihuangda Bicycle (Shenzhen) Co., Ltd. for 1000 OEM bicycles in advance. The subscription will pay the final money according to the agreement. The business still not settles till end of the period (2) Top 5 advance payment at ending balance by prepayment object Ratio in t Relationship Account otal adva Item with the Amount Nature age nce e pay company ment (%) Unrelated Within on Tianjin Shuntian Electric Bicycle Co., Prepayments for 1,279,523.55 e 85.48% Ltd. materials year Huihuangda Bicycle (Shenzhen) Co., Unrelated Prepayments for 200,000.00 1-2 years 13.36% Ltd. materials Unrelated Within on Shenzhen ZHengyijia Technology Prepayments for 10,800.00 e 0.72% Co.,Ltd. materials year Unrelated Within on Prepayments for Shenzhen Jiekang Industrial Co., Ltd. 3,375.00 e 0.22% materials year 56 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Ratio in t Relationship Account otal adva Item with the Amount Nature age nce e pay company ment (%) Unrelated Within on Shenzhen Yuanshun Sports Apparatus Prepaid service 1,890.00 e 0.13% Co., Ltd. charge year Total - 1,495,588.55 - 99.91% - Note: In accordance with the concentration ratio, aggregation or closing balance of prepayment of the top five closing balance respectively disclosed and the proportion of the total number of closing balance of prepayment Other explanation: 7. Interest receivable (1) Interest receivable In RMB Item Ending balance Opening balance Time deposit Loan by mandate Debt investment Total 0.00 0.00 (2) Important overdue interest Overdue time Overdue Impairment (Y/N) and Borrower Ending balance Overdue reason time judgment basis -- -- -- Total 0.00 Other explanation: Nil 8. Dividend receivables (1) Dividend receivables In RMB Item (or the invested entity) Ending balance Opening balance 57 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (2) Major dividend receivables with over one year age In RMB Item or the invested Impairment (Y/N) and Ending balance Age Reasons entity) judgment basis Total 0.00 -- -- -- Other explanation: Nil 9. Other accounts receivable (1) Other accounts receivable by 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 Other receivables with bad debt 1,046,10 452,521. 593,588.2 1,111,4 452,717.7 100.00% 43.26% 100.00% 40.73% 658,754.09 provision accrual by 9.89 64 5 71.82 3 credit portfolio 1,046,10 452,521. 593,588.2 1,111,4 452,717.7 Total 100.00% 43.26% 100.00% 40.73% 658,754.09 9.89 64 5 71.82 3 Other receivable with single significant amount and withdrawal bad debt provision separately at end of period: □ Applicable √ Not applicable In combination, other accounts receivable whose bad debts provision was accrued by age analysis √ Applicable □ Not applicable In RMB Ending balance Age Other accounts receivable Bad debt provision Accrual ratio Within one year Within one year 314,641.37 943.92 0.30% Subtotal within one year 314,641.37 943.92 0.30% 1-2 years 208,705.00 626.12 0.30% 2-3 years 72,028.00 216.08 0.30% Over 3 years 450,735.52 450,735.52 100.00% Total 1,046,109.89 452,521.64 43.26% 58 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Explanations on combination determine: According to the business scale, business nature, and customers’ settlement, etc., the other account receivable with single big amount is determined to be RMB 5 million. The other account receivable with single big amount has no depreciation reserve, and the reserve for bad debt provision is withdrawn with age analysis method. In combination, withdrawal proportion of bad debt provision based on balance proportion for other account receivable: □ Applicable √ Not applicable In combination, withdrawal proportion of bad debt provision based on other methods for other account receivable: □ Applicable √ Not applicable (2) Bad debt provision accrual collected or switch back Bad debt provision accrual was 0 Yuan; the amount collected or switches back amounting to 196.09 Yuan. Important bad debt provision collected or switch back: In RMB Company Amount reversal or collected Collection way Total 0.00 -- Nil (3) Other receivables actually written-off during the reporting period In RMB Item Amount written off Written-off for the major other receivable: In RMB Nature of other Verification Arising from related Company Amount written off Reason for write-off receivables procedures transaction (Y/N) Total -- 0.00 -- -- -- Explanation for write-off of other receivables: Nil (4) Other receivables by nature In RMB Nature Ending book balance Opening book balance Margin or deposit 584,750.00 503,614.00 Equipment money 311,400.00 311,400.00 Staff personal loans 72,098.50 111,870.60 Other 77,861.39 184,587.22 59 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Total 1,046,109.89 1,111,471.82 (5) Top 5 other receivables at ending balance by arrears party In RMB Ratio in total ending Ending balance of Company Nature Ending balance Age balance of other bad bet provision receivables Shenzhen Luwei Machine nary Equipment money 300,000.00 Over 3 years 28.68% 300,000.00 Equipment Co., Ltd. Shenzhen Anjingheng Margin or deposit 150,900.00 1-2 year 14.43% 452.70 Industrial Co., Ltd. Shenzhen Material Margin or deposit 135,723.00 1-2 year 12.97% 407.17 Group Co., Ltd. Tianjin Lvchi Margin or deposit 72,000.00 1-2 year 6.88% 216.00 E-Business Co., Ltd. Alipay (China) Network Technology Margin or deposit 50,000.00 1-2 year 4.78% 150.00 Co., Ltd. Total -- 708,623.00 -- 67.74% 301,225.87 (6) Account receivable with government grants involved In RMB Time, amount and basis Company Item Ending balance Ending age of amount collection estimated Total -- 0.00 -- -- (7) Other account receivable derecognition due to financial assets transfer Nil (8) Assets and liability resulted by other account receivable transfer and continuous involvement Nil Other explanation: Nil 60 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 10. Inventory Whether the company needs to comply with the disclosure requirements of the particular industry No (1) Inventory classification In RMB Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserve reserve Raw materials 535,609.59 40,706.54 494,903.05 785,399.89 40,706.54 744,693.35 Finished goods 5,595,790.29 5,519.40 5,590,270.89 2,379,266.31 5,519.40 2,373,746.91 Total 6,131,399.88 46,225.94 6,085,173.94 3,164,666.20 46,225.94 3,118,440.26 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 Increase in the current period Decrease in the current period Item Opening balance Switch back or Ending balance Accrual Other Other write-off Raw materials 40,706.54 40,706.54 Finished goods 5,519.40 5,519.40 Total 46,225.94 46,225.94 (3) Explanation on capitalization of borrowing costs at ending balance of inventory Nil (4) Assets that completed without settlement from construction contract In RMB Item Amount Other explanation: Nil 61 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 11. Assets holding ready for sold In RMB Expected disposal Item Ending book value Fair value Expected disposal time expenses Total 0.00 0.00 0.00 -- Other explanation: Nil 12. Non-current assets due within one year In RMB Item Ending balance Opening balance Other explanation: Nil 13. Other current assets In RMB Item Ending balance Opening balance Prepaid intermediary fee 1,792,452.81 1,509,433.95 Prepaid tax 763,158.94 541,396.60 Total 2,555,611.75 2,050,830.55 Other explanation: Nil 14. Financial assets available for sale (1) Financial assets available for sale In RMB Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Total 0.00 0.00 0.00 0.00 (2) Financial assets available for sale measured by fair value at period-end In RMB Type Equity instrument Debt instrument Total 62 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 available for sale available for sale (3) Financial assets available for sale measured by cost at period-end In RMB Book balance Depreciation reserves Ratio of The share-holdi Cash invested Period-beg Period-beg ng in Increased Decreased Period-end Increased Decreased Period-end dividend entity inning inning invested entity Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -- 0.00 (4) Changes of impairment in Period In RMB Equity instrument Debt instrument Type Total available for sale available for sale Balance of impairment 0.00 accrual at period-begin Current accrual 0.00 Including: transfer-in from other 0.00 comprehensive income Current decrease 0.00 Including: switch back due to fair value rebound 0.00 at period-end Balance of impairment 0.00 accrual at period-end (5) Fair value of equity instrument available for sale sharply declined or other-than-temporary declined at period-end without depreciation reserves accrual In RMB Fair value Time of drops Amount with Reasons for Item Investment cost Ending fair value declined relative persistently impairment un-accrual to cost (month) accrual Total 0.00 0.00 -- -- 0.00 -- Other explanation Nil 63 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 15. Held-to-maturity investment (1) Held-to-maturity investment In RMB Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Total 0.00 0.00 0.00 0.00 (2) Important held-to-maturity investment at period-end In RMB Bond Face value Coupon value Actual rate Maturity date Total 0.00 -- -- -- (3) Held-to-maturity investment reclassify in the Period Nil Other explanation Nil 16. 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 section provision provision Total 0.00 0.00 0.00 0.00 -- (2) Long-term account receivable derecognition due to transfer of financial assets Nil (3) Assets and liability resulted by long-term account receivable transfer and continuous involvement Nil Other explanation Nil 64 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 17. Long-term equity investment In RMB +,- Ending Other Cash Investme balance The Additiona comprehe dividend Opening nt gains Other Ending of invested l Capital nsive or profit Impairme balance recognize equity Other balance impairme entity investmen reduction income announce nt accrual d under change nt t adjustmen d to equity provision t issued I. Joint venture Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 II. Associated enterprise Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation Nil 18. Investment real estate (1) Investment real estate measured at cost □ Applicable √ Not applicable (2) Investment real estate measured at fair value □ Applicable √ Not applicable (3) Certificate of title un-completed In RMB Item Book value Reasons for un-completed Other explanation Nil 19. Fixed assets (1) Fixed assets In RMB Houses and Machines equipme Electronic Item Transport tools Total buildings nt equipment and 65 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 other I. Original book value: 1.Opening 2,959,824.00 564,123.99 416,629.06 635,351.81 4,575,928.86 balance 2. Increased in 0.00 0.00 0.00 31,940.00 31,940.00 the Period (1) Purchase 0.00 0.00 0.00 31,940.00 31,940.00 (2) construction in 0.00 0.00 0.00 0.00 0.00 process transfer-in (3) the increase in 0.00 0.00 0.00 0.00 0.00 business combination 3. Decreased in 0.00 0.00 0.00 0.00 0.00 the Period (1) Disposal or 0.00 0.00 0.00 0.00 0.00 scrap 4.Ending 2,959,824.00 564,123.99 416,629.06 667,291.81 4,607,868.86 balance II. accumulated depreciation 1.Opening 66,596.04 229,871.16 71,749.48 478,757.07 846,973.75 balance 2. increased in 66,596.04 50,771.16 18,748.32 9,021.45 145,136.97 the Period (1) provision 66,596.04 50,771.16 18,748.32 9,021.45 145,136.97 3. Decreased in 0.00 0.00 0.00 0.00 0.00 the Period (1) Disposal or 0.00 0.00 0.00 0.00 0.00 scrap 4.Ending 133,192.08 280,642.32 90,497.80 487,778.52 992,110.72 balance 66 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 III. impairment of preparation 1.Opening 0.00 0.00 0.00 0.00 0.00 balance 2. increased in 0.00 0.00 0.00 0.00 0.00 the Period (1) provision 0.00 0.00 0.00 0.00 0.00 3. Decreased in 0.00 0.00 0.00 0.00 0.00 the Period (1) Disposal or 0.00 0.00 0.00 0.00 0.00 scrap 4.Ending 0.00 0.00 0.00 0.00 0.00 balance IV. book value 1.Ending book 2,826,631.92 283,481.67 326,131.26 179,513.29 3,615,758.14 value 2. Opening 2,893,227.96 334,252.83 344,879.58 156,594.74 3,728,955.11 book value (2) Fixed assets temporary idle In RMB Accumulated Depreciation Item Original book value Book value Note depreciation reserves (3) Fixed assets leased through operating lease In RMB Accumulated Item Original book value Depreciation reserves Book value depreciation (4) Fixed assets leased through operating lease In RMB Item Ending book value 67 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (5) Certificate of title un-completed In RMB Item Book value Reasons Purchasing six properties of Lianxin Garden with original value of 2,959,824.00 Yuan in 2016. The property purchasing refers to the indemnificatory housing for enterprise talent buying from Shenzhen Housing and Construction Six properties in Lianxin Garden 2,826,631.92 Bureau of Luohu District. According to the agreement, the enterprise shall not carrying any kind of property trading with any units or individuals except the government, and the company has no property certification on the above mentioned properties. Other explanation No accrual for impairment provision due to there was no evidence of impairment being found in fixed assets at period-end. 20. Construction in progress (1) Construction in progress In RMB Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Total 0.00 0.00 0.00 0.00 (2) Changes in significant construction in progress In RMB Accumul including Proporti Fixed ated : interest Interest Other on of increased assets amount capitaliz capitaliz Opening decrease Ending project Sourceof Item Budget in the transfer-i Progress of ed ation rate balance d in the balance investme funds Period n in the interest amount of the Period nt in Period capitaliz of the period budget ation period Total 0.00 0.00 0.00 0.00 0.00 0.00 -- -- 0.00 0.00 0.00% -- 68 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (3) Depreciation reserves accrual In RMB Item Accrual Amount Reasons Total 0.00 -- Other explanation Nil 21. Engineering materials In RMB Item Ending balance Opening balance Other explanation: Nil 22. Disposal of fixed assets In RMB Item Ending balance Opening balance Other explanation: Nil 23. Productive biological assets (1) Productive biological assets measured by cost □ Applicable √ Not applicable (2) Productive biological assets measured by fair value □ Applicable √ Not applicable 24. Oil-and-gas assets □ Applicable √ Not applicable 25. Intangible assets (1) Intangible assets In RMB Item Land use right Patent Non-patent Trademark Total 69 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 technology I. original book value: 1.Opening balance 5,271,000.00 5,271,000.00 2. increased in the 0.00 0.00 Period (1) Purchase 0.00 0.00 (2) internal R 0.00 0.00 &D (3) the increase in business 0.00 0.00 combination 3.DecreasedAmount 0.00 0.00 (1) Disposal 0.00 0.00 4.Ending balance 5,271,000.00 5,271,000.00 II. accumulated depreciation 1.Opening balance 2,259,000.00 2,259,000.00 2. increased in the 376,500.00 376,500.00 Period (1) provision 376,500.00 376,500.00 3.DecreasedAmount 0.00 0.00 (1) Disposal 0.00 0.00 4.Ending balance 2,635,500.00 2,635,500.00 III. impairment of preparation 1.Opening balance 0.00 0.00 2. increased in the 0.00 0.00 Period (1) provision 0.00 0.00 3.DecreasedAmount 0.00 0.00 (1) Disposal 0.00 0.00 4.Ending balance 0.00 0.00 IV. book value 1.Ending book 2,635,500.00 2,635,500.00 value 70 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 2. Opening book 3,012,000.00 3,012,000.00 value Ratio of intangible assets resulted from internal R&D in balance of intangible assets at period-end (2) Land use right without certificate of title completed In RMB Item Book value Reasons Other explanation: No accrual of impairment provision due to there was no impairment evidence being found in intangible assets at end of the period 26. Development expense In RMB Opening Item Increased in the Period Decreased in the Period Ending balance balance Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation Nil 27. Goodwill (1) Original book value of goodwill In RMB The invested Opening balance Increase during the year Decreased during the year Ending balance entity or items Total 0.00 0.00 0.00 0.00 0.00 0.00 (2) Depreciation reserves of goodwill In RMB The invested Opening balance Increase during the year Decreased during the year Ending balance entity or items Total 0.00 0.00 0.00 0.00 0.00 0.00 Process of impairment testing, parameter and recognition method for impairment losses: Nil Other explanation: Nil 71 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 28. Long-term unamortized expenses In RMB increased in the Amortized in the Item Opening balance Other decrease Ending balance Period Period Total 0.00 0.00 0.00 Other explanation Nil 29. Deferred income tax assets and deferred income tax liabilities (1) Deferred income tax assets un-offset In RMB Ending balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Asset depreciation 2,534,267.48 633,566.88 2,580,785.12 645,196.29 reserves Total 2,534,267.48 633,566.88 2,580,785.12 645,196.29 (2) Deferred income tax liabilities un-offset In RMB Ending balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax differences liabilities differences liabilities Total 0.00 0.00 0.00 0.00 (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 Deferred income tax 633,566.88 645,196.29 assets (4) Details of unrecognized deferred income tax assets In RMB 72 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Item Ending balance Opening balance Total 0.00 0.00 (5) Deductible losses of un-recognized deferred income tax assets expired on the followed year In RMB Year Ending amount Opening amount Note Total 0.00 0.00 -- Other explanation: As stated under article 17 of the Enterprise Accounting Standards No.18-Income Tax, deferred income tax assets and deferred income tax liabilities shall be measured at the tax rate applicable in the period in which the assets are expected to be recovered or liabilities are expected to be settled according to relevant tax laws on the balance sheet date. The tax rate adopted by the Company in calculating deferred income tax assets is 25% for both parent company and subsidiaries. Due to the uncompensated loss of parent company, the Company did not recognize deferred income tax assets. 30. Other non-current assets In RMB Item Ending balance Opening balance Advance payment for house 400,000.00 400,000.00 Total 400,000.00 400,000.00 Other explanation: In2016, the Company paid the four houses in advance for enterprise talent, located in Yinhu Lanshan, to Shenzhen Housing and Construction Bureau of Luohu District, the event still in process. 31. Short-term loans (1)Types of short-term loans In RMB Item Ending balance Opening balance Explanation on short-term loans category: Nil (2) Overdue outstanding short-term loans Total 0.00 Yuan overdue outstanding short-term loans at period-end, including the followed significant amount: In RMB Unit Ending balance Lending rate Overdue time Overdue rate Total 0.00 -- -- -- 73 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Other explanation: Nil 32. Financial liability measured by fair value and with its variation reckoned into current gains/losses In RMB Item Ending balance Opening balance Other explanation: Nil 33. Derivative financial liabilities □ Applicable √ Not applicable 34. Notes payable In RMB Type Ending balance Opening balance Notes expired at year-end without paid was 0.00 Yuan 35. Account payable (1) Account payable In RMB Item Ending balance Opening balance Within 1 year (including 1year) 11,562,728.53 9,563,099.99 1-2 year (including 2year) 3,084.95 3,084.95 Over 3 years 185,792.84 185,792.84 Total 11,751,606.32 9,751,977.78 (2) Account payable with over one year book age In RMB Item Ending balance Reasons of un-paid or carry-over Total 0.00 -- Other explanation: (3) Top 5 payables at Period-end Item Relationship Amount Account Ratio in total payables in Nature 74 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 with the age advance (%) company Baodao Vehicles Group Co., Within Trade Unrelated party 3,859,528.31 32.84 Ltd. one year payable Tianjin Luying Vehicles Co., Within Trade Unrelated party 2,776,581.32 23.63 Ltd. one year payable Jinda Intelligent Technology Within Trade Unrelated party 2,506,554.35 21.33 Co., Ltd. one year payable Tianjin Jianya Electronic Within Trade Unrelated party 1,100,395.34 9.36 Technology Co., Ltd. one year payable Taizhou Huangyan Jisheng Within Trade Unrelated party 231,274.77 1.97 Industrial & Trade Co., Ltd. one year payable Total 10,474,334.09 89.13 36. Account received in advance (1) Account received in advance In RMB Item Ending balance Opening balance Within one year (one year included) 968,316.34 3,257,952.74 1-2 years (2 years included) 503,352.22 503,352.22 2-3 years (3 years included) 141,481.50 141,481.50 Over 3 years 418,273.37 418,273.37 Total 2,031,423.43 4,321,059.83 (2) Top 5 account received in advance at Period-end Relationship Account Ratio in total account Item with the Amount Nature age received in advance (%) company Goods Unrelated Over 3 y received Zhengzhou Daming Kemao Co., Ltd. 404,013.70 19.89 party ears in advance Goods Henan Xinming Electro car Sales Unrelated received 200,689.00 1-2 years 9.88 Co., Ltd. party in advance Unrelated Goods Nanchang Ledao Industrial Co., Ltd. 200,462.80 1-2 years 9.87 party received 75 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 in advance Goods Unrelated Within 1 received Zhigao (Tianjin) Vehicles Co., Ltd 68,433.61 3.37 party year in advance Goods Changzhou Wujin Legou Life Unrelated received 62,633.88 1-2 years 3.08 Shopping Co., Ltd. party in advance Total - 936,232.99 - 46.09 - (3) Account received in advance with over one year book age In RMB Item Ending balance Reasons of un-paid or carry-over Zhengzhou Daming Kemao Co., Ltd. 404,013.70 Henan Xinming Electro car Sales Co., 200,689.00 Ltd. Nanchang Ledao Industrial Co., Ltd. 200,462.80 Total 805,165.50 -- (4) Projects that settle without completed from construction contract at period-end In RMB Item Amount Other explanation: 37. Wages payable (1) Wages payable In RMB Increase during the Decrease during the Item Opening balance Ending balance period period Short-term 770,985.97 3,001,725.32 3,130,963.44 641,747.85 compensation Post-employment benefit – defined - 226,101.91 226,101.91 - contribution plan 76 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Total 770,985.97 3,227,827.23 3,357,065.35 641,747.85 (2) Short-term compensation In RMB Increase during the Decrease during the Item Opening balance Ending balance period period 1. Wages, bonuses, allowances 764,217.25 2,630,407.18 2,759,581.18 635,043.25 andsubsidies 3. Social insurance 91,473.54 91,473.54 Including: Medical 74,268.56 74,268.56 insurance Work injury 3,773.80 3,773.80 insurance Maternity 13,431.18 13,431.18 insurance 4. Housing accumulation 241,319.36 241,319.36 fund 5. Labor union expenditure and 6,768.72 38,525.24 38,589.36 6,704.60 personnel education expense Total 770,985.97 3,001,725.32 3,130,963.44 641,747.85 (3) Defined contribution plans In RMB Increase during the Item Opening balance Decreased Ending balance period 1. Basic endowment 216,041.04 216,041.04 insurance 2. Unemployment 10,060.87 10,060.87 insurance Total 226,101.91 226,101.91 Other explanation: Nil 38. Tax payable In RMB Item Ending balance Opening balance 77 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Value-added tax 331,800.99 988,097.16 Enterprise income tax 506,828.92 Individual income tax 27,133.26 10,263.10 Urban maintenance and construction tax 11,817.23 11,499.17 House property tax 45,070.60 45,070.60 Educational surtax 3,622.00 3,394.82 Total 419,444.08 1,565,153.77 Other explanation: Nil 39. Interest payable In RMB Item Ending balance Opening balance Interest overdue without paid: In RMB Borrower Amount overdue Reasons Total 0.00 -- Other explanation: Nil 40. Dividends payable In RMB Item Ending balance Opening balance Other explanation, including dividends payable with over one year age and disclosure un-payment reasons: Nil 41. Other payable (1) Classification of other payable according to nature of account In RMB Item Ending balance Opening balance With 1 year (including 1 year) 165,800.00 1,150,299.74 1-2 years 913,734.06 1,361,511.50 2-3 years 2,530,934.97 2,530,934.97 Over 3 years 15,345,541.11 15,354,541.11 78 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Total 18,956,010.14 20,397,287.32 (2) Significant other payable with over one year age In RMB Item Ending balance Reasons of un-paid or carry-over Custodian and common benefit debts 9,511,005.85 Guosheng Energy 6,500,000.00 Interest-free loans Total 16,011,005.85 -- Other explanation Nil 42. Liability holding ready for sold In RMB Item Ending balance Opening balance Other explanation: Nil 43. Non-current liability due within one year In RMB Item Ending balance Opening balance Other explanation: Nil 44. Other current liability In RMB Item Ending balance Opening balance Changes of short-term bond payable: In RMB Accrual Premium/ Face Release Bond Issuing Opening Issued in interest discount Paid in Ending Bond value date period amount balance the Period by face amortizati the Period balance value on Total -- -- -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other explanation: Nil 79 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 45. Long-term loans (1) Classification of long-term loans In RMB Item Ending balance Opening balance Explanation: Nil Other explanation, including interest rate section: Nil 46. 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 Total -- -- -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (3) Convertible conditions and time for shares transfer for the convertible bonds Nil (4) Other financial instruments classify as financial liability Basic information of the outstanding preferred stock and perpetual capital securities at period-end Nil Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Increase during the period Decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Total 0 0.00 0 0.00 0 0.00 0 0.00 Basis for financial liability classification for other financial instrument Nil Other explanation 80 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Nil 47. Long-term account payable (1) Listed by nature In RMB Item Ending balance Opening balance Other explanation: Nil 48. Long-term employee payable (1) Long-term employee 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 amount Last amount Scheme assets: In RMB Item Current amount Last amount Net liability (assts) of the defined benefit plans In RMB Item Current amount Last amount Content of defined benefit plans and relevant risks, impact on future cash flow of the Company as well as times and uncertainty: Nil Major actuarial assumption and sensitivity analysis: Nil Other explanation: Nil 49. Special payable In RMB Item Opening balance Increase during the Decreased Ending balance Causes 81 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 period Total 0.00 0.00 -- Other explanation: Nil 50. Accrued liability In RMB Item Ending balance Opening balance Causes Other explanation, including relevant important assumptions and estimation: Nil 51. Deferred income In RMB Increase during the Item Opening balance Decreased Ending balance Causes period Total 0.00 0.00 -- Item with government grants involved: In RMB Amount reckoned New grants in the Assets-related/inc Item Opening balance in non-operation Other changes Ending balance Period ome related revenue Total 0.00 0.00 0.00 -- Other explanation: Nil 52. Other non-current liability In RMB Item Ending balance Opening balance Other explanation: Nil 53. Share capital In RMB Changeduringtheperiod(+,-) Opening New shares Shares Ending balance balance Bonus share Other Subtotal issued transferred 82 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 from capital reserve Total shares 551,347,947.00 551,347,947.00 Other explanation: 54. Other equity instrument (1) Basic information of the outstanding preferred stock and perpetual capital securities at period-end Nil (2) Changes of outstanding preferred stock and perpetual capital securities at period-end In RMB Outstanding Period-begin Increase during the period Decreased Period-end financial Amount Book value Amount Book value Amount Book value Amount Book value instrument Total 0 0 0.00 0 0.00 0 Changes of other equity instrument, change reasons and relevant accounting treatment basis: Nil Other explanation: Nil 55. Capital reserve In RMB Increase during the Item Opening balance Decreased Ending balance period Other capital reserve 627,834,297.85 627,834,297.85 1. Debt restructuring 482,580,588.23 482,580,588.23 income 2. Other 145,253,709.62 145,253,709.62 Total 627,834,297.85 0.00 0.00 627,834,297.85 Other explanation, including changes and reasons for changes: Among the other capital reserves, 135,840,297.18 Yuan refers to the payment for creditor from shares assignment by whole shareholders; majority shareholder Guosheng Energy donated 5,390,399.74 Yuan. 56. Treasury stock In RMB 83 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Increase during the Item Opening balance Decreased Ending balance period Total 0.00 0.00 Other explanation, including changes and reasons for changes: Nil 57. Other comprehensive income In RMB Current amount Less: written in other Account comprehensive Opening Belong to Belong to Ending Item before income in balance Less : income parent minority balance previous period income tax in and carried tax expense company after shareholders tax after tax the period forward to gains and losses in current period Total other comprehensive income 0.00 0.00 0.00 Other explanation, including the active part of the hedging gains/losses of cash flow transfer to initial recognization adjustment for the arbitraged items: Nil 58. Special reserves In RMB Increase during the Item Opening balance Decreased Ending balance period Total 0.00 0.00 Other explanation, including changes and reasons for changes: Nil 59. Surplus reserves In RMB Increase during the Item Opening balance Decreased Ending balance period Statutory surplus reserve 32,673,227.01 32,673,227.01 Total 32,673,227.01 0.00 0.00 32,673,227.01 Other explanation, including changes and reasons for changes: Nil 84 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 60. Retained profit In RMB Item Current period Last period Retained profit at period-end before adjustment -1,197,486,788.28 -1,200,090,425.75 Retained profit at period-begin after adjustment -1,197,486,788.28 -1,200,090,425.75 Add: net profit attributable to shareholders of -1,691,378.44 2,603,637.47 parent company for this year Retained profit at period-end -1,199,178,166.72 -1,197,486,788.28 Adjustment for retained profit at period-begin: 1) Retroactive adjustment due to the Accounting Standards for Business Enterprise and relevant new regulations, retained profit at period-begin has 0.00 Yuan affected; 2) Due to the accounting policy changes, retained profit at period-begin has 0.00 Yuan affected; 3) Due to the major accounting errors correction, retained profit at period-begin has 0.00 Yuan affected; 4) Consolidation range changed due to the same control, retained profit at period-begin has 0.00 Yuan affected; 5) Total other adjustment impacts 0.00 Yuan retained profit at period-begin 61. Operating income and operating cost In RMB Current amount Last amount Item Income Cost Income Cost Main business 45,537,967.15 43,692,197.03 62,897,880.97 58,317,911.87 Other business 3,391,709.12 1,994,075.80 2,876,132.36 2,003,321.50 Total 48,929,676.27 45,686,272.83 65,774,013.33 60,321,233.37 62. Business tax and surcharge In RMB Item Current amount Last amount Urban maintenance and construction tax 45,604.48 24,281.09 Educational surtax 32,574.63 17,077.44 Stamp tax 13,173.94 Business tax 29,766.86 Total 91,353.05 71,125.39 63. Sales expense In RMB 85 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Item Current amount Last amount Employee compensation 1,126,682.80 1,642,059.12 Development cost for new products 4,122.39 378,545.62 Market promotion costs 19,287.44 327,449.25 Rental property charges 180,047.47 324,646.28 Travel expenses 218,695.40 266,170.42 Net work sales costs 476,089.26 Other 443,777.11 289,311.67 Total 2,468,701.87 3,228,182.36 Other explanation: Nil 64. Administration expense In RMB Item Current amount Last amount Salary 2,079,149.94 1,310,472.25 Rental and property charges 702,602.38 592,893.94 Other 557,779.18 445,273.88 Total 3,339,531.50 2,348,640.07 Other explanation: Nil 65. Financial expense In RMB Item Current amount Last amount Interest income -213,713.97 -551,941.52 Commission charge etc. 12,149.06 7,415.97 Total -201,564.91 -544,525.55 Other explanation: Nil 66. Loss from Assets depreciation In RMB Item Current amount Last amount 86 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 I. Bad debt losses -47,271.09 -24,888.28 Total -47,271.09 -24,888.28 Other explanation: Nil 67. Changes in fair value gains In RMB Changes resources Current amount Last amount Other explanation: Nil 68. Investment income In RMB Item Current amount Last amount Other explanation: Nil 69. Other income In RMB Resources Current amount Last amount 70. Non-operation revenue In RMB Amount reckoned into Item Current amount Last amount non-recurring gains/losses in the period Other 291,710.58 342,089.82 291,710.58 Total 291,710.58 342,089.82 291,710.58 Government grants reckoned into current gains/losses: In RMB Whether the impact of Whether Assets Issuing subsidies on Amount of Amount of Item Issuing cause Property type special related/Incom subject the current this period last period subsidies e related profit and loss 87 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Total -- -- -- -- -- 0.00 0.00 -- Other explanation: Nil 71. Non-operating expenditure In RMB Amount reckoned into Item Current amount Last amount non-recurring gains/losses in the period Other 1,509.00 Total 1,509.00 0.00 Other explanation: Nil 72. Income tax expense (1) Income tax expense In RMB Item Current amount Last amount Current income tax 195,895.21 Deferred income tax 11,629.41 Total 11,629.41 195,895.21 (2) Adjustment on accounting profit and income tax expenses In RMB Item Current amount Total profit -2,115,636.40 Impact of deductible temporary difference and deductible loss 11,629.41 for the deferred income tax recognized in previous year income tax expenses 11,629.41 Other explanation The income tax expenses: declined of the bad debt provision for deductible temporary difference last year, than the “deferred income tax” decreased and “income tax – deferred income tax” increasd in the period 73. Other comprehensive income Found more in Note 57. 88 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 74. Items of cash flow statement (1) Other cash received in relation to operation activities In RMB Item Current amount Last amount Interest and Rent and utilities etc. 1,603,116.82 1,626,821.50 Other Current money 721,181.20 2,057,230.85 Total 2,324,298.02 3,684,052.35 Explanation on other cash received in relation to operation activities: Nil (2) Other cash paid in relation to operation activities In RMB Item Current amount Last amount Period expenses, operation costs and 5,580,059.48 4,991,881.79 common benefit debts paid Total 5,580,059.48 4,991,881.79 Explanation on other cash paid in relation to operation activities: Nil (3) Cash received from other investment activities In RMB Item Current amount Last amount Explanation on cash received from other investment activities: Nil (4) Cash paid related with investment activities In RMB Item Current amount Last amount Explanation on cash paid related with investment activities Nil (5) Other cash received in relation to financing activities In RMB Item Current amount Last amount 89 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Explanation on other cash received in relation to financing activities: Nil (6) Cash paid related with financing activities In RMB Item Current amount Last amount Explanation on cash paid related with financing activities: Nil 75. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow In RMB Supplementary information This Period Last Period 1. Net profit adjusted to cash flow of -- -- operation activities: Net profit -2,127,265.81 518,931.58 Add: Assets impairment provision -47,271.09 -24,888.28 Depreciation of fixed assets, consumption of oil assets and depreciation of productive 145,136.97 81,421.30 biology assets Amortization of intangible assets 376,500.00 376,500.00 Financial expense(gain listed with “-”) -544,525.55 Decrease of deferred income tax 11,629.41 asset( (increase is listed with “-”) Decrease of inventory (increase is listed -2,966,733.68 -6,498,474.09 with “-”) Decrease of operating receivable accounts 1,556,935.35 -11,317,496.10 (increase is listed with “-”) Increase of operating payable accounts -5,754,973.38 12,659,916.36 (decrease is listed with “-”) Net cash flow arising from operating -8,806,042.23 -4,748,614.78 activities 2. Material investment and financing not -- -- involved in cash flow 3. Net change of cash and cash -- -- equivalents: 90 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Balance of cash at period end 15,177,305.48 19,043,626.88 Less: Balance of cash at year-begin 24,015,287.71 26,752,065.66 Net increasing of cash and cash -8,837,982.23 -7,708,438.78 equivalents (2) Net cash paid for obtaining subsidiary in the Period In RMB Amount Including: -- Including: -- Including: -- Other explanation: Nil (3) Net cash received by disposing subsidiary in the Period In RMB Amount Including: -- Including: -- Including: -- Other explanation: Nil (4) Constitution of cash and cash equivalent: In RMB Item Ending balance Opening balance Ⅰ. Cash 15,177,305.48 24,015,287.71 Including: Cash on hand 77,429.04 132,652.06 Bank deposit available for payment at 15,099,876.44 23,768,774.82 any time Other monetary fund available for 113,860.83 payment at any time Ⅲ. Balance of cash and cash equivalent at 15,177,305.48 24,015,287.71 period-end Other explanation: 91 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Nil 76. Notes of changes of owners’ equity Explain the name and adjusted amount in “Other” at end of last period: Nil 77. Assets with ownership or use right restricted In RMB Item Ending book value Restriction reasons Total 0.00 -- Other explanation: Nil 78. Foreign currency monetary items (1) Foreign currency monetary items In RMB Ending foreign currency Ending RMB balance Item Convert rate balance converted HKD 1.53 0.8952 1.37 Other explanation: Nil (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: Nil 80. Other Nil 92 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 VIII. Changes of consolidation range 1. Enterprise combined under different 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: Nil (2) Combination cost and goodwill In RMB Combination cost Determination method for fair value of the combination cost and contingent consideration and changes: Nil Main reasons for large goodwill resulted: Nil Other explanation: Nil (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: Nil Contingent liability of the acquiree bear during combination: Nil Other explanation: Nil (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 93 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 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 Nil (6) Other explanation Nil 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 party from party from Basis of Standard to combined the combined Equity ratio period-begin period-begin combined Combination determine the party during party during Acquiree obtained in of of under the date combination the the combination combination combination same control date comparison comparison to the to the period period combination combination date date Other explanation: Nil (2) Combination cost Combination cost Explanation on contingent consideration and its changes: Nil Other explanation: Nil (3) Assets and liability of the combined party on combination date On purchasing date At end of last period Contingent liability of the combined party bear during combination: 94 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Nil Other explanation: Nil 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 Nil 4. Subsidiary disposal Whether lost controlling rights while dispose subsidiary on one time or not □ Yes √ No Whether lost controlling rights in the Period while dispose subsidiary on two or more steps or not □ Yes √ No 5. Other reasons for consolidation range changed Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.)And relevant information Nil 6. Other During the reporting period, there is no change in the scope of consolidation. IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main operation Share-holding ratio Subsidiary Registered place Business nature Acquired way place Directly Indirectly Shenzhen Emmelle Bicycle and spare Shenzhen Shenzhen 70.00% Investment Industrial Co., parts distribution Ltd. Explanation on share-holding ratio in subsidiary different from ratio of voting right: Nil 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 Nil 95 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Controlling basis for the structuring entity included in consolidated range Nil Basis on determining to be an agent or consignor: Nil Other explanation: Nil (2) Important non-wholly-owned subsidiary In RMB Dividend announced to Share-holding ratio of Gains/losses attributable Ending equity of Subsidiary distribute for minority in minority to minority in the Period minority the Period Shenzhen Emmelle 30.00% -435,887.37 2,477,240.10 Industrial Co., Ltd. Explanation on share-holding ratio of minority different from ratio of voting right: Nil Other explanation: Nil (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 ry ent ent ent ent assets assets liability liability assets assets liability liability assets liability assets liability Shenzhe n Emmelle 37,636,1 839,021. 38,475,1 30,217,6 30,217,6 42,841,4 845,466. 43,686,9 33,976,5 33,976,5 0.00 0.00 Industria 39.70 27 60.97 93.96 93.96 78.93 81 45.74 20.84 20.84 l Co., Ltd. In RMB Current amount Last amount Cash flow Cash flow Total Total Subsidiary Operation from Operation from Net profit comprehensi Net profit comprehensi Income operation Income operation ve income ve income activity activity Shenzhen 46,225,592.7 -1,452,957.89 -1,452,957.89 -9,054,161.55 63,060,684.1 235,250.98 235,250.98 -7,627,354.73 96 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Emmelle 7 3 Industrial Co., Ltd. Other explanation: Nil (4) Major restriction on using corporate assets and liquidate corporate debts Nil (5) Financial or other supporting provided to structuring entity that included in consolidated financial statement Nil Other explanation: Nil 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 3. Equity in joint venture and cooperative enterprise (1) Important joint venture and cooperative enterprise Share-holding ratio Accounting treatment on Main operation investment for Name Registered place Business nature place Directly Indirectly joint venture and cooperative enterprise 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: 97 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (2) Main financial information of the important joint venture Closing balance/current amount Opening balance /last period amount Other explanation (3) Main financial information of the important cooperative enterprise Closing balance/current amount opening balance /last period amount Other explanation (4) Financial summary for un-important joint venture or cooperative enterprise In RMB Ending balance /Current amount Opening balance /Last amount Joint venture -- -- Total numbers measured by share-holding -- -- ratio Cooperative enterprise -- -- Total numbers measured by share-holding -- -- ratio Other explanation (5) Assets transfer ability has major restriction from joint venture or cooperative enterprise (6) Excess losses from joint venture or cooperative enterprise In RMB Un-confirmed losses not Cumulative un-confirmed Cumulative un-confirmed Name recognized in the Period (or net losses losses at period-end profit enjoyed in the Period) Other explanation (7) Un-confirmed commitment with investment concerned with joint venture (8) Contingent liability with investment concerned with joint venture or cooperative enterprise 4. Co-runs operation Name Main operation place Registered place Business nature Share-holding ratio/ share enjoyed 98 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Directly Indirectly Share-holding ratio or shares enjoyed different from voting right ratio: If the co-runs entity is the separate entity, basis of the co-runs classification: Other explanation 5. Equity in structuring entity that excluding in the consolidated financial statement Relevant explanation: 6. Other X. Risk related with financial instrument The major financial instruments of the Company consist of monetary funds, trade receivables, other receivables, trade payables, other payables, etc. details of these financial instruments are disclosed in the relevant notes. Risks relating to these financial instruments and risk management policies adopted by the Company to minimize these risks are detailed as follows. Management of the Company manages and monitors the risk exposures, to make sure they are under control. 1. Risk management targets and policies The objectives of the Company’s risk management is to balance the risk and income, reduce the negative risk impact of operating performance to the lowest level, maximize the interests of shareholders and other equity investors. Based on these objectives, the Company has established risk management policies to identify and analyze the risks faced by the Company, set adequate risk acceptable level and designed relevant internal control system to monitor the level of risks. The Company regularly reviews these policies and related internal control system to adapt to market development and change of operating activities of the Company. The major risks arising from the Company’s financial instruments are credit risk and liquidity risk. (1) Credit risk Credit risk represents the risk of financial loss suffered by a party to a financial instrument due to failure of performance obligation of another party. Credit risk of the Company is managed by category. Credit risk mainly arises from bank deposits and trade receivables. Since the bank deposits of the Company are mainly placed with those banks of high credit rating, the Company expects no significant credit risk on bank deposits. As for trade receivables, the Company establishes relevant policies to control credit risk exposure. The Company, based on financial position of debtors, their credit records, market conditions and other factors, makes assessment on debtors’ credit quality and sets relevant limit on amount of debt and credit term. The maximum credit risk exposure assumed by the Company equals to the sum of carrying value of every financial asset in the balance sheet. The Company provides no guarantee that may lead it to be exposed to credit risks. (2) Liquidity risk Liquidity risk refers to the risk of capital shortage of the Company when performing settlement obligation via delivery of cash or other financial assets. When managing liquidity risk, the Company maintains and monitors such cash and cash equivalents as deemed adequate by the 99 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 management, so as to satisfy its operation needs and minimize influence of fluctuation of cash flow. Management of the Company monitors application of bank borrowings to make sure it complies with relevant borrowing agreements. 2. Capital management The capital management policy of the Company is designed to ensure sustainable operation Of the Company so as to bring shareholders return and benefit other stakeholders, and to minimize capital cost by maintaining optimal capital structure. In order to maintain and adjust capital structure, the Company may adjust share dividend paid to shareholders or issue new shares. The Company monitors capital structure based on gearing ratio (total liabilities divided by total assets). As at 30 June 2017, the gearing ratio of the Company was 69.04% (31 December 2016: 68.05%) 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 I. Sustaining measured -- -- -- -- by fair value (I) Financial assets measured at fair value and changes accounted 0.00 in the current profits and losses 1. Transaction financial 0.00 assets (1) Investment in debt 0.00 instruments (2) Investment in equity 0.00 instruments (3) Derivative financial 0.00 assets 2. Financial assets appointed to measure at fair value and changes 0.00 accounted in the current profits and losses (1) Investment in debt 0.00 instruments 100 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (2) Investment in equity 0.00 instruments (II) Financial assets 0.00 available for sale (1) Investment in debt 0.00 instruments (2) Investment in equity 0.00 instruments (3) Other 0.00 (III) Investment real 0.00 estate 1. Rental land use rights 0.00 2. Rental buildings 0.00 3. Land use rights holding and preparing to 0.00 transfer after add value (IV) Biological assets 0.00 1. Consumption 0.00 biological assets 2. Productive biological 0.00 assets Total assets continuously measured 0.00 by fair value (V) Transaction 0.00 financial liabilities Among them: issue of 0.00 transaction bonds Derivative 0.00 financial liabilities Other 0.00 (VI) Financial liabilities appointed to measure at fair value and changes 0.00 accounted in the current profits and losses Total liabilities continuously measured 0.00 by fair value 101 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 II. Non-sustaining -- -- -- -- measured by fair value (I) Assets held for sale 0.00 Total assets non-continuously 0.00 measured by fair value Total liabilities non-continuously 0.00 measured by fair value 2. Recognized basis for the market price sustaining and non-persistent measured by fair value on first-order Nil 3. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on second-order Nil 4. Valuation technique and qualitative and quantitative information on major parameters for the fair value measure sustaining and non-persistent on third-order Nil 5. Adjustment information and sensitivity analysis of unobservable parameters for the fair value measure sustaining and non-persistent on third-order Nil 6. Sustaining items measured by fair value, as for the conversion between at all levels, reasons for conversion and policy for conversion time point Nil 7. Changes of valuation technique in the Period Nil 8. Financial assets and liability not measured by fair value Nil 102 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 9. Other Nil 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 We do not have parent company presently Ultimate controlling party: Nil Other explanation: At the end of last year, the parent company of the Company, Shenzhen Guosheng Energy Investment & Development Co., Ltd., issued a document to the Company on February 20, 2017 to give up the status as the actual controller, this company held only 11.52% of the shares of the Company and could not control or govern the Company's personnel, finance, business and other matters, and also did not participate in the Company's business operations, nor nominated members of the board. Up to the current reporting period, Shenzhen Guosheng Energy Investment & Development Co., Ltd. is only the largest shareholder of the Company. 2. Subsidiary of the Enterprise Found more in Note IX-1 3. Cooperative enterprise and joint venture Found more in Note IX-3 Other cooperative enterprise and joint venture that have related transaction with the Company in the Period or occurred in pervious period Name Relationship Other explanation Nil 4. Other related party Other related party Relationship with the Enterprise Shenzhen Guosheng Energy Investment Development Co., Ltd. The largest shareholder Other explanation The Shenzhen Guosheng Energy Investment Development Co., Ltd. holds 11.52% equity of the Company, found more in 1. Parent company in above mentioned 103 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 5. Related transaction (1) Goods purchasing, labor service providing and receiving Goods purchasing/labor service receiving In RMB Approved transaction Whether more than Related party Content Current amount Last amount amount the transaction amount Goods sold/labor service providing In RMB Related party Content Current amount Last amount Explanation on goods purchasing, labor service providing and receiving Nil (2) Related trusteeship/contract and delegated administration/outsourcing Trusteeship/contract In RMB Income from Client/ Entrusting party/ Yield pricing Assets type Starting date Maturity date trusteeship/contra contract-out party contractor basis ct Explanation on related trusteeship/contract Nil Delegated administration/outsourcing In RMB Pricing basis of trustee Client/ Entrusting party/ trustee fee/outsourcing contract-out Assets type Starting date Maturity date contractor fee/outsourcing fee recognized in party fee the Period Explanation on related administration/outsourcing Nil (3) Related lease As a lessor for the Company: In RMB Lease income in recognized in Lease income in recognized last Lessee Assets type the Period the Period As a lessee for the Company: In RMB 104 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Lease income in recognized in Lease income in recognized last Lessor Assets type the Period the Period Explanation on related lease Nil (4) Related guarantee As a guarantor for the Company In RMB Guarantee completed Secured party Amount guarantee Starting date Maturity date (Y/N) As a secured party for the Company In RMB Guarantee completed Guarantor Amount guarantee Starting date Maturity date (Y/N) Explanation on related guarantee Nil (5) Borrowed funds of related party In RMB Related party Borrowed funds Starting date Maturity date Note Borrowing Lending (6) Assets transfer and debt restructuring of related party In RMB Related party Transaction content Current amount Last amount (7) Remuneration of key manager In RMB Item Current amount Last amount Remuneration of key manager 1,091,420.00 732,061.00 (8) Other related transactions Nil 105 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 6. Receivable/payable items of related parties (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 Shenzhen Guosheng Energy Other account payable Investment Development Co., 6,500,000.00 6,500,000.00 Ltd. 7. Commitments of related party Nil 8. Other Nil XIII. Share-based payment 1. General share-based payment □ Applicable √ Not applicable 2. Share-based payment settled by equity □ Applicable √ Not applicable 3. Share-based payment settled by cash □ Applicable √ Not applicable 4. Revised and termination on share-based payment Nil 106 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 5. Other Nil XIV. Commitment or contingency 1. Important commitments Important commitments in balance sheet date Nil 2. Contingency (1) Contingency on balance sheet date Nil (2) For the important contingency not necessary to disclosed by the Company, explained reasons The Company has no important contingency that need to disclosed. 3. Other Nil XV. Events after balance sheet date 1. Important non-adjustment items In RMB Impact on financial status and Reasons on un-able to estimated Item Content operation results the impact number 2. Profit distribution In RMB 3. Sales return Nil 4. Other events after balance sheet date On June 19, 2017, the company convened the second extraordinary general meeting of shareholders in 2017 which approved the proposal on this non-public offering of shares. Pursuant to the subscription agreement for the non-public offering of shares, the four 107 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 subscribers should respectively pay 1% of the total amount of the subscription to the Company within 30 working days from the date of approval by the shareholders' general meeting as the performance bond. The Company has received the performance bond of RMB 8 million from the four subscribers after the balance sheet date. XVI. Other important events 1. Previous accounting errors collection (1) Retrospective restatement In RMB Impact items of statement Content Treatment procedures Cumulative impacted number during a comparison (2) Prospective application Reasons for prospective application Accounting error correction Approval procedures adopted 2. Debt restructuring Nil 3. Assets replacement (1) Non-monetary assets change Nil (2) Other assets replacement Nil 4. Pension plan Nil 5. Discontinued operations In RMB Discontinued Income tax operations profit Item Revenue Expenses Total profit Net profit expenses attributable to owners of parent 108 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 company Other explanation Nil 6. Segment (1) Recognition basis and accounting policy for reportable segment Nil (2) Financial information for reportable segment In RMB Item Offset between segments Total (3) The company has no reportable segments, or unable to disclose total assts and total liability for reportable segments, explain reasons Nil (4) Other explanation Nil 7. Major transaction and events makes influence on investor’s decision Nil 8. Other 1. Instructions for continuing operations On 11th, May 2012, the largest shareholder and biggest creditor of the Company, Shenzhen Guosheng Energy Investment and Development Co., Ltd. applied to Shenzhen Municipal Intermediate People's Court for reforming the Company as the Company couldn’t pay off the matured debts and was seriously insolvent. On 12th, Oct., 2012, Shenzhen Municipal Intermediate People's Court ruled to accept the application proposed by Guosheng Energy according to (2012) Shenzhen Intermediate Court Po Zi No. 30 civil ruling. In late October, 2012, Shenzhen Municipal Intermediate People's Court ruled to reform the Company since 25th, Oct., 2012 according to (2012) Shenzhen Intermediate Court Po Zi No. 30-1 civil ruling, appointed King & Wood (Shenzhen) Mallesons and Shenzhen ZhengYuan Liquidation Affairs Co., Ltd. as the custodians of the Company. Subsequently, Shenzhen Municipal Intermediate People's Court made (2012) Shenzhen Intermediate Court Po Zi No. 30-1 written decision, and approved the Company to manage property and business affairs by itself under the supervision of custodians according to the law. On 5 November 2013, the Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-6 Civil Ruling Paper judged that approved the reorganization plan of the Company. On 27 December 2013, the Civil Ruling Paper Shenzhen Intermediate People’s Court (2012) Shen Zhong Fa Po Zi No. 30-10 ruled that the reorganization plan of CBC was completed and bankruptcy procedures of CBC closed 109 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 down. The Company has solved the debt problem by reforming, realized the net assets with positive value, the main business of bicycle is able to be maintained and realizes the stable development. The Company has set up the conditions for introducing the recombination party in the reforming plan, and expects to restore the abilities of sustainable operation and sustained profitability by reorganization. The conditions of introducing the recombination party includes: the assessed value of net assets should be no less than 2 billion Yuan, the net assets in the same year for implementing the major reorganization should be no less than 200 million Yuan. The Company doesn’t have the recombination party at the moment. 2. Proposed non-public issue of shares for purpose of assets acquisition in 2016 In July 2016, the Company started to plan a non-public issue of shares with proceeds to be utilized to acquire material assets. The Plan on Non-public Issue of A shares in 2016 was considered and approved by the Board of the Company. Based on the due diligence, audit, assessment and business negation with intermediates, taking into account the conditions of capital market and actual conditions of the Company, the Board of the Company considered and approved the Proposal Relating to Adjusting the Plan of non-public of A Shares and the Plan on Non-public Issue of A shares in 2016 (amended) in February 2017. According to the amended plan, the total proceeds to be raised from this non-public issue are estimated not to exceed RMB 0.8 billion after deduction of issuance expense. Among which, RMB 660 million is planned to be used in the “online and offline marketing network platform construction and upgrading project”, and RMB 140 million is planned to be used in the “R & D center construction project”. For additional details, please refer to the announcement issued by the Board on behalf of the Company. On June 19, 2017, the company convened the second extraordinary general meeting of shareholders in 2017 which approved the aforesaid proposal on non-public offering of shares. As of the date the finacnial statement reported, the above said non-public offering should be approved in CSRC XVII. Principle notes of financial statements of parent company 1. Accounts receivable (1) Category In RMB Ending balance Opening balance Book balance Bad debt provision Book balance Bad debt provision Types Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Total 0.00 0.00% 0.00 0.00% 0.00 0.00% 0.00 0.00% Receivable with single significant amount and withdrawal bad debt provision separately at end of period: □ Applicable √ Not applicable In combination, accounts receivable whose bad debts provision was accrued by age analysis: □ Applicable √ Not applicable In combination, withdrawal proportion of bad debt provision based on balance proportion for account receivable: □ Applicable √ Not applicable In combination, withdrawal proportion of bad debt provision based on other methods for account receivable: Nil 110 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (2) Bad debt provision accrual, collected or reversed Accrual bad debt provision 0.00 Yuan; collected or reversed 0.00 Yuan. Major bad debt provision reversal or collected in the Period In RMB Company Amount reversal or collected Collection way Total 0.00 -- Nil (3) Receivables actually written-off during the reporting period In RMB Item Amount written off Written-off for the major receivable In RMB Nature of Procedures Arising from related Company Amount written off Reason for write-off receivables implemented transactions Total -- 0.00 -- -- -- Explanation for write-off of receivables Nil (4) Top 5 receivables at ending balance by arrears party Nil (5) Receivable derecognition due to transfer of financial assets Nil (6) Assets and liability resulted by receivable transfer and continuous involvement Nil Other explanation: Nil 2. Other accounts receivable (1) Classification In RMB Type Ending balance Opening balance 111 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Book balance Bad debt provision Book balance Bad debt provision Book Accrual Accrual Book value Amount Ratio Amount value Amount Ratio Amount ratio ratio Other account receivable with single major amount 6,785,03 6,785,035 9,113,6 9,113,689.7 96.43% 97.32% and withdrawal bad 5.19 .19 89.74 4 debt provision for single item Other receivables with bad debt 251,350. 250,596.5 251,150 3.57% 753.45 0.30% 2.68% 753.45 0.30% 250,396.55 provision accrual by 00 5 .00 credit portfolio 7,036,38 7,035,631 9,364,8 9,364,086.2 Total 100.00% 753.45 0.01% 100.00% 753.45 0.01% 5.19 .74 39.74 9 Other receivable with single significant amount and withdrawal bad debt provision separately at end of period √ Applicable □ Not applicable In RMB Closing balance Other receivables (unit) Other receivables Provision for bad debt Accrue ratio Accrue reason Shenzhen Emmelle 子公司往来款合并报 6,785,035.19 0.00 0.00% Industrial Co., Ltd. 表抵消项目 Total 6,785,035.19 -- -- In combination, other accounts receivable whose bad debts provision was accrued by age analysis √ Applicable □ Not applicable In RMB Ending balance Age Other receivable bad debts provision Accrual ratio Within one year Within one year 68,588.00 205.16 0.30% Subtotal of within one year 68,588.00 205.16 0.30% 1-2 year 182,762.00 548.29 0.30% Total 251,350.00 753.45 0.30% Explanations on combination determine: Nil In combination, withdrawal proportion of bad debt provision based on balance proportion for other account receivable □ Applicable √ Not applicable In combination, withdrawal proportion of bad debt provision based on other methods for other account receivable 112 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 □ Applicable √ Not applicable (2) Bad debt provision accrual, collected or reversed Accrual bad debt provision 0 Yuan; collected or reversed 0 Yuan. Major bad debt provision reversal or collected in the Period In RMB Company Amount reversal or collected Collection way Total 0.00 -- Nil (3) Other receivables actually written-off during the reporting period In RMB Item Amount written off Written-off for the major other receivable: In RMB Nature of other Procedures Arising from related Company Amount written off Reason for write-off receivables implemented transactions Total -- 0.00 -- -- -- Explanation for write-off of other receivables: Nil (4) Other receivables by nature In RMB Nature Ending book balance Opening book balance Current money 6,785,035.19 9,113,689.74 Margin or deposit 239,950.00 239,750.00 Equipment amount 11,400.00 11,400.00 Total 7,036,385.19 9,364,839.74 (5) Top 5 other receivables at ending balance by arrears party In RMB Ratio in total Ending balance of Company Nature Ending balance Book age ending balance of bad bet provision other receivables Shenzhen Emmelle Current money 6,785,035.19 Within one year 96.43% 0.00 113 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Industrial Co., Ltd. Shenzhen Materials Margin or deposit 135,723.00 0-2 year 1.93% 407.17 Group Co., Ltd. Shenzhen Anjingheng Margin or deposit 90,100.00 1-2 year 1.28% 270.30 Industrial Co. Ltd. Shenzhen Baifanghe Property Margin or deposit 13,627.00 1-2 year 0.19% 40.88 Co., Ltd. Shenzhen Hongkang Equipment Instrument 11,400.00 1-2 year 0.16% 34.20 amount Technology Co., Ltd. Total -- 7,035,885.19 -- 99.99% 752.55 (6) Account receivable with government subsidy involved In RMB Time, amount and basis Company Item Ending balance Ending book age for money collected Total -- 0.00 -- -- Nil (7) Other receivable derecognition due to transfer of financial assets Nil (8) Assets and liability resulted by other receivable transfer and continuous involvement Nil Other explanation: Nil 3. Long-term equity investment In RMB Ending balance Opening balance Item Book balance Impairment Book value Book balance Impairment Book value Investment for 1,400,000.00 1,389,620.27 10,379.73 1,400,000.00 1,389,620.27 10,379.73 subsidiary 114 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Total 1,400,000.00 1,389,620.27 10,379.73 1,400,000.00 1,389,620.27 10,379.73 (1) Investment for subsidiary In RMB Ending balance of Impairment The invested entity Opening balance Increased Decreased Ending balance impairment accrual provision Shenzhen Emmelle Industrial 1,400,000.00 0.00 0.00 1,400,000.00 0.00 1,389,620.27 Co., Ltd. Total 1,400,000.00 0.00 0.00 1,400,000.00 0.00 1,389,620.27 (2) Investment for associates and joint venture In RMB +,- Ending Other Cash Investme balance Additiona comprehe dividend Opening nt gains Other Ending of Company l Capital nsive or profit Impairme balance recognize equity Other balance impairme investmen reduction income announce nt accrual d under change nt t adjustmen d to equity provision t issued I. Joint venture Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 II. Associated enterprise Total 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (3) Other explanation Nil 4. Operating income and cost In RMB Current amount Last amount Item Income Cost Income Cost Other business 3,228,905.96 1,994,075.80 3,476,770.26 2,092,043.56 Total 3,228,905.96 1,994,075.80 3,476,770.26 2,092,043.56 Other explanation: 115 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Nil 5. Investment gains In RMB Item Current amount Last amount 6. Other Supplementary information to statement of cash flow Item This Period Last Period I. Net profit adjusted to cash flow of operation activities: Net profit -674,307.92 283,680.60 Add: Assets impairment provision - - Depreciation of fixed assets, consumption of oil assets and 118,380.84 53,177.68 depreciation of productive biology assets Amortization of intangible assets 376,500.00 376,500.00 Amortization of long-term deferred expenses - - Loss from disposal of fixed assets, intangible assets and - - other long-term assets(gain is listed with “-”) Loss of disposing fixed assets(gain is listed with “-”) - - Loss from change of fair value (gain is listed with “-”) - - Financial expenses (gain is listed with “-”) - - Investment loss (gain is listed with “-”) - - Decrease of deferred income tax asset( (increase is listed - - with “-”) Increase of deferred income tax liability (decrease is listed - - with “-”) Decrease of inventory (increase is listed with “-”) - - Decrease of operating receivable accounts (increase is listed 2,003,606.92 2,435,690.70 with “-”) Increase of operating payable accounts (decrease is listed -1,576,060.52 -270,309.03 with “-”) Other - Net cash flow arising from operating activities 248,119.32 2,878,739.95 II. Material investment and financing not involved in cash flow: 116 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Item This Period Last Period Conversion of debt into capital - - Switching Company bonds due within one year - - Financing lease of fixed assets - - III. Net change of cash and cash equivalents: - - Balance of cash at period end 1,391,537.61 1,118,850.04 Less: Balance of cash at period -begin 1,143,418.29 1,199,934.09 Add: Balance of cash equivalent at period-end - - Less: Balance of cash equivalent at period-begin - - Net increasing of cash and cash equivalents 248,119.32 -81,084.05 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. REO and earnings per share Earnings per share Profits during report period Weighted average ROE Diluted EPS Basic EPS (RMB/Share) (RMB/Share) Net profits belong to common stock -12.51% -0.0031 -0.0031 stockholders of the Company Net profits belong to common stock stockholders of the Company after -14.07% -0.0035 -0.0035 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 117 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 (3) Explain accounting difference over the accounting rules in and out of China; as for the difference adjustment for data audited by foreign auditing organ, noted the name of such foreign organ Nil 4. Other Nil 118 深圳中华自行车(集团)股份有限公司 2017 年半年度财务报告 Section XI. Documents available for reference 1. Accounting statement carrying the signatures and seals of the legal representative, person in charge of accounting and person in charge of accounting organ. 2. Originals documents of the Company and manuscripts of public notices that disclosed in the newspaper designated by CSRC in the report period. 3. English version of the Semi-Annual Report 2017. 119