深圳市特力(集团)股份有限公司 2018 年半年度报告全文 SHENZHEN TELLUS HOLDING CO., LTD Semi-Annual Report 2018 August 2018 1 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section I. Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen Tellus Holding Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Lv Hang, Principal of the Company, Lou Hong, person in charge of accounting works and Liu Yuhong, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of Semi-Annual Report 2018 is authentic, accurate and complete. All directors are attended the Board Meeting for report deliberation. Securities Times, Hong Kong Commercial Daily and Juchao Website (www.cninfo.com.cn) are the media for information disclosure appointed by the Company, all information under the name of the Company disclosed on the above said media shall prevail. Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors, and investors are advised to exercise caution of investment risks. The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either. 2 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Contents Section I. Important Notice, Contents and Paraphrase ............................................................................... 2 Section II Company Profile and Main Finnaical Indexes ............................................................................ 5 Section III Summary of Company Business.................................................................................................. 8 Section IV Discussion and Analysis of the Operation................................................................................. 10 Section V. Important Events ......................................................................................................................... 21 Section VI. Changes in Shares and Particulars about Shareholders ........................................................ 39 Section VII. Preferred Stock ......................................................................................................................... 44 Section VIII. Directors, Supervisors and Senior Executives...................................................................... 45 Section IX Corporate Bond .......................................................................................................................... 46 Section X Financial Report ........................................................................................................................... 47 Section XI Documents Available for Reference......................................................................................... 175 3 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Paraphrase Items Refers to Contents CSRC Refers to China Securities Regulatory Commission SZ Exchange Refers to Shenzhen Stock Exchange Shenzhen Branch of China Securities Depository & Clearing Shenzhen Branch of SD&C Refers to Corporation Limited Company, the Company, our Company, Tellus Refers to Shenzhen Tellus Holding Co., Ltd. Group Reporting period, this reporting period, The Refers to January to June of 2018 Year Auto Industry and Trade Co., Refers to Shenzhen Auto Industry and Trade Corporation Zhongtian Company Refers to Shenzhen Zhongtian Industrial Co,. Ltd. GAC Refers to Gems & Jewelry Trade Association of China Shenzhen Huari Toyota Auto Sales Co., Ltd.; Shenzhen SDG Huari Company Refers to Huari Auto Enterprise Co., Ltd. Zung Fu Tellus Refers to Shenzhen Zung Fu Tellus Auto Service Co., Ltd. Tellus Starlight Refers to Anhui Tellus Starlight Jewelry Investment Co., Ltd. Tellus Starlight Jinzun Refers to Anhui Tellus Starlight Jinzun Jewelry Co., Ltd. Sichuan Channel Platform Company, Sichuan Refers to Sichuan Tellus Jewelry Tech. Co., Ltd. Jewelry Company Xinglong Company Refers to Shenzhen Xinglong Machinery Mould Co., Ltd. Xinyongtong Company Refers to Shenzhen Tellus Xinyongtong Automobile Development Co. Ltd SDG Refers to Shenzhen Special Development Group Co., Ltd. Property Company Refers to Shenzhen SD Tellus Property Management Co., Ltd 4 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section II Company Profile and Main Finnaical Indexes I. Company information Short form of the stock Tellus-A, Tellus-B Stock code 000025, 200025 Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 深圳市特力(集团)股份有限公司 Chinese) Short form of the Company 特力 A (in Chinese) Foreign name of the Company Shenzhen Tellus Holding Co., Ltd (if applicable) Legal representative Lv Hang II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Qi Peng Sun Bolun 15/F, CNNC Building, Shennan Middle 15/F, CNNC Building, Shennan Middle Contact add. Road, Futian District, Shenzhen Road, Futian District, Shenzhen Tel. (0755)83989378 (0755)83989339 Fax. (0755)83989386 (0755)83989386 E-mail ir@tellus.cn sunbl@tellus.cn III. Others 1. Way of contact Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or not □ Applicable √ Not applicable Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period, found more details in Annual Report 2017. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 5 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation place for semi-annual report have no change in reporting period, found more details in Annual Report 2017 IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □ Yes √ No Current period Same period of last year Changes over last year Operating income (RMB) 197,955,081.73 160,984,104.56 22.97% Net profit attributable to shareholders of 26,920,279.86 24,596,905.09 9.45% the listed Company(RMB) Net profit attributable to shareholders of the listed Company after deducting 22,098,655.68 17,705,046.11 24.82% non-recurring gains and losses(RMB) Net cash flow arising from operating -28,070,468.11 7,380,561.40 -480.33% activities(RMB) Basic earnings per share (RMB/Share) 0.0906 0.0827 9.55% Diluted earnings per share (RMB/Share) 0.0906 0.0827 9.55% Weighted average ROE 2.76% 2.71% 0.05% Changes over period-end of Period-end Period-end of last year last year Total assets (RMB) 1,478,584,645.36 1,403,314,594.42 5.36% Net assets attributable to shareholder of 990,179,336.49 963,259,056.63 2.79% listed Company (RMB) V. 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 The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 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 The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or 6 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Chinese GAAP (Generally Accepted Accounting Principles) in the period. VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the 1,308,598.25 Income from equity transfer write-off that accrued for impairment of assets) Capital occupancy expense, collected from non-financial 37,708.32 enterprises and recorded in current gains and losses Except for effective hedge business relevant to normal operation of the Company, gains and losses arising from fair value change of tradable financial assets and tradable financial liabilities, and 3,762,123.18 Income from financing products investment income from disposal of tradable financial assets, tradable financial liabilities and financial assets available for sale Restoring of receivable impairment provision that tested 434,566.24 Restoring of bad debt provision individually Other non-operating income and expenditure except for the -65,293.92 aforementioned items Less: Impact on income tax 382,490.63 Impact on minority shareholders’ equity (post-tax) 273,587.26 Total 4,821,624.18 -- 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 In reporting period, the Company has no particular about 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 7 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section III Summary of Company Business I. Main businesses of the Company in the reporting period Does the Company need to comply with the disclosure requirements of the special industry No The main business of the Company during the reporting period was auto sales; auto testing, maintenance and accessories sales; resource assets management; wholesale and retail of the jewelry. During the reporting period, under the leadership of the Board of Directors, the Company took innovation-driven development as the guiding principle, actively promoted the Company's strategic transformation in accordance with the Company's strategic planning, ensured the sound development of existing main business, accelerated to implement the new business model and ensured the smooth implementation of strategic transformation through the overall allocation of resources. II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Equity assets No major change Fixed assets No major change Intangible assets No major change Book value of the construction in progress till end of 30 June 2018 amounting to Construction in progress 388,384,800 Yuan, an increase of 10,223,900Yuan from a year earlier with 2.70% up. Mainly due to the continuous input on Shuibei Jewelry Building Book value of other current assets till end of 30 June 2018 amounting to 122,022,100 Other current assets Yuan, a decrease of 97,560,200 Yuan from a year earlier with 44.43% down, mainly because financing products are redemption on maturity 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis Does the Company need to comply with the disclosure requirements of the special industry No 1. The advantage of mastering the real estate resources of the core gathering place of the jewelry industry The output value of Shenzhen jewelry accounts for more than 70% of the national jewelry industry, and Shuibei-Buxin area is the core gathering area of jewelry industry in Shenzhen, its output value accounts for more than 70% of the jewelry industry in Shenzhen.We has formed the largest cluster of gold jewelry enterprises in the 8 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 country, covering the entire industry chain including raw material procurement, production and processing, and wholesale sales, and the economic and strategic position and the core aggregation effects of this area in jewelry industry have remained stable for many years. According to the ―13th Five-Year Plan‖ for urban renewal in Luohu District, Shenzhen, Luohu District will build the Dawutong emerging industrial belt and create an international consumer center. Shuibei-Buxin area is the jewelry fashion industry zone of Luohu District, and Shuibei area is an international jewelry art center, and Buxin area is the intelligent high-end manufacturing center of jewelry, forming the Shuibei-Buxin International Jewelry Eco-Creative Area. The Tellus Gmond Gold Jewelry Industrial Park is located in the core area of Shuibei area, and the gross building area of the industrial park will be 290,000㎡ in total after the transformation and renovation, Tellus has shareholding ratio over 40% and is the largest owner in the industrial park. At the same time, Tellus is also the largest owner of the plots No.04 and No.05 in the urban renewal unit planning project of Buxin Industrial Zone, and the property owned by Tellus accounts for more than 50% of the above two plots. After the completion of the renovation project, the area of the property owned by Tellus in this area will increase from 37,000㎡ to 70,000 -80,000㎡. Tellus will maintain the status as the largest owner of Shuibei-Buxin area, and master the resource advantages of the physical platform in the core area of jewelry industry. 2. The capacity of credit enhancement brought by the dual status as a state-owned enterprise and a listed Company In 2017, the state’s macro-control policies changed, and under the influence of the guiding spirit such as controlling financial risks and deleveraging, banks have tightened credits, and the fund of the overall jewelry industry has become tight. At the same time, in response to the spirit of ―deepening the reform of financial system and enhancing the real economic ability of financial services‖ proposed by the 19th National Congress, the banks have formulated various support policies, increased the cooperation with state-owned enterprises, planned to carry out inclusive financial services through the bank-enterprise cooperation with the core platform enterprises of every industry, strengthened the financial supports for medium, small, and micro enterprises, and served the real economy. In this environment, the credit endorsement ability and important role of state-owned enterprises are enhancing day by day. Tellus has a clear third-party service platform strategy and the good credit enhancement ability brought by the dual status as a state-owned enterprise and a listed Company, masters the high-quality property resources of the industry’s core industrial belt, and its operating capacity and performance keep improving in recent years, therefore, it is the best choice for the banks to carry out cooperation. Tellus has the necessary conditions to become a core enterprise in the jewelry industry chain and to carry out supply chain financial services. 3. Comprehensive service capabilities of third-party platforms In the next three years, Tellus will form a technology platform Company with ―Technology + Finance + Service‖ as its core operation, enhance the enterprise value through the use of high technology in the jewelry industry based on the big data analysis system, and build a moat for Tellus in third-party services field of jewelry through the comprehensive service capabilities solving the real needs of customers. In the future, Tellus will create a comprehensive service platform that integrates supply chain finance, industry-wide chain trading, design and entrepreneurship, big data analysis and operation, provides customers with the most comprehensive, efficient and low-cost service in the jewelry industry, and possesses unique integrated business advantages in the jewelry 9 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 industry. Section IV Discussion and Analysis of the Operation I. Introduction During the reporting period, in the context of the continuously sluggish domestic market environment, the Company continued to adhere to the market-oriented policy, on the one hand, it fully vitalized its own resources, improved the management level and cost control level of the automobile business, and maintained stable operating income of the automobile business; on the other hand, it increased the operating income of resource assets by strengthening management, optimizing structure, revitalizing resources, and tapping the maximum potential of stock business. On the basis of maintaining the original business scale, the Company continued to push forward the transformation of jewelry service business. During the reporting period, Sichuan Jewelry Company and Tellus Xingguang Jinzun operated steadily, and the business scale reached record highs. The jewelry industry innovation investment fund which the Company participated in the establishment has conducted in-depth screening to some suitable targets, and the fund investment projects will be actively promoted in the second half of the year; as a dual-creation base awarded by the Development and Reform Commission of Shenzhen Municipality, the Company plans to take some property of Tellus Jewelry Building Phase I as a dual- creation industrial base of which the embodiment is being implemented; during the report period, the Company was elected as the executive director of the GAC Intellectual Property Service Committee. Through the above-mentioned strategic implementation measures, the Company’s strategic transformation has taken a solid step, accumulated industry experience through actual operation, and the visibility in the industry has been significantly improved through the in-depth cooperation with many leading enterprises in the jewelry industry. From January to June 2018, the Company achieved operating income of RMB 197,955,100, an increase of RMB 36,971,000 or 22.97% compared with RMB 160,984,100 in the same period of last year; the total profit was RMB 28,454,300, an increase of RMB 4,429,200 or 18.44% compared with RMB 24,025,100 in the same period of last year; net profit attributable to the parent Company was RMB 26,920,300, an increase of RMB 2,323,400 or 9.45% compared with RMB 24,596,900 in the same period of last year. The main reason for the increase in operating income, total profit and net profit attributable to the parent Company over the same period of last year was the increase in the jewelry wholesale income of Sichuan Jewelry Company and the increase in investment income from shareholding enterprises counted and drawn by equity method. In the future, the Company will firmly promote the implementation of various strategic projects in accordance with the transformation strategy so as to realize the growth of jewelry service business income and strive to achieve the strategic transformation goals as soon as possible. II. Main business analysis See the ―I-Introduction‖ in ―Discussion and Analysis of the Operation‖ 10 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Change of main financial data on a y-o-y basis In RMB Current period Same period of last year y-o-y changes (+,-) Reasons Income from wholesale of jewelry by Sichuan Operation revenue 197,955,081.73 160,984,104.56 22.97% Jewelry Company increased in the period Operation costs increased Operation costs 153,739,952.11 118,024,813.96 30.26% for the increase of wholesale of jewelry The phase I project of Shuibei Jewelry Building from Zhongtian Sales expense 8,337,907.27 6,883,605.25 21.13% Company was cessation of capitalization in the period, thus the expenses increased Management expense 19,137,092.41 19,352,021.76 -1.11% The interest expenditure Financial expense 2,771,872.61 26,460.54 10,375.50% increased for increase of the loans principal Operating profit from Income tax expense 1,887,473.77 623,687.09 202.63% subordinate companies increased The sell on credit payment from jewelry Net cash flow arising -28,070,468.11 7,380,561.40 -480.33% whole in Sichuan Jewelry from operation activities Company are not in the return period Cash inflow increased because 1)received the initial payment of equity Net cash flow arising transfer from Xinglong from investment 128,447,077.73 -84,354,916.88 -252.28% Company and 2)financial activities products redemption on due increased on a y-o-y basis in the period Cash outflow increased Net cash flow arising 15,386,557.76 21,709,660.64 -29.13% for paying the loan from financing activities principal and interest to 11 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 SDG in the period Net increase of cash and 115,763,237.91 -55,264,848.22 -309.47% cash equivalent The investment income for joint stock enterprise Investment earnings 17,866,022.25 9,636,578.24 85.40% and financing income increased Major changes on profit composition or profit resources in reporting period □ Applicable √ Not applicable No major changes on profit composition or profit resources occurred in reporting period Constitution of main business In RMB Increase or Increase or Increase or decrease of decrease of decrease of gross Operating Operating cost Gross profit ratio operating revenue operating cost profit ratio over revenue over same period over same period same period of of last year of last year last year According to industries Auto sales 61,613,402.01 60,137,721.39 2.40% -17.77% -18.57% 0.96% Auto inspection and maintenance 21,955,246.82 17,826,247.35 18.81% -9.40% -4.18% -4.42% and accessories sales Property rental 38,838,482.41 6,500,866.37 83.26% -33.87% -70.69% 21.02% and service Wholesale and 71,783,625.94 68,272,973.37 4.89% 16,492.91% 2,589.73% 491.62% retail of jewelry According to products Auto sales 61,613,402.01 60,137,721.39 2.40% -17.77% -18.57% 0.96% Auto inspection and maintenance 21,955,246.82 17,826,247.35 18.81% -9.40% -4.18% -4.42% and accessories sales Property rental 38,838,482.41 6,500,866.37 83.26% -33.87% -70.69% 21.02% and service Wholesale and 71,783,625.94 68,272,973.37 4.89% 16,492.91% 2,589.73% 491.62% retail of jewelry According to region Shenzhen 122,407,131.24 84,464,835.11 31.00% -22.47% -26.32% 3.60% Anhui 5,888,718.98 6,214,579.06 -5.53% 1,261.19% 144.83% 481.20% 12 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Sichuan 65,894,906.96 62,058,394.31 5.82% 5.82% Operating income and cost of property leasing and service business in the reporting period decreased over same period of last year, mainly due to the transfer of property company in May 2017. III. Analysis of non-main business √Applicable □ Not applicable In RMB Amount Ratio in total profit Note Whether be sustainable Earnings from disposal of the equity from subsidiary of Investment earnings 1,308,598.25 4.60% N Xingyongtong Company and joint stock enterprise Assets impairment 392,040.25 1.38% Non-operation 34,394.39 0.12% revenue Non-operation 99,688.31 0.35% expenditure IV. Assets and liability 1. Major changes of assets composition In RMB Period-end Period-end of last year Ratio Ratio in total Ratio in total Notes of major changes Amount Amount changes assets assets Received the initial payment of equity 277,556,456.4 transfer from Xinglong Company and Monetary fund 18.77% 153,232,791.88 12.58% 6.19% 7 the financial products redemption on due transfer to monetary fund Receivable from the wholesale of Account 81,270,957.00 5.50% 2,221,154.93 0.18% 5.32% jewelry from Sichuan Jewelry receivable Company increased Inventory 5,858,705.33 0.40% 7,989,799.13 0.66% -0.26% Investment real 70,972,017.37 4.80% 75,475,007.05 6.20% -1.40% Accruing the depreciation estate Change of the investment income from Long-term equity 244,379,388.1 16.53% 198,496,585.91 16.30% 0.23% joint stock enterprise based on equity investment 0 method and bonus from Zung Fu Tellus 13 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 116,927,224.8 Fix assets 7.91% 124,060,216.94 10.19% -2.28% Accruing the depreciation 2 Construction in 388,384,816.2 Continuing investment in Shuibei 26.27% 354,723,231.16 29.12% -2.85% process 1 Jewelry Building Project 143,000,000.0 Short-term loans 9.67% 50,000,000.00 4.11% 5.56% New bank loans 0 Long-term loans 34,934,887.55 2.36% 27,600,000.00 2.27% 0.09% Dividend 52,732,683.74 3.57% 3.57% Bonus from Zung Fu Tellus receivable Other current 122,022,053.7 The financial products redemption on 8.25% 185,823,991.93 15.26% -7.01% assets 6 due transfer to monetary fund Intangible assets 51,677,187.69 3.50% 53,042,802.82 4.35% -0.85% The initial equity transfer amount from Other account 182,185,901.1 Xinglong Company stay in the account 12.32% 114,778,401.19 9.42% 2.90% payables 5 and repaying the principal and interest to SDG 2. Assets and liability measured by fair value □Applicable √ Not applicable 3. Right of the assets restrained till end of the Period Item Book value at period-end Restriction reasons Intangible assets 49,637,241.84 (1) Long-term equity investment 40,174,714.13 (2) Total 89,811,955.97 (1) In order to meet the project construction needs of Tellus Shuibei Jewelry Building, Shenzhen Zhongtian Industrial Co., Ltd., a subsidiary of the Company, took the land (No. SFDZ2000609764) of this project as the mortgage and signed a loan contract (DJ2014G250TB) with China Construction Bank Shuibei Jewelry Sub-branch on June 24, 2014 with loan amount of RMB 300 million and loan term from June 24, 2014 to June 23, 2024, and the Company provided the joint liability guaranty (BJ2014G250TB), up to June 30, 2018, Shenzhen Zhongtian Industrial Co., Ltd. borrowed RMB 34,934,887.55 from the bank. (2) The Company signed a Pledge Contract with Zung Fu Automobile Management (Shenzhen) Co., Ltd. (hereinafter referred to as ―Zung Fu Shenzhen‖) which agreed that from the establishment of the Company’s joint venture Shenzhen Zung Fu Tellus Auto Service Co., Ltd. (hereinafter referred to as ―Zung Fu Tellus‖) to the expiration date of the joint venture contract between the Company and Zung Fu Shenzhen, Zung Fu Shenzhen provided loans to Zung Fu Tellus by entrusted loan, and Zung Fu Tellus asked for loans to banks or other 14 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 financial enterprises and Zung Fu Shenzhen provided guarantee for it, if the total amount of above loans was no more than RMB 100 million, Zung Fu Shenzhen would undertake 35% of the liabilities caused by above loans according to the equity ratio, and agree the Company to pledge its 35% equity stake of Zung Fu Tellus to Zung Fu Shenzhen as the corresponding counter guarantee of above loans. V. Investment 1. Overall situation □Applicable √ Not applicable 2. The major equity investment obtained in the reporting period □Applicable √ Not applicable 3. The major non-equity investment doing in the reporting period □Applicable √ Not applicable 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable The Company had no securities investment in the reporting period. (2) Derivative investment □ Applicable √ Not applicable The Company has no derivatives investment in the Period VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company had no sales of major assets in the reporting period. 2. Sales of major equity √Applicable □ Not applicable Trading Net The Ratio of Whether Relation Equity Whether Pricing Disclos Counter Equity Date on price (in profit influenc the net to be a ship have implem Disclos principl ure party on sale sale 10 contribu e of profit related with the ownersh ented as ure date e index thousan ted by equity contribu transacti counter ip schedul 15 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 d Yuan) the sales to ted by on party transfer ed, equity the equity (Y/N) complet explain to listed Compan sales in ed reasons Compan y total net (Y/N) and y (from profit counter period-b measure egin to if not date on sale) (in 10 thousan d Yuan) Accordi ng to the Assets Apprais al Report [Guo Zhong Lian Notice Apprais No: al Zi 2018-04 The 43% (2017) on project equity No. Securiti Shenzhe has of 3-0083 es n Runhe impact Shenzhe issued Times, United on total n by Guo Complet Hong Investm profit Xinglon 2018-06 ZHong ed as 2018-06 Kong ent 28,667 0 approxi N N/A N g -15 Lian schedul -20 Comme Develop mately Machin Assets e rcial ment amounte ery Apprais Daily Co., d as Mould al Land and Ltd. 201.88 Co., and Juchao million Ltd. Real Website Yuan Estate (www.c Apprais ninfo.co al Co., m.cn) Ltd., who has the qualific ation for perform ing related business 16 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 of securitie s and futures, the assessm ent based on asset-ba sed approac h and income approac h. VII. Analysis of main Holding Company and stock-jointly companies √Applicable □ Not applicable Particular about main subsidiaries and stock-jointly companies net profit over 10% In RMB Company Main Register Operating Operating Type Total assets Net Assets Net profit name business capital revenue profit Shenzhen Auto Sales of auto RMB 58.96 300,122,868. 260,948,067. 10,074,571.2 4,369,234. Industry and Subsidiary and 3,492,806.14 million 19 81 4 28 Trade accessories Corporation Auto Shenzhen SD maintenance Huari and US$ 5 73,690,579.2 28,471,432.6 17,507,428.3 -400,277.4 Automobile Subsidiary -411,922.09 production million 1 9 9 6 Enterprise and sales of Co. Limited accessories Shenzhen RMB Zhongtian Property 532,195,014. 377,936,396. -2,045,500. Subsidiary 366.2219 2,597,474.75 -2,044,863.78 Industrial rental 75 52 51 million Co,. Ltd. Shenzhen Automobile RMB 2 50,438,211.8 85,879,290.0 Huari Toyota Subsidiary -959,410.49 443,569.13 446,069.13 Sales million 1 3 Automobile 17 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Sales Co. Ltd Shenzhen Manufacture Xinyongtong of inspection Auto Vehicle RMB 19.61 Subsidiary equipment 9,479,400.02 4,600,459.74 2,432,894.27 717,257.15 534,909.22 Inspection million for motor Equipment vehicle Co., Ltd. Shenzhen Tellus Inspection Xinyongtong and repair of RMB 32.9 89,390,870.1 54,198,621.6 2,668,602. Subsidiary 5,610,552.42 2,459,060.05 Automobile motor million 4 4 72 Development vehicle Co. Ltd Anhui Tellus Starlight RMB 9.8 13,862,571.5 -1,861,096. Jewelry Subsidiary Jewelry sales 8,483,636.17 5,888,718.98 -1,861,096.02 million 3 02 Investment Co., Ltd. Sichuan Tellus RMB 150 87,697,219.7 86,816,230.6 65,894,906.9 2,638,003. Subsidiary Jewelry sales 1,978,502.74 Jewelry Tech. million 2 0 6 66 Co., Ltd. Shenzhen Zung Fu Joint stock Car sales and RMB 30 396,472,136. 111,058,919. 625,845,433. 32,009,836 Tellus Auto 24,457,707.54 Company maintenance million 68 04 53 .02 Service Co., Ltd. Manufacture Shenzhen and Dongfeng Joint stock RMB 100 853,608,283. 161,686,462. 206,529,913. maintenance 820,280.29 3,918,159.88 Automobile Company million 86 93 61 of Co., Ltd. automobile Investment Shenzhen industrial, RMB Tellus Gman Joint stock 415,064,403. 119,472,910. 33,843,551.1 3,969,546. property 123.70496 6,984,356.55 Investment Company 96 19 0 44 management million Co., Ltd. and rental Particular about subsidiaries obtained or disposed in report period √Applicable □ Not applicable Impact on overall operation and Name Way to obtained and dispose in the Period performance 18 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen Xinyongtong Dongxiao Auto Investment income achieved 1,072,860.12 Sales through equity transfer Inspection Co., Ltd. Yuan Notes of holding and shareholding companies VIII. Structured vehicle controlled by the Company □Applicable √ Not applicable IX. Prediction of business performance from January – September 2018 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation on reason □Applicable √ Not applicable X. Risks and countermeasures 1. Risks caused by fluctuations in the macroeconomic situation In 2017, China’s supply-side structural reform gradually showed its effects, and the GDP was on a steady rise. However, at the same time, China’s reforms have entered the critical stage and the deep end, there are many intricate and complex issues need to be resolved, and daunting challenges still exist. In 2018, there are still uncertainties in the continued recovery of the global economy. China’s economy is still facing the risks of slowdown in growth and increasing industrial restructuring pressures, which brings uncertainties to the overall economic environment and the Company’s operating performance. In response to this risk, the Company will actively adopt various types of preventive measures. The first is to comprehensively improve the profitability of original businesses. The profits from the Company’s main businesses have hit new highs in recent years, and the Company will continue to strengthen the management, enhance the profitability by strengthening customer development, optimizing management structure, and improving service quality, meanwhile, increase the investment in strategic transformation of new businesses, explore incremental markets, expand business scale, find new profit growth points, and ensure the stable development of the Company’s operating performance. 2. Risks brought by transforming to new fields After years of research and planning, the Company has had a more clear understanding about the characteristics of jewelry industry, the core links of industrial chain and the pain points of enterprises, and has begun to spare no effort to implement the transformational business, in this process, the Company is facing various kinds of challenges in the transformation of new business fields. Some of the Company’s transformation projects have been implemented, although the development prospects of such projects are good, the projects need to maintain a sustained and stable operation for a long period of time after being put into operation so as to achieve scale and brand effect. In addition, whether or not the effective synergy can be formed among each business platform project and whether the synergy can mutually promote the business development still require the inspection of actual operations. Therefore, there may be a risk of long investment payback period in the Company’s transformational 19 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 business. In response to this risk, firstly, the Company will firm the transformation beliefs, strictly control the investment projects, and make scientific and prudent decisions to protect the investment returns. Secondly, the Company will deepen its operation and management, strengthen the management and supervision to its subsidiaries, seek benefits from management, discover and solve problems encountered in new business development, and improve its own operating and management level; and continue to promote the information management, steadily push forward the reform and innovation, establish a market-oriented assessment and incentive mechanism, mobilize the enthusiasm of all employees, improve the management level and operating efficiency of enterprises, and ensure that the implemented projects are efficient and controllable. 20 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section V. Important Events I. AGM and extraordinary general meeting 1. AGM held in the period Participation ratio Meeting Type Holding date Disclosure date Index for investors Notice No.: 2018-014 on Securities Times, First Extraordinary Extraordinary Hong Kong Shareholders Shareholders 73.01% 2018-02-27 2018-02-28 Commercial Daily Meeting of 2018 Meeting and Juchao Website (www.cninfo.com.cn ) Notice No.: 2018-041 on Securities Times, Annual General Hong Kong AGM 73.07% 2018-06-29 2018-06-30 Meetin2017 Commercial Daily and Juchao Website (www.cninfo.com.cn ) 2. Request for extraordinary general meeting by preferred stockholders with rights to vote □Applicable √ Not applicable II. Profit distribution plan and capitalizing of common reserves in the period □ Applicable √ Not applicable There are no cash dividend, bonus and capitalizing of common reserves carried out in the semi-annual III. Commitments that actual controller, shareholder, related parties, buyer and committed party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period □ Applicable √ Not applicable There are no commitments that the actual controller, shareholder, related parties, buyer and committed party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period 21 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 IV. Appointment and non-reappointment (dismissal) of CPA Whether the semi-annual financial report had been audited □Yes √ No The semi-annual report was not audited V. Explanation on “Qualified Opinion” from CPA by the Board and Supervisory Committee □ Applicable √ Not applicable VI. Explanation from the Board for “Qualified Opinion” of last year’s □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization in Period. VIII. Lawsuits Material lawsuits and arbitration □ Applicable √ Not applicable No material lawsuits and arbitration in the reporting Other lawsuits □Applicable √ Not applicable IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in reporting period. X. Integrity of the Company and its controlling shareholders and actual controllers □Applicable √ Not applicable XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or other employee incentives □Applicable √ Not applicable Nil 22 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 XII. Major related transaction 1. Related transaction with routine operation concerned √Applicable □ Not applicable Whether Trading Related over the Content transacti Proporti limit Clearing Availabl Index Type of approve Date of of Pricing Related on on in approve form for e similar of Related Relation related related principl transacti amount similar d related disclosu party ship transacti transacti e on price (in 10 transacti d (in 10 transacti market disclos on limited re on thousan ons (%) thousan on price ure d Yuan) or not d Yuan) (Y/N) Notice No.: 2018-0 22 on Securit ies Shenzhe Director Times, n Zung /Supervi Hong By Fu sor/ SE Routine Referen Kong contract Tellus serves related Housing ce to 2018-04 Comm 265 265 6.50% 530 N or 265 Auto director transacti lease market -03 ercial agreeme Service of the ons price Daily nt Co., Compan and Ltd. y Juchao Websit e (www. cninfo. com.c n) Notice No.: Shenzhe 2018-0 n SD Subsidia Accepti 22 on By Tellus ry of the Routine ng Referen Securit contract Property controlli related property ce to 2018-04 ies 140 140 660 N or 22 Manage ng transacti manage market -03 Times, agreeme ment sharehol ons ment price Hong nt Co., der service Kong Ltd. Comm ercial Daily 23 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 and Juchao Websit e (www. cninfo. com.c n) Total -- -- 405 -- 1,190 -- -- -- -- -- Detail of sales return with major N/A amount involved Report the actual implementation of the normal related transactions which were projected about their total Performing normally amount by types during the reporting period(if applicable) Reasons for major differences between trading price and market Not applicable reference price (if applicable) 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in reporting period 3. Main related transactions of mutual investment outside □ Applicable √ Not applicable No main related transactions of mutual investment outside for the Company in reporting period 4. Contact of related credit and debt √Applicable □ Not applicable Whether has non-operational contact of credit and debts or not √Yes □No Debts payable to related party: Balance at Current Current Current Balance at period-begin newly added recovery interest period-end Related party Relationship Causes Interest rate (10 thousand (10 thousand (10 thousand (10 thousand (10 thousand Yuan) Yuan) Yuan) Yuan) Yuan) Shenzhen Intercourse Special Controlling funds and Development 3,244 22 1,561 22 1,705 shareholder loans Group Co., interests Ltd. Shenzhen Controlling Loan 1,868 1,277 591 Special shareholder principal of 24 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Development Tellus Group Co., Group and Ltd. Huari Company Impact on operation results Total profit decreased 220,000 Yuan due to the interest expenses increased in the Year and financial status 5. Other related transactions □Applicable √Not applicable Nil XIII. Non-business capital occupying by controlling shareholders and its related parties □ Applicable √ Not applicable No non-business capital occupied by controlling shareholders and its related parties in Period XIV. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable No trusteeship for the Company in reporting period (2) Contract □ Applicable √ Not applicable No contract for the Company in reporting period (3) Leasing □ Applicable √ Not applicable No leasing for the Company in reporting period 2. Major guarantees √Applicable □ Not applicable (1) Guarantees In 10 thousand Yuan Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) Name of the Related Guarantee Actual date of Actual Guarantee Guarantee Implemen Guarante Company Announce limit happening (Date guarantee limit type term ted (Y/N) e for 25 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 guaranteed ment of signing related disclosure agreement) party date (Y/N) To the expire Shenzhen Zung Fu date of joint Tellus Auto 2014-09-30 3,500 2007-04-17 3,500 Pledge N Y venture Service Co., Ltd. contract Total actual occurred external Total approving external 0 guarantee in report period 3,500 guarantee in report period (A1) (A2) Total approved external Total actual balance of guarantee at the end of report 3,500 external guarantee at the end 3,500 period ( A3) of report period (A4) Guarantee of the Company and the subsidiaries Guarante Related Actual date of e for Name of the Announce Implemen Guarantee happening (Date Actual Guarantee Guarantee Company ment related limit of signing guarantee limit type term ted (Y/N) guaranteed disclosure agreement) party date (Y/N) Shenzhen 24 June 2014 Joint liability Zhongtian 2014-05-07 30,000 2014-06-24 30,000 to 23 June N Y guaranty Industrial Co,. Ltd. 2024 Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in 0 30,000 subsidiaries in report period report period (B1) (B2) Total balance of actual Total amount of approved guarantee for subsidiaries at guarantee for subsidiaries at the 30,000 30,000 the end of reporting period end of reporting period (B3) (B4) Guarantee of the subsidiaries and the subsidiaries Guarante Related Actual date of e for Name of the Announce Implemen Guarantee happening (Date Actual Guarantee Guarantee Company ment related limit of signing guarantee limit type term ted (Y/N) guaranteed disclosure agreement) party date (Y/N) Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in 0 0 subsidiaries in report period report period (C1) (C2) Total balance of actual Total amount of approved guarantee for subsidiaries at guarantee for subsidiaries at the 0 0 the end of reporting period end of reporting period (C3) (C4) Total amount of guarantee of the Company( total of three abovementioned guarantee) Total amount of approving Total amount of actual guarantee in report period 0 occurred guarantee in report 33,500 (A1+B1+C1) period (A2+B2+C2) 26 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Total amount of approved Total balance of actual guarantee at the end of report 33,500 guarantee at the end of report 33,500 period (A3+B3+C3) period (A4+B4+C4) The proportion of the total amount of actually guarantee in the 33.83% net assets of the Company (that is A4+ B4+C4) Including: Amount of guarantee for shareholders, actual controller and its 0 related parties(D) The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or 0 indirectly(E) Proportion of total amount of guarantee in net assets of the 0 Company exceed 50%(F) Total amount of the aforesaid three guarantees(D+E+F) 0 Explanations on possibly bearing joint and several liquidating N/A responsibilities for undue guarantees (if applicable) Explanations on external guarantee against regulated N/A procedures (if applicable) Explanation on guarantee with composite way (2)Guarantee outside against the regulation □Applicable √ Not applicable No guarantee outside against the regulation in Period. 3. Other material contracts □ Applicable √ Not applicable No other material contracts for the Company in reporting period XV. Social responsibility 1. Major environmental protection Listed Company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection No Nil 2. Targeted poverty alleviation social responsibility (1) Targeted measures in poverty alleviation During the period, the Company participates in the targeted measures in poverty alleviation for Libai Village, Shangguang Town, Dongyuan County, Heyuan City, Guangdong Province. 27 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (2) Annual poverty alleviation in the Year The Company is concerned about the mountainous areas, takes the initiative to assume social responsibilities for poverty alleviation. According to the arrangement, the Company is responsible for the hard bottoming and widening of village roads and the hard bottoming of roads for transporting of Libai village. The project has begun on 29 December 2017, the project has been completed and in acceptance of work recently. After the project is completed, it will greatly facilitate the production and transportation of Libai villagers, and the ―difficulties in roads‖ that have plagued the villagers for many years will be thoroughly resolved. (3) Results of targeted poverty alleviation Measurement Target Numbers/ implementation unit i. Overall —— —— ii. Invested by specific project —— —— 1. Industrial development poverty —— —— 2. Transfer employment —— —— 3.Relocation the poor —— —— 4.Education poverty —— —— 5.Health poverty alleviation —— —— 6.Ecological protection and poverty alleviation —— —— 7.Fallback protection —— —— 8.Social poverty alleviation —— —— 9. Other —— —— iii. Awards (content and grade) —— —— (4) Follow-up of targeted poverty alleviation Plans to completed the road expansion and repair in Li Bai village in year of 2018 XVI. Explanation on other significant events √Applicable □Not applicable 1、 Entrust others to cash asset management Unit: ten thousand yuan Related Product Entrusted Valid Date of Method Principal Accrual Anticipat Gain/loss Gain/lo Trustee transact type financial from expiry of actual reduced-v ed income actually ss 28 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 ion amount determine collected alue in the actuall (Y/N) compensa in the allowance period y tion period (if collect applicable ed in ) the period Repayme nt of interest China in Industrial Guarantee installme 2016-3-2 2018-4-1 Bank- N d floating 1,000.00 nts and 1,000.00 9.68 9.68 9.68 3 7 Tian’an Sub income Repayme -branch nt of principal at maturity Repayme Bank of nt of Guarantee Jiangsu- 2017-5-2 principal N d floating 950.00 T+0 Shenzhen 6 and income Sub -branch interest at maturity Repayme nt of interest 兴 China in Industrial Guarantee installme 2017-8-1 2018-4-1 Bank- N d floating 2,000.00 nts and 2,000.00 19.39 19.39 19.39 4 7 Tian’an Sub income Repayme -branch nt of principal at maturity Repayme Bank of nt of Guarantee Jiangsu- 2017-8-1 2018-2-1 principal N d floating 1,000.00 1,000.00 21.57 21.57 21.57 Shenzhen 6 3 and income Sub -branch interest at maturity China Citic Guarantee Repayme 2017-8-1 2018-6-2 Bank – N d floating 2,500.00 nt of 1,000.00 30.26 30.26 30.26 7 8 Business income principal 29 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 office of and Shenzhen interest at Sub -branch maturity Repayme nt of CMBC- Guarantee 2017-8-1 2018-5-1 principal Luohu Sub N d floating 2,000.00 1,000.00 27.21 27.21 27.21 7 6 and -branch income interest at maturity Repayme nt of interest in installme CEB- Huali Guarantee 2017-9-2 2018-3-2 N 2,000.00 nts and 2,000.00 20.38 20.38 20.38 Sub -branch d income 7 7 Repayme nt of principal at maturity Repayme China Citic nt of Bank – Guarantee 2017-10- 2018-3-2 principal Consulate N d floating 140.00 140.00 1.99 1.99 1.99 23 1 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2017-10- 2018-1-1 principal Consulate N d floating 100.00 100.00 0.79 0.79 0.79 23 5 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2017-10- principal Consulate N d floating 60.00 2018-1-9 60.00 0.44 0.44 0.44 23 and Road Sub income interest at -branch maturity China Repayme Guarantee Industrial 2017-10- 2018-1-2 nt of N d floating 5,500.00 5,500.00 60.9 60.9 60.9 Bank- 26 5 principal income Tian’an Sub and 30 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 -branch interest at maturity Repayme China Citic nt of Guarantee Bank – 2017-12- 2018-3-1 principal N d floating 1,200.00 1,200.00 15.98 15.98 15.98 Shenzhen 1 9 and income Sub -branch interest at maturity China Citic Repayme Bank – nt of Guarantee Business 2017-12- principal N d floating 1,200.00 2018-4-2 1,200.00 15.64 15.64 15.64 office of 6 and income Shenzhen interest at Sub -branch maturity Repayme China nt of Industrial Guarantee 2017-12- 2018-1-1 principal Bank- N d floating 3,000.00 3,000.00 11.83 11.83 11.83 14 5 and Tian’an Sub income interest at -branch maturity Repayme China nt of Industrial Guarantee 2017-12- 2018-1-2 principal Bank- N d floating 1,000.00 1,000.00 4.14 4.14 4.14 26 5 and Tian’an Sub income interest at -branch maturity Repayme Bank of nt of Guarantee China- 2017-12- principal N d floating 1,200.00 2018-4-2 1,200.00 11.09 11.09 11.09 Xiangmi 28 and income Sub -branch interest at maturity Repayme CCB- nt of Guarantee Shuibei 2018-1-1 principal N d floating 4,000.00 2018-3-9 4,000.00 24.15 24.15 24.15 Jewelry Sub 0 and income -branch interest at maturity China Repayme Guarantee Guangfa nt of N d floating 500.00 2018-2-2 2018-3-5 500.00 1.68 1.68 1.68 Bank- principal income Shenzhen and 31 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Sub -branch interest at maturity Repayme China nt of Guangfa Guarantee principal Bank- N d floating 1,500.00 2018-2-2 2018-5-3 1,500.00 17.01 17.01 17.01 and Shenzhen income interest at Sub -branch maturity Repayme 兴 China nt of Industrial Guarantee 2018-3-2 principal Bank- N d floating 900.00 2018-2-7 900.00 3.11 3.11 3.11 8 and Tian’an Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 principal Consulate N d floating 140.00 2018-2-9 140.00 0.52 0.52 0.52 1 and Road Sub income interest at -branch maturity Repayme China Citic nt of Guarantee Bank – 2018-2-1 principal N d floating 400.00 T+0 Shenzhen 4 and income Sub -branch interest at maturity Repayme China Citic nt of Guarantee Bank – 2018-2-1 2018-6-2 principal N d floating 300.00 300.00 3.83 3.83 3.83 Shenzhen 4 8 and income Sub -branch interest at maturity Repayme China nt of Guangfa Guarantee principal Bank- N d floating 500.00 2018-3-9 2018-4-9 500.00 1.68 1.68 1.68 and Shenzhen income interest at Sub -branch maturity China Repayme Guarantee Industrial 2018-3-1 2018-3-2 nt of N d floating 4,000.00 2,000.00 2.63 2.63 2.63 Bank- 3 8 principal income Shenzhen and 32 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Sub -branch interest at maturity Repayme nt of 2018-4-1 principal 2,000.00 6.11 6.11 6.11 7 and interest at maturity Repayme China nt of Industrial Guarantee 2018-3-1 2018-6-1 principal Bank- N d floating 3,500.00 3,500.00 42.35 42.35 42.35 3 3 and Shenzhen income interest at Sub -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 principal Consulate N d floating 300.00 2018-4-3 300.00 0.10 0.10 0.10 8 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 2018-4-1 principal Consulate N d floating 40.00 40.00 0.04 0.04 0.04 8 0 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 principal Consulate N d floating 300.00 2018-5-3 300.00 0.70 0.70 0.70 8 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 2018-5-1 principal Consulate N d floating 100.00 100.00 0.38 0.38 0.38 8 0 and Road Sub income interest at -branch maturity China Citic Repayme Guarantee Bank – 2018-3-2 2018-5-1 nt of N d floating 670.00 670.00 2.85 2.85 2.85 Consulate 8 5 principal income Road Sub and 33 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 -branch interest at maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 principal Consulate N d floating 300.00 2018-6-6 300.00 1.46 1.46 1.46 8 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 2018-6-1 principal Consulate N d floating 20.00 20.00 0.11 0.11 0.11 8 4 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 2018-6-2 principal Consulate N d floating 260.00 260.00 1.61 1.61 1.61 8 5 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-3-2 2018-6-2 principal Consulate N d floating 200.00 200.00 0.92 0.92 0.92 9 5 and Road Sub income interest at -branch maturity Repayme China Citic nt of Guarantee Bank – 2018-3-3 2018-7-1 principal N d floating 1,500.00 0 20.42 0 0 Shenzhen 0 6 and income Sub -branch interest at maturity Repayme Bank of nt of Guarantee China- principal N d floating 1,000.00 2018-4-2 2018-7-3 0 9.70 0 0 Xiangmi and income Sub -branch interest at maturity Repayme CEB- Guarantee nt of Shenzhen N 2,000.00 2018-4-2 2018-6-2 2,000.00 14.70 14.70 14.70 d income principal Sub -branch and 34 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 interest at maturity Repayme Bank of nt of Guarantee Ningbo- 2018-6-2 principal N d floating 1,000.00 2018-4-3 1,000.00 10.13 10.13 10.13 Shenzhen 9 and income Sub -branch interest at maturity Repayme China nt of Guangfa Guarantee 2018-4-1 2018-7-1 principal Bank- N d floating 500.00 0 5.55 0 0 3 2 and Shenzhen income interest at Sub -branch maturity Repayme China nt of Industrial Guarantee 2018-4-1 2018-5-1 principal Bank- N d floating 3,000.00 3,000.00 10.26 10.26 10.26 7 7 and Tian’an Sub income interest at -branch maturity Repayme Bank of nt of Guarantee China- 2018-4-1 2018-5-2 principal N d floating 1,200.00 1,200.00 3.67 3.67 3.67 Xiangmi 9 5 and income Sub -branch interest at maturity Repayme China nt of Industrial Guarantee 2018-4-1 2018-5-2 principal Bank- N d floating 2,400.00 2,400.00 8.42 8.42 8.42 9 1 and Shenzhen income interest at Sub -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-4-2 2018-6-2 principal Consulate N d floating 100.00 100.00 0.21 0.21 0.21 5 5 and Road Sub income interest at -branch maturity China Repayme Guarantee Guangfa nt of N d floating 800.00 2018-5-4 2018-6-4 800.00 2.65 2.65 2.65 Bank- principal income Shenzhen and 35 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Sub -branch interest at maturity Repayme China nt of Guangfa Guarantee principal Bank- N d floating 500.00 2018-5-4 2018-8-2 0 5.61 0 0 and Shenzhen income interest at Sub -branch maturity Repayme China nt of Industrial Guarantee 2018-5-2 2018-7-2 principal Bank- N d floating 2,400.00 0 18.15 0 0 5 4 and Shenzhen income interest at Sub -branch maturity Repayme Bank of nt of Guarantee China- 2018-5-2 principal N d floating 1,200.00 2018-7-2 0 3.94 0 0 Xiangmi 5 and income Sub -branch interest at maturity Repayme China Citic nt of Bank – Guarantee 2018-5-2 2018-6-2 principal Consulate N d floating 10.00 10.00 0.02 0.02 0.02 9 5 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-5-2 principal Consulate N d floating 390.00 T+0 9 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee principal Consulate N d floating 173.00 2018-6-1 T+0 and Road Sub income interest at -branch maturity China Repayme Guarantee Guangfa nt of N d floating 600.00 2018-6-8 2018-9-6 0 7.05 0 0 Bank- principal income Shenzhen and 36 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Sub -branch interest at maturity Repayme China nt of Guangfa Guarantee 2018-6-1 2018-7-1 principal Bank- N d floating 400.00 0 1.44 0 0 5 6 and Shenzhen income interest at Sub -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-6-2 principal Consulate N d floating 200.00 T+0 2 and Road Sub income interest at -branch maturity Repayme China Citic nt of Bank – Guarantee 2018-6-2 principal Consulate N d floating 400.00 T+0 7 and Road Sub income interest at -branch maturity Total 62,553.00 -- -- -- 49,440.00 484.45 412.59 -- Capital source Idle fund-raising and some of the owned fund Accruing amounts of overdue 0 principal and income Lawsuits (if applicable) Not applicable Date of the notice disclosed for entrust financial approved by the 8 April 2017, 27 April 2018 Board (if applicable) Date of the notice disclosed for entrust financial approved by the 5 May 2017, 30 June 2018 Shareholders General Meeting (if applicable) Yes, The decision-making procedures for the Company to use part of its own funds and idle raised funds to purchase financing products are in compliance with the relevant provisions of the Articles of Association and the Management System for Raised Funds. The use of idle raised Whether has entrust financial funds and self-owned funds to purchase financing products is implemented in the premise of not plan in future (Y/N) influencing the main business. Through the moderate investment in low-risk financing products, not only the Company can obtain a certain amount of investment income, but also the Company’s capital usage efficiency can be improved. 37 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 XVII. Significant event of subsidiary of the Company □Applicable √ Not applicable 38 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital In Share Before change Increase/decrease in this time (+ , - ) After change Capitalizat Bonus ion of Amount Ratio New issue Other Subtotal Amount Ratio share public reserve 77,000,00 -77,000,00 -77,000,00 I. Restricted shares 25.90% 0 0.00% 0 0 0 2. State-owned corporation 6,000,000 2.02% -6,000,000 -6,000,000 0 0.00% shares 71,000,00 -71,000,00 -71,000,00 3. Other domestic shares 23.88% 0 0.00% 0 0 0 Including: domestic legal 71,000,00 -71,000,00 -71,000,00 23.88% 0 0.00% person’s shares 0 0 0 220,281,6 77,000,00 77,000,00 297,281,6 II. Un-restricted shares 74.10% 100.00% 00 0 0 00 193,881,6 77,000,00 77,000,00 270,881,6 1. RMB ordinary shares 65.22% 91.12% 00 0 0 00 2. Domestically listed 26,400,00 26,400,00 8.88% 8.88% foreign shares 0 0 297,281,6 297,281,6 III. Total shares 100.00% 100.00% 00 00 Reasons for share changed √Applicable □Not applicable In March 2015, the Company issued a total of 77,000,000 shares of private placement to 2 specific investors, and the issued shares were listed on the Shenzhen Stock Exchange on March 27, 2015. According to the Regulations on the Securities Issuance of Listed Companies and other relevant regulations, non-publicly issued A-shares would be locked during the restricted period. In the non-public offering of shares, the restricted period of 77,000,000 shares subscribed by the two subscribers was 36 months from the date of listing (March 27, 2015). During the reporting period, the restriction on the Company’s non-public offering of shares expired, and the stock was listed and circulated on April 19, 2018. Approval of share changed √Applicable □Not applicable 39 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 On April 11, 2018, the Company submitted an application for the listing and circulation of restricted shares to the China Securities Depository and Clearing Co., Ltd Shenzhen Branch and the Shenzhen Stock Exchange, China Securities Depository and Clearing Co., Ltd issued the Stock Change Registration Confirmation on April 18, 2018. According to the Stock Change Registration Confirmation, CSDC would officially complete the change registration of the restricted shares for lifting the restriction after the market close on April 18, 2018. On April 19, 2018, after being approved by the Shenzhen Stock Exchange, the Company disclosed the Indicative Announcement on Lifting the Restriction of Non-public Offering of Shares on www.cninfo.com.cn. Ownership transfer of share changes □Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □Applicable √ Not applicable Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators □Applicable √ Not applicable 2. Changes of restricted shares √Applicable □Not applicable In Share Shares released Restricted shares Restricted shares Restricted shares Date for shares Shareholder for restriction in increased in the Restriction reason at period-begin at period-end trading the period period Released for trading due to the Shenzhen Special restriction period Development 6,000,000 6,000,000 0 0 2018-4-19 for private Group Co., Ltd. placement shares expired Shenzhen Capital Released for Fortune Jewelry trading due to the Industry restriction period Investment 71,000,000 71,000,000 0 0 2018-4-19 for private Enterprise placement (limited shares expired partnership) Total 77,000,000 77,000,000 0 0 -- -- II. Securities issuance and listing □Applicable √ Not applicable 40 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 III. Amount of shareholders of the Company and particulars about shares holding In Share Total preference shareholders Total common stock with voting rights recovered at shareholders in reporting 52,145 0 end of reporting period (if period-end applicable) (found in note8) Particulars about shares held above 5% by common shareholders or top ten common shareholders Total Number of share pledged/frozen Amount sharehold Amount of Changes in of Proportion ers at un-restricte Full name of Nature of of shares report restricted Shareholders shareholder the end of d shares State of share held Amount period shares report held held period Shenzhen Special State-owned 145,925,2 145,925,25 49.09% 0 0 Development corporation 56 6 Group Co., Ltd. Shenzhen Capital Fortune Jewelry Domestic non Industry 70,947,00 state-owned 23.87% -53,000 0 70,947,000 Investment 0 corporate Enterprise (limited partnership) GUOTAI JUNAN Foreign SECURITIES( 0.40% 1,201,304 +3,100 0 1,201,304 corporation HONGKONG) LIMITED Domestic nature Li Guangxin 0.26% 761,161 0 0 761,161 person Agricultural Bank of China Other 0.16% 469,200 +233,100 0 469,200 Ltd. – CSI 500 ETF Domestic nature He Xing 0.10% 300,100 0 0 300,100 person Domestic nature Huang Chuyun 0.09% 266,500 0 0 266,500 person 41 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Domestic nature Chen Guifei 0.09% 260,400 +260,400 0 260,400 person Celestial Foreign Securities 0.07% 196,226 0 0 196,226 corporation Limited Foreign nature Zeng Huiming 0.07% 195,000 -55,000 0 195,000 person Strategy investors or general corporation comes top 10 Not applicable shareholders due to rights issue (if applicable) (see note3) Among the top ten shareholders, there exists no associated relationship between the Explanation on associated state-owned legal person’s shareholders SDG, Ltd and other shareholders, and they do not relationship among the top ten belong to the consistent actionist regulated by the Management Measure of Information shareholders or consistent action Disclosure on Change of Shareholding for Listed Companies. For the other shareholders of circulation share, the Company is unknown whether they belong to the consistent actionist. Particular about top ten shareholders with un-restrict shares held Type of shares Shareholders’ name Amount of un-restrict shares held at Period-end Type Amount Shenzhen Special Development RMB ordinary 145,925,256 145,925,256 Group Co., Ltd. shares Shenzhen Capital Fortune Jewelry RMB ordinary Industry Investment Enterprise 70,947,000 70,947,000 shares (limited partnership) GUOTAI JUNAN Domestically SECURITIES(HONGKONG) 1,201,304 listed foreign 1,201,304 LIMITED shares Domestically Li Guangxin 761,161 listed foreign 761,161 shares Agricultural Bank of China Ltd. – RMB ordinary 469,200 469,200 CSI 500 ETF shares Domestically He Xing 300,100 listed foreign 300,100 shares Domestically Huang Chuyun 266,500 listed foreign 266,500 shares RMB ordinary Chen Guifei 260,400 260,400 shares 42 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Domestically Celestial Securities Limited-Digital 196,226 listed foreign 196,226 Security Investment Fund shares Domestically Zeng Huiming 195,000 listed foreign 195,000 shares Expiation on associated relationship Among the top ten shareholders, there exists no associated relationship between the or consistent actors within the top state-owned legal person’s shareholders SDG and other shareholders, and they do not belong 10 un-restrict shareholders and to the consistent actionist regulated by the Management Measure of Information Disclosure on between top 10 un-restrict Change of Shareholding for Listed Companies. For the other shareholders of circulation share, shareholders and top 10 the Company is unknown whether they belong to the consistent actionist. shareholders Explanation on shareholders involving margin business about top ten common shareholders with N/A un-restrict shares held(if applicable) (see note 4) Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period. IV. Changes of controlling shareholders or actual controller Changes of controlling shareholders in reporting period □ Applicable √ Not applicable Changes of controlling shareholders had no change in reporting period. Changes of actual controller in reporting period □ Applicable √ Not applicable Changes of actual controller in reporting period had no change in reporting period. 43 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting. 44 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section VIII. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives □Applicable √ Not applicable Found more in annual report 2017 for the changes of shares held by directors, supervisors and senior executives II. Resignation and dismissal of directors, supervisors and senior executives √Applicable □ Not applicable Name Title Type Date Reasons Yang Jianping Director Leave office 2018-01-04 Resigned for career move Yang Jianping CFO Leave office 2018-01-04 Resigned for career move Lou Hong CFO Appointment 2018-01-04 Appointed by the Board Elected as director of the Company in Shareholders Lou Hong Director Election 2018-02-27 General Meeting 45 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section IX Corporate Bond Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when semi-annual report approved for released or fail to cash in full on due No 46 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section X 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 2018-06-30 In RMB Item Closing balance Opening balance Current assets: Monetary funds 277,556,456.47 161,793,218.56 Settlement provisions Capital lent Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable Accounts receivable 81,270,957.00 44,215,236.68 Accounts paid in advance 5,002,538.34 3,737,706.70 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable 221,232.88 Dividend receivable 52,732,683.74 779,868.09 Other receivables 24,823,888.53 14,819,164.11 Purchase restituted finance asset Inventories 5,858,705.33 12,646,227.22 Assets held for sale Non-current asset due within one 47 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 year Other current assets 122,022,053.76 219,582,250.70 Total current assets 569,267,283.17 457,794,904.94 Non-current assets: Loans and payments on behalf Finance asset available for sales 10,176,617.20 10,176,617.20 Held-to-maturity investment Long-term account receivable Long-term equity investment 244,379,388.10 284,464,749.15 Investment property 70,972,017.37 73,223,512.21 Fixed assets 116,927,224.82 120,296,822.84 Construction in progress 388,384,816.21 378,160,896.69 Engineering material Disposal of fixed asset Productive biological asset Oil and gas asset Intangible assets 51,677,187.69 52,349,686.92 Expense on Research and Development Goodwill Long-term expenses to be 1,751,891.37 1,779,713.94 apportioned Deferred income tax asset 24,374,557.81 24,394,028.91 Other non-current asset 673,661.62 673,661.62 Total non-current asset 909,317,362.19 945,519,689.48 Total assets 1,478,584,645.36 1,403,314,594.42 Current liabilities: Short-term loans 143,000,000.00 120,000,000.00 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 Derivative financial liability Notes payable Accounts payable 22,940,795.88 28,032,708.69 Accounts received in advance 10,891,562.79 13,790,019.47 48 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Selling financial asset of repurchase Commission charge and commission payable Wage payable 22,622,742.58 23,171,154.53 Taxes payable 9,650,704.98 9,927,572.27 Interest payable 235,225.83 229,494.72 Dividend payable Other accounts payable 182,185,901.15 153,099,910.49 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Liability held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 391,526,933.21 348,250,860.17 Non-current liabilities: Long-term loans 34,934,887.55 38,600,000.00 Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable 3,920,160.36 3,920,160.36 Long-term wages payable Special accounts payable Accrual liabilities Deferred income Deferred income tax liabilities Other non-current liabilities 14,520,000.00 14,520,000.00 Total non-current liabilities 53,375,047.91 57,040,160.36 Total liabilities 444,901,981.12 405,291,020.53 Owner’s equity: Share capital 297,281,600.00 297,281,600.00 Other equity instrument Including: preferred stock Perpetual capital securities 49 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Capital public reserve 565,226,274.51 565,226,274.51 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 2,952,586.32 2,952,586.32 Provision of general risk Retained profit 124,718,875.66 97,798,595.80 Total owner’s equity attributable to 990,179,336.49 963,259,056.63 parent company Minority interests 43,503,327.75 34,764,517.26 Total owner’s equity 1,033,682,664.24 998,023,573.89 Total liabilities and owner’s equity 1,478,584,645.36 1,403,314,594.42 2. Balance Sheet of Parent Company In RMB Item Closing balance Opening balance Current assets: Monetary funds 152,388,443.29 97,991,738.05 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable Accounts receivable Account paid in advance 117,736.22 Interest receivable 221,232.88 Dividends receivable 52,732,683.74 779,868.09 Other receivables 104,505,630.50 98,321,166.40 Inventories Assets held for sale Non-current assets maturing within one year Other current assets 70,500,000.00 203,500,000.00 Total current assets 380,244,493.75 400,814,005.42 Non-current assets: Available-for-sale financial assets 10,176,617.20 10,176,617.20 Held-to-maturity investments 50 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Long-term receivables Long-term equity investments 878,457,157.13 789,830,758.66 Investment real estate 45,200,498.37 46,749,467.61 Fixed assets 15,116,889.20 15,536,781.07 Construction in progress 8,075,987.18 5,554,512.79 Project materials Disposal of fixed assets Productive biological assets Oil and natural gas assets Intangible assets 291,629.96 341,121.77 Research and development costs Goodwill Long-term deferred expenses 236,786.48 223,715.66 Deferred income tax assets 13,849,840.74 13,869,311.84 Other non-current assets Total non-current assets 971,405,406.26 882,282,286.60 Total assets 1,351,649,900.01 1,283,096,292.02 Current liabilities: Short-term borrowings 143,000,000.00 120,000,000.00 Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable Accounts payable 14,000.00 14,000.00 Accounts received in advance 2,523,809.60 1,511.00 Wage payable 4,985,150.49 5,769,360.88 Taxes payable 1,139,784.03 474,977.89 Interest payable 183,561.00 165,604.16 Dividend payable Other accounts payable 316,818,068.69 295,776,662.59 Liability held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 468,664,373.81 422,202,116.52 51 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 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 Accrual liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 468,664,373.81 422,202,116.52 Owners’ equity: Share capita 297,281,600.00 297,281,600.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 562,032,851.23 562,032,851.23 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus reserve 2,952,586.32 2,952,586.32 Retained profit 20,718,488.65 -1,372,862.05 Total owner’s equity 882,985,526.20 860,894,175.50 Total liabilities and owner’s equity 1,351,649,900.01 1,283,096,292.02 3. Consolidated Profit Statement In RMB Item Current Period Last Period I. Total operating income 197,955,081.73 160,984,104.56 Including: Operating income 197,955,081.73 160,984,104.56 Interest income Insurance gained 52 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Commission charge and commission income II. Total operating cost Including: Operating cost 153,739,952.11 118,024,813.96 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Tax and extras 2,922,621.92 2,810,925.76 Sales expenses 8,337,907.27 6,883,605.25 Administration expenses 19,137,092.41 19,352,021.76 Financial expenses 2,771,872.61 26,460.54 Losses of devaluation of asset 392,040.25 -189,620.97 Add: Changing income of fair value(Loss is listed with ―-‖) Investment income (Loss is listed 17,866,022.25 9,636,578.24 with ―-‖) Including: Investment income 12,795,300.82 2,929,608.85 on affiliated company and joint venture Exchange income (Loss is listed with ―-‖) Assets disposal income (Loss is listed with ―-‖) Other income III. Operating profit (Loss is listed with 28,519,617.41 23,712,476.50 ―-‖) Add: Non-operating income 34,394.39 319,517.17 Less: Non-operating expense 99,688.31 6,919.80 IV. Total Profit (Loss is listed with ―-‖) 28,454,323.49 24,025,073.87 Less: Income tax expense 1,887,473.77 623,687.09 V. Net profit (Net loss is listed with ―-‖) 26,566,849.72 23,401,386.78 (i) net profit from continuous 26,566,849.72 23,401,386.78 operation (Net loss is listed with ―-‖) 53 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (ii) net profit from discontinued operation (Net loss is listed with ―-‖) Net profit attributable to owner’s of 26,920,279.86 24,596,905.09 parent company Minority shareholders’ gains and -353,430.14 -1,195,518.31 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 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 54 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 6. Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income 26,566,849.72 23,401,386.78 Total comprehensive income 26,920,279.86 24,596,905.09 attributable to owners of parent Company Total comprehensive income -353,430.14 -1,195,518.31 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share 0.0906 0.0827 (ii) Diluted earnings per share 0.0906 0.0827 4. Profit Statement of Parent Company In RMB Item Current Period Last Period I. Operating income 20,083,496.42 21,455,828.43 Less: Operating cost 1,842,326.22 1,800,520.02 Tax and extras 818,654.42 852,504.05 Sales expenses Administration expenses 7,986,244.31 8,630,924.30 Financial expenses 2,215,649.63 -315,599.87 Losses of devaluation of asset 69,500.70 -189,620.97 Add: Changing income of fair value(Loss is listed with ―-‖) Investment income (Loss is 14,956,569.69 14,439,969.08 listed with ―-‖) Including: Investment income 12,154,498.47 5,721,803.49 on affiliated company and joint venture Assets disposal income (Loss is listed with ―-‖) Other income II. Operating profit (Loss is listed 22,107,690.83 25,117,069.98 with ―-‖) Add: Non-operating income 3,130.97 Less: Non-operating expense 55 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 III. Total Profit (Loss is listed with 22,110,821.80 25,117,069.98 ―-‖) Less: Income tax expense 19,471.10 19,471.10 IV. Net profit (Net loss is listed with 22,091,350.70 25,097,598.88 ―-‖) (i) net profit from continuous 22,091,350.70 25,097,598.88 operation (Net loss is listed with ―-‖) (ii) net profit from discontinued operation (Net loss is listed with ―-‖) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes 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 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 56 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 currency financial statements 6. Other VI. Total comprehensive income 22,091,350.70 25,097,598.88 VII. Earnings per share: (i) Basic earnings per share 0.0743 0.0844 (ii) Diluted earnings per share 0.0743 0.0844 5. Consolidated Cash Flow Statement In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling 190,354,252.94 172,205,464.81 commodities and providing labor services Net increase of customer deposit and interbank deposit 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 14,796,131.60 17,681,721.14 operating activities Subtotal of cash inflow arising from 205,150,384.54 189,887,185.95 57 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 operating activities Cash paid for purchasing 156,589,699.73 100,485,791.06 commodities and receiving labor 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 25,206,855.48 30,466,874.43 Taxes paid 10,795,455.49 12,522,480.67 Other cash paid concerning 40,628,841.95 39,031,478.39 operating activities Subtotal of cash outflow arising from 233,220,852.65 182,506,624.55 operating activities Net cash flows arising from operating -28,070,468.11 7,380,561.40 activities II. Cash flows arising from investing activities: Cash received from recovering 454,400,000.00 237,000,000.00 investment Cash received from investment 4,153,597.07 10,890,968.34 income Net cash received from disposal of fixed, intangible and other long-term 272,340.00 assets Net cash received from disposal of 1,504,125.26 2,343,240.90 subsidiaries and other units Other cash received concerning 46,001,000.00 investing activities Subtotal of cash inflow from investing 506,058,722.33 250,506,549.24 activities Cash paid for purchasing fixed, 14,848,244.60 12,861,466.12 intangible and other long-term assets Cash paid for investment 357,030,000.00 322,000,000.00 Net increase of mortgaged loans 58 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Net cash received from subsidiaries and other units obtained Other cash paid concerning 5,733,400.00 investing activities Subtotal of cash outflow from investing 377,611,644.60 334,861,466.12 activities Net cash flows arising from investing 128,447,077.73 -84,354,916.88 activities III. Cash flows arising from financing activities Cash received from absorbing 9,000,000.00 7,672,000.00 investment Including: Cash received from 9,000,000.00 7,672,000.00 absorbing minority shareholders’ investment by subsidiaries Cash received from loans 25,082,000.00 15,600,000.00 Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing 34,082,000.00 23,272,000.00 activities Cash paid for settling debts 8,665,112.45 Cash paid for dividend and profit 10,030,329.79 1,562,339.36 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 18,695,442.24 1,562,339.36 activities Net cash flows arising from financing 15,386,557.76 21,709,660.64 activities IV. Influence on cash and cash 70.53 -153.38 equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 115,763,237.91 -55,264,848.22 equivalents Add: Balance of cash and cash 161,793,218.56 178,497,640.10 equivalents at the period -begin VI. Balance of cash and cash 277,556,456.47 123,232,791.88 59 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 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 26,539,659.00 32,112,173.50 commodities and providing labor services Write-back of tax received Other cash received concerning 10,135,679.87 4,567,298.11 operating activities Subtotal of cash inflow arising from 36,675,338.87 36,679,471.61 operating activities Cash paid for purchasing commodities and receiving labor service Cash paid to/for staff and workers 8,333,154.63 8,371,531.53 Taxes paid 1,125,249.42 1,808,421.17 Other cash paid concerning 31,499,877.17 11,123,303.80 operating activities Subtotal of cash outflow arising from 40,958,281.22 21,303,256.50 operating activities Net cash flows arising from operating -4,282,942.35 15,376,215.11 activities II. Cash flows arising from investing activities: Cash received from recovering 344,000,000.00 220,000,000.00 investment Cash received from investment 3,180,515.85 10,718,165.59 income Net cash received from disposal of fixed, intangible and other long-term assets Net cash received from disposal of 14,150,000.00 subsidiaries and other units Other cash received concerning 46,001,000.00 investing activities Subtotal of cash inflow from investing 393,181,515.85 244,868,165.59 60 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 activities Cash paid for purchasing fixed, 2,710,314.68 250,108.10 intangible and other long-term assets Cash paid for investment 339,971,900.00 293,998,000.00 Net cash received from subsidiaries and other units Other cash paid concerning 5,733,400.00 investing activities Subtotal of cash outflow from investing 348,415,614.68 294,248,108.10 activities Net cash flows arising from investing 44,765,901.17 -49,379,942.51 activities III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans 23,000,000.00 Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing 23,000,000.00 activities Cash paid for settling debts Cash paid for dividend and profit 9,086,253.58 1,099,583.35 distributing or interest paying Other cash paid concerning financing activities Subtotal of cash outflow from financing 9,086,253.58 1,099,583.35 activities Net cash flows arising from financing 13,913,746.42 -1,099,583.35 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 54,396,705.24 -35,103,310.75 equivalents Add: Balance of cash and cash 97,991,738.05 110,800,890.39 equivalents at the period -begin VI. Balance of cash and cash 152,388,443.29 75,697,579.64 equivalents at the period -end 61 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 7. Statement of Changes in Owners’ Equity (Consolidated) Current Period In RMB Current Period Owners’ equity attributable to parent company Other equity instrument Item Perpet Less: Other Provisio Minorit Total Reason Share ual Capital Invento compre Surplus n of Retaine y owners’ Prefer able capital capita reserve ry hensive reserve general d profit interests equity red Other reserve l shares income risk stock securi ties 297,28 I. Balance at the 565,226 2,952,5 97,798, 34,764, 998,023 1,600. end of the last year ,274.51 86.32 595.80 517.26 ,573.89 00 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 297,28 565,226 2,952,5 97,798, 34,764, 998,023 beginning of this 1,600. ,274.51 86.32 595.80 517.26 ,573.89 year 00 III. Increase/ Decrease in this 26,920, 8,738,8 35,659, year (Decrease is 279.86 10.49 090.35 listed with ―-‖) (i) Total 26,920, -353,43 26,566, comprehensive 279.86 0.14 849.72 income (ii) Owners’ 9,092,2 9,092,2 devoted and 40.63 40.63 decreased capital 1.Common shares 9,000,0 9,000,0 invested by 00.00 00.00 shareholders 62 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 92,240. 92,240. 4.Other 63 63 (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 297,28 565,226 2,952,5 124,718 43,503, 1,033,6 end of the report 1,600. ,274.51 86.32 ,875.66 327.75 82,664. 63 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 period 00 24 Last period In RMB Last period Owners’ equity attributable to parent company Other equity instrument Minorit Item Perpet Less: Other Provisio Total Reason y Share ual Capital Invento compre Surplus n of Retaine owners’ Prefer able interest capital reserve ry hensive reserve general d profit s equity capita red Other reserve l shares income risk stock securi ties 297,28 I. Balance at the 564,192 2,952,5 30,935, 13,173, 908,536 1,600. end of the last year ,605.51 86.32 823.12 721.23 ,336.18 00 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 297,28 564,192 2,952,5 30,935, 13,173, 908,536 beginning of this 1,600. ,605.51 86.32 823.12 721.23 ,336.18 year 00 III. Increase/ Decrease in this 1,033,6 24,596, 6,476,4 32,107, year (Decrease is 69.00 905.09 81.69 055.78 listed with ―-‖) (i) Total 24,596, -1,195, 23,401, comprehensive 905.09 518.31 386.78 income (ii) Owners’ 7,672,0 7,672,0 devoted and 00.00 00.00 decreased capital 1.Common shares 7,672,0 7,672,0 invested by 00.00 00.00 shareholders 2. Capital invested 64 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 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 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 1,033,6 1,033,6 (VI)Others 69.00 69.00 IV. Balance at the 297,28 565,226 2,952,5 55,532, 19,650, 940,643 end of the report 1,600. ,274.51 86.32 728.21 202.92 ,391.96 period 00 65 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 8. Statement of Changes in Owners’ Equity (Parent Company) Current Period In RMB Current period Other equity instrument Perpetu Other Less: Total Item Share Capital comprehe Reasonab Surplus Retaine al Preferre Inventory owners’ capital capital Other reserve nsive le reserve reserve d profit d stock shares equity securiti income es I. Balance at the 297,281, 562,032,8 2,952,586 -1,372,8 860,894,1 end of the last year 600.00 51.23 .32 62.05 75.50 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 297,281, 562,032,8 2,952,586 -1,372,8 860,894,1 beginning of this 600.00 51.23 .32 62.05 75.50 year III. Increase/ Decrease in this 22,091, 22,091,35 year (Decrease is 350.70 0.70 listed with ―-‖) (i) Total 22,091, 22,091,35 comprehensive 350.70 0.70 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 66 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (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 IV. Balance at the 297,281, 562,032,8 2,952,586 20,718, 882,985,5 end of the report 600.00 51.23 .32 488.65 26.20 period Last period In RMB Last period Other equity instrument Perpetu Other Less: Total Item Share al Capital comprehe Reasonab Surplus Retaine Preferre Inventory owners’ capital capital Other reserve nsive le reserve reserve d profit d stock shares equity securiti income es I. Balance at the end 297,281, 560,999,1 2,952,586 -55,254, 805,978,9 67 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 of the last year 600.00 82.23 .32 452.82 15.73 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 297,281, 560,999,1 2,952,586 -55,254, 805,978,9 beginning of this year 600.00 82.23 .32 452.82 15.73 III. Increase/ Decrease 1,033,669 25,097, 26,131,26 in this year (Decrease .00 598.88 7.88 is listed with ―-‖) (i) Total 25,097, 25,097,59 comprehensive income 598.88 8.88 (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 68 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period 1,033,669 1,033,669 (VI)Others .00 .00 IV. Balance at the end 297,281, 562,032,8 2,952,586 -30,156, 832,110,1 of the report period 600.00 51.23 .32 853.94 83.61 69 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen Tellus Holding Co., Ltd. Notes to Financial Statements of Semi-annual Report 2018 (The unit is RMB unless otherwise specified) I. Company profiles 1. Company profile Chinese name of the Company: 深圳市特力(集团)股份有限公司 Foreign name of the Company: Shenzhen Tellus Holding Co.,Ltd Registered address of the Company: 3/F, Tellus Building, Shuibei 2nd Road, Luohu District, Shenzhen, Guangdong Province. Office address of the Company: 15/F, Zhonghe Building, Shennan Middle Road, Futian District, Shenzhen Stock exchange for listing: Shenzhen Stock Exchange Short form of the stock and Stock code: Tellus-A(000025),Tellus-B(200025) Registered capital: RMB 297,280,000.00 Legal representative: Lv Hang Unified social credit code: 91440300192192210U 2. Business nature, operating scope and major products and services of the Company Business nature: wholesale industry of energy, materials and machinery electronic equipments. Operating scope: Investment in industries (a separate application would be made for specific project); domestic commerce, supply and distribution of materials (excluding those commodities subject to exclusive operation, control and sale); rental and management of independently-owned properties. Operation of the products produced by the Company and its subsidiaries, productive materials used by us, and import and export of metal proceeding machinery and general components. The import and export business is subject to the foreign trade review certificate No.098 (SMGZZDi). Major products and services: sales, detection and maintenance of autos and sales of jwerly, property leasing and service. 3. The history of the Company Shenzhen Testrite Group Co., Ltd. (hereinafter referred to as the Company), previously known as Shenzhen Machinery Industry Company, was incorporated on 10 November 1986. In 1992, as authorized by the reply relating to Shenzhen Machinery Industry Company transforming to Shenzhen Testrite Machinery Co., Ltd.(SFBF[1991]1012) issued by the Office of Shenzhen People Government, Shenzhen Machinery Industry Company was transformed to Shenzhen Testrite Machinery Co., Ltd. in 1993, as authorized by the reply relating to Shenzhen Testrite Machinery Co., Ltd. transforming to a public company (SFBF[1992]1850) issued by the Office of Shenzhen People Government and the reply relating to 70 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 issuance of stocks by Shenzhen Testrite Machinery and Electric Co., Ltd. (SRYFZ[1993]092) issued by Shenzhen branch of People’s Bank of China, Shenzhen Testrite Machinery Co., Ltd. changed to be a public company and made the initial public offering. The name of the Company changed to Shenzhen Testrite Machinery and Electric Co., Ltd., with a total share capital of 166,880,000 shares, among which, 120,900,000 shares were converted from the original assets and 45,980,000 shares were newly issued. The newly issued shares comprises of 25,980,000 RMB ordinary shares (A shares) and 20,000,000 RMB special shares (B shares). In June 1993, as approved by the reply relating to listing of Shenzhen Testrite Machinery and Electric Co., Ltd. (SZBF[1993]34) issued by Shenzhen Securities Management Office and the Listing Grant issued by Shenzhen Stock Exchange(SZSZ[1993]22), Shenzhen Testrite Machinery and Electric Co., Ltd. was listed on Shenzhen Stock Exchange. On 15 March 1993, being approved by branch of Shenzhen Special Economic Zone of People’s Bank of China ―Shen Ren Yin Fu Zi (1993) No.: 092‖, the Company released 25.98 million registered common A shares with RMB 1.00 par value as well as 20 million B shares. And the Company renamed as Shenzhen Tellus Holding Co., Ltd. instead of Shenzhen Testrite Machinery Co., Ltd. dated 30 June 1994 after approval from the Shenzhen Administration for Industry and commerce. Capital structure of the Company while initial public offering: Type Amount (Share) Ratio (%) I. Non-tradable share Including: State shares 120,900,000 72.45 Total non-tradable shares 120,900,000 72.45 II. Outstanding shares 1. Tradable A-Share 25,980,000 15.57 2. Tradable B-Share 20,000,000 11.98 Total tradable shares 45,980,000 27.55 Total 166,880,000 100.00 All previous changes in the share capital after the public issue of the Company: (1) Bonus shares in 1993 The Company held the resolution of annual shareholders' general meeting of 1993, distribute dividend of 0.5 Yuan in cash for every 10 shares and 2 more bonus shares to all shareholders based on the Company’s total share capital of 166,880,000 shares on 31st, Dec., 1993, and the Company’s total share capital changed to 200,256,000 shares. On 22nd April 1994, Shenzhen Securities Regulatory Office approved the stock dividend scheme of the Company. After the implementation of the stock dividend program, the ownership structure of the Company became as follows: Type Amount (Share) Ratio (%) 71 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Type Amount (Share) Ratio (%) State-owned corporate shares 145,080,000 72.45 Domestic public shares 31,176,000 15.57 RMB special stock (B-Share) 24,000,000 11.98 Total 200,256,000 100.00 (2) Bonus shares and capitalization in 1994 On 28th May 1995, the shareholders' general meeting of the Group approved the bonus share and capitalization program proposed by the board of directors. The Company distributes 0.5 bonus shares to every 10 shares with 0.5 more shares increased for 0.5 Yuan dividend in cash to all shareholders based on the Company’s total share capital of 200,256,000 shares on 31st, Dec., 1994, and the Company’s total share capital changed to 220,281,600 shares. Equity structure of the Company after bonus scheme implemented: Type Amount (Share) Ratio (%) State-owned corporate shares 159,588,000 72.45 Domestic public shares 34,293,600 15.57 RMB special stock (B-Share) 26,400,000 11.98 Total 220,281,600 100.00 (3) The changes of controlling shareholders in 1997 On 31st March 1997, in accordance with the approval of ―Shenfuhan [1997] No.19‖ and ―Zhengjianhan [1997] No.5‖, the People's Government of SZ Municipality and China Securities Regulatory Commission agreed Shenzhen Investment and Management Company to transfer its 159,588,000 shares of State shares to ―Shenzhen Special Development Group Co., Ltd‖ (hereinafter referred to as ―SDG‖), which took proportion of 72.45% in the total share capital. (4) Reform of non-tradable shares in 2006 In December 2005, Shenzhen State-owned Assets Supervision and Administration Commission approved the non-tradable shares reform program of Shenzhen Tellus (Group) Ltd. which reported by the Company’s non-tradable shareholders - Shenzhen Special Development Group Co., Ltd. On 4th January 2006, SDG paid 13,717,440 shares of stock to the shareholders of A shares in circulation as the consideration of the non-tradable shares reform, and SDG held 66.22% of the Company’s total share capital after the non-tradable shares reform. After the implementation of the non-tradable shares reform program, the ownership structure of the company became as follows: Type Amount (Share) Ratio (%) State-owned corporate shares 145,870,560 66.22 Domestic public shares 48,011,040 21.80 72 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Type Amount (Share) Ratio (%) RMB special stock (B-Share) 26,400,000 11.98 Total 220,281,600 100.00 (5) Non-public RMB common stock offer in 2015 In accordance with the provisions of the Company’s 19th extraordinary meeting of the 7th session of board of directors on April 21, 2014 and the resolutions of the fourth extraordinary general meeting of 2014 on June 3, 2014, the non-public offering of RMB ordinary shares (A shares) that the Company issues to Shenzhen SDG Co., Ltd. and Shenzhen CMAF Jewelry Industry Investment Company (limited partnership) should not exceed 77,000,000 shares, of which the par value is 1 Yuan per share, the total raised funds are no more than RMB 646,800,000.00 Yuan, the issuance objects are all subscribed by cash. On May 19, 2014, State-owned Assets Supervision and Administration Commission of the People's Government of Shenzhen Municipality issued ―Reply to issues related to non-public offering of shares of Shenzhen Test Rite (Group) Co., Ltd. from SASAC of Shenzhen Municipality‖ (SGZWH No. [2014]237) which agreed the Company’s plan for non-public offering of shares. The Company’s non-public offering has obtained the ―Approval for non-public offering of shares of Shenzhen Test Rite (Group) Co., Ltd.‖ (CSRC License No. [2015]173) approved by China Securities Regulatory Commission, which agrees the Company to issue the non-public offering of RMB ordinary shares (A shares) not exceeding 77,000,000 new shares. The registered capital is RMB 297,281,600.00 after change, and the company’s ownership structure is as follows: Type Amount (Share) Ratio (%) State-owned corporate shares 151,870,560 51.09 Domestic public shares 119,011,040 40.03 RMB special stock (B-Share) 26,400,000 8.88 Total 297,281,600 100.00 (6) Reducing stock by controlling shareholder in 2016 In accordance with the Announcement on Reducing Share Holding of Controlling Shareholder the company disclosed on June 1, 2016, from May 4, 2016 to May 31, 2016, Shenzhen SDG Co., Ltd. totally reduced 2,972,537 shares of the company’s unrestricted outstanding shares by concentrated bidding, accounting for 1% of the company’s total share capital. On September 30, 2016, the company received a Letter About Reducing Test Rite A Shares and Completing the Share Holding Reducing Plan from SDG, from September 29, 2016 to September 29, 2016, SDG totally reduced 2,972,767 shares of the company’s unrestricted outstanding shares by concentrated bidding, accounting for 1% of the company’s total share capital. Up to September 29, 2016, SDG completed the share holding reducing plan. The company's equity structure was as follows: 73 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Type Amount (Share) Ratio (%) State-owned corporate shares 145,925,256 49.09 Domestic public shares 124,956,344 42.03 RMB special stock (B-Share) 26,400,000 8.88 Total 297,281,600 100.00 As of 30 June 2018, the Company have 297,281,600 shares offered in total, found more in 32 of Note VI. 4. Consolidation scope of the Company in the year Totally 15 companies included in the consolidation scope for the first half Year of 2018, found more in ―Equity in other entity‖ in the Note VIII. One company deducted in consolidation range in the Year. 5. Relevant party offering approval reporting of financial statements and date thereof This financial statement is approved for disclosure by resolution from the Board dated 22 August 2018. II. Basis Preparation of the Financial Statements 1.Preparation base The financial statements of the Group is prepared based on the going-concern assumption in accordance with the actually occurred transactions and events, the ―Accounting standards for Business Enterprise-Basic rules‖ (ministry of finance order No. 33 issued, ministry of finance No.76 revised), the ―Accounting Standards for Business Enterprises – Basic Standards‖ and 42 specific accounting standards promulgated by the ministry of finance on 15 th, Feb., 2006, the subsequently promulgated application guide and interpretation of the accounting standards for business enterprises and other relevant provisions (hereinafter collectively referred to as ―ASBE‖), and China Securities Regulatory Commission ―information disclosure regulations No.15 for the companies publicly issuing securities - general provisions of financial reports‖ (2014 Revision). According to the relevant requirements under the Accounting Standards for Business Enterprises, the Company has adopted the accrual basis as its basis of accounting. Except for certain financial instruments, historical costs have been adopted as the basis of measurement in these Financial Statements. Non-current assets held for sale are recorded at the lower of fair value less predicted expenses and the original carrying value when the assets satisfy such conditions for sale. Provisions of corresponding impairment losses are recognized in respect of any impairment of assets. III. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Groups meet the requirements of the Accounting Standards for Business Enterprises, truthfully and completely reflect the financial situation of the Company on 30 th, June 2018 and the business performance and cash flow in January to June of 2018. In addition, the financial statements of the Company and the Group meet the disclosure requirements of ―Preparation Regulation of Information Disclosure for Enterprise with Security Issued Publicly No.15—General Rules of Financial Report‖ revised by China Securities Regulatory Commission in all significant aspects in 2014. IV. Main accounting policy and estimate 74 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 The Company and its subsidiaries determine specific accounting policies and accounting estimation based on their actual production characteristics according to the relevant requirements under the Accounting Standards for Business Enterprises. Details relating to significant accounting judgment and estimation made by the management, please refer to note IV(29) ―Significant accounting judgment and estimation‖. 1. Fiscal period The accounting period of the Group includes annual and interim, accounting interim refers to the reporting period shorter than a complete fiscal year. The fiscal year of the Group adopts the Gregorian calendar, i.e. from 1 January to 31 December for each year. 2. Business cycle Normal business cycle is the period from purchasing assets used for process by the Company to the cash and cash equivalent achieved. The Company’s normal business cycle was one-year (12 months), and as the determining criterion of the liquidity for assets and liabilities. 3. Book-keeping currency RMB is the currency in the major economic environment of the Company and its sub-company which take RMB as the book-keeping currency. The Group adopts RMB as the currency when preparing this financial statement. 4. The accounting treatment of business merger under the common control and the different control. Business merger refers to the transactions or matters that two or more than two individual enterprises form a reporting entity. Business merger includes the business merger under the common control and the different control. (1) Business merger under the common control Business merger under the common control means the enterprises participated in the merger are subject to the ultimate control of the same party or the same multi-party before and after the merger, and the control is not temporary. For the business merger under the same control, the party obtains the control rights of other enterprises participated in the merger on the merger date is the merging party, and other enterprises participated in the merger are the merged party. The merger date refers to the date that the merging party obtains the control rights of the merged party. The assets and liabilities of the merging party should be measured in accordance with the book value of the combined party on the combining date. The balance between the book value of the net asset obtained by the merging party and the book value of the merger consideration (or the total face value of the issued shares) paid by the merging party, and adjust the capital reserve (share premium); for the capital reserve (share premium) insufficient to reduce, adjust the retained earnings. All direct expenses the merging party spent for the business merger are included in the current profit and loss when the business merger occurred. (2) Business merger under the different control Business merger under the different control means the enterprises participated in the merger are not subject to the ultimate control of the same party or the same multi-party before and after the merger. For the business merger under the different control, the party obtains the control rights of other enterprises participated in the merger on the acquisition date is the acquirer, and other enterprises participated in the merger are the acquiree. The acquisition date refers to the date that the acquirer obtains the control rights of the acquiree. As for the business merger under the different control, the merger costs contain the assets paid by the acquirer for obtaining the control rights of the acquiree on the acquisition date, the liabilities incurred or assumed, and the fair value of the issued equity securities. The intermediary fees such as auditing, legal services and consulting services costs and other administrative costs incurred by the business merger are charged to the current profit and loss. The transaction costs of the equity securities or debt securities issued as the combination consideration by the acquirer are reckoned in the initially 75 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 recognized amount of the equity securities or debt securities. As for the involved or existing consideration reckoned in the merger costs in accordance with the fair value on the acquisition date, correspondingly adjust the consolidated goodwill for these needs to be adjusted or possess consideration because new or further evidence appears for the situations existing on the acquisition date within 12 months after the acquisition date The merger costs of the acquirer and the net identifiable assets obtained in the merger are reckoned in accordance with the fair value on the acquisition date. The balance of which the merger costs are more than the net identifiable assets’ fair value share of the acquiree obtained in the merger on the acquisition date is recognized as goodwill. For those whose merger costs are less than the net identifiable assets’ fair value share of the acquiree obtained in the merger, recheck the obtained identifiable assets, liabilities, and the fair value with contingent liability of the acquiree, and the measurement of the merger costs at first, while for those whose merger costs are still less than the net identifiable assets’ fair value share of the acquiree obtained in the merge after rechecking, reckon its the balance in the current profit and loss. For the deductable temporary difference obtained by the acquirer from the acquiree that is not confirmed because of not meeting the assets confirmation requirements of the deferred income taxes on the acquisition date, if there is new or further information states that the relevant conditions on the acquisition date has already existed and the economic interests on the acquisition date brought by the deductable temporary difference can be realized by the acquiree within 12 months after the acquisition date, then confirm the relevant deferred income tax assets, and decrease the goodwill, as for the goodwill insufficient for reducing, confirm the difference to be the current profit and loss; except for the above-mentioned cases, reckon those deferred income tax assets related to the business merger in the current profit and loss. For a business combination not involving enterprises under common control and achieved in stages, the company shall determine whether the business combination shall be regarded as ―a bundle of transactions‖ in accordance with ―Interpretation 5 on Accounting Standards for Business Enterprises‖ (Cai Kuai 2012 No. 19) and clause 51 of ASBE 33- Consolidated Financial Statements relating to judgment standard for ―a bundle of transactions‖(please refer to this Note IV 5(2)). When the business combination is regarded as ―a bundle of transactions‖, the accounting treatment for the business combination shall be in accordance with the previous paragraphs and Note IV 13 ―long term equity investment‖; when the business combination is not regarded as ―a bundle of transactions‖, the accounting treatment should be different when comes to individual financial report and consolidated financial report. In the individual financial statements, the initial cost of the investment shall be the sum of the carrying amount of its previously-held equity interest in the acquiree prior to the acquisition date and the amount of additional investment made to the acquiree at the acquisition date. Other comprehensive income involved in the previously-held equity interest of the acquiree prior to the acquisition date shall be subject to accounting treatment on the same basis adopted by the acquiree in its direct disposal of related assets or liabilities (which are reclassified as investment income during the period , net of the audited changing corresponding shares resulted from the net liability and net assets re-measured and set by acquiree according to equity method ). In the consolidate financial statements, the previously-held equity interest of the acquire is re-measured according to the fair value at the acquisition date; the difference between the fair value and the carrying amount is recognized as investment income for the current period; the amount recognized in other comprehensive income relating to the previously-held equity interest in the acquire shall be subject to accounting treatment on the same basis adopted by the acquire in its direct disposal of related assets or liabilities (which are reclassified as investment income during the period, net of the audited changing corresponding shares resulted from the net liability and net assets re-measured and set by acquire according to equity method). 5. Preparing method of consolidated financial statements (1) Determinate principles of range for consolidation financial statement The scope of consolidated financial statements is determined based on control. Control is the power to govern the investees 76 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 so as to obtain benefits from their operating activities by the involvement in the relevant activities of the investee. The scope of consolidation comprises the Company and all of its subsidiaries. Subsidiaries are the entities controlled by the Company. Once relevant elements involved in the above definition of control change due to alteration of relevant facts or situations, the Company will make evaluation again. (2) Preparing method of consolidated financial statements Since the date of gaining the net assets and the actual control rights of the production and operation decision-making of the subsidiaries, the Group has started to bring it into the consolidation scope; stop to bring into the consolidation scope since the date of losing the actual control rights. As for the disposed subsidiaries, the business performance and cash flow before the disposal have been suitably included in the consolidated income statement and the consolidated cash flow statement; as for the subsidiaries currently disposed; don’t adjust the opening balance of the consolidated balance sheet. For the subsidiaries increased by the business merger under the different control, the business performance and cash flow after its acquisition date have been suitably included in the consolidated income statement and the consolidated cash flow statement, and don’t adjust the opening balance and correlation date of the combined financial statement. For the subsidiaries increased by the business merger under the common control, the business performance and cash flow from the beginning period of the merger to its merger date have been suitably included in the consolidated income statement and the consolidated cash flow statement, and adjust the correlation date of the combined financial statement at the same time. When preparing the consolidated financial statements, for the accounting policies adopted by the subsidiaries and the Company being inconsistent during the accounting time period, adjust in accordance with the accounting policies of the Company and the financial statements of the subsidiaries during the accounting time period. As for the subsidiaries obtained by the business merger under the different control, adjust the financial statements based on the fair value of the net identifiable assets on the acquisition date. All significant intra-group current account balances, transactions and unrealized profits are offset in the preparation of consolidated financial statements. The stockholders' equity of the subsidiaries and the shares not belong to the Company in the current net profit or loss are respectively served as the separate presentation in the stockholders' equity and net profits of the minority interest and minority interest income in the consolidated financial statements. The shares of the current net profit or loss of the subsidiaries that belong to the minority interest are listed under net profit item in the consolidated profit statement as ―minority interest income‖ item. Reduce the minority interest for those that the subsidiaries’ losses shared by the minority shareholders exceed the shares that the minority shareholders gained from the owner's equity at the beginning period of this subsidiary. When losing the control rights of the original sub companies because of disposing some equity investment or other reasons, re-measure the residual equity in accordance with its fair value on the date of losing the control rights. Use the sum of the consideration obtained by disposing the stock rights and the fair value of the residual equity to minus the balance among the net assets’ shares of the original sub companies continuously calculated since the acquisition date in accordance with the original shareholding ratio, and then reckon in the current investment income when losing the control rights. The other consolidated incomes related to the equity investment of the original sub companies, It shall be subject to accounting treatment on the same basis adopted by the acquiree in its direct disposal of related assets or liabilities during the period when the control ceases (which are reclassified as investment income for the current period, other than changes resulting from re-measuring net liability or net assets under defined benefit plan of the original subsidiary). Thereafter, do the follow-up measurement for this part’s residual equity in accordance with the relevant provisions of ―Accounting Standards for Business Enterprises No.2 - long-term equity investment‖ or ―Accounting Standards for Business Enterprises No.22 - financial instruments recognition and measure’, refer to the Note IV 13 ―long-term equity investment‖ or the Note IV 9 77 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 ―financial instruments‖ for details. The company shall determine whether loss of control arising from disposal in a series of transactions should be regarded as a bundle of transactions. When the economic effects and terms and conditions of the disposal transactions met one or more of the following situations, the transactions shall normally be accounted for as a bundle of transactions: (i) The transactions are entered into after considering the mutual consequences of each individual transaction; (ii) The transactions need to be considered as a whole in order to achieve a deal in commercial sense; (iii) The occurrence of an individual transaction depends on the occurrence of one or more individual transactions in the series; (iv) The result of an individual transaction is not economical, but it would be economical after taking into account of other transactions in the series. When the transactions are not regarded as a bundle of transactions, the individual transactions shall be accounted as ―disposal of a portion of an interest in a subsidiary which does not lead to loss of control‖) (for details, please refer to Note IV 13(2)④) and ―disposal of a portion of an interest in a subsidiary which lead to loss of control‖ (details are set out in previous paragraph). When the transactions are regarded as a bundle of transactions, the transactions shall be accounted as a single disposal transaction; however, the difference between the consideration received from disposal and the share of net assets disposed in each individual transactions before loss of control shall be recognized as other comprehensive income, and reclassified as profit or loss arising from the loss of control when control is lost. 6. Classification of joint arrangement and accounting for joint operations A joint arrangement refers to an arrangement jointly controlled by two or more parties. In accordance with the Company’s rights and obligations under a joint arrangement, the Company classifies joint arrangements into: joint ventures and joint operations. Joint operations refer to a joint arrangement during which the Company is entitled to relevant assets and obligations of this arrangement. Joint ventures refer to a joint arrangement during which the Company only is entitled to net assets of this arrangement. Investment in joint venture is accounted for using the equity method accounting to the accounting policies referred to Note IV 13(2)②―Long-term equity investment accounted for using the equity method‖. The Company shall, as a joint venture, recognize the assets held and obligations assumed solely by the Company, and recognize assets held and obligations assumed jointly by the Company in appropriation to the share of the Company; recognize revenue from disposal of the share of joint operations of the Company; recognize fees solely occurred by Company and recognize fees from joint operations in appropriation to the share of the Company. When the Company, as a joint venture, invests or sells assets to or purchase assets (the assets dose not constitute a business, the same below) from joint operations, the Company shall only recognize the part of profit or lost from this transaction attributable to other parties of joint operations before these assets are sold to a third party. In case of an impairment loss incurred on these assets which meets the requirements as set out in ―Accounting Standards for Business Enterprises No. 8 – Asset Impairment‖, the Company shall recognize the full amount of this loss in relation to its investment in or sale of assets to joint operations, or recognize the loss according to the Company’s share of commitment in relation to the its purchase of assets from joint operations. 7. Determination criteria of cash and cash equivalent Cash and cash equivalent of the Company including stock cash, deposits available for payment at any time and the investment held by the Company with the follow characters obtained at the same time: short term (expire within 3 months commencing from purchase day), active liquidity, easy to convert to already-known cash, and small value change risks. 78 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 8. Foreign Currency Operations and translation of foreign currency statements (1) Basis for translation of foreign currency transactions The foreign currency transactions of the Company, when initially recognized, are translated into functional currency at the prevailing spot exchange rate on the date of exchange (usually refers to the middle rate of the exchange rate for the day as quoted by the People’s Bank of China, the same below) while the Company’s foreign currency exchange operations and transactions in connection with foreign currency exchange shall be translated into functional currency at the exchange rate actually adopted. (2) Basis for translation of foreign currency monetary items and foreign currency non-monetary items On the balance sheet date, foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. All differences are included in the consolidated income statement, except for: ① the differences arising from foreign currency borrowings related to the acquisition or construction of fixed assets which are qualified for capitalization; and ② except for other carrying amounts of the amortization costs, the differences arising from changes of the foreign currency items available for sale. When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange rate fluctuation shall be included in other comprehensive income; and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of. The foreign currency non-monetary items measured at historical cost shall still be measured by the functional currency translated at the spot exchange rate on the date of the transaction. Foreign currency non-monetary items measured at fair value are translated at the spot exchange rate on the date of determination of the fair value. The difference between the amounts of reporting currency before and after the translation will be treated as changes in fair value (including changes in foreign exchange rates) and recognized in profit or loss for the period or recognized as other consolidated income. (3) Translation of foreign currency financial statement When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange rate fluctuation shall be included in other comprehensive income as ―translation difference of foreign currency statement‖; and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of. Foreign currency financial statement for overseas operation is translated into RMB statement by the following means: assets and liabilities in balance sheet are translated at the spot rate as of balance sheet date; owner’s equity items (other than undistributed profit) are translated at the spot rate prevailing on the date of occurrence. Income and expense items in profit statement are translated at the spot rate prevailing on the date of transactions. Beginning undistributed profit represents the translated ending undistributed profit of previous year; ending undistributed profit is allocated and stated as several items upon translation. Upon translation, difference between assets, liabilities and shareholders’ equity items shall be recorded as foreign currency financial statement translation difference and recognized as other comprehensive income. In case of disposal of overseas operation where control is lost, foreign currency financial statement translation difference relating to the overseas operation as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of disposal in full or under the proportion it disposes. Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rate prevailing on the date of occurrence of cash flow. Influence over cash from exchange rate fluctuation is taken as adjustment items to separately stated in cash flow statement. 79 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 The beginning figure and previous year actual figures are stated at the translated figures in previous year financial statement. If the Company loses control over overseas operation due to disposal of all the owners’ equity or part equity investment in the overseas operation or other reasons, foreign currency financial statement translation difference relating to the overseas operation attributable to owners’ equity of parent company as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of disposal in full. If the Company reduces equity proportion while not loses control over overseas operation due to disposal of part equity investment in the overseas operation or other reasons, foreign currency financial statement translation difference relating to the disposed part will be vested to minority interests and will not transfer to current gains and losses. When disposing part equity interests of overseas operation which is associate or joint venture, foreign currency financial statement translation difference relating to the overseas operation shall transfer to current disposal gains and losses according to the disposed proportion. 9. Financial instruments Financial asset or financial liability is recognized when the Company becomes a party to financial instrument contract. Financial assets and liabilities are initially measured at fair value. For financial assets and financial liabilities classified as fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial assets and financial liabilities classified as other categories, relevant transaction costs are included in the amount initially recognized. (1) Method of determination of the fair value for financial assets and financial liabilities Fair value represents the price that market participator can receive for disposal of an asset or he should pay for transfer of a liability in an orderly transaction happened on the measurement date. Financial instruments exist in an active market. Fair value is determined based on the quoted price in such market. An active market refers to where pricing is easily and regularly obtained from exchanges, brokers, industrial organizations and price-fixing service organizations, representing the actual price of a market transaction that takes place in a fair deal. While financial instruments do not exist in an active market, the fair value is determined using valuation techniques. Valuation technologies include reference to be familiar with situation and prices reached in recent market transactions entered into by both willing parties, reference to present fair values of similar other financial instruments, cash flow discounting method and option pricing models. (2) Classification, recognition and measurement of the financial assets Financial assets traded in a regular way shall be accounted for recognition and derecognition based on the trading date. Financial assets are classified into financial assets through profit or loss at fair value, held-to-maturity investment, loans and receivables and financial assets available for sale upon initial recognition. ①Financial assets carried at fair value through profit or loss for the current period They include financial assets held for trading and financial assets designated as at fair value through profit or loss for the current period. Financial assets may be classified as financial assets held for trading if one of the following conditions is met: A. the financial assets is acquired or incurred principally for the purpose of selling it in the near term; B. the financial assets is part of a portfolio of identified financial instruments that are managed together 80 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 and for which there is objective evidence of a recent pattern of short-term profit taking; or C. the financial assets is a derivative, excluding the derivatives designated as effective hedging instruments, the derivatives classified as financial guarantee contract, and the derivatives linked to an equity instrument investment which has no quoted price in an active market nor a reliably measured fair value and are required to be settled through that equity instrument. A financial asset may be designated as at FVTPL upon initial recognition only when one of the following conditions is satisfied: A. Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; or B. The financial asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis. Financial assets carried at fair value through profit or loss for the current period is subsequently measured at fair value. The gain or loss arising from changes in fair value and dividends and interest income related to such financial assets are charged to profit or loss for the current period. ②Held-to-maturity investments They are non-derivative financial assets with fixed maturity dates and fixed or determinable payments that the Group has positive intent and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gain or loss on derecognition, impairment or amortization is recognized through profit or loss for the current period. The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income or expense over each period based on the effective interest of a financial asset or a financial liability (including a group of financial assets or financial liabilities). The effective interest is the rate that discounts future cash flows from the financial asset or financial liability over its expected life or (where appropriate) a shorter period to the carrying amount of the financial asset or financial liability. In calculating the effective interest rate, the Group will estimate the future cash flows (excluding future credit losses) by taking into account all contract terms relating to the financial assets or financial liabilities whilst considering various fees, transaction costs and discounts or premiums which are part of the effective interest rate paid or received between the parties to the financial assets or financial liabilities contracts. ③ Loans and receivable They are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets, including bills receivable, accounts receivable, interest receivable, dividends receivable and other receivables, are classified as loans and receivables by the Group. 81 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising from derecognition, impairment or amortization is recognized in current profit or loss. ④Available-for-sale financial assets They include non-derivative financial assets that are designated in this category on initial recognition, and the financial assets other than the financial assets at fair value through profit and loss, loans and receivables and held-to-maturity investments. The closing cost of available-for-sale debt instruments are determined based on amortized cost method, which means the amount of initial recognition less the amount of principle already repaid, add or less the accumulated amortized amount arising from the difference between the amount due on maturity and the amount initially recognized using effective interest rate method, and less the amount of impairment losses recognized. The closing cost of available-for-sale equity instruments is equal to its initial acquisition cost. Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change in fair value are recognized as other comprehensive income, except for impairment loss and exchange differences arising from foreign monetary financial assets and amortized cost which are accounted for through profit or loss for the current period. The financial assets will be transferred out of the financial assets on derecognition and accounted for through profit or loss for the current period. However, equity instrument investment which is not quoted in active market and whose fair value cannot be measured reliably, and derivative financial asset which is linked to the equity instrument and whose settlement is conditional upon delivery of the equity instrument, shall be subsequently measured at cost. Interests received from available-for-sale financial assets held and the cash dividends declared by the investee are recognized as investment income. (3) Impairment of financial assets In addition to financial assets at fair value through profit or loss for the current period, the Group reviews the book value of other financial assets at each balance sheet date and provide for impairment where there is objective evidence that financial assets are impaired. For a financial asset that is individually significant, the Group assesses the asset individually for impairment. For a financial asset that is not individually significant, the Group assess the asset individually for impairment or include the asset in a group of financial assets with similar credit risk characteristics and collectively assess them for impairment. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether the financial asset is individually significant or not, the financial asset is included in a group of financial assets with similar credit risk characteristics and collectively assessed for impairment. Financial assets for which an impairment loss is individually recognized are not included in the collective assessment for impairment. ①Impairment of held-to-maturity investments, loans and receivables The carrying amount of financial assets measured at costs or amortized costs are subsequently reduced to the present value discounted from its projected future cash flow. The reduced amount is recognized as impairment loss and recorded as profit or loss for the period. After recognition of the impairment loss from financial assets, if there is objective evidence showing recovery in value of such financial assets 82 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 impaired and which is related to any event occurring after such recognition, the impairment loss originally recognized shall be reversed to the extent that the carrying value of the financial assets upon reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for impairment. ②Impairment of available-for-sale financial assets In the event that decline in fair value of the available-for-sale equity instrument investment is regarded as ―severe decline‖ or ―non-temporary decline‖ on the basis of comprehensive related factors, it indicates that there is impairment loss of the available-for-sale equity instrument investment. The company’s standards to judge if the fair value of available for sale equity instruments investment has a ―severe‖ depreciation is that if the fair value of a single available for sale financial asset has a sharp fall which exceeds 50% of its holding cost, then this available for sale financial asset is affirmed to have a severe decrease in value and should have the provision for asset impairment to confirm the impairment loss. The company’s standards to judge if the fair value of available for sale equity instruments investment has a ―non-temporary" depreciation is that if the fair value of a single available for sale financial asset has a sharp fall and this downtrend is predicted to be non-temporary with the duration over a year that cannot be fundamentally changed in the whole holding period, then this available for sale financial asset is affirmed to have a non-temporary decrease in value and should have the provision for asset impairment to confirm the impairment loss. When the available-for-sale financial assets impair, the accumulated loss originally included in the capital reserve arising from the decrease in fair value was transferred out from the capital reserve and included in the profit or loss for the period. The accumulated loss that transferred out from the capital reserve is the balance of the acquired initial cost of asset, after deduction of the principal recovered, amortized amounts, current fair value and the impairment loss originally included in the profit or loss. After recognition of the impairment loss, if there is objective evidence showing recovery in value of such financial assets impaired and which is related to any event occurring after such recognition in subsequent periods, the impairment loss originally recognized shall be reversed. The impairment loss reversal of the available-for-sale equity instrument will be recognized as other consolidated income, and the impairment loss reversal of the available-for-sale debt instrument will be included in the profit or loss for the period. When an equity investment that is not quoted in an active market and the fair value of which cannot be measured reliably, or the impairment loss of a derivative financial asset linked to the equity instrument that shall be settled by delivery of that equity instrument, then it will not be reversed. (4) Recognition and measurement of transfers of financial asset Financial asset that satisfied any of the following criteria shall be derecognized: ①the contract right to recover the cash flows of the financial asset has terminated; ② the financial asset, along with substantially all the risk and return arising from the ownership of the financial asset, has been transferred to the transferee; and ③ the financial asset has been transferred to the transferee, and the transferor has 83 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 given up the control on such financial asset, though it does not assign maintain substantially all the risk and return arising from the ownership of the financial asset. When the entity does not either assign or maintain substantially all the risk and return arising from the ownership of the financial asset and does not give up the control on such financial asset, to the extent of its continuous involvement in the financial asset, the entity recognizes it as a related financial asset and recognizes the relevant liability accordingly. The extent of the continuous involvement is the extent to which the entity exposes to changes in the value of such financial assets. On derecognition of a financial asset, the difference between the following amounts is recognized in profit or loss for the current period: the carrying amount and the sum of the consideration received and any accumulated gain or loss that had been recognized directly in equity. If a part of the financial assets qualifies for derecognition, the carrying amount of the financial asset is allocated between the part that continues to be recognized and the part that qualifies for derecognition, based on the fair values of the respective parts. The difference between the following amounts is recognized in profit or loss for the period: the sum of the consideration received and the carrying amount of the part that qualifies for derecognition and the aforementioned carrying amount. For financial assets that are transferred with recourse or endorsement, the Company needs to determine whether the risk and rewards of ownership of the financial asset have been substantially transferred. If the risk and rewards of ownership of the financial asset have been substantially transferred, the financial assets shall be derecognized. If the risk and rewards of ownership of the financial assets have been retained, the financial assets shall not be derecognized. If the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial assets, the Company shall assess whether the control over the financial assets is retained, and the financial assets shall be accounted for according to the above paragraphs. (5) Classification and measurement of financial liabilities At initial recognition, financial liabilities are classified either as ―financial liabilities at fair value through profit or loss‖ or ―other financial liabilities‖. Financial liabilities are initially recognized at fair value. For financial liabilities classified as fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial liabilities classified as other categories, relevant transaction costs are included in the amount initially recognized. ① Financial liabilities at fair value through profit or loss for the period The criteria for a financial liability to be classified as held for trading and designated as at financial liabilities at fair value through profit or loss are the same as those for a financial asset to be classified as held for trading and designated as at financial assets at fair value through profit or loss. Financial liabilities at fair value through profit or loss for the period are subsequently measured at fair value. The gain or loss arising from changes in fair value and dividends and interest income related to such financial liabilities are included into the current profit or loss. ② Other financial liabilities Derivative financial liabilities which are linked to equity instruments that are not quoted in an active market and the fair value of which cannot be measured reliably measured, and which shall be settled by delivery of equity instruments are subsequently measured at cost. Other financial liabilities are 84 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 subsequently measured at amortized cost using the effective interest method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for the current period. ③Financial guarantee contract Financial guarantee contract in respect of financial liabilities not designed at fair value through profit or loss shall be initially measured at fair value, and subsequently measured at the lower between the amount determined under Accounting Standards for Enterprises No.13-Contingent issues and its initial measurement amount less accumulative amortization determined under Accounting Standards for Enterprises No.14-Revenue. (6) Derecognition of financial liabilities Financial liabilities are derecognized in full or in part only when the present obligation is discharged in full or in part. An agreement is entered between the Group (debtor) and a creditor to replace the original financial liabilities with new financial liabilities with substantially different terms, derecognize the original financial liabilities as well as recognize the new financial liabilities. When financial liabilities is derecognized in full or in part, the difference between the carrying amount of the financial liabilities derecognized and the consideration paid (including transferred non-cash assets or new financial liability) is recognized in profit or loss for the current period. (7) Derivatives and embedded derivatives Derivatives are initially measured at fair value as of the execution date of relevant contract, and subsequently measured at fair value. Change of fair value of derivatives is recorded in profit or loss for the period. In respect of mixed instruments containing embedded derivatives, if they are financial assets or financial liabilities not designated at fair value through profit or loss, and there is no close relation between embedded derivatives and such main contract in terms of economic characteristics and risk, separate instrument shares the same conditions with embedded derivatives and meets definition of derivatives, the embedded derivatives are split off from the mixed instruments and accounted for as separate derivative financial instrument. If an embedded derivative instrument cannot be measured separately upon acquisition or at subsequent balance sheet date, the mixed instruments shall be taken in its entirety as financial assets or financial liabilities designated at fair value through profit or loss. (8) Offset of Financial Assets and Financial Liabilities If the Group owns the legitimate rights of offsetting the recognized financial assets and financial liabilities, which are enforceable currently, and the Group plans to realize the financial assets or to clear off the financial liabilities by net amount method, the amount of the offsetting financial assets and financial liabilities shall be reported in the balance sheep. Otherwise, financial assets and financial liabilities are presented separately in the balance sheet without offsetting. (9) Equity instruments Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The Company issues (including refinancing), repurchases, sells or cancels equity instruments as movement of equity. No fair value change of equity instrument would be recognized by the Company. Transaction fees relating to equity transactions are deducted from equity. 85 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 The distribution (excluding the dividends) to the equity instrument holders by the Group shall reduce the shareholder’s equity. The Group shall not recognize the changes of the equity instruments’ fair value. 10. Account receivable Account receivable including receivables and other account receivables etc. (1) Recognition standards for bad debt provision On balance sheet date, the Company examined book value of the account receivable, if the followed objective evidence has been show for impairment occurred, impairment provision shall withdrawal: ①the debtor has serious financial difficulties; ②debtor violated the terms of the contract (such as interest or principal payment default or overdue etc.); ③debtor probably close down or exercise other financial restructuring; and ④other objective evidence showing impairment occurred on receivables. (2) Withdrawal method for bad debt provision ①Recognition criteria and depreciation method for account receivable with large single amount and accrued for provision of bad debt on a single basis Account receivable with over RMB one million and other account receivable with over RMB 500,000 are recognized as account receivable with large single amount. The Company exercise impairment test separately on account receivable with large single amount, if no impairment been found in financial assets after separate testing, they shall be included in portfolios of accounts receivable with similar credit risk features for impairment tests. For accounts receivable with confirmed impairment losses after separate tests, they shall not be included in portfolios of accounts receivable with similar credit risk features for impairment tests. ②Recognition criteria and depreciation method for account receivable with accrued for provision of bad debt on credit risk portfolio basis A. Recognition basis for credit risk characteristics portfolio As for the account receivable with minor single amount and those with major amount without impairment had been found after testing on a single basis, the Company grouping the financial assets according to similarity and relativity of the credit risk characteristics. The credit risk characteristics usually reflect the repaying capability for all due amount from debtors, in line with the terms of the contract, and related with the measurement of future cash flow on assets which has been examined. Recognition basis for different portfolio: Item Basis Age portfolio Divide the portfolio on the age of account receivable as a credit risk characteristics B. Depreciation method for bad debt provision recognized by credit risk characteristics portfolio At the time of impairment testing, the bad debt amount will recognized by the estimated losses, according to historical losses experience, which has been occurred in account receivable portfolio, and current economic status as well as portfolio structure and similar credit risk characteristics (debt paying capability for debtor based on terms of the contract). Depreciation method of bad debt provision in different portfolio: 86 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Depreciation method Age portfolio Accrual bad debt provision by aging of accounts a. Depreciation method of bad debt provision by aging of accounts in portfolio Age Accrual ratio of account receivable (%) Accrual ratio of other receivables (%) Within 1 year (including one year, the same below) No accrual No accrual 1-2 years 5 5 2-3 years 20 20 Over 3 years 50 50 ③Accounts receivable that are individually insignificant but with bad debt provision provided on an individual basis: Account receivable with RMB one million at most and other account receivable with RMB 500,000 at most are recognized as account receivable with insignificant single amount. As for the account receivable with insignificant single amount but with followed features, exercise impairment separately, if there has evidence of impairment, provision for bad debts shall be made at the difference of present value of estimated future cash flows in short of their book values, and shall be recognized as impairment losses: account receivable with dispute and arbitration involved or exist with the counter party; receivables which has obvious evidence that the debtor probably unable to performed payment obligations etc. (3) Reversal of bad debt provisions If there is evidence showing that the value of the account receivable has been recovered, and that the recovery is objectively related to events after recognition of the loss, the originally recognized impairment loss should be reversed and included in current profit and loss. However, the book values after such reversal shall not exceed the amortized costs of the account receivable on the reversal date, assuming there is no provision for impairment. 11. Inventories (1) Classification of inventories Inventory including raw materials, stock commodity and low value consumables etc. (2) Pricing for inventories delivered and obtained Inventories are priced at actual costs when acquired. Inventory cost includes procurement cost, processing cost and other costs. Raw materials and inventory commodities are measured under weighted average method when applied for use and delivered. (3) Recognition for net realizable value of inventories and withdrawal method for inventory impairment provision Net realizable value refers to the amount resulted by inventory’s estimated sale price minor the cost, which is going to occurred till end of the completion, estimated sales expenses and relevant taxes, in daily activities. At the time of recognizing the net realizable value for inventory, on basis of unambiguous evidence, take the purpose of inventory held and influence of events after the balance sheet date into account at the same time. 87 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 On balance sheet date, measure of the inventory is made as the lower of their cost and or net realizable values. Provision for inventory depreciation reserve are made while the net realizable values below the cost. Inventory falling price reserves withdrawal usually base on the difference of the cost of single inventory which over the net realizable value. As for inventories with numerous quantity and low unit price, inventory depreciation provision is made based on categories of inventories. After inventory impairment provision, if any factor rendering write-downs of the inventories has been eliminated as net realizable value higher than its book value resulted, the amounts written down are recovered and reversed from the inventory depreciation reserve, which has been provided for. The reversed amounts are included into the current profit and loss. (4) Inventory system was the perpetual inventory system. (5) Low value consumptions and packing materials are amortized under amortization method when applied for use. 12. Held-for-sale assets and disposal group The Company shall classify a non-current asset or disposal group as held for sale if its carrying amount will be recovered principally through a sale transaction (including a non-monetary asset exchange of commercial substance, the same below) rather than through continuous use, and when all of the following conditions are met: according to the practice of disposing of this type of assets or disposal groups in a similar transaction, a non-current asset or disposal group is available for immediate sale in its present condition; the Company has made a resolution in respect of a disposal plan and obtained a firm purchase commitment from a buyer; and the sale is probable to be completed within one year. A disposal group is a group of assets to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. Where goodwill acquired in a business combination has been allocated to the asset group or groups to which a disposal group belongs in accordance with the Accounting Standard for Business Enterprises No. 8 - Impairment of Assets, the disposal group shall include the goodwill allocated to it. When the Company measures initially or remeasures the non-current assets and disposal group classified as held for sale on the balance sheet date, its carrying amount is written down to its fair value less selling costs if its carrying amount is higher than its fair value less costs to sell. The reduced amount is recognised as asset impairment loss and charged to current profit or loss, with provision made for the impairment of the held-for-sale assets. With regard to the disposal group, the asset impairment loss recognised is offset by the carrying amount of the goodwill in the disposal group first, and then by the carrying amount of each of the non-current assets in the disposal group which are applicable to the measure requirements under the Accounting Standard for Business Enterprises No. 42 - Non-current Assets Held For Sale, Disposal Groups and Discontinued Operations (hereinafter referred to as ―Held-For-Sale Standard‖) pro rata. If on a subsequent balance sheet date, the net amount of the fair value of a held-for-sale disposal group less its costs to sell increases, the amount reduced previously shall be recovered, and reversed in the asset impairment loss recognised on the non-current asset which is applicable to the measurement requirements of the Held-For-Sale Standard after the non-current asset is classified as held for sale. The reversed amount is credited to current profit or loss, and the carrying amount of each non-current asset (other than goodwill) which is applicable to the measurement requirements of the Held-For-Sale Standard is increased pro rata according to the percentage of each non-current asset’s carrying amount. Neither the carrying amount of goodwill which has been offset nor the asset impairment loss recognised before the non-current asset to which the measurement requirements of the Held For-Sale Standard is applicable is classified as held for sale can be reversed. No depreciation or amortisation is provided for a non-current asset in the non-current assets or disposal groups held for 88 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 sale. Interest and other expenses attributable to the liabilities of a disposal group held for sale shall continue to be recognised. When a non-current asset or a disposal group does not meet the condition to be classified as held for sale, the Company ceases to classify it as held for sale or removes the non-current asset from the disposal group held for sale, and measures it at the lower of: (1) the carrying amount before it was classified as held for sale, adjusted for any depreciation (or amortisation) or impairment that would have been recognised had it not been classified as held for sale, and (2) its recoverable amount. 13. Long-term equity investments Long-term equity investments under this section refer to long-term equity investments in which the Company has control, joint control or significant influence over the investee. Long-term equity investment without control or joint control or significant influence of the Group is accounted for as available-for-sale financial assets or financial assets measured at fair value with any change in fair value charged to profit or loss. Details on its accounting policy please refer to Note 9. ―Financial instruments‖ under section IV. Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities of such arrangement must be decided by unanimously agreement from parties who share control. Significant influence is the power of the Company to participate in the financial and operating policy decisions of an investee, but to fail to control or joint control the formulation of such policies together with other parties. (1) Determination of investment cost For a long-term equity investment acquired through a business combination involving enterprises under common control, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the cash paid, non-cash assets transferred as well as the book value of the debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. With the total face value of the shares issued as share capital, the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall be used to offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For business combination resulted in an enterprise under common control by acquiring equity of the absorbing party under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as ―transactions in a basket‖. If they belong to ―transactions in a basket‖, these transactions will be accounted for a transaction in obtaining control. If they are not belong to ―transactions in a basket‖, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the aggregate of the carrying amount of the long-term equity investment before merging and the carrying amount the additional consideration paid for further share acquisition on the date of combination shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognized as a result of the previously held equity investment accounted for using equity method on the date of combination or recognized for available-for-sale financial assets will not be accounted for. For a long-term equity investment acquired through a business combination involving enterprises not under common control, the initial investment cost of the long-term equity investment shall be the cost of combination on the date of 89 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne and equity securities issued. For business combination resulted in an enterprise not under common control by acquiring equity of the acquiree under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as ―transactions in a basket‖. If they belong to ―transactions in a basket‖, these transactions will be accounted for a transaction in obtaining control. If they are not belong to ―transactions in a basket‖, the initial investment cost of the long-term equity investment accounted for using cost method shall be the aggregate of the carrying amount of equity investment previously held by the acquiree and the additional investment cost. For previously held equity accounted for using equity method, relevant other comprehensive income will not be accounted for. For previously held equity investment classified as available-for-sale financial asset, the difference between its fair value and carrying amount, as well as the accumulated movement in fair value previously included in the other comprehensive income shall be transferred to profit or loss for the current period. Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and valuation and consultation fees, and other related administration expenses are charged to profit or loss in the current period at the time such expenses incurred. The long-term equity investment acquired through means other than a business combination shall be initially measured at its cost. Such cost is depended upon the acquired means of long-term equity investments, which is recognized based on the purchase cost actually paid by the Company in cash, the fair value of equity securities issued by the Group, the agreed value of investment contract or agreement, the fair value or original carrying amounts of the non-monetary asset exchange transaction which the asset will be transferred out of the Company, and the fair value of long-term equity investment itself. The costs, taxes and other necessary expenses that are directly attributable to the acquisition of the long-term equity investments are also included in the investment cost. For additional equity investment made in order to obtain significant influence or common control over investee without resulted in control, the relevant cost for long-term equity investment shall be the aggregate of fair value of previously held equity investment and additional investment cost determined according to ―Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments‖. (2) Subsequent measurement and income recognition method Long term equity investment by which the Company has common control (other than that constituting joint operation) or significant influence in investee is measured under equity method. In addition, long term equity investment by which the Company is able to exercise control in investee is measured under cost method in financial statements. ①Long term equity investment measured under cost method Under cost method, long term equity investment is measured at initial investment cost, and cost of long term equity investment shall be adjusted in case of adding or recovering investment. Other than the price actually paid when obtaining investment or cash dividends or distribution declared but not paid in consideration, investment income for the period would be recognized based on the cash dividend or distribution declared by the investee. ② Long-term equity investments accounted for using the equity method Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, no adjustment shall be made to the initial investment cost. Where the initial investment cost is less than the investor’s interest in the fair value of the investee’s identifiable net assets at the acquisition date, the difference shall be charged to profit or loss for the current period, and the cost of the long term equity investment shall be adjusted accordingly. Under the equity method, investment gain and other comprehensive income shall be recognized based on the Group’s share 90 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 of the net profits or losses and other comprehensive income made by the investee, respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss, other comprehensive income and profit distribution of investee, the carrying value of long-term equity investment shall be adjusted and included in the capital reserves. The Group shall recognize its share of the investee’s net profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition, after making appropriate adjustments thereto. In the event of inconformity between the accounting policies and accounting periods of the investee and the Company, the financial statements of the investee shall be adjusted in conformity with the accounting policies and accounting periods of the Company. Investment gain and other comprehensive income shall be recognized accordingly. In respect of the transactions between the Group and its associates and joint ventures in which the assets disposed of or sold are not classified as operation, the share of unrealized gain or loss arising from inter-group transactions shall be eliminated by the portion attributable to the Company. Investment gain shall be recognized accordingly. However, any unrealized loss arising from inter-group transactions between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Group disposed of an asset classified as operation to its joint ventures or associates, which resulted in acquisition of long-term equity investment by the investor without obtaining control, the initial investment cost of additional long-term equity investment shall be the fair value of disposed operation. The difference between initial investment cost and the carrying value of disposed operation will be fully included in profit or loss for the current period. In the event that the Group sold an asset classified as operation to its associates or joint ventures, the difference between the carrying value of consideration received and operation shall be fully included in profit or loss for the current period. In the event that the Company acquired an asset which formed an operation from its associates or joint ventures, relevant transaction shall be accounted for in accordance with ―Accounting Standards for Business Enterprises No. 20 ―Business combination‖. All profit or loss related to the transaction shall be accounted for. The Group’s share of net losses of the investee shall be recognized to the extent that the carrying amount of the long-term equity investment together with any long-term interests that in substance form part of the investor’s net investment in the investee are reduced to zero. If the Group has to assume additional obligations, the estimated obligation assumed shall be provided for and charged to the profit or loss as investment loss for the period. Where the investee is making profits in subsequent periods, the Group shall resume recognizing its share of profits after setting off against the share of unrecognized losses. If there is debit variation in relation to the long-term equity investments in associates and joint venture held prior to first adoption of the Accounting Standards for Business Enterprises by the Group on 1 January 2007, the amounts amortized over the original residual term using the straight-line method is included in the profit or loss for the period. ③Acquisition of minority interests Upon the preparation of the consolidated financial statements, since acquisition of minority interests increased of long-term equity investment which was compared to fair value of identifiable net assets recognized which are measured based on the continuous measurement since the acquisition date (or combination date) of subsidiaries attributable to the Group calculated according to the proportion of newly acquired shares, the difference of which recognized as adjusted capital surplus, capital surplus insufficient to set off impairment and adjusted retained earnings. ④Disposal of long-term equity investments 91 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 In these consolidated financial statements, where the parent company disposes of a portion of the long term equity investments in a subsidiary without a change in control, the difference between disposal cost and disposal of long-term equity investments relative to the net assets of the subsidiary is charged to the shareholders’ equity. As for the disposal of a portion of the long term equity investments in a subsidiary by the parent company leading to lose of control over such subsidiary, it shall be accounted for under the relevant accounting policies described in Note IV.5-(2) Headed ―preparation methods for consolidated financial statements‖. On disposal of a long-term equity investment otherwise, the difference between the carrying amount of the investment and the actual consideration paid is recognized through profit or loss in the current period. In respect of long-term equity investment at equity with the remaining equity interest after disposal also accounted for using equity method, other comprehensive income previously under owners’ equity shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee on pro rata basis at the time of disposal. The owners’ equity recognized for the movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis. In respect of long-term equity investment at cost with the remaining equity interest after disposal is also accounted for at cost, other comprehensive income recognized due to measurement at equity or recognition and measurement for financial instruments prior to obtaining control over investee shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee and carried forward to current gains and losses on pro rata basis. The movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis. In the event of loss of control over investee due to partial disposal of equity investment by the Group, in preparing separate financial statements, the remaining equity interest which can apply common control or impose significant influence over the investee after disposal shall be accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity method since it is obtained and adjustment was made accordingly. For remaining equity interest which cannot apply common control or impose significant influence over the investee after disposal, it shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing control shall be included in profit or loss for the current period. In respect of other comprehensive income recognized using equity method or the recognition and measurement standard of financial instruments before the Group obtained control over the investee, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee at the time when the control over investee is lost. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when the control over investee is lost. Of which, for the remaining equity interest after disposal accounted for using equity method, other comprehensive income and other owners’ equity shall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for using the recognition and measurement standard of financial instruments, other comprehensive income and other owners’ equity shall be fully transferred. In the event of loss of common control or significant influence over investee due to partial disposal of equity investment by the Group, the remaining equity interest after disposal shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing common control or significant influence shall be included in profit or loss for the current period. In respect of other comprehensive income recognized under previous equity investment using equity method, it shall be accounted for in 92 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee at the time when equity method was ceased to be used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when equity method was ceased to be used. The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until the control over the subsidiary is lost. If the said transactions belong to ―transactions in a basket‖, each transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and loss of control. The difference between the disposal consideration for each transaction and the carrying amount of the corresponding long-term equity investment of disposed equity interest before loss of control shall initially recognized as other comprehensive income, and subsequently transferred to profit or loss arising from loss of control for the current period upon loss of control. 14. Investment real estate Investment real estate is the real estate that held by the Company for purpose of obtaining rent or capital appreciation or both purpose received. Investment real estate including rented land use right, land use right held ready for transfer after appreciation and rented buildings etc. The investment real estate shall be measured initially at the cost. The subsequent spending related to the investment real estate, if it is very likely for the related economic interest to flow in and its cost can be reliably measured, shall be included in the cost for the investment real estate. Other subsequent spending shall be included in the current profit or loss when occurring. The Company applies the cost model for subsequent measurement of investment real estate, and depreciates and amortizes it as per the policy consistent to those for the houses and buildings and land use right. For details about the methods for impairment testing of the investment real estate and for accrual of impairment provision, see Note IV 20 ―Impairment of long term assets‖. Where property for own use or inventory transfers to investment property, or investment property transfers to property for own use, carrying value before such transfer shall be taken as book value after such transfer. In the event that an investment property is converted to an owner-occupied property, such property shall become fixed assets or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted to real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an investment property since the date of its conversion. Upon the conversion, investment property which is measured at cost is accounted for with the carrying value prior to conversion, and investment property which is measured at fair value is accounted for with the fair value as of the conversion date. If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be obtained from the disposal, the recognition of it as an investment property shall be terminated. When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related tax and surcharges is recognized in profit or loss for the current period. 15. Fixed assets (1) Recognition criteria of fixed assets Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services, renting or business management with useful lives exceeding one fiscal year. Fixed assets are only recognized when the relevant economic benefits are likely to inflow to the Company and their cost can be measured reliably. Fixed assets are initially measured at cost taking into account predicted disposal expenses. 93 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (2) Depreciation method of fixed assets The initial measurement of a fixed assets shall be made at its cost and consider expected discard expenses factors alternatives. Accrual depreciation of fixed assets shall be made based on straight-line depreciation within the service life since the second month, when the fixed assets reached its expected condition for use. Service life, estimated net residual value and annual depreciation rate for vary fixed assets are as: Annual depreciation rate Type Depreciation term (year) Residual rate (%) (%) House and buildings 35 3 2.77 Machinery equipment 12 3 8.08 Transportation equipment 7 3 13.86 Electronic equipment 7 3 13.86 Office and other equipment 7 3 13.86 Decoration charge for 10 0 10.00 self-owned houses Estimated net residual value is the amount obtained from disposal of such fixed assets after estimated disposal expense deducted, on assumption basis of the fixed assets has full estimated service life and in an anticipating condition of service life terminated. (3) Impairment test method and accrual of depreciation reserves for fixed asset Impairment test method and accrual of depreciation reserves for fixed asset please found in ―20. Impairment of non-current and non-financial assets‖ in Note IV. (4)Recognition and accounting method of fixed assets acquired under finance leases 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 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. (5) Others As for the subsequent expenditure related to fixed assets, if the economic benefits related to the fixed assets is probable to flow into the Company and its cost could be measured reliably, then the expenditure shall be included in costs of the fixed assets, and the carrying value of the replaced portion shall be derecognized. Other subsequent expenditures other than this shall be included in profits or losses of the period when occurred. 94 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Fixed assets are derecognised when there is no economic benefit arising from disposal or expected use or disposal of fixed assets. The disposal income from disposal, transfer, dumping or damage of fixed assets less its carrying value and related tax expenses shall be recorded in profits or losses of the period. The Company, at least, re-reviews the use of life, projected net residual value and depreciation method of fixed assets at the end of year. For any change of the above factor, it shall be dealt as change of accounting estimation. 16. Construction-in-progress Cost of construction-in-progress should recognized by the actual construction costs, including vary construction costs during the period of construction, the capitalized borrowing costs prior to the expected conditions for use and other relevant expenses etc. The construction-in-progress should carry forward as fixed assets after reached the expected conditions for use. Impairment test method and impairment provision method for the construction-in-progress found in ―20.impairment of non-current/non-financial assets‖ in Note IV. 17. Borrowing costs Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. For borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset, when expenditures for the asset and borrowing costs are being incurred, activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced, such borrowing costs shall be capitalized as part of the cost of that asset; and capitalization shall discontinue when the qualifying asset is ready for its intended use or sale. Other borrowing costs shall be recognized as expense in the period in which they are incurred. Where funds are borrowed for a specific purpose, the amount of interest to be capitalized shall be the actual interest expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before being used into banks or any investment income on the temporary investment of those funds. Where funds are borrowed for general purpose, the Group shall determine the amount of interest to be capitalized on such borrowings by applying a capitalization rate to the weighted average of the excess amounts of cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings. The capitalization rate shall be the weighted average of the interest rates applicable to the general-purpose borrowings. During the capitalization period, exchange differences related to the principal and interest on a specific purpose borrowing denominated in foreign currency shall be capitalized as part of the cost of the qualifying asset. Exchange differences related to general-purpose borrowings denominated in foreign currency shall be included in profit or loss for the current period. 95 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Qualifying assets are assets (fixed assets, investment property, inventories, etc) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale. Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until the acquisition, construction or production of the qualifying asset is resumed. 18. Intangible assets (1) Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Group. An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be recognized as cost of the intangible asset only if it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably. Other expenditures on an item asset shall be charged to profit or loss when incurred. Land use right acquired shall normally be recognized as an intangible asset. Self-constructed buildings (e.g. plants), related land use right and the buildings shall be separately accounted for as an intangible asset and fixed asset. For buildings and structures purchased, the purchase consideration shall be allocated among the land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation, the consideration shall be recognized in full as fixed assets. An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any accumulated impairment loss provision and amortized using the straight-line method over its useful life when the asset is available for use. Intangible assets with indefinite life are not amortized. The Group shall review the useful life of intangible asset with an infinite useful life and the amortization method applied at period-end. A change in the useful life or amortization method used shall be accounted for as a change in accounting estimate. For an intangible asset with an indefinite useful life, the Group shall review the useful life of the asset. If there is evidence indicating that the period during which the intangible assets brings in economic benefits to the Group can be predicted, the Group shall estimate the useful life of that asset and make amortization under the amortization policies applicable to intangible assets with finite useful life. (2) Research and development expenditures Research and development expenditure of the Group was divided into expenses incurred during the research phase and expenses incurred during the development phase. Expenses incurred during the research phase are recognized as profit or loss in the current period. Expenses incurred during the development phase that satisfy the following conditions are recognized as intangible assets, while those that do not satisfy the following conditions are accounted for in the profit or loss for the current period: 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; 96 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 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. If the expenses incurred during the research phase and the development phase cannot be distinguished separately, all development expenses incurred are accounted for in the profit or loss for the current period. (3) Intangible assets impairment test method and their impairment provision The method for impairment test and impairment provision of intangible assets is detailed in Note IV. 20 ―Impairment of non-current non-monetary financial asset‖. 19. Long-term prepaid expenses Long-term prepaid expenses refer to the general expenses that occurred but shall be amortized over one year in reporting period and later period. Long-term prepaid expenses shall amortized by straight-line method in expected benefit period. 20. Long-term assets impairment The Group will judge if there is any indication of impairment as at the balance sheet date in respect of long-term investments such as fixed assets, construction in progress, intangible assets with a finite useful life, investment properties measured at cost, and long-term equity investments in subsidiaries, joint controlled entities and associates. If there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be tested for impairment annually, regardless of whether there is any indication of impairment. If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the impairment provision will be made according to the difference and recognized as an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determined based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based on the best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale. The present value of the future cash flows expected to be derived from the asset over the course of continued use and final disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for assets impairment shall be made and recognized for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the smallest group of assets capable of generating cash flows independently. 97 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements shall be allocated to the asset groups or group of assets benefiting from synergy of business combination. If the recoverable amount is less than the carrying amount, the Group shall recognize an impairment loss. The amount of impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of asset groups, pro rata on the basis of the carrying amount of each asset. An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect of the restorable value. 21. Staff remuneration Staff remuneration includes short term staff remuneration, post office benefit, dismissal benefit, among which: Short term staff remuneration mainly consists of salary, bonus, allowance and subsidy, staff benefits, medical insurance, maternity insurance, work related injury insurance, housing funds, labor unit fee and education fee, non-monetary benefits, etc. short term staff remuneration actually happened during the accounting period in which staff provides services to the Company is recognized as liability, and shall be included in current gains and losses or relevant asset cost. Non-monetary benefits are measured at fair value. Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Defined withdraw plan mainly includes basic pension insurance, unemployment insurance and annuity, and the contribution payable is included in relevant asset cost or current gains and losses when occurs. Our defined benefit plan mainly relates to retirement benefits. The Company engaged independent actuary to make estimation on demographic variables and financial variables under predicted accumulative benefits unit method with unbiased and consistent actuary assumption, measure liabilities arising from defined benefit plan and determine vesting periods of various liabilities. On balance sheet date, the Company presented liabilities arising from defined benefit plan at present value, and recorded service costs as profit or loss for the period. 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. However, if the compensation for termination of employment is not expected to be fully paid within 12 months from the reporting period, it shall be accounted for other long-term staff remuneration. Employee internal retirement plans is to use the same principle to deal with termination benefits. The group will pay staff salary, social insurance and others from the date they stop providing service to their retire-day. This amount shall be included in the current profits and losses (termination benefits), only when it meets the projected liabilities confirmation conditions. 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. 98 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 22. Accrual liability The obligation pertinent to contingencies shall be recognized as accrual liability when the following conditions are satisfied simultaneously: (1) That obligation is a current obligation of the Group; (2) It is likely to cause any economic benefit to flow out of the enterprise as a result of performance of the obligation; and (3) The amount of the obligation can be measured in a reliable way. At the balance sheet date, considering matters related to risks, uncertainties and time value of money and other factors, the expected liabilities are measured in accordance with the best estimate of the necessary expenses for the performance of the current obligation. If the expenditure required paying all or part of the expected liabilities was compensated by the third party, and the amount of compensation basically can be sure when received, it could be recognized as a separate asset. But the amount of compensation confirmed couldn’t be more than the book value of the estimated debts. (1)Contract in loss Contract in loss is identified when the inevitable cost for performance of the contractual obligation exceeds the inflow of expected economic benefits. When a contract in loss is identified and the obligations thereunder are qualified by the aforesaid recognition criterion for contingent liability, the difference of estimated loss under contract over the recognized impairment loss (if any) of the subject matter of the contract is recognized as projected liability. (2)Restructuring obligations For detailed, official and publicly announced restructuring plan, the direct expenses attributable to the restructuring are recognized as contingent liabilities, provided that the aforesaid recognition criterion for contingent liability is met. In respect of restructuring obligations which involve disposal of partial business, such obligations may be recognized in relation to restructuring only when the Company undertakes to dispose partial business, namely its execution of binding disposal agreement. 23. Income (1) Income of commodities sales When the transfer of significant risks and rewards of ownership of the goods to the buyer is done, when the right of management usually associated with ownership is not reserved, when we didn’t effectively control the goods sold, the amount of revenue can be measured reliably. The associated economic benefits are likely to flow into the enterprise. And the related costs incurred or to be incurred can be measured in a reliable way. Thus we realize sales income. The company engages in sales of cars, confirming income after the vehicle delivery to customers according to agreement, payment received or the rights to receive payment. Revenue from sale of jewelry of the Company is classified into retail revenue and wholesale revenue based on way of sales. Retail revenue is recognized upon the commodity is delivered to consumers with receipt of goods payment. Wholesale revenue is recognised when the commodity is delivered to customers, signed by the customers for receipt of the goods and the Company receives goods payment or the voucher to ask for the goods payment. (2) Income from providing labor On condition that provision of services trade results can be reliably estimated, we confirm income from providing labor on 99 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 the balance sheet date according to the percentage of completion. The Company calculates the completion schedule through the ratio of the costs incurred taking up of the estimated total cost. The results of labor transaction provided can be estimated reliably only when simultaneously: ①the amount of revenue can be measured reliably; ②the economic interests are likely to flow into the enterprise; ③the degree of completion can be reliably determined; ④cost occurred and to be occurred can be reliably measured. If the service transaction results couldn’t be able to reliably estimated, labor income will be calculated according to according to amount of labor costs which has occurred and is expected to be t compensated, and labor costs occurred would be included as expenses of the current period. Labor cost occurred which cannot be compensated will not be included as revenue. The Company engages in car repair services, confirming income after the car repair service is delivered to customers according to agreement, payment received or the rights to receive payment. (3) Use fee income According to the relevant contract or agreement, revenue is recognized in accordance with the accrual basis. (4) Interest income Interest income is confirmed in accordance with time and actual interest others make use of the monetary capital of the group 24. Government subsidy A government subsidy means the monetary or non-monetary assets obtained free by the Group from the government, but excluding the capital invested by the government as the owner of the enterprise. Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income. Government grant obtained by the Company for the purpose of constructing or otherwise forming long term assets is recognized as government grant related to assets, and other government grants are recognized as those related to income. If government document fails to identify specific grantee, government grants will be categorized into government grants related to income or assets respectively under the below method: (1) in case government document indicates the specific project applicable to the grant, such categorization shall be made based on the respective proportion of expenditures to form assets or be recorded as expenses in budget for the specific project. The allocation proportion will be reviewed on each balance sheet date, and is subject to necessary alteration; (2) in case government document only indicate general purpose of such grant instead of specific project, the grant shall be viewed as government grant related to income. The government subsidy with monetary assets concerned should be measured by the actual received or receivable amount while non-monetary assets government subsidy measured by fair value; if without realizable fair value obtained, measured by nominal amount instead. The government subsidy with nominal amount measured should reckon into current gains and losses. Government grants are generally recognized when received and measured at the amount actually received, but are measured at the amount likely to be received when there is conclusive evidence at the end of the accounting period that the Group will meet related requirements of such grants and will be able to receive the grants. The government grants so measured should also satisfy the following conditions: (1) the amount of the grants be confirmed with competent authorities in written form or reasonably deduced from related requirements under financial fund management measures officially released without material uncertainties; (2) the grants be given based on financial support projects and fund management policies officially published 100 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 and voluntarily disclosed by local financial authorities in accordance with the requirements under disclosure of government information, where such policies should be open to any company satisfying conditions required and not specifically for certain companies; (3) the date of payment be specified in related documents and the payment thereof be covered by corresponding budget to ensure such grants will be paid on time as specified; and (4)other relevant conditions which shall be met based on the specific situations of the Company and the subject matter. Asset-related government subsidies are recognized as deferred income and accounted into the current gains/losses equally within service life for the relevant assets. The government subsidies pertinent to incomes, which are used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and should reckoned into current gains/losses in period of when relevant expenses are recognized; if used for compensating the occurred relevant expenses and losses, reckoned into current gains/losses directly. Government subsidies related to assets and revenue is included at the same time, which are classified into different sections and respectively for accounting treatment; for the other indistinguishable sections, they are all classified into the government subsidies related to revenue as a whole. The government subsidies related to daily activities of the company is classified into other revenue according to the economic business substance; the government subsidies not related to daily activities, is classified into nonbusiness revenue. As for the recognized government subsidy needs to return, if there has relevant balance of deferred incomes, relevant book balance of the deferred income should be written down, and the exceeded part should included in the current gains/losses; if there has no relevant balance of deferred incomes, reckoned into current gains/losses directly. 25. Deferred income tax assets and deferred income tax liabilities (1) The current income tax At the balance sheet date, for the current income tax liabilities (or assets) arising during the current and previous periods, current income tax should be calculated in line with expected payable (or return) income tax amount in accordance with the provisions of the tax law. Calculation of the current income tax expenses on the basis of the computation of taxable income is adjusted to the pre-tax accounting profit according to the relevant provisions of the tax law. (2) The deferred income tax assets and deferred income tax liabilities As for the balance between the book value of some assets and liabilities and the tax base, and those temporary difference arisen from balance which is not recognized as an asset or liability but whose difference between the book value and tax base could be calculable in accordance with the provisions of the tax law, we adopt debt method of balance sheet to recognize deferred income tax assets and deferred income tax liabilities. As for taxable temporary differences which is arisen from initial recognition of goodwill, and those related to initial recognition of assets or liabilities arisen during trade with neither merging nor those which won’t affect the accounting profit and taxable income (or deductible loss), related deferred tax liabilities will not be confirmed. In addition, as for temporary differences taxable related to subsidiary companies, associated enterprises and joint venture investment, if the group is able to control the reversal time of the temporary difference, and the temporary differences in the foreseeable future probably will not be reversed, we also could not confirm the deferred income tax liabilities. In addition to the above condition, the group could confirm all the other deferred income tax liabilities arising from taxable temporary differences. As for deductible temporary differences related to initial reorganization of asset or liability arising from trades with neither merge nor those which won’t affect the accounting profit and taxable income (or deductible loss), we’ll not recognize relevant deferred income tax assets. In addition, as for deductible temporary differences related to subsidiary companies, 101 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 associated enterprises and joint venture investment, if the temporary differences in the foreseeable future probably will not be reversed, we also could not confirm the deferred income tax assets. In addition to the above condition, the group could confirm all the other deferred income tax assets arising from deductible temporary differences within benchmark of income of taxable deductible temporary differences. As for deductible loss or tax deduction which to be reversed in the following years, we confirm the corresponding deferred income tax assets within benchmark of future taxable income to be likely deducted for deductible loss and tax deduction. On the balance sheet date, the deferred income tax assets and liabilities are measured according to the provisions of the tax law, in accordance with the applicable tax rate during related assets to be expected recovery or related liabilities to be paid off. At the balance sheet date, we recheck the book value of deferred income tax assets. If in future it is unlikely to obtain adequate taxable income to offset the benefit of the deferred income tax asset, then we write down the book value of deferred income tax assets. When it is probable to obtain adequate taxable income, amount written down shall be reversed. (3) The income tax expenses The income tax expense included the current income tax and deferred income tax. In addition to trades and current income tax and deferred income tax related to projects which are included in other comprehensive income or directly included in owners’ interest, as well as the book value whose goodwill arranged in line with deferred income tax arising from enterprises combination, all the other current income tax and deferred income tax expenses or income will be included in current profit and loss. (4) Offset of income tax When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis. When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 26. Leasing Finance lease transfers substantially all the risks and rewards related to the ownership of an asset. Its ownership may eventually transfer, also may not. While all the other leases are classified as operating leases. (1) The Company keeps record of lease business as lessee Rental expense of operating lease is included in the relevant asset costs or current profits and losses through the straight-line method during every period. Initial direct costs shall be included in profit or loss for the current period. Or rent to the actual shall be included in the current profits and losses. (2) The Company keeps record of lease business as lessor Rental income of operating lease is included in the relevant asset costs or current profits and losses through the straight-line method during every period. The larger amount of initial direct costs shall be capitalized when it is created, and shall be included in the current profits and losses during the lease period in accordance with same basic as the confirmed amount by stages. The other small amount of initial direct costs shall be included in the current profits and losses when it’s created. Or rent to the actual shall be included in the current profits and losses. (3) Financing lease business with the Group recorded as lessee On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date of the lease. Minimum lease payment shall be the 102 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 entry value of long-term accounts payable, with difference recognized as unrecognized financing expenses. In addition, initial direct costs attributable to leased items incurred during the process of lease negotiation and signing of lease agreement shall be included in the value of leased assets. The balance of minimum lease payment after deducting unrecognized financing expenses shall be accounted for long-term liability and long-term liability due within one year. Unrecognized financing expenses shall be recognized as financing expenses for the current period using effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it incurred. (4) Financing lease business with the Group recorded as lessor On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum lease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall be recorded. The aggregate of minimum lease receivable, initial direct costs and unsecured balance and the different between their present value shall be recognized as unrealized financing income. The balance of lease receivable after deducting unrecognized financing income shall be accounted for long-term debt and long-term debt due within one year. Unrecognized financing income shall be recognized as financing income for the current period using effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it incurred. 27. Other significant accounting policies and accounting estimation (1) Discontinued operation 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 IV 12 ―classified as assets or assets group held for sale‖. 28. Changes of major accounting policies and accounting estimation (1) Changes of accounting policy No accounting policy changed in reporting period. (2) Changes of accounting estimate No accounting estimate changed in reporting period. 29. Major accounting judgment and estimate The Company need make judgment, estimation and hypothesis to book value of those unaccountable items in sheet due to inner uncertainties of operating activities in the process of using accounting policies. These judgments, estimates and assumptions are made in line with the Company's past management experience, and in consideration of other relevant factors. These judgments, estimates and assumptions will affect disclosure of amount of income, expenses, assets and liabilities as well as contingent liability on the balance sheet day. However, the uncertainties in these estimates may cause significant adjustments to book value of those asset or liability affected in the future. The Company rechecks regularly the judgment, estimation and hypothesis based on sustainable management. As for a change affecting only the current period, the amount shall be confirmed only in the current period; for those not only affecting the current but the future, the amount shall be confirmed in the current and future period. 103 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 At the balance sheet date, the Company needs to determine amount of items of the financial statements, estimation and hypothesis shown as the following important areas: (1)Classification of leases The Company classifies its leases as operating lease and financing lease in accordance with ―Accounting Standard for Business Enterprises No. 21 - Leases‖. When classifying leases, the management needs to analyse and judge whether all risks and returns relating to the ownership of leased out assets have transferred to the leasee, or whether the Company has obliged to all risks and returns relating to the ownership of leased assets. (2) Provision for bad debts The Company accounts for the allowance for bad debt losses according to the receivable accounting policies. Accounts receivable is the valuation of accounts receivable can be recovered based on. Identification of devaluation of accounts receivable needs judgments and estimates of management level. Difference between actual results and the original estimates impact reversal of the book value accounts receivable and accounts receivable for provision for bad debts during the estimation was changing. (3) Provision of inventory devaluation According to the inventory accounting policies, the Company shall accrue inventory devaluation provision as for inventory whose cost is higher than net realizable and those obsolete or unmarketable in accordance with the lower one in cost and net realizable value. Write-down of inventories to net realizable value is to assess the salability and net amount of prospect realization. Identification of inventory impairment requires management’s judgment and estimation after their obtaining conclusive evidence and consideration of the purpose for holding inventories, events effects occurring after balance sheet date. The difference between actual results and original estimates will affect the reversal of book value and devaluation provision of inventories during the estimation was changing. (4) Financial assets available for sale In respect of impairment of available-for-sale financial assets, whether impairment loss shall be recognized in income statement significantly depends on the judgments and assumptions of the management. While making judgments and assumptions, the Company shall assess the excess of cost of the investee’s identifiable net assets attributable to the investment over fair value and the duration, and financial condition and short term business outlook of the investee, including industry situation, technical reform, credit rating, default rate and risks from counterparties. (5) Long-term provision for asset impairment The Company has checked if there is any sign that the long-term asset except for the financial assets may have the impairment at the balance sheet date. For the intangible assets with uncertain service life, in addition to the annual impairment test, make the impairment test when it has signs of impairment. Proceed with the impairment test when there is any sign indicates that the book amounts of other long-term assets except for the financial assets are uncollectible When the book value of the asset or group of assets exceeds its recoverable amount, i.e. the higher one between the net amount after subtracting the disposal costs from the fair value and the present value of the future cash flow, it indicates impairment occurs. The net amount after subtracting the disposal costs from the fair value is determined by subtracting the incremental costs 104 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 directly attributable to this disposal of assets from the sales agreement price similar to assets in fair dealing or the observable market price. When predicting the present value of future cash flows, it is required to make significant judgments to the output, selling price and related operating expenses of this asset or group of assets and the discount rate used for calculating the present value. The Company shall adopt all available related data when predicting the recoverable amounts, including making predictions about the relevant output, selling price and related operating expenses based on reasonable and supportable assumptions. (6) Depreciation and amortization For the investment real estate, fixed assets and intangible assets, the Company takes a straight-line depreciation and amortization within service life in consideration of its residual value. The Company regularly review service life, thus determine the depreciation and amortization amount in each reporting period. Life is determined based on past experience of similar assets and technology update is expected. If the previous estimate changes, we will adjust depreciation and amortization expense in future periods. (7) The deferred income tax assets Within the limits that it is very likely to have sufficient taxable profits to offset losses, the Company confirms deferred income tax assets using all unused tax losses. This requires the management to use a lot of judgment to estimate the time and amount of future taxable profits, combined with the tax planning strategy, thus confirm the amount of deferred income tax assets. (8) The income tax During ordinary course of business, uncertainty exists in final tax treatment and calculation of a part of trading. Whether part of the project is in pre tax expenses requires approval of tax authorities. If the final confirmation of these tax matters differs from an initial estimate, the difference will affect current income tax and deferred income tax during the final period. (9) Accrual liabilities The Company estimates and accrues corresponding provision for product quality guarantee, expected contract loss, penalty for late delivery and others in accordance with terms of the contract, existing knowledge and experience. When such contingencies has formed a present obligation, and the performance of the current obligation is likely to lead to the outflow of economic benefits of the Company, the Company recognizes the best estimate of required expense when performing current obligation as accrual liability. The recognition and measurement of debt is largely dependent on the judgment of management. In the process of judgment the Company needs to assess the contingent risks, uncertainties and money and the time value and other factors. V. Taxation 1. Main tax and tax rate Type Tax rate The value-added tax for rental and water utilities income is levied at 5% and 3% respectively; the output tax for jewelry retail and wholesale, sale of auto and VAT components, auto repair and maintenance, electricity utilities and property management fee are levied at 17% (adjusted to 16% since 1 May 2018) and 6%. Value-added tax is computed on the difference after deduction of the deductible 105 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Type Tax rate input tax for the period. Consumption duty 5% of the sales revenue of jewelry taxable consumer goods City maintaining & construction Calculated and paid on 7% of the turnover tax actually paid tax Education surcharge Calculated and paid on 3% of the turnover tax actually paid Local education surcharge Calculated and paid on 2% of the turnover tax actually paid Corporation income tax Calculated and paid on 25% of the taxable income amount and tax by the levy rate VI. Enterprise consolidation and consolidated financial statements Unless otherwise stated, the follow notes (including the items of financial statement of the Company), year-begin refers to 1st January 2018 while period-end refers to 30th June 2018. 1. Monetary fund Item Period-end balance Balance at year-begin Stock cash 109,592.35 119,576.83 Bank deposits: 277,446,864.12 161,673,641.73 Total 277,556,456.47 161,793,218.56 The Company has no monetary fund with use of right restricted up to 30 June 2018. At end of last year, the restricted use of right amount as 20,000,000.00 Yuan in monetary fund, which refers to the bank structured deposits purchased by the Company with 6-month terms 2. Accounts receivable (1) Accounts receivable by category Period-end balance Category Book balance Bad debt reserve Book value Amount Ratio (%) Amount Accrual ratio (%) Account receivable with single significant amount and withdrawal bad 97,387,917.64 74.45 23,251,269.45 23.87 74,136,648.19 debt provision separately Receivables with bad debt provision 7,134,308.81 5.46 7,134,308.81 accrual by credit portfolio Accounts with single significant amount and bad debts provision 26,279,070.64 20.09 26,279,070.64 100.00 accrued individually 106 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Period-end balance Category Book balance Bad debt reserve Book value Amount Ratio (%) Amount Accrual ratio (%) Total 130,801,297.09 100.00 49,530,340.09 37.87 81,270,957.00 (Cont.) Balance at year-begin Book balance Bad debt reserve Category Accrual ratio Book value Amount Ratio (%) Amount (%) Account receivable with single significant amount and withdrawal bad 65,959,038.60 70.59 22,936,980.76 34.77 43,022,057.84 debt provision separately Receivables with bad debt provision 1,193,178.84 1.28 1,193,178.84 accrual by credit portfolio Accounts with single significant amount and bad debts provision 26,282,070.64 28.13 26,282,070.64 100.00 accrued individually Total 93,434,288.08 100.00 49,219,051.40 52.68 44,215,236.68 ① Account receivable with single significant amount and withdrawal bad debt provision separately at year end Period-end balance Account receivable(units) Account Bad debt Accrual Accrual reasons receivable reserve ratio Shenzhen Jinlu Industry and Trade Co., 9,846,607.00 9,846,607.00 100.00 Has greater uncertainty in Ltd. collection Guangdong Zhanjiang Sanxing Auto 4,060,329.44 4,060,329.44 100.00 Not expected to collected due to Service Co., Ltd. long account age 2,370,760.40 2,370,760.40 100.00 Not expected to collected due to Wang Changlong long account age Huizhou Jiandacheng Daoqiao 2,021,657.70 2,021,657.70 100.00 Less likely to collection Engineering Company 107 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Period-end balance Account receivable(units) Account Bad debt Accrual Accrual reasons receivable reserve ratio 1,191,059.98 1,191,059.98 100.00 Not expected to collected due to Jiangling Automobile Factory long account age 1,150,000.00 1,150,000.00 100.00 Not expected to collected due to Yangjiang Auto Trade Co., Ltd. long account age 1,862,000.00 1,862,000.00 100.00 Not expected to collected due to Guangdong Materials Group Corp long account age Sales of jewely on credit and in 74,885,503.12 748,854.93 1.00 Deng Debing etc. the credit terms Total 97,387,917.64 23,251,269.45 23.87 ② Account receivable provided for bad debt reserve under aging analysis method in the groups Period-end balance A/C age Account receivable Bad debt reserve Accrual ratio (%) Within 1 year 7,134,308.81 Total 7,134,308.81 (2) Bad debt provision accrual collected or switch back Amount of 748,854.93 Yuan accrual for bad debt provision in the period, bad debt provision has 434,566.24 Yuan switch-back and bad debt provision has 3,000.00 Yuan declined for change of the consolidation scope (3) Top 5 account receivables at ending balance by arrears party Proportion in total Relationship with Name of the company Amount Terms account the Company receivables (%) Shenzhen Jinlu Industry and Trade Co., Ltd. Non-related party 9,846,607.00 Over 3 years 7.53 Guangdong Zhanjiang Sanxing Auto Service Co., Ltd. Non-related party 4,060,329.44 Over 3 years 3.10 Deng Debing Non-related party 4,695,771.50 within 1 year 3.59 108 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Wei Tingyun Non-related party 3,174,350.00 within 1 year 2.43 Xiao Yueliang Non-related party 3,165,466.66 within 1 year 2.42 Total 24,942,524.60 19.07 (4) Account receivable derecognition due to financial assets transfer The Company has no account receivable derecognition due to financial assets transfer in the Period. (5) Assets and liabilities resulted by account receivable transfer and continues involvement The Company has no assets and liabilities resulted by account receivable transfer and continues involvement in the Period. 3. Advance payment (1) Advance payment by age Period-end balance Balance at year-begin A/C age Amount Ratio (%) Amount Ratio (%) Within 1 year 4,909,812.67 98.15 3,717,452.76 99.46 1-2 years 72,471.73 1.45 2-3 years 20,253.94 0.54 Over 3 years 20,253.94 0.40 Total 5,002,538.34 100.00 3,737,706.70 100.00 (2) Top 5 advance payment at ending balance by prepayment object Proportion in total Relationship with Name of the company Amount Terms account the Company receivables (%) FAW TOYOTA Motor Sales Co., Ltd. Non-related party 4,278,869.08 within 1 year 85.53 Hefei Jinshi Investment Co., Ltd. Non-related party 399,542.08 within 1 year 7.99 Xi'an Xidian Asset Management Co., Ltd. Non-related party 117,736.22 within 1 year 2.35 Chow Tai Fook Jewellery (Shenzhen) Co., Non-related party within 1 year 1.78 Ltd. 88,993.79 Shenzhen Tellus Jilin Investment Co., Ltd. Non-related party 72,471.73 within 1 year 1.45 Total 4,957,612.90 99.10 4. Interest receivable (1) Interest receivable by category 109 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Period-end balance Balance at year-begin Structured deposit 221,232.88 Total 221,232.88 5. Dividends receivable (1) Dividends receivable Item (or invested unit) Period-end balance Balance at year-begin Shenzhen Zung Fu Tellus Auto Service Co., 52,500,000.00 Ltd. China Pudong Development Machinery 547,184.35 Industry Co., Ltd. Shenzhen SDG Tellus Property Management 232,683.74 232,683.74 Co., Ltd. Total 52,732,683.74 779,868.09 6. Other accounts receivable (1) Other accounts receivable by category Period-end balance Category Book balance Bad debt reserve Book value Amount Ratio (%) Amount Accrual ratio (%) Other account receivable with single significant amount and withdrawal bad 39,195,957.36 50.13 39,195,957.36 100.00 debt provision separately Other receivables with bad debt 28,321,626.31 36.22 3,497,737.78 12.35 24,823,888.53 provision accrual by credit portfolio Other accounts with single significant amount and bad debts provision accrued 10,669,248.95 13.65 10,669,248.95 100.00 individually Total 78,186,832.62 100.00 53,362,944.09 68.25 24,823,888.53 (Cont.) Balance at year-begin Category Book balance Bad debt reserve Book value 110 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Amount Ratio (%) Amount Accrual ratio (%) Other account receivable with single significant amount and withdrawal bad 39,192,975.09 57.37 39,192,975.09 100.00 debt provision separately Other receivables with bad debt 18,393,888.57 26.92 3,574,724.46 19.43 14,819,164.11 provision accrual by credit portfolio Other accounts with single significant amount and bad debts provision accrued 10,735,208.95 15.71 10,735,208.95 100.00 individually Total 68,322,072.61 100.00 53,502,908.50 78.31 14,819,164.11 ① Other receivable with single significant amount and withdrawal bad debt provision separately at end of period Period-end balance Account receivable(units) Account Accru Bad debt reserve Accrual reasons receivable al ratio The Company has revoked, and Zhongqi South China Auto Sales Company 9,832,956.37 9,832,956.37 100.00 estimated of uncollectible amount South Industry & TRADE Shenzhen The Company has revoked, and 7,359,060.75 7,359,060.75 100.00 Industrial Company estimated of uncollectible amount Win a lawsuit, no executable assets Shenzhen Zhonghao (Group) Co., Ltd. 5,000,000.00 5,000,000.00 100.00 from adversary Not expected to collected due to Gold Beili Electrical Appliances Company 2,706,983.51 2,706,983.51 100.00 long account age The Company has revoked, and Shenzhen Xinxingtai Trade Co., Ltd. 2,418,512.90 2,418,512.90 100.00 estimated of uncollectible amount Shenzhen Petrochemical Group 1,907,138.45 1,907,138.45 100.00 Less likely to collection Shenzhen SDG Huatong Industrial Package The Company has revoked, and 1,212,373.79 1,212,373.79 100.00 Co., Ltd. estimated of uncollectible amount The Company has revoked, and Shenzhen Jinhe Standard Mould Co., ltd. 1,023,560.00 1,023,560.00 100.00 estimated of uncollectible amount 111 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Heyuan Dongfeng Technology Service The company has revoked, and 930,000.00 930,000.00 100.00 station estimated of uncollectible amount Not expected to collected due to Shenzhen Nuoer Electrical Co., Ltd. 906,024.60 906,024.60 100.00 long account age Shenzhen South Great Wall Investment Has greater uncertainty in collection 819,460.91 819,460.91 100.00 Holding Co., Ltd. The Company has revoked, and Shenzhen Xiandao New Materials Company 660,790.09 660,790.09 100.00 estimated of uncollectible amount Shenzhen Baodong Property Development Not expected to collected due to 609,773.00 609,773.00 100.00 Company long account age Not expected to collected due to Others 3,809,322.99 3,809,322.99 100.00 long account age Total 39,195,957.36 39,195,957.36 100.00 ② In combination, other accounts receivable whose bad debts provision was accrued by age analysis Period-end balance A/C age Other accounts receivable Bad debt reserve Accrual ratio (%) Within 1 year 21,070,698.07 1-2 years 222,017.41 11,100.88 5.00 2-3 years 92,728.40 18,545.68 20.00 Over 3 years 6,936,182.43 3,468,091.22 50.00 Total 28,321,626.31 3,497,737.78 12.35 (2) Bad debt provision accrual collected or switch back Amount of 69,500.70 Yuan are accrual for bad debt provision in the period, the bad debt provision has 209,465.11 Yuan decreased for change of the consolidation scope (3) Classification of other receivables by nature Nature Closing book balance Book balance at year-begin Intercourse accounts of related units 6,432,951.98 5,043,179.46 receivable Other intercourse 71,753,880.64 63,278,893.15 112 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Total 78,186,832.62 68,322,072.61 (4) Top 5 other receivables at ending balance by arrears party Ratio in total ending Period-end Period-end Name of the company Nature A/C age balance of other balance of bad balance receivables(%) debt reserves Zhongqi South China Auto Sales Intercourse Over 3 9,832,956.37 9,832,956.37 12.58 Company funds years Chow Tai Fook Jewellery (Shenzhen) Intercourse within 1 8,830,754.82 11.29 Co., Ltd. funds year South Industry & TRADE Shenzhen Intercourse Over 3 7,359,060.75 7,359,060.75 9.41 Industrial Company funds years Intercourse Over 3 5,000,000.00 6.39 Shenzhen Zhonghao (Group) Co., Ltd. funds years 5,000,000.00 Shenzhen Kaifeng Special Vehicles Intercourse Over 3 4,413,728.50 5.65 Industry Co., Ltd. funds years 2,206,864.25 Total 35,436,500.44 45.32 24,398,881.37 7. Inventory (1) Inventory classification Period-end balance Item Book balance Depreciation reserve Book value Raw materials 15,208,749.62 14,771,812.17 436,937.45 Low value consumable Stock products 19,527,394.38 14,105,626.50 5,421,767.88 Total 34,736,144.00 28,877,438.67 5,858,705.33 (Cont.) Balance at year-begin Item Book balance Depreciation reserve Book value Raw materials 15,289,604.77 14,771,812.17 517,792.60 Low value consumable 113 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Stock products 26,225,810.26 14,097,375.64 12,128,434.62 Total 41,515,415.03 28,869,187.81 12,646,227.22 (2) Inventory depreciation reserve Increase in the Decrease in the current period current period Item Balance at year-begin Period-end balance Switch back or Accrual Other Other write-off Raw materials 14,771,812.17 14,771,812.17 Stock products 14,097,375.64 8,250.86 14,105,626.50 Total 28,869,187.81 8,250.86 28,877,438.67 (3) Accrual basis for inventory depreciation reserve and reason of switch back or write-off in the period Reasons of switch-back Accrual basis for inventory Reasons of write-off for inventory Item for inventory falling impairment provision falling price reserves price reserves Its net realizable value is lower Stock products than cost of inventory 8. Other current assets Item Period-end balance Balance at year-begin Input tax ready for deducted 892,053.76 1,082,250.70 Financial products 121,130,000.00 218,500,000.00 Total 122,022,053.76 219,582,250.70 9. Financial assets available for sale (1) Particular about financial assets available for sale Period-end balance Balance at year-begin Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Equity instrument 18,302,857.20 8,126,240.00 10,176,617.20 18,302,857.20 8,126,240.00 10,176,617.20 available for sale Including: measured by 114 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 fair value Measured by cost 18,302,857.20 8,126,240.00 10,176,617.20 18,302,857.20 8,126,240.00 10,176,617.20 Total 18,302,857.20 8,126,240.00 10,176,617.20 18,302,857.20 8,126,240.00 10,176,617.20 115 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (2) Financial assets available for sale measured by cost at period-end Book balance Depreciation reserves Ratio of Increas Increas share-holdin Decreas The invested entity ed in Decreased ed in g in At year-begin At period-end At year-begin ed in At period-end the in the year the invested the year year year entity (%) China Pudong Development Machinery 10,176,617.20 10,176,617.20 4.94 Industry Co., Ltd. Shenzhen Jingwei Industrial Co., Ltd. 4,000,000.00 4,000,000.00 4,000,000.00 4,000,000.00 12.50 Shenzhen (Masco) Co., Ltd. 825,000.00 825,000.00 825,000.00 825,000.00 7.00 Wuhan Weite Hotel 640,000.00 640,000.00 640,000.00 640,000.00 Shenzhen Petrochemical Group 100000 sha 700,000.00 700,000.00 700,000.00 700,000.00 res Shenzhen Shuntian Electro car Technology 600,000.00 600,000.00 600,000.00 600,000.00 11.10 Development Co., Ltd. Shenzhen Jinhe Standard Mould Co., ltd. 453,440.00 453,440.00 453,440.00 453,440.00 15.00 Shenzhen China Auto Training Center 600,000.00 600,000.00 600,000.00 600,000.00 6.25 Dratini 162,000.00 162,000.00 162,000.00 162,000.00 6.25 Rishen International Co., Ltd. 145,800.00 145,800.00 145,800.00 145,800.00 7.50 116 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Total 18,302,857.20 18,302,857.20 8,126,240.00 8,126,240.00 117 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (3) Changes of impairment in period Equity instrument Debt instrument Type Total available for sale available for sale Balance of impairment accrual at year-begin 8,126,240.00 8,126,240.00 Accrual in the period Including: transfer-in from other comprehensive income Decreased in the period Including: switch back due to fair value rebound at period-end Balance of impairment accrual at period-end 8,126,240.00 8,126,240.00 10. Held-to-maturity investment (1) Held-to-maturity investment Period-end balance Balance at year-begin Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Treasury 20,000.00 20,000.00 20,000.00 20,000.00 Total 20,000.00 20,000.00 20,000.00 20,000.00 11. Long-term account receivable (1) Long-term account receivable Period-end balance Balance at year-begin Range of Item Depreciation Book Depreciation Book Book balance Book balance discou reserves value reserves value nt rate Other: Essentially constitute a long-term equity for net 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68 investment of invested company Including: Shenzhen Tellus Auto Service Chain 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68 Co., Ltd. * Total 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68 118 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 * Notes: the Company is an associate of the Company, thus the non-operating receivables by the Company substantially constitute net investments in investee. Till the end of this reporting period, the total liabilities exceeded total assets, and owners’ equity was negative. Carrying value of the long term equity investment in the company has been less to nil. This company ceased operation in this reporting period. Considering the actual conditions of this company, the Company made bad debt provision in full for this long term receivables. 12. Long-term equity investment +,- Other Balance at Capita comprehe The invested entity Investment Other Additional l nsive year-begin gains recognized equity investment reducti income under equity change on adjustmen t I. Joint venture Shenzhen Tellus Gman Investment Co., Ltd 56,244,276.84 3,492,178.30 Shenzhen Tellus Hang Investment Co., Ltd. 10,863,393.76 102,122.54 Subtotal 67,107,670.60 3,594,300.84 II. Associated enterprise Shenzhen Xinglong Machinery Mould Co., Ltd. 84,792,998.83 Shenzhen Tellus Auto Service Chain Co., Ltd. Shenzhen Zung Fu Tellus Auto Service Co., Ltd. 84,114,516.50 8,560,197.63 Shenzhen Auto Industry Imp& Exp Co., Ltd. 8,140,473.84 -362,624.06 Shenzhen Dongfeng Auto Co., Ltd. 39,928,427.51 1,003,426.41 Shenzhen New Yongtong Technology Co., Ltd. 380,66 380,661.87 1.87 Shenzhen New Yongtong Oil Pump 127,836.59 Environment Protection Co., Ltd. Shenzhen New Yongtong Consultant Co., Ltd. 41,556.83 Shenzhen New Yongtong Auto Service Co., Ltd. Shenzhen New Yongtong Dongxiao Auto Parts Sales Co., LTd. Shenzhen Yongtong Xinda Inspection Equipment 119 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 +,- Other Balance at Capita comprehe The invested entity Investment Other Additional l nsive year-begin gains recognized equity investment reducti income under equity change on adjustmen t Co., Ltd. Hunan Changyang Industrial Co., Ltd.*① 1,810,540.70 Shenzhen Jiecheng Electronic Co., Ltd*① 3,225,000.00 Shenzhen Xiandao New Materials Company*① 4,751,621.62 China Auto Industrial Shenzhen Trading 400,000.00 Company*① Shenzhen General Standard Co., Ltd.*① 500,000.00 Shenzhen Huoju Spark Plug Industry Co., Ltd. 17,849.20 Zhongqi South China Auto Sales Company*① 2,250,000.00 Shenzhen Bailiyuan Power Supply Co., Ltd*① 1,320,000.00 Shenzhen Yimin Auto Trading Co., Ltd*① 200,001.10 232,001,484.59 380,66 Subtotal 9,200,999.98 1.87 III. Other equity investment Shenzhen Hanli Hi-Tech Ceramics Co., Ltd.*② 1,956,000.00 Shenzhen South Auto Maintenance Center*② 6,700,000.00 Subtotal 8,656,000.00 307,765,155.19 380,66 Total 12,795,300.82 1.87 (Cont.) +,- Period-end Cash dividend or Accrual Period-end balance The invested entity Othe profit announced provisio balance depreciation r to issued n reserves I. Joint venture Shenzhen Tellus Gman Investment Co., Ltd 59,736,455.14 120 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen Tellus Hang Investment Co., Ltd. 10,965,516.30 Subtotal 70,701,971.44 II. Associated enterprise Shenzhen Xinglong Machinery Mould Co., Ltd. 84,792,998.83 Shenzhen Tellus Auto Service Chain Co., Ltd. Shenzhen Zung Fu Tellus Auto Service Co., Ltd. 52,500,000.00 40,174,714.13 Shenzhen Auto Industry Imp& Exp Co., Ltd. 7,777,849.78 Shenzhen Dongfeng Auto Co., Ltd. 40,931,853.92 Shenzhen New Yongtong Technology Co., Ltd. Shenzhen New Yongtong Oil Pump Environment 127,836.59 127,836.59 Protection Co., Ltd. Shenzhen New Yongtong Consultant Co., Ltd. 41,556.83 41,556.83 Shenzhen New Yongtong Auto Service Co., Ltd. Shenzhen Xinyongtong Dongxiao Auto Parts Sales Co., LTd. Shenzhen Yongtong Xinda Inspection Equipment Co., Ltd. Hunan Changyang Industrial Co., Ltd.*① 1,810,540.70 1,810,540.70 Shenzhen Jiecheng Electronic Co., Ltd*① 3,225,000.00 3,225,000.00 Shenzhen Xiandao New Materials Company*① 4,751,621.62 4,751,621.62 China Auto Industrial Shenzhen Trading Company*① 400,000.00 400,000.00 Shenzhen General Standard Co., Ltd.*① 500,000.00 500,000.00 Shenzhen Huoju Spark Plug Industry Co., Ltd. 17,849.20 17,849.20 Shenzhen Zhongqi South China Auto Sales Company*① 2,250,000.00 2,250,000.00 Shenzhen Bailiyuan Power Supply Co., Ltd*① 1,320,000.00 1,320,000.00 Shenzhen Yimin Auto Trading Co., Ltd*① 200,001.10 200,001.10 Subtotal 52,500,000.00 188,321,822.70 14,644,406.04 III. Other equity investment Shenzhen Hanli Hi-Tech Ceramics Co., Ltd.*② 1,956,000.00 1,956,000.00 121 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen South Auto Maintenance Center*② 6,700,000.00 6,700,000.00 Subtotal 8,656,000.00 8,656,000.00 Total 52,500,000.00 267,679,794.14 23,300,406.04 Note: *①Industry and commerce registration of the enterprise have been revoked, the long-term equity investment for the above mentioned enterprise have accrual for depreciation reserves in total. Note: more details of *②Other equity investment can be seen in Note VIII-1 ―Equity of subsidiaries‖. 13. Investment real estate (1) Investment real estate measured at cost Item House and building Total I. Original book value 1、Balance at year-begin 161,317,125.12 161,317,125.12 2、Increase in the current period (1) Newly increased 3、Decrease in the current period (1) Disposal 4、Period-end balance 161,317,125.12 161,317,125.12 II. Accumulated depreciation and accumulated amortization 1、Balance at year-begin 88,093,612.91 88,093,612.91 2、Increase in the current period 2,251,494.84 2,251,494.84 (1) Accrual or amortization 2,251,494.84 2,251,494.84 3、Decrease in the current period (1) Disposal 4、Period-end balance 90,345,107.75 90,345,107.75 III.Depreciation reserves IV. Book value 1. Ending book value 70,972,017.37 70,972,017.37 2. Book value at year-begin 73,223,512.21 73,223,512.21 122 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (2) Investment real estate with ownership restricted Up to 30 June 2018, the Company had no investment real estate with ownership restricted. (3) Investment real estate with certificate of title im-completed There are no investment real estate with certificate of title im-completed up to 30 June 2018 123 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 14. Fixed assets (1) Fixed assets Machinery Transportation Office and other Renovation costs of Item House and buildings Electronic equipment Total equipment equipment equipment self-owned housing I. Original book value 1. Balance at year-begin 271,013,453.39 17,133,707.07 5,543,208.41 10,793,798.87 4,142,044.95 2,697,711.99 311,323,924.68 2.Increase in the current period 581,102.20 47,863.25 185,943.98 104,195.24 919,104.67 (1) Purchase 581,102.20 47,863.25 185,943.98 104,195.24 919,104.67 3. Decrease in the current period 2,972,262.88 335,000.00 873,146.98 1,397,636.02 5,578,045.88 (1) Disposal or scrapping 2,972,262.88 335,000.00 873,146.98 1,397,636.02 5,578,045.88 4. Period-end balance 271,013,453.39 14,742,546.39 5,256,071.66 10,106,595.87 2,848,604.17 2,697,711.99 306,664,983.47 II. Accumulated depreciation 1. .Balance at year-begin 153,917,272.35 13,084,301.89 3,946,918.48 8,687,439.96 3,491,998.99 2,416,329.26 185,544,260.93 2. Increase in the current period 3,021,632.68 163,340.26 479,230.62 202,704.02 37,552.15 3,904,459.73 (1) Accrual 3,021,632.68 163,340.26 479,230.62 202,704.02 37,552.15 3,904,459.73 3. Decrease in the current period 1,736,178.76 858,904.98 1,361,331.33 3,956,415.07 (1) Disposal or scrapping 1,736,178.76 858,904.98 1,361,331.33 3,956,415.07 4. Period-end balance 156,938,905.03 11,511,463.39 4,426,149.10 8,031,239.00 2,168,219.81 2,416,329.26 185,492,305.59 124 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Machinery Transportation Office and other Renovation costs of Item House and buildings Electronic equipment Total equipment equipment equipment self-owned housing III.Depreciation reserves 1. Balance at year-begin 3,555,385.70 1,552,359.79 6,165.00 17,984.71 69,562.98 281,382.73 5,482,840.91 2. Increase in the current period (1) Accrual 3. Decrease in the current period 1,232,684.68 4,703.17 1,237,387.85 (1) Disposal or scrapping 1,232,684.68 4,703.17 1,237,387.85 4. Period-end balance 3,555,385.70 319,675.11 6,165.00 17,984.71 64,859.81 281,382.73 4,245,453.06 IV. Book value 1. Ending book value 110,519,162.66 2,911,407.89 823,757.56 2,057,372.16 615,524.55 116,927,224.82 2. Book value at year-begin 113,540,795.34 2,497,045.39 1,590,124.93 2,088,374.20 580,482.98 120,296,822.84 Note: Depreciation in this period amounting to RMB 3,904,459.73. Transfer from construction in progress to fixed assets amounting as RMB 0.00 in this period. In reporting period, the provision amount for scrapped fixed assets decreased 650,147.31 Yuan, the provision for consolidate scope changed decreased 587,240.54 Yuan 125 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (2) Temporary idle fixed asset The Company had no temporary idle fixed asset end as 30 June 2018. (3) Certificate of title un-completed Item Book value Reasons A failure to carry out the property certificate is 1,115,500.50 Shuibei Zhongtian Comprehensive Build caused by issues rooted in history Hostel of People North Road A failure to carry out the property certificate is 5,902.41 caused by issues rooted in history Songquan Apartment (mixed) A failure to carry out the property certificate is 29,844.26 caused by issues rooted in history Tellus Building underground parking Parking lot is un-able to carried out the 10,275,006.26 certificate Tellus Building transformation layer 1,818,333.44 Un-able to carried out the certificate Trade department warehouse A failure to carry out the property certificate is 89,458.93 caused by issues rooted in history Warehouse A failure to carry out the property certificate is 949,420.09 caused by issues rooted in history 1#,2# and 3-5/F 3# plant of Taoyuan Road A failure to carry out the property certificate is 4,162,434.16 caused by issues rooted in history A failure to carry out the property certificate is Yongtong Building 38,188,870.57 caused by issues rooted in history 16# Taohua Garden A failure to carry out the property certificate is 1,681,060.44 caused by issues rooted in history Automotive building A failure to carry out the property certificate is 17,896,313.59 caused by issues rooted in history A failure to carry out the property certificate is First floor of Bao’an commercial-residence build 1,055,720.37 caused by issues rooted in history A failure to carry out the property certificate is Nuclear Office build 5,221,111.83 caused by issues rooted in history Total 82,488,976.85 (4) Fixed assets with restriction in ownership 126 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Up to 30 June 2018, the Company had no fixed assets with restriction in ownership. 15. Construction in process (1) Basic situation of construction in process Period-end balance Balance at year-begin Item Book Depreciation Book Depreciation Book value Book value balance reserves balance reserves Shuibei Jewelry Industrial Park 8,075,987.18 8,075,987.18 5,554,512.79 5,554,512.79 Phase I of the Tellus Shuibei Jewelry 380,308,829. 380,308,829. 372,606,383. 372,606,383. 03 Building 03 90 90 388,384,816. 388,384,816. 378,160,896. 378,160,896. Total 21 21 69 69 (2) Changes of major projects under construction Transfer to fixed Other Balance at Increased in the Item Budget assets in the decrease in Period-end balance year-begin period period the period Phase I of the Tellus Shuibei 433,620,000 372,606,383.90 7,702,445.13 380,308,829.03 Jewelry Building Total 372,606,383.90 7,702,445.13 380,308,829.03 (Cont.) Proportion of project Interest Accumulated Including: interest Capital Item investment in budget Progress amount of interest capitalized amount capitalization rate of capitalization of the period source the period (%) (%) Phase I of the Tellus Raise funds Shuibei Jewelry 87.71 87.71 17,208,030.29 685,189.91 0.36 +Self-raised Building Total 87.71 87.71 17,208,030.29 685,189.91 0.36 (3) Accrual of depreciation reserves of construction in process in the period Up to 30 June 2018, the construction in process of the Company has no impairment evidence 16. Intangible assets 127 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (1) Particular about intangible assets Item Land use right Trademark right Software Total I. Original book value 1. Balance at year-begin 56,252,774.80 95,800.00 1,070,185.00 57,418,759.80 2. Increase in the year 23,000.00 23,000.00 (1) Purchase 23,000.00 23,000.00 3. Decrease in the current period (1) Disposal 4. Period-end balance 56,252,774.80 95,800.00 1,093,185.00 57,441,759.80 II. accumulated amortization 1. Balance at year-begin 4,271,209.65 75,304.83 722,558.40 5,069,072.88 2. Increase in the current period 609,507.42 3,589.98 82,401.83 695,499.23 (1) Accrual 609,507.42 3,589.98 82,401.83 695,499.23 3. Decrease in the current period (1) Disposal 4. Period-end balance 4,880,717.07 78,894.81 804,960.23 5,764,572.11 III.Depreciation reserves IV. Book value 1. Ending book value 51,372,057.73 16,905.19 288,224.77 51,677,187.69 2. Book value at year-begin 51,981,565.15 20,495.17 347,626.60 52,349,686.92 Note: The amount amortized in this period accounting as RMB 695,499.23. (2) Up to 30 June 2018, details of intangible assets restricted in aspect of ownership or use of rights can be seen in Note VI-47. (3) Up to 30 June 2018, the Company has no intangible assets with un-confirmed service life 17. Long-term deferred expense Balance at Increase in the Amortization during Item Other decrease Closing amount year-begin current period this period Decoration charge 1,779,713.94 358,218.53 379,476.58 6,564.52 1,751,891.37 128 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Balance at Increase in the Amortization during Item Other decrease Closing amount year-begin current period this period Total 1,779,713.94 358,218.53 379,476.58 6,564.52 1,751,891.37 18. Deferred income tax assets/ deferred income tax liabilities (1) Details of recognized deferred income tax assets Period-end balance Balance at year-begin Deductible temporary Deductible Item Deferred income tax Deferred income tax difference temporary difference assets assets Provision of assets impairment 78,513,371.56 19,628,342.90 78,513,371.56 19,628,342.90 Equity investment difference 14,844,139.31 3,711,034.83 14,844,139.31 3,711,034.83 Un-realized transaction profit with 4,218,604.72 1,054,651.18 affiliated companies 4,140,720.32 1,035,180.08 Total 97,498,231.19 24,374,557.81 97,576,115.59 24,394,028.91 (2) Details of unrecognized deferred income tax assets Item Period-end balance Balance at year-begin Deductible temporary difference 91,128,654.07 92,186,466.78 Offset-able losses 27,011,412.35 34,548,078.47 Total 118,140,066.42 126,734,545.25 (3) Offset-able losses of the unrecognized deferred income tax assets will expire the following year Year Period-end balance Balance at year-begin Note 2018 14,595,474.27 2019 12,533,828.34 14,499,089.58 2020 505,862.23 505,862.23 2021 2,121,161.25 1,842,637.49 2022 7,475,385.50 3,105,014.90 2023 4,375,175.03 Total 27,011,412.35 34,548,078.47 129 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 19. Other non current assets Item Period-end balance Balance at year-begin Project account paid in advance 573,661.62 573,661.62 Other 100,000.00 100,000.00 Total 673,661.62 673,661.62 20. Details of asset impairment provision Amount at Provision in Decreased in the period Item Closing amount year-begin the period Written back Write off Other I. Bad debt reserve 104,901,163.58 818,355.63 434,566.24 212,465.11 105,072,487.86 II. Held-to-maturity investment 20,000.00 20,000.00 impairment provision III. Inventory impairment 28,869,187.81 8,250.86 28,877,438.67 provision IV.Long-term equity investment 23,300,406.04 23,300,406.04 impairment provision V. Fixed assets impairment 5,482,840.91 650,147.31 587,240.54 4,245,453.06 provision VI. Financial assets 8,126,240.00 depreciation reserves available 8,126,240.00 for sale Total 170,699,838.34 826,606.49 434,566.24 650,147.31 799,705.65 169,642,025.63 Note: decreased in the period in ―other‖ refers to the consolidate scope declined 21. Short-term loans (1) Category Item Period-end balance Balance at year-begin Debt of honor 143,000,000.00 120,000,000.00 Total 143,000,000.00 120,000,000.00 (2) No un-settlement short-term loans due in the period 22. Account payable (1) Account payable 130 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Period-end balance Balance at year-begin Account payables 22,940,795.88 28,032,708.69 Total 22,940,795.88 28,032,708.69 (2) Major account payable with over one year age Item Period-end balance Unsettled reasons Shenzhen SDG Real Estate Co., Ltd. 6,054,855.46 Intercourse funds of related company unpaid Total 6,054,855.46 23. Account received in advance (1) Account received in advance Item Period-end balance Balance at year-begin Within 1 year 9,828,288.78 10,035,943.26 1-2 years 2,699,525.20 2-3 years 8,723.00 345,811.38 Over 3 years 1,054,551.01 708,739.63 Total 10,891,562.79 13,790,019.47 Note: prepayment over 3 years mainly represents the prepayment from the subsidiary Shenzhen Xinyongtong Auto Inspection Equipment Co., Ltd. (not carried forward since the customer has not reviewed and accepted the equipment during the installment and commissioning stage) and the prepayment from Huari Company for components acquisition. 24. Wages payable (1) Wages payable Decreased in the Increased in the period Item Balance at year-begin period Period-end balance I. Short-term compensation 21,442,246.57 24,756,977.57 24,410,975.90 21,788,248.24 II. Post-employment welfare- 1,728,907.96 2,671,268.89 3,565,682.51 834,494.34 defined contribution plans III. Compensation from labor 176,030.00 176,030.00 relationship dismissed IV. Other welfare due within one year Total 23,171,154.53 27,604,276.46 28,152,688.41 22,622,742.58 131 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 (2) Short-term compensation Decreased in the Increased in the period Item Balance at year-begin period Period-end balance 1. Wages,bonuses,allowances and 19,225,690.87 21,515,586.71 21,098,120.23 19,643,157.35 subsidies 2. Welfare for workers and 376,841.00 376,841.00 - staff 3. Social insurance 10,365.82 1,172,131.54 1,175,817.39 6,679.97 Including: Medical 9,179.74 1,055,635.18 1,059,321.03 5,493.89 insurance Work injury 513.72 43,426.52 43,426.52 513.72 insurance Maternity 672.36 73,069.84 73,069.84 672.36 insurance 4. Housing accumulation fund 2,035,280.61 1,229,218.18 1,235,111.80 2,029,386.99 5. Labor union expenditure and 170,909.27 463,200.14 525,085.48 109,023.93 personnel education expense 6. Short-term compensated absences 7. Short-term profit sharing plan 8. Other Total 21,442,246.57 24,756,977.57 24,410,975.90 21,788,248.24 (3) Defined contribution plans Decreased in Item Balance at year-begin Increased in the period Period-end balance the period 1. Basic endowment insurance 133,161.62 2,340,971.27 2,343,514.76 130,618.13 2. Unemployment insurance 1,268.72 37,233.62 37,392.08 1,110.26 3. Enterprise annuity 1,594,477.62 293,064.00 1,184,775.67 702,765.95 Total 1,728,907.96 2,671,268.89 3,565,682.51 834,494.34 24. Tax payable Item Period-end balance Balance at year-begin Value-added tax 562,137.80 502,040.39 132 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Period-end balance Balance at year-begin Enterprise income tax 1,395,184.91 2,319,674.83 Individual income tax 557,263.42 286,741.01 Urban maintenance and construction tax 107,208.61 155,053.76 Property right tax 1,263,800.29 897,951.76 land VAT 5,362,682.64 5,362,682.64 Land use tax 233,161.63 123,484.44 Educational surtax 117,829.47 152,004.54 Stamp duty 18,242.02 62,434.50 Other 33,194.19 65,504.40 Total 9,650,704.98 9,927,572.27 26. Interest payable Item Period-end balance Balance at year-begin Interest payable of short-term loans 183,561.00 165,604.16 Interest of long-term loans with 51,664.83 63,890.56 interest-installment and principal paid on due Total 235,225.83 229,494.72 27. Other payable (1) Classification of other payable according to nature of account Item Period-end balance Balance at year-begin Relevance contact, borrowings and interests 33,084,552.95 58,367,438.13 Deposit and margin 20,910,521.82 16,365,292.81 Other 128,190,826.38 78,367,179.55 Total 182,185,901.15 153,099,910.49 (2) Significant other payable with over one year age Item Period-end balance Reasons of un-paid or carry-over Shenzhen SDG Co., Ltd. 22,962,986.08 Term of repayment has not been regulated by parent company Total 22,962,986.08 133 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 28. Long-term loans Item Period-end balance Balance at year-begin Mortgage loan 34,934,887.55 38,600,000.00 Total 34,934,887.55 38,600,000.00 29. Long-term account payable Item Period-end balance Balance at year-begin Deposit of staff residence 3,908,848.40 3,908,848.40 Allocation for technology innovation projects 11,311.96 11,311.96 Total 3,920,160.36 3,920,160.36 30. Other non-current liability Item Closing amount Amount at year-begin Rental received in advance 14,520,000.00 14,520,000.00 Total 14,520,000.00 14,520,000.00 Notes: other non-current liability refers to the rental received in advance from Shuibei Jewelry Building, the income was subsequently measured at amortized cost at effective rate. 31. Share capital Increased/decreased (+,-) in the Period Balance at Shares Item New shares Bonus converted Period-end balance year-begin Other Subtotal issued shares from public reserve I. Restricted shares 1. State-owned shares 2. State-owned legal person’s shares 6,000,000 -6,000,000 -6,000,000 0 3.Other domestic shares 71,000,000 -71,000,000 -71,000,000 0 Including: Domestic 71,000,000 -71,000,000 -71,000,000 0 legal person’s shares Domestic natural person’s shares 4. Foreign shares 134 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Increased/decreased (+,-) in the Period Balance at Shares Item New shares Bonus converted Period-end balance year-begin Other Subtotal issued shares from public reserve Including: Foreign legal person’s shares Foreign natural person’s shares Total restricted shares 77,000,000 -77,000,000 -77,000,000 0 II. Unrestricted shares 1. RMB Ordinary shares 193,881,600 +77,000,000 +77,000,000 270,881,600 2. Domestically listed foreign shares 26,400,000 26,400,000 3. Overseas listed foreign shares 4. Others Total unrestricted shares 220,281,600 +77,000,000 +77,000,000 297,281,600 III. Total shares 297,281,600 0 0 297,281,600 32. Capital reserves Item Balance at year-begin Increased in the period Decreased in the period Period-end balance Capital premium 559,544,773.35 559,544,773.35 Other capital reserve 5,681,501.16 5,681,501.16 Total 565,226,274.51 565,226,274.51 33. Surplus reserves Item Balance at year-begin Increased in the period Decreased in the period Period-end balance Statutory surplus 2,952,586.32 2,952,586.32 reserves Total 2,952,586.32 2,952,586.32 34. Retained profits Item The period Last year Undistributed profits at the end of last year before adjustment 97,798,595.80 30,935,823.12 Adjust the total undistributed profits at the beginning of the year (Increase +, Decrease -) 135 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item The period Last year Undistributed profits at the beginning of the year after adjustment 97,798,595.80 30,935,823.12 Add: The net profits belong to shareholders of patent company of 26,920,279.86 24,596,905.09 this period Less: Withdraw statutory surplus reserves Withdraw free surplus reserves Withdrawal of general risk provisions Common stock dividends payable Common stock dividends transferred to capital stock Retained profits at end of the period 124,718,875.66 55,532,728.21 35. Operating income and cost Jan.- Jun.2018 Jan.- Jun.2017 Item Income Cost Income Cost Main operating 194,190,757.18 152,737,808.48 158,321,271.67 117,170,941.78 Other operating 3,764,324.55 1,002,143.63 2,662,832.89 853,872.18 Total 197,955,081.73 153,739,952.11 160,984,104.56 118,024,813.96 36. Tax and surcharges Item Jan.- Jun.2018 Jan.- Jun.2017 Consumption tax 238,345.22 21,580.86 City maintenance and construction tax 364,256.92 368,816.45 Education surcharge 258,836.71 254,567.79 Land use right 209,447.09 312,379.03 Property tax 1,729,876.12 1,792,852.09 Stamp duty 102,522.31 57,109.97 Other taxes 19,337.55 3,619.57 Total 2,922,621.92 2,810,925.76 37. Sales expenses Item Jan.- Jun.2018 Jan.- Jun.2017 136 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Jan.- Jun.2018 Jan.- Jun.2017 Employee compensation 5,088,693.99 4,628,353.86 Advertising and exhibition expenses 337,873.81 110,070.26 Depreciation and amortization 578,266.24 451,080.13 Office expenses 302,546.51 411,090.60 Utilities 395,335.70 150,135.43 Transportation and business trip cost 177,820.47 189,297.19 Other 1,457,370.55 943,577.78 Total 8,337,907.27 6,883,605.25 38. Administration expense Item Jan.- Jun.2018 Jan.- Jun.2017 Employee compensation 14,695,652.80 14,072,858.71 Office expenses 754,044.43 1,384,396.56 Transportation and business trip cost 322,091.67 626,527.69 Business entertainment expenses 441,210.59 376,655.28 Depreciation and amortization 868,746.73 959,488.65 Consulting and service expenses 1,382,567.03 898,254.97 Other 672,779.16 1,033,839.90 Total 19,137,092.41 19,352,021.76 39. Financial expenses Item Jan.- Jun.2018 Jan.- Jun.2017 Interest expenses 4,367,283.44 2,069,420.04 Less: Interest income 1,053,302.07 1,396,595.43 Less: interest capitalized amount 685,189.91 720,020.72 Exchange gains and losses 14,108.62 -81,475.00 Other 128,972.53 155,131.65 Total 2,771,872.61 26,460.54 40. Assets impairment loss 137 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Jan.- Jun.2018 Jan.- Jun.2017 Bad debt loss 383,789.39 -189,620.97 Loss on inventory 8,250.86 Total 392,040.25 -189,620.97 41. Investment income Item Jan.- Jun.2018 Jan.- Jun.2017 Income of long-term equity investment 12,795,300.82 2,929,608.85 calculated based on equity Income of disposal of long-term equity 1,308,598.25 4,916,001.05 investment Investment income of financial products during 3,762,123.18 1,790,968.34 the holding period Total 17,866,022.25 9,636,578.24 42. Non-operating income Amount reckoned into current Item Jan.- Jun.2018 Jan.- Jun.2017 non-recurring gains/losses Gains from non-current assets scrap 58,186.00 Gains for account unable to paid 3,131.97 225,926.22 3,131.97 Other 31,262.42 35,404.95 31,262.42 Total 34,394.39 319,517.17 34,394.39 43. Non-operating expenditure Amount reckoned into current Item Jan.- Jun.2018 Jan.- Jun.2017 non-recurring gains/losses Loss of non-current assets scrap and damage 99,240.38 6,919.80 99,240.38 Other 447.93 447.93 Total 99,688.31 6,919.80 99,688.31 44. Income tax expense (1) Statement of income tax expense Item Jan.- Jun.2018 Jan.- Jun.2017 138 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Jan.- Jun.2018 Jan.- Jun.2017 Current income tax expense 1,671,294.17 1,077,177.35 Deferred income tax expense 19,471.10 -103,215.92 Adjustment for precious period 196,708.50 -350,274.34 Total 1,887,473.77 623,687.09 (2) Adjustment on accounting profit and income tax expenses Item Jan.- Jun.2018 Total profit 28,454,323.49 Income tax measured by statutory/applicable tax rate 7,113,580.88 Impact by different tax rate applied by subsidies Adjusted the previous income tax 196,708.50 Impact by non-taxable revenue Impact on cost, expenses and losses that unable to deducted -3,157,937.97 Impact by the deductible losses of the un-recognized previous deferred income tax The deductible temporary differences or deductible losses of the un-recognized deferred income -2,264,877.64 tax assets in the Period Change of the balance of deferred income tax assets/liabilities at period-begin resulted by tax rate adjustment Income tax expense 1,887,473.77 45. Notes to statement of cash flow (1) Other cash received in relation to operation activities Item Jan.- Jun.2018 Jan.- Jun.2017 Intercourse funds 14,445,364.48 16,403,125.71 Interest income 350,767.12 1,278,595.43 Total 14,796,131.60 17,681,721.14 (2) Other cash paid in relation to operation activities Item Jan.- Jun.2018 Jan.- Jun.2017 Expenses of operation management cash paid 6,238,289.92 6,123,845.66 Intercourse funds and other 34,390,552.03 32,907,632.73 139 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Jan.- Jun.2018 Jan.- Jun.2017 Total 40,628,841.95 39,031,478.39 (3) Other cash received in relation to investment activities Item Jan.- Jun.2018 Jan.- Jun.2017 Down-payment for equity transfer received 46,001,000.00 Total 46,001,000.00 (4) Other cash paid in relation to investment activities Item Jan.- Jun.2018 Jan.- Jun.2017 Equity transfer fee 5,733,400.00 Total 5,733,400.00 46. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow Supplementary information Jan.- Jun.2018 Jan.- Jun.2017 1. Net profit adjusted to cash flow of operation activities: Net profit 26,566,849.72 23,401,386.78 Add: Provision of assets impairment 392,040.25 -189,620.97 Depreciation of fixed assets, consumption of oil assets and depreciation of productive biology assets 6,493,475.89 6,155,954.57 Amortization of intangible assets 695,499.23 696,315.90 Amortization of long-term deferred expenses 379,476.58 381,828.78 Loss from disposal of fixed assets, intangible assets and other long-term 63,707.05 -57,116.20 assets(gain is listed with ―-‖) Loss of disposing fixed assets(gain is listed with ―-‖) 35,533.33 5,850.00 Loss from change of fair value(gain is listed with ―-‖) Financial expenses (gain is listed with ―-‖) 3,596,467.06 1,267,924.32 Investment loss (gain is listed with ―-‖) -17,866,022.25 -9,636,578.24 Decrease of deferred income tax asset( (increase is listed with ―-‖) 19,471.10 35,297.85 Increase of deferred income tax liability (decrease is listed with ―-‖) -122,687.02 Decrease of inventory (increase is listed with ―-‖) 5,938,424.27 3,049,116.56 140 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Supplementary information Jan.- Jun.2018 Jan.- Jun.2017 Decrease of operating receivable accounts (increase is listed with ―-‖) -23,770,419.43 -3,111,248.97 Increase of operating payable accounts (decrease is listed with ―-‖) -30,277,449.59 -14,833,383.28 Other Net cash flow arising from operating activities -28,070,468.11 7,380,561.40 2. Material investment and financing not involved in cash flow Debt transfer to capital Convertible bonds due within one year Fixed assets financing lease-in 3. Net change of cash and cash equivalents: Balance of cash at period end 277,556,456.47 123,232,791.88 Less: Balance of cash equivalent at period-begin 161,793,218.56 178,497,640.10 Add: Closing balance of cash equivalents Less: Opening balance of cash equivalents Net increasing of cash and cash equivalents 115,763,237.91 -55,264,848.22 (2) Constitution of cash and cash equivalent Period-end Balance at Item balance year-begin 141,793,218.5 I. Cash 277,556,456.4 6 7 Including: stock cash 109,592.35 119,576.83 141,673,641.7 Bank deposit available for payment at any time 277,446,864.1 3 2 Other monetary fund available for payment at any time II. Cash equivalent Including: bond investment matured within 3 months II. Balance of cash and cash equivalent at year-end 141,793,218.5 141 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Period-end Balance at Item balance year-begin 277,556,456.4 6 7 Including: Cash and cash equivalent with restriction used by parent company or subsidiary in the Group Note: cash and cash equivalent excluding the cash and cash equivalent with use-restricted concerned of the parent company or subsidiaries in the Group 47. Assets with ownership or use right restricted Item Book value at Period-end Reason Intangible assets 49,637,241.84 Long-term equity investment 40,174,714.13 See Note IX-5-(2) Total 89,811,955.97 (1)The land of this project (SFDZ No. 2000609764) needs to be mortgaged in order to satisfy the requirements for the implementation of Testrite Shuibei Jewelry Building project, the Company’s subsidiary Shenzhen Zhongtian Industry Co., Ltd. signed the loan contract (Mortgage & Loan 2014 Gu 250 Tianbei) with borrowing amount of 0.3 billion Yuan and loan term from June 24, 2014 to June 23, 2024 with China Construction Bank Shuibei Branch on June 24, 2014, and the Company providing the joint liability guaranty (Guarantee and loan 2014 Gu 250 Tianbei). Up to June 30, 2018, loans of 34,934,887.55 Yuan from the bank under the name of Shenzhen Zhongtian Industrial Co., Ltd. 48. Item of foreign currency (1) Item of foreign currency Closing balance of foreign Item Rate of conversion Ending RMB balance converted currency Monetary fund Including: USD 856.00 6.6166 5,663.81 VII. Changes of consolidation range 1.Enterprise merger under the different control The Company had no enterprise merger under the different control in Period. 2.Enterprise merger under the same control 142 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 The Company had no enterprise merger under the same control in Period. 3.Reverse purchase The Company had no reverse purchase in Period. 4.Disposal of subsidiaries (1) Loss controlling right by disposing subsidiary investment by single time Difference between share of the net assets of the Basis for Share subsidiary based on Share disposal Disposal Time for losing determination Name of subsidiary disposal disposal price and price ways controlling rights of timing of ratio (%) disposal investment in the losing control consolidated financial statements Equity transfer amount has been received in Shenzhen Tellus full and the New Yongtong control right on Automobile 95 Transfer 2018-1-16 848,065.00 the target 1,072,860.12 Development Co. company has Ltd*1 been transferred to the acquiree. (Cont.) Amount of other Basis of Proportion of Carrying Profit or loss comprehensive Fair value of determination and the remaining value of the arising from income transferred the remaining major assumption for equity interest remaining remeasuring the to investment profit Name of subsidiary equity interest fair value of the on the date of equity interest remaining equity or loss relating to on the date of remaining equity losing control on the date of interest at fair equity investment losing control interest on the date of (%) losing control value by the original losing control subsidiary Shenzhen Tellus New Yongtong Automobile Development Co. Ltd*1 VIII. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group 143 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Main Share-holding ratio Registered Subsidiary operation Business nature (%) Acquired way place place Directly Indirectly Obtained by Shenzhen Tellus New Yongtong Automobile Service Shenzhen Shenzhen 100.00 establishment or Development Co. Ltd. industry investment Obtained by Shenzhen Dongchang Yongtong Motor Service Shenzhen Shenzhen 95.00 establishment or Vehicle Detection Co., Ltd. industry investment Obtained by Shenzhen Bao’an Shiquan Industrial Co., Ltd. Shenzhen Shenzhen Commerce 100.00 establishment or investment Obtained by Shenzhen SDG Tellus Real Estate Co., Ltd. Shenzhen Shenzhen Manufacture 100.00 establishment or investment Obtained by Shenzhen Tellus Real Estate Exchange Co. Service Shenzhen Shenzhen 100.00 establishment or Ltd. industry investment Obtained by Shenzhen New Yongtong Automobile Service Shenzhen Shenzhen 51.00 establishment or Inspection Equipment Co. Ltd. industry investment Obtained by Shenzhen Automobile Industry Trading Shenzhen Shenzhen Commerce 100.00 establishment or General Company investment Obtained by Shenzhen Automotive Industry Supply Service Shenzhen Shenzhen 100.00 establishment or Corporation industry investment Obtained by Shenzhen SDG Huari Automobile Enterprise Service Shenzhen Shenzhen 60.00 establishment or Co.Limited industry investment Shenzhen Huari Anxin Automobile Inspection Service Obtained by Shenzhen Shenzhen 100.00 Ltd. industry establishment or 144 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Main Share-holding ratio Registered Subsidiary operation Business nature (%) Acquired way place place Directly Indirectly investment Obtained by Service Shenzhen Zhongtian Industrial Co., Ltd. Shenzhen Shenzhen 100.00 establishment or industry investment Obtained by Shenzhen Huari TOYOTA Automobile Sales Shenzhen Shenzhen Commerce 60.00 establishment or Service Co., Ltd. investment Obtained by Shenzhen Hanli Hi-Tech Ceramics Co., Ceramic Shenzhen Shenzhen 80.00 establishment or Ltd.*1 technology investment Obtained by Vehicle Shenzhen South Auto Maintenance Center*1 Shenzhen Shenzhen 100.00 establishment or maintenance investment Obtained by Anhui Tellus Starlight Jewelry Investment Hefei Hefei Commerce 51.00 establishment or Co., Ltd. investment Obtained by Anhui Tellus Starlight Junzun Jewelry Co., Hefei Hefei Commerce 60.00 establishment or Ltd. investment Obtained by Sichuan Tellus Jewelry Technology Co., Ltd. Chengdu chengdu Commerce 66.67 establishment or investment Note: *1. The operating period of Shenzhen Hanli Hi-Tech Ceramics Co., Ltd. was from September 21, 1993 to September 21, 1998, and the operating period of Shenzhen South Auto Maintenance Center was from July 12, 1994 to July 2002 11, these companies have ceased to operate for many years and have been revoked the industrial and commercial registration because they did not participate in the annual inspection of industry and commerce. The Company has not been able to exercise effective control over such companies which should not be included in the consolidated scope of the consolidated financial statements of the Company, and the book value of the 145 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Company's investment in such companies and the net value of the net investment in these companies was zero. (2) Important non-wholly-owned subsidiary Gains/losses Dividend announced Share-holding ratio of attributable to Ending equity of to distribute for Subsidiary minority (%) minority in the minority minority in the Period Period Shenzhen Huari Toyota Automobile Co. Ltd 40% 178,427.65 -383,764.20 Shenzhen SDG Huari Automobile Enterprise 40% -164,768.84 11,388,573.08 Co.Limited (3) Main finance of the important non-wholly-owned subsidiary Period-end balance Subsidiary Non-current Non-current Current assets Total assets Current liability Total liability assets liability Shenzhen Huari Toyota Automobile 49,311,422.47 1,126,789.34 50,438,211.81 51,397,622.30 51,397,622.30 Co. Ltd Shenzhen SDG Huari Automobile 44,108,876.78 29,581,702.43 73,690,579.21 45,219,146.52 45,219,146.52 Enterprise Co.Limited (Cont.) Balance at year-begin Subsidiary Non-current Non-current Current assets Total assets Current liability Total liability assets liability Shenzhen Huari Toyota Automobile 48,902,736.46 1,164,059.81 50,066,796.27 51,472,275.89 51,472,275.89 Co. Ltd Shenzhen SDG Huari Automobile 46,281,176.84 29,886,773.06 76,167,949.90 47,284,595.12 47,284,595.12 Enterprise Co.Limited 146 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Jan.- Jun.2018 Jan.- Jun.2017 Subsidiar Total Cash flow from Total Cash flow from y Business income Net profit comprehensi operating Business income Net profit comprehensiv operating ve income activities e income activities Shenzhen Huari Toyota 85,879,290.03 446,069.13 446,069.13 2,611,399.29 97,707,246.23 204,462.59 204,462.59 967,416.91 Automobi le Co. Ltd Shenzhen SDG Huari Automobi le 17,507,428.39 -411,922.09 -411,922.09 -972,706.87 17,870,512.30 146,386.14 146,386.14 -2,957,442.18 Enterpris e Co.Limite d (4) Material limits on using group assets or discharging group debts There is no material limit on using group assets or discharging group debts by our subsidiaries. 2. Transactions leading to change of owner’s equity while not resulting in loss of control in subsidiary There is no transaction by the Company leading to change of owner’s equity while not resulting in loss of control in subsidiary. 3. Equity in joint venture and cooperative enterprise (1) Important cooperative enterprise Share-holding ratio Accounting (%) treatment on Main Registered investment for joint Name operation Business nature place place venture and Directly Indirectly cooperative enterprise 147 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Main Registered Name Business nature Share-holding ratio Accounting operation place place (%) treatment on Affiliation: investment for joint venture and Shenzhen Zung Fu Tellus Auto Sales and maintain of Shenzhen Shenzhen Benz 35.00 Equity method Service Co., Ltd. enterprise Auto manufacture and Shenzhen Shenzhen Shenzhen Dongfeng Auto Co., Ltd. maintain 25.00 Equity method Joint venture: Investment in industry Shenzhen Tellus Gman Investment and property Shenzhen Shenzhen management and 50.00 Equity method Co., Ltd leasing (2) Main financial information of the important joint venture 2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017 Shenzhen Item Shenzhen Zung Fu Tellus Shenzhen Zung Fu Tellus Shenzhen Dongfeng Dongfeng Auto Auto Service Co., Ltd. Auto Service Co., Ltd. Auto Co., Ltd. Co., Ltd. Current assets 377,072,861.88 615,374,679.81 390,613,571.00 685,184,923.52 Non -current assets 19,399,274.80 238,233,604.05 23,214,032.00 241,719,824.00 Total assets 396,472,136.68 853,608,283.86 413,827,603.00 926,904,747.52 Current liabilities 285,413,217.64 633,219,931.93 173,500,413.00 708,700,096.37 Non –current liabilities 58,701,889.00 60,436,348.10 Total liabilities 285,413,217.64 691,921,820.93 173,500,413.00 769,136,444.47 Minority shareholders’ equity -2,040,952.77 -1,945,407.03 Attributable to parent company shareholders’ equity 111,058,919.04 163,727,415.70 240,327,190.00 159,713,710.08 Share of net assets calculated by shareholding ratio 38,870,621.66 40,931,853.92 84,114,516.50 39,928,427.51 Adjustment items 148 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017 Shenzhen Item Shenzhen Zung Fu Tellus Shenzhen Zung Fu Tellus Shenzhen Dongfeng Dongfeng Auto Auto Service Co., Ltd. Auto Service Co., Ltd. Auto Co., Ltd. Co., Ltd. --Goodwill --Unrealized profit of internal trading —Other 1,304,092.47 Book value of equity investment 40,174,714.13 40,931,853.92 84,114,516.50 39,928,427.51 in joint ventures Fair value of the equity investment of affiliation with public offers concerned Operation income 625,845,433.53 206,529,913.61 602,080,907.00 249,209,515.73 Net profit 24,457,707.54 3,918,159.88 24,584,092.96 -9,138,940.53 Net profit of the termination of operation Other comprehensive income Total comprehensive income 24,457,707.54 3,918,159.88 24,584,092.96 -9,138,940.53 Dividends received from 52,500,000.00 9,100,000.00 affiliation in the year (3) Main financial information of the important cooperative enterprise Shenzhen Tellus Gman Investment Co., Ltd Item 2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017 Current assets 27,302,262.00 45,981,179.66 Including: cash and cash equivalents 13,284,634.82 14,656,470.18 Non -current assets 387,762,141.96 388,901,782.46 149 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen Tellus Gman Investment Co., Ltd Item 2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017 Total assets 415,064,403.96 434,882,962.12 Current liabilities 25,591,493.77 38,394,408.48 Non –current liabilities 270,000,000.00 284,000,000.00 Total liabilities 295,591,493.77 322,394,408.48 Minority shareholders’ equity Attributable to parent company shareholders’ equity 119,472,910.19 112,488,553.64 Share of net assets calculated by shareholding ratio 59,736,455.14 56,244,276.84 Adjustment items --Goodwill --Unrealized profit of internal trading —Other Book value of equity investment in joint ventures 59,736,455.14 56,244,276.84 Fair value of the equity investment of joint ventures with public offers concerned Operation income 33,843,551.10 19,777,905.85 Financial expense 9,221,726.36 10,275,774.46 Income tax expense Net profit 6,984,356.55 -6,609,390.37 Net profit of the termination of operation Other comprehensive income Total comprehensive income 6,984,356.55 -6,609,390.37 150 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen Tellus Gman Investment Co., Ltd Item 2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017 Dividends received from joint venture in the year (4) Summary financial information of not important joint venture and cooperative enterprise Item 2018-6-30 / Jan.- Jun.2018 2017-12-31/ Jan.- Jun.2017 Joint ventures: Total investment of book value 10,965,516.30 10,863,393.76 Total amount of the follow items calculated by share-holding ratio —net profit 102,122.54 140,991.04 —Other comprehensive income —Total comprehensive income 102,122.54 140,991.04 affiliation: Total investment of book value 92,570,848.61 93,314,134.54 Total amount of the follow items calculated by share-holding ratio —net profit -362,624.06 1,007,637.49 —Other comprehensive income —Total comprehensive income -362,624.06 1,007,637.49 (5) Excess deficit from joint venture or affiliated business Cumulative losses Losses of current period-end Cumulative losses Name un-recognized in un-recognized (or net profit un-recognized at current the end of last year shares in the period) period-end Shenzhen Tellus Auto Service Chain Co., Ltd. 98,104.52 759.21 98,863.73 Shenzhen Xinyongtong Dongxiao Auto Parts Sales 273,881.84 1,331,461.18 1,057,579.35 Co., LTd. Shenzhen New Yongtong Auto Service Co., Ltd. 79,046.58 472,747.73 551,794.31 Shenzhen Yongtong Xinda Inspection Equipment Co., 221,136.79 592,499.80 813,636.59 151 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Cumulative losses Losses of current period-end Cumulative losses Name un-recognized in un-recognized (or net profit un-recognized at current the end of last year shares in the period) period-end Ltd. 4. Important co-management No co-management in the Period. IX. Related party and related transactions 1. Parent company of the enterprise Share-holding ratio Registration Registered Voting right ratio on the Parent company Business nature on the enterprise for place capital enterprise (%) parent company (%) Development and operation of real 2,582,820,000 Shenzhen SDG Co., Ltd. Shenzhen estate and 49.09 49.09 Yuan domestic commerce Note: Ultimate controller of the Company is SASAC of Shenzhen. 2. Subsidiary of the Company Found more in Note VIII-1. 3. Details of joint-venture and affiliated enterprise of the Company Found more in Note VIII-3. 4. Particulars about other related parties Other related parties Relationship with the Company Shenzhen SDG Swan Industrial Company Ltd. Subsidiary of parent company Shenzhen Machinery Equipment Imp & Exp. Company Subsidiary of parent company Shenzhen SDG Real Estate Co., Ltd. Subsidiary of parent company Hong Kong Yujia Investment Co, Ltd. Subsidiary of parent company Shenzhen Tellus Real Estate Yueyang Co., Subsidiary of parent company Shenzhen SDG Development Center Construction Supervision Subsidiary of parent company Co., Ltd. Shenzhen Tellus Yangchun Real Estate Co., Ltd. Subsidiary of parent company 152 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen Longgang Tellus Real Estate Co., Ltd. Subsidiary of parent company Shenzhen SDG Property Management Co., Ltd. Subsidiary of parent company Chengdu RuihangJewelry Co., Ltd. – Lin Hang Shareholder of subsidiary and related individual Chengdu Zhongjin Guifu Jewelry Co., Ltd. – Lin Tonggui Shareholder of subsidiary and related individual Chengdu Hezhiyuan Jewelry Co., Ltd. – Xiong Yungui Affiliated enterprise and related individual of the subsidiary’s shareholder Anhui Jinzun Jewerly Co., Ltd. Shareholder of subsidiary 5. Related transaction (1) Related lease ①As a lessor for the Company Lease income in Lease income in Lessee Assets type recognized in recognized in Jan.- Jan.- Jun. 2018 Jun. 2017 Shenzhen Zung Fu Tellus Auto Service Co., Ltd. House leasing 2,523,809.60 2,523,809.60 Shenzhen SDG Tellus Property Management Co., Ltd. House leasing 70,190.48 Shenzhen New Yongtong Auto Service Co., Ltd. House leasing 308,502.84 134,586.67 Shenzhen Xinyongtong Dongxiao Auto Parts Sales Co., Ltd. House leasing 226,285.74 95,190.49 (2) Related guarantee ① The Company serves as guarantor The Company entered into pledge contract with Zung Fu Auto Management (Shenzhen) Co., Ltd. (hereinafter referred to as Zung Fu Shenzhen), pursuant to which, during the period from establishment of our associate company Shenzhen Renhu Tellus Auto Service Co., Ltd. (hereinafter referred to as Renhu Tellus) to the expiration date of the joint venture contract between the Company and Renhe Shenzhen, provided that Zung Fu Shenzhen provides borrowings to Zung Fu Tellus under entrusted loan, Zung Fu Tellus makes borrows from bank or other financial institutions and guaranteed by Zung Fu Shenzhen, and the total borrowings shall not exceed RMB100 million, the Company bears 35% of the obligations arising from above borrowings according to its shareholding proportion. It was agreed for the Company to pledge 35% equity interests held in Zung Fu Tellus to Zung Fu Shenzhen as counter guarantee for the above borrowings. Other than the above guarantee, the Company’s provision of guarantees as guarantor all relates to such guarantees provided to subsidiaries. 153 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 ②The Company as secured creditor Chengdu Ruihang Jewelry Co.,Ltd. the shareholder of Sichuan Test Rite Jewelry Technology Co.,Ltd. which is the subsidiary of the Company, jointly with the affiliated individual Lin Hang, set Sichuan Test Rite Jewelry Technology Co,.Ltd. as the secured creditor with a ceiling amount of secured guarantee, and the principal creditor’s right secured is the receivables of RMB13,810,000 from Sichuan Test Rite Jewelry Technology Co,.Ltd. to the guaranteed Zhang Hongcheng and others; Chengdu He Zhiyuan Jewelry Co.,Ltd., as an affiliated corporation of Chengdu Cai Zhiyuan Jewelry Co.,Ltd. the shareholder of Sichuan Test Rite Jewelry Technology Co.,Ltd., which is the subsidiary of the Company, jointly with affiliated individual Xiong Yungui, set Sichuan Test Rite Jewelry Technology Co,.Ltd. as the secured creditor with a ceiling amount of secured guarantee, and the principal creditor’s right secured is the receivables of RMB52,940,000 from Sichuan Test Rite Jewelry Technology Co,.Ltd to the guaranteed Xiao Yueliang and others; Chengdu Zhongjin Guifu Jewelry Co.,Ltd. as the shareholder of Sichuan Test Rite Jewelry Technology Co.,Ltd., which is the subsidiary of the Company, and the affiliated individual Lin Tonggui, set Sichuan Test Rite Jewelry Technology Co,.Ltd as the secured creditor with a ceiling amount of secured guarantee, and the principal creditor’s right secured is the receivables of RMB9,640,000 from Sichuan Test Rite Jewelry Technology Co,.Ltd. to the guaranteed Zhen Ruijin and others; (3)Hiring the affiliated parties to provide labor services ①Center Enterprise opted for the engineering supervision organization of Test Rite Shuibei project through a public tender. In May 2013, Center Enterprise has signed a contract on the Engineering Supervision of Test Rite Shuibei Jewelry Building with Shenzhen Tefa Development Center Construction Supervision Co., Ltd., which was commissioned by Center Enterprise to implement supervision on the Test Rite Shuibei Project with a total of RMB5, 041,900 as commissioned supervision expenses, among which, RMB240, 000 has been paid from Jan. to Jun. 2018, and total amount of RMB4, 997,200 has been paid by Jun. 30th, 2018. ②Center Enterprise has signed a property management service contract with Shenzhen Tefa Teli Property Management Co., Ltd., which shall provide property management (including early intervention) service for Center Enterprise, paying RMB 1,403,196.03 for various types of management expenses from Jan.to Jun. 2018. (4) Related fund occupation expenses Related party Content Jan.- Jun.2018 Jan.- Jun.2017 Borrow-in: 154 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Shenzhen SDG Co., Ltd. Fund occupation expenses 216.794.15 261,953.30 Anhui Jinzun Jewerly Co., Ltd. Fund occupation expenses 18,368.53 Starlight Jewerly Co., Ltd. Fund occupation expenses 4,411.18 Borrow-out: Shenzhen Xinglong Machinery Mould Co., Ltd. Fund occupation expenses 37,708.32 37,708.32 (5) Remuneration of key manager Item Jan.- Jun.2018 Jan.- Jun.2017 Remuneration of key manager 5.35 million Yuan 4.19 million Yuan 6. Receivable/payable items of related parties (1) Receivable item Period-end balance Balance at year-begin Item Book balance Bad debt reserve Book balance Bad debt reserve Account receivable: Shenzhen New Yongtong Auto Service Co., Ltd. 1,089,566.00 927,602.00 1,359,506.00 927,602.00 Shenzhen Xinyongtong Dongxiao Auto Parts Sales 997,200.00 680,400.00 799,200.00 680,400.00 Co., LTd. Total 1,888,766.00 1,608,002.00 2,356,706.00 1,608,002.00 Other account receivable: Shenzhen Tellus Auto Service Chain Co., Ltd. 1,359,297.00 1,359,297.00 1,359,297.00 1,359,297.00 Shenzhen New Yongtong Technology Co., Ltd. 116,480.22 58,240.11 Shenzhen Yongtong Xinda Inspection Equipment 529,111.24 529,111.24 530,506.24 529,111.24 Co., Ltd. Shenzhen Xiandao New Material Co., Ltd. 660,790.09 660,790.09 660,790.09 660,790.09 Shenzhen Xinglong Machinery Mould Co., Ltd. 2,300,432.90 1,055,072.90 2,262,724.58 1,036,172.99 Shenzhen Tellus New Yongtong Auto Service Co., 114,776.33 114,776.33 114,776.33 114,776.33 ltd. Total 4,965,802.56 3,719,047.56 5,043,179.46 3,758,387.76 Dividends receivable: Shenzhen Zung Fu Tellus Auto Service Co., Ltd. 52,500,000.00 155 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Period-end balance Balance at year-begin Item Book balance Bad debt reserve Book balance Bad debt reserve Shenzhen SDG Tellus Property Management Co., Ltd* 232,683.74 232,683.74 Total 52,732,683.74 232,683.74 Long-term receivables Shenzhen Tellus Auto Service Chain Co., Ltd. 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68 Total 2,179,203.68 2,179,203.68 2,179,203.68 2,179,203.68 (2) Payable item Item Period-end balance Balance at year-begin Account payable: Shenzhen SDG Real Estate Co., Ltd. 6,054,855.46 6,054,855.46 Shenzhen Machinery Equipment Imp & Exp. Company 45,300.00 45,300.00 Shenzhen SDG Tellus Property Management Co., Ltd. 279,793.26 Total 6,100,155.46 6,379,948.72 Other account payable: Shenzhen SDG Real Estate Co., Ltd. 335,701.34 335,701.34 Hong Kong Yujia Investment Co, Ltd. 2,026,287.81 2,009,360.35 Shenzhen SDG Swan Industrial Company Ltd. 20,703.25 20,703.25 Shenzhen Machinery Equipment Imp & Exp. Company 1,554,196.80 1,554,196.80 Shenzhen SDG Co., Ltd. 22,962,986.08 51,122,660.84 Shenzhen Longgang Tellus Real Estate Co., Ltd. 1,095,742.50 1,095,742.50 Shenzhen Tellus Yangchun Real Estate Co., Ltd. 476,217.49 476,217.49 Shenzhen Xinglong Machinery Mould Co., Ltd. 78,515.56 78,515.56 Shenzhen New Yongtong Technology Co., Ltd. 320,000.00 Shenzhen Yongtong Xinda Inspection Equipment Co., Ltd. 24,340.00 24,340.00 Anhui Jinzun Jewerly Co., Ltd. 2,530,000.00 1,330,000.00 Starlight Jewerly Co., Ltd. 882,000.00 Total 31,986,690.83 58,367,438.13 156 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 X. Commitment or contingency 1. Important commitments (1) Capital commitments Item Period-end balance Balance at year-begin Signed without recognized in financial statement —Purchase and construction of long-term assets 62,287,414.67 100,505,887.53 commitment Total 62,287,414.67 100,505,887.53 2. Contingency (1) Contingent liability and its financial influence formed by un-settle lawsuits or arbitration ① In October 2005, a lawsuit was brought before Shenzhen Luo Hu District People’s Court by the Company, which was the recognizer of Jintian Industrial (Group) Co., Ltd. (―Jintian‖) to require Jintian to redress RMB 4,081,830 (principal: RMB 3,000,000, interest: RMB 1,051,380, legal fare: RMB 25,160 and executive fare: RMB 5,290). Shenzhen Intermediate People’s Court had adjudged that the Company won the lawsuit and the forcible execution had been applied by the Company. As for the deducted amount in previous years, the Company has counted as debt losses. In April 2006, Shenzhen Development Bank brought an accusation against Jintian’s overdue loan two million U.S. dollars and the Company who guaranteed for this loan. The company took on the principal and all interest. After that, the Company appealed to Shenzhen Luohu District People's Court, asking Jintian to repay 2,960,490 U.S. dollars and interest. In 2008, it reached Shen Luo No.937 Civil Reconciliation Agreement (2008) after the mediating action taken by Shenzhen Luohu District People's Court. The agreement is as follows: If Jintian repay 2,960,490 U.S. dollars before October 31, 2008, the company will exempt all the interest. If Jintian can not settle the amount on time, it will pay the penalty in accordance with the People's Bank of China RMB benchmark lending rate over the same period. Jintian Company in process of debt service for bankruptcy reorganization. On January 29, 2016, Shenzhen Intermediate People's Court ruled that the reorganization plan of Jintian Company was completed and the bankruptcy proceedings were terminated, Jintian Company was re-allocating to the creditors, including the Company, according to the reorganization plan. Up to the approval date of this financial report, the Company has not yet received the allocated property. ② Subsidiary of the Company Shenzhen SD Tellus Real Estate Company (―Tellus Real Estate 157 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Company‖) entered into the ―Contract of Liyehui Food Street Co-operation in Buji Town‖ with Shenzhen Jinlu Industrial & Trading Company (―Jinlu Company‖) on 29 November 1994. In accordance with the Contract, on the foundation of ―Cooperative Development Contract of Liyehui Food Street in Buji Town‖ signed between the Jinlu Company and land providers -- Shenzhen Real Estate Management Branch Bureau of Guangzhou Military Region (―Real Estate Management Branch Bureau‖) and People’s Liberation Army Unit 75731 (― Unit 75731‖), construction funds 10 million Yuan invested by Tellus Real Estate, received fixed floor area of 6,000 M 2 property, and Jinlu Company promise to delivered the completed building and ancillary facility at the end of November 1995. Tellus Real Estate Company have invested a total of 9,822,500.00 Yuan in cooperative development up to 31 December 1996, however, Tellus Real Estate Company failed to get the property should enjoy on the agreed date for property hand over. Tellus Real Estate Company institute an action at law to the Court, requesting Jinlu Company pay back the 9.8 million Yuan investment and interests immediately and shoulder all the Court Costs, Real Estate Management Branch Bureau and Unit 75731 were sentence to be the defendant pursuant to the law in trial. On 18 March 2003, in line with the Written Judgment (2000) Shen Zhong Fa Fang Chu Zi No. 101 by Shenzhen Intermediate People’s Court, the above mentioned ―Cooperative Contract‖ is valid, identified as nature of cooperative housing, the two parties continue to perform the contract and legitimate mechanism should be follow if any disputes arising from executing the Contract by parties in the Contract. In March 2005, as a joint plaintiff, Tellus Real Estate Company and Jinlu Company start a suit to Real Estate Management Branch Bureau and Unit 75731(Communication Equipment Repair Institute of Guangzhou Military Region), requesting two defendants performing cooperative contract, and delivered 11,845 M2(approximately 11,851,357 Yuan in value) property of Liyehui Food Street to two plaintiff, moreover, pay for the rental income 5,034,664.94 Yuan in total due to two plaintiff since 1998. Meanwhile, Tellus Real Estate Company and Jinlu Company entered into an agreement, that is, due to the self-executing or mandatory enforcement by the Court, concerning the Liyehui Food Street property taken back in lawsuit, Tellus Real Estate Company received a fixed property of 6,000 M2, rests of the property belongs to Jinlu Company and Tellus Real Estate Company owns all property while less than 6,000 M2; the income deserved in the lawsuit should be allocated according to 5:5 ratio by two parties, and as for this lawsuit, which have its first trial in Shenzhen Intermediate People’s Court in August 2010, because details of a case is complex, the case did not judge in court. In 2011, Tellus Real Estate Company received a civil ruling paper (2005) Shen Zhong Fa Min Chu Zi No. 82 from Shenzhen Intermediate People’s Court, that is, ―People’s Court has no right to 158 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 judged how to allocate the building and its working interest‖, because Liyehui Food Street property ―is part of the illegal building‖, reject the Tellus Real Estate Company and Jinlu Company’s claim in aspect of the property delivery and rental allocation of Liyehui Food Street. The cooperative development fund invested for Tellus Real Estate Company has been provision for bad debts in total in previous year by the Company. ③ In 2014, our subsidiary Shenzhen Auto Industrial Trading General Company (hereinafter referred to as Auto Industrial Trading Company) was served with a summon from people’s court in Futian district, Shenzhen, pursuant to which, Shenzhen branch of China Huarong Asset Management Co., Ltd. (―Huarong Shenzhen‖) sued Auto Industrial Trading Company for joint settlement responsibility in respect of the debt disputes between Shenzhen Guangming Watch Co., Ltd. (―Guangming Watch‖) and its creditors. Pursuant to the civil verdict (SFFJCZD No.801(1997)) issued by people’s court in Futian district, Shenzhen on 24 November 1997, Guangming Watch shall repay RMB700,000 and interests thereof to Shenzhen Futian branch of China CITIC Bank. Guangming Watch failed to discharge debts after such verdict, and Shenzhen Futian branch of China CITIC Bank applied for compulsive execution and recovered an amount of RMB561,398.30. later, due to that there was no property available for execution, people’s court in Futian district of Shenzhen issued civil verdict (SFFZZD No.102(1998)) to suspend execution on 10 December 1998. In July, the original creditor Shenzhen Futian branch of China CITIC Bank transferred the above creditor’s right (namely outstanding principal of RMB350,000 million and relevant interests) to Huarong Shenzhen. Guangming Watch was an associate company of Auto Industrial Trading Company with a shareholding of 10% in 1990. Guangming Watch has been deregistered with Shenzhen Business and Commerce Bureau on 28 February 2002. Huarong Shenzhen sued Guangming Watch and Auto Industrial Trading Company at people’s court in Futian district of Shenzhen in May 2014, requesting to obtain all the interests of Guangming Watch under the civil verdict (SFFJCZD No.801(1997)), and request an order for Auto Industrial Trading Company to take joint settlement responsibility for the above debts on the grounds that failure of Guangming Watch to settle debts resulted in prejudice in creditors’ right by shareholders. On Jan 20th 2018, Huarong Asset Shenzhen Branch applied to withdraw its complaints to Shenzhen Futian District People’s Court and the court issued(2014)SFFMECZ No.4712 -2 civic ruling paper on Jan. 30th 2018, which granted to revoke the approval and ruled in favor of Automobile Industry and Trading Co., Ltd. ④ The Company’s subsidiary, Shenzhen Automobile Industry and Trade Co., Ltd (hereinafter 159 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 referred to as "Automobile Industry and Trade Company") got shares in Shenzhen Guangming Watch Co., Ltd. (hereinafter referred to as "Guangming Watch Company", Automobile Industry and Trade Company holds 10% of shares) in 1990, this company loaned RMB 2 million from China Construction Bank on December 12, 1990 with time limit of nine months, Guangming Watch Company repaid RMB 100,000 in October 1992, but the balance was still in arrears. Shenzhen Bao'an District People's Court (1996) BFJZ No. 183 paper of civil judgment determined Guangming Watch Company to repay the loan of RMB 1.9 million and the interests to China Construction Bank, Shenzhen Intermediate People's Court (1996) SZFJYZZ No. 563 paper of civil judgment’ final judgment affirmed the original judgment. After the judgment, Guangming Watch Company didn’t perform the obligations, so China Construction Bank applied for compulsory execution and got repayment of 1.64 million Yuan, but later due to no property for execution, Bao'an District People's Court (1997) SBFZZ No. 220 civil ruling paper had the verdict for termination of execution on May 20, 2003. In June 2004, the original creditor CCB transferred the above-mentioned creditor's rights to Assets Management Company, after several transfers, Ezhou Liantai Investment and Consulting Co., Ltd. put forward the creditor's rights in April 2008. Guangming Watch Company has been revoked license by Shenzhen Industrial and Commercial Bureau on February 28, 2002. Ezhou Liantai Investment and Consulting Co., Ltd. submitted the case of Guangming Watch Company and Automobile Industry and Trade Company to Shenzhen Futian District People's Court in May 2012, requesting to order Guangming Watch Company to pay off 3.607 million Yuan and the interests from May 11, 2012 to the actual repayment date, and requesting to order Automobile Industry and Trade Company to assume the joint liability for above-mentioned debts by the reason of Automobile Industry and Trade Company being its last shareholder, not setting up a liquidation team for liquidation within the legal time limit, and assuming the joint liability for debts. In 2013, Shenzhen Futian District People's Court (2012) SFFMECZ No. 4328 paper of civil judgment determined Automobile Industry and Trade Company to assume the joint liability for debts in (1996) SZFJYZZ No. 563 paper of civil judgment to the accused, Guangming Watch Company. Automobile Industry and Trade Company appealed, on December 12, 2013, Shenzhen Intermediate People's Court (2013) SZFSZZ No. 1677 civil judgment’s final judgment affirmed the 160 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 original judgment. Automobile Industry and Trade Company accrued the payable joint liability funds of 2,130,200 Yuan in 2013. Hua Rong District People's Court of Ezhou City (2008) HMCZ No. 57 civil judgment determined the accused Ezhou Liantai Investment and Consulting Co., Ltd. to pay the accuser Huizhou Lamei Information Consulting Co., Ltd. assignment of claims and liquidated damages and also bear the legal fare. In the executing process, on April 14, 2015, Hua Rong District People's Court of Ezhou City (2015) EHRZYZ No. 0005 execution ruling added Automobile Industry and Trade Company as the person subject to enforcement and ordered Automobile Industry and Trade Company to pay the object funds of 4,170,859.54 Yuan. Hua Rong District People's Court of Ezhou City held that the object Guangming Watch Company should perform is the loan principal of 1.9 million Yuan and the promissory loan interest of 331,785.60 Yuan from November 21, 1995 to January 22, 1997, with a total of 2,231,785.60 Yuan. Shenzhen Bao’an District People's Court has executed 1,641,888.10 Yuan, deducting the litigation fee of 21,700 Yuan and execution fee of 28,500 Yuan, up to March 25, 2002, there were still object funds of 1,161,725.65 Yuan and debt interest of 1,274,604.31 Yuan during the delay in performance calculated by the principle of repayment of principal with interest and debt interest of 1,734,529.5 Yuan caused by delay in performance from March 25, 2002 to March 30, 2009, principal and interest amounting to 4,170,859.54 Yuan. Automobile Industry and Trade Company proposed an opposition to execution that Automobile Industry and Trade Company should assume the joint liability for the debts of 258,111.90 Yuan and the interest to be assumed by Guangming Watch Company, and (1996) BFJZ No. 183 litigation fee of 21,700 Yuan, and (1997) SBFZZ No. 220 case execution fee of 28,500 Yuan. Ezhou City Intermediate People's Court held that the surplus creditor's rights was non liquet after Shenzhen Bao'an District People's Court’s execution of (1996) SZFJYZZ No. 563 civil judgment, both parties had large difference in opinion whether the executed 1.64 million Yuan was just principal or principal and interest, which was difficult to be determined, therefore, Ezhou City Intermediate People's Court (2015) EHRZYZ No. 00005 execution ruling was repealed and returned for re-examination. In Dec. 2017, Shenzhen Test Rite Xin Yongtong Automobile Development Co., Ltd, the subsidiary of Test Rite Group, has filed a lawsuit to Luohu District People’s Court for its lease contract with a natural person Huang Wei because of unreasonable long lease period and low rental price, applying for terminating the lease contract and asking the defendant Huang Wei to return the house back. For the reason that the defendant Huang Wei refused to accept the court mediation, the joint mediation before litigation ended on Jan. 22nd 2018. So far, the court has opened twice court sessions, 161 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 respectively on Mar. 7th, 2018 and Mar. 29th, 2018. Now the verdict is being awaited. ⑥In Mar. 2018, the natural person Huang Weiqiang has filed a lawsuit with Shenzhen Automobile Industry and Trading General Company and Shenzhen Tefa Group Co., Ltd. to Shenzhen Luohu District People’s Court, asking them to pay a total amount of RMB136, 692.13 for the delinquent settlement allowance of state-owned enterprises restructuring and the overdue interest. Huang Weiqiang is the shareholder and chairman of Shenzhen Automobile Import and Export Co., Ltd. Shenzhen Automobile Import and Export Co., Ltd. was established in 1987 and it was the wholly owned subsidiary of Shenzhen Automobile Industry and Trading General Company at the establishment period. After the enterprise restructuring in 2002, the restructured Shenzhen Automobile Industry and Trading General Company has still held 35% share rights of Shenzhen Automobile Import and Export Co., Ltd. In May 2018, Luohu District People’s Court issued a civic ruling paper, and the judgment result said this case was the dispute arising from applying for the payment of settlement allowance caused by the identity transformation of employees during the process of enterprise restructuring, which was put forward in line with the Shenzhen government’s policies, so the case did not fall within the scope of the court and the court dismissed the action. Huang Weiqiang has instated an appeal to Guangdong Provincial Intermediate People’s Court and we haven’t received any court summons from Guangdong Province Intermediate People’s Court yet. XI. Events occurring after the balance sheet date 1. Profit distribution The Company has no plan of cash dividends carried out and capitalizing of common reserves either XII. Other important events 1. Previous accounting errors collection The Company had no previous accounting errors collection in Period. 2. Debt restructuring The Company had no debt restructuring in Period. 3. Assets replacement The Company had no non-monetary assets change in Period. 4. Segment 162 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Financial information for reportable segment Jan.- Jun.2018 Auto maintenance Leasing and Jewelry Item Auto sales Offset of segment Total and repair services operation Main operating revenue 61,613,402.01 37,925,019.21 40,798,989.10 71,783,625.94 -17,930,279.08 194,190,757.18 Main operating cost 60,137,721.39 33,796,019.74 8,471,631.42 68,272,973.37 -17,940,537.44 152,737,808.48 Total assets 18,348,537.16 106,059,130.64 2,312,261,181.48 101,559,791.25 -1,059,643,995.17 1,478,584,645.36 Total liabilities 29,987,929.63 66,907,715.97 718,902,933.48 6,259,924.48 -377,156,522.44 444,901,981.12 Jan.- Jun.2017 Auto Offset of segment Auto sales Wholesale and Item maintenance and Leasing and services Total retail of jewelry repair Main 81,828,629.57 30,933,280.83 59,669,477.32 432,616.24 -14,542,732.29 158,321,271.67 operating revenue Main 80,552,582.86 25,502,996.33 23,195,618.35 2,538,282.27 -14,618,538.03 117,170,941.78 operating cost Total assets 32,917,126.16 98,657,932.40 1,983,022,242.18 14,455,973.67 -911,054,418.73 1,217,998,855.68 Total 46,119,475.69 60,693,706.80 556,102,721.70 1,978,405.53 -387,538,846.00 277,355,463.72 liabilities 5. Other matters On Jul. 20th 2017, the Company signed a contract with Shenzhen Runhe Joint Investment and Development Co.,Ltd. (hereinafter referred to as Runhe Company) , Shenzhen Xinglong Machinery Molding Co.,Ltd., (hereinafter referred to as Xinglong Company) and Shenzhen Yayu Investment and Development Co.,Ltd. Runhe Company made a commitment to attend the open bidding and offer a bidding of RMB200,000,000 on the condition that the Company sells 30% share rights of Xinglong Company by means of listing or agreement, or buy the above share rights at the price of RMB200,000,000 and be willing to pay RMB40,000,000 as the security deposit. Meanwhile, Runhe Company made a commitment that if the Company transfers the share rights of Xinglong Company held by Harbin No. One Machinery Group Co., Ltd, for the Company to increase the share rights of Xinglong Company, Runhe Company will take the price of per share of the transferred 30% share rights as the procurement price for the increased share rights. All the parties of the agreement agreed that the Company only accepted the stock transfer invitation of Runhe Company, it still hasn’t made a decision on whether to transfer the share rights of Xinglong Company, and therefore, the signature of this agreement does not necessarily lead to the result of the Company selling the share rights of Xinglong Company. By Dec.31st 2017, the Company has received RMB 40,000,000 of security deposit as stated above. In Sep. 2017, after completing the share rights transfer of Xinglong Company held by Harbin No. One Machinery Group Co., Ltd., the 163 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Company has held 43% share rights of Xinglong Company. On Dec. 12th 2017, the board of the directors of the Company has deliberated and passed a Proposal on Selling the 43% Share Rights of Shenzhen Xinglong Machinery Molding Co., Ltd, the Company intended to sell the 43% share rights of Shenzhen Xinglong Machinery Molding Co., Ltd, which is the stock-sharing subsidiary of the Company, through public listing, and the Company will no longer hold the share rights of Xinglong Company after transaction. By the issuance date of this report, the listing results of this share rights transfer is as below: the Company has transferred the 43% share rights of Xinglong Company by listing in Shenzhen United Property and Share Rights Exchange on Mar. 26th 2018. By the expired date of listing, according to the transaction results from Shenzhen United Property and Share Rights Exchange, Shenzhen Runhe United Investment and Development Company (hereinafter referred as Runhe) was the final transferee of this asset transfer, with transfer the price of RMB 286,670,000. Runhe has paid RMB30, 000,000 to Shenzhen United Property and Share Rights Exchange as the guarantee deposit. On Jun.15th 2018, the Company has signed an agreement with Runhe on the Transfer of Enterprise State-owned Property, transferring 43% of share rights of Xinglong Company at the price of RMB 286,670,000. In line with the agreement, on Jun. 25th 2018, the Company has received the initial payment of RMB86, 001,000 for the transfer of 30% of share rights. XIII. Principle notes of financial statements of parent company 1. Account receivable (1) Accounts receivable by category Period-end balance Category Book balance Bad debt reserve Book Amount Ratio (%) Amount Ratio (%) value Account receivable with single significant amount and withdrawal bad debt provision separately Receivables with bad debt provision accrual by credit portfolio Accounts with single significant amount and bad debts 484,803.08 100.00 484,803.08 100.00 provision accrued individually Total 484,803.08 100.00 484,803.08 100.00 (Cont.) Balance at year-begin Category Book balance Bad debt reserve Book Amount Ratio (%) Amount Ratio (%) value Account receivable with single significant amount and withdrawal bad debt provision separately 164 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Balance at year-begin Category Book balance Bad debt reserve Book Amount Ratio (%) Amount Ratio (%) value Receivables with bad debt provision accrual by credit portfolio Accounts with single significant amount and bad debts provision 484,803.08 100.00 484,803.08 100.00 accrued individually Total 484,803.08 100.00 484,803.08 100.00 2. Other accounts receivable (1) Classification Period-end balance Category Book balance Bad debt reserve Book value Amount Ratio (%) Amount Ratio (%) Other account receivable with single significant amount and withdrawal bad 12,250,767.63 10.23 12,250,767.63 100.00 debt provision separately Other receivables with bad debt 105,663,886.02 88.24 1,158,255.52 1.10 104,505,630.50 provision accrual by credit portfolio Other accounts with single significant amount and bad debts provision 1,833,967.78 1.53 1,833,967.78 100.00 accrued individually Total 119,748,621.43 100.00 15,242,990.93 12.73 104,505,630.50 (Cont.) Balance at year-begin Category Book balance Bad debt reserve Book value Amount Ratio (%) Amount Ratio (%) Other account receivable with single significant amount and withdrawal bad 12,247,785.36 10.79 12,247,785.36 100.00 debt provision separately Other receivables with bad debt 99,412,903.49 87.59 1,091,737.09 1.10 98,321,166.40 provision accrual by credit portfolio 165 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Balance at year-begin Category Book balance Bad debt reserve Book value Amount Ratio (%) Amount Ratio (%) Other accounts with single significant amount and bad debts provision 1,833,967.78 1.62 1,833,967.78 100.00 accrued individually Total 113,494,656.63 100.00 15,173,490.23 13.37 98,321,166.40 ① Other receivable with single significant amount and withdrawal bad debt provision separately at end of period Period-end balance Other receivable (By unit) Other receivable Bad debt reserve Accrual ratio (%) Accrual reasons Shenzhen Zhonghao (Group) Co., Ltd. 5,000,000.00 5,000,000.00 100.00 Win a lawsuit, no executable assets from adversary Gold Beili Electrical Appliances Company 2,706,983.51 2,706,983.51 100.00 Not expected to collected due to long account age Shenzhen Petrochemical Group 1,907,138.45 1,907,138.45 100.00 Less likely to collection Huatong Package Co., Ltd. Not expected to collected due to 1,212,373.79 1,212,373.79 100.00 long account age Shenzhen Xiandao New Materials Not expected to collected due to 660,790.09 660,790.09 100.00 Company long account age Other_VAT(trade department) Not expected to collected due to 763,481.79 763,481.79 100.00 long account age Total 12,250,767.63 12,250,767.63 ② In combination, other accounts receivable whose bad debts provision was accrued by age analysis Period-end balance A/C age Other receivable Bad debt reserve Accrual ratio Within 1 year 103,228,316.63 1-2 years 76,041.64 3,802.08 5.00 166 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Period-end balance A/C age Other receivable Bad debt reserve Accrual ratio 2-3 years 84,368.14 16,873.63 20.00 Over 3 years 2,275,159.61 1,137,579.81 50.00 Total 105,663,886.02 1,158,255.52 1.10 (2) Bad debt provision accrual collected or switch back Bad debt provision amounted as 69,500.70 Yuan in the period (3) Classification of other receivables by nature Nature Closing book balance Book balance at year-begin Intercourse funds receivable between inner 97,263,924.18 96,526,430.14 units Intercourse accounts of related units 2,996,660.41 2,958,952.09 receivable Other 19,488,036.84 14,009,274.40 Total 119,748,621.43 113,494,656.63 (4) Top 5 other receivables at ending balance by arrears party Ratio in total ending Bad debt Period-end balance of other receivables reserve Name of the company Nature A/C age balance (%) year-end balance Suspense Within 1 4.79 SEHK 5,733,400.00 debits year Intercour Over 3 4.18 Shenzhen Zhonghao (Group) Co., Ltd. 5,000,000.00 5,000,000.00 se funds years Gold Beili Electrical Appliances Intercour Over 3 2.26 2,706,983.51 2,706,983.51 Company se funds years Intercour Over 3 Shenzhen Petrochemical Group 1,907,138.45 1.59 1,907,138.45 se funds years Intercour Over 3 1.01 Huatong Package Co., Ltd. 1,212,373.79 1,212,373.79 se funds years 167 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Ratio in total ending Bad debt Period-end balance of other receivables reserve Name of the company Nature A/C age balance (%) year-end balance Total 16,559,895.75 13.83 10,826,495.75 (5) Account receivable with government grand involved No account receivable with government grand involved of the Company at year-end. (6) Other account receivable derecognition due to financial assets transfer No other account receivable derecognition due to financial assets transfer of the Company in Period. (7) Assets and liabilities resulted by other account receivable transfer and continues involvement No assets or liabilities resulted by other account receivable transfer and continues involvement of the Company in Period. 3. Long-term equity investment (1) Category of Long-term equity investment Period-end balance Balance at year-begin Depreciati Item Book Book Depreciation on Book value Book value balance balance reserves reserves 684,743,472. 1,956,000.0 682,787,472. 555,771,572. 553,815,572. Investment for subsidiary 1,956,000.00 73 0 73 73 73 Investment for associates and joint 205,456,846. 9,787,162.3 195,669,684. 245,802,348. 236,015,185. 9,787,162.32 venture 72 2 40 25 93 890,200,319. 11,743,162. 878,457,157. 801,573,920. 789,830,758. Total 11,743,162.32 45 32 13 98 66 (2) Investment for subsidiary Depreciat Period-end ion Balance at Increased in the Decreased in the balance of The invested entity Period-end balance reserves year-begin period period depreciation accrual in reserves the period 168 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Depreciat Period-end ion Balance at Increased in the Decreased in the balance of The invested entity Period-end balance reserves year-begin period period depreciation accrual in reserves the period Shenzhen SDG Tellus 31,152,888.87 31,152,888.87 Real Estate Co., Ltd. Shenzhen Tellus Real 2,000,000.00 2,000,000.00 Estate Exchange Co. Ltd. Shenzhen SDG Tellus Property Management 57,672,885.22 57,672,885.22 Co., Ltd. Shenzhen Zhongtian 270,708,622.90 98,971,900.00 369,680,522.90 Industrial Co., Ltd. Shenzhen Automobile Industry Trading General 126,251,071.57 126,251,071.57 Company Shenzhen SDG Huari Automobile Enterprise 19,224,692.65 19,224,692.65 Co.Limited Shenzhen Huari TOYOTA Automobile 1,807,411.52 1,807,411.52 Sales Service Co., Ltd. Shenzhen New Yongtong Automobile Inspection 10,000,000.00 10,000,000.00 Equipment Co. Ltd Shenzhen Hanli Hi-Tech 1,956,000.00 1,956,000.00 1,956,000.00 Ceramics Co., Ltd.* Anhui Tellus Starlight Jewelry Investment Co., 4,998,000.00 4,998,000.00 Ltd. Sichuan Tellus Jewelry 30,000,000.00 30,000,000.00 60,000,000.00 169 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Depreciat Period-end ion Balance at Increased in the Decreased in the balance of The invested entity Period-end balance reserves year-begin period period depreciation accrual in reserves the period Technology Co., Ltd. Total 555,771,572.73 128,971,900.00 684,743,472.73 1,956,000.00 Note: more details of * Shenzhen Hanli Hi-Tech Ceramics Co., Ltd. can be seen in Note VIII-1 ―Equity of subsidiaries‖. (3) Investment for associates and joint venture +,- Other Balance at Capita Investment comprehe Other The invested entity Additional l year-begin gains recognized nsive equity investment reducti under equity income change on adjustment I. Joint venture Shenzhen Tellus Gman Investment Co., Ltd 56,244,276.84 3,492,178.30 Shenzhen Tellus Hang Investment Co., Ltd. 10,863,393.76 102,122.54 Subtotal 67,107,670.60 3,594,300.84 II. Associated enterprise Shenzhen Xinglong Machinery Mould Co., 84,792,998.83 Ltd. Shenzhen Tellus Auto Service Chain Co., Ltd. Shenzhen Zung Fu Tellus Auto Service Co., 84,114,516.50 8,560,197.63 Ltd. Hunan Changyang Industrial Co., Ltd.* 1,810,540.70 Shenzhen Jiecheng Electronic Co., Ltd* 3,225,000.00 Shenzhen Xiandao New Materials 4,751,621.62 Company* 170 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 +,- Other Balance at Capita Investment comprehe Other The invested entity Additional l year-begin gains recognized nsive equity investment reducti under equity income change on adjustment Subtotal 178,694,677.65 8,560,197.63 Total 245,802,348.25 12,154,498.47 (Cont.) +,- Cash dividend Period-end balance of The invested entity or profit Period-end balance Impairment accrual Other depreciation reserves announced to issued I. Joint venture Shenzhen Tellus Gman Investment Co., Ltd 59,736,455.14 Shenzhen Tellus Hang Investment Co., Ltd. 10,965,516.30 Subtotal 70,701,971.44 II. Associated enterprise Shenzhen Xinglong 84,792,998.83 Machinery Mould Co., Ltd. Shenzhen Tellus Auto Service Chain Co., Ltd. Shenzhen Zung Fu Tellus 52,500,000.00 Auto Service Co., Ltd. 40,174,714.13 Hunan Changyang Industrial 1,810,540.70 1,810,540.70 Co., Ltd.* Shenzhen Jiecheng 3,225,000.00 3,225,000.00 Electronic Co., Ltd* Shenzhen Xiandao New 4,751,621.62 4,751,621.62 171 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 +,- Cash dividend Period-end balance of The invested entity or profit Period-end balance Impairment accrual Other depreciation reserves announced to issued Materials Company* Subtotal 52,500,000.00 134,754,875.28 9,787,162.32 Total 52,500,000.00 205,456,846.72 9,787,162.32 4. Operating income and operating cost Jan.- Jun.2018 Jan.- Jun.2017 Item Income Cost Income Cost Main business 20,083,496.42 1,842,326.22 21,455,828.43 1,800,520.02 Total 20,083,496.42 1,842,326.22 21,455,828.43 1,800,520.02 5. Investment income Item Jan.- Jun.2018 Jan.- Jun.2017 Long-term equity investment measured by 5,721,803.49 12,154,498.47 equity Investment income from disposal of long-term 7,100,000.00 equity investment Investment income of financial products during 1,618,165.59 2,802,071.22 the holding period Total 14,956,569.69 14,439,969.08 XIV. Supplementary Information 1. Details of non-recurring gains and losses in Year Item Amount Note Income from equity Gains/losses from disposal of non-current asset 1,308,598.25 transfer Tax refund or mitigate due to examination-and-approval beyond power or without official approval document or accident Government subsidies included in current gains and loss (excluding those closely in 172 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Amount Note accordance with corporation business and enjoyed according to fixed amount under national united standard) Capital occupancy expense, collected from non-financial enterprises and recorded in 37,708.32 current gains and losses Income from the exceeding part between investment cost of the Company paid for obtaining subsidiaries, associates and joint-ventures and recognizable net assets fair value attributable to the Company when acquiring the investment Gains and losses from exchange of non-monetary assets Income from Gains and losses from assets under trusted investment or management 3,762,123.18 financial products Various provision for impairment of assets withdrew due to act of God, such as natural disaster Gains and losses from debt restructuring Enterprise reorganization expense, such as expenses from staffing and integrated cost etc. Gains and losses of the part arising from transaction in which price is not fair and exceeding fair value Current net gains and losses occurred from period-begin to combination day by subsidiaries resulting from business combination under common control Gains and losses arising from contingent proceedings irrelevant to normal operation of the Company Except for effective hedge business relevant to normal operation of the Company, gains and losses arising from fair value change of tradable financial assets and tradable financial liabilities, and investment income from disposal of tradable financial assets, tradable financial liabilities and financial assets available for sale Switch-back of provision of impairment of account receivable which are treated with Bad debt provision separate depreciation test 434,566.24 switch-back Gains and losses obtained from external trusted loans Gains and losses arising from change of fair value of investment real estate whose follow-up measurement are conducted according to fair value pattern Affect on current gains and losses after an one-time adjustment according to requirements of laws and regulations regarding to taxation and accounting 173 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Item Amount Note Trust fee obtained from trust operation Other non-operating income and expenditure except for the aforementioned ones -65,293.92 Other gains and losses items complying with definition for non-current gains and losses Subtotal 5,477,702.07 Affect on income tax 382,490.63 Affect on minority equity(after tax) 273,587.26 Total 4,821,624.18 Note: as for the numbers of non-recurring gains/losses, ―+‖ stands for income or earnings,‖-―stands for losses or expenses The Company recognizes non-recurring profit or loss items according to Information Disclosure Explanatory Document Announcement No.1 for Public Listed Issuer- Non-recurring Profit or Loss (ZJHGG[2008]43). 2. REO and earnings per share Weighted average Earnings per share Profits during report period ROE (%) Basic EPS Diluted EPS Net profits belong to common stock stockholders of the Company 2.7562 0.0906 0.0906 Net profits belong to common stock stockholders of the Company 2.2625 0.0743 0.0743 after deducting nonrecurring gains and losses 174 深圳市特力(集团)股份有限公司 2018 年半年度报告全文 Section XI Documents Available for Reference The Company reserved completed integrated documents for CSRC, SZSE, relevant departments and public investor for reference, including: 1. Original Accounting Statement of Semi-Annual 2018 carrying the signatures and seals of the legal representative, CFO and manager of Financial Department; 2. All original documents and notifications of the Company disclosed in newspapers that designated by CSRC in report period; 3. Semi-Annual report disclosed in other securities market. 175