司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Stock Code: 000613, 200613 Short Form of the Stock: *ST Donghai-A, *ST Donghai-B 海南大东海旅游中心股份有限公司 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Semi-Annual Report 2017 (Full-text) Disclosure Date: 19August 2017 1 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Section I. Important Notice, Contents and Paraphrase Important Notice: Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Hainan Dadonghai Tourism Centre (Holdings) 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. Li Yuanbin, Principal of the Company, Fu Zongren, person in charger of accounting works and Fu Zongren, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2017 Semi-Annual Report is authentic, accurate and complete. All directors are attending the Board Meeting for Report deliberation. The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either. Concerning the forward-looking statements with future planning involved in the Report, they do not constitute a substantial commitment for investors. Investors are advised to exercise caution of investment risks. 2 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Content Section I Important Notice adn Paraphrase..........................................................................................3 Section II Company Profile and Main Finnaical Indexes ....................................................................4 Section III Summary of Company Business ........................................................................................6 Section IV Discussion and Analysis of Operation ...............................................................................7 Section V Important Events ............................................................................................................... 11 Section VI Changes in shares and particular about shareholders ......................................................18 Section VII Preferred Stock ...............................................................................................................22 Section VIII Particulars about Directors, Supervisors and Senior Executives ..................................22 Section IX Corporate Bonds ............................................................................................................22 Section X Financial Report ................................................................................................................23 Section XI Documents available for reference ................................................................................74 3 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Paraphrase Items Refers to Contents CSRC Refers to China Securities Regulation Commission SSE Refers to Shenzhen Stock Exchange Company Law Refers to Company Law of The People’s Republic of China Securities Law Refers to Securities Law of The People’s Republic of China Company/the Company Refers to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. Article of Association of Hainan Dadonghai Tourism Centre Article of Association Refers to (Holdings) Co., Ltd. Shareholders’ General Meeting of Hainan Dadonghai Tourism Shareholders’ General Meeting Refers to Centre (Holdings) Co., Ltd. Board of directors of Hainan Dadonghai Tourism Centre BOD Refers to (Holdings) Co., Ltd. Supervisory Committee of Hainan Dadonghai Tourism Centre Supervisory Committee Refers to (Holdings) Co., Ltd. Yuan Refers to RMB/CNY Risk Warning Securities Times, Hong Kong Commercial Daily and Juchao Website (www.cninfo.com.cn) are the media for information disclosure appointed by the Company for year of 2017, all information under the name of the Company disclosed on the above said media shall prevail. The report is prepared in bilingual versions of Chinese and English respectively, in the event of any discrepancy in understanding the two aforementioned versions, the Chinese version shall prevail. Investors are advised to exercise caution of investment risks. 4 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Section II Company Profile and Main Finnaical Indexes I. Company profile Short form of the stock *ST Donghai-A , *ST Donghai-B Stock code 000613, 200613 Short form of the Stock after N/A changed (if applicable) Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in Chinese) 司公限有份股心中游旅海东大南海 Short form of the Company (in Chinese) 海东大 Foreign name of the Company Hainan Dadonghai Tourism Centre (Holdings) Co.,Ltd (if applicable) Foreign name of the Company DADONGHAI in short (if applicable) Legal representative Li Yuanbin II. Person/Way to contact Secretary of the Board Rep. of security affairs Name Wang Hongjuan Contact add. Dadonghai Sanya Tel. 0898-88219921 Fax. 0898-88214998 E-mail hnddhhn@21cn.com 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 add. Dadonghai Sanya Code for the registration address 572021 5 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Office address Dadonghai Sanya Code for the office address 572021 Website —— E-mail hnddhhn@21cn.com Inquiry date of the notice disclosed on appointed —— website 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 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 2016. IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data □Yes √ No Increase/decrease in this Current period Same period of last year report y-o-y Operating revenue (RMB) 15,096,273.42 12,062,797.60 25.15% Net profit attributable to shareholders of 1,719,253.80 172,122.52 898.85% the listed company(RMB) Net profit attributable to shareholders of the listed company after deducting 1,719,253.80 94,716.52 1,715.16% non-recurring gains and losses(RMB) Net cash flow arising from operating 3,231,073.10 1,453,697.44 122.27% activities(RMB) Basic earnings per share (RMB/Share) 0.0047 0.0005 840.00% Diluted earnings per share (RMB/Share) 0.0047 0.0005 840.00% Weighted average ROE (%) 2.29% 0.22% 2.07% Increase/decrease in this End of current period End of last period report-end over that of last period-end Total assets (RMB) 96,200,796.86 105,444,153.63 -8.77% Net assets attributable to shareholder of 75,995,669.24 74,276,415.44 2.31% listed company(RMB) 6 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 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 Chinese GAAP (Generally Accepted Accounting Principles) in the period. VI. Items and amounts of extraordinary profit (gains)/loss □Applicable √Not applicable The Company has no extraordinary profit(gains) in the period Section III Summary of Company Business I. Main businesses of the company in the reporting period Whether the company needs to comply with the disclosure requirements of the particular industry No The company's main business is hotel accommodation and catering services. Procurement of goods is mainly the goods and materials necessary for hotel and catering operations by taking the principle of low price and fine quality, some goods are purchased by directly signing purchase contracts with suppliers, and some good are purchased by procurement agents. The selling is mainly based on internet marketing and supplemented by the individual travelers of non-internet marketing and business and the tourists from travel agencies. The hotel is located at the central zone of Dadonghai scenic spot in Sanya City, Hainan Province, and it has become a member of the nationwide famous hotels because of the convenient transportation, beautiful environment, long history, and rich culture. However, in recent years, the local high-, middle- and low-grade hotels or guesthouses numerously emerge, resulting in the supply much larger than the market demand, the industry competition is rather fierce, and the pressure of decline in business remains. 7 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Increased 980,000Yuan over that of year-beginning, mainly because the villa in Building Construction in process C and swimming pool are in renovation and reformation during the reporting period Decreased 17.1 million Yuan over that of year-beginning, mainly because debt Monetary fund investment 9 million Yuan paid and contact account 10 million Yuan with Luoniushan Group Co., Ltd. Decreased 350,000 Yuan over that of year-beginning, mainly because business from Account receivable those units settled by month declined Increased 140,000 Yuan over that of year-beginning, mainly because the personal Other account receivable account ready for settlement increased Decreased 290,000 Yuan over that of year-beginning, mainly because the long-term Non-current assets due within one year amortization expenses due within one year was amortized by month after re-listed Increased 9.14 million Yuan over that of year-beginning, mainly because debt investment Other current assets increased 9 million Yuan 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis Whether or not the Company complies with disclosure requirement of the special industry No The company takes hotel accommodation and catering services as the principle works, locates at Dadonghai bay which is one of the China “Top 40 scenery” and the only AAAA scenic spot open for free in Sanya and has the maximum passenger flow volume in Sanya City, and is about a 5-minute drive from downtown of Sanya City and about a 30-munite drive from Sanya Phoenix Airport. The hotel is only tens of meters distant from the sea level, possesses beautiful landscaping full of blooming flowers all the year round, and enjoys exceptional geography, natural environmental advantages. The hotel has opened for more than two decades which is one of the oldest hotels in Sanya and has received many domestic and foreign heads of state and national leaders. In the recent years, the company has comprehensively upgraded and rebuilt the hotel’s software and hardware facilities, further improved the hotel's internal and external business environment, and effectively enhanced the business competitiveness. Currently, the management of the company’s hotel is still in the front rank among hotels in the same area, with the same scale, and at the same level. In the future work, the company will keep trying to improve the hotel’s internal and external business environment, strengthen the sales efforts and the staff construction, and further improve the operational capability. 8 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 During the reporting period, the company's core competence had no significant change. Section IV Discussion and Analysis of Operation 1. Introduction During the reporting period, the Company realized main business income of 15,096,300 Yuan, increased by 3,033,500 Yuan compared with the same period last year, an increase of 25.15%; operating profit earns 17,190,000 Yuan, increased by 1,547,100 Yuan compared with the same period last year, an increase of 898.85%; net profit earns 1,719,300 Yuan, increased by 1,547,100 Yuan compared with the same period last year, an increase of 898.85%. During the reporting period, the Company keep innovating in new market development and use marketing strategy in a flexible way to expoile the sales channel, acquiring a large number of guest source from Russian by making use of the favorable geographical advantage. Moreover, we put more effors in renovation and reforming of the equipment and facilities, strengthing skill training for the employees in order to improve the product quality. Strictly controlling the cost management, perfect the Company’s internal control system in order to earns and less expenditure costs, we completed the operation targets that formulated at beginning of the year basically. Main works are as: 1. Actively expand market, broaden marketing channels, and flexibly utilize marketing strategy to strive for a large number of Russian customers. During the reporting period, the company continued to increase the sales efforts of network marketing channels, strengthen the cooperation with the domestic leading travel network companies, such as Ctrip, Qunar, Tuniu, Alitrip, Asiatravel, CFHC Tmall, etc., and make the best of network channels and e-commerce platforms to expand network marketing. Take advantage of hotel location, and flexibly utilize the marketing strategies to cooperate with Russian tourist suppliers including Haolide International Travel Agency, Anex Tour, Youyi International Travel Agency, etc. to win a large number of Russian customers. During the reporting period, the company achieved main business income of RMB 15,096,300, an increase of RMB 3,033,500 compared with the same period last year, and rate of increase was 25.15%. 2. Continue to increase the investment in the renovation of hotel facilities and strengthen the training of service skills so as to improve the quality of hotel products and enhance the product competitiveness. During the reporting period, in the face of the constantly emerging new hotels, the company continued to increase investment, decorated and renovated the hotel's C building, villas and swimming pools in the off season, and optimized the hotel's landscape. Based on the “people first” operation principle, strengthen the business service skills training, at the same time, continue to enrich the staff’s cultural life, create the harmonious working environment, and enhance the corporate culture construction. Re-newing the equipment and facilities, improve 9 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 service skill traning for strengthening the quality of the hotel products and market competitiveness. 3. Strictly curb the costs and budget management, improve internal control mechanism, increase revenue and reduce expenditures, safety in production During the reporting period, the company took business expansion as the guiding and financial management as the operating service, strengthened the procurement cost control management and budget management, achieved the diversification of procurement cost enquiry channels through network price query and hotel industry price inquiries and other measures, shopped around for super quality and competitive price, and scientifically controlled the operating costs; strictly and reasonably controlled various costs and expenditures, diligently checked up and made repairs, and resolutely put an end to various wasting of resources, effectively improved the procurement cost rationality and income cost-effectiveness. At the same time, the company continued to improve the internal control system, strengthen the internal control work norms and implementation, intensify the effective implementation of internal controls, increase revenue and reduce expenditure, and implement safety production so as to effectively improve the operating efficiency, ensure the safety of operation, and achieve the maximization of corporate benefits. In 2017, the Company continue to consolidate and expand sales channels, improve the hotel’s quality and service standards, enhance the comprehensive competitveness, to laying out a solid foundation for sustained, stable and healthy development of the Company. II. Main business analysis See the “I-Introduction” in “Discussion and Analysis of Operation” Change of main financial data on a y-o-y basis In RMB Same period of Y-o-y Current period Reasons for changes last year increase/decrease More revenue from guest houses and Operation revenue 15,096,273.42 12,062,797.60 25.15% catering Operation cost 5,256,112.51 4,460,023.31 17.85% Increase of the operation business Sales expenses 2,458,144.93 2,099,035.74 17.11% Increase of the remuneration Increase of the remuneration and Administrative expenses 5,089,450.57 4,989,443.77 2.00% promotion costs Income from savings interests Financial cost -180,672.66 -204,752.54 11.76% decreased Income tax expenses 57,374.17 -100.00% The losses from previous year are not 10 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 reckoned for income tax expenses Net cash flow arising from 3,231,073.10 1,453,697.44 122.27% Increase of gross margin operation activities Net cash flow arising from Increase of the investment for -10,333,145.20 -9,410,799.00 -9.80% investment activities transformation & renovation Net cash flow arising from The contact account paid to -10,000,000.00 financing activities Luoniushan Group The contact account paid to Net increase of cash and cash -17,102,072.10 -7,957,101.56 -114.93% Luoniushan Group and amount from equivalent transformation & renovation Major changes on profit composition or profit resources in reporting period □Applicable √Not applicable No changes on profit composition or profit resources 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 Tourism & 15,096,273.42 5,256,112.51 65.18% 25.15% 17.85% 3.42% catering According to products Room revenue 11,676,662.38 4,079,275.81 65.06% 19.01% 11.21% 3.91% Catering and entertainment 1,841,782.51 939,586.67 48.98% 79.74% 69.38% 6.81% revenue Rental revenue 1,577,828.53 237,250.03 84.96% 28.66% -0.01% 5.34% According to region Hainan Province 15,096,273.42 5,256,112.51 65.18% 25.15% 17.85% 3.42% III. Analysis of the non-main business √Applicable □ Not applicable In RMB Amount Ratio in total profit Note Whether be sustainable Non-operation Refundable holiday road tolls 260.00 0.02% Lack of sustainability revenue received 11 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 IV. Assets and liability 1. Major changes of assets composition In RMB Current period-end Same period-end last year Ratio in Ratio in Ratio Notes of major changes Amount total Amount total changes assets assets Monetary fund 10,108,175.91 10.51% 11,825,290.70 11.39% -0.88% Business from those units settled by month Account receivable 337,187.05 0.35% 531,683.28 0.51% -0.16% declined Inventory 253,215.05 0.26% 235,587.40 0.23% 0.03% Investment real estate 9,096,265.77 9.46% 9,570,789.33 9.21% 0.25% Accrual of the depreciation and amortization Fix assets 39,264,470.61 40.82% 41,663,971.17 40.11% 0.71% Depreciation accrual for the fix assets Construction in The renovation and reformation engineering 978,211.64 1.02% 1.02% process money paid in advance Other account 316,384.24 0.33% 414,276.84 0.40% -0.07% receivable The taxes paid in advance are re-listed for Other current assets 11,020,867.76 11.46% 9,000,000.00 8.66% 2.80% accounting policy changed last year Financial assets Equity transfer of the Sanya Xiangyu E-Business 4,500,000.00 4.33% -4.33% available for sale Company Long-term amortization 1,071,343.97 1.11% 1,508,750.00 1.45% -0.34% The balance for amortization declined year by year expenses 2. Assets and liability measured by fair value □ Applicable √ Not applicable 3. Assets right restriction till end of reporting period Nil V. Investment 1. Overall situation √Applicable □ Not applicable 12 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Current investment amount (RMB) Same period of last year (RMB) Changes (+,-) 9,000,000.00 9,000,000.00 0.00% 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 VII. Analysis of main holding company and stock-jointly companies □ Applicable √ Not applicable The Company had no information of main holding company and stock-jointly companies disclosed in the reporting period. VIII. Structured vehicle controlled by the Company □ Applicable √ Not applicable 13 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 IX. Prediction of business performance from January – September 2017 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) Marco Policy risks In order to normalize and optimize tourism market or further to promote clear-party construction, related departments may further issue some relative policies. While these polices may cause restrain and effect on regional tourism development. Main business income may be affected since we are engaged in tourism service. Countermeasures: The Company will further to improve the hard and soft equipments and facilities of the hotel while expanding the business scope, and win more market shares via high-class service and comfortable environment so as to ensure the main business income level. (2) Natural disaster risks In recent years, various natural disasters take place frequently, Hainan Island belongs to oceanic climate, where has high incidence of disastrous weather in summer. If Sanya becomes the landing place of typhoon, it may cause great damages to the facilities of the Company and affect the Company’s normal operation. Countermeasures: The Company will strengthen the construction and maintenance for infrastructure, continue to buy property insurances, positively adopt effective prevention measures, and improve the ability of resisting natural disasters. (3) Risks of HR Demand for talend in aspect of hotel sales and management are increasingly due to the constantly rise of hotel industry, flow of hotel talented people comes more widespread and more frenquent, we may face the risks of development restrained from brain drain. Countermeasure: we will continue to improved the talent introduction, taining system, incentive mechanism, remuneration and welfare as well as insurance mechanism, strive to attract talent, cultivate them and retain them. Meanwhile, strengthen staff quality and skills as well as the manaegment ability, further putting more efforts in enterprise culture construction, enhance the cohesion in the Company, guarantee a stable of the core managemers and skill technicians. (4) Operational risks of main business With the ceaseless development of global tourist industry constantly and ceaseless rising of high-class, middle-class and low-class hotels, the tourist sources keep shunting, and the competition of tourism service industry in Sanya becomes increasingly fierce. While the main business of the Company is just a small-scale hotel, as the main business is single and the business scope is limited, the tourist market conditions and tourist quantity directly make significant affects on the company performance. Countermeasure: made a scientific management and decision-making procedures, strengthen the awarenes of risk prevention, building and improving relevant mechanism and regulized the management in the Company. Furthermore, increase the sales ability, on base of the former saels networ, continues to exploit foreign high-end 14 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 tourism market under the superior geographical location and enviornment for highering the occupancy rate. Besides, we will push forward the material asset reorganization, expanding opertaion projects, enrich the industrial structure for increasing the profit increasing point. (5) Suspension risk Stock of the Company will suspended after the annual report of 2017 released, if the audited net profit for year of 2017 recognized as negative. Countermeasures: take a variety of measures in order to improve the sustainable ability and strive to avold the suspension conditions. Section V. Important Events I. In the report period, the Company held annual general meeting and extraordinary shareholders’ general meeting 1. Annual General Meeting in the report period Ratio of Session of Type investor Date Date of disclosure Index of disclosure meeting participation The “Resolution Notice of Annual General Meeting of 2016” (No.: 2017-027) Annual published on Securities Times, Hong Kong AGM of 2016 general 26.37% 21 April 2017 22 April 2017 Commercial Daily and Juchao website meeting (http://www.cninfo.com.cn) dated 22 April 2017 respectively The “Resolution Notice of First First Extraordinary Shareholders Meeting of Extraordina Extraordinary 2017” (No.: 2017-038) published on ry Shareholders 9.48% 12 May 2017 13 May 2017 Securities Times, Hong Kong Commercial shareholder Meeting of Daily and Juchao website s meeting 2017 (http://www.cninfo.com.cn) dated 13 May 2017 respectively The “Resolution Notice of Second Second Extraordinary Shareholders Meeting of Extraordina Extraordinary 2017” (No.: 2017-057) published on ry Shareholders 9.47% 12 July 2017 13 July 2017 Securities Times, Hong Kong Commercial shareholder Meeting of Daily and Juchao website s meeting 2017 (http://www.cninfo.com.cn) dated 13 July 2017 respectively 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √ Not applicable 15 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 II. Profit distribution and capitalization of capital reserves in the Period □ Applicable √ Not applicable The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the semi-annual year III. Commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies √Applicable □ Not applicable Type of Comm Commitme Implementati Commitments Promise commit Content of commitments itment nt date on term ments On May 30, 2007, Luoniushan Co., Ltd. made commitments in the Company’s "Instructions for reform of non-tradable shares" (Revision) and "Instructions for Till end of the reform of non-tradable shares" (Abstract of reporting revision) that in view of Dadonghai Commi period, the tments Company’s losses in successive years and on Luonius for 6 original plans Commitments for the verge of delisting, in order to reverse the 27 June han Share month of material Share Merger Reform company's business difficulties, improve 2017 Co., Ltd Merger s assets profitability and recover the continuous Reform reorganizatio business capacity, Luoniushan Co., Ltd., the n was controlling shareholder of Dadonghai terminated Company made commitments to actively seek restructuring parties to reorganize the assets of Dadonghai Company at the appropriate time. Commitments in report of acquisition or equity change Commitments in assets reorganization Commitments make in initial public offering or re-financing Equity incentive commitment Other commitments for medium and small shareholders Completed on time(Y/N) Yes If the commitments is not fulfilled on time, shall explain the specify reason N/A and the next work plan 16 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 IV. Engagement and non-reappointment of CPA Whether the semi-annual report was audited or not □Yes √ No The semi-annual report of the Company had no audited. VII. Explanation from the Board and Supervisory Committee for “Qualified Opinion” from the CPA □ Applicable √ Not applicable VI. Explanation on “Qualified Opinion” of previous year from the Board □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable In reporting period, the Company has no bankruptcy reorganization occurred. VIII. Lawsuits Significant lawsuits and arbitrations of the Company □ Applicable √ Not applicable The Company has no significant lawsuits and arbitrations in reporting period Other lawsuits □ Applicable √ Not applicable IX. Penalty and rectification □ Applicable √ Not applicable The Company has no penalty and rectification in the 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 During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives that have not been implemented. 17 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 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) Same as Same as First the the Luonius Accom majority Consum Market Market transacti transacti han Co., modatio 25.23 1.67% 0Y sharehol ption price price on with on with Ltd. n der non-rela non-rela ted party ted party Total -- -- 25.23 -- 0 -- -- -- -- -- Detail of sales return with major N/A amount involved Report the actual implementation of the daily related transactions which were projected about their total N/A amount by types during the reporting period Reasons for major differences between trading price and market Not applicable reference price 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. 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 There are non-operational contact of related credit and debts in the Company √ Yes □No 18 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Related party claims receivable: Nil Debt payable to related parties: The newly The amount Balance of Current Balance at added amount of recovery in Related period-begin interest period-end Related Resulted in Period Period relation (in 10 Interest rate (in 10 (in 10 party reason (in 10 (in 10 ship thousand thousand thousand thousand thousand Yuan) Yuan) Yuan) Yuan) Yuan) Luoniushan Inter-enterp Group Co., Related party rise capital 0 1,981 1,000 Ltd. exchange Influence on operation result The related debts have no major influence on operation results of the Company and shows a certain and financial statue of the extent positive influence on financial status of the Company Company from related debts 5. Other material related transactions □Applicable √Not applicable The Company has no other material related transactions in the period 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. Major contract and implantation 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable The Company had no trusteeship in the reporting period. (2) Contract □ Applicable √ Not applicable The Company had no contract in the reporting period. 19 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 (3) Leasing √Applicable □Not applicable Leasing Leasing age Items Lessee Term of lease limit (year) Restaurant in 1st floor Ma Ming (Hainan Hangpai Food Co., 5-year 2016-01-01 to 2020-12-31 of Building B Ltd. ) Shooping mall of Xu Jipeng 3-year 2016-11-15 to 2019-11-14 Building B Ground floor of the Chen Junwei 3-year 2016-03-01 to 2019-02-28 Building A Seaside sidewalk snack Sanya Leda Cantering Management 5-year 2016-05-01 to 2021-04-30 booth and wooden house Co., Ltd. Seaside locker room Zhong Zhengao 3-year 2016-12-01 to 2019-11-30 Items bring over 10% of the total profit in reporting period √Applicable □Not applicable Amount Standard Earnings for leasing Date of for Impact on Related Related Leasing Assets Starting (in 10 Lessor (in 10 terminatio earnings the transaction relationshi party leasing date thousand thousand n determinat Company (Y/N) p Yuan) Yuan) ion Ma Ming (Hainan Restaurant The Hangpai in 1st floor 2016-01-0 2020-12-3 Revenue 1,886 75.6 Contract N N/A Company Food of 1 1 increased Co., Building B Ltd. ) Sanya Seaside Leda sidewalk The Cantering snack 2016-05-0 2021-04-3 Revenue 566 180 Contract N N/A Company Manageme booth and 1 0 increased nt Co., wooden Ltd. house Zhong Seaside 2016-12-0 2019-11-3 Revenue v 10 36 Contract N N/A Zhengao locker 1 0 increased 20 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 room 2. Major guarantee □ Applicable √ Not applicable The Company had no major guarantee in the reporting period. 3. Other material contracts □ Applicable √ Not applicable The Company had no other material contracts in the reporting period. XV. Social responsibility 1. Execution of social responsibility of targeted poverty alleviation (1) Summary of targeted poverty alleviation for fist half year (2) Targeted poverty alleviation of the listed company for first half year: Nil (3) Follow-up targeted poverty alleviation plans: Nil 2. Major environmental protection Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection No XVI. Explanation on other significant events √Applicable □ Not applicable 1. On 8 March 2001, the Company received a written decision of administrative penalty ZJFZi [2001] No.3 “Penalty Decision on Hainan Dadonghai Tourism Center (Holdings) Co., Ltd. in Violation of Securiteis Laws and Regulations ” from CSRC for false profit and rule-violation. Penalty including confiscate their illegal income of 19.31 million Yuan and improse a fine of 0.5 million Yuan. On 20 Feburary 2017, the Company paid the penalty in full to CSRC. 2. Lawyer’s Letter received by the Company: based on the preliminary calculation by Sanya Power Supply Bureau, totally 10313373 KWH was undercounted from July 2006 to April 2016 under the name of South China Hotel. Found more in the “Notice of Reciveing the Lawyer’s Letter (Notice No.: 2016-016)” released on Securities Times, Hong Kong Commercial Daily and Juchao Website dated 31 May 2016. Currently, the Company still in negotiation and communication with Sanya Power Supply Bureau, relevant results are not comes out. 21 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 XVII. Major event of the subsidiaries □ Applicable √ Not applicable 22 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in shares 1. Changes in shares In Share Before change Increase/decrease in this time (+ , - ) After changed Bon Capitalizat New us ion of Amount Ratio Other Subtotal Amount Ratio issue shar public e reserve I. Restricted shares 10,455,687 2.87% 0 0 10,455,687 2.87% 1. State-owned shares 2. State-owned corporate 2,369,400 0.65% 0 0 2,369,400 0.65% shares 8,086,287 2.22% 0 0 8,086,287 2.22% 3. Other domestic shares Including: Domestic legal 7,953,000 2.18% -132,000 -132,000 7,821,000 2.15% person shares Domestic natural person 133,287 0.04% 132,000 132,000 265,287 0.07% shares II. Unrestricted shares 353,644,313 97.13% 0 0 353,644,313 97.13% 265,644,313 72.96% 0 0 265,644,313 72.96% 1. RMB common shares 2.Domestically listed foreign 88,000,000 24.17% 0 0 88,000,000 24.17% shares III. Total shares 364,100,000 100.00% 0 0 364,100,000 100.00% Reasons for share changed √Applicable □Not applicable In the process of subsequent work of share-trading reform of the Company, according to relevant regulations the release procedures were in process and part of the shareholders handling the payment of account paid in advance. Thus, the share structure changes in the report period but retained the same in total share capital. Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changed 23 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 □ 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 Number of shares Number of Number of Number of restricted shares new shares shares Restriction Shareholders’ name Released date at released in restricted restricted at reasons Period-begi the period in the Year Period-end n Legal After relevant reimbursement Xiao Tiefeng 132,000 0 0 132,000 commitment in and unrestricted procedures share reform completed x Legal After relevant reimbursement Sanya Real Estate Valuation Agent 924,000 0 0 924,000 commitment in and unrestricted procedures share reform completed Hainan Hong Kong-Macao Legal After relevant reimbursement International Trade Development Co., 924,000 0 0 924,000 commitment in and unrestricted procedures Ltd. share reform completed Legal After relevant reimbursement Haikou Dongfang Urban credit 924,000 0 0 924,000 commitment in and unrestricted procedures Cooperative share reform completed Legal After relevant reimbursement Hainan Branch of Bank of 924,000 0 0 924,000 commitment in and unrestricted procedures Communications Co., Ltd. share reform completed Legal After relevant reimbursement Shenyang Jin’an Industrial 831,600 0 0 831,600 commitment in and unrestricted procedures Corporation share reform completed Legal After relevant reimbursement Sales Dept. of Sanya Wanli Building 92,400 0 0 92,400 commitment in and unrestricted procedures Materials share reform completed Legal After relevant reimbursement Hainan Nongken Sanya Timber Mill 46,200 0 0 46,200 commitment in and unrestricted procedures 24 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 share reform completed Legal After relevant reimbursement Guangzhou Company of Hainan 660,000 0 0 660,000 commitment in and unrestricted procedures International Investment Co., Ltd. share reform completed Legal After relevant reimbursement Southern Industrial and Trading 660,000 0 0 660,000 commitment in and unrestricted procedures Corporation share reform completed Legal After relevant reimbursement Guangzhou Dongzhan Industrial Co. 924,000 0 0 924,000 commitment in and unrestricted procedures LTD share reform completed Legal After relevant reimbursement Sanya Zhongxing Development Co., 2,541,000 0 0 2,541,000 commitment in and unrestricted procedures Ltd. share reform completed Legal After relevant reimbursement Hainan Dadonghai Tourism Co. Ltd. 739,200 0 0 739,200 commitment in and unrestricted procedures share reform completed Legal After relevant reimbursement Ma Xiaoping 0 0 132,000 132,000 commitment in and unrestricted procedures share reform completed Legal After relevant reimbursement Beijing Xueli Clothing Accessories 132,000 0 -132,000 0 commitment in and unrestricted procedures Co., Lt.d share reform completed Supervisor Chen Gang (former named Chen Comply with relevant 1,287 0 0 1,287 un-tradable Shengguang) regulations shares Total 10,455,687 0 0 10,455,687 -- -- II. Securities issuance and listing □ Applicable √ Not applicable III. Amount of shareholders of the Company and particulars about shares holding In Share Total common stock Total preference shareholders shareholders in reporting 17,444 with voting rights recovered at 0 period-end end of reporting period Particulars about common shares held above 5% by shareholders or top ten common shareholders Nature of Proporti Number of Changes in Amount Amount of Full name of Shareholders on of shareholder common report of un-restricte shares Number of share 25 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 restricte pledged/frozen shares held d shares held period d shares State of Amou at period-end held held share nt Domestic non Luoniushan Co., Ltd. state-owned 16.90% 61,515,370 0 61,515,370 corporate Domestic nature Pan Guoping 8.48% 30,879,791 0 30,879,791 person Changxin Fund- Shanghai Pudong Development Bank - Gold Investment Other 3.30% 12,000,052 4,970,010 12,000,052 Asset No.2 Management Plan First Shanghai Securities Limited Foreign corporate 2.62% 9,552,798 0 9,552,798 HGNH INTERNATIONAL ASSETS MANAGEMENT CO., LTD. – Clients Foreign corporate 2.29% 8,327,502 2,468,200 8,327,502 fund Domestic nature Hu Jianguo 1.71% 6,227,640 564,700 6,227,640 person Yunnan International Trust Co., Ltd. – Yunnan Trust Yunqilongxiang No.2 Trust Other 1.37% 5,000,084 500,084 5,000,084 Plan China Investment Securities (HK) Co., Ld. Foreign corporate 1.30% 4,722,300 1,090,000 4,722,300 – customer deposit Domestic nature Zhang Fengxiu 1.07% 3,901,372 0 3,901,372 person Domestic non Yangpu Tongrong Investment Management state-owned 0.99% 3,609,000 -1,009,800 3,609,000 Consultation Co., Ltd corporate Strategy investors or general legal person becomes top 10 N/A common shareholders due to rights issued The Company is unknown whether there exists associated relationship or Explanation on associated relationship or accordant action belongs to the consistent actor regulated by the Management Measure of among the aforesaid shareholders Information Disclosure on Change of Shareholding for Listed Company among the other shareholders. Particular about top ten shareholders with un-restrict common shares held Amount of un-restrict common Type of shares Shareholders’ name shares held at Period-end Type Amount Luoniushan Co., Ltd. 61,515,370 RMB common share 61,515,370 Pan Guoping 30,879,791 Domestically listed 30,879,791 26 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 foreign share Changxin Fund- Shanghai Pudong Development Bank - 12,000,052 RMB common share 12,000,052 Gold Investment Asset No.2 Management Plan Domestically listed First Shanghai Securities Limited 9,552,798 9,552,798 foreign share HGNH INTERNATIONAL ASSETS MANAGEMENT 8,327,502 RMB common share 8,327,502 CO., LTD. – Clients fund Hu Jianguo 6,227,640 RMB common share 6,227,640 Yunnan International Trust Co., Ltd. – Yunnan Trust 5,000,084 RMB common share 5,000,084 Yunqilongxiang No.2 Trust Plan China Investment Securities (HK) Co., Ld. – customer 4,722,300 RMB common share 4,722,300 deposit Zhang Fengxiu 3,901,372 RMB common share 3,901,372 Yangpu Tongrong Investment Management Consultation 3,609,000 RMB common share 3,609,000 Co., Ltd Expiation on associated relationship or consistent actors The Company is unknown whether there exists associated relationship or belongs within the top 10 un-restrict common shareholders and to the consistent actor regulated by the Management Measure of Information between top 10 un-restrict common shareholders and top Disclosure on Change of Shareholding for Listed Company among the other 10 common shareholders shareholders. Explanation on top ten common shareholders involving N/A margin business Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common shareholders or top ten common 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. 27 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting. 28 司公限有份股心中游旅海东大南海 2017 文全告报度年半年 Section VIII. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives □ Applicable √ Not applicable Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report 2016. II. Resignation and dismissal of directors, supervisors and senior executives □ Applicable √ Not applicable Directors, supervisors and senior executives has no changed in the period, found more in Annual Report 2016 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 29 Section X Financial Report HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Financial Report and Financial Statement Semi-Annual 2017 1 HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Financial Report and Financial Statement (Jan. 1, 2017- Jun. 30, 2017) Content Page I. Financial Statement Balance Sheet 1-2 Profit Statement 3 Statement of Cash Flow 4 Statement of Changes in Owners’ Equity 5-6 II. Notes to Financial Statement 1-48 1 HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Balance Sheet June 30, 2017 (Expressed in Renminbi unless otherwise stated) Assets Note V Ending balance Beginning balance Current assets: Monetary funds (I) 10,108,175.91 27,210,248.01 Financial assets measured at fair value through rofit or loss for the current period Derivative financial assets Notes receivable Accounts receivable (II) 337,187.05 690,444.72 Prepayments (III) 38,660.36 58,783.23 Interests receivable Dividends receivable Other receivables (IV) 316,384.24 174,103.52 Inventories (V) 253,215.05 219,179.72 Assets classified as held for sale Non-current assets maturing within one year (VI) 292,184.72 584,369.42 Other current assets (VII) 11,020,867.76 1,876,449.22 Total current assets 22,366,675.09 30,813,577.84 Non-current assets: Available-for-sale financial assets (VIII) Held-to-maturity investments Long-term receivables Long-term equity investments (IX) Investment property (X) 9,096,265.77 9,333,527.55 Fixed assets (XI) 39,264,470.61 40,395,680.91 Construction in progress (XII) 978,211.64 Project materials Disposal of fixed assets Productive biological assets Oil and gas assets Intangible assets (XIII) 23,423,829.78 23,830,023.36 Development expenses Goodwill Long-term deferred expenses (XIV) 1,071,343.97 1,071,343.97 Deferred income tax assets 1 页 第表报 Other non-current assets Total non-current assets 73,834,121.77 74,630,575.79 Total assets 96,200,796.86 105,444,153.63 The accompanying notes to the financial statements are an integral part of the financial statements. Legal Representative: Accounting Principal: The Accounting Firm’s Principal: 2 页 第表报 HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Balance Sheet (continued) June 30, 2017 (Expressed in Renminbi unless otherwise stated) Liabilities and owners 'equity Note V Ending balance Beginning balance Current liabilities: Short-term borrowings Financial liabilities measured at fair value through profit or loss for the current period Derivative financial liabilities Notes payable Accounts payable (XVI) 2,042,988.73 1,967,565.51 Accounts received in advance (XVII) 1,246,924.32 1,894,524.28 Employee benefits payable (XVIII) 1,799,762.38 2,148,514.36 Taxes and surcharges payable (XIX) 539,524.00 582,944.27 Interests payable Dividends payable Other payables (XX) 13,086,243.15 23,084,504.73 Liabilities classified as held for sale Non-current liabilities maturing within one year Other current liabilities Total current liabilities 18,715,442.58 29,678,053.15 Non-current liabilities: Long-term borrowings Bonds payable Including: preferred shares Perpetual capital securities Long-term payables Long-term employee benefits payable Special payables Estimated liabilities (XXI) 1,489,685.04 1,489,685.04 Provisions Deferred income tax liabilities Other non-current liabilities Total non-current liabilities 1,489,685.04 1,489,685.04 Total liabilities 20,205,127.62 31,167,738.19 Owners 'equity: Share capital (XXII) 364,100,000.00 364,100,000.00 Other equity instruments Including: preferred shares Perpetual capital securities Capital reserves (XXIII) 54,142,850.01 3 页 第表报 54,142,850.01 Less: treasury stock Other comprehensive income Special reserves Surplus reserves General risk reserves Undistributed profit (XXIV) -342,247,180.77 -343,966,434.57 Total owners 'equity 75,995,669.24 74,276,415.44 Total liabilities and owners 'equity 96,200,796.86 105,444,153.63 The accompanying notes to the financial statements are an integral part of the financial statements. Legal Representative: Accounting Principal: The Accounting Firm’s Principal: HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Profit Statement Semi-Annual 2017 (Expressed in Renminbi unless otherwise stated) Item Note V Current period Last period I. Operating income (XXV) 15,096,273.42 12,062,797.60 Less: operating cost (XXV) 5,256,112.51 4,460,023.31 Business taxes and surcharges (XXVI) 754,244.27 566,956.63 Selling expenses (XXVII) 2,458,144.93 2,099,035.74 Administrative expenses (XXVIII) 5,089,450.57 4,989,443.77 Financial expenses (XXIX) -180,672.66 -204,752.54 Losses from asset impairment (XXX) Plus: gains from changes in fair value ("-" for losses) Investment income ("- " for loss) Including: income from investments in associates and joint ventures II. Operating profits ("-" for losses) 1,718,993.80 152,090.69 Plus: non-operating income (XXXI) 260.00 77,406.00 Including: Gains from disposal of non-current assets Less: non-operating expenses Including: Loss on disposal of non-current assets III. Total profits ("-" for total losses) 1,719,253.80 229,496.69 Less: income tax expenses 57,374.17 IV. Net profit ("-" for net loss) 1,719,253.80 172,122.52 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 remeasurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of 4 页 第表报 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 6. Others VI. Total comprehensive income 1,719,253.80 172,122.52 VII. Earnings per share: X. (II) (I) Basic earnings per share 0.0047 0.0005 (II) Diluted earnings per share 0.0047 0.0005 Legal Representative: Accounting Principal: The Accounting Firm’s Principal: HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Statement of Cash Flow Semi-Annual 2017 (Expressed in Renminbi unless otherwise stated) Item Note V Current period Last period I. Cash flows from operating activities Cash received from sale of goods and rendering of services 15,736,183.76 12,211,146.88 Refunds of taxes and surcharges 4,801.73 Cash received from other operating activities (XXXII) 677,415.38 545,761.73 Sub-total of cash inflows from operating activities 16,413,599.14 12,761,710.34 Cash paid for goods purchased and services received 3,826,391.38 3,278,812.89 Cash paid to and on behalf of employees 5,608,808.99 4,775,931.92 Cash paid for taxes and surcharges 1,610,025.50 1,706,387.86 Cash paid for other operating activities (XXXII) 2,137,300.17 1,546,880.23 Sub-total of cash outflows from operating activities 13,182,526.04 11,308,012.90 Net cash flows from operating activities 3,231,073.10 1,453,697.44 II. Cash flows from investing activities Cash received from disposal of investments 5 页 第表报 Cash received from returns on investments Net cash received from disposal of fixed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and other business units Cash received from other investing activities Sub-total of cash inflows from investing activities Cash paid to acquire and construct fixed assets, intangible assets 1,333,145.20 410,799.00 and other long-term assets Cash paid for investments 9,000,000.00 9,000,000.00 Net cash paid to acquire subsidiaries and other business units Cash paid for other investing activities Sub-total of cash outflows from investing activities 10,333,145.20 9,410,799.00 Net cash flows from investing activities -10,333,145.20 -9,410,799.00 III. Cash flows from financing activities Cash from absorption of investments Cash received from borrowings Cash received from bonds issue Cash received from other financing activities (XXXII) 19,810,000.00 Sub-total of cash inflows from financing activities 19,810,000.00 Cash paid for debt repayments Cash paid for distribution of dividends and profits or payment of interests Cash paid for other financing activities 29,810,000.00 Sub-total of cash outflows from financing activities (XXXII) 29,810,000.00 Net cash flows from financing activities -10,000,000.00 IV. Effect of fluctuation on exchange rate on cash and cash equivalents V. Net increase in cash and cash equivalents -17,102,072.10 -7,957,101.56 Plus: balance of cash and cash equivalents at the beginning of the 27,210,248.01 19,782,392.26 period VI. Balance of cash and cash equivalents at the end of the period 10,108,175.91 11,825,290.70 The accompanying notes to the financial statements are an integral part of the financial statements. Legal Representative: Accounting Principal: The Accounting Firm’s Principal: 页 第表报 6 HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Statement of Changes in Owners' Equity Semi-Annual 2017 (Expressed in Renminbi unless otherwise stated) Current period Other Other equity instrument compreh Speci Item Less: ensive Perpetua Capital al Surplus Undistributed Total owner's Share capital treasury income Preferre l capital reserve reser reserves profit equity Other stock d stock securitie ve s I. Balance as at the end of last year 364,100,000.00 54,142,850.01 -343,966,434.57 74,276,415.44 Plus: Changes in accounting policies Correction of accounting errors in prior periods Others II. Balance as at the beginning of year 364,100,000.00 54,142,850.01 -343,966,434.57 74,276,415.44 III. Increases/decreases in the period (“-” for 1,719,253.80 1,719,253.80 decreases) (I) Total comprehensive income 1,719,253.80 1,719,253.80 (II) Capital contributed or reduced by owners 1. Ordinary shares contributed by owners 2. Contributions from holders of other equity instruments 3.Amounts of share-based payments recognized in owners’ equity 4.Others (III) Profit distribution 1. Withdrawal of surplus reserves 2. Profit distributed to owners (or shareholders) 3. Others (IV) Internal carry-forward of owners' equity 7 页 第表报 1. Conversion of capital reserves into paid-in capital (or share capital) 2. Conversion of surplus reserves into paid-in capital (or share capital) 3. Making up losses with surplus reserves 4. Others (V) Special reserves 1. Withdrawal in the period 2. Use in the period (VI) Others IV. Balance as at the end of the period 364,100,000.00 54,142,850.01 -342,247,180.77 75,995,669.24 The accompanying notes to the financial statements are an integral part of the financial statements. Legal representative: Accounting Principal: The Accounting Firm’s Principal: 8 页 第表报 HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD Statement of Changes in Owners' Equity (continued) Semi-Annual 2017 (Expressed in Renminbi unless otherwise stated) Last period Other Other equity instrument compreh ensive Specia Surplu Item Perpet Less: income l s Undistributed Total owner's Share capital ual Capital reserve treasur Preferre reserv reserv profit equity capital Other y stock d stock e es securiti es I. Balance as at the end of last year 364,100,000.00 54,142,850.01 -341,305,382.08 76,937,467.93 Plus: Changes in accounting policies Correction of accounting errors in prior periods Others II. Balance as at the beginning of year 364,100,000.00 54,142,850.01 -341,305,382.08 76,937,467.93 III. Increases/decreases in the period (“-” for 172,122.52 172,122.52 decreases) (I) Total comprehensive income 172,122.52 172,122.52 (II) Capital contributed or reduced by owners 1. Ordinary shares contributed by owners 2. Contributions from holders of other equity instruments 3.Amounts of share-based payments recognized in owners’ equity 4.Others (III) Profit distribution 1. Withdrawal of surplus reserves 2. Profit distributed to owners (or shareholders) 9 页 第表报 3. Others (IV) Internal carry-forward of owners' equity 1. Conversion of capital reserves into paid-in capital (or share capital) 2. Conversion of surplus reserves into paid-in capital (or share capital) 3. Making up losses with surplus reserves 4. Others (V) Special reserves 1. Withdrawal in the period 2. Use in the period (VI) Others IV. Balance as at the end of the period 364,100,000.00 54,142,850.01 -341,133,259.56 77,109,590.45 The accompanying notes to the financial statements are an integral part of the financial statements. Legal representative: Accounting Principal: The Accounting Firm’s Principal: 10 页 第表报 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD NOTES TO FINANCIAL STATEMENT SEMI-ANNUAL 2017 1. Company basic information 1.1 Company profile Hainan Dadonghai Tourism Center (Holdings) Co., Ltd. (hereinafter referred to as “the Company”), was founded as a standardized LLC on April 26, 1993, reorganized and incorporated on the basis of the former Hainan Sanya Dadonghai Tourism Center Development Ltd. and approved by the Hainan Provincial Stock System Experimentation Leading Team Office with a document of Qiong Gu Ban Zi [1993] No. 11. On May 6, 1996, the Company underwent a restructuring and a corresponding division under the approval of the Hainan Provincial Securities Administration Office with a document of Qiong Zheng Ban [1996] No. 58. On October 8, 1996 and January 28, 1997, the Company, with duly approval, went public by issuing 80 million shares of B stock and 14 million shares of A stock respectively on Shenzhen Security Exchange. On June 20, 2007, the Company experienced a reform of non-tradable shares, through which non-tradable share holders of the Company got circulating right of their shares by paying shares to tradable share holders, and tradable share holders got paid three shares for every ten of their shares. The Company operates business in the industry of tourism and catering services. As of June 30, 2017, the Company’s total capital stock is 364,100,000 shares. The Company’s registered capital is RMB 364.1 million. The legal representative is Li Yuanbin. The registration number of its Business License for Enterprise Legal Person (Duplicate) is 4600001003983. The legal registerred residence is Dadonghai, Hedong District, Sanya. Its scope of business includes: accommodation and catering industry (limited to those operated by branches); photography; operation of ornamental plant bonsai, knitwear and textiles, general merchandise, hardware and electrical equipment, chemical products (excluding those require specialized licenses), daily necessities, industrial means of production (excluding those require specialized licenses), metal materials and machinery equipment; commission sale of plane, bus, train and ship tickets (items in require of administrative permission shall be 1 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 operated under license). The Company’s largest shareholder is the Hainan Luoniushan (Holdings) Co., Ltd. These financial statements have been approved by all directors of the Company on August 17, 2017 for disclosure. 1.2 Scope of consolidation (aggregation) of financial statements Until June 30, 2017, the scope of consolidation (aggregation) of financial statements as below: Company Name Relationship South China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd (hereinafter referred to as “South China Subsidiary Grand Hotel”) The consolidate (Summarize) financial statement range in the period and its changes found more in the “VI Change of Consolidate Range” in Note 2 Basis of preparation for financial statements 2.1 Basis of preparation Based on going concern, according to actually occurred transactions and events, the Company prepares its financial statements in accordance with the Accounting Standards for Business Enterprises – Basic Standards and concrete accounting standards, Accounting Standards for Business Enterprises – Application Guidelines, Accounting Standards for Business Enterprises – Interpretations and other relevant provisions (collectively known as “Accounting Standards for Business Enterprises”), as well as the disclosure requirements of Regulation on the Preparation of Information Disclosure of Companies Issuing Public Shares No.15 - General Requirements for Financial Reports (as revised in 2014) by the China Securities Regulatory Commission. 2.2 Going concern The Company is currently operating normal, net cash flows from operating activities is positive, the Company is expected to continue operate as going concern in the next twelve months. 3 Principal accounting policies and estimates 页 第注附表报务财 2 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.1 Statement on compliance with Accounting Standards for Business Enterprises The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises and truly and completely reflect the Company’s financial position, and its operating results, cash flows and other related information. 3.2 Accounting period The accounting year is from January 1 to December 31 in calendar year. 3.3 Operating cycle The operating cycle of the Company is twelve months. 3.4 Functional currency RMB is adopted as the functional currency. 3.5 Recognition criteria of cash and cash equivalents For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash on hand and the unrestricted deposit. The term “cash equivalents” refers to short-term (maturing within three months from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. 3.6 Foreign currency transactions Foreign currency transactions are converted into RMB for recording purpose at the spot exchange rate on the date when the transaction occurs. Balances of foreign currency monetary items are measured at the spot exchange rate on the balance sheet date. The exchange difference arising therefrom shall be included in the current profit and loss, except that those exchange differences arising from the special borrowings of foreign currency related to the acquired and constructed assets qualified for capitalization shall be dealt with according to the principle of borrowing cost capitalization. Foreign currency non-monetary items measured at historical costs shall 3 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 still be converted at the spot exchange rates on the date when the transactions occur, and the amount in functional currency shall remain unchanged. Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rates on the date when the fair value is determined. The exchange difference arising therefrom shall be included in the current profit and loss or capital reserves. 3.7 Financial instruments Financial instruments include financial assets, financial liabilities and equity instruments. 3.7.1 Classification of financial instruments Financial assets and liabilities are classified into the following categories according to the purpose of acquisition: financial assets or financial liabilities measured at fair value and whose variation is included in the current profit and loss, including financial assets or financial liabilities held for trading and financial assets or financial liabilities directly designated to be measured at fair value through current profit and loss, held-to-maturity investments, accounts receivables, available-for-sale financial assets and other financial liabilities, etc. 3.7.2 Recognition basis and measurement method of financial instruments (1) Financial assets (financial liabilities) measured at fair value and whose variation is included in the current profit and loss Financial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cash dividends that have been declared but not distributed and bond interests that have matured but not been drawn). Relevant transaction expenses are included in the current profit and loss. The interests or cash dividends to be received during the holding period are recognized as investment income. Change in fair values is included in the current profit and loss at the end of the period. Difference between the fair value and initial book-entry value is recognized as investment income upon disposal; meanwhile, adjustment is made to gains or 4 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 losses from changes in fair values. (2) Held-to-maturity investments Held-to-maturity investments are initially recorded at fair values plus the related trade expenses when acquired (deducting bond interests that have matured but not been drawn). The interest revenue calculated at amortization cost and effective interest rate (nominal interest rate is adopted when the difference between the actual interest rate and the nominal interest rate is minor) during the holding period is recognized as investment income. Effective interest is recognized when obtained, and remains unchanged in the predictable holding period or applicable shorter period. The difference between the amount received and the book value of the investment is included in the investment profit and loss upon disposal. (3) Accounts receivable For creditor’s rights receivable arising from external sales of goods or rendering of service by the Company and other creditor's rights of other enterprises (excluding liability instruments quoted in an active market) held by the Company, including accounts receivable, other receivables, notes receivable and prepayments, etc., the initial recognition amount shall be the contract price or agreement price receivable from purchasing party. Accounts receivable with financing nature are initially recognized at their present values. The difference between the amount received and the book value of the accounts receivable is included in the current profit and loss upon recovery or disposal. (4) Available-for-sale financial assets Available-for-sale financial assets are initially recorded at fair values plus the related trade expenses when acquired (deducting cash dividends that have been declared but not been paid or bond interests that have matured but not been 页 第注附表报务财5 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 drawn). The interests or cash dividends to be received during the holding period are recognized as investment income. It is measured in fair value at the end of the period and change in fair values is included in other comprehensive income at the end of the period. However, the equity instrument investments unquoted in an active market and whose fair value cannot be measured reliably, and the derivative financial assets which are connected with the said equity instrument and must be settled by delivering the said equity instrument shall be measured on the costs basis. The difference between the amount received and the book value of the financial asset is included in the investment profit and loss upon disposal. Meanwhile, the corresponding part of fair value accumulated change accounted as other comprehensive income is transferred into investment profit or loss. (5) Other financial liabilities Other financial liabilities are initially recognized at the sum of fair value and transaction expenses and subsequently measured at amortized costs. 3.7.3 Recognition basis and measurement method of transfer of financial assets When transfer of financial assets occurs, if nearly all of the risks and rewards of ownership of the financial assets have been transferred to the transferee, the Company derecognizes the financial assets; if nearly all of the risks and rewards of ownership of the financial assets are retained, the Company shall not derecognize the financial assets. The principle of substance over form is adopted to determine whether the transfer of a financial asset satisfies the criteria as described above for derecognition of a financial asset. The Company shall classify the transfer of a financial asset into the entire transfer and the partial transfer of financial asset. If the entire transfer of financial asset satisfies the criteria for derecognition, the difference between the amounts of the following two items shall be included in the current profit and loss: 6 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 (1) The book value of the transferred financial asset; (2) The sum of the consideration received from the transfer and the accumulated amount of the changes in fair value originally and directly included in owners’ equity (the situation where the financial asset transferred is an available-for-sale financial asset is involved in) If the partial transfer of financial asset satisfies the criteria for derecognition, the entire book value of the transferred financial asset shall be split into the derecognized and recognized part according to their respective fair value and the difference between the amounts of the following two items shall be included in the current profit and loss: (1) The book value of derecognized part; (2) The sum of the consideration for the derecognized part and the portion of derecognition corresponding to the accumulated amount of the changes in fair value originally and directly included in owners’ equity (the situation where the financial asset transferred is an available-for-sale financial asset is involved in). If the transfer of financial assets does not meet the derecognition criteria, the financial assets shall continue to be recognized, and the consideration received will be recognized as a financial liability. 3.7.4 Derecognition criteria of financial liabilities A financial liability shall be totally or partly derecognized if its present obligations are totally or partly dissolved. Where the Company enters into an agreement with a creditor so as to substitute the existing financial liabilities with any new financial liability, and the new financial liability is substantially different from the contractual stipulations regarding the existing financial liability, it shall derecognize the existing financial liability, and shall at the same time recognize a new financial liability. Where substantial revisions are made to some or all of the contractual stipulations 7 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 of the existing financial liability, the Company shall derecognize the existing financial liability totally or partly, and at the same time recognize the financial liability with revised contractual stipulations as a new financial liability. Upon total or partial derecognition of financial liabilities, the difference between the book value of the financial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new financial liabilities assumed) shall be included in the current profit and loss. Where the Company redeems part of its financial liabilities, it shall, on the redemption date, allocate the entire book value of whole financial liabilities according to the comparative fair value of the part that continues to be recognized and the de-recognized part. The difference between the book value allocated to the derecognized part and the considerations paid (including non-cash assets surrendered and the new financial liabilities assumed) shall be included in the current profit and loss. 3.7.5 Method of determining the fair value of financial assets and financial liabilities For financial instruments with active market, their fair values are determined with quoted market price. For financial instruments without active market, their fair values are determined by using valuation technique. During the valuation, the Company use valuation techniques that are appropriate in the circumstances and for which sufficient data and other information are available to measure fair value, select inputs that are consistent with the characteristics of the asset or liability that market participants would take into account in a transaction for the asset or liability, and give priority to the use of relevant observable inputs. Unobservable inputs are only adopted when relevant observable inputs cannot be obtained or are impracticable to obtain. 8 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.7.6 Providing of impairment provision on financial assets (exclude receivable accounts) The Company performs inspection on the book value of financial assets apart from those financial assets measured at fair value through current profit and loss on the balance sheet date. Impairment provision is required if objective evidences of impairment occurs to the financial assets. (1) Impairment provision of available-for-sale financial assets: If there is a serious decline in fair value of the available-for-sale financial assets at the end of the period, or such decline is not temporary after considering various factors, the impairment shall be confirmed, the accumulated losses due to decreases in fair value previously included in owner’s equity shall be reversed, and the impairment loss shall be recognized. If, in a subsequent period, the carrying amount of available-for-sale debt instruments investments increases and the increase can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment losses are reversed, included in current profit or loss. The impairment losses of available-for-sale equity instruments cannot be reversed through profit or loss. (2) Impairment provision of held-to-maturity investment: Measurement of held-to-maturity investment impairment loss is governed by measurement of account receivables impairment loss. 3.8 Provision for bad debts of receivables 3.8.1 Provision for bad debts of account receivables that are individually significant: Assessment basis or standard of amount individually significant: top five accounts receivable and other receivables in terms of individual amount at the end of the year. 页 第注附表报务财9 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Method of provision for bad debts of accounts receivable that are individually significant: after separate impairment test, 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 include in current profit and loss. For accounts receivable with no impairment found after separate tests, they shall be included in corresponding portfolios for provisions for bad debts. 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. 3.8.2 Provision for bad debts of accounts receivable made on the basis of portfolio: Basis of determining portfolio Aging portfolio Length of the aging Method of making provision for bad debts on the basis of portfolio Aging portfolio Aging analysis method Proportions of provision for bad debts on the basis of aging analysis in portfolios are as follows: Proportion of provision for Proportion of provision for other Aging account receivable (%) receivables (%) Within 1 year (including 1 year) 1-2 years 5 5 2-3 years 15 15 3-4 years 25 25 4-5 years 50 50 More than five years 100 100 3.8.3 Accounts receivable that are individually insignificant but with bad debt provision provided on an individual basis: Reason for bad debt provision provided on an individual basis: For account 页 第注附表报务财 10 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 receivable with an individual balance lower than the top five at the end of the year and with objective evidence showing it may be impaired, and for uncollectible accounts receivable arising from repeal and liquidation of debtor after taking legal clearance procedures, their provision for bad debts shall be provided on an individual basis. Method of provision for bad debt: For accounts receivable with objective evidence showing they may be impaired, they shall be separate from relevant portfolios and separately tested for impairment to recognize the impairment losses. Other remarks: provision for impairment of accounts receivable, excluding debts receivable and other receivables, shall be made at the specific identification method. 3.8.4 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. 3.9 Inventories 3.9.1 Classification of inventories Inventories are classified into raw materials, stock commodities, low-cost consumables, food materials, fuels, etc. 3.9.2 Measurement method of dispatched inventories Stock commodities are measured at selling price and their purchase and sale price differential are amortized over every month at the method of comprehensive differential. The purchasing and storage of stock materials are measured at actual 页 第注附表报务财 11 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 cost, and at the first-in-first-out method when fetched for use. Low-cost consumables are amortized in full when fetched for use. 3.9.3 Determination basis of net realizable values of inventories and provision method of inventory depreciation reserve After the comprehensive inventory count at the end of the period, provisions for inventory depreciation reserve are made or adjusted at the lower of their costs or net realizable values. In normal operation process, for merchandise inventories for direct sale, including stock commodities and materials for sale, their net realizable values are determined at the estimated selling prices minus the estimated selling expenses and relevant taxes and surcharges; for inventories held to execute sales contract or service contract, their net realizable values are calculated on the basis of contract price. If the quantities of inventories specified in sales contracts are less than the quantities held by the Company, the net realizable value of the excess portion of inventories shall be based on general selling prices. At the end of the period, provisions for inventory depreciation reserve are made on an individual basis. For inventories with large quantity and low unit price, the provisions for inventory depreciation reserve are made on a category basis. For inventories related to the product portfolios manufactured and sold in the same area, and of which the final usage or purpose is identical or similar thereto, and which is difficult to separate from other items for measurement purposes, the provisions for inventory depreciation reserve shall be made on a portfolio basis. If any factor rendering write-downs of the inventories has been eliminated, 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. 页 第注附表报务财12 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.9.4 Inventory system Perpetual inventory system is adopted. 3.9.5 Amortization method of low-cost consumables and packaging materials (1) Low-cost consumables are amortized at lump-sum method; (2) Packaging materials are amortized at lump-sum method. 3.10 Long-term equity investments 3.10.1 Determination basis of joint control or significant influence over the investee Joint control is the relevant agreed sharing of control over an arrangement, and the arranged relevant activity must be decided under unanimous consent of the parties sharing control. When the Company and other joint parties do joint control and have rights to the net assets over an investee, the investee shall be the Company’s joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those polices (such as has a representative in the Board or similar authority organ under the name of the invested unit). When an investing enterprise is able to have significant influences on an investee, the investee shall be its associate. 3.10.2 Determination of investment cost (1) Long-term equity investments acquired from business combinations For business combination under common control: if the Company makes payment in cash, transfer non-cash assets or bear debts and issues equity securities as the consideration for the business combination, the book value of the owners’ equity of the combinee obtained is recognized as the initial cost of the long-term equity investment on the combination date. The difference between the initial investment cost and the carrying amount of cash paid, 13 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 non-cash assets transferred, liabilities assumed and par value of share issued shall be adjusted to the stock premium in the capital reserved; if there is no sufficient premium in the capital reserve for write-downs, the retained earnings are adjusted. When exercising control over an investee under common control due to additional investment or other reasons, the initial investment cost of the long-term equity investment shall be determined by the absorbing party’s share of the net assets of the party being absorbed in the consolidated financial statements of the ultimate controlling party at combination date. The difference between the initial investment cost of the long-term equity investment at combination date and the sum of the total of the carrying amount of equity investment held by the acquirer before the combination date and the newly increased investment on the combination date shall be adjusted to share premium. If the balance of share premium is not sufficient, any excess shall be adjusted to retained earnings. For business combination not under common control, the Company recognizes the combination cost determined on the combination date as the initial cost of long-term equity investment. When exercising control over an investee not under common control due to additional investment or other reasons, in stand-alone financial statements, the investor shall change to the cost method and use the carrying amount of the previously-held equity investment, together with the additional investment cost, as the initial investment cost under the cost method. The audit, legal, valuation and consulting fees, other intermediary fees, and related administrative fees paid by the absorbing party or acquirer for the business combination, shall be recognized in profit or loss as incurred; the cost of issuing equity securities or debt securities as the combination consideration shall be included in the initial cost of the equity securities or debt securities. (2) Long-term equity investments acquired by other means For long-term equity investments acquired from making payments in cash, the initial cost is the actually paid purchase cost. 页 第注附表报务财14 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 For long-term equity investments acquired from issuance of equity securities, the initial cost is the fair value of the issued equity securities. If the exchange of non-monetary assets has commercial substance, and the fair values of assets traded out and traded in can be measured reliably, the initial cost of long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded out together with relevant taxes unless there is any conclusive evidence that the fair values of the assets traded in are more reliable. If the exchange of non-monetary assets does not meet the above criteria, the book value of the assets traded out and relevant taxes are recognized as the initial cost of long-term equity investment traded in. For long-term equity investment acquired from debt restructuring, the initial cost is determined based on the fair value. 3.10.3 Subsequent measurement and recognition of profit or loss (1) Long-term equity investment adopting cost method Long-term equity investments of the Company in its subsidiaries are accounted for at cost method, except for the actual price paid for acquisition of investment or the cash dividends or profits contained in the consideration which have been declared but not yet distributed, the Company recognizes the proportion it shall enjoy in the cash dividends or profits declared by the investee as current investment income. (2) Long-term equity investment adopting equity method A long-term equity investment in an associate or a joint venture shall be accounted for using the equity method. If the cost of initial investment is in excess of the proportion of the fair value of the net identifiable assets in the investee when the investment is made, the difference will not be adjusted to the initial cost of long-term equity investment; if the cost of initial investment is in short of the proportion of the fair value of the net identifiable assets in the investee when the investment is made, the difference will be included in the 页 第注附表报务财15 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 current profit and loss. The Company recognizes the share of the investee’s net profits or losses, as well as its share of the investee’s other comprehensive income, as investment income or losses and other comprehensive income, and adjusts the carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of any profit distributions or cash dividends declared by the investee that is attributable to the investor. The investor’s share of the investee’s owners’ equity changes, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution, would be recognized in the investor’s equity, and the carrying amount of the long-term equity investment shall be adjusted accordingly. The Company recognizes its share of the investee’s net profits or losses after making appropriate adjustments based on the fair values of the investee’s identifiable net assets at the acquisition date according to the Company’s accounting policies and accounting period. When holding the investment, if the investee is capable of providing consolidated financial statements, the profit or loss shall be measured based on the net profit, other comprehensive income and other changes in owners’ equity attributed to the Company recorded in the consolidated financial statements. The unrealized profits or losses resulting from transactions between the Company and its associate or joint venture are eliminated in proportion to the Company’s equity interest in the investee, based on which investment income or losses shall be recognised. Any losses resulting from transactions between the investor and the investee, which are attributable to asset impairment shall be recognized in full. The transactions of investing or selling assets between the Company and its associate or joint venture are accounted for under relevant accounting policies when the asset constitutes a business. When the Company confirms that it should share losses of the investee, treatment shall be done in following sequence: firstly, the book value of the long-term equity investment shall be reduced; secondly, where the book value is insufficient to cover the share of losses, investment losses are recognized to 16 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 the extent of book value of long-term equity which form net investment in the investee in substance and the book value of long-term equity shall be reduced; finally, after all the above treatments, if the Company is still responsible for any additional liabilities in accordance with the provisions stipulated in the investment contracts or agreements, estimated liabilities are recognized and included into current investment loss according to the obligations estimated to undertake. If the investee achieves profit in subsequent periods, the treatment is in the reversed sequence described above, i.e. after deduct any unrecognized investment losses, reduce book value of estimated liabilities recognized, restore book values of other long-term equity which form net investment in the investee in substance, and of long-term equity investment, and recognize investment income at the same time. (3) Disposal of long-term equity investment On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount shall be recognized in profit or loss for the current period. For a long-term equity investment accounted for using the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities on a por-rata basis upon the disposal of the equity investment. The owners’ equity recognised due to the investor’s share of the investee’s owners’ equity changes, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution, is included in current profit or loss on a pro-rata basis. When the Company can no longer exercise joint control of or significant influence over an investee due to partial disposal of equity investment or other reasons, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial Instruments: Recognition and Measurement”. The difference between the fair value and the carrying amount at the date of the loss of joint control or 页 第注附表报务财 17 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 significant influence shall be charged to profit or loss for the current period. When the previously-held equity investment is accounted for under the equity method, any other comprehensive income previously recognized shall be accounted for on the same basis as would have been required if the investee had directly disposed of the related assets or liabilities for the current period upon discontinuation of the equity method. The owners’ equity recognised due to the investor’s share of the investee’s owners’ equity changes, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution, is transferred to current profit or loss upon discontinuation of the equity method. When no longer exercise control over an investee due to partial disposal of equity investment or other reasons, and with the retained interest, still has joint control of , or significant influence over, the investee, when preparing the individual financial statements, the Company shall change to the equity method and adjust the remaining equity investment as if the equity method had been applied from the date of the first acquisition. If the Company can not exercise joint control of or significant influence over the investee after partial disposal of equity investment, the remaining equity investment shall be accounted for in accordance with “Accounting Standard for Business Enterprises No.22-Financial Instruments: Recognition and Measurement”, and the difference between the fair value and carrying amount at the date of the loss of control shall be charged to profit or loss for the current period. The equity investment disposed was obtained over additional investment or other reasons through business combination, when preparing the individual financial statements, and the remaining equity investment accounted on cost method or equity method, the other comprehensive income and other owner’s equity recognized due to the equity investment held before acquisition date was accounted for under the equity method are carried forward on a pro-rata basis; when the remaining equity investment is accounted for in accordance with “Accounting Standard for Business Enterprises No. 22 – Financial Instruments: Recognition and Measurement”, the other comprehensive income and other 18 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 owner’s equity are totally carried forward. 3.11 Investment property Investment property refers to possessing real estate for gaining rent or capital appreciation, or both, including the rental of the land use right, possession and prepare to value-added after the transfer of the land use rights and the rental of buildings leased (Including rental buildings after completion of construction or development activities or in the development processing). Investment property is measured at their actual cost in the Company. Due to the method of determining is actual cost model for investment property-its method of provision for depreciation policy is same with fixed assets’ when the investment properties are constructions or buildings, its method of provision for amortization policy is same with Intangible assets’ when the investment property is land usage right. 3.12 Fixed assets 3.12.1 Recognition criteria of fixed assets Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services, renting or business management with useful lives exceeding one year. Fixed assets will only be recognized when all the following criteria are satisfied: (1) It is probable that the economic benefits relating to the fixed assets will flow into the Company; (2) The costs of the fixed assets can be measured reliably. 3.12.2 Classification of fixed assets Fixed assets are classified into buildings and constructions, machinery equipment, transportation equipment, electronic entertainment equipment, other equipment and Improvement. 19 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.12.3 Initial measurement of fixed assets Fixed assets are initially measured at their actual cost when acquired. The costs of a purchased fixed asset are determined at the purchase price, the relevant taxes, and the traffic expenses, loading and unloading fees, installation fees and professional service fees arising from preparing the fixed asset for its intended use. If the payment for a fixed asset is delayed beyond the normal credit conditions and it is of financing nature in effect, the costs of the fixed asset shall be determined based on the present value of the purchase price. The cost of a self-constructed fixed asset shall be formed by the necessary expenses incurred for preparing the asset for its intended use. The fixed assets which the debtor uses to pay back the debt in debt restructuring should be recognized at the fair value of the fixed assets. The difference between the book value of restructured debts and the fair value of fixed assets used to pay back the debt should be recorded into current profit and loss; On the premise that non-monetary asset trade is of commercial nature and the fair value of the asset traded in or out can be measured reliably, the fixed asset traded in with non-monetary asset should be recognized at the fair value of the asset traded out, unless any unambiguous evidence indicates that the fair value of the asset traded in is more reliable; as to the non-monetary asset trade not meeting the aforesaid premise, the book value of the asset traded out and related taxes and surcharges payable should be recognized as the cost of the fixed asset, with gains or losses not recognized. As for the book-entry value, the fixed assets acquired from the absorption and merger of an enterprise under common control are recognized at the book value of the merged enterprise; the fixed assets acquired from the absorption and merger of an enterprise not under common control are recognized at the fair value. 20 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 The book-entry value of a fixed asset acquired under financing lease is measured at the asset’s fair value on the commencement date of the lease or the present value of the minimum lease payment, whichever is lower. 3.12.4 Method of provision for impairment of fixed assets The fixed assets are depreciated at straight-line-method, and the depreciation rates are determined as follows based on the category, estimated economic useful lives and estimated residual values (5% of original values): Estimated net residual Annual depreciation Estimated useful life Category rate rate (Year) (%) (%) Buildings and 20-40 5 4.75-2.37 constructions Machinery equipment 8-20 5 11.87-4.75 Electronic entertainment 5-16 5 19-5.93 equipment Transportation 7-12 5 13.57-7.91 equipment Other equipment 8 5 11.87 Improvement 5 19 3.13 Construction in progress The initial book values of the fixed assets are stated at total expenditures incurred before construction in progress reaches the working condition for their intended use. For construction in progress that has reached working conditions for its intended use but for which the completion of settlement has not been handled, it shall be transferred into fixed assets at the estimated value according to the project budget, construction price or actual cost, etc. from the date when it reaches the working conditions for its intended use. And 页 第注附表报务财 21 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 the fixed assets shall be depreciated in accordance with the Company’s policy on fixed asset depreciation. Adjustment shall be made to the originally and provisionally estimated value based on the actual cost after the completion of settlement is handled, but depreciation already provided will not be adjusted. 3.14 Borrowing costs 3.14.1 Recognition principles of capitalization of borrowing costs Borrowing costs include the interest of borrowings, the amortization of discount or premium, auxiliary expenses, exchange differences incurred by foreign currency borrowings, etc. The borrowing costs incurred to the Company and directly attributable to the acquisition and construction or production of assets eligible for capitalization should be capitalized and recorded into asset costs; other borrowing costs should be recognized as costs according to the amount incurred and be included into current profit and loss. Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets which may reach their intended use or sale status only after long-time acquisition and construction or production activities. Borrowing costs may be capitalized only when all the following conditions are met at the same time: (1) Asset disbursements, which include those incurred by cash payment, the transfer of non-cash assets or the undertaking of interest-bearing debts for acquiring and constructing or producing assets eligible for capitalization, have already been incurred; (2) Borrowing costs have already been incurred; (3) The acquisition and construction or production activities which are necessary to prepare the assets for their intended use or sale have already been started. 22 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.14.2 Capitalization period of borrowing costs Capitalization period refers to the period from the beginning of capitalization to the cease of capitalization, excluding the period of capitalization suspension of borrowing costs. Capitalization of borrowing costs should be ceased when the acquired and constructed or produced assets eligible for capitalization have reached their intended use or sale condition. When some projects among the acquired and constructed or produced assets eligible for capitalization are completed and can be used separately, the capitalization of borrowing costs of such projects should be ceased. If all parts of the acquired and constructed or produced assets are completed but the assets cannot be used or sold externally until overall completion, the capitalization of borrowing costs should be ceased at the time of overall completion of the said assets. 3.14.3 Period of capitalization suspension If the acquisition and construction or production activities of assets eligible for capitalization are interrupted abnormally and this condition lasts for more than three months, the capitalization of borrowing costs should be suspended; if the interruption is necessary for the acquisition and construction or production to prepare the assets for their intended use or sale, the capitalization of borrowing costs should continue. The borrowing costs incurred during interruption are recognized in the current profit and loss, and the capitalization of borrowing costs continues after the restart of the acquisition and construction or production activities of the assets. 3.14.4 Calculation method of capitalization amount of borrowing costs As for special borrowings borrowed for acquiring and constructing or producing 23 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 assets eligible for capitalization, borrowing costs of special borrowing actually incurred in the current period less the interest income of the loans unused and deposited in bank or return on temporary investment should be recognized as the capitalization amount of borrowing costs. As for general borrowings used for acquiring and constructing or producing assets eligible for capitalization, the interest of general borrowings to be capitalized should be calculated by multiplying the weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special borrowings at the end of every month by the capitalization rate of used general borrowings. The capitalization rate is calculated by weighted average interest rate of general loans. As for borrowings with discount or premium, the to-be-amortized discount or premium in each accounting period should be recognized by effective interest rate method, and the interest for each period should be adjusted. 3.15 Intangible assets 3.15.1 Measurement method of intangible assets (1) The Company initially measures intangible assets at cost on acquisition; The cost of an externally acquired intangible asset comprises its purchase price, related taxes and surcharges and any other directly attributable expenditure of preparing the asset for its intended use. If the deferred payment of purchase price of intangible assets exceeding normal credit terms is substantially of financial nature, the cost of intangible assets should be recognized at the present value of the purchase price. The intangible assets which the debtor uses to pay back the debt in debt restructuring should be recognized at the fair value of the intangible assets. The difference between the book value of restructured debts and the fair value of intangible assets used to pay back the debt should be recorded into the current profit and loss; 页 第注附表报务财 24 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 On the premise that non-monetary assets trade is of commercial nature and the fair value of the assets traded in or out can be measured reliably, the intangible assets traded in by the trade of non-monetary assets should be recognized at the fair value of the assets traded out, unless any unambiguous evidence indicates that the fair value of the assets traded in is more reliable; as to the non-monetary assets trade not meeting the aforesaid premise, the book value of the assets traded out and related taxes payable should be recognized as the cost of the intangible assets traded in, with gains or losses not recognized. The intangible assets obtained by the absorption and merger of an enterprise under common control are recognized at the book value of the merged enterprise; the intangible assets obtained by the absorption and merger of an enterprise not under common control are recognized at the fair value. Costs of intangible assets developed internally and independently include: the costs of materials and labor services used to develop the intangible assets, the registration fee, the amortization of other patents and franchise used in the process of development, the interest of capitalization, and other direct expenses for preparing the intangible assets for their intended use. (2) Subsequent measurement The useful life of intangible asset is analyzed on acquisition. As for intangible assets with limited useful lives, straight-line amortization method is adopted in the period when the intangible assets generate economic benefit for enterprise; if the period when the intangible assets generate economic benefit for enterprise cannot be forecasted, the intangible assets should be deemed as those with indefinite useful lives and should not be amortized. 3.15.2 Estimation of useful life of intangible assets with limited useful life Item Estimated useful life Basis Land use right 50 years Validity term of land use certificate 页 第注附表报务财25 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 The useful lives and amortization method of intangible assets with limited useful lives are reviewed at the end of each period. Upon review, the useful lives and amortization method of the intangible assets as at the end of the year are not different from those estimated before. 3.15.3 Determination basis of intangible assets with indefinite useful lives As at the balance sheet date, the Company has no intangible assets with indefinite useful lives. 3.16 Impairment of long-term assets If there is any indication that the long-term assets such as long-term equity investment, investment properties accounted through cost pattern, fixed assets, construction in progress, intangible assets etc. may be impaired at the balance sheet date, an impairment test would be implemented. If the result of impairment test indicates the recoverable amounts of the long-term assets are lower than their book values, the difference between the recoverable amounts and book values is recognized as impairment loss, provisions for impairment of the long-term assets are made. The recoverable amounts of the long-term assets are the higher of their fair values less costs to disposal and the present values of the estimated future cash flows of the long-term assets. The provision for impairment is recognized and calculated on the individual basis. If it is difficult to estimate the recoverable amount of the individual asset, the Company estimates the recoverable amount of the asset group that the individual asset belongs to. The asset group is the minimum asset group which can generate cash flows independently. The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognized. 3.17 Long-term deferred expenses Long-term deferred expenses are various expenses already incurred, which shall be amortized over current and subsequent periods with the amortization period exceeding one year. 26 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.17.1 Amortization method Long-term deferred expenses are evenly amortized over the beneficial period. 3.17.2 Amortization period Item Amortization period Hotel exterior wall decoration 4 years 3.18 Employee compensation 3.18.1 Short-term employee benefits The Company recognizes, in the accounting period in which an employee provides service, actually occurred short-term employee benefits as a liability, with a corresponding charge to current profit or loss or relevant cost of assets. Payments made by the Company of social security contributions for employees, and union running costs and employee education costs provided in accordance with relevant requirements, in the accounting period in which employees provide services, is calculated according to prescribed bases and percentages of provision in determining the amount of employee benefits. Employee benefits which are non-monetary benefits are measured at fair value. 3.18.2 Termination benefits When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal, or when the Company recognizes costs or expenses related to a restructuring that involves the payment of termination benefits (the earlier is adopted), the employee benefits liabilities caused by termination benefits are recognized and included in current profit or loss. 27 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.18.3 Post-employment benefits Payments made by the Company of basic endowment insurance and unemployment insurance in accordance with relevant requirements of local government, in the accounting period in which employees provide services, is calculated according to prescribed bases and percentages of provision of local requirements in determining the amount payable, is recognized as a liability, with a corresponding charge to current profit or loss or relevant cost of assets. 3.19 Estimated liabilities When the Company is involved in proceedings, debt guarantees, onerous contracts and reorganization events, if such events may require delivery of assets or rendering of services in the future and the amounts of such events can be reliably measured, estimated liabilities are recognized. 3.19.1 Recognition criteria of estimated liabilities The Company recognizes the estimated liabilities when obligations related to contingencies satisfy all the following conditions: (1) The obligation is a present obligation of the Company; (2) The performance of the obligation is likely to result in outflow of economic benefits from the Company; and (3) The amount of the obligation can be measured reliably. 3.19.2 Measurement method of estimated liabilities The estimated liabilities of the Company are initially measured as the best estimate of expenses required for the performance of relevant present obligations. The Company, when determining the best estimate, has had a comprehensive 28 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 consideration of risks with respect to contingencies, uncertainties and the time value of money. If the time value of money is significant, the best estimate shall be determined after discounting the relevant future outflow of cash. The best estimate shall be accounted as follows in different circumstances: If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all the outcomes within this range are equal, the best estimate shall be determined at the average amount of upper and lower limits within the range. If there is no continuous range (or interval) for the necessary expenses, or probabilities of occurrence of all the outcomes within this range are unequal despite such a range exists, the outcomes within this range are unequally likely to occur, in case that the contingency involves a single item, the best estimate shall be determined at the most likely outcome; if the contingency involves two or more items, the best estimate should be determined according to all the possible outcomes with their relevant probabilities. When all or part of the expenses necessary for the settlement of an estimated liability of the Company is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the compensation will be received. The amount recognized for the compensation should not exceed the book value of the estimated liability. 3.20 Revenue 3.20.1 Recognition and measurement principles of revenue from sales of goods (1) Overall recognition and measurement principles of revenue from sales of goods When the Company has transferred significant risks and rewards of ownership of the goods to the buyer; the Company retains neither continuous management rights associated with ownership of the goods sold nor effective control over 29 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 the goods sold; the relevant amount of revenue can be measured reliably; it is highly likely that the economic benefits associated with the transaction will flow into the enterprise, and the relevant amount of cost incurred or to be incurred can be measured reliably, revenue from sales of goods shall be recognized. (2) Recognition criteria of revenue from selling goods and specific recognition timing criteria of revenue of the Company The Company provides hotel accommodation service as well as goods. After the recognition of both housekeeping department and hotel reception desk, the daily business report is established. The accounting department makes sure the significant risks and rewards of ownership of the goods have been transferred to the client, the selling revenue is recognized. 3.20.2 Recognition and measurement principles of revenue from providing labor services (1) The hotel room service, catering (breakfast) service etc. of the Company, after the hotel room service, catering (breakfast) service etc. had provided, and each consumption department had checked with the receptionist, the daily business report and detailed report of account receivables are established, and the reports are submitted to accounting department, which recognizes the revenue after examining the daily reports. (2) Revenue from outsourced restaurant and site rental is recognized according to contract or agreement time period and time of collecting. 3.20.3 Recognition basis of revenue from transferring the use right of assets The economic benefits related to the transaction may flow into entities and the amount of revenue can be reliably measured. The amount of revenue from transferring use right of assets is recognized as follows in different circumstances: (1) The amount of interest income is determined by the time and effective interest rate for others to use the monetary fund of the Company. 页 第注附表报务财30 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 (2) The amount of revenue from usage is determined according to the charging time and method as agreed in relevant contract or agreement. 3.21 Government subsidies 3.21.1 Types Government subsidies are monetary assets and non-monetary assets acquired free of charge by the Company from the government. Government subsidies are classified into government subsidies related to assets and government subsidies related to income. 3.21.2 Accounting treatment Government subsidies related to acquisition and construction of fixed assets, intangible assets and other long-term assets are recognized as deferred income, and included in non-operating income by stages within the useful life of the assets acquired and constructed; If government subsidies related to income are used to compensate the enterprise’s relevant expenses or losses in future periods, such government subsidies should be recognized as deferred income on acquisition and be included into the current non-operating income in the period of recognizing relevant expenses; if government subsidies related to income are used to compensate the enterprise’s relevant expenses or losses incurred, such government subsidies are directly included into the current non-operating income on acquisition. 3.22 Deferred income tax assets and deferred income tax liabilities Deductible temporary differences are recognized as deferred income tax assets to the extent that it shall not exceed future taxable income possibly available to be against the deductible temporary difference. Deductible temporary differences are recognized as deferred income tax liabilities except in special circumstances. 31 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Special circumstances in which deferred income tax assets or deferred income tax liabilities shall not be recognized include: the initial recognition of goodwill; other transactions or matters excluding business combinations, which affect neither accounting profits nor the taxable income (or deductible losses) when occurred. If the Company has the legal right of netting and intends to settle in net amount or to obtain assets and discharge liabilities simultaneously, the income tax assets and income tax liabilities of the Company for the current period shall be presented based on the net amount after offset. When the Company has the legal rights to balance income tax assets and income tax liabilities in current period with net settlement, and deferred income tax assets and deferred income tax liabilities are related to the income tax which imposed on the same taxpaying subject by the same tax collection authority or to different taxpaying subjects, but, in each important future period in connection with the reverse of deferred income tax assets and liabilities, the involved taxpaying subject intends to balance income tax assets and liabilities in current period with net settlement at the time of obtaining assets and discharging liabilities, deferred income tax assets and deferred income tax liabilities of the Company shall be presented based on the net amount after offset. 3.23 Operating lease 3.22.1 Accounting of leased assets Lease fees paid by the Company for leased asset shall be amortized at straight-line method over the whole lease period (including rent-free period) and shall be included in the current expenses. Initial direct costs related to lease transactions paid by the Company shall be included in the current expenses. If the expense related to the lease which shall be paid by the Company is assumed by the lessor of the asset, such expenses shall be deducted from total lease fees, and residual lease fees shall be amortized over the lease period and included in the current expenses. 32 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 3.23.2 Accounting of leasing assets Lease fees received by the Company from leasing assets shall be amortized at straight-line method over the whole lease period (including rent-free period), and shall be recognized as lease income. Initial direct costs related to lease transactions paid by the Company shall be included in the current expenses; if the amount is large, it shall be capitalized, and shall be included in the current income by stages within the whole lease period on same basis for recognition of lease income. If the expenses related to the lease which shall be paid by the lessee are borne by the Company, such expenses shall be deducted from total lease income by the Company, and residual lease fees shall be amortized over the lease period. 3.24 Adjustments for changes in principal accounting policies and estimates 3.24.1 Adjustments for changes in accounting policies There are no changes in principal accounting policies for the Company during the reporting period. 3.24.2 Adjustments for changes in accounting estimates There are no changes in principal accounting estimates for the Company during the reporting period. 4 Taxation Major tax types and tax rates applicable to the Company Taxation type Basis of tax assessment Tax rate Differential section of VAT calculated on revenue from sale of goods and service 5%, 6%, 11%, 17% Value added tax (VAT) deduct VAT paid in current period in 页 第注附表报务财33 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 accordance with tax law Levy by taxable business revenue Business tax 5% Urban maintenance and Levy by the taxable business tax and VAT 7% construction tax Levy by the taxable business tax and VAT Education surcharge 3% Levy by the taxable business tax and VAT Local education surcharge 2% Remaining value after deducting 30% of the original value of houses (including Property tax 1.2%, 12% land price), Rental income Land use tax Land area 18 yuan/ ㎡ Levy by taxable income Enterprise income tax 25% Other explanation: In accordance with the “Fully Implementation of the Pilot Proposals for the Change from Business Tax to Value-Added Tax” (Cai Shui [2016] No.36) issued by Ministry of Finance and SAT, the proposals for the change from business tax to VAT will carry out since 1 May 2016, the Company pay the VAT with rate of 5%, 6%, 11% and 17% respectively for different business revenue. 5 Notes to the main items of financial statements 5.1 Monetary funds Item Ending balance Beginning balance Cash 329,071.51 273,523.86 Bank Deposit 9,779,104.40 26,936,724.15 Total 10,108,175.91 27,210,248.01 The main reason for the decrease in bank deposits is to pay RMB 10 million to Luoniushan Group Co., Ltd. and pay RMB 9 million to Wuhan Aierjia Technology Development Co., Ltd. for the creditors’ investment. Other notes: The closing balance is unsecured, unfrozen or doesn’t have other restrictions on realization or the funds deposit in the overseas, or have potential recovery risks. 页 第注附表报务财 34 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.2 Accounts receivable 5.2.1 Accounts receivable by type Ending balance Beginning balance Book balance Provision for bad debts Book balance Provision for bad debts Type Book Book Proporti Proporti Proporti Proporti Amount Amount Value Amount Amount Value on on on on Accounts receivable with large single amount and accrued 1,466,400.49 57.13% 1,466,400.49 100.00% 1,466,400.49 50.22% 1,466,400.49 100.00% for provision of bad debt on a single basis Accounts receivable accrued for provision 1,100,308.71 42.87% 763,121.66 69.36% 337,187.05 1,453,566.38 49.78% 763,121.66 52.50% 690,444.72 of bad debt by portfolio Accounts receivable with insignificant single amount but accrued for provision of bad debt 35 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Ending balance Beginning balance Book balance Provision for bad debts Book balance Provision for bad debts Type Book Book Proporti Proporti Proporti Proporti Amount Amount Value Amount Amount Value on on on on on a single basis Total 2,566,709.20 100.00% 2,229,522.15 86.86% 337,187.05 2,919,966.87 100.00% 2,229,522.15 76.35% 690,444.72 36 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 (1) Accounts receivable with large single amount and accrued for provision of bad debt on a single basis as at June 30, 2017 Ending balance Content of accounts Provision for Proportion of receivable (By Company) Book balance Reason for provision bad debts provision (%) Over five years, the bill Sanya Power Supply signing expenses was 775,304.98 775,304.98 100.00% Company un-collectable for personnel changes Over five years, the bill Hainan Hong Kong & Macao signing expenses was 464,563.21 464,563.21 100.00% International Tourism Ltd. un-collectable for bills un-recognized Over five years, the bill signing expenses was Sanya City Council reception 101,652.32 101,652.32 100.00% un-collectable for personnel changes LLC SOUTH CROSS 124,879.98 124,879.98 100.00% TRAVELINN Had declared bankruptcy Total 1,466,400.49 1,466,400.49 (2) Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio: Ending balance Aging Accounts receivable Provision for bad debts Proportion of provision Within 1 year 298,461.50 1-2 years 18,633.00 931.65 5.00% 2-3 years 5,262.00 789.30 15.00% 3-4 years 6,942.00 1,735.50 25.00% 4-5 years 22,690.00 11,345.00 50.00% 页 第注附表报务财 37 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 More than five 748,320.21 748,320.21 100.00% years Total 1,100,308.71 763,121.66 69.36% 5.2.2 Situation of withdrawing or write-off for bad debts provision of accounts receivable in current period No situation of withdrawing or write-off for bad debts provision of accounts receivable in current period. 5.2.3 Top five accounts receivable Relationship Proportion in total Name with the Book balance Aging accounts receivable (%) Company Sanya Power Supply Non related More than five 775,304.98 30.21% Company years party Hainan Hong Kong & Non related Macao International 464,563.21 More than five 18.10% Tourism Ltd. party years LLC SOUTH CROSS Non related 124,879.98 2-3 years 4.87% TRAVELINN party Reception centre of Non related Sanya Municipal 101,652.32 More than five 3.96% Committee party years Hainan Baoping Travel Non related More than five 46,798.32 1.82% Agency years party Total 1,513,198.81 58.95% 5. 3 Prepayments 5.3.1 Aging analysis of repayment Ending balance Beginning balance Aging Book balance Proportion Book balance Proportion Within 1 year 38,660.36 100.00% 58,783.23 100.00% Total 38,660.36 100.00% 58,783.23 100.00% Other explanation: prepayment including the insurance expenses, fuel costs and 页 第注附表报务财 38 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 book allowance etc. 5.3.2 Top five prepayment collected by objects at ending balance Proportion in total Name Book balance prepayment (%) Sunshine Property Insurance Co., LTD Hainan 19,445.29 50.30% Branch China Petrochemical Marketing Co. Ltd Sanya 9,036.31 23.37% Branch China Post Group Corporation Sanya Branch 5,400.00 13.97% Sanya Daily Office 4,778.76 12.36% Total 38,660.36 100.00% 39 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.4 Other receivables 5.4.1 Other receivables by type: Ending balance Beginning balance Book balance Provision for bad debts Book balance Provision for bad debts Type Book Book Proportio Proporti Proportio Amount Proportion Amount Value Amount Amount Value n on n Other receivables with large single amount and accrued 77,363,143.3 77,363,143.31 98.67% 77,363,143.31 100.00% 98.85% 77,363,143.31 100.00% 1 for provision of bad debt on a single basis Other receivables accrued for 174,103.5 provision of bad debt by 1,045,483.05 1.33% 729,098.81 69.74% 316,384.24 903,202.33 1.15% 729,098.81 80.72% 2 portfolio Other receivables with insignificant single amount but accrued for provision of bad debt on a single basis 78,266,345.6 100.00 174,103.5 Total 78,408,626.36 100.00% 78,092,242.12 99.60% 316,384.24 78,092,242.12 99.78% 4 % 2 页 第注附表报务财 40 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 (1) Other receivables with large single amount and accrued for provision of bad debt on a single basis as at period-end Other Ending balance receivables (By Provision for Proportion of Book balance Reason for provision Company) bad debts provision Hainan Over five years account age, Dadonghai 54,767,945.15 54,767,945.15 100.00% un-collectable for debtor has Hotel Co., Ltd. abnormal operation Cash dividends distributed in 16,899,000.00 16,899,000.00 100.00% un-collectable 1994-1996 Hainan Hong Over five years account age, Kong & Macao 4,145,704.16 4,145,704.16 100.00% un-collectable for mis-listing the International Tourism Ltd. contract income on account Guangdong The bonus money before 1996, Jinma Tourism 1,200,494.00 1,200,494.00 100.00% un-collectable for equity change with Ltd. Shenzhen Difu un-collectable for the trustee fee paid Shareholder 350,000.00 350,000.00 100.00% on behalf of other shareholders while custody fee listing Total 77,363,143.31 77,363,143.31 (2) Other receivables accrued for provision of bad debt by aging analysis method in portfolio: Beginning balance Aging Proportion of provision Accounts receivable Provision for bad debts (%) Within 1 year 298,329.64 1-2 years 18,468.00 923.40 5.00 2-3 years 600.00 90.00 15.00 页 第注附表报务财 41 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Beginning balance Aging Proportion of provision Accounts receivable Provision for bad debts (%) More than five years 728,085.41 728,085.41 100.00 Total 1,045,483.05 729,098.81 5.4.2 Provision for bad debts accrued, regain or switch back in the Period No provision for bad debts accrued, regain or switch back in the Period. 5.4.3 Other receivables by fund quality Fund quality Ending book balance Beginning book balance Original relevant companies fund 54,767,945.15 54,767,945.15 accounts Contracting profit receivable 4,145,704.16 4,145,704.16 Distributing dividends receivable 18,099,494.00 18,099,494.00 Guarantee deposit 563,818.99 563,818.99 Advance money for custody fee 350,000.00 350,000.00 Other fund accounts 245,477.64 23,114.20 Petty money 78,772.22 78,772.22 Utilities 92,411.70 164,165.49 Money from invested items 30,500.00 30,500.00 Personal social security 、 29,502.50 37,831.43 Accumulation fund Project funds 3,700.00 3,700.00 Cash deposit for invoices 1,300.00 1,300.00 Total 78,408,626.36 78,266,345.64 页 第注附表报务财42 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.4.4 Top five other account receivables collected by arrears party at ending balance Proportion in Ending Nature of Ending Company name Aging total other balance of bad money balance receivables debt provision Hainan Dadonghai Hotel Current More than 54,767,945.15 69.85% 54,767,945.15 Co., Ltd. accounts five years Dividends distributed Cash dividends More than and ought to 16,899,000.00 21.55% 16,899,000.00 distributed in 1994-1996 five years be recovered Hainan Hong Kong & Current More than Macao International 4,145,704.16 5.29% 4,145,704.16 accounts five years Tourism Ltd. Guangdong Jinma More than Dividends 1,200,494.00 1.53% 1,200,494.00 Tourism Ltd. five years More than Shareholder custody fee Custody fee 350,000.00 0.45% 350,000.00 five years Total -- 77,363,143.31 -- 98.67% 77,363,143.31 5.5 Inventories 5.5.1 Classification of inventories Ending balance Beginning balance Item Book Depreciatio Depreciatio Book value Book balance Book value balance n reserve n reserve Stock materials 923,401.41 742,966.17 180,435.24 876,822.10 742,966.17 133,855.93 Stock 22,771.38 11,102.41 11,668.97 22,771.38 11,102.41 11,668.97 commodities Food and 39,315.16 39,315.16 52,660.42 52,660.42 beverages Fuels 21,795.68 21,795.68 20,994.40 20,994.40 Total 1,007,283.63 754,068.58 253,215.05 973,248.30 754,068.58 219,179.72 页 第注附表报务财 43 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.5.2 Inventory depreciation reserve Provision in Period Decrease in Period Category of Beginning Withdrawi Reversal or Ending balance inventories balance Other Other ng Write-off Stock 742,966.17 742,966.17 materials Stock 11,102.41 11,102.41 commodities Total 754,068.58 754,068.58 5.6 Non-current liabilities maturing within one year Item Ending balance Beginning balance Remarks Long-term deferred expenses Hotel exterior needed to be amortised within one 292,184.72 584,369.42 wall year decoration Total 292,184.72 584,369.42 5.7 Other current assets Beginning Remarks Item Ending balance balance Prepay corporate income tax 1,702,702.80 1,702,702.80 Prepay VAT 318,164.96 173,746.42 Debt investment Wuhan Aierjia Technology 9,000,000.00 Development Co., Ltd. Total 11,020,867.76 1,876,449.22 页 第注附表报务财 44 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.8 Available-for-sale financial assets 5.8.1 Available-for-sale financial assets Ending balance Beginning balance Item Provision for Provision for Book balance Book value Book balance Book value impairment impairment Available-for-sale debts Available-for-sale equity 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 instruments. Of which: Measured at fair value Measured at cost 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 Total 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5.8.2 Available-for-sale financial assets measured at cost at the end of the period Book balance Provision for impairment Shareho Cash lding divid Decr Incre ratio in ends Increa Decrea ease Item ase in Beginning Ending Beginning Ending investee in se in se in in balance balance balance Perio balance (%) Peri Period Period Perio d od d Shenzhen Difu Investment & 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 14.28 Development Ltd Total 5,000,000.00 5,000,000.00 5,000,000.00 5,000,000.00 5.9 Long-term equity investments 5.9.1 The classification of long-term equity investment is as follows: Ending balance Beginning balance Investee Provision for Book Provision for Book Book balance Book balance impairment Value impairment Value 页 第注附表报务财 45 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Ending balance Beginning balance Investee Provision for Book Provision for Book Book balance Book balance impairment Value impairment Value Hubei Jingsha Dadonghai Club Ltd. 4,566,207.42 4,566,207.42 4,566,207.42 4,566,207.42 Sanya Shun’an Casino 5,150,166.84 5,150,166.84 5,150,166.84 5,150,166.84 Total 9,716,374.26 9,716,374.26 9,716,374.26 9,716,374.26 页 第注附表报务财 46 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.9.2 Details of long-term equity investment Remark on Provisi Shareholdi Cash Accoun Voting ratio different ratios on for Investment Beginning Increase in Decrease Ending ng ratio in Provision for dividen Investee ting in investee of shareholding impair costs balance Period in Period balance investee impairment ds in Method (%) and voting in ment in (%) Period investee Period Hubei Jingsha 4,566,207.42 4,566,207.42 4,566,207.42 91.00 91.00 4,566,207.42 Dadonghai Cost Club Ltd. method Sanya Shun’an Cost 5,150,166.84 5,150,166.84 5,150,166.84 70.00 70.00 5,150,166.84 Casino method Subtotal of 9,716,374.26 9,716,374.26 9,716,374.26 9,716,374.26 cost method 47 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.10 Investment real estate Investment real estate by cost measurement Houses and Item Land use right Total buildings I. Original book value: 1. Beginning balance 18,856,504.44 5,662,740.59 24,519,245.03 2. Increase in Period (1) Purchase (2) Transfer from fixed assets\intangible assets (3) Increase in business merger 3. Decrease in Period (1) Disposal (2) Other transfer 4. Ending balance 18,856,504.44 5,662,740.59 24,519,245.03 II. Accumulated depreciation and accumulated amortization 1. Beginning balance 9,771,216.42 2,107,046.45 11,878,262.87 2. Increase in Period 209,091.78 28,170.00 237,261.78 (1) Withdraw or amortize 3. Decrease in Period (1) Disposal (2) Other transfer 4. Ending balance 9,980,308.20 2,135,216.45 12,115,524.65 III. Depreciation reserve 1. Beginning balance 1,404,400.47 1,903,054.14 3,307,454.61 2. Increase in Period (1) Withdraw 3. Decrease in Period (1) Disposal (2) Other transfer 4. Ending balance 1,404,400.47 1,903,054.14 3,307,454.61 IV . Book value 1. Book value at the end of the period 7,471,795.77 1,624,470.00 9,096,265.77 48 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Houses and Item Land use right Total buildings 2. Book value at the beginning of the period 7,680,887.55 1,652,640.00 9,333,527.55 5.11 Fixed assets 5.11.1 Fixed assets Buildings and Electronic Item Machines Vehicles Others Total Constructions Equipments I. Original book value: 136,564,783.1 2,091,322.7 2,585,268.9 1,703,389.4 156,086,235.2 1.Beginning balance 13,141,471.00 5 7 2 5 9 2. Increase in 253,752.14 -16,489.74 14,423.30 251,685.70 Period (1) Purchase 253,752.14 6,758.12 14,423.30 274,933.56 (2) transfer in of -23,247.86 -23,247.86 the construction project (3) the increase in business combination 3. Decrease in Period (1) Disposal or scrap 136,564,783.1 2,345,074.9 2,568,779.1 1,717,812.7 156,337,920.9 4.Ending balance 13,141,471.00 5 1 8 5 9 II. Accumulated depreciation 1,252,935.7 1,447,909.8 1.Beginning balance 68,185,246.92 9,092,676.08 2,111,146.45 82,089,914.95 0 0 2. Increase in Period 1,066,956.49 138,639.24 87,765.30 51,597.85 37,937.12 1,382,896.00 (1) Withdraw 1,066,956.49 138,639.24 87,765.30 51,597.85 37,937.12 1,382,896.00 3. Decrease in Period (1) Disposal or scrap 1,340,701.0 2,162,744.3 1,485,846.9 4.Ending balance 69,252,203.41 9,231,315.32 83,472,810.95 0 0 2 III Depreciation reserve . 1.Beginning balance 31,072,788.17 2,527,851.26 33,600,639.43 2. Increase in Period (1) Withdraw 3. Decrease in Period (1) Disposal or scrap 4.Ending balance 31,072,788.17 2,527,851.26 33,600,639.43 IV Book value of fixed . assets 1,004,373.9 (1) Book value at the end 36,239,791.57 1,382,304.42 406,034.88 231,965.83 39,264,470.61 1 页 第注附表报务财 49 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Buildings and Electronic Item Machines Vehicles Others Total Constructions Equipments of the period (2) Book value at the 37,306,748.06 1,520,943.66 838,387.07 474,122.47 255,479.65 40,395,680.91 beginning of the period Other explanation: no temporary idle fixed assets at end of the period, and no fixed assets mortgage or guarantee 5.12 Construction in process Ending balance Beginning balance Provisio Provision Item n for Book for Book Book balance Book Value impairm balance impairme Value ent nt Reconstruction of 805,644.64 805,644.64 swinging pool Hatchway of the 100,000.00 100,000.00 sightseeing elevator Reconstruction of 46,800.00 46,800.00 high-voltage metering cubicle Reconstruction of fire 25,767.00 25,767.00 stair in Building A Total 978,211.64 978,211.64 5.13 Intangible assets Item Land use right Total I. Original book value 81,653,137.15 81,653,137.15 1. Beginning balance 2. Increase in the period 3. Decrease in the period 页 第注附表报务财 50 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item Land use right Total 81,653,137.15 81,653,137.15 4. Ending balance II. Accumulated amortization 30,382,276.95 30,382,276.95 1. Beginning balance 406,193.58 406,193.58 2. Increase in the period 3. Decrease in the period 30,788,470.53 30,788,470.53 4. Ending balance III. Depreciation reserve 27,440,836.84 27,440,836.84 1. Beginning balance 2. Increase in the period 3. Decrease in the period 27,440,836.84 27,440,836.84 4. Ending balance IV. Booking value 23,423,829.78 23,423,829.78 1. Ending book value 23,830,023.36 23,830,023.36 2. Beginning book value Note: The provision for impairment of intangible assets was the excess of the book value over the marker price of the lands at Oceanside which was restricted for use under the plan of Sanya Municipal Government. 5.14 Long-term deferred expenses Beginning balance Ending balance Long-term Long-term Long-term Increase in Amortization Long-term Item prepaid deferred prepaid expenses Period in Period deferred expenses due expenses due within a year expenses within a year Hotel exterior wall coating 1,071,343.97 584,369.42 292,184.70 1,071,343.97 292,184.72 project Total 1,071,343.97 584,369.42 292,184.70 1,071,343.97 292,184.72 页 第注附表报务财 51 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.15 Provision for assets impairment Decrease in Period Beginning Increase in Item Revers Ending balance balance Period Write-off al Provision for bad debts 80,321,764.27 80,321,764.27 Inventory depreciation reserve 754,068.58 754,068.58 Provision for impairment of available-for-sale financial 5,000,000.00 5,000,000.00 assets Provision for impairment of 9,716,374.26 9,716,374.26 long-term equity investments Provision for impairment of 33,600,639.43 33,600,639.43 fixed assets Provision for impairment of 27,440,836.84 27,440,836.84 intangible assets Impairment provision of 3,307,454.61 3,307,454.61 investment real estate Total 160,141,137.99 160,141,137.99 5.16 Accounts payable 5.16.1 Details of accounts payable are as follows: Item Ending balance Beginning balance Within 1 year (including 1 year) 801,070.51 856,048.21 1-2 years (including 2 years) 329,718.70 199,317.78 2-3 years (including 3 years) 334,316.59 334,316.59 Over 3 years 577,882.93 577,882.93 Total 2,042,988.73 1,967,565.51 5.16.2 Accounts payable with major amount and aging of over one year 页 第注附表报务财 52 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item Ending balance Reason Purchase amount recorded Provisional estimation 719,013.26 without invoice issued Total 719,013.26 / 5.17 Accounts received in advance 5.17.1 Accounts received in advance Item Ending balance Beginning balance Within 1 year (including 1 year) 625,072.93 1,272,672.89 1-2 years (including 2 years) 141,408.02 141,408.02 2-3 years (including 3 years) 65,874.80 65,874.80 Over 3 years 414,568.57 414,568.57 Total 1,246,924.32 1,894,524.28 5.17.2 Accounts received in advance with major amount and aging of over one year Outstanding or carry-over Item Ending balance reasons Guangzhou South Holiday International Travel 101,244.00 No settlement Service Co., Ltd. Sanya Branch Hainan QiongZhong Ecological Investment 31,314.00 No settlement Guarantee Co., Ltd. Beijing Yualuxincheng Management Consulting 30,540.00 No settlement Co., Ltd. PEGAS Zheng Qingbo 32,243.02 No settlement Sanya Public Security Fire Control Team 19,420.88 No settlement Total 214,761.90 53 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.18 Employee compensation payable 5.18.1 Classification of employee compensation payable Increase in Decrease in Beginning Item Ending balance Period Period balance Short-term employee benefits 2,148,514.36 5,388,428.75 5,737,180.73 1,799,762.38 Post-employment benefits - 470,188.05 470,188.05 defined contribution plans Termination benefits Other benefits due within one year Total 2,148,514.36 5,858,616.80 6,207,368.78 1,799,762.38 5.18.2 Short-term employee benefits Beginning Increase in Decrease in Item Ending balance balance Period Period (1) Salary, bonus, allowance and 1,299,545.99 4,273,089.74 4,695,482.96 877,152.77 subsidy (2) Employee welfare 674,073.97 674,073.97 (3) Social insurance premium 222,048.79 222,048.79 Of which: including: medical 198,783.08 198,783.08 insurance expenses Work injury insurance expenses 10,135.79 10,135.79 Maternity insurance 13,129.92 13,129.92 (4) Housing provident funds 69,293.32 59,593.32 9,700.00 (5) Labor union expenditures and 848,968.37 149,922.93 85,981.69 912,909.61 employee education expenses (6) Short-term paid absences Total 2,148,514.36 5,388,428.75 5,737,180.73 1,799,762.38 页 第注附表报务财 54 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.18.3 Details of defined contribution plans Beginning Increase in Decrease in Item Ending balance balance Period Period Basic endowment insurance 455,465.02 455,465.02 expenses Unemployment insurance expenses 14,723.03 14,723.03 Total 470,188.05 470,188.05 5.19 Taxes and surcharges payable Item Ending balance Beginning balance VAT 205,157.45 228,923.41 Individual income tax 1.14 Urban maintenance and 4,842.25 6,505.86 construction tax Educational surtax 2,075.24 2,788.22 Local educational surtax 1,383.50 1,858.82 Property tax 199,326.91 234,032.26 Land use tax 108,590.91 108,588.06 Stamp tax 246.50 18,147.74 Security for disabled person 539,524.00 582,944.27 Total Other explanation: in line with relevant regulation of accounting rules of business enterprise, the business income tax prepaid in previous at period-end will re-classified to other current assets for calculation 5.20 Other payables 5.20.1 Other payables by fund quality Fund quality Ending balance Beginning balance 55 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Fine for rule-breaking operation 19,810,000.00 on the stock of the Company Audit fee 285,003.21 285,003.21 Project funds 327,589.46 317,277.05 Agency fund 30,884.66 139,319.74 Quality retention money 35,731.15 230,096.75 Guarantee deposit 333,000.00 350,600.90 membership of Board director, 40,506.98 214,506.98 the board of supervisors Personal fund accounts 67,918.27 73,752.85 Other fund accounts 11,144,451.10 1,001,405.96 Deposit and rental 821,158.32 662,541.29 Total 13,086,243.15 23,084,504.73 Other explanation: the fine 19,810,000.00 Yuan for illegal stock operation of the Company are paid to CSRC on 20 February 2017 5.20.2 Other payables with large amount and aging of over one year Reason for Company name Ending balance Remark non-repayment Hong Kong Deloitte & Touche 285,003.21 No settlement LLP Sanya Shuxin Building 170,000.00 No settlement Waterproofing Co. Ltd China Building Decoration 161,111.03 No settlement Company Hannan Branch Total 616,114.24 5.21 Estimates liabilities Item Ending balance Beginning balance Accrual the un-payment electricity 1,489,685.04 1,489,685.04 56 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item Ending balance Beginning balance account Total 1,489,685.04 1,489,685.04 Other explanation: See Note IX 5.22 Share capital Unit: share Before this change Increase or decrease ( , -+ ) After this change Share capital Item Proporti Shares converte Proportio Amount New issue Others Sub-total Amount on (%) granted d from n (%) reserve fund 1. Restricted shares 10,455,687 2.87 10,455,687 2.87 (1) State shareholding (2) State-owned legal 2,369,400 0.65 2,369,400 0.65 person shareholding (3) Other domestic capital 8,085,000 2.22 8,085,000 2.22 shareholding Including: domestic legal 7,953,000 2.18 7,953,000 2.18 person shareholding Domestic natural person 132,000 0.04 132,000 0.04 shareholding (4) Foreign capital shareholding Including: overseas legal person shareholding Overseas natural person shareholding 页 第注附表报务财 57 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Before this change Increase or decrease ( , -+ ) After this change Share capital Item Proporti Shares converte Proportio Amount New issue Others Sub-total Amount on (%) granted d from n (%) reserve fund (5) Senior officers shares 1,287 1,287 2. Unrestricted shares 353,644,313 97.13 353,644,313 97.13 (1) RMB ordinary shares 265,644,313 72.96 265,644,313 72.96 (2) Foreign shares listed in 88,000,000 24.17 88,000,000 24.17 China (3) Foreign shares listed overseas (4). Others 3. Total shares 364,100,000 100.00 364,100,000 100.00 5.23 Capital reserves Item Beginning balance Increase in Period Decrease in Period Ending balance Capital (share capital) 33,336,215.58 33,336,215.58 premium Other capital reserves 20,806,634.43 20,806,634.43 Total 54,142,850.01 54,142,850.01 5.24 Undistributed profits Item The Period Last period Undistributed profits as at June 30, 2016 -343,966,434.57 -341,305,382.08 Plus: net profit attributable to owner of 1,719,253.80 172,122.52 parent company in Period Less: appropriation of statutory surplus 页 第注附表报务财 58 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 reserves Appropriation of discretionary surplus reserve Appropriation of reserve funds Appropriation of enterprise expansion funds Appropriation of bonus and welfare funds Appropriation of general risk reserve Ordinary share dividends payable Ordinary share dividends transferred to share capital Undistributed profits as at June 30, 2016 -342,247,180.77 -341,133,259.56 5.25 Operating income and operating cost 5.25.1 Operating income and operating cost The Period Last period Item Income Cost Income Cost Operating income 13,518,444.89 5,018,862.48 10,836,467.50 4,222,761.53 Operating cost 1,577,828.53 237,250.03 1,226,330.10 237,261.78 15,096,273.42 5,256,112.51 12,062,797.60 4,460,023.31 Total Other explanation: The current operating income increased by 25.15% compared with the previous year, of which the main operating income increased by 20.34% compared with the previous year, mainly due to the increase of Russian tourists in the current period. The main operating costs increased by 17.85% compared with the previous year, mainly due to the increase in food and beverage consumption brought by the increase of passenger traffic in the report period. 5.25.2 Primary business (by industry) Name of industry The Period Last period 页 第注附表报务财 59 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Operating income Operating cost Operating income Operating cost Tourism, catering and 15,096,273.42 5,256,112.51 12,062,797.60 4,460,023.31 service industry Total 15,096,273.42 5,256,112.51 12,062,797.60 4,460,023.31 5.25.3 Primary business (by products) The Period Last period Name of products Operating income Operating cost Operating income Operating cost Guest room income 11,676,662.38 4,079,275.81 9,811,796.58 3,668,041.91 Catering and entertainment 1,841,782.51 939,586.67 1,024,670.92 554,719.62 income Rental income 1,577,828.53 237,250.03 1,226,330.10 237,261.78 Total 15,096,273.42 5,256,112.51 12,062,797.60 4,460,023.31 5.25.4 Primary business (by region) The Period Last period Name of region Operating income Operating cost Operating income Operating cost Hainan region 15,096,273.42 5,256,112.51 12,062,797.60 4,460,023.31 Total 15,096,273.42 5,256,112.51 12,062,797.60 4,460,023.31 5.26 Business tax and surcharges Item The Period Last period Urban maintenance and 52,296.64 40,719.96 construction tax Educational surtax 37,289.14 29,085.71 Property tax 441,630.64 Land use tax 217,184.65 页 第注附表报务财 60 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item The Period Last period 4,980.00 Vehicle and vessel use tax Stamp tax 863.20 Business tax 497,150.96 Total 754,244.27 566,956.63 Other explanation: 1. Due to the increase of property tax, land use tax, travel tax, stamp tax and others, the Ministry of Finance issued Accounting Regulations for Value-added Tax (CS No. [2016] 22) on December 3, 2016, which reclassifies the property tax, land use tax, travel tax, and stamp tax generated from the business operation since May 1, 2016 to the “taxes and additional” project, and the taxes and dues occurred before May 1, 2016 shall not be adjusted. The comparative data shall not be adjusted. 2. According to the Notice on Comprehensively Launching the Pilot of Business Tax to Value-added Tax (CS No.[ 2016] 36) of the Ministry of Finance and the State Administration of Taxation, because the business tax to value-added tax policy has been comprehensively launched since May 1, 2016. 5.27 Selling expenses Item The Period Last period 1,532,804.73 1,257,447.17 Staff wages and benefits 224,176.69 217,223.10 Social workers insurance expenses Depreciation 245,942.02 272,774.51 Water and electricity fees 83,061.58 95,815.71 Repair charges 65,649.32 57,227.50 Other expenses 306,510.59 198,547.75 Total 2,458,144.93 2,099,035.74 5.28 Administrative expenses Item The Period Last period Staff wages and benefits 2,450,309.99 2,069,711.09 325,482.11 250,843.95 Social workers insurance expenses 61 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Taxes 646,738.02 Business entertainment 402,028.00 295,348.47 Travel expenses 97,189.95 87,737.20 Social labor insurance premium 406,193.58 406,193.58 Other expenses 1,408,246.94 1,232,871.46 Total 5,089,450.57 4,989,443.77 5.29 Financial expenses Type The Period Last period Interest expenses Less: interest income -204,780.17 -258,930.94 Gains or losses on exchange Handling charges 24,107.51 54,178.40 Total -180,672.66 -204,752.54 5.30 Losses on assets impairment Item The Period Last period Losses on bad debt Losses on inventory depreciation Losses on impairment of other current assets Losses on impairment of long-term equity investments Loss on fixed asset impairment Loss on intangible asset impairment Total Other explanation: there no loss of impairment of fix assets occurred in the period and last period 62 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 5.30 Non-operating income Non-operating income by items Amount included in current Item The Period Last period non-recurring profits or losses Total gains on disposal of non-current assets Including: gain on disposal of fixed assets Gain on disposal of intangible assets Income from compensation 64,926.00 Others 260.00 12,480.00 Total 260.00 77,406.00 5.32 Notes to statement of cash flow 5.32.1 Other cash receipts related to operating activities Item The Period Last period Compensation for articles in the guest 77,406.00 rooms 204,780.17 258,930.94 Interest income 472,635.21 209,424.79 Other income 677,415.38 545,761.73 Total 5.32.2 Cash paid for other operating activities Item The Period Last period Business entertainment expenses 402,028.00 295,848.47 63 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item The Period Last period Audit fee 400,000.00 390,000.00 Announcement fee 60,000.00 60,000.00 Traveling expenses 109,715.87 95,971.20 Promotion expenses 21,162.60 5,312.00 Repair charge 100,191.70 71,380.30 Directors and supervisors membership dues 354,000.00 234,000.00 Others 690,202.00 394,368.26 Total 2,137,300.17 1,546,880.23 5.32.3 Cash received with other financing activities concerned Item The Period Last period 19,810,000.00 LUONIUSHAN Group Co. Ltd. Total 19,810,000.00 5.32.4 Cash paid for other financing activities Item The Period Last period LUONIUSHAN Group Co. Ltd. 10,000,000.00 CSRC 19,810,000.00 Total 29,810,000.00 5.33 Supplementary information to statement of cash flows 5.33.1 Supplementary information to statement of cash flows Item The Period Last period (1) Net profit adjusted to cash flows from operating activities Net profit 1,719,253.80 172,122.52 Plus: provision for asset impairment Depreciation of fixed assets, gas and oil assets and productive 1,591,987.78 1,764,713.08 页 第注附表报务财 64 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item The Period Last period biological assets Amortization of intangible assets 434,363.58 434,363.58 Amortization of long-term deferred expenses 292,184.70 266,250.00 Loss on disposals of fixed assets, intangible assets and other long-term assets ("-" for gains) Loss on write-off of fixed assets ("-" for gains) Losses from the changes in fair value ("-" for gains) Financial expenses ("-" for gains) Investments loss ("-" for gains) Loss from debts restructuring ("-" for gains) Decrease in deferred income tax assets ("-" for increases) Increase in deferred income tax liabilities ("-" for decreases) Decrease in inventories ("-" for increases) -34,035.33 -17,511.97 Decrease in operating receivables ("-" for increases) 159,732.97 -290,307.05 Increase in operating payables ("-" for decreases) -932,414.40 -875,932.72 Others (Projected liabilities) Net cash flows from operating activities 3,231,073.10 1,453,697.44 2. Significant investing and financing activities not involving cash receipts and payments Conversion of debt into capital Convertible corporate bonds maturing within one year Fixed assets under financial lease 3. Net changes in cash and cash equivalents Ending balance of cash 10,108,175.91 11,825,290.70 Less: Beginning balance of cash 27,210,248.01 19,782,392.26 Plus: Ending balance of cash equivalents 页 第注附表报务财 65 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item The Period Last period Less: Beginning balance of cash equivalents Net increase in cash and cash equivalents -17,102,072.10 -7,957,101.56 5.33.2 Breakdowns of cash and cash equivalents: Item Ending balance Beginning balance 1. Cash 10,108,175.91 27,210,248.01 Including: cash on hand 329,071.51 273,523.86 Bank deposit available for payment at any time 9,779,104.40 26,936,724.15 Other monetary funds available for payment at any time Deposits in the central bank available for payment Deposits with banks and other financial institutions Loans to banks and other financial institutions 2. Cash equivalents Including: Bond investment due within three months 3. Ending balance of cash and cash equivalents 10,108,175.91 27,210,248.01 6Business combination and consolidated financial statements 6.1 Scope of consolidation (aggregation) of financial statements The scope of consolidation (aggregation) of financial statements covers the headquarter of the Company and the subsidiary South China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd., which is subject to independent accounting. 6.2 Changes in scope of consolidation (aggregation) of financial statements: There is no change in scope of consolidation (aggregation) of the financial statements of the Company in the year. 页 第注附表报务财 66 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 7 Risks relating to financial instruments The Company faces a variety of financial risks in business process: credit risk, market risk and liquidity risk. The Company’s Board of Directors is overall responsible for risk management objectives and determining policies, and bears the ultimate responsibility for risk management objectives and policies, but the board has authorized the Company’s enterprise management department to design and executive the procedure which could guarantee the effective implementation of risk management objectives and policies. The Company’s internal auditors will audit the policies and procedures of risk management as well, and will report the discovery to Audit Committee. The overall objective of the Company’s risk management is to set the risk management policies to reduce risks as possible without giving excessive influence to competitiveness and strain capacity of the Company. 7.1 Credit risk Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of another party to meet its obligations. The Company mainly faces credit risk generated from customers through credit sales. The Company will understand and assess the credit risk of the new customer before signing the new contract. The Company makes credit rating for existing customers and aging analysis of accounts receivable to ensure the Company’s overall credit risk falls within a controllable range. 7.2 Market risk Market risk is the risk of financial instruments’ fair value and future cash flow fluctuating due to change of market price, including currency risk, interest risk and other pricing risk. 7.3 Liquidity risk Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling the obligations when paying cash or settle in way of other financial assets. The policy of the Company is to ensure there are enough cash to pay back mature debts. The liquidity risk is centralized controlled by the Company’s accounting department. The accounting department ensures the Company to possess enough cash to pay back the debts in all reasonable foreseeable circumstances through monitor the balance of cash, monitor the 67 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 securities that can be converted into cash at any time and rolling forecasts of future cash flows in twelve months. 8 Related parties and related party transactions 8.1 The largest shareholder of the Company Registered Ultimate Name of Relationship Nature Shareholding Business Registered Legal Capital Voting ratio in the controller parent with the of ratio in the Type place representative (RMB Company (%) of the company Company Business Company (%) 0’000) Company Hainan Plant LuoNiu Luoniushan The largest Listed Haikou and Xu Zili 115,151.00 16.90 16.90 Shan Co., Ltd. shareholder company City culturing Holding business Group Note: As of June 30, 2016, Luoniushan Co., Ltd., as the largest shareholder, held 61,515,400 shares (16.90% of the total share capital of the Company). 8.2 Related party transactions 8.2.1 Sale of goods/rendering of labor services Contents Pricing method The Period Last period of related and Proportion Proportion Related party party decision-making in similar in similar Amount Amount transactio procedure of transactions transaction ns related transaction (%) s (%) Luoniushan Accommo Market price 252,303.00 1.67% 20,672.00 0.17% Co., Ltd. dation 8.2.2 Receivables and payables of related parties Name Related party Ending balance Beginning balance 页 第注附表报务财 68 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Accounts receivable Luoniushan Co., Ltd. 51,896.00 10,668.00 8.2.3 Remuneration of key management Name The Period (RMB ’0,000) Last period (RMB ’0,000) Remuneration of key management 73.15 64.58 9 Contingencies At May 26,2016 the Company received lawyer’s letter of Hainan Yunfan law firm which is , entrusted by Hainan Power Grid Co., LTD Sanya Power Supply Bureau (hereinafter referred to as the "Sanya Power Supply Bureau"), the letter claims that Sanya Power Supply Bureau found that the Company’s subsidiary South China Grand Hotel of Hainan Dadonghai Tourism Center (Holdings) Co., Ltd’s the amount of CT is different with its marketing management system record. The inconformity time is July, 2006, and the hotel’s CT is changing on April, 2016. Therefore, undercounted electricity consumption amount is 10,313,373.00 kilowatt-hours, and estimated cost is 7,200,165.75 Yuan as various electricity prices and charges. According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute between South China Grand Hotel and Sanya Power Supply Bureau” issued by Beijing Junhe (Haikou) Law Firm at December 20, 2016, which claims that Sanya Power Supply Bureau has responsibility for CT to purchase, install, enseal, unseal and change, therefore, the responsibility of the guilty party for undercounted electricity consumption of South China Grand Hotel is Sanya Power Supply Bureau. According to the one hundred and thirty-five item of “General Rule of Civil Law”, this item claims that limitation of action is two years if accuser request people's court’s protection, except situations provided by law. The Company has withheld the undercounted electricity consumption cost in 2016 which is about 1,489,685.04 Yuan during the period from April, 2014 to April, 2016. 69 页 第注附表报务财 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 10 Commitments There are no commitments required to be disclosed by the Company. 11 Notes to other significant events 11.1 Correction of accounting errors in previous period 11.1.1 Retrospective restatement method There is no correction of accounting errors using retrospective restatement method in previous period. 11.1.2 Prospective application method There is no correction of accounting errors using prospective application method in previous period 11.2 Others In accordance with the requirements of the Regulatory Guidelines of Listed Companies No. 4 - Actual Controller, Shareholders, Related Parties, Purchaser and Commitments and Fulfillment of Listed Companies (CSRC Announcement No. [2013] 55) of China Securities Regulatory Commission, on June 7, 2014, Luoniushan Co., Ltd. (hereinafter referred to as “Luoniushan”) sent out the Letter about Changing the Commitments of Luoniushan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. to the Company, and made commitments that Luoniushan shall actively seek reorganization party to reorganize the assets of Dadonghai within three years from the date the Company’s general meeting of shareholders considered and approved this commitment. The above matters have been considered and approved by the general meeting of shareholders of Dadonghai on June 27, 2014. On February 22, 2017, the company received the Letter about the Progress of Planning and Preparing for the Fulfillment of Commitments from the largest shareholder Luoniushan, Luoniushan planned to transfer 100% equity stake it held in the wholly-owned subsidiary - Industrial Corporation (thereinto, Industrial Corporation shall firstly plan to accept the transfer of some equity stake of financial assets held by Luoniushan, tentatively confirmed as 6.91% equity stake of Sanya Rural Commercial Bank, which is subject to the transaction object confirmed by ultimate negotiation) to the Company, the means of transaction is expected to be cash offer, and the transaction amount is approximately RMB 300 million. At present, the work is being promoted. 页 第注附表报务财 70 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 13 Supplementary information 13.1 Details of current non-recurring profits and losses Item The Period Introduction Profits or losses from disposal of non-current assets Tax refunded, reduced or exempted with unauthorized approval or without formal documents of approval Government subsidies included into current profits and losses (other than government subsidies related closely to enterprise business and granted by quota or quantity according to national unified standard) Fund occupancy expenses collected from non-financial enterprises and accounted into current profit and loss Gains from differences between the investment costs of acquiring of subsidiaries, joint ventures or associates and the share of fair value of identifiable net assets of the investees at such investment Gains or losses from non-monetary assets exchange Gains or losses from commissioned investment or management on assets Provisions for asset impairment due to force majeure, such as natural disasters Gain or loss from debt restructuring Enterprise reorganizing expenses, such as employee accommodation costs and integration expenses Gains or losses from excess over fair value due to obvious unfair transaction price Current net gains or losses of subsidiaries acquired through business combination under common control from the beginning of current period till the date of consolidation 页 第注附表报务财 71 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 Item The Period Introduction Gains or losses incurred by contingencies irrelevant to the Company’s normal business Gains or losses from changes in fair value of financial assets or liabilities held for trading, as well as investment income from disposal of financial assets or liabilities held for trading and available-for-sale financial assets, other than those in valid hedging businesses related to the Company’s normal businesses Reversal of provisions for impairment of accounts receivable tested for impairment independently Gains or losses from external consigned loans Gains or losses from external consigned loans Effect on current profit and losses of one-off adjustments for current profit and loss in accordance with the requirements of laws and regulations regarding taxation or accounting Trustee fee obtained from entrusted operations Other non-operating income and expense other than the abovementioned ones Effect of income tax Effect of minority interest (after tax) Total 13.2 Return on net assets and earnings per share Weighted average Earnings per share (RMB) Profit during the reporting period return on net Basic earnings Diluted earnings assets (%) per share per share Net profits attributable to ordinary shareholders 2.29% 0.0047 0.0047 of the Company Net profits attributable to ordinary shareholders 2.29% 0.0047 0.0047 of the Company after deduction of non-recurring 页 第注附表报务财 72 司公限有份股心中游旅海东大南海 2017 告报务财度年半年 注附表报务财 profits or losses 13.3 Accounting difference between IFRS and CAS There are no accounting differences between IFRS and CAS. Section XI. Documents available for references I. Text of Semi-Annual Report 2017 with signature of the legal person; II. Financial statement with signature and seal of legal person, person in charge of accounting works and person in charge of accounting organ (accountant in charge); III. The original manuscripts of all documents and announcements of the Company publicly disclosed on website appointed by CSRC; IV. Other relevant documents The above said documents are prepared in the security department of the Company HAINAN DADONGHAI TOURISM CENTER (HOLDINGS) CO., LTD 17 August 2017 页 第注附表报务财 73