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深深宝B:2017年半年度报告(英文版)2017-08-28  

						                       深圳市深宝实业股份有限公司 2017 年半年度报告全文




     深圳市深宝实业股份有限公司
SHENZHEN SHENBAO INDUSTRIAL CO.,LTD.


      SEMI-ANNUAL REPORT 2017




              August 2017




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                                             深圳市深宝实业股份有限公司 2017 年半年度报告全文




     Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of Shenzhen Shenbao Industrial 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.
Chairman of the Company Zheng Yuxi, General Manager Yan Zesong, Chief
Financial Officer Wang Zhiping and Financial Management Department
Manager Xu Qiming hereby confirm that the Financial Report of Semi-Annual
Report 2017 is authentic, accurate and complete.
All Directors are attended the Board Meeting for deliberation of this Report.
Concerning the forward-looking statements with future planning involved in the
annual report, they do not constitute a substantial commitment for investors,
Securities Times, China Securities Journal, Hong Kong Commercial Daily and
Juchao Website (www.cninfo.com.cn) are the media appointed by the Company
for information disclosure, all information of the Company disclosed in the
above mentioned media should prevail. Investors are advised to exercise caution
of investment risks.
The Company has analyzed the risk factors that the Company may exist and its
countermeasures in the report, investors are advised to pay attention to read
“Risks and Countermeasures” in the report of Section IV-Discussion and
Analysis of the Operation.

The Company plans not to distributed cash dividend, bonus and no capitalizing
of common reserves either.

This report has been prepared in Chinese and English version respectively. In
the event of difference in interpretation between the two versions, Chinese
report shall prevail.

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                                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文



                                                  Contents


Section I. Important Notice, Contents and Paraphrase .......................................... 2


Section II Company Profile and Main Financial Indexes ....................................... 5


Section III Summary of Company Business ............................................................. 9


Section IV Discussion and Analysis of the Operation ............................................ 11


Section V. Important Events ..................................................................................... 21


Section VI. Changes in Shares and Particulars about Shareholders ................... 28


Section VII. Preferred Stock ..................................................................................... 33


Section VIII. Particulars about Directors, Supervisor and Senior Executives ... 34


Section IX Corporate Bonds..................................................................................... 36


Section X. Financial Report...................................................................................... 37


Section XI. Documents available for Reference ................................................... 162




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                                                          深圳市深宝实业股份有限公司 2017 年半年度报告全文



                                          Paraphrase
                     Items             Refers to                              Contents
Shenshenbao/Shenbao Company/ Listed
                                       Refers to   Shenzhen Shenbao Industrial Co., Ltd.
Company /the Company/

Shenbao Huacheng                       Refers to   Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd

Wuyuan Ju Fang Yong                    Refers to   Wuyuan Ju Fang Yong Tea Industry Co., Ltd.

Hangzhou Ju Fang Yong                  Refers to   Hangzhou Ju Fang Yong Holding Co., Ltd.

Shenbao Technology Center              Refers to   Shenzhen Shenbao Technology Center Co., Ltd.

Huizhou Shenbao Science & Technology   Refers to   Huizhou Shenbao Science & Technology Co., Ltd.

                                                   Shenzhen Shenbao Sanjing Food & Beverage Development Co.,
Shenbao Sanjing                        Refers to
                                                   Ltd

Shenbao Industrial & Trading           Refers to   Shenzhen Shenbao Industrial & Trading Co., Ltd.

Shenbao Properties                     Refers to   Shenzhen Shenbao Properties Management Co., Ltd.

Shenshenbao Investment                 Refers to   Shenzhen Shenshenbao Investment Co., Ltd.

Yunnan Supply Chain                    Refers to   Yunnan Shenbao Pu’er Tea Supply Chain Management Co., Ltd

Fuhaitang Ecological                   Refers to   Fuhaitang Tea Ecological Technology Co., Ltd.

Chunshi Network                        Refers to   Hangzhou Chunshi Network Technology Co., Ltd.

Ju Fang Yong Commerce                  Refers to   Hangzhou Ju Fang Yong Commerce Co., Ltd.

                                                   Shenzhen Shenshenbao Tea Culture Business Management Co.,
Shenshenbao Tea Culture                Refers to
                                                   Ltd.

Pu’er Tea Exchange Center             Refers to   Yunnan Pu’er Tea Exchange Center Co., Ltd.

Huizhou Shenbao Food                   Refers to   Huizhou Shenbao Food Co., Ltd.

Shenbao Rock Tea                       Refers to   Mount Wuyi Shenbao Rock Tea Co., Ltd.

Agricultural Products                  Refers to   Shenzhen Agricultural Products Co., Ltd

Shenzhen Investment Holding            Refers to   Shenzhen Investment Holding Co., Ltd

                                                   Shenzhen Municipal People’s Government State-owned Assets
Shenzhen SASAC                         Refers to
                                                   Supervision & Administration Commission

CSRC                                   Refers to   China Securities Regulation Commission

SSE                                    Refers to   Shenzhen Stock Exchange

                                                   Dahua Certified Public Accountants (Special General
Dahua CPA                              Refers to
                                                   Partnership)

Article of Association                 Refers to   Article of Association of Shenzhen Shenbao Industrial Co., Ltd

RMB/10 thousand Yuan                   Refers to   CNY/ten thousand Yuan




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                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文




       Section II Company Profile and Main Financial Indexes

I. Company profile

                           SHENSHENBAO-A,
Short form for share                                         Stock code               000019, 200019
                           SHENSHENBAO-B
Listing stock exchange     Shenzhen Stock Exchange
Chinese name of the
                           深圳市深宝实业股份有限公司
Company
Abbr. of Chinese name of
the Company (if          深宝
applicable)
English name of the
                           SHENZHEN SHENBAO INDUSTRIAL CO.,LTD.
Company(if applicable)
Abbr. of English name of
the Company(if           SBSY
applicable)
Legal Representative       Zheng Yuxi


II. Person/Way to contact

                                            Secretary of the Board               Rep. of security affairs
Name                                 Li Yiyan                             Huang Bingxia
                                     8/F, Tower-B, Building 4, Software 8/F, Tower-B, Building 4, Software
                                     Industry    Base,    Science    & Industry     Base,    Science    &
Contact add.
                                     Technology Park (South), Xuefu Technology Park (South), Xuefu
                                     Road, Nanshan District, Shenzhen Road, Nanshan District, Shenzhen
Tel.                                 0755-82027522                        0755-82027522
Fax.                                 0755-82027522                        0755-82027522
E-mail                               lyy@sbsy.com.cn                      huangbx@sbsy.com.cn


III. Others

1. Way of contact


Whether registrations address, offices address and codes as well as website and email of the Company changed in
reporting period or not
□ Applicable   √ Not applicable
Registrations address, offices address and codes as well as website and email of the Company has no change in
reporting period, found more details in Annual Report 2016

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                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


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
                                                            Same period of last
                                       Current period                                 Changes over last year
                                                                  year
Operating revenue (RMB)                   138,158,382.95         149,155,529.71                          -7.37%
Net profit attributable to
shareholders of the listed                -17,759,776.83          -15,099,180.63                        -17.62%
Company(RMB)
Net profit attributable to
shareholders of the listed
Company after deducting                   -19,357,560.01          -20,333,457.37                          4.80%
non-recurring gains and
losses(RMB)
Net cash flow arising from
                                          -50,432,648.15           31,597,947.36                      -259.61%
operating activities(RMB)
Basic earnings per share
                                                  -0.0357                -0.0304                        -17.43%
(RMB/Share)
Diluted earnings per share
                                                  -0.0357                -0.0304                        -17.43%
(RMB/Share)
Weighted average ROE                              -1.74%                  -1.63%                         -0.11%
                                    End of current period     End of last year     Changes over end of last year
Total assets (RMB)                      1,121,549,159.24       1,178,543,725.30                          -4.84%
Net assets attributable to
shareholder of listed                     991,427,598.24       1,031,768,388.87                          -3.91%
Company(RMB)
V. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS
(International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting
Principles)
√ Applicable □ Not applicable
                                                                                                         In RMB



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                                                                   深圳市深宝实业股份有限公司 2017 年半年度报告全文


                               Net profit attributable to shareholders of    Net assets attributable to shareholders of
                                            listed Company                                listed Company
                                Current period            Last period            Period-end           Period-begin
Chinese GAAP                      -17,759,776.83            -15,099,180.63       991,427,598.24      1,031,768,388.87
Items and amount adjusted by IAS
Adjustment for other
payable fund of stock                                                               1,067,000.00         1,067,000.00
market regulation
IAS                               -17,759,776.83            -15,099,180.63       992,494,598.24      1,032,835,388.87


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 has no above mentioned condition occurred in the period

3. Explanation on differences of the data under accounting standards in and out of China

□ Applicable √ Not applicable

VI. Items and amounts of extraordinary profit (gains)/loss

√ Applicable □ Not applicable
                                                                                                                In RMB
                                 Item                                              Amount                   Note
Gains/losses from the disposal of non-current asset (including the
                                                                                           -21,015.26
write-off that accrued for impairment of assets)
Governmental subsidy reckoned into current gains/losses (not
including the subsidy enjoyed in quota or ration according to
                                                                                         1,002,062.22
national standards, which are closely relevant to enterprise’s
business)
Profit and loss of assets delegation on others’ investment or
                                                                                         1,252,661.10
management
Gains and losses from change of fair values of held-for-transaction
financial assets and financial liabilities except for the effective
hedge business related to normal business of the Company, and                             -990,762.24
investment income from disposal of transactional financial assets
and liabilities and financial assets available for sale



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                                                                            深圳市深宝实业股份有限公司 2017 年半年度报告全文


Other non-operating income and expenditure except for the
                                                                                                       370,612.55
aforementioned items
Less: impact on income tax                                                                              11,131.51

      Impact on minority shareholders’ equity (post-tax)                                                 4,643.68

Total                                                                                               1,597,783.18             --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons

□ Applicable √ Not applicable

In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss




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                                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文




                  Section III Summary of Company Business

I. Main businesses of the Company in the reporting period


Does the Company need to comply with disclosure requirements of the special industry?

□Yes √ No
The Company focuses on tea industry development, established relatively complete industrial chain involving tea
cultivation, purified tea, tea extract, boutique tea sales, tea cultural experience, e-commerce, tea trading platform
and tea finance. Its main business comprises tea refining and fine tea sales, tea-life experience, tea e-commerce,
food and beverage, research and development. The Company has formed direction of "health technology" based
on plant extraction technology, "industrial services" based on core business ranging from tea trading center
finance, electronic trading, modern logistics, "life experience" based on core business of Tea bank\Fuhai Tong
Fashion- Tea consumption. Main products are "Golden Eagle" instant tea powder, juice ect series; "Jufangyong",
"Gutan", "Fuhai Tong" ect series; "Mitsui" oyster sauce, chicken, seafood sauce and other condiments; "Shenbao"
chrysanthemum tea, lemon tea, herbal tea and other drinks.



II. Major changes in main assets
1. Major changes in main assets

            Major assets                                        Note of major changes

           Equity assets             No major Change
            Fixed assets             No major Change
          Intangible assets          No major Change
     Construction in progress        No major Change
                                     Decrease of the monetary fund in the period: 1. cash paid for purchasing
                                     financing products increased from a year earlier; 2. income tax for last year
          Monetary fund              are paid in the period; 3. major margin received at same period of last year
                                     while there are no such amounted occurred in the period; 4. cash bonus paid
                                     in the period; and 5. cash received from sales of goods declined.
                                     Increase of other current assets: balance of financing products at period-end
        Other current assets
                                     increased from a year earlier.


2. Main overseas assets

□ Applicable √ Not applicable
III. Core Competitiveness Analysis

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                                                                深圳市深宝实业股份有限公司 2017 年半年度报告全文


Does the Company need to comply with disclosure requirements of the special industry?

□Yes √ No
During the reporting period, core competence wasn’t significantly changed. The Company has established
relatively complete industrial chain involving tea cultivation, purified tea, tea extract, boutique tea sales, tea
cultural experience, e-commerce, tea trading platform and tea finance, forming a good industrial base; relying
strong R & D capabilities, leading edge technology, two state-level high-tech enterprises, a quality control system
recognized by large international food and beverage companies, the Company brought a group of high-quality
large domestic and foreign clients. The Company will continue to innovate institutional mechanisms, innovative
ideas, innovative products to enhance synergies and core competitiveness of the tea industry chain.




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                                                                  深圳市深宝实业股份有限公司 2017 年半年度报告全文




          Section IV Discussion and Analysis of the Operation

I. Introduction

During the reporting period, the company spared no efforts to implement various management measures, strived
to consolidate the industrial base and enhance the industrial value, combined with the existing industrial layout
and market development trends, initially determined the strategic direction of health industry, and focused on the
existing business development planning to adjust and comb the business model, improved the strategic orientation,
further promoted the scientific and technological innovation, and vigorously expanded the main business, and
enhanced the profitability and core competitiveness of the enterprise.
As the core driving force for the scientific research and industry development, the company's technology center
determined the “development of healthy and functional tea and deep processing products” project in the first half
of the year, and continued to strengthen the development of application products, put forth efforts to open the
production and research and efficiency channels, accelerated the transformation of scientific research
achievements, and provided reviving function for the development of industrial chain, in the first half of 2017, it
totally researched and developed 21 new tea products which were approved by the customer, and completed the
applications for 8 government projects. All business sectors developed smoothly, the deep processing division
spared no efforts to expand export business and orders were basically stable, and achieved outstanding results in
reducing consumption and increasing efficiency, optimizing supply chain and strictly controlling costs;
Hangzhou Ju Fang Yong continued to expand commercial channels and innovate products, took Longjing tea and
small gift business as channels for brand interaction and cooperation with outstanding platforms and resources in
the industry by “offline store drainage and online precipitation” so as to promote the brand awareness and
gradually increase the performance; In April 2017, Hangzhou Ju Fang Yong set up Hangzhou Fu Hai Tang
Restaurant Management Co., Ltd. to operate the fast drink business of Fu Hai Tang, increased the species richness
and diversification of store products by developing light food and fruit tea products, increase the units per
transaction, promoted the performance enhancing, and tried out to open the chain system to expand customers at
the same time, and has consulted and completed the cooperation matters with some customers at present; In July
2017, Teabank became the company's wholly-owned brand after confirming the stock right assigning, and the
business model of Shenbao Teabank has preliminarily established. During the reporting period, the company
continued to integrate resources for various industrial service platforms and broaden the enterprise's sustainable
development space, at present, it has completed the integration of all e-commerce platforms of Shenbao, gathered
and centralized the scattered network flow of all business sectors by online exhibition sales and marketing of tea
and derivatives, and promoted the value conversion. In the first half of the year, the company initially completed
the brand integration work, set up Shenbao Teabank for the collection and operating of fine tea business, the
relevant work at earlier stage has been completed at present, and the company has implemented the product
development and production plan of the first batch of retail tea for external sales.
In the first half of 2017, the company achieved total operating income of RMB 138,158,382.95, a decrease of

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                                                                         深圳市深宝实业股份有限公司 2017 年半年度报告全文


7.37% over the same period last year; achieved operating profits of RMB -21,509,006.38, an increase of 16.66%
over the same period last year; and achieved net profits attributable to shareholders of listed companies of RMB
-17,759,776.83, a decrease of 17.62% over the same period last year. The main reasons for the changes in net
profits attributable to shareholders of listed companies were that the operating income in the current period
decreased compared with the same period of last year, the company received settlement payment in the same
period of last year but didn’t in the current period, and the non-operating income decreased compared with the
same period of last year.



II. Main business analysis
See the “I-Introduction” in “Discussion and Analysis of the Operation”

Y-o-y changes of main financial data
                                                                                                                               In RMB
                                             Same period of last        Y-o-y
                        Current period                                                               Reasons for changes
                                                    year           increase/decrease

Operation revenue           138,158,382.95       149,155,529.71              -7.37%
Operation cost              104,400,839.32       116,893,235.04             -10.69%
Sales expenses               21,174,407.31        20,601,283.18                 2.78%
Management
                             33,082,783.76        34,369,699.17              -3.74%
expenses

                                                                                        Interest revenue in the Period increased from
Financial expenses           -1,533,397.02           213,297.58            -818.90%
                                                                                        a year earlier
Income tax expense               36,586.58          -501,745.09            107.29%
R&D investment                1,162,154.46         1,442,268.22             -19.42%

                                                                                        Reasons for declined: 1. cash received from
                                                                                        good sales declined; 2. received major
Net cash flow
                                                                                        margins at same period of last year while no
arising from                -50,432,648.15        31,597,947.36            -259.61%
                                                                                        such amount occurred in the period; and 3.
operation activities
                                                                                        income tax for last year are paid in this
                                                                                        period
Net cash flow
                                                                                        Cash paid for purchasing financial products
arising from                -84,671,733.66       -33,549,430.36            -152.38%
                                                                                        increased over that of last year
investment activities

Net cash flow
arising from                -17,904,646.76          -790,774.97          -2,164.19% Cash dividend paid in the period
financing activities

Net increase of cash
                          -153,076,370.04          -2,614,834.69         -5,754.15%
and cash equivalent

Monetary fund               205,487,872.79       358,564,242.83             -42.69% Decrease of the monetary fund in the period:


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                                                                        深圳市深宝实业股份有限公司 2017 年半年度报告全文


                                                                                    1. cash paid for purchasing financing
                                                                                    products increased from a year earlier; 2.
                                                                                    income tax for last year are paid in the
                                                                                    period; 3. major margin received at same
                                                                                    period of last year while there are no such
                                                                                    amounted occurred in the period; 4. cash
                                                                                    bonus paid in the period; and 5. cash
                                                                                    received from sales of goods declined.

Transactional                                                                       Price of the stock held by the Company
                               2,260,176.36       3,250,938.60            -30.48%
financial assets                                                                    drops

Account paid in
                             14,278,408.17        6,321,827.64           125.86% Inventory purchasing increased in the period
advance

                                                                                    Increase of other current assets: balance of
Other current assets         91,856,403.28       11,299,954.58           712.89% financing products at period-end increased
                                                                                    from a year earlier.

Short-term loans             10,000,000.00        5,000,000.00           100.00% New loans in the period

                                                                                    Purchasing of the raw materials in the period
Account payable              22,645,209.79       15,782,288.29            43.48%
                                                                                    increased

                                                                                    Performance-related pay for last year are
Wages payable                  9,383,764.84      16,279,706.84            -42.36%
                                                                                    distributed in this period

                                                                                    Final settlement and payment of enterprise
Taxes payable                  5,242,645.48      26,345,138.53            -80.10%
                                                                                    income taxes in this period

                                                                                    Bonus shares and dividend are paid to the
Retained profit              72,736,795.31      158,239,612.94            -54.03%
                                                                                    shareholders in this period

                                                                                    Associated company has deficit in this
Investment income              1,093,417.06        -898,654.15           221.67%
                                                                                    period

                                                                                    Received a compensation at same period of
Non-operational
                               1,024,229.54       6,218,417.29            -83.53% last year while no such account occurred in
revenue
                                                                                    this period

Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period



Composition of main business

                                                                                                                           In RMB
                                                                            Increase or           Increase or        Increase or
                                                         Gross profit       decrease of           decrease of     decrease of gross
                Operating revenue     Operating cost
                                                            ratio        operating revenue      operating cost    profit ratio over
                                                                         over same period over same period         same period of



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                                                                            深圳市深宝实业股份有限公司 2017 年半年度报告全文


                                                                                 of last year          of last year          last year

According to industries
  Industry        121,219,608.71             96,382,162.58          20.49%                -14.57%             -16.35%               1.69%
  Trading             13,664,854.16           6,571,143.93          51.91%             308.63%                315.41%               -0.79%

According to products

Soft drink            15,227,181.14          10,502,335.78          31.03%                25.90%                5.98%               12.96%

Tea products      116,212,886.82             90,319,654.20          22.28%                 -9.72%             -13.28%               3.19%

According to region

Exportation            7,027,084.57           4,869,073.53          30.71%                -21.25%             -26.58%               5.04%

South China           32,299,897.84          23,237,196.36          28.06%                -31.72%             -28.84%               -2.91%

East China            67,445,554.63          50,063,223.58          25.77%                 -2.97%             -15.81%               11.32%

Central
                      11,676,328.24           9,490,593.18          18.72%                21.67%               20.71%               0.65%
China

III. Analysis of the non-main business
□Applicable √Not applicable

IV. Assets and liability

1. Major changes of assets composition

                                                                                                                                   In RMB
                           End of current period             End of period of last year
                                                                                                    Ratio
                                              Ratio in                           Ratio in                       Notes of major changes
                           Amount                              Amount                           changes
                                             total assets                       total assets

                                                                                                              Decrease of the monetary
                                                                                                              fund in the period: 1. cash
                                                                                                              paid for purchasing
                                                                                                              financing products
                                                                                                              increased from a year
                                                                                                              earlier; 2. income tax for
                                                                                                              last year are paid in the
Monetary fund              205,487,872.79       18.32%         358,564,242.83      30.42%           -12.10% period; 3. major margin
                                                                                                              received at same period of
                                                                                                              last year while there are no
                                                                                                              such amounted occurred in
                                                                                                              the period; 4. cash bonus
                                                                                                              paid in the period; and 5.
                                                                                                              cash received from sales of
                                                                                                              goods declined.

Account                      72,042,632.44         6.42%        62,582,867.63        5.31%            1.11%


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                                                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


receivable

Inventory                   149,475,307.29       13.33%          140,951,059.39      11.96%           1.37%

Investment
                             18,637,070.20        1.66%           18,872,865.36       1.60%           0.06%
property

Long-term equity
                              5,707,237.59        0.51%            5,866,481.63       0.50%           0.01%
investment

Fix assets                  323,793,293.30       28.87%          333,013,767.86      28.26%           0.61%

Construction in
                                 54,574.34        0.00%               54,574.34       0.00%           0.00%
process

Short-term loans             10,000,000.00        0.89%            5,000,000.00       0.42%           0.47%


2. Assets and liability measured by fair value

√ Applicable □ Not applicable
                                                                                                                                 In RMB
                                                                                                    Amount
                                           Changes of fair       Accumulative       Devaluation                Amount
                                                                                                       of
                         Amount at the           value           changes of fair         of                    of sale in Amount in the
          Items                                                                                     purchase
                        beginning period     gains/losses in   value reckoned into withdrawing                   the      end of period
                                                                                                     in the
                                              this period            equity         in the period               period
                                                                                                     period

Financial assets

1. Financial assets
measured by fair
value and whose
change is recorded
                            3,250,938.60        -990,762.24          1,179,110.27                                           2,260,176.36
in current gains and
losses (excluding
derivative financial
assets)

Aforementioned
                            3,250,938.60        -990,762.24          1,179,110.27                                           2,260,176.36
total

Financial liabilities               0.00                                                                                            0.00

Whether there have major changes on measurement attributes for main assets of the Company in report period or
not
□ Yes √No

3. The assets rights restricted till end of the period


Nil




                                                                                                                                          15
                                                                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文
V. Investment analysis
1. Overall situation
√ Applicable □ Not applicable

        Investment in reporting period (Yuan)          Investment in the same period of last year (Yuan)                         Range
                                        5,500,000.00                                         6,375,000.00                                             -13.73%


2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable

3. The major non-equity investment carrying in the reporting period

□ Applicable √ Not applicable

4. Financial assets investment

(1) Securities investment
√ Applicable □ Not applicable
                                                               Changes in
Variety              Short                          Book value fair value Cumulative Current Curren Profit and
          Code of               Initial Accounting
   of               form of                           at the     of the    fair value purchas t sales loss in the Book value Accounting             Capital
          securitie           investmen measuremen                                                                at the end of
securitie           securitie                      beginning of current   changes in     e    amoun Reporting the period        subject             Source
             s                  t cost    t model
   s                   s                            the period profit and    equity   amount     t      Period
                                                                  loss
Domesti                                                                                                                                         Shares repaid
                                                                                                                                   Transactiona
 c and                                  Measured by 3,250,938.6 -990,762.2 1,179,110.2                      -990,762.2 2,260,176.3              from debt
         000017 CBC-A             --                                                           0.00    0.00                        l financial
overseas                                 fair value           0          4           7                               4           6              reorganizatio
                                                                                                                                   assets
 stock                                                                                                                                          n

                                                                                                                                                              16
                                                                                                            深圳市深宝实业股份有限公司 2017 年半年度报告全文

                                                       3,250,938.6 -990,762.2 1,179,110.2                 -990,762.2 2,260,176.3
Total                             --           --                                           0.00   0.00                               --            --
                                                                 0          4           7                          4           6
Disclosure date of securities
investment approval of the Not applicable
Board
Disclosure date of securities
investment approval of the
                              Not applicable
Shareholder Meeting (if
applicable)


(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

Particular about main subsidiaries and stock-jointly companies net profit over 10%

                                                                                                                                                         17
                                                                                                                     深圳市深宝实业股份有限公司 2017 年半年度报告全文
                                                                                                                                                                In RMB
                                                                                                                         Operating       Operating
Company name           Type         Main business       Industry      Register capital   Total assets   Net Assets                                        Net profit
                                                                                                                          revenue         profit
 Shenshenbao                         Investment
             Subsidiary                         Comprehensive 50,000,000.00              36,998,930.33 26,622,668.95     3,052,329.52 -5,113,614.15       -5,103,523.76
  Investment                         management
                                     Production,
 Hangzhou Ju
             Subsidiary             wholesale and Comprehensive 175,000,000.00 215,811,936.19 172,868,023.66 18,205,800.03 -3,407,994.18                  -3,078,384.14
  Fang Yong
                                    retail business
   Pu’er Tea                         Providing
   Exchange     Subsidiary          service for tea Comprehensive 50,000,000.00          49,833,620.07 44,872,486.35       556,614.78 -2,089,534.90       -2,089,534.90
    Center                             trading
Particular about subsidiaries obtained or disposed in report period

□Applicable √ Not applicable


Explanation on main holding/stock-jointly enterprise
1. Shenzhen Shenshenbao Investment Co., Ltd., the company’s wholly-owned subsidiary, business scope: investing and developing enterprises (declare specific
items separately); exchange, promotion and consultation services of tea knowledge and tea culture, tea art training; marketing of tea set, tea table, and root carving;
online trade, domestic trade (excluding monopoly and special control products); operating import and export business (excluding restricted items), with registered
capital of RMB 50,000,000. Up to the end of the reporting period, the total assets of Shenshenbao Investment amounted to RMB 36,998,930.33, the net assets were
RMB 26,622,668.95, and the equity attributable to shareholders of the parent company was RMB 31,286,738.96. During the reporting period, the operating income
was RMB 3,052,329.52, net profit was RMB -5,103,523.76, and the net profit attributable to the parent company was RMB -3,474,202.65.
2. Hangzhou Ju Fang Yong Holding Co., Ltd., a wholly owned subsidiary. Business scope: sell both retail and wholesale: wholesale, retail of the prepackaged food
and bulk food (pre-approval items should be operated within validity period ): tea set; acquisitions: tea business sales required (limited to the acquisition of the
original producer of primary industry directly); Services: Tea business investment and asset management, technology development, cultivation, breeding, technical
consulting, technical services, transfer of results, the other all legitimate projects without approval, subsidiaries’ business scope included. Register capital was RMB
175 million. Ended as this period-end, the total assets of Ju Fang Yong is RMB 215,811,936.19, and net assets amounting to RMB172,868,023.66, interest
attributable to shareholders of parent Company is RMB173,243,655.13; in the reporting period, Ju Fang Yong realized operation income, net profit and net profit
                                                                                                                                                                       18
                                                                                                                     深圳市深宝实业股份有限公司 2017 年半年度报告全文
attributable to parent Company as RMB 18,205,800.03, RMB-3,078,384.14 and RMB -2,830,739.34 respectively.
3. Yunnan Pu'er Tea Exchange Center Co., Ltd., the company’s holding subsidiary, business scope: providing places, facilities and intermediaries, brokers, auctions,
finance, and advisory services for spot transactions and related financial services of tea and its agricultural and sideline products, industrial raw materials bulk
commodity, etc; other relevant project investment and management; meetings and exhibition services (projects need to be approved according to law, operating
activities can only be carried out after being approved by relevant departments ), with registered capital of RMB 50,000,000. Up to the end of the reporting period,
the total assets of Pu'er Tea Exchange amounted to RMB 49,833,620.07, the net assets were RMB 44,872,486.35, and the equity attributable to shareholders of parent
company was RMB 44,872,486.35; during the reporting period, the operating income was RMB 556,614.78, net profit was RMB -2,089,534.90, and the net profit
attributable to the parent company was RMB -2,089,534.90.


VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable


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. In recent years, the domestic beverage market growth has continued to slow down, subject to the decline in customer market, increase in the company’s costs, and
intensifying industrial competition and other reasons, the profits have slightly decreased; the company's business sectors in the market just cut a striking figure, the
recognition is limited, and the expected return has been relatively slow. In the second half of 2017, the company will increase the efforts to upgrading of existing
products, speed up the establishment of product databases, continue to adjust the product structure, product type, sales channels, and strive to improve the earnings.
2. The business structure transformation and upgrading face challenges, the enterprise operating costs continue to increase, the profit margins are squeezed, and the
scale profit margins need to be improved. In the second half of 2017, the company will continue to enhance the core strength of scientific research, promote the

                                                                                                                                                                         19
                                                                                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文
product upgrading and innovation to enhance market competitiveness, and increase the overall profit margins.
3. In recent years, "internet +", sharing economy, and experience economy have risen, the development environment and consumer trends have been changing, the
company's business structure and talent structure have been relatively single, the team construction has lagged behind and talent team has lacked, resulting in
insufficient innovation ability and strain capacity when the company facing competition of new areas in the new business cultivation, which increased the cycle and
costs of business transformation. In the second half of 2017, the company will continue to introduce foreign professionals, cultivate internal directed talents,
strengthen the talent echelon construction, break through the upward development channels for staff, create career development opportunities, and complete the
company's employer brand building at the same time, and strengthen corporate culture propaganda.




                                                                                                                                                                20
                                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文




                                      Section V. Important Events

I. Annual General Meeting and extraordinary shareholders general meeting held in this
period

1. AGM in the period

                            Investor
  Sessions       Type     participation Opening date Disclosure date                  Disclosure index
                               (%)
                                                                          Resolution Notice of AGM 2016 of
                Annual
  AGM of                                                                  Shenzhen Shenbao Industrial Co., Ltd.
                general     0.03%      2017-05-15     2017-05-16
   2016                                                                   (Notice No.: 2017-13) released on Juchao
                meeting
                                                                          website dated 16 May 2017


2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable     √ Not applicable


II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable √ Not applicable
The Company plans not to carried out distribution of cash dividend, bonus shares and share converted from capital
reserve either for the half year


III. Commitments completed in Period and those without completed till end of the Period from actual
controller, shareholders, related parties, purchaser and companies etc.

□Applicable √ Not applicable

There are no commitments completed in Period and those without completed till end of the Period from actual
controller, shareholders, related parties, purchaser and companies etc.


IV. Appointment and non-reappointment (dismissal) of CPA


Whether the financial report has been audited or not

□Yes    √No

The financial report has not been audited


                                                                                                                21
                                                                            深圳市深宝实业股份有限公司 2017 年半年度报告全文


V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion”
that issued by CPA

□ Applicable √ Not applicable


VI. Explanation from the BOD for “Qualified Opinion” of last year


□ Applicable √ Not applicable


VII. Bankruptcy reorganization

□ Applicable     √ Not applicable
No bankruptcy reorganization for the Company in end of this period


VIII. Lawsuits


Significant lawsuits and arbitrations

□ Applicable     √ Not applicable

No significant lawsuits and arbitrations occurred in the reporting period



Other lawsuits

√Applicable      □Not applicable

                                              Amount Resulted
                                              involved     an                                                               Disclo Disclos
                                                                                        Trial result and     Execution of
         Lawsuits (arbitrations)               (in 10    accrual      Progress                                               sure    ure
                                                                                           influence          judgment
                                              thousand liability                                                             date   index
                                               Yuan)     (Y/N)
Shenzhen Shenbao Industrial Co., Ltd.
                                                                                       The first instance
(hereinafter referred to as “Shenbao
                                                                                       judgment has been
Company”) received the Civil Complaint
                                                                                        issued, the court
from Shenzhen Agricultural Products
                                                                                       ruled to reject the
Financing      Guarantee    Co.,       Ltd.                           In second                              The verdict
                                                                                           appeal of
(hereinafter referred to as “Guarantee                                instance                              has not yet
                                                500        N                               Guarantee                          -       -
Company”) in July 2016, Case No.:                                    procedure                               come into
                                                                                         Company that
(2016)Y0304MC15008,                required                        without trial yet                            effect
                                                                                            Shenbao
Changzhou Shenbao Tea Warehousing
                                                                                       Company should
E-commerce Co., Ltd., a shareholding
                                                                                        undertake joint
enterprise of Shenbao Company, to repay
                                                                                            liability
the loan principal and interest, penalty


                                                                                                                                            22
                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


interest and compensation, with a total of
RMB         8,690,240.31,          the     shareholder
Shenbao        Company            undertook      joint
liability     for       the       (loan     principal)
borrowings of RMB 5,000,000.00.
After       holding      a      hearing,     Shenbao
Company received the written judgment
of first instance in June 2017, the court
ruled to reject the appeal of Guarantee
Company that Shenbao Company should
undertake       joint         liability.    Guarantee
Company refused to accept the judgment
of the first instance and appealed to
Shenzhen Intermediate People's Court,
and it is now in the second instance, but
not yet holds a court.



IX. Penalty and rectification

□ Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.

X. Integrity of the Company and its controlling shareholders and actual controllers

√ Applicable □ Not applicable

During the reporting period, the Company and its controlling shareholder, actual controller always obeyed final
judgment in the court case, relatively large amount of debt overdue and other non-compliance.

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.


XII. Major related transaction


1. Related transaction with routine operation concerned


□ Applicable √ Not applicable

No related transaction occurred in the period with routine operation concerned


                                                                                                            23
                                                                  深圳市深宝实业股份有限公司 2017 年半年度报告全文



2. Assets or equity acquisition, and sales of assets and equity


□ Applicable √ Not applicable

No related transaction concerning the asses or equity acquisition and sold at period-end


3. Related transaction of foreign investment


□ Applicable √ Not applicable

No related transaction of foreign investment occurred at period-end


4. Related credits and liabilities


□ Applicable √ Not applicable

No related credits and liabilities occurred in period


5. Other major related transaction


□ Applicable √ Not applicable

No other major related transaction in the Period


XIII. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.

XIV. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

□ Applicable     √ Not applicable
No trusteeship for the Company in reporting period

(2) Contract

□ Applicable     √ Not applicable
No contract for the Company in reporting period

                                                                                                               24
                                                                            深圳市深宝实业股份有限公司 2017 年半年度报告全文


(3) Leasing


□ Applicable √ Not applicable

No leasing in the Period


2. Major Guarantee


√ Applicable □ Not applicable


(1) Guarantee

                                                                                                              In 10 thousand Yuan
                                    External Guarantee (not including guarantees to subsidiaries)
                      Related
                                             Actual date of                                                      Complete Guarante
   Name of the       Announce
                                  Guarantee happening (Date     Actual                Guarantee      Guarantee   implemen    e for
    Company             ment
                                    limit      of signing   guarantee limit             type           term       tation or related
   guaranteed        disclosure
                                              agreement)                                                             not     party
                        date
                                          Guarantee between the Company and subsidiary
                        Related                                                                                 Complet
                                                                                                                         Guarante
    Name of the       Announcem                      Actual date of        Actual                                   e
                                     Guarantee                                          Guarantee     Guarantee            e for
     Company               ent                    happening (Date of      guarantee                             impleme
                                       limit                                              type          term              related
    guaranteed         disclosure                 signing agreement)        limit                                ntation
                                                                                                                           party
                          date                                                                                   or not
Shenzhen Shenbao
                                                                                       Joint
Huacheng Science
                     2016-04-26            3,000 2016-07-26                    3,000 liability       1 year       N       Y
and Technology
                                                                                       guaranty
Co.,Ltd
                                                                        Total amount of actual
Total amount of approving
                                                                        occurred guarantee for
guarantee for subsidiaries in                                         0                                                       3,000
                                                                        subsidiaries in report
report period (B1)
                                                                        period (B2)
                                                                        Total balance of actual
Total amount of approved
                                                                        guarantee for subsidiaries
guarantee for subsidiaries at the                                 3,000                                                       3,000
                                                                        at the end of reporting
end of reporting period (B3)
                                                                        period (B4)
                                                 Guarantee between the subsidiaries
                      Related
                                             Actual date of                                          Complete Guarante
   Name of the       Announce
                                  Guarantee happening (Date     Actual                     Guarantee implemen    e for
    Company             ment                                                Guarantee type
                                    limit      of signing   guarantee limit                  term     tation or related
   guaranteed        disclosure
                                              agreement)                                                 not     party
                        date
Total amount of guarantee of the Company( total of three abovementioned guarantee)
Total amount of approving                                       Total amount of actual occurred
guarantee in report period                                    0 guarantee in report period                                    3,000
(A1+B1+C1)                                                      (A2+B2+C3)
Total amount of approved                                        Total balance of actual guarantee
guarantee at the end of report                            3,000 at the end of report period                                   3,000
period (A3+B3+C2)                                               (A4+B4+C4)
The proportion of the total amount of actually guarantee in the                                                               3.03%



                                                                                                                                  25
                                                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


net assets of the Company(that is A4+ B4+C4)

Including:
Amount of guarantee for shareholders, actual controller and its
                                                                                                                           0
related parties(D)
The debts guarantee amount provided for the guaranteed
parties whose assets-liability ratio exceed 70% directly or                                                                0
indirectly(E)
Proportion of total amount of guarantee in net assets of the
                                                                                                                           0
Company exceed 50%(F)
Total amount of the aforesaid three guarantees(D+E+F)                                                                      0

Explanations on possibly bearing joint and several liquidating
                                                                    Not applicable
responsibilities for undue guarantees (if applicable)
Explanations    on    external   guarantee   against    regulated
                                                                    Not applicable
procedures (if applicable)

Explanation on compound guarantee
N/A

(2) Illegal external guarantee

□ Applicable √ Not applicable

No illegal external guarantee in the period


3. Other material contracts

□ Applicable        √ Not applicable
No other material contracts for the Company in reporting period

XV. Social responsibility

1. Execution of social responsibility of targeted poverty alleviation


The Company has no targeted poverty alleviation in the period and no follow-up poverty alleviation plan either

temporary

2. Major environment protection

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental

protection department

□ Y √N




                                                                                                                           26
                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


XVI. Other major events

□Applicable √Not applicable

There are n other major events need to explain in the period


XVII. Major event of the subsidiaries

□ Applicable √ Not applicable




                                                                                                            27
                                                                           深圳市深宝实业股份有限公司 2017 年半年度报告全文




         Section VI. Changes in Shares and Particulars about Shareholders

  I. Changes in Shares

  1. Changes in shares

                                                                                                                        In Share
                            Before the Change                Increase/Decrease in the Change (+, -)             After the Change
                                                    New                 Capitalization
                                                              Bonus
                          A mount       Proportion shares                  of public    Others Subtotal       A mount       Proportion
                                                              shares
                                                    issued                  reserve

I. Restricted shares       26,425,861       5.85%             2,642,584                         2,642,584      29,068,445       5.85%

1. State-owned shares               0       0.00%                    0                                    0             0       0.00%
2. State-owned
                           12,210,713       2.70%             1,221,071                         1,221,071      13,431,784       2.70%
corporate     shares
3. Other domestic
                           14,166,661       3.14%             1,416,664                         1,416,664      15,583,325       3.14%
shares
Including: Domestic
                           13,986,211       3.10%             1,398,621                         1,398,621      15,384,832       3.10%
legal person’s shares
          Domestic
                             180,450        0.04%               18,043                            18,043         198,493        0.04%
nature person’s shares
4. Foreign shares             48,487        0.01%                4,849                             4,849          53,336        0.01%

Including: Foreign
                                    0       0.00%                    0                                    0             0       0.00%
corporate shares
           overseas
                              48,487        0.01%                4,849                             4,849          53,336        0.01%
nature person’s share

II. Un-restricted
                          425,194,415      94.15%            42,519,443                       42,519,443      467,713,858      94.15%
shares
1. RMB common
                          378,149,615      83.73%            37,814,963                       37,814,963      415,964,578      83.73%
shares
2. Domestically listed
                           47,044,800      10.42%             4,704,480                         4,704,480      51,749,280      10.42%
foreign shares
3. Foreign listed
                                    0       0.00%                    0                                    0             0       0.00%
foreign shares

4. Other                            0       0.00%                    0                                    0             0       0.00%

III. Total shares         451,620,276     100.00%            45,162,027                       45,162,027      496,782,303     100.00%
  Reasons for share changed
  √ Applicable □ Not applicable
  In June 2017, the Company implemente an equity allocation scheme for year fo 2016, based on total share captial
  451,620,276 shares of the Company dated 31 December 2016, distributed 0.50 Yuan (tax included) in cash for
  each 10 shares held by shareholders, and 1 share for bonus (tax included), no capitalizing from common reserves.
  Found more in the Notice released on juchao website (www.cninfo.com.cn) dated 22 June 2017.



                                                                                                                                 28
                                                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文




Approval of share changed
√ Applicable □ Not applicable
The equity allocation scheme for year of 2016 was deliberated and approved by 9th session of 9th BOD held on
21 April 2017 and AGM of 2016 held on 15 May 2017


Ownership transfer of share changed
□ 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
In reporting period, after equity allocate for year of 2016, the basic EPS for 2016 and fist half year of 2017, based
on new share capital 496,782,303 shares, counted as 0.1945 Yuan/Share and -0.0357 Yuan/Share respectively; net
assets value per share counted as 2.08 Yuan/Share and v Yuan/Share respectively



Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable


2. Changes of restricted shares

√ Applicable □ Not applicable
                                                                                                                             In Share
               Number of       Number of       Number of    Number of
Shareholders      shares         shares        new shares     shares      Restriction
                                                                                                         Released date
  ’ name      restricted at   released in restricted in restricted at      reasons
               Period-begin     the Year        the Year    Period-end

                                                                         Executives     Shares unlock every year takes 25% of the total
Zheng Yuxi           45,000                0        4,500       49,500
                                                                         locked shares shares holding

                                                                         Executives     Shares unlock every year takes 25% of the total
 Lin Hong            28,125                0        2,812       30,937
                                                                         locked shares shares holding

                                                                         Executives     Shares unlock every year takes 25% of the total
Yan Zesong           48,487                0        4,849       53,336
                                                                         locked shares shares holding

                                                                         Executives     Shares unlock every year takes 25% of the total
  Li Fang            27,113                0        2,711       29,824
                                                                         locked shares shares holding

                                                                         Executives     Shares unlock every year takes 25% of the total
  Li Yiyan           28,125                0        2,812       30,937
                                                                         locked shares shares holding


                                                                                                                                     29
                                                                             深圳市深宝实业股份有限公司 2017 年半年度报告全文


     Yao                                                                Executives     Shares unlock every year takes 25% of the total
                       30,262             0        3,026       33,288
 Xiaopeng                                                               locked shares shares holding

    Wang                                                                Executives     Shares unlock every year takes 25% of the total
                       19,125             0        1,912       21,037
  Zhiping                                                               locked shares shares holding

                                                                        Executives     Shares unlock every year takes 25% of the total
Fan Zhiqing             2,700             0          270        2,970
                                                                        locked shares shares holding

    Total             228,937             0       22,892      251,829         --                                --


II. Securities issuance and listing


□ Applicable √ Not applicable

III. Amount of shareholders and particulars about shares holding

                                                                                                                                   In Share

                                                                      Total preference shareholders with
Total common stock
                                                                      voting rights recovered at end of
shareholders in reporting                                    76,987                                                                               0
                                                                      reporting period (if applicable) (found
period-end
                                                                      in note8)

                      Particulars about shares held above 5% by common shareholders or top ten common shareholders

                                                                                                                                    Number of
                                                 Total common                                               Amount of
                                                                                                                                      share
                                      Proportion shares hold at     Changes in Amount of restricted         un-restricted
  Full name of          Nature of                                                                                                pledged/frozen
                                       of shares
  Shareholders         shareholder               the end of report report period common shares held        common shares
                                         held
                                                                                                                                 State of
                                                      period                                                    held                        Amount
                                                                                                                                  share

Shenzhen
Agricultural              Other         19.09%        94,832,294 8,621,118                 15,384,832            79,447,462
Products Co., Ltd

Shenzhen
                       State-owned
Investment                              16.00%        79,484,302 7,225,845                 13,431,784            66,052,518
                       legal person
Holding Co., Ltd

                        Domestic
Sun Huiming                              0.69%         3,403,262 139,487                             0               3,403,262
                      nature person

Xiamen
International Trust
Co., Ltd. – Xinjin
                          Other          0.37%         1,831,291 1,831,291                           0               1,831,291
No.7 Security
Investment Trust
Fund Plan

                        Domestic
Hu Xiangzhu                              0.35%         1,760,000 1,509,850                           0               1,760,000
                      nature person


                                                                                                                                             30
                                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


Central Huijin
Asset                  State-owned
                                          0.30%          1,472,625 133,875                            0             1,472,625
Management Co.,        legal person
Ltd.

                        Domestic
Li Qian                                   0.29%          1,432,378 80,076                             0             1,432,378
                       nature person

                        Domestic
Zhang Yue                                 0.28%          1,390,807 1,390,807                          0             1,390,807
                       nature person

                        Domestic
Xu Yanhui                                 0.22%          1,072,500 97,500                             0             1,072,500
                       nature person

                        Domestic
Ye Xiuxia                                 0.20%          1,000,230 140,230                            0             1,000,230
                       nature person

Strategy investors or general
corporation comes top 10
common shareholders due to             N/A
rights issue (if applicable) (see
note 3)

                                       Shenzhen SASAC directly holds 28.76% equity interests of Agricultural Products, indirectly holds
Explanation       on      associated 5.24% equity interests of Agricultural Products and directly holds 100% equity interests of Shenzhen
relationship among the aforesaid Investment Holding; the Company was not aware of any related relationship between other
shareholders                           shareholders above, and whether they belonged to parties acting in concert as defined by the
                                       Acquisition Management Method of Listed Company.

                                    Particular about top ten common shareholders with un-restrict shares held

                                                                                                                      Type of shares
           Shareholders’ name               Amount of un-restrict common shares held at Period-end
                                                                                                                   Type           Amount

Shenzhen Agricultural Products                                                                            RMB common
                                                                                           79,447,462                                  79,447,462
Co., Ltd                                                                                                  shares

Shenzhen Investment Holding Co.,                                                                          RMB common
                                                                                           66,052,518                                  66,052,518
Ltd                                                                                                       shares

                                                                                                          Domestically listed
Sun Huiming                                                                                  3,403,262                                  3,403,262
                                                                                                          foreign shares

Xiamen International Trust Co.,
                                                                                                          RMB common
Ltd. – Xinjin No.7 Security                                                                 1,831,291                                  1,831,291
                                                                                                          shares
Investment Trust Fund Plan

                                                                                                          RMB common
Hu Xiangzhu                                                                                  1,760,000                                  1,760,000
                                                                                                          shares

Central Huijin Asset Management                                                                           RMB common
                                                                                             1,472,625                                  1,472,625
Co., Ltd.                                                                                                 shares

Li Qian                                                                                      1,432,378 RMB common                       1,432,378



                                                                                                                                           31
                                                                             深圳市深宝实业股份有限公司 2017 年半年度报告全文


                                                                                                        shares

                                                                                                        RMB common
Zhang Yue                                                                                   1,390,807                            1,390,807
                                                                                                        shares

                                                                                                        RMB common
Xu Yanhui                                                                                   1,072,500                            1,072,500
                                                                                                        shares

                                                                                                        RMB common
Ye Xiuxia                                                                                   1,000,230                            1,000,230
                                                                                                        shares

Expiation on associated relationship
                                         Shenzhen SASAC directly holds 28.76% equity interests of Agricultural Products, indirectly holds
or consistent actors within the top
                                         5.24% equity interests of Agricultural Products and directly holds 100% equity interests of
10 un-restrict shareholders and
                                         Shenzhen Investment Holding; the Company was not aware of any related relationship between
between        top    10   un-restrict
                                         other shareholders above, and whether they belonged to parties acting in concert as defined by the
shareholders         and   top     10
                                         Acquisition Management Method of Listed Company.
shareholders

Explanation on top 10 shareholders
involving margin business (if            N/A
applicable) (see note 4)

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back
agreement dealing in reporting period
□ Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no
buy-back agreement dealing in reporting period.


IV. Change of controlling shareholder or actual controller

Changes of controlling shareholders in reporting period
□ Applicable  √ Not applicable
The Company had no changes of controlling shareholders in reporting period



Changes of actual controller in reporting period
□ Applicable  √ Not applicable
The Company had no changes of actual controller in reporting period




                                                                                                                                    32
                                                      深圳市深宝实业股份有限公司 2017 年半年度报告全文




                                    Section VII. Preferred Stock

□ Applicable   √ Not applicable
The Company had no preferred stock in the Period.




                                                                                                   33
                                                                                   深圳市深宝实业股份有限公司 2017 年半年度报告全文




     Section VIII. Particulars about Directors, Supervisor and Senior

                                                             Executives

I. Changes of shares held by directors, supervisors and senior executives

√Applicable          □ Not applicable
                                                          Increasing                                        Number of         Number of Number of
                                                                       Decreasing
                                           Shares held      shares                                           restricted       restricted     restricted
                                                                       shares held
                            Post-holding        at         held in                      Shares held at     shares granted      shares         shares
               Title                                                     in this
 Name                          status      period-begin      this                      period-end(Share)         at           granted in     granted at
                                                                         period
                                             (Share)       period                                          period-begin this period period-end
                                                                        (Share)
                                                           (Share)                                            (share)          (share)        (share)

               Party
 Zheng                      Currently in
            Secretary,                          60,000        6,000                0             66,000                   0              0                0
  Yuxi                         office
            Chairman

  Fan      Independent Currently in
                                                 3,600          360                0              3,960                   0              0                0
Zhiqing      director          office

  Yan                       Currently in
           Director, GM                         64,649        6,465                0             71,114                   0              0                0
Zesong                         office

            Director、
           Deputy GM, Currently in
Li Yiyan                                        37,500        3,750                0             41,250                   0              0                0
           Secretary of        office
            the Board

           Chairman of
                            Currently in
Lin Hong supervisory                            37,500        3,750                0             41,250                   0              0                0
                               office
            committee

           Deputy party
             secretary,     Currently in
Li Fang                                         36,151        3,615                0             39,766                   0              0                0
           SCID, Deputy        office
               GM

  Yao                       Currently in
           Deputy GM                            40,350        4,035                0             44,385                   0              0                0
Xiaopeng                       office

 Wang                       Currently in
               CFO                              25,500        2,550                0             28,050                   0              0                0
Zhiping                        office

 Total           --              --            305,250       30,525                0            335,775                   0              0                0

*Shares held by directors, supervisors and senior executives changed mainly due to the implementation of equity
 allocation plan for year of 2016 in this period


                                                                                                                                                    34
                                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


II. Changes of directors, supervisors and senior executives
□ Applicable √ Not applicable

Directors, supervisors and senior executives of the Company has no changed in the period, found more in Annual

Report 2016




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                                                             深圳市深宝实业股份有限公司 2017 年半年度报告全文




                                 Section IX Corporate Bonds

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

□Y √N




                                                                                                              36
                                                                   深圳市深宝实业股份有限公司 2017 年半年度报告全文




                                       Section X. Financial Report

I. Audit reports


Whether the semi-annual report was audited or not
□ Yes √ No
The financial report of this semi-annual report was unaudited


II. Financial statements


Units in Notes of Financial Statements is RMB
1. Consolidated Balance Sheet

Prepared by Shenzhen Shenbao Industrial Co., Ltd.

                                                    2017-06-30
                                                                                                              In RMB

                    Items                       Ending balance                          Opening balance

Current assets:

     Monetary fund                                           205,487,872.79                          358,564,242.83

     Settlement provisions

     Capital lent

     Financial assets measured by fair
value and with variation reckoned into                            2,260,176.36                            3,250,938.60
current gains/losses

     Derivative financial assets

     Notes receivable

     Account receivable                                          72,042,632.44                        62,582,867.63

     Account paid in advance                                     14,278,408.17                            6,321,827.64

     Insurance receivable

     Reinsurance receivables

     Contract reserve of reinsurance
receivable

     Interest receivable

     Dividends receivable

     Other receivables                                           26,491,781.90                        22,643,449.94




                                                                                                                    37
                                                   深圳市深宝实业股份有限公司 2017 年半年度报告全文


       Purchase restituted finance asset

       Inventory                               149,475,307.29                        140,951,059.39

       Divided into assets held for sale

       Non-current assets due within one
year

       Other current assets                     91,856,403.28                         11,299,954.58

Total current assets                           561,892,582.23                        605,614,340.61

Non-current assets:

       Loans and payments on behalf

       Available-for-sale financial assets          57,500.00                             57,500.00

       Held-to-maturity investments

       Long-term receivables

       Long-term equity investment               5,707,237.59                          5,866,481.63

       Investment property                      18,637,070.20                         18,872,865.36

       Fix assets                              323,793,293.30                        333,013,767.86

       Construction in process                      54,574.34                             54,574.34

       Project materials

       Disposal of fixed assets

       Productive biological assets                421,617.46                           426,463.64

       Oil and natural gas assets

       Intangible assets                       192,152,459.54                        195,678,353.58

       Research and development costs            1,162,154.46

       Goodwill                                    673,940.32                           673,940.32

       Long-term deferred expenses              11,972,290.55                         13,312,189.59

       Deferred income tax assets                5,024,439.25                          4,973,248.37

       Other non-current assets

Total non-current assets                       559,656,577.01                        572,929,384.69

Total assets                                  1,121,549,159.24                     1,178,543,725.30

Current liabilities:

       Short-term loans                         10,000,000.00                          5,000,000.00

       Loan from central bank

       Absorbing deposit and interbank
deposit

       Capital borrowed

       Financial liability measured by fair


                                                                                                 38
                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


value and with variation reckoned into
current gains/losses

     Derivative financial liability

     Notes payable

     Accounts payable                        22,645,209.79                        15,782,288.29

     Accounts received in advance             3,722,669.37                         2,379,824.13

     Selling financial asset of
repurchase

     Commission charge and
commission payable

     Wage payable                             9,383,764.84                        16,279,706.84

     Taxes payable                            5,242,645.48                        26,345,138.53

     Interest payable

     Dividend payable                         2,909,182.74                         2,909,182.74

     Other accounts payable                  47,944,982.29                        46,119,690.25

     Reinsurance payables

     Insurance contract reserve

     Security trading of agency

     Security sales of agency

     Divided into liability held for sale

     Non-current liabilities due within
one year

     Other current liabilities

Total current liabilities                   101,848,454.51                       114,815,830.78

Non-current liabilities:

     Long-term loans

     Bonds payable

        Including: preferred stock

                Perpetual capital
securities

     Long-term account payable

     Long-term wages payable

     Special accounts payable

     Accrual liabilities

     Deferred income                         11,752,035.29                        12,335,552.15




                                                                                             39
                                                                         深圳市深宝实业股份有限公司 2017 年半年度报告全文


     Deferred income tax liabilities                                    1,368,153.83                            1,653,779.51

     Other non-current liabilities

Total non-current liabilities                                          13,120,189.12                        13,989,331.66

Total liabilities                                                  114,968,643.63                          128,805,162.44

Owners’ equity:

     Share capital                                                 496,782,303.00                          451,620,276.00

     Other equity instrument

        Including: preferred stock

                  Perpetual capital
securities

     Capital reserve                                               367,172,017.79                          367,172,017.79

     Less: Inventory shares

     Other comprehensive income

     Reasonable reserve

     Surplus reserve                                                   54,736,482.14                        54,736,482.14

     Provision of general risk

     Retained profit                                                   72,736,795.31                       158,239,612.94

Total owners’ equity attributable to
                                                                   991,427,598.24                        1,031,768,388.87
parent company

     Minority interests                                                15,152,917.37                        17,970,173.99

Total owners’ equity                                            1,006,580,515.61                        1,049,738,562.86

Total liabilities and owner’s equity                            1,121,549,159.24                        1,178,543,725.30


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming


2. Balance Sheet of Parent Company

Prepared by Shenzhen Shenbao Industrial Co., Ltd.
                                                         2017-06-30
                                                                                                                    In RMB
                    Items                             Ending balance                          Opening balance

Current assets:

     Monetary fund                                                 194,464,298.57                          305,477,853.97



                                                                                                                          40
                                                深圳市深宝实业股份有限公司 2017 年半年度报告全文


       Financial assets measured by fair
value and with variation reckoned into         2,260,176.36                         3,250,938.60
current gains/losses

       Derivative financial assets

       Notes receivable

       Account receivable                     26,791,498.16                        40,123,423.12

       Account paid in advance

       Interest receivable

       Dividends receivable

       Other receivables                     224,226,099.33                       212,821,890.56

       Inventory                               7,371,538.85                         7,784,904.36

       Divided into assets held for sale

       Non-current assets due within one
year

       Other current assets                   90,001,308.37                         9,895,236.82

Total current assets                         545,114,919.64                       579,354,247.43

Non-current assets:

       Available-for-sale financial assets

       Held-to-maturity investments

       Long-term receivables

       Long-term equity investment           921,964,954.57                       916,622,212.24

       Investment property                    18,637,070.20                        18,872,865.36

       Fix assets                             33,117,013.12                        33,686,897.31

       Construction in process

       Project materials

       Disposal of fixed assets

       Productive biological assets             421,617.46                           426,463.64

       Oil and natural gas assets

       Intangible assets                       7,454,875.72                         7,742,703.23

       Research and development costs

       Goodwill

       Long-term deferred expenses              730,194.84                           837,768.34

       Deferred income tax assets              3,339,641.09                         3,288,450.21

       Other non-current assets

Total non-current assets                     985,665,367.00                       981,477,360.33


                                                                                              41
                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文


Total assets                                1,530,780,286.64                     1,560,831,607.76

Current liabilities:

     Short-term loans                         10,000,000.00                          5,000,000.00

     Financial liability measured by fair
value and with variation reckoned into
current gains/losses

     Derivative financial liability

     Notes payable

     Accounts payable                         36,651,251.29                         47,165,259.53

     Accounts received in advance                 31,539.00                           495,004.08

     Wage payable                              3,768,185.23                          9,641,601.54

     Taxes payable                             2,712,081.31                         15,711,497.39

     Interest payable

     Dividend payable                          2,909,182.74                          2,909,182.74

     Other accounts payable                  330,829,346.65                        306,770,480.94

     Divided into liability held for sale

     Non-current liabilities due within
one year

     Other current liabilities

Total current liabilities                    386,901,586.22                        387,693,026.22

Non-current liabilities:

     Long-term loans

     Bonds payable

        Including: preferred stock

                Perpetual capital
securities

     Long-term account payable

     Long-term wages payable

     Special accounts payable

     Accrual liabilities

     Deferred income                              47,793.88                             48,348.52

     Deferred income tax liabilities             294,777.57                           542,468.13

     Other non-current liabilities

Total non-current liabilities                    342,571.45                           590,816.65

Total liabilities                            387,244,157.67                        388,283,842.87



                                                                                               42
                                                                          深圳市深宝实业股份有限公司 2017 年半年度报告全文


Owners’ equity:

     Share capital                                                    496,782,303.00                         451,620,276.00

     Other equity instrument

       Including: preferred stock

               Perpetual capital
securities

     Capital reserve                                                  382,444,482.45                         382,444,482.45

     Less: Inventory shares

     Other comprehensive income

     Reasonable reserve

     Surplus reserve                                                   54,736,482.14                           54,736,482.14

     Retained profit                                                  209,572,861.38                         283,746,524.30

Total owners’ equity                                               1,143,536,128.97                        1,172,547,764.89

Total liabilities and owner’s equity                               1,530,780,286.64                        1,560,831,607.76


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming


3. Consolidated Profit Statement


Prepared by Shenzhen Shenbao Industrial Co., Ltd.

                                                  Semi-annual 2017
                                                                                                                     In RMB
                     Item                             Amount in this period                  Amount in last period

I. Total operating income                                             138,158,382.95                         149,155,529.71

     Including: Operating income                                      138,158,382.95                         149,155,529.71

             Interest income

             Insurance gained

             Commission charge and
commission income

II. Total operating cost                                              159,770,044.15                         173,217,380.85

     Including: Operating cost                                        104,400,839.32                          116,893,235.04

             Interest expense

             Commission charge and


                                                                                                                          43
                                                       深圳市深宝实业股份有限公司 2017 年半年度报告全文


commission expense

                Cash surrender value

                Net amount of expense of
compensation

                Net amount of withdrawal of
insurance contract reserve

                Bonus expense of guarantee
slip

                Reinsurance expense

                Operating tax and extras             2,454,733.49                           945,881.40

                Sales expenses                      21,174,407.31                         20,601,283.18

                Administration expenses             33,082,783.76                         34,369,699.17

                Financial expenses                   -1,533,397.02                          213,297.58

                Losses of devaluation of
                                                       190,677.29                           193,984.48
asset

         Add: Changing income of fair
                                                      -990,762.24                           -848,856.19
value(Loss is listed with “-”)

              Investment income (Loss is
                                                     1,093,417.06                           -898,654.15
listed with “-”)

              Including: Investment income
                                                      -159,244.04                         -2,144,995.21
on affiliated company and joint venture

              Exchange income (Loss is
listed with “-”)

              Other income

III. Operating profit      (Loss is listed with
                                                    -21,509,006.38                       -25,809,361.48
“-”)

         Add: Non-operating income                   1,024,229.54                          6,218,417.29

              Including: Disposal gains of
                                                        12,532.09                              1,609.60
non-current asset

         Less: Non-operating expense                    55,670.03                           371,090.74

              Including: Disposal loss of
                                                        33,547.35                              8,020.41
non-current asset

IV. Total Profit      (Loss is listed with “-”)   -20,540,446.87                       -19,962,034.93

         Less: Income tax expense                       36,586.58                           -501,745.09

V. Net profit (Net loss is listed with “-”)       -20,577,033.45                       -19,460,289.84

         Net profit attributable to owner’s of
                                                    -17,759,776.83                       -15,099,180.63
parent company



                                                                                                     44
                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


     Minority shareholders’ gains and
                                              -2,817,256.62                       -4,361,109.21
losses

VI. Net after-tax of other comprehensive
income

  Net after-tax of other comprehensive
income attributable to owners of parent
company

     (I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss

                  1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset

             2. Share of the other
comprehensive income of the investee
accounted for using equity method which
will not be reclassified subsequently to
profit and loss

     (II) Other comprehensive income
items which will be reclassified
subsequently to profit or loss

             1. Share of the other
comprehensive income of the investee
accounted for using equity method which
will be reclassified subsequently to profit
or loss

             2. Gains or losses arising
from changes in fair value of
available-for-sale financial assets

             3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale financial
assets

             4. The effect hedging portion
of gains or losses arising from cash flow
hedging instruments

             5. Translation differences
arising on translation of foreign currency
financial statements

             6.Other



                                                                                             45
                                                                          深圳市深宝实业股份有限公司 2017 年半年度报告全文


   Net after-tax of other comprehensive
income attributable to minority
shareholders

VII. Total comprehensive income                                        -20,577,033.45                            -19,460,289.84

      Total comprehensive income
                                                                       -17,759,776.83                            -15,099,180.63
attributable to owners of parent Company

      Total comprehensive income
                                                                        -2,817,256.62                             -4,361,109.21
attributable to minority shareholders

VIII. Earnings per share:

       (i) Basic earnings per share                                              -0.0357                                  -0.0304

      (ii) Diluted earnings per share                                            -0.0357                                  -0.0304

Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and
realized 0 Yuan at last period for combined party.


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming


4. Profit Statement of Parent Company


Prepared by Shenzhen Shenbao Industrial Co., Ltd.

                                                     Semi-annual 2017
                                                                                                                         In RMB
                     Item                             Amount in this period                    Amount in last period

I. Operating income                                                     49,271,727.89                            65,133,125.18

      Less: Operating cost                                              45,987,989.13                            59,896,259.51

            Operating tax and extras                                           37,532.38                               139,061.20

            Sales expenses                                               1,562,377.52                             1,653,570.46

            Administration expenses                                      9,942,760.18                            11,125,199.86

            Financial expenses                                          -1,563,751.20                                  214,502.26

            Losses of devaluation of asset                                    194,763.50                               199,473.50

      Add: Changing income of fair
                                                                          -990,762.24                              -848,856.19
value(Loss is listed with “-”)

            Investment income (Loss is
                                                                         1,095,403.43                                  100,367.90
listed with “-”)

            Including: Investment income                                  -157,257.67                              -564,801.46



                                                                                                                               46
                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文


on affiliated company and joint venture

II. Operating profit      (Loss is listed
with “-”)

         Add: Non-operating income             -6,785,302.43                        -8,843,429.90

              Including: Disposal gains of
                                                  66,060.72                          4,103,837.74
non-current asset

         Less: Non-operating expense              12,532.09

              Including: Disposal loss of
                                                  10,261.85
non-current asset

           Other income                           10,261.85

III. Total Profit    (Loss is listed with
                                               -6,729,503.56                        -4,739,592.16
“-”)

         Less: Income tax expense               -298,881.44                          -715,569.21

IV. Net profit (Net loss is listed with
                                               -6,430,622.12                        -4,024,022.95
“-”)

V. Net after-tax of other comprehensive
income

         (I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss

                   1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset

                2. Share of the other
comprehensive income of the investee
accounted for using equity method
which will not be reclassified
subsequently to profit and loss

         (II) Other comprehensive income
items which will be reclassified
subsequently to profit or loss

                1. Share of the other
comprehensive income of the investee
accounted for using equity method
which will be reclassified subsequently
to profit or loss

                2. Gains or losses arising
from changes in fair value of
available-for-sale financial assets



                                                                                               47
                                                                          深圳市深宝实业股份有限公司 2017 年半年度报告全文


              3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale
financial assets

              4. The effect hedging
portion of gains or losses arising from
cash flow hedging instruments

              5. Translation differences
arising on translation of foreign
currency financial statements

              6.Other

VI. Total comprehensive income                                          -6,430,622.12                          -4,024,022.95

VII. Earnings per share:

        (i) Basic earnings per share

       (ii) Diluted earnings per share


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming


5. Consolidated Cash Flow Statement


Prepared by Shenzhen Shenbao Industrial Co., Ltd.

                                                  Semi-annual 2017
                                                                                                                     In RMB
                    Item                              Amount in this period                  Amount in last period

I. Cash flows arising from operating
activities:

       Cash received from selling
commodities and providing labor                                        146,109,487.53                         180,368,265.08
services

       Net increase of customer deposit
and interbank deposit

       Net increase of loan from central
bank

       Net increase of capital borrowed
from other financial institution



                                                                                                                          48
                                                深圳市深宝实业股份有限公司 2017 年半年度报告全文


       Cash received from original
insurance contract fee

       Net cash received from reinsurance
business

       Net increase of insured savings
and investment

       Net increase of amount from
disposal financial assets that measured
by fair value and with variation
reckoned into current gains/losses

       Cash received from interest,
commission charge and commission

       Net increase of capital borrowed

       Net increase of returned business
capital

       Write-back of tax received               582,422.91                           182,087.90

       Other cash received concerning
                                               6,348,302.37                        31,164,007.17
operating activities

Subtotal of cash inflow arising from
                                             153,040,212.81                       211,714,360.15
operating activities

       Cash paid for purchasing
commodities and receiving labor              110,998,020.02                       105,153,288.36
service

       Net increase of customer loans and
advances

       Net increase of deposits in central
bank and interbank

       Cash paid for original insurance
contract compensation

       Cash paid for interest, commission
charge and commission

       Cash paid for bonus of guarantee
slip

       Cash paid to/for staff and workers     38,799,120.95                        38,530,123.70

       Taxes paid                             33,095,652.63                        13,663,894.12

       Other cash paid concerning
                                              20,580,067.36                        22,769,106.61
operating activities

Subtotal of cash outflow arising from        203,472,860.96                       180,116,412.79



                                                                                              49
                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


operating activities

Net cash flows arising from operating
                                           -50,432,648.15                        31,597,947.36
activities

II. Cash flows arising from investing
activities:

     Cash received from recovering
                                           189,350,000.00                       113,825,000.00
investment

     Cash received from investment
                                             1,252,661.10
income

     Net cash received from disposal of
fixed, intangible and other long-term           31,780.00                            13,245.00
assets

         Net cash received from disposal
                                                                                   -919,992.72
of subsidiaries and other units

     Other cash received concerning
                                                                                   665,169.36
investing activities

Subtotal of cash inflow from investing
                                           190,634,441.10                       113,583,421.64
activities

     Cash paid for purchasing fixed,
                                             5,306,174.76                        13,638,864.72
intangible and other long-term assets

     Cash paid for investment              270,000,000.00                       134,648,200.00

     Net increase of mortgaged loans

         Net cash received from
                                                                                 -1,154,212.72
subsidiaries and other units

     Other cash paid concerning
investing activities

Subtotal of cash outflow from investing
                                           275,306,174.76                       147,132,852.00
activities

Net cash flows arising from investing
                                           -84,671,733.66                       -33,549,430.36
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
investment

     Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries

     Cash received from loans               10,000,000.00                        50,000,000.00



                                                                                            50
                                                                          深圳市深宝实业股份有限公司 2017 年半年度报告全文


     Cash received from issuing bonds

     Other cash received concerning
                                                                                                                         79.19
financing activities

Subtotal of cash inflow from financing
                                                                        10,000,000.00                          50,000,079.19
activities

     Cash paid for settling debts                                        5,000,000.00                          50,000,000.00

     Cash paid for dividend and profit
                                                                        22,904,646.76                                790,854.16
distributing or interest paying

     Including: Dividend and profit of
minority shareholder paid by
subsidiaries

     Other cash paid concerning
financing activities

Subtotal of cash outflow from financing
                                                                        27,904,646.76                          50,790,854.16
activities

Net cash flows arising from financing
                                                                       -17,904,646.76                            -790,774.97
activities

IV. Influence on cash and cash
equivalents due to fluctuation in                                             -67,341.47                             127,423.28
exchange rate

V. Net increase of cash and cash
                                                                      -153,076,370.04                          -2,614,834.69
equivalents

     Add: Balance of cash and cash
                                                                       358,564,242.83                         147,513,887.15
equivalents at the period -begin

 VI. Balance of cash and cash
                                                                       205,487,872.79                         144,899,052.46
equivalents at the period -end


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming


6. Cash Flow Statement of Parent Company


Prepared by Shenzhen Shenbao Industrial Co., Ltd.

                                                  Semi-annual 2017
                                                                                                                       In RMB
                  Item                                Amount in this period                  Amount in last period



                                                                                                                             51
                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


I. Cash flows arising from operating
activities:

     Cash received from selling
commodities and providing labor             70,267,796.87                        82,209,684.08
services

     Write-back of tax received               433,663.93                             27,140.22

     Other cash received concerning
                                            34,066,372.91                        42,175,322.72
operating activities

Subtotal of cash inflow arising from
                                           104,767,833.71                       124,412,147.02
operating activities

     Cash paid for purchasing
commodities and receiving labor             63,220,288.40                        57,018,521.50
service

     Cash paid to/for staff and workers     13,078,753.60                        10,874,944.58

     Taxes paid                             15,149,260.25                         4,566,555.47

     Other cash paid concerning
                                            21,420,055.12                        11,571,284.84
operating activities

Subtotal of cash outflow arising from
                                           112,868,357.37                        84,031,306.39
operating activities

Net cash flows arising from operating
                                            -8,100,523.66                        40,380,840.63
activities

II. Cash flows arising from investing
activities:

     Cash received from recovering
                                           189,350,000.00                       110,000,000.00
investment

     Cash received from investment
                                             1,252,661.10
income

     Net cash received from disposal of
fixed, intangible and other long-term           31,000.00
assets

         Net cash received from disposal
of subsidiaries and other units

     Other cash received concerning
                                                                                   665,169.36
investing activities

Subtotal of cash inflow from investing
                                           190,633,661.10                       110,665,169.36
activities

     Cash paid for purchasing fixed,
                                              133,049.80                          1,546,631.28
intangible and other long-term assets




                                                                                            52
                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


     Cash paid for investment             275,500,000.00                        137,000,000.00

      Net cash received from
subsidiaries and other units

     Other cash paid concerning
investing activities

Subtotal of cash outflow from investing
                                          275,633,049.80                        138,546,631.28
activities

Net cash flows arising from investing
                                          -84,999,388.70                        -27,881,461.92
activities

III. Cash flows arising from financing
activities

     Cash received from absorbing
investment

     Cash received from loans              10,000,000.00                         50,000,000.00

     Cash received from issuing bonds

     Other cash received concerning
                                                                                        79.19
financing activities

Subtotal of cash inflow from financing
                                           10,000,000.00                         50,000,079.19
activities

     Cash paid for settling debts           5,000,000.00                         50,000,000.00

     Cash paid for dividend and profit
                                           22,904,646.76                           790,854.16
distributing or interest paying

     Other cash paid concerning
financing activities

Subtotal of cash outflow from financing
                                           27,904,646.76                         50,790,854.16
activities

Net cash flows arising from financing
                                          -17,904,646.76                           -790,774.97
activities

IV. Influence on cash and cash
equivalents due to fluctuation in               -8,996.28                             2,590.75
exchange rate

V. Net increase of cash and cash
                                          -111,013,555.40                        11,711,194.49
equivalents

     Add: Balance of cash and cash
                                          305,477,853.97                        116,074,656.42
equivalents at the period -begin

 VI. Balance of cash and cash
                                          194,464,298.57                        127,785,850.91
equivalents at the period -end

Legal Representative: Zheng Yuxi



                                                                                            53
                                                      深圳市深宝实业股份有限公司 2017 年半年度报告全文


Person in charge of accounting works: Wang Zhiping
Person in charge of accounting institute: Xu Qiming




                                                                                                   54
                                                                                                                                        深圳市深宝实业股份有限公司 2017 年半年度报告全文


7. Statement of Changes in Owners’ Equity (Consolidated)

Prepared by Shenzhen Shenbao Industrial Co., Ltd.
                                                                                  Semi-annual 2017
                                                                                                                                                                                     In RMB
                                                                                             Amount in this period

                                                                Owners’ equity attributable to parent company

                                   Other equity instrument                                                                           Provision
     Items                                                                     Less:       Other                                                                   Minority    Total owners’
                                            Perpetual                                                  Reasonable      Surplus          of
                  Share capital Preferred                    Capital reserve Inventory comprehensive                                             Retained profit   interests      equity
                                             capital Other                                               reserve       reserve        general
                                   stock                                      shares       income
                                            securities                                                                                 risk

I. Balance at
the end of the    451,620,276.00                             367,172,017.79                                          54,736,482.14               158,239,612.94 17,970,173.99 1,049,738,562.86
last year

     Add:
Changes of
accounting
policy


Error
correction of
the last period


Enterprise
combine under
the same
control

                                                                                                                                                                                            55
                                                                       深圳市深宝实业股份有限公司 2017 年半年度报告全文


Other

II. Balance at
the beginning        451,620,276.00   367,172,017.79   54,736,482.14         158,239,612.94 17,970,173.99 1,049,738,562.86
of this year

III. Increase/
Decrease in
this year             45,162,027.00                                          -85,502,817.63 -2,817,256.62   -43,158,047.25
(Decrease is
listed with “-”)

 (i) Total
comprehensive                                                                -17,759,776.83 -2,817,256.62   -20,577,033.45
income

(ii) Owners’
devoted and
decreased
capital

1.Common
shares
invested by
shareholders

2. Capital
invested by
holders of
other equity
instruments

3. Amount
reckoned into

                                                                                                                       56
                                  深圳市深宝实业股份有限公司 2017 年半年度报告全文
owners equity
with
share-based
payment

4.Other

(III) Profit
                  45,162,027.00         -67,743,040.80               -22,581,013.80
distribution

1. Withdrawal
of surplus
reserves

2. Withdrawal
of general risk
provisions

3. Distribution
for owners (or    45,162,027.00         -67,743,040.80               -22,581,013.80
shareholders)

4.Other

(IV) Carrying
forward
internal
owners’ equity

1. Capital
reserves
conversed to
capital (share
capital)

2. Surplus
reserves
                                                                                57
                                                                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文
conversed to
capital (share
capital)

3. Remedying
loss with
surplus reserve

4.Other

(V)
Reasonable
reserve

1. Withdrawal
in the report
period

2. Usage in the
report period

(VI)Others

IV. Balance at
the end of the    496,782,303.00                      367,172,017.79                           54,736,482.14          72,736,795.31 15,152,917.37 1,006,580,515.61
report period


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming
                                                                                                                                                          In RMB

      Items                                                            Amount in last period


                                                                                                                                                               58
                                                                                                                                      深圳市深宝实业股份有限公司 2017 年半年度报告全文

                                                                Owners’ equity attributable to parent company

                                   Other equity instrument                                                                          Provision
                                                                               Less:        Other                                                                 Minority     Total owners’
                                            Perpetual                                                  Reasonable     Surplus          of
                  Share capital Preferred                    Capital reserve Inventory comprehensive                                            Retained profit   interests       equity
                                             capital Other                                               reserve      reserve        general
                                   stock                                       shares      income
                                            securities                                                                                risk

I. Balance at
the end of the    301,080,184.00                             518,186,660.59                                         49,670,863.23                66,684,572.93 21,515,728.34   957,138,009.09
last year

     Add:
Changes of
accounting
policy


Error
correction of
the last period


Enterprise
combine under
the same
control


Other

II. Balance at
the beginning     301,080,184.00                             518,186,660.59                                         49,670,863.23                66,684,572.93 21,515,728.34   957,138,009.09
of this year

III. Increase/    150,540,092.00                             -151,014,642.80                                         5,065,618.91                91,555,040.01 -3,545,554.35    92,600,553.77


                                                                                                                                                                                            59
                                    深圳市深宝实业股份有限公司 2017 年半年度报告全文
Decrease in
this year
(Decrease is
listed with “-”)

 (i) Total
comprehensive                              96,620,658.92 -6,475,132.84     90,145,526.08
income

(ii) Owners’
devoted and
                                                            2,929,578.49    2,929,578.49
decreased
capital

1.Common
shares
                                                           11,250,000.00   11,250,000.00
invested by
shareholders

2. Capital
invested by
holders of
other equity
instruments

3. Amount
reckoned into
owners equity
with
share-based
payment

4.Other                                                    -8,320,421.51   -8,320,421.51

(III) Profit         5,065,618.91          -5,065,618.91

                                                                                     60
                                                                    深圳市深宝实业股份有限公司 2017 年半年度报告全文
distribution

1. Withdrawal
of surplus                                           5,065,618.91          -5,065,618.91
reserves

2. Withdrawal
of general risk
provisions

3. Distribution
for owners (or
shareholders)

4.Other

(IV) Carrying
forward
                  150,540,092.00   -151,014,642.80                                                        -474,550.80
internal
owners’ equity

1. Capital
reserves
conversed to      150,540,092.00   -150,540,092.00
capital (share
capital)

2. Surplus
reserves
conversed to
capital (share
capital)

3. Remedying
loss with
surplus reserve

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                                                                                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文

4.Other                                                       -474,550.80                                                                                              -474,550.80

(V)
Reasonable
reserve

1. Withdrawal
in the report
period

2. Usage in the
report period

(VI)Others

IV. Balance at
the end of the    451,620,276.00                           367,172,017.79                                      54,736,482.14         158,239,612.94 17,970,173.99 1,049,738,562.86
report period


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming


8. Statement of Changes in Owners’ Equity (Parent Company)


Prepared by Shenzhen Shenbao Industrial Co., Ltd

                                                                               Semi-annual 2017
                                                                                                                                                                          In RMB
                                                                                              Amount in this period
          Items
                            Share capital      Other equity instrument      Capital reserve   Less:         Other     Reasonable Surplus reserve Retained profit   Total owners’


                                                                                                                                                                                    62
                                                                                                                                    深圳市深宝实业股份有限公司 2017 年半年度报告全文

                                                          Perpetual                             Inventory comprehensive   reserve                                            equity
                                              Preferred
                                                           capital     Other                     shares      income
                                               stock
                                                          securities

I. Balance at the end of
                             451,620,276.00                                    382,444,482.45                                           54,736,482.14   283,746,524.30   1,172,547,764.89
the last year

      Add: Changes of
accounting policy

            Error
correction of the last
period

            Other

II. Balance at the
                             451,620,276.00                                    382,444,482.45                                           54,736,482.14   283,746,524.30   1,172,547,764.89
beginning of this year

III. Increase/ Decrease in
this year (Decrease is        45,162,027.00                                                                                                             -74,173,662.92     -29,011,635.92
listed with “-”)

 (i) Total comprehensive
                                                                                                                                                         -6,430,622.12      -6,430,622.12
income

(ii) Owners’ devoted and
decreased capital

1.Common shares
invested by shareholders

2. Capital invested by
holders of other equity
instruments

3. Amount reckoned into
owners equity with

                                                                                                                                                                                      63
                                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文
share-based payment

4.Other

(III) Profit distribution    45,162,027.00                                        -67,743,040.80     -22,581,013.80

1. Withdrawal of surplus
reserves

2. Distribution for
                             45,162,027.00                                        -67,743,040.80     -22,581,013.80
owners (or shareholders)

3.Other

(IV) Carrying forward
internal owners’ equity

1. Capital reserves
conversed to capital
(share capital)

2. Surplus reserves
conversed to capital
(share capital)

3. Remedying loss with
surplus reserve

4.Other

(V) Reasonable reserve

1. Withdrawal in the
report period

2. Usage in the report
period

(VI)Others

IV. Balance at the end of   496,782,303.00   382,444,482.45       54,736,482.14   209,572,861.38   1,143,536,128.97
                                                                                                                64
                                                                                                                                   深圳市深宝实业股份有限公司 2017 年半年度报告全文
the report period


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming
                                                                                                                                                                                  In RMB

                                                                                                  Amount in last period

                                                 Other equity instrument
                                                                                                  Less:         Other
            Items                                         Perpetual                                                        Reasonable                                     Total owners’
                             Share capital    Preferred                        Capital reserve   Inventory comprehensive                Surplus reserve Retained profit
                                                           capital     Other                                                reserve                                           equity
                                               stock                                              shares       income
                                                          securities

I. Balance at the end of
                             301,080,184.00                                     532,984,495.26                                           49,670,863.23   238,155,954.14   1,121,891,496.63
the last year

      Add: Changes of
accounting policy

            Error
correction of the last
period

            Other

II. Balance at the
                             301,080,184.00                                     532,984,495.26                                           49,670,863.23   238,155,954.14   1,121,891,496.63
beginning of this year

III. Increase/ Decrease in
this year (Decrease is       150,540,092.00                                    -150,540,012.81                                            5,065,618.91    45,590,570.16     50,656,268.26
listed with “-”)

 (i) Total comprehensive                                                                                                                                  50,656,189.07     50,656,189.07

                                                                                                                                                                                           65
                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文
income

(ii) Owners’ devoted and
decreased capital

1.Common shares
invested by shareholders

2. Capital invested by
holders of other equity
instruments

3. Amount reckoned into
owners equity with
share-based payment

4.Other

(III) Profit distribution                                           5,065,618.91   -5,065,618.91

1. Withdrawal of surplus
                                                                    5,065,618.91   -5,065,618.91
reserves

2. Distribution for
owners (or shareholders)

3.Other

(IV) Carrying forward
                            150,540,092.00   -150,540,012.81                                              79.19
internal owners’ equity

1. Capital reserves
conversed to capital        150,540,092.00   -150,540,092.00
(share capital)

2. Surplus reserves
conversed to capital
(share capital)


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                                                                       深圳市深宝实业股份有限公司 2017 年半年度报告全文

3. Remedying loss with
surplus reserve

4.Other                                                       79.19                                                   79.19

(V) Reasonable reserve

1. Withdrawal in the
report period

2. Usage in the report
period

(VI)Others

IV. Balance at the end of
                            451,620,276.00            382,444,482.45       54,736,482.14   283,746,524.30   1,172,547,764.89
the report period


Legal Representative: Zheng Yuxi


Person in charge of accounting works: Wang Zhiping


Person in charge of accounting institute: Xu Qiming




                                                                                                                         67
                                                                 深圳市深宝实业股份有限公司 2017 年半年度报告全文




III. Basic situation of Company

1. Company registration, organization form and headquarters address
Shenzhen Shenbao Industrial Co., Ltd. (the “Company” or “Company” for short), formerly named Shenzhen
Shenbao Canned Food Company, obtained approval (Document (1991) No.978) from Shenzhen Municipal
People’s Government to change to the present name as on 1 August 1991.Then with the approval (Document
(1991)No.126) from People’s Bank of China, the Company began to list on Shenzhen Stock Exchange.


The Company initially issued 107,312,935 shares in the stock exchange. In 1992, one bonus share was dispatched
for each 10 shares held by its shareholders, thus totally 10,731,290 shares were increased. In 1993, one bonus
share and one allotted share were dispatched for each 10 shares held by its shareholders, thus totally 20,878,845
shares were increased. Subsequently, one bonus share was dispatched for each 10 shares held by shareholders
upon the basis of total share capital as at the end of 1996, and capitalizing of capital reserves was carried out at
one to ten basis, thus totally 27,784,614 shares were increased. In 2001, based on the total share capital as at the
end of 1999, three shares were allotted for each 10 shares held by shareholders, and totally 15,215,404 shares
were allotted. The registered capital of the Company amounts to RMB181, 923,088.


On 22 June 2011, the Company privately offering 68,977,066 shares of RMB ordinary share (A share) to target
investors with issuing price of RMB 8.70 each while book value of RMB 1.00. Total monetary capital RMB
600,100,474.20 was raised. Change procedures of industrial and commerce has completed on 12 July 2011.
Register capital of the Company changed as RMB 250,900,154.00.


On 9 April 2014, the equity allocation plan was deliberated and approved by Annual General Meeting of 2013.
Based on 250,900,154 shares dated 31st December 2013, increase 2 shares by each 10 shares transferring to all
shareholders. Share capital increased to 301,080,184 shares after transferring.


On 17 May 2016, the equity allocation plan was deliberated and approved by Annual General Meeting of 2015.
Based on 301,080,184 shares dated 31st December 2015, increase 5 shares by each 10 shares transferring to all
shareholders. Share capital increased to 451,620,276 shares after transferring.


On 15 May 2017, the equity allocation plan was deliberated and approved by Annual General Meeting of 2016.
Based on 451,620,276 shares dated 31st December 2016, distributed one bonus share for each 10-share held by the
whole shareholders. Shares capital increased to 496,782,303 shares after bonus stock distributed.


Register address of the Company: 8/F, B Section, 4th Tower, Software Industrial Base, South Technology Park,
Xuefu Street, Yuehai Avenue, Nanshan District, Shenzhen, P.R. China; license No.: 91440300192180754J.


2. Business nature and major operation activities of the Company

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                                                                    深圳市深宝实业股份有限公司 2017 年半年度报告全文


The Company mainly engaged in the products of tea series of “Jindiao” brand including instant tea power and tea
concentrate; “Ju Fang Yong”; “Gutan” and serials of “Fu Hai Tang”; seasoning series under “Sanjing” brand
include oyster sauce, olive vegetable, and soy; beverages series under “Shenbao” brand include daisy tea, lemon
tea, and wax gourd tea.


General business scope including: production of tea, tea products, extract of tea and natural plant, canned food,
beverage and native products ( business license for the production place should apply separately);               technology
development and technology service of tea, plant products, soft beverage and foods; info tech development and
supporting service; on-line trading; investment, operation, management and development of tea plantation;
investment in industrial projects (apply separately for detail projects); domestic trading(excluding special sales,
specific control and exclusive commodity); import and export business; engaged in real estate development and
operation in the land legally obtained; lease and sales of the self-owned property and property management.” (as
for the projects subject to examination and approval regulated by the state laws, administrative regulations and
state council, approval should be obtained before operation). Business in license: wholesale of prepackaged food
(excluding reheating prepackaged food) (in non-physical way).


3. Report approval for the financial statement
The statement has been approved by the Board dated 24 August 2017 for reporting.


4. Scope of consolidated financial statements
Totally 17 subsidiaries are included in consolidate financial statement, mainly including:
                                                                                             Shareholding Voting rights ratio
                           Subsidiaries                             Type         Level
                                                                                               ratio (%)          (%)

Shenzhen Shenbao Huacheng Technology Co., Ltd. (Shenbao Wholly-owned                             100              100
                                                                               First grade
Huacheng for short)                                              subsidiary
                                                                Wholly-owned                     100              100
Wuyuan Jufangyong Tea Co., Ltd. (Wuyuan Jufangyong for short)                  First grade
                                                                 subsidiary
Shenzhen Shenbao Sanjing Food and Beverage Development Co., Wholly-owned                         100              100
                                                                               First grade
Ltd. (Shenbao Sanjing for short)                                 subsidiary
Huizhou Shenbao Technology Co., Ltd. (Huizhou Shenbao Wholly-owned                               100              100
                                                                               First grade
Technology for short)                                            subsidiary
Shenzhen Shenbao Property Management Co., Ltd. (Shenbao Wholly-owned                             100              100
                                                                               First grade
Property for short)                                              subsidiary
Shenzhen Shenbao Industry and Trade Co., Ltd. (Shenbao Industry Wholly-owned                     100              100
                                                                               First grade
and Trade for short)                                             subsidiary
Hangzhou Jufangyong Holding Co., Ltd. (Hangzhou Jufangyong Wholly-owned                          100              100
                                                                               First grade
for short)                                                       subsidiary
Shenzhen Shenbao Technology Center Co., Ltd. (Shenbao Wholly-owned                               100              100
                                                                               First grade
Technology Center for short)                                     subsidiary
Shenzhen Shenshenbao Investment Co., Ltd. (Shenshenbao Wholly-owned First grade                  100              100


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Investment for short)                                                subsidiary
Yunnan Pu'er Tea Shenbao Supply Chain Management Co., Ltd.          Wholly-owned                 100          100
                                                                                   First grade
(hereinafter referred to as Yunnan Supply Chain)                     subsidiary
                                                                    Wholly-owned                 100          100
Huizhou Shenbao Food Co., Ltd. (Huizhou Shenbao Food for short)                    First grade
                                                                     subsidiary
Yunnan Pu’er Tea Exchange Center Co., Ltd. (hereinafter referred     Holding                    55           55
                                                                                   First grade
to as Pu’er Tea Exchange Center)                                    subsidiary
Wuyishan Shenbeo Rock Tea Co., Ltd. (Shenbao Rock Tea for           Wholly-owned    Second       100          100
short)                                                               subsidiary      grade
Hangzhou Fuhaitang Tea Ecological Technology Co., Ltd. Wholly-owned                 Second       100          100
(Fuhaitang Ecological for short)                                     subsidiary      grade
Hangzhou Chunshi Network Technology Co., Ltd. (Chunshi Wholly-owned                 Second       100          100
Network for short)                                                   subsidiary      grade
Shenzhen Shenshenbao Tea Culture Business Management Co.,             Holding       Second       65           65
Ltd.     (Shenshenbao Tea Culture for short)                         subsidiary      grade
Hangzhou Jufangyong Trading Company (hereinafter referred to as       Holding       Second       60           60
Jufangyong Trading)                                                  subsidiary      grade
Subsidiary excluded in consolidated financial statement
(1) Shenzhen Shenbao (Liaoyuan) Industrial Company has established for a long time without normal operation,
Industry and Commerce Bureau has canceled the business license of the company, the long-term equity
investment for the company has been accrual for impairment totally. Financial statement of the company is out of
the consolidation range.


(2) Shenzhen Baomanan Biotechnology Co., Ltd. is a subsidiary of the Company, set up by Huizhou Shenbao
Technology and Guangzhou Shen Guangsheng biotechnology limited liability company, according to the contract
signed by both parties on March 28, 2014, Huizhou Shenbao Technology does not have the right to actual control
this company, thus it is accounted by the equity method.


(3) Shenzhen Shichumingmen Restaurant Management Co., Ltd. (hereinafter referred to as "Shichumingmen
Company"), set up by a subsidiary of the Company Shenshenbao tea culture and Shenzhen Investment Co., Ltd. F.
according to Articles of Association, the Board of Directors to vote by one vote one person. Attendees to the
board of directors should be more than 2/3 of the whole number of directors, and all participants aaprove the
resolution thus it is effective. The Company only accounted for 3/5 of the voting rights in Shichumingmen
Company, control can not be reached, so it is accounted for by the equity method.


IV. Basis of preparation of financial statements

1. Basis of preparation
Based on continuing operation, the Company conducts recognition and measurement according to actual
occurrence of transactions and issues, pursuant to the accounting principles for enterprise-basic rules and specific


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accounting principle as well as the application guidance for the accounting principles for enterprise, interpretation
to the accounting principles for enterprise and other related requirements (hereinafter referred to as Enterprise
Accounting Principles) issued by the ministry of finance, on that basis, combining the Information Disclosure
Preparation Rules for Company Public Issuing Securities No.15-General Rules for Financial Report (amended in
2014) of the CSRC for statement preparation.
2. Going concern
The Company was evaluated on continued viability of 12 months for the reporting period and found to have no
significant doubt. Accordingly, the financial statements have been prepared on the basis of going concern
assumptions.


V. Major accounting policy, accounting estimation

Specific accounting policies and estimation attention:
The financial statements prepared by the Company are in accordance to requirements of Accounting Standard for
Enterprise, which truly and completely reflect the information related to financial position, operational results and
cash flow of the Company.


1. Statement for observation of Accounting Standard for Enterprise


The financial statements prepared by the Company are in accordance to requirements of Accounting Standard for
Enterprise, which truly and completely reflect the information related to financial position, operational results and
cash flow of the Company.


2. Accounting period


Calendar year is the accounting period for the Company, that is falls to the range starting from 1 January to 31
December.


3. Operating cycle


Operating cycle of the Company was 12 months, and the operating cycle is the determining criterion for liquidity
of assets and liabilities.


4. Standard currency


The Company and its subsidiaries take RMB as the standard currency for bookkeeping.




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5. Accounting treatment for business combinations under the same control and those not under the same
control


(1) If the terms, conditions, and economic impact of each transaction involved in business combination
achieved in stages fall within one or more of the following situations, such transactions will be accounted for
as a package deal
1) Such transactions are entered into simultaneously or in the case of considering the impact of each other;
2) Such transactions as a whole in order to reach a complete business results;
3) The occurrence of a transaction subject to that of at least one other transaction;
4) One transaction alone is not economic, but otherwise when considered with other transactions.


(2) Business combination under the same control
The assets and liabilities the Company acquired in a business combination shall be measured in accordance with
book value of assets, liabilities (including the ultimate controlling party of goodwill acquired by the merging
parties and the formation of) stated in combined financial report of the ultimate controlling party on the merger
date. The net book value of assets and the payment of the merger consideration in the merger book value (or
nominal value of shares issued) shall be adjusted in the share premium of reserve capital. the share premium in
capital reserve is not enough for deducting, retained earnings .


If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained
earnings. In case there is existence of contingent consideration which needs to confirm projected liabilities or
assets, then the difference between the projected liabilities or assets and settlement amount for consequent
contingent consideration is utilized to adjust capital reserve (capital premium or equity premium); in case of
insufficient capital reserve, adjust retained earnings.


As for business combination realized through numbers of transactions, and if these transactions belong to a bundle
of transactions, then each of them shall be accounted as a transaction to acquire controlling right; and if not belong
to a bundle of transactions, then the difference between the initial investment cost of the long term equity
investment as of the date on which the Company obtains controlling right and the carrying value of the long term
equity investment prior to combination plus the carrying value of the new consideration paid for further
acquisition of shares as of the combination date shall be used to adjust capital reserve; in case of insufficient
capital reserve, adjust retained earnings. For equity investment held prior to the combination date, the other
comprehensive income recognized due to calculation by equity method or based on recognition and measurement
principles for financial instruments would not be accounted for temporarily until the Company disposes of this
investment on the same basis as the investee directly disposes of relevant assets or liabilities; other changes of
owners’ equity in the net assets of investee as recognized under equity method, except for net profit or loss, other
comprehensive income and profit distribution, shall not be accounted for until being transferred to current profit
or loss when this investment is disposed of.


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(3) Business combination not under the same control
Assets paid and liabilities taken for business combination on the acquisition date shall be measured at fair value.
The difference between the fair value and book value is recognized in profit or loss.


Goodwill is realized by the Company as for the difference between the combination cost and the fair value of the
recognizable net assets of the acquiree acquired by acquirer in such business combination. In case that the above
cost is less than the above fair value even with re-review, then the difference shall be recorded in current gains
and losses.


As for the business combination not under the same control realized through several exchange transactions step by
step, part of the package deal, than carrying accounting treatment on transactions with controlling rights obtained
through vary transactions; as for non-package: for equity investment held prior to combination date which is
calculated under equity method, the sum between carrying value of the equity investment prior to acquisition date
and cost of additional investment made on the acquisition date is deemed to be the initial investment cost of this
investment. Other comprehensive income recognized for equity investment held prior to combination date under
equity method shall be accounted for when the Company disposes of this investment on the same basis as the
investee directly disposes of relevant assets or liabilities. In case that equity investment held prior to combination
date is calculated based on recognition and measurement principles for financial instruments, then the fair value of
this equity investment as of combination date plus new investment cost shall be deemed as initial investment cost.
The difference between fair value and carrying value of the originally held equity interests and the accumulated
fair value movements as originally recorded in other comprehensive income shall be all transferred to investment
income of the period in which the combination date falls.


(4) Expenses related to the merger
Audit, legal, consulting services, and other intermediary costs and other expenses directly related to the business
combination, shall be included in current profit or loss in the event; any transaction fee for issuing equity
securities for business combination which can be directly attributable to the equity transaction shall be deducted
from equity.


6. Methods for preparation of consolidated financial statements

1. Merger scope
The consolidation scope of the consolidated financial statements of the Company is fixed on the basis of control,
and all subsidiaries have been consolidated.


2. Merger procedure
The Company edits the consolidated financial statements based on its own financial statements and the
subsidiaries’, as well as other relevant information. The consolidated financial statements hold the enterprise
group as a whole accounting entity. It is recognized in accordance with relevant Accounting Standards,

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measurement and presentation requirements. Uniform accounting policies reflect the overall financial position of
the Group's business, operating results and cash flow.


The accounting policies and accounting period adopted by the subsidiaries taken into account of the consolidation
scope are in line with the Company. If it is not the same as the Company, necessary adjustments will be made
when preparing consolidated financial statements according to the accounting policy and accounting period of the
Company.


Internal transactions between the Company and its subsidiaries and between subsidiaries to each other shall put
impact on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, the
consolidated shareholders' equity. The impact shall be offset when combing financial statements. If it is not the
same when you stand Enterprise Group and the angle of the Company or its subsidiaries as the accounting entity
identified on the same transaction, the business point of view shall be adjusted to the Group's transactions.


Subsidiary's equity, current net profits or losses and current comprehensive income belonging to minority
shareholders shall be listed respectively under item of owners’ equity in the consolidated balance sheet, item of
net profit in profit sheet and item of total comprehensive income. Current loss minority shareholders of a
subsidiary exceed the minority shareholders in the subsidiary's opening owners' equity share and the formation of
balance, offset against minority interests.


For the subsidiaries acquired through business combination under common control, its assets and liabilities
(including goodwill formed from ultimate controlling party acquiring the subsidiary to) shall be adjusted based on
the book value in the financial statements of the ultimate controlling party.


For the subsidiaries acquired through business combination under uncommon control, financial statements shall
be adjusted based on the fair value of the identifiable net assets on acquiring date.


1) Increase of subsidiary or business
During the reporting period, the merger of the enterprises under the same control results in additional subsidiaries
or business, then adjust the opening amount of consolidated balance sheet; income, expenses and profit of the
subsidiaries or business from beginning to the end of the reporting shall be included in the consolidated profit
statement; cash flows of the subsidiaries or business from beginning to the end of reporting period shall be
included into the consolidated cash flow statement. And relevant comparative items of comparable statement shall
be adjusted since reporting entity is controlled by the ultimate controller.


If additional investment and other reasons can lead investee to be controlled under the same control, all parties
shall be adjusted at the beginning when the ultimate controlling party starts control. Equity investments made
before obtaining controlling right, relevant gains and losses and other comprehensive income as well as other


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changes in net assets confirmed during the latter date between point obtaining original equity and merger and
mergeree under the same control day to the combined day, shall be offset against the retained earnings or profit or
loss of the comparative reporting period.


During the reporting period, opening amount of consolidated balance sheet shall not be adjusted since enterprise
under different control combine or increase holding of subsidiary or business; the income, expense and profit of
the subsidiaries or business from the acquisition date to the end of reporting period shall be included in the
consolidated profit statement; while cash flows shall be included into the consolidated cash flow statement.


Equity held from investee before acquisition date shall be measured at fair value of acquisition date if additional
investment and other reasons can lead investee to be controlled under the same control. Difference between the
fair value and the book value is recognized as investment income. other comprehensive income and other owners'
equity except for net profit or loss, other comprehensive income and the distribution of profits related to equity
held from investee before acquisition date, as well as relevant other comprehensive income associated with all
other by changes in equity shall be included in current investment income, except for other comprehensive income
arising from change of net assets or net liabilities redefined by investee.


2) Disposal of subsidiaries or business
A. The general approach
During the reporting period, the Company carry out disposal of subsidiaries or business, revenue, expense and
profit of the subsidiary or business included in the consolidated profit statement from the beginning to the disposal
date; while the cash flow into cash flow table.


If losing controlling right to investee due to disposal of partial equity, the remaining equity after the disposal shall
be re-measured at fair value at the date when control is lost. Price of equity disposal plus fair value of the
remaining equity, then subtracting net assets held from the former subsidiary from the acquisition date or
combination date initially measured in accordance with original stake and goodwill, the difference shall be
included in investment income of the period losing controlling right. other comprehensive income and other
owners' equity except for net profit or loss, other comprehensive income and the distribution of profits related to
equity held from investee before acquisition date, as well as relevant other comprehensive income associated with
all other by changes in equity shall be included in current investment income, except for other comprehensive
income arising from change of net assets or net liabilities redefined by investee.


B. Step disposal of subsidiaries
As multiple transactions over disposal of the subsidiary's equity lead to loss of controlling right, if the terms of the
transaction, situation and economic impact subject to one or above of the following conditions, usually it indicates
repeated transactions should be accounted for as a package deal:
    a. These transactions are made considering at the same time or in the case of mutual impact;


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     b. These transactions only reach a complete business results when as a whole;
     c. A transaction occurs depending on the occurrence of at least one other transaction;
     d. Single transaction is not economical, but considered together with other transactions it is economical.
If disposal of equity in subsidiaries lead the loss of control and the transactions can be seen as a package deal, the
Company will take accounting treatment of the transaction; however, before the loss of control the difference
between the disposal price and the corresponding net assets of the subsidiary, recognized as other comprehensive
income in the consolidated financial statements, into current profit and loss at current period when losing
controlling right.


If disposal of equity in subsidiaries lead the loss of control and the transactions doesn’t form a package deal,
equity held from subsidiary shall be accounted in accordance with relevant rules before losing controlling right,
while in accordance with general accounting treatment when losing controlling right.


3) Purchase of a minority stake in the subsidiary
Long-term equity investment of the Company for the purchase of minority interests in accordance with the newly
acquired stake in the new calculation shall be entitled to the difference between the net assets from the acquisition
date (or combination date) initially measured between the consolidated balance sheet adjustment capital balance
of the share premium in the capital reserve share premium insufficient, any excess is adjusted to retained earnings.


4) Disposal of equity in subsidiary without losing control
Disposal price and disposal of long-term equity investment without a loss of control due to partial disposal of
subsidiaries and long-term equity investment made between the relative net assets from the purchase date or the
date of merger were initially measured at the difference between the subsidiary shall enjoy, the consolidated
balance sheet adjustment in the balance of the share premium, capital balance of the share premium insufficient,
any excess is adjusted to retained earnings.




7. Classification of joint venture arrangement and accounting for joint operations

(1) Classification of joint venture arrangement
The Company classifies joint venture arrangement into joint operations and joint ventures based on the structure,
legal form, agreed terms of the arrangement and other related facts and conditions.


Joint venture arrangement not concluded through separate entity is classified as joint operation; and those
concluded through separate entity are generally classified as joint ventures. However, joint venture arrangement
which meets any of the following conditions as proven by obvious evidence and satisfies relevant laws and rules
is grouped as joint operation:
1) The legal form of the arrangement shows that parties to the arrangement are entitled to and assume rights and
obligations in respect of the relevant assets and liabilities.

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2) It is agreed by the terms of the arrangement that parties to the arrangement are entitled to and assume rights and
obligations in respect of the relevant assets and liabilities.
3) Other related facts and conditions show that parties to the arrangement are entitled to and assume rights and
obligations in respect of the relevant assets and liabilities. For instance, joint parties are entitled to almost all the
output related to joint venture arrangement and settlement of the liabilities under the arrangement continues to rely
on supports from the joint parties.


(2) Accounting for joint operations
The Company recognizes its proportion of interests in joint operation as related to the Company, and accounts for
under relevant business accounting principles:
1) To recognize separately-held assets and jointly-held assets under its proportion;
2) To recognize separately-assumed liabilities and jointly-assumed liabilities under its proportion;
3) To recognize revenue from disposal of the output which the Company is entitled to under the proportion;
4) To recognize revenue from disposal of the output under the proportion;
5) To recognize separately occurred expenses, and to recognize expenses occurred for joint operations under its
proportion.


For injection to or disposal of assets of joint operations (other than those assets constituting business operation),
gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the
joint operation before the joint operation is sold to any third party. In case those assets injected or disposed satisfy
the condition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the
Company recognizes this loss in full.


For acquisition of assets from joint operations (other than those assets constituting business operation), gain or
loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint
operation before the relevant assets are sold to any third party. In case that the acquired assets satisfy the condition
for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes
relevant loss according to the proportion it assumes.


The Company exercises no common control over joint operations. If the Company is entitled to relevant assets of
the joint operation and assure relevant liabilities, it shall be accounted for under the above principle, otherwise it
would be accounted for under the relevant business accounting principles.


8. Recognition standards for cash and cash equivalents


When preparing cash flow statement, the Company recognized the stock cash and deposits available for payment
at any time as cash, and investments featuring with the following four characters at the same time as cash
equivalents: short term (expire within 3 months commencing from purchase day), active liquidity, easy to convert
to already-known cash, and small value change risks.

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9. Foreign currency business and conversion of foreign currency statement
For the foreign currency business, the Company converts the foreign currency into RMB for book-keeping based
on spot exchange rate at date of trading occurred.


On balance sheet date, balance of foreign currency monetary items shall be converted based on the spot rate as at
the balance sheet date, and the arising exchange difference shall be recorded in current gains and losses other than
those arising from the special foreign currency borrowings related to purchasing assets qualifying for
capitalization which is treated under the principle of borrowing expense capitalization. As for the foreign currency
non-monetary items measured in historical cost, conversion is still conducted with the spot rate as at the
transaction date, without any change to its functional currency. As for the foreign currency non-monetary items
measured in fair value, conversion is conducted with the spot rate as at the date for determination of fair value,
and the arising exchange difference shall be recorded in current gains and losses or capital reserve.


As for the foreign currency non-monetary items measured in fair value, conversion is conducted with the spot rate
as at the date for determination of fair value, and the arising exchange difference shall be recorded in current gains
and losses or capital reserve.


10. Financial instruments
Financial instruments include financial assets, financial liabilities and equities instruments.
1. Categories of financial instruments
According to the contract terms of the financial instrument issued and economic substance reflects by such
instrument, not only in form of law, combine with purposes held for financial assets and liabilities, the Company
categorizes financial assets and liability into different types: financial assets (or financial liabilities) at fair value
through current gains and losses; accounts receivable; financial assets available for sale; other financial liabilities,
etc.


2. Recognition and measurement for financial instrument
(1) Financial assets or liabilities at fair value through profit or loss
Financial assets or liabilities at fair value through profit or loss include transactional financial assets or financial
liabilities and financial assets or liabilities directly designated at fair value through profit or loss.


Transactional financial assets or financial liabilities refer to those meeting any of the following conditions:
1) Purpose for holding the assets or liabilities are to disposal, repurchase or redemption in a short time;
2) Constitute part of the identifiable financial instrument group for central management, and there is objective
evidence proving that the Company manages this group in a short-time-return way recently;
3) Belong to derivative financial instrument, other than those derivatives designated as effective hedge
instruments, belonging to financial guarantee contracts and those linked to equity instrument investment which is


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not quoted in an active market and whose fair cannot be measured reliably and the settlement of which is
conditional upon delivery of the equity instrument.


Subject to satisfaction of any of the following conditions, financial assets or liabilities can be designated as
financial assets or liabilities at fair value through profit or loss upon initial measurement:
1) The designation can eliminate or substantially eliminate the inconsistencies between profit and loss from the
financial assets arising from different measurement basis;
2) The portfolio of financial assets and liabilities in which the financial asset belongs to are designated as
measured at fair value in the risk management report or investment strategic report handed in to key management
personnel;
3) Hybrid instruments which contains one or more embedded derivatives, unless the containing of embedded
derivatives does not have substantial effect on the cash flows of the hybrid instruments, or the embedded
derivatives obviously should not be separated from relevant hybrid instruments;
4) Hybrid instruments which contains embedded derivatives that should split, but cannot be measured separately
when acquired or on the subsequent balance sheet date.


The Company initially measures financial assets or liabilities at fair value through profit or loss at their fair values
when acquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond
interests which is due for interest payment but not received), and the relevant transaction fee is included in current
profit or loss. Interest or cash dividend acquired during the holding period shall be recognized as investment
income, and movement of fair value at the end of period is included in current profit or loss. Upon disposal, the
difference between its fair value and initial accounting amount shall be recognized as investment income, with
corresponding adjustment to gains and losses from movement of fair value.


(2) Account receivables
Account receivable refers to the non-derivative financial assets without price in active market and with amount to
be fixed or to be determined.


The contract price charged to the buyers shall be recognized as initial value for those account receivables which
mainly comprise the receivable creditor’s right caused by the sale of goods and providing of labor service to
external customers by the Company, and receivables in other companies excluding debt instruments priced in
active markets, includes but not limited to trade receivables, notes receivables, account paid in advance and other
receivables. If characterized as of financing nature, the initial recognition shall be priced at the present value.


Upon disposal, the difference between the sale value and the book value of the receivables shall be accounted into
current profit or loss on its recovery or disposal.


(3) Held-to-maturity investment


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The non-derivative financial assets with maturity date, fix return amount or amount able to determined, and the
Company held with specific intention and ability.


The Company takes the sum of fair value (after deducting bond interests which is due for interest payment but not
received) and related transaction fee as initial recognition amount in respect of held-to-maturity investment upon
acquisition of the investment. During the holding period, the Company recognizes interest income at amortized
cost and effective interest rate which is included in investment income. The effective interest rate is determined
upon acquisition of the investment and remains unchanged for the expected continuous period or appropriate
shorter period. Difference between sale price and carrying value of the investment is included in investment
income.


If held-to-maturity investment is disposed or reclassified as other types of financial asset, and the relevant amount
is relatively bigger than the total amount of our all held-to-maturity investments prior to disposal or
reclassification, the remaining held-to-maturity investments shall be reclassified as available-for-sale financial
assets immediately following such disposal or reclassification. On the reclassification date, difference between the
carrying value and fair value of the investment is included in other comprehensive income and is transferred out
into current profit or loss when the available-for-sale financial assets experience impairment or derecognition.
However, the followings are exceptions:
1) The date of disposal or reclassification is approaching to the date of expiration or redemption of the investment
(such as three months prior to expiration), and change of market rate has no material influences over the fair value
of the investment.
2) Company has already recovered nearly all initial principal under the repayment means as agreed in contract.
3) Disposal or reclassification is arising from separate matters which are out of our control, which are expected
not to occur repeatedly and which are difficult to predict reasonably.


(4) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale upon
initial recognition and financial assets other than other categories of financial assets.


The Company initially measures available-for-sale financial assets at the sum between their fair values when
acquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond interests
which is due for interest payment but not received) and the relevant transaction fee. Interest or cash dividend
acquired during the holding period shall be recognized as investment income. Gains or losses arising from
movement of fair value is directly included in other comprehensive income except for impairment loss and
exchange difference arising from foreign currency monetary financial assets. When disposing available-for-sale
financial assets, the Company includes the difference between the acquired price and carrying value of the
financial assets into investment profit or loss. Meanwhile, accumulated fair value movement attributable to the
disposed part which is originally directly included in other comprehensive income is transferred out and included


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investment profit or loss.


For equity instrument investment which is not quoted in an active market and whose fair value cannot be reliably
measured, and derivative financial assets which are linked to the equity instrument and whose settlement is
conditional upon delivery of the equity instrument, they are stated at cost by the Company.


(5) Other financial liabilities
Initial recognition amount is determined at the sum of fair value and relevant transaction fee. Subsequent
measurement is conducted at amortized cost.


3. Confirmation evidence and measurement methods for transfer of financial assets
When transfer of financial assets occurs, the Company shall stop recognition of such financial assets if all risks
and remunerations related to ownership of such financial assets have almost been transferred to the receiver; while
shall continue to recognize such financial assets if all risks and remunerations related to ownership of such
financial assets have almost been retained.


When judging whether or not the aforesaid terminal recognition condition for financial assets is arrived at for
transfer of financial assets, the Company generally adopts the principle that substance overweighs format. The
Company divides such transfer into entire transfer and part transfer. As for the entire transfer meeting condition
for discontinued recognition, balance between the following two items is recorded in current gains and losses:
(1) Carrying value of financial assets in transfer;
(2) Aggregate of the consideration received from transfer and accumulative movements of fair value originally
recorded in owners’ equity directly (applicable when financial assets involved in transfer belong to financial assets
available for sale).


As for the part transfer meeting condition for discontinued recognition, entire carrying value of financial assets in
transfer is shared by discontinued recognition part and continued recognition part, in light of their respective fair
value. Balance between the following two items is recorded in current gains and losses:
(1) Carrying value of discontinued recognition part;
(2) Aggregate of the consideration of discontinued recognition part and amount of such part attributable to
accumulative movements of fair value originally recorded in owners’ equity directly (applicable when financial
assets involved in transfer belong to financial assets available for sale).


Financial assets are still subject to recognition if transfer of such assets doesn’t satisfy the condition for
discontinued recognition. And consideration received is recognized as financial liability.


4. De-recognition condition for financial liability
As for the financial liabilities with its whole or part present obligations released, the company shall de-realize


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such financial liabilities or part of it. if the company enters into agreement with its creditor to substitute for the
existing financial liabilities by means of assuming new financial liabilities, then the company shall de-realize the
existing financial liabilities and realize the new financial liabilities provided that the contract clauses of the new
and the existing financial liabilities are different in substance.


If the company makes substantial amendment to the whole or part contract clauses of the existing financial
liabilities, it shall de-realize the existing financial liabilities or part of it. Meanwhile, the financial liabilities with
amendment to its clauses shall be realized as new financial liabilities.


In case of derecognizing of financial liabilities in whole or part, the difference between the carrying value of such
de-realized financial liabilities and consideration paid (including the non-cash assets exchanged or new financial
liabilities assumed) shall be recorded in current gains and losses.


In case that the company repurchases part of financial liabilities, based on the comparative fair value of the
continuing recognition part and the derecognizing part, the company shall allocate the carrying value of the
financial liabilities in whole on the repurchase date. Difference between the carrying value allocated to the
derecognizing part and the consideration paid (including the non-cash assets exchanged or new financial liabilities
assumed) shall be recorded in current gains and losses.


5. Determination method for fair value of financial assets and financial liabilities
As for the financial assets or financial liabilities with an active market, the fair value is determined by the offer of
the active market; the offer of the active market includes the offers of underlying assets or liabilities easily and
regularly obtained from the exchange, the dealer, the broker, the industry group, the pricing institution or the
regulatory body, which can represent the market transactions actually and frequently occur on the basis of fair
trade.


The initial acquisition or financial assets or financial liabilities assumed, market transaction price to determine the
fair value basis.


There is no active market for a financial asset or financial liability, the valuation techniques to determine its fair
value. At the time of valuation, the Company adopted applicable in the present case and there is enough available
data and other information technology to support valuation, assets or liabilities of feature selection and market
participants in the trading of the underlying asset or liability considered consistent input value and priority as the
relevant observable inputs. Where relevant observable inputs can not get or do not get as far as practicable, the use
of unobservable inputs.


6. Provision of impairment reserve for impairment of financial assets (excluding account receivables)
The company reviews the carrying value of the financial assets (excluding those measured by fair value and the


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change thereof is recorded in current gains and losses) on the balance sheet date, if there is objective evidence
showing impairment of the financial assets, it shall provide impairment reserve.


Objective evidence that a financial asset is impaired includes the following observable events:
(1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal payments;
(3) The creditor, for economic or legal reasons relating to the borrower’s financial difficulty, granting a
concession to the borrower;
(4) It becoming probable that the borrower will enter bankruptcy or other financial reorganizations;
(5) The disappearance of an active market for that financial asset because of financial difficulties of the issuer;
(6) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with
the individual financial assets in the group, including: adverse changes in the payment status of borrowers in the
group, an increase in the unemployment rate in the country or geographical area of the borrowers, a decrease in
property prices for mortgages in the relevant area, or adverse changes in industry conditions that affect the
borrowers in the group;
(7) Significant adverse changes in the technological, market, economic or legal environment in which the issuer
operates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor;
(8) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost;


Details for impairment of financial assets are set out below:
(1) Impairment provision for available-for-sale financial assets
The Group has separately tested various available-for-sale equity instruments at the balance sheet date. It will be
defined as impairment if the fair value is lower than the initial investment cost by more than 50% (including 50%)
or the low state has lasted for no less than 1 year. While the lower proportion is between 20% and 50%, the Group
will take other factors such as price fluctuation into consideration to estimate whether the equity instrument has
impaired or not.


Initial segment of the "cost" of the sale of equity instruments in accordance with available cost less any principal
repayment and amortization, impairment loss has been included in determining profit or loss; The fair value of the
available-for-sale equity instrument investment without an active market is determined by the present value
determined on the basis of the current market return similar to financial assets versus the future discounted cash;
the fair value of available-for-sale equity instrument investment with offers in the active market is determined by
the closing price of the stock exchange at the end of the period, unless this available-for-sale equity instrument
investment has a restricted stock trade period.For the presence of restricted investments in equity instruments
available for sale, according to the end of the closing price of the stock exchange market participants by deducting
the risk equity instrument within a specified period cannot be sold on the open market and the requirements to
obtain compensation.


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When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value that
had been recognized in other comprehensive income is reclassified to the profit or loss even though the financial
asset has not been derecognized. The amount of the cumulative loss that is removed from equity is the difference
between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any
impairment loss on that financial asset previously recognized in profit or loss.


If there are objective evidences showing that the value of available-for-sale debt instrument is recovered and it
relates to the matters happened after the impairment loss recognition, the impairment loss recognized shall be
reversed and accounted in current profit or loss. Impairment losses recognized for equity instrument investments
classified as available-for-sale are reversed through equity. However, impairment loss occurred by equity
instrument investment which is not quoted in an active market and whose fair value cannot be measured reliably
and derivative financial assets which are linked to the equity instrument and whose settlement is conditional upon
delivery of the equity instrument, shall not be reversed.


(2) Impairment provision for held-to-maturity investment
For held-to-maturity investment, if there is object evidence showing the investment is impaired, then impairment
loss is determined based on the difference between its fair value and present value of predicted future cash flow.
After provision, if there is evidence showing its value has been restored, the originally recognized impairment loss
can be reversed and included in current profit or loss, provided that the reversed carrying value shall not exceed
the amortized cost of the financial asset as at reversal date assuming no impairment provision had been made.


7. Offset of financial assets and financial liabilities
Financial assets and financial liabilities are stated in balance sheet separately without inner-offset. However, the
net amount after inner offset is stated in balance sheet date when the following conditions are all met:
(1) The Company has legal right to offset recognized amount and the right is enforceable;
(2) The Company plans to settle on a net basis, or simultaneously realize the financial assets and settle the
financial liabilities.


11. Account receivable


(1) Account receivable with single significant amount and withdrawal single item bad debt provision


                                                                 Amount occupied 10 percent (including 10 percent) of the
 Account with single significant amount
                                                                 balance of account receivable.
                                                                 Conducted impairment testing separately, balance between the
 Withdrawal method for bad debt provision of account receivable present value of future cash flow and its carrying value, bad debt
 with single significant amount                                  provision withdrawal and reckoned into current gains/losses. For
                                                                 those without impairment being found after test, collected into


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                                                                 relevant combination for accrual.


(2) Accounts receivable whose bad debts provision was accrued by combination based on credit risk
characteristics portfolio

                           Combination                                               Bad debt provision accrual
 Party composition within the scope of consolidation related     Other method
 Aging of accounts group                                         Age analysis method

Group with bad debt provision accrual by aging:
√ Applicable □ Not applicable
                     Age                                   Accrual ratio                    Accrual ratio for other receivable

 Within one year (one year included)                                             0.00%                                        0.00%

 1-2 years                                                                      5.00%                                        5.00%

 2-3 years                                                                     10.00%                                     10.00%

 Over 3 years                                                                   15.00%                                     15.00%

 3-4 years                                                                     15.00%                                     15.00%

 4-5 years                                                                     15.00%                                     15.00%

 Over 5 years                                                                   15.00%                                     15.00%

In combination, withdrawal proportion of bad debt provision based on balance proportion
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods:
□ Applicable √ Not applicable

(3) Account receivable with minor single amount but with withdrawal bad debt provision for single item

                                                                 There is objective evidence that the Company will not be able to
 Reasons for provision of bad debt reserve
                                                                 recover the money under the original terms of receivables.
                                                                 Withdrawn according to the difference between present value of
 Provision method of bad debt reserve
                                                                 expected future cash flows and the book value of the receivables.


12. Inventories

Whether the company needs to comply with the disclosure requirements of the particular industry
No
(1) Classification
Inventory means finished goods and merchandise that are ready for sale, work-in-progress, or material used in the
process of production or provision of service in the ordinary course of business. Inventory includes merchandise
in warehouse, delivered goods, work- in-progress, raw materials, subcontracted materials, packages, etc.


(2) Valuation method


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Inventory carried initial measured by cost, including purchasing cost, processing cost and other costs. The
inventory in transit was valued by weighted average method.


(3) Recognized standards of the net realizable value for inventory and withdrawal method on provision of
inventory
After inventory at period-end, the inventories are accounted depending on which is lower between the cost and the
net realizable value or adjusted the provision of inventory. The net realizable value of inventory products and
sellable materials, in normal business production, is measured as the residual value after deducting the estimated
sales expense and related taxes and fees from the estimated selling price; the net realizable value of an item of
inventories subject to further processing, in normal business production, is measured as the residual value after
deducting the sum of the estimated costs of completion, sales expense and related taxes and fees from the
estimated selling price of the sellable item. The net realizable value of the quantity of inventories held to satisfy
firm sales or service contracts is based on the contract price. If the sales contracts are for less than the inventory
quantities held, the net realizable value of the excess is based on general selling prices.


An impairment allowance, if any, is generally individually recognized for each type of inventories at period-end
except: For an individual impairment allowance, if any, is recognized for the whole category of inventories of low
value and large quantities; and for an individual impairment allowance, if any, is recognized for a group of
inventories, which are held for the production and sales of products of a single territory and for identical or similar
usages or purposes, and which are indistinguishable from other types of inventories within the group.


If the previous factors resulting in deduction of inventories values disappear, then such deduction of value shall be
reversed back from the original provision of inventory depreciation reserve, and turns to current gains and losses.


(4) Inventory system
Inventory system is the perpetual inventory system.


(5) Amortization of low-value consumables and packaging materials
1) Adopt five-five amortization for low-value consumables;
2) Adopt one-off writing off process for packaging materials


13. Long-term equity investment

(1) Recognition of investment cost
1) As for the long-term equity investment formed from business combination under the same control, accounting
policy found in (V) Accounting method for business combination (not) under the same control of Note IV


2) Long-term equity investment obtained by other means



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For long-term equity investments obtained through payment with cash, then the actual payment shall be viewed as
initial investment cost. Initial investment cost including the expenses, taxes and other necessary costs that directly
concerned with the long-term equity investment that acquired.


For long-term equity investments obtained through issuance of equity securities, then the fair value of such
securities shall be viewed as initial investment cost; for transaction expenses from issuing or own equity
instrument acquired, it can be deducted from the equity when such expenses attributable directly to equity
transaction.


Under the precedent condition that non-monetray assets exchanges are featured with commercial nature and fair
values of exchange-in or exchange-out assets can be reliably measured, long-term equity investment exchange-in
through non-monetary assets exchange shall be recognized with initial investment cost on the basis of the fair
value of the assets exchange-out, unless there is obvious evidence showing that fair value of exchange-in assets is
more reliable; as for non-monetary assets exchanges not satisfying such precedent condition, initial investment
cost of exchange-in long-term equity investment falls to the carrying value of exchange-out assets and relevant
taxes payable.


For long-term equity investments obtained through debt reorganization, its initial investment cost is recognized
based on fair value.


(2) Subsequent measurement and recognition of gains and losses
1) Cost method
The long-term equity investment control by invested entity shall counted by cost method, and pricing on initial
investment cost, cost of the long-term equity investment shall be adjusted while additional investment or
dis-investment.


Other than payment actually paid for obtaining investment or cash dividend or profit included in consideration
which has been declared while not granted yet, the Company recognizes investment income according to its share
in the cash dividend or profit declared for grant by the invested unit.


2) Equity method
The Company calculates long term equity investment in associates and joint ventures under equity method. For
certain equity investments in associates indirectly held through risk investment institutions, joint funds, trust
companies or similar entities including investment linked insurance fund, the Company measures the investment
at fair value through profit or loss.


Where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of
the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost.


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Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net
assets at the time of acquisition, the difference is recognized in profit or loss for the period.


Return on investments and other comprehensive income is recognized respectively by shares of net gains and
losses realized by the invested company and other comprehensive income after acquisition of long-term equity,
and book value of such investment is adjusted accordingly. Profit or cash dividends pro rata distributed by the
invested company are to minus book value of the relative long-term investment. Book value of long-term
investment is adjusted when changes occur other than net gains and losses, other comprehensive income and
profit distribution of the invested company, and is to reported in owners’ equity accordingly.


The Company should recognized net profit of invested unit after adjustment, based on fair value of vary
identifiable assets of invested unit while obtained investment, while recognized net profit or net losses of invested
units that should be enjoy by investment enterprise. the un-realized transaction gains/losses attributable to
investment enterprise, internally occurred between the Company, affiliated units and joint-ventures should
calculated by proportion of shares-holding which should be offset, than recognized investment gains/losses.


When the Company is confirmed to share losses of the invested units, the following order shall prevail for
disposal: first of all, offset carrying value of long-term equity investment. Second, for long-term equity investment
whose carrying value is not enough for offset, investment loss should be continued to recognize within the limit of
carrying value of other long-term equity which substantially forms net investment to invested units, to offset
carrying value of long-term items receivable. At last, after the aforesaid treatment, if enterprise still bears
additional duties according to investment contract or agreement, projected liabilities are recognized in accordance
to the obligations which are expected to undertake, and then recorded in current gains and losses.


In the event that the invested unit realizes profit in later periods, the Company will adopt disposal adversed to the
above order after deduction the unrecognized share of loss, i.e. write off the carrying value of the recognized
projected liabilities, recover carrying value of long-term equity which substantially forms net investment to
invested unit and long-term equity investment, and recognize investment income at the same time.


(3) Transfer of calculation for long term equity investment
1) Measure at fair value transfer to equity method
For the equity investment originally held by the Company in which it has no control, common control or
significant influence over the investee and which is accounted for under recognition and measurement principle as
financial assets, in case that the Company becomes able to exercise significant influence or common control upon
the investee due to additional investment while no control is reached, the sum of fair value of the originally held
equity investment as determined under Business Accounting Principles No.22- Recognition and Measurement
Principle as Financial Assets plus cost of the new investment shall be deemed as the initial investment cost upon
calculation under equity method.


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If the originally held equity investment is classified as available for sale financial assets, the difference between its
fair value and carrying value and the accumulated fair value movement which is originally included in other
comprehensive income shall be transferred to current period gains and losses under equity method.


In case that the initial investment cost under equity method is lesser than share of fair value of the investee’s net
identifiable assets as of the date when additional investment is made as calculated based on the latest shareholding
proportion upon additional investment, carrying value of the long term equity investment shall be adjusted against
such difference which is included in current period non-operating income.


2) Measure at fair value or calculation under equity method transfer to calculation under cost method
For the equity investment originally held by the Company in which it has no control, common control or
significant influence over the investee and which is accounted for under recognition and measurement principle as
financial instrument, or for long term equity investment originally held in associates or joint ventures, in case that
the Company becomes able to exercise control over investee not under common control due to additional
investment, the sum of fair value of the originally held equity investment plus cost of the new investment shall be
deemed as the initial investment cost upon calculation under cost method when preparing separate financial
statement.


For other comprehensive income as recognized under equity method in respect of equity investment held prior to
acquisition date, when the Company disposes this investment, the aforesaid income shall be accounted for on the
same basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities.


For equity investment held prior to acquisition date which is accounted for under Business Accounting Principles
No.22- Recognition and Measurement of Financial Assets, the accumulated fair value movement which originally
included in other comprehensive income shall be transferred to current period gains and losses upon calculation
under cost method.


3) Calculation under equity method transfer to fair value measurement
In case that the Company lost common control or significant influence upon investee due to disposal of part equity
investment, the remaining equity investment shall be calculated under Business Accounting Principles No.22-
Recognition and Measurement of Financial Assets, and the difference between its fair value and carrying value as
of the date when the Company lost common control or significant influence shall be included in current period
gains and losses.


For other comprehensive income as recognized under equity method in respect of the original equity investment,
when the Company ceases calculation under equity method, the aforesaid income shall be accounted for on the
same basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities.


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4) Cost method transfer to equity method
In case that the Company lost control upon investee due to disposal of part equity investment, and if the remaining
equity investment can exercise common control or significant influence over the investee, equity method shall be
adopted when preparing separate financial statement, and the remaining equity investment shall be adjusted as if it
had been stated under equity method since the acquisition.


5) Cost method transfer to fair value measure
In case that the Company lost control upon investee due to disposal of part equity investment, and if the remaining
equity investment cannot exercise common control or significant influence over the investee, Business Accounting
Principles No.22- Recognition and Measurement of Financial Assets shall be adopted for accounting treatment
when preparing separate financial statement, and the fair value and carrying value as of the date when control is
lost shall be included in current period gains and losses.


(4) Disposal of long term equity investment
Difference between carrying value and actual acquisition price in respect of disposal of long term equity
investment shall be included in current period gains and losses. For long term equity investment under equity
method, the Company shall adopt the same basis as the investee directly disposes relevant assets or liabilities
when disposing this investment, and account for the part originally included in other comprehensive income under
appropriate proportion.


If the terms, conditions and economic impact of each transaction involved in the disposal by steps of investment
in subsidiaries fall into one or more of the following situations, such transactions will be accounted for as a
package deal:
1) Such transactions are entered into simultaneously or in the case of considering the impact of each other;
2) Such transactions as a whole in order to reach complete commercial results;
3) The occurrence of one transaction is subject to that of at least one other transaction;
4) A transaction alone is not economic, but otherwise when considered with other transactions.


Enterprises that lose control of their original subsidiaries due to the disposal of partial equity investment or
otherwise, and therefore disqualify a package deal, should prepare the relevant accounting treatment in
differentiation with individual financial statements and consolidated financial statement:
A. In separate financial statement, as for disposal of equity interest, difference between carrying value and actual
acquisition price shall be included in current period gains and losses. In case that the remaining equity interests
can exercise common control or significant influence over investee, it shall be stated under equity method in stead,
and shall be adjusted as if the remaining equity interests had been stated under equity method since the acquisition.
In case that the remaining equity interests cannot exercise common control or significant influence over investee,
it shall be accounted for under Business Accounting Principles No.22- Recognition and Measurement Principle of


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Financial Instruments, and the difference between its fair value and carrying value as of the date then the
Company lost control shall be included in current period gains and losses.


B. In consolidated financial statement, for those transactions occurred before lost of control in subsidiaries, the
difference between disposal price and share of net assets of subsidiaries since purchase date or combination date
shall be used to adjust capital reserve (equity premium), and if capital reserve is insufficient to offset, then it shall
adjust retained earnings; when the Company lost control in a subsidiary, the remaining equity interests would be
re-measured at the fair value as of the control-lost date. The sum of consideration gained from the disposal of
equity and the fair value of remaining equity minus the share of net assets of original subsidiaries since the day of
purchase and based on its original shareholding ratio is credited into investment gain for the current period, and
off-set the goodwill at the same time. Other comprehensive income in relation to equity investments of original
subsidiaries should be transferred to investment gain for the period at the time of loss of control.


Each transaction involved in the disposal of equity investments of subsidiaries until loss of control falls into a
package deal, carrying accounting treatment on transaction of losing control rights and disposing the company,
and should be accounted for accordingly in differentiation with individual financial statements and consolidated
financial statements:
A. In consolidated financial statements, difference between each payment from disposal of an equity and the book
value of such long-term equity investment before the loss of control should be recognized as other comprehensive
income and at the time of loss of control, transferred to profit or loss for the current period.
B. In consolidated financial statements, difference between each payment from disposal of a subsidiary and the
share of its net assets through investment before the loss of control should be recognized as other comprehensive
income and at the time of loss of control, transferred to profit or loss for the current period.


(5) Criteria for common control and significant influence
Where the Company jointly controls an arrangement with other participators under agreed terms, and decisions
which materially affect return of such arrangement can only exist when other participators unanimously agree on
the decisions, the Company is deemed to jointly control this arrangement with other participators, and the
arrangement belongs to joint venture arrangement.


In case of a joint venture arrangement concluded through separate entity, when the Company is judged to be
entitled to the net assets of the separate entity under relevant agreements, the entity shall be viewed as a joint
venture under equity method. However, when the Company is judged to be not entitled to the net assets of the
separate entity under relevant agreements, the entity shall be viewed as a joint operation, in which case, the
Company recognizes items relating to its share of interests from the joint operation and accounts for according to
relevant business accounting rules.


Significant influence refers to that investor has right to participate in making decisions relating to the financial and


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operational policies of the investee, while not able to control or jointly control (with others) establishment of these
policies. The following one or more conditions are based to judge whether the Company has significant influence
over investee with consideration of all facts and situations: (1)has delegate in the board of directors or similar
authority organs of investee; (2)participate in establishing financial and operational policies of the investee;
(3)occur material transactions with the investee; (4)delegate management to the investee; (5)provide key technical
data to the investee.


14. Investment real estate

Measurement
Measured by cost


Depreciation or amortization method
Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both,
including the rented land use rights and the land use rights which are held and prepared for transfer after
appreciation, the rented buildings.


The investment property of the Company is accounted at its cost. Cost of investment property purchased from the
external sources includes purchase payment, related taxes and other expenditures which can be directly
attributable to such assets; Cost of investment property constructed by the Company comprise of the necessary
expenditure occurred during the construction for reaching the condition of planned use.


The Company adopts cost method for subsequent measurement of investment property. As for the investment
property measured at cost method – buildings for lease are depreciated under the policies which are the same as
fixed assets, and land use right for lease are amortized under the policies which are the same as intangible assets.


When use of investment property changes to be used by the company itself, the company shall transfer the
investment property to fixed assets or intangible assets since the change date. When use of the self-use real estate
changes for earning rental or capital appreciation, the company shall transfer the fixed assets or intangible assets
to investment property since the change date. For such transfer, the carrying value prior to the transfer is deemed
to be the value accounted after the transfer.


The company would de-realize investment property when the same is disposed or out of use forever and no
economic benefit would be obtained from such disposal. The disposal income from sale, transfer, dump or destroy
of investment property less its carrying value and related taxes is recorded in current gains and losses.




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15. Fixed asset

(1) Recognition of fixed assets
Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing
services, lease or for operation & management, and have more than one year of service life. Fixed assets should be
recognized for qualified the followed conditions at the same time:
1) It is probable that the economic benefits associated with the assets will flow into the Company;
2) The cost of the assts can be measured reliably. Among them, the cost of outsourcing fixed assets includes the
buying price, import tariff and other related taxes and fees, as well as other expenses occurred before making the
fixed assets reach the intended serviceable condition and can be directly attributable to the assets. The cost of
self-constructed fixed assets consists of the necessary expenses occurred before reaching the intended serviceable
condition by the construction of the assets. The fixed assets invested by the investors take the value stipulated by
investment contract or agreement as the entry value, but it should take the fair value as the entry value when the
value stipulated by investment contract or agreement is not fair. When the cost of purchasing fixed assets has a
delay in payment exceeding the normal credit terms and substantially possesses financing, the cost of fixed assets
is determined on the basis of the present value of the purchasing price. The balance between the actual paid cost
and the present value of purchasing price is reckoned in the current profits and losses in the credit period, except
for the capitalization.
Subsequent measurement and disposal of fixed assets 1) Depreciation of fixed assets is accrued within the
estimated useful life after deducting the estimated residual value from its entry value. For the fixed assets accrued
with provision for impairment, determine the amount of depreciation by the book value deducting the provision
for impairment and according to the useful life. The Company determines the useful life and estimated net
residual value of fixed assets according to the nature and use of fixed assets, and rechecks the useful life,
estimated net residual value, and depreciation method of fixed assets at the end of the year, and makes
corresponding adjustments if there is difference with the original estimated number.
2) The follow-up expenses of fixed assets and the follow-up expenses related to fixed assets are included in the
cost of fixed assets if they meet the requirements for recognition of fixed assets; those cannot meet the
requirements for recognition of fixed assets should be included in the current profits and losses when occur.
3) When the fixed assets are disposed, or expected not to generate economic benefits through use or disposal,
derecognize the fixed assets. The amount after deducting its book value and related taxes and dues from the
disposal income of the fixed assets sale, transfer, retirement or impairment is included in the current profits and
losses.


(2) Depreciation methods

          Categories               Method              Years of depreciation    Scrap value rate       Yearly depreciation rate
 Houses and buildings:    Straight-line depreciation
                                                                           35                      5                       2.71
 production buildings

 Houses and buildings:    Straight-line depreciation                       40                      5                       2.38



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 production buildings
 Houses and buildings:    Straight-line depreciation
                                                                     9                       5                  10.56
 makeshift

 Mechanical equipment     Straight-line depreciation                12                       5                   7.92

 Transportation vehicle   Straight-line depreciation                 9                       5                  10.56

 Other equipment          Straight-line depreciation                 6                       5                  15.83


(3) Recognition, measurement and depreciation of fixed assets held under finance lease

A fixed asset leased by the Company is recognized as the fixed asset held under finance lease if one or more of the
following criteria are met: (1) Upon the expiry of the lease term, the ownership is transferred to the Company. (2)
The Company has the option to purchase the asset at a predetermined price that is expected to be sufficiently
lower than the fair value at the date the option becomes exercisable and it is reasonably ascertained at the
inception of lease that the option will be exercised. (3) The lease term approximates the useful life of the relevant
asset even if the ownership is not transferred. (4) At the inception of the lease, the present value of the minimum
lease payments is substantially equivalent to the fair value of the leased asset. (5) The leased assets are of such a
specialized nature that only the Company can use them without major modification. A fixed asset held under
finance lease is initially recognized at the lower of fair value of the leased asset and the present value of the
minimum lease payments, while the amount of the minimum lease payments will be recognized as the entry value
of long-term account payable, the difference between them will be recognized as unrecognized financing costs.
The initial direct costs such as commissions, attorney’s fees, and travelling expenses, stamp duties attributable to
the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be
recorded in the asset value. Unrealized finance costs will be amortized using actual interest rate method over each
period during the lease terms. The Company adopts depreciation policies for leased assets consistent with those of
self-owned fixed assets for the purpose of calculating the depreciation of a leased asset. If it is reasonable to be
certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset
shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the
ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the
shorter one of the lease term or its useful life.


16. Construction in process

(1) Initial measurement of constructions under progress
Self-constructed constructions under progress of the Company are carried at actual costs. Actual costs include the
necessary expenses for constructing such asset to the expected useable condition, including material costs for
project, labor cost, related taxes and fees paid, borrowing expenses to be capitalized and indirect costs to be
amortized. The constructions under progress of the Company are accounted for by project category.


(2) Standard and point of time for construction in process carrying forward to fixed assets


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Fixed asset is booked with the entire expenditures occurred in the construction in process till it arrives at predicted
state for use. For those constructions in process of fixed assets which have already arrived at the predicted state
for use, while still with absence of completion settlement, they shall be carried forward to fixed assets at the
estimated value based on engineering budget, construction cost or actual cost commencing from the date of arrival
of the predicted state for use. Meanwhile, they shall be also subject to the depreciation policies applicable to fixed
assets of the Company for provision of depreciation. Once completion settlement is made, the original temporary
estimated value shall be adjusted at the effective cost. However, the original provision of depreciation remains
unchanged.


17. Borrowing expenses

(1)Recognition of the borrowing expenses capitalization
Borrowing expenses that attributed for purchasing or construction of assets that are complying with capitalizing
conditions start to be capitalized and counted as relevant assts cost; other borrowing expenses, reckoned into
current gains and losses after expenses recognized while occurred.


Assets satisfying the conditions of capitalization are those assets of fixed, investment real estate etc. which need a
long period of time to purchase, construct, or manufacturing before becoming usable.


Capitalizing for borrowing expenses by satisfying the followed at same time:
1) Assets expense occurred, and paid as expenses in way of cash, non-cash assets transfer or debt with interest
taken for purchasing, constructing or manufacturing assets that complying with capitalizing condition;
2) Borrowing expenses have occurred;
3) Necessary activities occurred for reaching predicted usable statues or sale-able status for assets purchased,
constructed or manufactured.


(2) Period of capitalization
Capitalizing period was from the time star capitalizing until the time of suspended capitalization. The period for
borrowing expensed suspended excluded in the period.


If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization
reached its predicted usable status or sale-able status, capitalization suspended for borrowing expenses.


If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization
completed projects and usable independently for part of the projects, borrowing expenses for this kind of assts
shall suspended capitalization.




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If the assets have been completed in every part, but can be reached the useful status or sale-able status while
completed entirely, the borrowing expense shall be suspended for capitalization while the assets completely
finished in whole.


(3) Period of suspended
If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization is
suspended abnormally for over 3 months, capitalizing of borrowing expenses shall be suspended; the suspended
assets that satisfying the conditions of capitalization meets the necessary procedure of reaching predicted usable
status or sellable status, capitalizing of borrowing expenses shall be resumed. The borrowing expenses occurred
during the period of suspended shall reckon into current gains and lossesuntil the purchasing, construction, or
manufacturing process is resumed for capitalizing.


(4) Calculation for capitalization amount
Interest expenses practically occurred at the current term of a special borrowing are capitalized after deducting of
the bank saving interest of unused borrowed fund or provisional investment gains.


Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of
accumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common
borrowings adopted. Capitalization rates are decided by the weighted average of common borrowings.


For those expenses with discount or premium, determined the amortizable discount or premium in every fiscal
year by effective interest method, than adjusted interest amount in every period.


18. Biological assets

Classification of biological assets
Biological assets of the Company refer to the productive biological assets. Productive biological assets included
tea tree.


Biological assets are recognized when the following three conditions are fully satisfied:
(1) An enterprise owns or controls such biological assets due to the past transactions or events;
(2) It may result in the inflow of economic benefits or service potential in relation to such biological assets;
Cost of such biological assets can be reliably measured.


Initial recognition of Biological assets
The biological assets will initially measured by cost while obtained. The cost of biological asset used for
production purchased from the outside includes the purchase price, related taxes, transportation expense,
insurance premium and other charges directly attributable to the purchase of such asset. Biological asset used for


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production input by investors is stated at its entry value which is calculated based on the value as stipulated in the
investment contract or agreement plus the related taxes payable. Where value stipulated in the contract or
agreement is not fair, the actual cost is fixed at fair value.


Subsequent measurement of biological assets
(1) Follow-up expenses
The cost of consumptive biological assets constituted by the actual costs of self-cultivated and constructed
consumptive biological assets occurred before closing, and the follow-up expenses such as management and
protection occurred after closing are included in the current profits and losses.


The cost of productive biological assets constituted by the actual costs of self-cultivated and constructed
productive biological assets occurred before achieving the intended production and operation goals, and the
follow-up expenses such as management and protection occurred after achieving the intended production goals are
included in the current profits and losses.


(2) Depreciation of productive biological assets
The Company adopts the straight-line method to make depreciation on schedule for the productive biological
assets achieving the intended production and operation goals. The Company determines the useful life and
estimated net residual value based on the nature and use condition of productive biological assets and the expected
realization way of related economic benefits; rechecks the nature, use condition and depreciation methods of
productive biological assets at the end of the year, and makes corresponding adjustments if there is difference with
the original estimated number.


Biological assets of the Company refer to the tea plants. For those productive biological assts that reached its
predicted productive purpose, withdrawal depreciation by average age method. The service life was determined by
the residual terms of the residual term of land use after deducting the un-maturity period (5-year) of the tea plants
with 5 percent salvage value calculated. Reviewing the service life, predicted salvage vale and depreciation
method at year-end, if there have difference between the predicted number and original estimated number or have
major changes on way of profit earning, than adjusted the service life or predicted salvage value or depreciation
method as account estimation variation.


(3) Disposal of biological assets:
When harvesting or selling consumable biological assets, the cost of biological assets after the shift of use is
stated at the carrying amount at the time of shift of use. When sold, destroyed and inventory losses occurred, the
disposal income of biological assets net of carrying amount and related taxes shall be charged to profit or loss for
the current period.


Biological assets impairment


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The company inspects the consumptive biological assets and productive biological assets at least at the end of
each year, conclusive evidence indicates that if the net realizable value of consumptive biological assets and the
recoverable amount of productive biological assets are less than the book value due to natural disasters, insect
pests, animal diseases or changes in market demand, the company accrues the provision for losses or provision for
impairment of biological assets and reckons in the current profits and losses according to the balance between the
recoverable amount and the book value.


For those that the influencing factor of the depreciation of consumptive biological assets has disappeared, recover
the write-down amount and reverse within the amount of provision for losses originally accrued, and reckon the
reversed amount in the current profits and losses. The provision for impairment of productive biological assets
shouldn’t be reversed once being accrued.


19. Intangible assets

(1) Measurement, use of life and impairment testing

An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the
Company, including land use right, technical know-how, forest tree use right, trademark use right and software
use right.


1) Measurement of intangible assets
For those intangible assets purchased from outside, the purchase value, relevant taxes and other payments
attributable to predicted purpose obtained should recognized as cost for this assts. For those purchased amount
that paid overdue exceeded the normal credit condition, owns financing natures actually, the cost should be
recognized based on the current value while purchased.


As for the intangible assets acquired from the debtor in debt restructuring for the purpose of settlement of debt, the
fair value of the intangible assets shall be based to determine the accounting value. The difference between the
carrying value of restructured debt and the fair value of the intangible assets use for settlement of debt shall be
recorded in current gains and losses.


With the preceding conditions that non-monetary assets exchange has commerce nature and the fair value of the
assets exchanged in or out can be measured reliably, the intangible assets exchanged in through non-monetary
assets exchange are accounted at the value based on the fair value of assets exchanged out, unless there is obvious
evidence showing the fair value of assets exchanged in is more reliable; for non-monetary assets exchange not
qualifying for the preceding conditions, the carrying value of assets exchanged out and related taxes payable shall
be viewed as the cost of intangible assets exchanged in, without recognition of gains and losses.


Intangible assets obtained by means of enterprise mergered under common control, recognized book-keeping


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value by the book value of mergered party; Intangible assets obtained by means of enterprise mergered under
different control, recognized book-keeping value by the its fair value.


For those cost of intangible assets development internally including: the used materials, labor cost and register
charge for development; amortization for other patent and concession used and interest expense satisfying the
capitalization condition during process of development; other directly expense before reached its predated useful
purpose.


2) Subsequent measurement
Analysis and determined the service life for intangible assts while obtained. And classified into intangible assets
with limited useful life and assets without certain service life


Intangible assets with limited useful life


Those intangible assets with limited useful life are evenly amortized on straight basis from the date when they
become useable to the end of expected useful life. Particular about the estimation on intangible assets with limited
service life:
                     Item                            Predicted useful life                                 Basis
                                     Amortized the actual rest of life after certificate of
Land use right                                                                                  Certificate of land use right
                                                   land use right obtained
Proprietary technology                                     20-year                            Actual situation of the Company
forest tree use right                               Service life arranged                           Protocol agreement
trademark use right                                        10-year                            Actual situation of the Company
software use right                                         5-8-year                                 Protocol agreement
At end of report term, revising will be performed on the useful life of intangible assets with limited useful life and
the methods of amortizing; if there is a differences been found with the original estimated number, corresponding
adjustment shall prevail.


Being revised, the useful life of intangible assets and amortization method at period-end shows the same as
previous


Intangible assets without certained service life
Intangible assets for which it is impossible to predict the term during which the assets can bring in economic
benefits are viewed as intangible assets with indefinite life.


Intangible assets with indefinite life are not amortized during the holding period, and useful life is re-reviewed at
the end of each accounting period. In case that it is still determined as indefinite after such re-review, then
impairment test will be conducted continuously in every accounting period.



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The Company has no such intangible assets without certained service life after review.
(2) Internal accounting policies relating to research and development expenditures
1) Detail standard for classification on research stage and exploitation stage
Research stage: stage of the investigation and research activities exercising innovative-ness for new science or
technology knowledge obtained and understanding.


Exploitation stage: stage of the activities that produced new or material advance materials, devices and products
that by research results or other knowledge adoption in certain plan or design before the commercial production or
usage.


The expenditure of the research stage in R&D project internally shall reckon into current gains and losses while
occurred.


2) Standards for capitalization satisfaction of expenditure in exploitation state
Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time:
A. Owes feasibility in technology and completed the intangible assets for useful or for sale;
B. Owes the intention for completed the intangible assets and for sale purpose;
C. Way of profit generated including: show evidence that the products generated from the intangible assets owes a
market or owes a market for itself; if the intangible assets will use internally, than show evidence of useful-ness;
(4) Possess sufficient technique, financial resources and other resources for the development of kind of intangible
assets and has the ability for used or for sale;
(5) The expenditure attributable to the exploitation stage for intangible assets could be measured reliably.


Expenditure happened in development phase not satisfying the above conditions is included in current period
gains and losses when occurs. Development expenditure previously included in gains and losses in previous
periods will not be re-recognized as assets in later periods. Capitalized development expenditure is stated in
balance sheet as development expenditure, and is transferred to intangible assets when the project is ready for
planned use.


20. Impairment of long term assets

Long term asset is judged whether for which there is indication of impairment on balance sheet date. If there is
indication of impairment, the Company would estimate its recoverable amount based on single asset; if it is
difficult to estimate the recoverable amount of single asset, then the assets group which the single asset belongs to
is based to determine the recoverable amount of the assets group.


Recoverable amount of an asset is determined at the higher of its fair value less disposal fee and present value of
its predicted future cash flow.



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If measurement of recoverable amount shows that the recoverable amount of long term asset is lower than
carrying value, and then the carrying value shall be deducted to recoverable amount, with the deducted amount
recognized as impairment loss which is included in current period gains and losses, meanwhile, asset impairment
provision shall be made accordingly. Once recognized, asset impairment loss would not be reversed in future
accounting period.


Once an asset is recognized for impairment loss, its depreciation or amortization expense would be adjusted in
future periods, so as to systematically allocate the adjusted asset carrying value (after deduction of predicted net
residual value) during the remaining useful life.


Goodwill arising from business combination and intangible assets with indefinite useful life shall be tested
annually for impairment whether or not there is indication of impairment.


When goodwill impairment testing comes, book value of goodwill is allocated to asset group or combination
benefit from the synergies of the business combination. When conducting impairment test for relevant asset group
with inclusion of goodwill, in case that there is indication of impairment for such asset group, impairment test
would be firstly conducted in respect of the asset groups without inclusion of goodwill. Then, it shall calculate the
recoverable amount and determine the corresponding impairment loss as compared to its carrying value. Second,
asset group with inclusion of goodwill would be tested for impairment. If it is found after comparison between the
carrying value and recoverable amount of the asset group that the recoverable amount is less than carrying value,
the Company would recognize impairment loss for goodwill.


21. Long term prepaid expense

Amortization method
Long term prepaid expense represents the expense which the Company has occurred and shall be amortized in the
current and later periods with amortization period exceeding one year. Long term prepaid expense is amortized
during the beneficial period under straight line method.


22. Staff remuneration

(1) Short term remuneration
Employee remuneration refers to the various forms of remuneration or compensation given by the Company to
obtain the services provided by the employees or to terminate the labor relations. Employee remuneration includes
short-term remuneration, after-service benefits, dismissal benefits and other long-term employee benefits.


Short term remuneration refers to all the staff remuneration payable by the Company to its staff within 12 months
after the end of annual reporting period in which staff provides relevant services, other than post office benefit and
dismissal benefits. The Company recognizes short term remuneration payables as liabilities during the accounting


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period during which staff provides services, and includes in cost and expense of relevant asset according to the
beneficial parties of such services.
(2) Post office benefits
Post office benefits refer to kinds of remuneration or benefits granted by the Company to staff for their provision
of service upon retirement or release of employment, other than short term remuneration and dismissal benefits.


Post benefit plan is categorized as defined withdraw plan.


Defined withdraw plan under post office benefit mainly represents participation into social basic pension
insurance and unemployment insurance operated by labor and social security authorities. During the accounting
period when employee provides services for the Company, the contribution calculated under defined withdraw
plan would be recognized as liabilities and included in current gains and losses or relevant asset cost.


Other than periodic payment of the aforesaid amounts in compliance with national standards, the Company is not
obliged to make other payment.
(3) Dismissal benefit
Dismissal benefit represents compensation paid to employees for release of employment before expiration or as
compensation for their willing of cut, Liabilities arising from dismiss benefit shall be included in current profit
and loss when the company cannot unilaterally withdraw from the termination plan or take redundancy offer and
when reorganize the payment of termination benefits related to the cost.
(4) Other long term staff benefits
Other long term staff benefits refers to all the other staff benefits except for short term remuneration, post office
benefit and dismissal benefit.


For other long term staff benefits satisfying conditions under defined withdraw plan, the contribution payables
shall be recognized as liabilities and included in current gains and losses or relevant asset cost during the
accounting period in which the staff provides services to the Company.


23. Accrual liability

1. Recognition standards for accrual liability
Responsibilities connected to contingent issues and satisfied all of the following conditions are recognized as
accrual liabilities:
The responsibility is a current responsibility undertaken by the Company;
Fulfilling of the responsibility may lead to financial benefit outflow;
The responsibility can be measured reliably for its value.


2. Measurement



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Accrual liabilities shall conduct initial measurement by best estimation of expenditures needed by fulfillment of
current responsibilities.


While determined the best estimation, take the risks, uncertainty and periodic value of currency that connected to
the contingent issues into consideration. For major influence from periodic value of currency, determined best
estimation after discount on future relevant cash out-flow.


Treatment for best estimation:
If the expenditure has a continuous range, and with similar possibility within the range, the best estimation should
determined by the middle value within the range, that is the average amount between the up and low limit.


If the expenditure has no continuous range, or has a continuous range but with different possibility within the
range, the possibility amount shall determined as the best estimation while single events involved by contingency;
if many events were involved by contingency, the best estimation shall be determined by various results and
relevant probability.


If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and the
compensated amount can be definitely received, it is recognized separated as asset. Though the compensated
amount shall not greater than the book value of the predictive liability


24. Revenue

Whether the company needs to comply with the disclosure requirements of the particular industry
No

(1) Recognition of the income from commodity sales
When main risks and rewards attached to the ownership of goods have been transferred to the buyer, reserved
neither continuous management power nor effective control over the goods, incoming payment can be measured
reliably, relative financial benefit possibly inflow to the company, cost occurred or will occur can be reliably
measured, sales income of goods is recognized.


As for main sales in the Company, according to the arrival of acceptance period agreed in the contract, income
shall be recognized after the period expired


(2) Basis on use right income for transaction assets
Financial benefit attached to the contract is possibly inflow to the company; Overall income of the contract can be
measured reliably. Determined the use right income for transaction assts respectively as followed:
1) Amount of interest income: determined by the time and effective interest rate of the currency capital used by
other people.



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2) Amount of income from use: determined by the charge time and calculation method agreed in the relevant
contract or agreement.


25. Government Grants

(1) Determination basis and accounting for government grants related to assets
1) Type
Governments grants of the Company refer to the monetary and non-monetary assets obtained from government
for free, and are divided into those related to assets and others related to revenues.


Government subsidies related to assets refer to those obtained by the Company and used for purchase or
construction of or otherwise to form long-term assets. Government subsidies related to revenue refer to those other
than government subsidies related to assets.


2) Recognition of government subsidies
At end of the period, if there is evidence show that the Company qualified relevant condition of fiscal supporting
polices and such supporting funds are predicted to obtained, than recognized the amount receivable as government
subsidy. After that, government subsidy shall recognize while actually received.


Government subsidies in the form of monetary assets are stated at the amount received or receivable. Government
subsidies in the form of non-monetary assets are measured at fair value; if fair value cannot be obtained, a
nominal amount (RMB1) is used. Government subsidies measured at nominal amount is recognized immediately
in profit or loss for the current period.


3) Accounting method
A. The government subsidy related to the assets should offset against the book value
of underlying assets or be confirmed as deferred income. When the government subsidy related to the assets is
confirmed as deferred income, it should be included in the profits and losses by stages within the service life of
underlying assets by reasonable and systematic methods. The government subsidy measured by nominal amount
should be directly included in the current profits and losses.
If the underlying assets are sold, transferred, scrapped or destroyed before the end of the service life, the balance
of relevant deferred income that has not been allocated should be transferred to the current profits and losses of
assets disposal.
The government subsidy related to the daily activities of the enterprise should be included in other income or
offset the relevant costs in accordance with the essence of economic business.
B. The finance directly appropriates the interest subsidy funds to the enterprises, and the enterprises should offset
the related borrowing costs with the corresponding interest subsidy.
C. If the government subsidy that has been confirmed needs to be returned, the accounting treatment should be
carried out according to below provisions in the current period in need of return:

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     a. For those to offset the book value of underlying assets in the initial recognition, adjust the book value of
the assets.
     b. For those having related deferred income, offset the book value of relevant deferred income, and include
the excess in the current profits and losses;
     c. Other circumstances should be directly included in the current profits and losses.
    (2) The judgment basis and accounting treatment method of income-related governmental subsidy
The income-related government subsidy should handle accounting treatment in accordance with the following
provisions:
1) Those that are used to compensate the relevant costs or losses of the enterprise in the subsequent period are
recognized as deferred income and included in the current profits or losses or offset the relevant costs in the
period of confirming the relevant costs or losses;
2) Those that are used to compensate the occurred relevant costs or losses of the enterprise are directly included in
the current profits and losses or offset the relevant costs.
For government subsidies that contain both asset-related parts and income-related parts are necessary to
distinguish the different parts and handle the accounting treatment separately; those being difficult to be
distinguished should be classified as the income-related government subsidies as a whole.


26. Deferred income tax assets and deferred income tax liabilities

Deferred income tax assets and liabilities are measured and recognized based on the difference (temporary
difference) between the taxation bases of the assets and liabilities and their carrying value. As of the balance sheet
date, deferred income tax assets and liabilities are measured at the tax rate applicable during the period in which
the assets are recovered or liabilities are settled.


(1) Reference for recognition of deferred income tax assets
Deferred income tax asset arising from deductible temporary difference is recognized to the extent of assessable
income which is likely to acquire to offset deductible temporary difference and for which deductible losses and
tax credit for subsequent years can be carried forward. However, deferred income tax assets arising from initial
measurement of assets or liabilities in transactions with the following characteristics would not be recognized:
(1)the transaction is not business combination; (2)occurrence of the transaction would neither affect accounting
profit nor affect assessable income or deductible loss.


For deductible temporary difference relating to investment in associates, the Company would recognize deferred
income tax assets accordingly if the following conditions are met: temporary difference is likely to be reversed in
foreseeable future and it is likely to acquire assessable income against which deductible temporary difference is
utilized.


(2) Basis for determination of deferred income tax liabilities



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Assessable temporary difference which should be paid while not paid yet for the current and previous periods is
recognized as deferred income tax liabilities, excluding:
1) Temporary difference arising from initial measurement of goodwill;
2) Transaction or issue arising from non business combination, and its occurrence would neither affect accounting
profit, nor affect temporary difference arising from assessable income (or deductible loss);
3) For assessable temporary difference relating to investments in subsidiary or associate, timing for reversal of the
temporary difference can be controlled and it is likely that the difference would not be reversed in foreseeable
future.


(3) Deferred tax assets and liabilities are offset if all the following conditions are met.
1) An enterprise has the legal rights to settle the income tax assets and income tax liabilities for the current period
by net amount;


2) They relate to income taxes levied by the same tax authority on either the taxable entity has a legally
enforceable right or set off current income tax assets against current income tax liabilities, and different taxable
entities which either intend to settle the current income tax liabilities and assets on a net basis, or to realize the
assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax
liabilities or assets are expected to be settled or recovered.


27. Lease


(1) Accounting for operating lease
Accounting for operating lease
1) The rental fee paid for renting the properties by the company are amortized by the straight-line method and
reckoned in the current expenses throughout the lease term without deducting rent-free period. The initial direct
costs related to the lease transactions paid by the company are reckoned in the current expenses.


When the lessor undertakes the expenses related to the lease that should be undertaken by the company, the
company shall deduct the expenses from the total rental costs, share by the deducted rental costs during the lease
term, and reckon in the current expenses.


2) Rental obtained from assets leasing, during the whole leasing period without rent-free period excluded, shall be
amortized by straight-line method and recognized as leasing revenue. The initial direct costs paid with leasing
transaction concerned are reckoned into current expenditure; the amount is larger is capitalized when incurred,
and accounted for as profit or loss for the current period on the same basis as recognition of rental income over the
entire lease period.


When the company undertakes the expenses related to the lease that should be undertaken by the lessor, the


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company shall deduct the expenses from the total rental income, and distribute by the deducted rental costs during
the lease term.
2) Accounting for financing lease
Accounting for financing lease
1) Assets lease-in by financing: On the beginning date of the lease, the entry value of leased asset shall be at the
lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date
of the lease. Minimum lease payment shall be the entry value of long-term accounts payable, with difference
recognized as unrecognized financing expenses. The Company had no financing lease.


Unrecognized financing expenses shall be reckoned in financial expenses and amortized and using effective
interest method during the leasing period.


2) Finance leased assets: on the lease commencement date, the company affirms the balance among the finance
lease receivables, the sum of unguaranteed residual value and its present value as the unrealized financing income,
and recognizes it as the rental income during the period of receiving the rent. For the initial direct costs related to
the rental transaction, the company reckons in the initial measurement of the finance lease receivables, and
reduces the amount of income confirmed in the lease term.


28. Changes of important accounting policy and estimation


(1) Changes of major accounting policies


√ Applicable □ Not applicable
           Content and reasons                      Approval procedure                               Note

      In accordance with the revised
                                                                                    Impact on financial statement: interest
   “Accounting Standards for Business
                                                                                     expenditure from financial expenses
 Enterprise No.16- Government subsidy”                      th          th
                                            Approved by the 11 session of 9 BOD         reduced 383,100.00 Yuan, and
  (Cai Kuai [2017] No.15), the financial
                                                                                  non-operating revenue reduced 383,100.00
 expenses will reduced by discount loans,
                                                                                                    Yuan.
and excluded in the non-operating revenue
The Ministry of Finance promulgated the Accounting Standards for Business Enterprises No. 16 - Government
Subsidies in 2017 which took effect from June 12, 2017. The Company handled the governmental subsidies
existed before January 1, 2017 by adopting prospective application, and adjusted the newly increased
governmental subsidies from January 1, 2017 to the implementation date of this Standard by this Standard.




(2) Changes of important accounting estimate


□ Applicable √ Not applicable


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VI. Taxes

1. Type of tax and rate for main applicable tax

                      Taxes                                     Basis                                     Rate

                                               Service income from goods sales and
 VAT                                                                                    17%, 11%, 6%, 5%, 3%
                                               taxable sales

 Urban maintenance and construction tax        Turnover tax payable                     5%, 7%

 Corporate income tax                          Taxable income                           25%

 Educational surtax                            Turnover tax payable                     5%



Rate of income tax for different taxpaying body:
                              Taxpaying body                                             Rate of income tax

 The Company                                                          25%

 Shenbao Huacheng                                                     25%

 Including: Shantou Branch of Shenbao Huacheng                        25%

 Wuyuan Jufangyong                                                    25%

 Shenbao Sanjing                                                      25%

 Huizhou Shenbao Technologies                                         25%

 Huizhou Shenbao Food                                                 25%

 Shenbao Properties                                                   25%

 Shenbao Industrial Trading & Developmen                              25%

 Hangzhou Jufangyong                                                  25%

 Shenbao Yuxing                                                       25%

 Shenbao Technology Center                                            25%

 Fuhaitang Tea Ecology                                                25%

 Chunshi Network                                                      25%

 Shenshenbao Investment                                               25%

 Shenshenbao Tea Culture                                              25%

 Yunnan Supply Chain                                                  25%

 Jufangyong Trading                                                   25%

 Shenbao Rock Tea                                                     25%

 Pu’er Tea Exchange Center                                           25%


2. Tax preferential and basis

Wuyuan Jufangyong, a wholly-owned subsidiary of the Company, has been granted High-tech Enterprise

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Certification (No. GF201436000182) jointly promulgated by Jiangxi Provincial Department of Science &
Technology, Shenzhen Finance Committee, Finance Bureau of Jiangxi Province, Jiangxi Municipal Bureau of
State Taxation and Local Taxation as at the date of 8 October 2014 with a valid term of 3 years. With relevant
preferential policies adopted by the State in favor of high-tech enterprises, all qualified high-tech enterprises are
able to enjoy the lower income tax rate of 15% for collection of enterprise income tax, capable for 3 years
commencing from the year when they are deemed as qualified. Wuyuan Jufangyong has favored from this
preferential policy from 2014 to 2016. Currently, Wuyuan Ju Fang Yong still in the process of identification of
high-tech enterprise.


VII. Annotation to main items of consolidated financial statements


1. Monetary fund

                                                                                                                                  In RMB

                    Item                                       Closing balance                            Opening balance
                                                                                  268,174.40                                   207,519.80
 Cash on hand
                                                                             205,219,698.39                              358,356,723.03
 Cash in bank
                                                                             205,487,872.79                              358,564,242.83
 Total
Other note: Nil

2. Financial assets measured by fair value and with the variation recorded into current gains/losses

                                                                                                                                  In RMB

                    Item                                       Closing balance                            Opening balance

 Tradable financial assets                                                       2,260,176.36                               3,250,938.60

    Equity investment                                                            2,260,176.36                               3,250,938.60

 Total                                                                           2,260,176.36                               3,250,938.60

Other explanation: Closing balance refers to the 258,011 shares of A-stock under the name of “CBC-A”

3. Account receivable

(1) Account receivable classified according to types

                                                                                                                                  In RMB

                                             Closing balance                                         Opening balance
                             Book balance       Bad debt provision                  Book balance       Bad debt provision
         Type                                                           Book
                                                           Accrual                                               Accrual       Book value
                        Amount       Ratio      Amount                  value     Amount    Ratio     Amount
                                                            Ratio                                                 Ratio
 Account receivable 72,932,9                    890,273.               72,042,63 63,476,             893,812.5                 62,582,867.
 withdrawal bad debt                 78.34%                    1.22%                        75.89%                     1.41%
 provision by group of 05.57                          13                    2.44 680.17                      4                         63


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 credit          risk
 characteristics
 Account receivable
 with single minor
 amount           but 20,164,6                  20,164,6                       20,164,             20,164,69
                                      21.66%               100.00%                        24.11%                 100.00%
 withdrawal bad debt     93.05                    93.05                         693.05                  3.05
 provision for single
 item
                          93,097,5              21,054,9             72,042,63 83,641,             21,058,50                62,582,867.
         Total                        100.00%               22.62%                       100.00%                   25.18%
                              98.62               66.18                   2.44 373.22                   5.59                         63

Account receivable with single significant amount and withdrawal bad debt provision separately at period end:
□Applicable √ Not applicable
Account receivable with bad debt provision withdrawal by age analysis in group:
√ Applicable □ Not applicable
                                                                                                                                 In RMB
                                                                             Closing balance
                 Age
                                          Account receivable                 Bad debt reserve                    Accrual ratio
 Subitem of within one year

 Within 1 year                                       63,901,750.67

 1-2 years                                            2,815,421.80                        140,771.09                              5.00%

 2-3 years                                            3,657,158.32                        365,715.82                             10.00%

 Over 3 years                                         2,558,574.78                        383,786.22                             15.00%

 3-4years                                                  132,860.76                      19,929.12                             15.00%

 4-5 years                                                 182,003.85                      27,300.58                             15.00%

 5years above                                         2,243,710.17                        336,556.52                             15.00%

 Total                                               72,932,905.57                        890,273.13                              1.22%
Explanation on combination determines: Nil
In combination, withdrawal proportion of bad debt provision based on balance proportion for account receivable
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for account receivable:
Nil


(2) Bad debt provision accrual collected or switch back

Bad debt provision accrual of RMB 0; collected or switch back bad debt provision of RMB 3,539.41.
Major bad debt provision collected or switch back:
                                                                                                                                 In RMB

                       Name                                      Amount                                        Method

 N/A

 Total




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(3) Account receivable actual charge off in the Period

                                                                                                                                 In RMB

                                Item                                                          Amount written off

Written-off for the major receivable:
                                                                                                                                 In RMB

                                                                                                                    Whether the money
                         Nature of accounts                                                   Performance written      is generated by
         Name                                    Amount written off     Reason written off
                             receivable                                                          off procedure          related party
                                                                                                                        transactions

Written-off for the receivable: Nil

(4) Top 5 receivables at ending balance by arrears party

                                                                                     Proportion in total
                    Name                                  Closing balance          receivables at closing    Bad debt provision accrual
                                                                                        balance (%)
Customer 1                                                          5,824,108.00                      6.26                               ---
Customer 2                                                          5,404,196.60                      5.80                               ---
Customer 3                                                          5,163,160.00                      5.55                               ---
Customer 4                                                          4,166,420.22                      4.48                               ---
Customer 5                                                          3,454,727.20                      3.70                               ---
                    Total                                          24,012,612.02                    25.79                                ---


(5) Account receivable derecognition due to financial assets transfer

Nil

(6) Assets and liabilities resulted by account receivable transfer and continues involvement

Nil
Other note: Nil

4. Account paid in advance

(1) Aging analysis

                                                                                                                                 In RMB
                                                 Closing balance                                      Opening balance
             Age
                                        Amount                      Ratio                    Amount                      Ratio

 Within 1 year                            13,117,213.53                     91.87%               5,357,620.52                    84.75%

 1-2years                                  1,038,065.38                     7.27%                  826,840.85                    13.08%




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 2-3years                                      17,182.51                         0.12%                      31,530.94                       0.50%

 Over 3 years                                 105,946.75                         0.74%                    105,835.33                        1.67%

             Total                      14,278,408.17                   --                              6,321,827.64               --

Reasons for significant repayment with over one year age without settle: Nil

(2) Top 5 accounts paid in advance at closing balance collected by objects

                                                                                                                                           In RMB
                                                                                                          Ratio in total account paid in advance
                     Name                                           Closing amount
                                                                                                                            (%)
Supplier 1                                                                               4,689,624.09                                         32.84
Supplier 2                                                                               1,446,776.95                                         10.13
Supplier 3                                                                               1,120,512.82                                          7.85
Supplier 4                                                                                860,160.00                                           6.02
Supplier 5                                                                                767,728.37                                           5.37
                     Total                                                               8,884,802.23                                         62.21
Other note: Nil

5. Other account receivable

(1) Other account receivable classified according to types

                                                                                                                                           In RMB

                                              Closing balance                                               Opening balance
                             Book balance        Bad debt provision                      Book balance         Bad debt provision
         Type                                                                Book
                                                            Accrual                                                      Accrual        Book value
                        Amount        Ratio      Amount                      value     Amount     Ratio      Amount
                                                                ratio                                                      ratio
 Other          account
 receivable        with
 single major amount 19,745,3                    8,839,24               10,906,13 19,540,                   8,634,484                   10,906,134.
                                     37.10%                  44.77%                              39.73%                     44.19%
 and withdrawal bad      82.18                       7.89                       4.29 618.68                        .39                          29
 debt provision for
 single item
 Other          account
 receivable
 withdrawal bad debt 15,904,1                    318,478.               15,585,64 12,066,                   329,042.6                   11,737,315.
                                     29.88%                     2.00%                            24.53%                       2.73%
 provision by group of   26.04                         43                       7.61 358.31                          6                          65
 credit             risk
 characteristics
 Other          account
 receivable        with
 single minor amount 17,577,7                    17,577,7                              17,577,              17,577,79
                                     33.02%                 100.00%                              35.74%                   100.00%
 but withdrawal bad      95.82                      95.82                               795.82                    5.82
 debt provision for
 single item
                        53,227,3                 26,735,5               26,491,78 49,184,                   26,541,32                   22,643,449.
         Total                       100.00%                 50.23%                              100.00%                    53.96%
                             04.04                  22.14                       1.90 772.81                       2.87                          94

Other receivable with single significant amount and withdrawal bad debt provision separately at end of period:
√ Applicable □ Not applicable

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                                                                                                                                 In RMB
          Account                                                        Closing balance
      receivable(units)       Account receivable         Bad debt reserve             Accrual ratio                    Reasons
 Changzhou Shenbao                                                                                           Estimated recoverable
 Chacang E-commence                  19,745,382.18                  8,839,247.89                      44.77% amount is lower than the
 Co., Ltd.                                                                                                   book balance

 Total                               19,745,382.18                  8,839,247.89              --                         --

Other receivable with bad debt provision withdrawal by age analysis in group:
√ Applicable □ Not applicable
                                                                                                                                 In RMB
                                                                            Closing balance
                 Age
                                    Other accounts receivable             Bad debt provision                    Accrual ratio

 Subitem of within one year

 Within 1 year                                     12,869,383.83                                   0.00

 1-2 years                                           1,273,075.20                           63,653.76                             5.00%

 2-3 years                                            188,507.50                            18,850.75                            10.00%

 Over 3 years                                        1,573,159.51                          235,973.92                            15.00%

 3-4 years                                            748,187.20                           112,228.08                            15.00%

 4-5 years                                            209,434.84                            31,415.22                            15.00%

 5 years above                                        615,537.47                            92,330.62                            15.00%

 Total                                             15,904,126.04                           318,478.43                             2.00%
Explanations on combination determine:
Nil
In combination, withdrawal proportion of bad debt provision based on balance proportion for other account
receivable:
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for other account receivable:
□ Applicable √ Not applicable


(2) Bad debt provision accrual collected or switch back

Bad debt provision accrual was 204,763.50 Yuan; the amount collected or switches back amounting to 10,564.23
Yuan.
Major bad debt provision collected or switch back:
                                                                                                                                 In RMB

                       Name                                  Amount                                           Method

Nil




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(3) Other receivables actually written-off during the reporting period

                                                                                                                                In RMB

                                  Name                                                             Amount

Other major receivables actually written-off: Nil
                                                                                                                                In RMB

                                                                                                                    Whether the money
                              Nature of other                                                 Performance write      is generated by
         Unit name                              Write off amount      Write off reason
                               receivables                                                      off procedure          related party
                                                                                                                       transactions

Other note: Nil

(4) Nature classification for other receivables

                                                                                                                                In RMB

                       Item                             Closing book balance                          Opening book balance

 Margin and deposit                                                         4,227,675.52                                  3,683,788.00

 VAT rebates receivables                                                        296,913.30                                  454,807.35

 Intercourse funds and other                                              48,702,715.22                                  45,046,177.46

                     Total                                                53,227,304.04                                  49,184,772.81


(5) Top five units in other account receivable at closing balance

                                                                                                                                In RMB
                                                                                              Ratio in total other
                                                                                                                   Bad debt provision
          Name                Amount nature     Closing balance             Age              account receivable at
                                                                                                                    Closing balance
                                                                                                closing balance
 Changzhou Shenbao
 Chacang                 Intercourse funds          19,745,382.18 1-3 years and above                    37.10%           8,839,247.89
 e-commerce Limited

 Shichu Mingmen          Intercourse funds           2,006,499.85 Within 1 year                             3.77%

 Hangzhou      Youyu
 Food Shop in            Pay rent for another        1,600,000.00 Within 1 year                             3.01%
 Shangcheng District

 Hangzhou Xiaoshan
                                                                    Within 1 year and
 International Airport Margin                        1,343,786.53                                           2.52%             13,875.00
                                                                    1-2 years
 Co., Ltd.

 Zhejiang Shishang
 Qitian Culture          Pay rent for another        1,000,000.00 Within 1 year                             1.88%
 Creativity Co., Ltd.

 Total                              --              25,695,668.56               --                       48.28%           8,853,122.89


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(6) Account receivables related to government subsidies

                                                                                                                                  In RMB

                            Government assistance                                                            Estimated time, amount
         Unit name                                        Closing balance               Closing age
                                 project name                                                                         and basis

Nil

(7) Other receivable for termination of confirmation due to the transfer of financial assets

Nil

(8) The amount of assets and liabilities that are transferred other receivable and continued to be involved

Nil
Other note: Nil

6. Inventory

Whether the company needs to comply with the disclosure requirements of the real estate industry
No

(1) Types

                                                                                                                                  In RMB
                                        Closing balance                                           Opening balance
         Items                           Falling price                                             Falling price
                       Book balance                         Book value       Book balance                               Book value
                                           reserves                                                  reserves

 Raw materials          71,829,063.76      3,869,665.51     67,959,398.25      65,391,782.65           3,869,665.51      61,522,117.14

 Goods in process       33,280,358.26        328,209.99     32,952,148.27      28,856,613.35            328,209.99       28,528,403.36

 Finished goods         34,390,824.94      1,328,404.27     33,062,420.67      40,266,937.30           1,774,575.14      38,492,362.16

 Goods in transit       10,260,276.65                       10,260,276.65          6,509,501.82                           6,509,501.82

 Materials processed
                         5,384,608.18      5,290,502.32         94,105.86          5,341,566.56        5,290,502.32          51,064.24
 on commission

 Wrappage                5,796,783.35        649,825.76      5,146,957.59          6,497,436.43         649,825.76        5,847,610.67

 Total                 160,941,915.14     11,466,607.85    149,475,307.29    152,863,838.11           11,912,778.72    140,951,059.39

Does the Company comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange
No.4 – Listed Companies Engaged in Seed Industry and Planting Business” or not
No


(2) Inventory falling price reserves

                                                                                                                                  In RMB


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                                                             Current amount increased    Current amount decreased
                                                Opening
                     Type                                                                Switch back/                   Closing balance
                                                balance      Accrual           Other                         Other
                                                                                          Written off

               Raw materials                3,869,665.51                                                                     3,869,665.51

              Goods in process                  328,209.99                                                                    328,209.99

              Finished goods                1,774,575.14                                      446,170.87                     1,328,404.27

         Work in process-outsourced         5,290,502.32                                                                     5,290,502.32

                 Wrappage                       649,825.76                                                                    649,825.76

                     Total                 11,912,778.72                                      446,170.87                  11,466,607.85


(3) Explanation on inventories with capitalization of borrowing costs included at ending balance

Nil

(4) Assets unsettled formed by construction contract which has completed at period-end

                                                                                                                                 In RMB

                                  Item                                                             Amount

Other note: Nil

7. Other current assets

                                                                                                                                 In RMB

                       Item                                  Closing balance                               Opening balance

 VAT input tax ready for deduction                                             1,856,403.28                                  1,949,954.58

 Financial products held to maturity within
                                                                            90,000,000.00                                    9,350,000.00
 one year

 Total                                                                      91,856,403.28                                 11,299,954.58

Other note: Nil

8. Financial assets available for sale

(1) Financial assets available for sale

                                                                                                                                 In RMB

                                                Closing balance                                     Opening balance
              Item
                                                 Depreciation                      Depreciation                          Depreciation
                                 Book balance                     Book balance                       Book balance
                                                   reserves                          reserves                              reserves
 Instrument equity
                                 17,537,500.00 17,480,000.00           57,500.00   17,537,500.00        17,480,000.00          57,500.00
 available for sale:



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      Measured by cost            17,537,500.00 17,480,000.00               57,500.00     17,537,500.00      17,480,000.00                57,500.00

 Total                            17,537,500.00 17,480,000.00               57,500.00     17,537,500.00      17,480,000.00                57,500.00


(2) Financial assets available for sale measured by fair value at period-end

                                                                                                                                             In RMB

                                   Instrument equity         Instrument debt available
              Type                                                                                                                Total
                                    available for sale                  for sale

Nil

(3) Financial assets available for sale measured by cost at period-end

                                                                                                                                             In RMB
                                  Book balance                                      Depreciation reserves                 Ratio of
                                                                                                                         share-holdi      Current
  Investee
                Opening         Current   Current         Closing      Opening       Current   Current       Closing       ng in             cash
       unit
                balance        increased decreased        balance      balance      increased decreased      balance      invested        dividend
                                                                                                                           entity
 Shenzhen
 Sanjiu     2,480,000.                                   2,480,000. 2,480,000.                              2,480,000.
 Weitai                                                                                                                      0.95%
 Capsules           00                                          00             00                                  00
 Co., Ltd.
 Shenzhen
 Tianji
 Photoelect
 ric        15,000,000                                   15,000,000 15,000,000                              15,000,000
 Technolog                                                                                                                   3.77%
 y                 .00                                          .00           .00                                  .00
 Industrial
 Co., Ltd.
 *1
 Beijing
 Tiantan
             57,500.00                                    57,500.00
 Co., Ltd.
 *2
               17,537,500                                17,537,500 17,480,000                              17,480,000
 Total                                                                                                                       --
                         .00                                    .00           .00                                  .00


(4) Change of financial assets depreciation for sale during reporting period

                                                                                                                                             In RMB
                                     Instrument equity                Instrument debt
              Type                                                                                                                   Total
                                     available for sale             available for sale
Balance of impairment
                                             17,480,000.00                                                                           17,480,000.00
accrual at period-begin
Balance of impairment
                                             17,480,000.00                                                                           17,480,000.00
accrual at period-end



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(5) Fair value of the available-for-sale equity instrument drops significantly or not contemporarily without
depreciation reserves accrued

                                                                                                                                   In RMB

                                                            Decline range of
 Equity instrume                                                                    Times continued
                                                                  fair value                          Amount accrual        Rasons for
     nts project       Investment cost Ending fair value                              to declined
                                                           compare with the                           for impairment       un-accurla l
 available for sale                                                                    (Monthe)
                                                                    cost

Other note: Nil

9. Long-term equity investment

                                                                                                                                   In RMB
                                                            -,+ in the Period
                                                                                                                                   Ending
                                                            Other                      Cash
                                              Investme                                                                            balance
             Opening Additiona                            comprehe                   dividend                          Closing
  Investee                                    nt gains                     Other                                                     of
               book          l      Capital                 nsive                    or profit Impairme                 book
     unit                                     recognize                    equity                          Other                  impairme
              balance investmen reduction                  income                    announce nt accrual               balance
                                              d under                    change                                                      nt
                             t                            adjustmen                    d to
                                               equity                                                                             provision
                                                              t                       issued
 I. Joint venture
 II. Associated enterprise
 Shenzhen
 Shenbao
 (Xinmin) 2,870,000                                                                                                2,870,000 2,870,000
 Foods                .00                                                                                                   .00           .00
 Co.,
 Ltd*1
 Changzho
 u
 Shenbao
 Chacang            0.00                                                                                                   0.00
 E-comme
 nce Co.,
 Ltd *2
 Shenzhen
 Shenbao
 (Liaoyuan
 )          57,628.53                                                                                              57,628.53 57,628.53
 Industrial
 Co.,
 Ltd.*1
 Shenzhen
 Shenbao
 Ma Nan 1,057,570                                                                                                  1,055,583
                                              -1,986.37
 Bio-techn        .23                                                                                                       .86
 ology
 Co., Ltd.


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 Shichu
 Mingmen          0.00                                                                                       0.00
 *3

 Guangzho
 u
 Shenbao     4,808,911                      -157,257.                                                   4,651,653
 Mendao            .40                             67                                                         .73
 Tea Co.,
 Ltd.

             8,794,110                      -159,244.                                                   8,634,866 2,927,628
 Subtotal
                   .16                             04                                                         .12       .53

             8,794,110                      -159,244.                                                   8,634,866 2,927,628
 Total
                   .16                             04                                                         .12       .53
Other explanation
        * 1: The two companies have established for a long time but have been revoked business license now, and
have been made provision for impairment in full due to not being liquidated.
        * 2: Check and calculate the long-term equity investment of Shenzhen Co., Ltd. by the equity method, due to
the serious losses of Changzhou Shenbao Tea Warehousing E-commerce Co., Ltd., the book balance of its
long-term equity investment is zero.
        * 3: Check and calculate the long-term equity investment of Shenzhen Shichumingmen Restaurant
Management Co., Ltd. by the equity method, due to the serious losses of Shenzhen Shichumingmen Restaurant
Management Co., Ltd., the book balance of its long-term equity investment is zero.


10. Investment real estate

(1) Investment real estate measured at cost

√ Applicable □ Not applicable

                                                                                                                     In RMB

             Item             House and building        Land use right        Construction in process        Total
 I. Total original book
 value
 1. Opening balance                 19,834,643.51                                                            19,834,643.51
 2. Current amount
 increased
 (1) Purchase
 (2) Stock\fixed assets
 \Transfer-in         from
 construction in process
 (3)     Increased       by
 combination


 3. Current amount
 decreased


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 (1) Disposal

 (2) Other transfer-out



 4. Closing balance                19,834,643.51                                          19,834,643.51
 II. accumulated
 depreciation and
 accumulated
 amortization
 1. Opening balance                     961,778.15                                          961,778.15
 2. Current amount
                                         235,795.16                                          235,795.16
 increased
 (1)      Accrual   or
                                         235,795.16                                          235,795.16
 amortization


 3. Current amount
 decreased
 (1) Disposal

 (2) Other transfer-out



 4. Closing balance                    1,197,573.31                                        1,197,573.31

 III. impairment provision

 1. Opening balance
 2. Current amount
 increased
 (1) Accrual



 3. Current amount
 decreased
 (1) Disposal

 (2) Other transfer-out



 4. Closing balance

 IV. Book value Total

 1. Ending book value               18,637,070.20                                          18,637,070.20

 2.Openingbook value                18,872,865.36                                          18,872,865.36


(2) Investment real estate measured by fair value

□ Applicable       √ Not applicable

(3) Certificate of title un-completed

                                                                                                In RMB


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                      Item                              Book value                               Reasons
Other note: Nil

11. Fixed assets

(1) Fixed assets

                                                                                                                     In RMB
                                               Machinery        Transportation
         Item             House & buildings                                         Other equipment          Total
                                               equipment           facilities
 I. Total original book
 value
 1. Opening balance           256,205,988.92   233,505,726.87        7,402,854.55       15,961,444.60      513,076,014.94
 2. Current amount
                                   48,653.88     1,126,959.08           91,948.71         291,479.22         1,559,040.89
 increased
 (1) Purchase                      48,653.88     1,126,959.08           91,948.71         291,479.22         1,559,040.89
 (2) Transfer-in from
 construction       in
 process
 (3) Increased by
 combination


 3. Current amount
                                                                       378,430.00         218,644.10          597,074.10
 decreased
 (1) Disposal or scrap                                                 378,430.00         218,644.10          597,074.10



 4. Closing balance           256,254,642.80   234,632,685.95        7,116,373.26       16,034,279.72      514,037,981.73
 II. accumulated
 depreciation
 1. Opening balance            29,168,595.82   133,139,998.42        4,372,504.62        7,736,906.67      174,418,005.53
 2. Current amount
                                3,878,822.46     5,792,745.41          298,217.57         755,419.02        10,725,204.46
 increased
 (1) Accrual                    3,878,822.46     5,792,745.41          298,217.57         755,419.02        10,725,204.46


 3. Current amount
                                                                       347,724.13         195,038.98           542,763.11
 decreased
 (1) Disposal or scrap                                                 347,724.13         195,038.98           542,763.11



 4. Closing balance            33,047,418.28   138,932,743.83        4,322,998.06        8,297,286.71      184,600,446.88
 III. impairment
 provision
 1. Opening balance             1,355,290.18     4,288,951.37                                                5,644,241.55
 2. Current amount
 increased
 (1) Accrual


 3. Current amount
 decreased


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 (1) Disposal or scrap



 4. Closing balance             1,355,290.18          4,288,951.37                                                     5,644,241.55

 IV. Book value Total
 1. Ending book
                             221,851,934.34          91,410,990.75         2,793,375.20         7,736,993.01         323,793,293.30
 value
 2.Openingbook
                             225,682,102.92          96,076,777.08         3,030,349.93         8,224,537.93         333,013,767.86
 value


(2) Temporarily idle fixed assets

                                                                                                                              In RMB

                                                Accumulated           Provision for
         Item            Original book value                                                 Book value                Note
                                                 depreciation          impairment

Nil

(3) Fixed assets acquired by financing lease

                                                                                                                              In RMB

                                                            Accumulated
           Item                Original book value                              Provision for impairment         Book value
                                                            depreciation

Nil



(4) Fixed assets acquired by operating lease

                                                                                                                              In RMB

                                Item                                                      Ending book value

Nil

(5) Certificate of title un-completed

                                                                                                                              In RMB

                      Item                                   Book value                                    Reasons

 House and building                                                        1,744,810.75 In progress

Other note: Nil


12. Construction in process

(1) Construction in process

                                                                                                                          In RMB


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                                                Closing balance                                              Opening balance
          Item
                                                 Depreciation                                                  Depreciation
                           Book balance                               Book value        Book balance                                 Book value
                                                   reserves                                                      reserves
 Shenbao         Plaza
                                 3,842,333.64      3,842,333.64                               3,842,333.64        3,842,333.64
 project

 Other                            957,764.08         903,189.74           54,574.34            957,764.08           903,189.74              54,574.34

 Total                           4,800,097.72      4,745,523.38           54,574.34           4,800,097.72        4,745,523.38              54,574.34


(2) Changes of major construction in process

                                                                                                                                              In RMB
                                                                                                                    Includin
                                                                                   Proporti                              g:
                                                                                                        Accumul
                                                   Other            on of                                            amount      Interest
                                                                                       ated
                                        Transfer- decrease Closing project                                               of     capitaliz Capital
                      Opening Current
 Projects      Budget                    in fixed                          Progress capitaliz
                      balance increased
                                          assets d in the balance investme                                          capitaliz ation rate resources
                                                                                    ation of
                                                   Period           nt in                                            ation of in Period
                                                                                     interest
                                                                   budget                                            interest
                                                                                                                    in Period

Nil

(3) The provision for impairment of construction projects

                                                                                                                                              In RMB

                          Item                                    Provision amount                                       Reason

Other note: Nil

13. Productive biological assets

(1) Productive biological assets measured by cost

√ applicable □ not applicable
                                                                                                                                              In RMB
            Item                      Plant               Livestock                Forestry                  Fisheries                Total
                                     Tea tree
 I. Total original book
 value
 1. Opening balance                     436,156.00                                                                                      436,156.00
 2. Current amount
 increased
        (1) Purchase

      (2)self-cultivate




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 3. Current amount
 decreased
 (1) Disposal

 (2) Other



 4. Closing balance          436,156.00                                                         436,156.00
 II. accumulated
 depreciation
 1. Opening balance               9,692.36                                                        9,692.36
 2. Current amount
                                  4,846.18                                                        4,846.18
 increased
 (1) Accrual                      4,846.18                                                        4,846.18


 3. Current amount
 decreased
 (1) Disposal

 (2) Other



 4. Closing balance           14,538.54                                                          14,538.54
 III. impairment
 provision
 1. Opening balance
 2. Current amount
 increased
 (1) Accrual


 3. Current amount
 decreased
 (1) Disposal

 (2) Other



 4. Closing balance

 IV. Book value Total
 1. Ending book
                             421,617.46                                                         421,617.46
 value
 2.Openingbook
                             426,463.64                                                         426,463.64
 value


(2) Productive biological assets measured by fair value

□ Applicable √ Not applicable




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14. Intangible assets

(1) Intangible assets

                                                                                                             In RMB

         Item             Land using right    Patent          Un-patent tech       Other             Total
 I. Total original book
 value
 1. Opening balance         172,549,352.87    46,260,818.89       3,690,648.83    22,871,704.98    245,372,525.57
 2. Current amount
 increased
 Purchase

 (2) internal R&D

 (3) Increased by
 combination


 3. Current amount
 decreased
 (1) Disposal



 4. Closing balance         172,549,352.87    46,260,818.89       3,690,648.83    22,871,704.98    245,372,525.57
 II. accumulated
 depreciation
 1. Opening balance          25,205,877.83    20,292,151.69       1,000,768.43     3,195,374.04     49,694,171.99
 2. Current amount
                               1,752,219.67    1,302,083.56         249,795.74       221,795.07       3,525,894.04
 increased
 (1) Accrual                   1,752,219.67    1,302,083.56         249,795.74       221,795.07       3,525,894.04


 3. Current amount
 decreased
 (1) Disposal



 4. Closing balance          26,958,097.50    21,594,235.25       1,250,564.17      3,417,169.11    53,220,066.03
 III. impairment
 provision
 1. Opening balance
 2. Current amount
 increased
 (1) Accrual


 3. Current amount
 decreased
 (1) Accrual




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 4. Closing balance

 IV. Book value Total
 1. Ending book
                                145,591,255.37         24,666,583.64          2,440,084.66       19,454,535.87       192,152,459.54
 value
 2.Openingbook
                                147,343,475.04         25,968,667.20          2,689,880.40       19,676,330.94       195,678,353.58
 value

Ratio of the intangible assets from internal R&D in balance of intangible assets at period-end was 0.60%.


(2) Land use rights without certificate of ownership

                                                                                                                             In RMB
                                                                                              Reason of not complete the property
                       Item                                     Book value
                                                                                                          certificate
 Forest tenure of Shenbao Rock Tea                                           11,966,959.82               In procedure

Other note: Nil

15. Development expense

                                                                                                                             In RMB
                     Opening                                                                                             Closing
     Item                               Amount of current increase                Amount of current decrease
                     balance                                                                                             balance

Project I                             188,849.68                                                                         188,849.68

Project II                            202,490.87                                                                         202,490.87

Project III                            72,760.75                                                                          72,760.75

Project IV                            132,428.66                                                                         132,428.66

Project V                              92,785.20                                                                          92,785.20

Project VI                            189,651.02                                                                         189,651.02

Project VII                           102,509.15                                                                         102,509.15

Project VIII                          180,679.13                                                                         180,679.13

    Total                           1,162,154.46                                                                        1,162,154.46

Other note: Nil

16. Goodwill

(1) Original book value of goodwill

                                                                                                                             In RMB

    The invested
                       Opening balance           Increase during the year           Decreased during the year      Closing balance
   entity or items

 Yunnan Tea
                               673,940.32                                                                                 673,940.32
 Trading Center


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         Total               673,940.32                                                                                          673,940.32


(2) Goodwill depreciation reserves

                                                                                                                                    In RMB

   The invested
                       Opening balance          Increase during the year                  Decreased during the year        Closing balance
  entity or items

Explain process of impairment test, index and determination: Nil
Other note:
Hangzhou Ju Fang Yong, a subsidiary of the Company, invested and purchased 15.00% equity stake of Pu'er Tea
Exchange held by Yunnan Hengfengxiang Investment Co., Ltd. in May 2016. After the completion of the
purchase, the Company has control right to Pu'er Tea Exchange. The balance between the combined cost and the
fair value of net identifiable assets on consolidated date formed goodwill of RMB 673,940.32.


17. Long-term deferred expense

                                                                                                                                    In RMB
            Item            Opening balance      Current increased       Current amortization      Other decreased        Closing balance

 Decoration charge               6,976,452.89             1,258,048.03           1,641,194.86                                  6,593,306.06
 Affiliated project of
 resident     area     in         699,319.22                                      154,681.60                                    544,637.62
 Jufangyong Wuyuan
 Reform of tea park
                                    22,666.65                                           7,999.99                                  14,666.66
 in Wuyuan
 Reform project of
                                 1,680,033.10              175,000.30             380,122.39                                   1,474,911.01
 warehouse
 Lease of workshop
                                  225,350.00                                      135,210.00                                      90,140.00
 and office building

 Other                           3,708,367.73               24,255.99             477,994.52                                   3,254,629.20
 Total                          13,312,189.59             1,457,304.32           2,797,203.36                                 11,972,290.55

Other note: Nil

18. Deferred income tax assets and deferred income tax liability

(1) Deferred income tax assets without offset

                                                                                                                                    In RMB
                                                Closing balance                                          Opening balance

             Item              Deductible temporary         Deferred income tax           Deductible temporary        Deferred income tax
                                   differences                     assets                     differences                    assets

 Impairment provision for                 19,141,605.62                  4,881,746.94              19,564,737.19               4,830,556.06



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 assets

 Deferred income                           570,769.24                  142,692.31                   570,769.24                   142,692.31

 Total                                  19,712,374.86                5,024,439.25               20,135,506.43                  4,973,248.37


(2) Deferred income tax liability without offset

                                                                                                                                     In RMB

                                               Closing balance                                         Opening balance

               Item             Taxable temporary        Deferred income tax            Taxable temporary          Deferred income tax
                                   differences                 liability                   differences                   liability
 Asset        evaluation
 increment of enterprise
                                         4,293,505.03                1,073,376.26                 4,445,245.52                 1,111,311.38
 combine under different
 control
 Change of fair value for
 the financial assets                    1,179,110.27                  294,777.57                 2,169,872.52                   542,468.13
 available for sale

 Total                                   5,472,615.30                1,368,153.83                 6,615,118.04                 1,653,779.51


(3) Deferred income tax assets and deferred income tax liabilities listed after off-set

                                                                                                                                     In RMB

                                                           Ending balance of          Trade-off between the         Opening balance of
                               Trade-off between the
                                                          deferred income tax          deferred income tax          deferred income tax
               Item             deferred income tax
                                                        assets or liabilities after   assets and liabilities at   assets or liabilities after
                               assets and liabilities
                                                                 off-set                   period-begin                    off-set
 Deferred income tax
                                                                     5,024,439.25                                              4,973,248.37
 assets
 Deferred income tax
                                                                     1,368,153.83                                              1,653,779.51
 liabilities


(4) Details of uncertain deferred income tax assets

                                                                                                                                     In RMB

                        Item                                Closing balance                                 Opening balance

 Deductible temporary differences                                            70,322,131.88                                   70,745,263.45

 Losses deductible                                                           73,822,026.16                                   55,242,461.48

 Total                                                                      144,144,158.04                                  125,987,724.93


(5) Deductible losses of un-recognized deferred income tax assets expired on the followed year

                                                                                                                                     In RMB




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                 Year                    Ending amount                     Opening amount                       Note

Other note: Nil

19. Short-term loans

(1) Short-term loans

                                                                                                                           In RMB

                        Type                             Closing balance                             Opening balance

 Guarantee loan                                                         10,000,000.00                                  5,000,000.00

                        Total                                           10,000,000.00                                  5,000,000.00

Note:

Among the guarantee loan, the 10 million Yuan refers to the loans from Shenzhen Branch of Agricultural Bank of

China under the name of the Company, and with the joint liability guaranty from subsidairy Shenbao Huacheng.


(2) Overdue short-term loans without payment

RMB 0 short-term loans over due without paid at period-end, including follow major amount:
                                                                                                                           In RMB

         Loan unit              Closing balance             Loan rate                Overdue time             Overdue interest

Other note: Nil

20. Account payables

(1) Account payables


                                                                                                                           In RMB
                        Item                             Closing balance                             Opening balance

 Within 1 year                                                          17,415,899.47                                11,401,741.46

 1-2 years                                                                 1,274,417.42                                 619,763.06

 2-3 years                                                                  270,658.16                                   81,285.32

 Over 3 years                                                              3,684,234.74                                3,679,498.45

 Total                                                                  22,645,209.79                                15,782,288.29


(2) Major accounts payable with age over 1 year

                                                                                                                           In RMB

                        Name                             Closing balance                    Reasons of outstanding or carry-over

 Supplier 1                                                                 518,655.52 Uncertain whether need to be paid


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 Supplier 2                                                             515,892.30 Uncertain whether need to be paid

 Total                                                                1,034,547.82                       --

Other note: Nil

21. Account received in advance

(1) Account received in advance

                                                                                                                          In RMB
                      Item                          Closing balance                                Opening balance

 Within 1 year                                                        2,923,378.98                                   1,582,442.08

 1-2 years                                                               22,733.11                                      20,824.77

 2-3 years                                                                 1,175.11                                      1,175.11

 Over 3 years                                                           775,382.17                                     775,382.17

 Total                                                                3,722,669.37                                   2,379,824.13


(2) Important account payable with account age over one year

                                                                                                                          In RMB

                      Item                          Closing balance                                    Reason


(3) Project settled without completed in construction at period-end

                                                                                                                          In RMB

                             Item                                                        Amount

Other note: Nil

22. Wages payable

(1) Wages payable

                                                                                                                          In RMB

              Item           Opening balance        Current increased          Current decreased              Closing balance
 I. Short-term
                                    16,013,302.23          35,366,159.63              42,249,708.96                  9,129,752.90
 compensation
 II. After-service
 welfare-defined                      266,404.61            2,732,705.21               2,745,097.88                    254,011.94
 contribution plans
 Total                              16,279,706.84          38,098,864.84              44,994,806.84                  9,383,764.84




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(2) Short-term remuneration

                                                                                                                           In RMB

           Item                  Opening balance       Current increased         Current decreased           Closing balance
 1. Wage, bonus,
                                       13,926,638.79          27,549,088.14             34,648,823.05                  6,826,903.88
 allowance and subsidy
 2. Employees’ welfare                                        3,620,490.60              3,620,490.60
 3. Social insurance
                                           37,917.96           1,162,125.93              1,180,222.31                    19,821.58
 charges
 Including: basic medical
                                           33,867.62           1,007,384.53              1,024,472.23                    16,779.92
  insurance premium
       Industrial injury
       insurance                             747.55               76,858.72                 77,093.52                       512.75
       premiums
       Maternity
       insurance                            3,302.79              77,882.68                 78,656.55                     2,528.92
       premiums
 4. Housing public reserve                                     1,987,870.74              1,987,870.74
 5. Trade union fee and
                                        2,048,745.48           1,046,584.22                812,302.26                  2,283,027.44
 education fee
 Total                                 16,013,302.23          35,366,159.63             42,249,708.96                  9,129,752.90


(3) Defined contribution plans

                                                                                                                           In RMB

           Item                  Opening balance       Current increased         Current decreased           Closing balance
 1. Basic endowment
                                          262,640.68           2,648,823.20              2,660,038.53                   251,425.35
 insurance premiums
 2. Unemployment
                                            3,763.93              83,882.01                 85,059.35                     2,586.59
 insurance premiums
 Total                                    266,404.61           2,732,705.21              2,745,097.88                   254,011.94

Other note: Nil

23. Tax payable

                                                                                                                           In RMB

                      Item                             Closing balance                               Opening balance

 VAT                                                                     1,050,206.69                                   875,568.98

 Enterprise income tax                                                   3,437,808.27                              24,416,713.98

 Personal income tax                                                       232,918.38                                   549,066.33

 Urban maintenance and construction tax                                     78,519.60                                    36,241.36

 House property tax                                                        172,745.19                                   148,805.39

 Surtax for education expenses                                              60,267.06                                    26,677.72

 Use tax of land                                                           125,174.33                                   125,174.33

 Other tax fee                                                              85,005.96                                   166,890.44



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 Total                                                                          5,242,645.48                              26,345,138.53

Other note: Nil

24. Dividend payable

                                                                                                                                  In RMB
                   Name                                       Closing balance                               Opening balance

 Other                                                                          2,909,182.74                                  2,909,182.74

 Total                                                                          2,909,182.74                                  2,909,182.74

Other note, including payable dividend unpaid with over one year, disclosure reasons: Nil

25. Other account payables

(1) Listed by age

                                                                                                                                  In RMB

                     Item                                     Closing balance                               Opening balance

 Deposit and margin                                                             1,086,467.98                                  2,090,774.94
 Engineering quality retention money and
                                                                                 199,541.37                                     17,097.62
 fund of tail
 Intercourse funds and other                                                41,120,543.75                                 38,588,210.38

 Fund lending                                                                   5,538,429.19                                  5,423,607.31

 Total                                                                      47,944,982.29                                 46,119,690.25


(2) Significant other payable with over one year age

                                                                                                                                  In RMB

                     Item                                     Closing balance                     Reasons of un-paid or carry-over

 Shenzhen Nongdimei Investment
                                                                                5,538,429.19 Fund lending
 Management Co., Ltd.

 Shenzhen Investment Management
                                                                                3,510,297.20 Historical payment
 Company

 Total                                                                          9,048,726.39                      --

Other note: Nil

26. Deferred income

                                                                                                                                  In RMB

                                                Increase during the Decreased during the
         Item               Opening balance                                                    Closing balance            Causes
                                                       year                     year

 Government grants              12,335,552.15                                    583,516.86        11,752,035.29



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 Total                         12,335,552.15                                    583,516.86        11,752,035.29          --
Items involving governance grants:
                                                                                                                              In RMB
                                                             Amount reckoned
                                          Grants increased                                                         Assets-related/inc
      Liability        Opening balance                       into non-operating Other changes     Ending balance
                                           in the Period                                                              ome-related
                                                                 revenue

(1) Subsidy for tea
seeding of New
                             48,348.52                                                   554.64         47,793.88 Assets-related
Tea Garden in
Wangkou

(2) Construction
amount for 50 tons
for clearly                 750,000.00                              62,500.00                          687,500.00 Assets-related
processing for
Mingyou tea
(3)Industrialization
project of instant        2,477,028.41                              98,222.94                        2,378,805.47 Assets-related
tea power
(4) Special fund
project of strategic
                             20,123.05                                                                  20,123.05 Assets-related
emerging industry
development
 (5) Base of further
 processing for tea       1,650,000.00                             137,500.00                        1,512,500.00 Assets-related
 and nature plants
(6) Enterprise
technology center
is a municipal
R&D center.
                           2,395,350.11                            102,012.27                        2,293,337.84 Assets-related
Subsidies for
industrial
technological
advancement
(7) Subsidies for
key technology
research and                181,501.23                               7,122.50                          174,378.73 Assets-related
industrialization of
instant tea powder
(8) Subsidy of
Guangdong
–Agricultural                1,120.58                                                                   1,120.58 Assets-related
public relation
project

(9) Special funds          4,241,311.01                            175,604.51                        4,065,706.50 Assets-related


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for Shenzhen
strategic emerging
industrial
development

 (10) Project
 grants for years
 for agricultural            570,769.24                                                                    570,769.24 Assets-related
 disctrict, Xihu
 Zone

Total                     12,335,552.15                           582,962.22              554.64     11,752,035.29

Other note: Nil

27. Share capital

                                                                                                                                In RMB

                                                          Increased (decreased) in this year +,-
                       Opening                                           Shares                                             Closing
                                       New shares
                         balance                     Bonus shares converted from           Other            Sub-total       balance
                                         issued
                                                                     public reserve

 Total shares       451,620,276.00                   45,162,027.00                                        45,162,027.00 496,782,303.00

Other note:
On May 15, 2017, the shareholders' general meeting of the Company examined and approved the Annual Equity
Distribution Plan for 2016, took the general capital of 451,620,276 shares up to December 31, 2016 as the cardinal
number and sent bonus shares of one share per every 10 shares to all shareholders. The capital stock increased to
496,782,303 shares after sending the bonus shares.


28. Capital reserves

             Item                  Opening balance        Current increased           Current decreased           Closing balance
Capital premium (share
                                        366,706,783.36                                                                  366,706,783.36
premium)

Other capital reserves                     465,234.43                                                                       465,234.43

Total                                   367,172,017.79                                                                  367,172,017.79

Other instructions, including changes in the current period, reasons for the change: Nil

29. Surplus reserves

                                                                                                                                In RMB

             Item                  Opening balance         Current increased           Current decreased            Closing balance

 Statutory surplus reserve                54,736,482.14                                                                   54,736,482.14

 Total                                    54,736,482.14                                                                   54,736,482.14


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                                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


Instructions, including changes in the current period, reasons for the change: Nil

30. Retained profit

                                                                                                                                   In RMB
                         Item                                        This period                                 Last period
 Retained profit at the end of the previous year
                                                                                158,239,612.94                              66,684,572.93
 before adjustment
 Total retained profit at the beginning of the
                                                                                158,239,612.94                              66,684,572.93
 previous year before adjustment
 Add: net profit attributable to shareholder of
                                                                                 -17,759,776.83                             96,620,658.92
 parent company
 Less: Exact Statutory surplus reserves                                                                                        5,065,618.91

      Dividend for common shares payable                                         22,581,013.80

      Dividend of common shares transferred                                      45,162,027.00

 Retained profit at the begin of the year after
                                                                                 72,736,795.31                             158,239,612.94
 adjustment

Details about adjusting the retained profits at the beginning of the period:
1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations
affect the retained profits at the beginning of the period amounting to 0 Yuan.
2) The changes in accounting policies affect the retained profits at the beginning of the period amounting to 0
Yuan.
3) The major accounting error correction affects the retained profits at the beginning of the period amounting to 0
Yuan
4) Merge scope changes caused by the same control affect the retained profits at the beginning of the period
amounting to 0 Yuan.
5) Other adjustments affect the retained profits at the beginning of the period amounting to 0 Yuan

31. Operating income and Operating cost

                                                                                                                                   In RMB
                                                  Current Period                                         Last Period
           Items
                                      Income                       Cost                       Income                       Cost

 Main operating                        136,473,406.96              103,182,564.29             146,569,809.91               116,893,235.04

 Other operating                          1,684,975.99               1,218,275.03                 2,585,719.80

 Total                                 138,158,382.95              104,400,839.32             149,155,529.71               116,893,235.04


32. Tax and surcharges

                                                                                                                                   In RMB

                     Item                                     Current Period                                 Last Period

 City maintenance and construction tax                                           570,241.97                                     431,109.87

 Educational fee and extra                                                       437,060.65                                     324,406.46


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 Property tax                                                      748,577.58

 Land use tax                                                      653,330.76

 Stamp tax                                                          45,522.53

 Business tax                                                                                             190,365.07

 Total                                                           2,454,733.49                             945,881.40

Other note: Nil

33. Sales expenses

                                                                                                             In RMB
                 Item                           Current Period                            Last Period
 Employee compensation and employee
                                                                 8,415,437.33                            8,939,930.99
 costs
 Rental and utilities                                            4,486,810.13                            3,068,591.19

 Depreciation and amortization expenses                          1,306,854.39                            1,756,086.17

 Goods transport miscellaneous expenses                          3,571,058.05                            3,357,828.74

 Sales    discounts,    promotion   fee   and
                                                                 1,016,356.24                            1,614,396.47
 advertising expenses

 Daily office expenses                                           1,894,181.18                            1,566,521.12

 Others                                                            483,709.99                             297,928.50

 Total                                                       21,174,407.31                              20,601,283.18

Other note: Nil

34. Management expenses

                                                                                                             In RMB

                 Item                           Current Period                            Last Period
 Employee compensation and employee
                                                             18,059,573.89                              17,348,437.24
 costs
 Rental and utilities                                            1,253,438.85                            1,242,451.04

 Depreciation and amortization expenses                          6,715,698.24                            7,744,370.44

 Intermediary and disclosure expenses                            1,408,462.38                             838,287.74

 Tax and fee                                                                                             1,531,982.39

 Daily office expenses                                           4,376,421.31                            4,455,006.68

 Others                                                          1,269,189.09                            1,209,163.64

 Total                                                       33,082,783.76                              34,369,699.17

Other note: Nil




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35. Financial expenses

                                                                                                               In RMB

                    Category                     Current Period                            Last Period

 Interest expense                                                   -57,803.94                              920,938.21

 Less: interest income                                            -1,951,838.54                            -791,028.37

 Exchange loss                                                      213,930.71

 Others                                                             262,314.75                              158,133.30

 Total                                                            -1,533,397.02                             213,297.58

Other note:

Interest costs in the period amounted as 325,296.06 Yuan, discount loans amounted as 383,100.00 Yuan.

36. Asset impairment loss

                                                                                                               In RMB
                      Item                       Current Period                            Last Period

 I. Bad debt losses                                                 190,677.29                              193,984.48

 Total                                                              190,677.29                              193,984.48

Other note: Nil

37. Gains /losses from change of fair value

                                                                                                               In RMB

  Source of gains from change of fair value      Current Period                            Last Period
 Financial assets measured by fair value and
 with its variation reckoned into current                          -990,762.24                             -848,856.19
 gains/losses

 Total                                                             -990,762.24                             -848,856.19

Other note: Nil

38. Investment gains

                                                                                                               In RMB
                     Item                           Current Period                          Last Period
 Long-term equity investment gains recognized
                                                                       -159,244.04                        -2,144,995.21
 under equity method
 Investment income from disposal of long-term
                                                                                                            581,171.70
 equity investment
 Earnings from financing products                                     1,252,661.10                          665,169.36

 Total                                                                1,093,417.06                         -898,654.15

Other note: Nil


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39. Non-operating income

                                                                                                                                         In RMB
                                                                                                              Amount included in the current
                     Item                          Current Period                 Last Period
                                                                                                               non-recurring profit and loss
 Total income from disposal of non-current
                                                            12,532.09                           1,609.60                            12,532.09
 assets
 Including: fixed assets disposal gains                     12,532.09                           1,609.60                            12,532.09

 Government grants                                        618,962.22                         1,876,962.20                         618,962.22

  Satisfaction                                                                              3,733,754.39

  Compensation                                           325,918.95                                                              325,918.95

  Other                                                   66,816.28                          606,091.10                            66,816.28

 Total                                                  1,024,229.54                         6,218,417.29                       1,407,329.54

Government subsidy reckoned into current gains/losses:
                                                                                                                                         In RMB
                                                              Whether the
                                                                impact of
                                                                              Whether                                             Assets
                   Issuing                                    subsidies on                      Amount of        Amount of
    Item                      Issuing cause Property type                         special                                      related/Incom
                    subject                                    the current                      this period      last period
                                                                              subsidies                                          e related
                                                               profit and
                                                                    loss
Deferred
income                                                        No             No                  582,962.22       520,462.20 Assets related
transfer-in

                                             Subsidies
                                             obtained
                                             from
                                             engaging in
                                             specific
                                             businesses
Award of                                     and industries
“Three Grade                                encouraged
                 Tea Bureau
Standards”                                  and                                                                               Income
                 of Wuyuan    Award                           No             No                   30,000.00
from                                         supported by                                                                      related
                 Country
Agricultural                                 the country
Bureau                                       (obtained by
                                             the national
                                             level policies
                                             and
                                             stipulations
                                             according to
                                             law)

Market           Shenzhen     Subsidy        Subsidies        No             No                    6,000.00                    Income


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Supervision   Market                 obtained                                                    related
Bureau -      Supervisory            from
Patent funded Authority              engaging in
subsidies                            specific
                                     businesses
                                     and industries
                                     encouraged
                                     and
                                     supported by
                                     the country
                                     (obtained by
                                     the national
                                     level policies
                                     and
                                     stipulations
                                     according to
                                     law)

                                     Subsidies
                                     obtained
                                     from
                                     engaging in
                                     specific
              Wuyuan
                                     businesses
              County
                                     and industries
              Committee
Xinjiang                             encouraged
              Organization
excellence                           and                                                         Income
              Department     Award                    No   No                       100,000.00
funded 866                           supported by                                                related
              of the
projects                             the country
              Communist
                                     (obtained by
              Party of
                                     the national
              China
                                     level policies
                                     and
                                     stipulations
                                     according to
                                     law)

                                     Subsidy for
              Wuyuan
                                     national
              County
                                     commitment
Gan po 555    Committee
                                     to safeguard
excellence    Organization                                                                       Income
                             Award   certain public No     No                       400,000.00
projects      Department                                                                         related
                                     utilities or
funded        of the
                                     socially
              Communist
                                     necessary
              Party of
                                     product

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                China                   supply

                                        Subsidies
                                        obtained
                                        from
                                        engaging in
                                        specific
                                        businesses
                                        and industries
Market
                Shenzhen                encouraged
Supervision
                Market                  and                                                         Income
Bureau -                      Subsidy                    No   No                        10,000.00
                Supervisory             supported by                                                related
Patent funded
                Authority               the country
subsidies
                                        (obtained by
                                        the national
                                        level policies
                                        and
                                        stipulations
                                        according to
                                        law)

                                        Subsidies
                                        obtained
                                        from
                                        engaging in
                                        specific
Patent grants                           businesses
from                                    and industries
Economy,        Shenzhen                encouraged
Trade and       Market                  and                                                         Income
                              Subsidy                    No   No                         4,000.00
Information     Supervisory             supported by                                                related
Commission Authority                    the country
of Shenzhen                             (obtained by
municipality                            the national
                                        level policies
                                        and
                                        stipulations
                                        according to
                                        law)

Loan                                    Subsidy for
discount of     Shenzhen                national
agriculture     Municipal               commitment                                                  Income
                              Subsidy                    No   No                        79,500.00
industrializati Finance                 to safeguard                                                related
on for key      Committee               certain public
leading                                 utilities or



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                                                                     深圳市深宝实业股份有限公司 2017 年半年度报告全文


enterprises                               socially
                                          necessary
                                          product
                                          supply

                                          Subsidy for
                                          national
                                          commitment
                                          to safeguard
Tax incentive Finance
                                          certain public                                                            Income
for tea         Bureau of      Award                       No        No                                 63,000.00
                                          utilities or                                                              related
industry        Wuyi Mount
                                          socially
                                          necessary
                                          product
                                          supply

                                          Subsidy for
Enterprise
                                          national
financial aid
                                          commitment
for
                Finance                   to safeguard
“scale-up”
                Office of                 certain public                                                            Income
from                           Subsidy                     No        No                               700,000.00
                Bingjiang                 utilities or                                                              related
Huangzhou
                District                  socially
Hi-Tech
                                          necessary
Disctric
                                          product
(Bingjiang)
                                          supply

Total                   --          --           --             --         --           618,962.22 1,876,962.20           --

Other note: Nil

40. Non-operating expenditure

                                                                                                                              In RMB
                                                                                                   Amount reckoned into current
                Item                     Current Period                   Last Period
                                                                                                    non-recurring gains/losses
 Non-current assets disposal
                                                         33,547.35                      8,020.41                         33,547.35
 losses
 Including: fixed assets disposal
                                                         33,547.35                      8,020.41                         33,547.35
 losses

 Loss of non-monetary assets
                                                         20,916.00                                                       20,916.00
 exchange

  Other                                                  1,206.68                  363,070.33                            1,206.68

                Total                                    55,670.03                  371,090.74                           55,670.03

Other note: Nil




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41. Income tax expense

(1) Statement of income tax expenses

                                                                                                                           In RMB

                     Item                                 Current Period                               Last Period

 Current income tax expenses                                                 335,468.02                                 213,824.12

 Deferred income tax expenses                                                -298,881.44                               -715,569.21

                    Total                                                     36,586.58                                -501,745.09


(2) Adjustment process of accounting profit and income tax expenses

                                                                                                                           In RMB
                                Item                                                       Current Period

 Total profit                                                                                                        -20,540,446.87

 Income tax expenses calculated by statutory tax rate                                                                 -5,135,111.72

 Impact from previous income tax adjusted                                                                               156,714.09

 Impact on deductible temporary differences or losses deductible
                                                                                                                      5,014,984.21
 which was un-recognized as deferred income tax assets

 Income tax expense                                                                                                      36,586.58

Other note: Nil

42. Annotation of cash flow statement

(1) Cash received with other operating activities concerned

                                                                                                                           In RMB

                     Item                                   This Period                                Last Period

 Interest income                                                            1,723,814.05                                521,408.99

 Government grants                                                           419,100.00                               1,214,000.00

 Intercourse funds and other                                                4,205,388.32                             29,428,598.18

                    Total                                                   6,348,302.37                             31,164,007.17

Note of cash received with other operating activities concerned: Nil

(2) Cash paid with other operating activities concerned

                                                                                                                           In RMB
                     Item                                   This Period                                Last Period

 Expenses                                                                  14,640,748.15                             15,943,042.18



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                                                                     深圳市深宝实业股份有限公司 2017 年半年度报告全文


 Intercourse funds and other                                          5,939,319.21                           6,826,064.43

 Total                                                               20,580,067.36                          22,769,106.61

Note of cash paid with other operating activities concerned: Nil


(3) Cash received with other investment activities concerned

                                                                                                                 In RMB

                    Item                             This Period                             Last Period

Financing income                                                                                             665,169.36

Total                                                                                                        665,169.36

Note of cash received with other investment activities concerned: Nil

(4) Cash paid related with investment activities

                                                                                                                 In RMB

                     Item                             This Period                             Last Period

Note of cash paid related with investment activities: Nil

(5) Cash received with other financing activities concerned

                                                                                                                 In RMB
                     Item                             This Period                             Last Period
 Sales of odd lots from increase by
                                                                                                                   79.19
 transferring
                     Total                                                                                         79.19

Note of cash received with other financing activities concerned: Nil

(6) Cash paid related with financing activities

                                                                                                                 In RMB

                     Item                             This Period                             Last Period

Note of cash paid related with financing activities: Nil

43. Supplementary information to statement of cash flow

(1) Supplementary information to statement of cash flow

                                                                                                                 In RMB

                         Item                          This Period                            Last Period

 1.Net profit adjusted to cash flow of
                                                            --                                    --
 operation activities:


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                                                               深圳市深宝实业股份有限公司 2017 年半年度报告全文


 Net profit                                                   -20,577,033.45                       -19,460,289.84

 Add: Impairment provision for assets                               190,677.29                           193,984.48

 Depreciation of fixed assets, consumption of
 oil assets and depreciation of productive                     10,965,845.80                        10,959,250.11
 biology assets

 Amortization of intangible assets                              3,525,894.04                            3,422,961.19

 Amortization of long-term deferred expenses                    2,797,203.36                            3,035,193.13
 Loss from disposal of fixed assets, intangible
 assets and other long-term assets (income is                        33,547.35                             8,020.41
 listed with “-”)
 Loss from change of fair value (income is
                                                                    990,762.24                           848,856.19
 listed with “-“)

 Financial expenses (income is listed with
                                                                    539,226.77                           663,430.88
 “-”)

 Investment loss (income is listed with “-”)                 -1,093,417.06                             898,654.15
 Decrease of deferred income tax assets
                                                                     -51,190.88                         -263,404.93
 (increase is listed with “-”)
 Increase of deferred income tax liability
                                                                    -285,625.68                         -490,099.40
 (decrease is listed with “-”)
 Decrease of inventory (increase is listed with
                                                               -8,524,247.90                        11,434,920.70
 “-”)
 Decrease of operating receivable
                                                              -14,650,942.01                            8,158,346.27
 accounts(increase is listed with “-”)
 Increase of operating payable
                                                              -24,293,348.02                        12,188,124.02
 accounts(decrease is listed with “-”)
 Net cash flow arising from operating
                                                              -50,432,648.15                        31,597,947.36
 activities
 2.Material investment and financing not
                                                        --                                  --
 involved in cash flow:

 3.Net change of cash and cash equivalents              --                                  --

 Balance of cash at period end                                205,487,872.79                      144,899,052.46

 Less: Balance of cash at year-begin                          358,564,242.83                      147,513,887.15

 Net increasing of cash and cash equivalents                 -153,076,370.04                        -2,614,834.69


(2) Constitution of cash and cash equivalent

                                                                                                            In RMB

                       Item                       Closing balance                     Opening balance

 I. Cash                                                      205,487,872.79                      358,564,242.83

 Including: Cash on hand                                            268,174.40                           207,519.80

           Bank deposit available for payment
                                                              205,219,698.39                      358,356,723.03
 at any time



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                                                                              深圳市深宝实业股份有限公司 2017 年半年度报告全文


 III. Balance of cash and cash equivalent at
                                                                            205,487,872.79                              358,564,242.83
 year-end

Other note: Nil

44. Foreign currency monetary items

(1) Foreign currency monetary items

                                                                                                                               In RMB
                                         Ending foreign currency                                             Ending balance of RMB
                 Item                                                       Exchange rate convert
                                                 balance                                                           converted
 Including: USD                                           113,635.74                           6.77440                      769,813.96

         HKD                                                98,815.33                          0.86792                       85,763.80

 Including: USD                                           346,033.20                           6.77440                    2,344,167.31

Other note:

(2) Explanation on foreign operational entity, including as for the major foreign operational entity,
disclosed main operation place, book-keeping currency and basis for selection; if the book-keeping
currency changed, explain reasons

□ Applicable √ Not applicable

VIII. Equity in other entity

1. Equity in subsidiary

(1) Constitute of enterprise group

                        Main operation                                                  Share-holding ratio
    Subsidiary                           Registered place     Business nature                                          Acquired way
                            place                                                   Directly             Indirectly
 Shenbao
                          Shenzhen           Shenzhen         Manufacturing             100.00%                       Establishment
 Huacheng
 Wuyuan
                          Shangrao             Shangrao       Manufacturing             100.00%                       Establishment
 Jufangyong

 Shenbao Sanjing Huizhou Huizhou             Shenzhen         Manufacturing             100.00%                       Establishment

 Huizhou Shenbao
                           Huizhou             Huizhou        Comprehensive             100.00%                       Establishment
 Technologies
 Shenbao                                                         Property
                          Shenzhen           Shenzhen                                   100.00%                       Establishment
 Properties                                                    management
 Shenbao                                                       Commerce &
 Industrial Trading        Huizhou           Shenzhen              trade                100.00%                       Establishment

 & Development                                                  wholesale

 Hangzhou                 Hangzhou          Hangzhou          Comprehensive             100.00%                       Establishment



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                                                                                  深圳市深宝实业股份有限公司 2017 年半年度报告全文


 Jufangyong
                                                               Technology
 Shenbao
                                                                development,
 Technology               Shenzhen            Shenzhen                                       100.00%                       Establishment
                                                                consulting       and
 Center
                                                                transfer
                                                                   Planting,
 Fuhaitang
                          Hangzhou            Hangzhou          production and                                     100.00% Acquisition
 Ecological
                                                                  sales of tea
                                                                 Commerce &
 Chunshi Network          Hangzhou            Hangzhou          trade; wholesale                                   100.00% Establishment


 Shenshenbao                                                      Investment
                          Shenzhen            Shenzhen                                       100.00%                       Establishment
 Investment                                                       management
 Shenshenbao Tea                                                 Commerce &
                          Shenzhen            Shenzhen                                                              65.00% Establishment
 Culture                                                              trade
 Jufangyong
                          Shenzhen            Shenzhen          Manufacturing                                       60.00% Establishment
 Trading
 Yunnan Supply                                                      Trading,
                            Pu’er                 Pu’er                                    100.00%                       Establishment
 Chain                                                             wholesale

 Huizhou Shenbao
                          Shenzhen            Shenzhen             Wholesale                 100.00%
 Food

 Shenbao Rock
                        Wuyishan City       Wuyishan City       Manufacturing                100.00%
 Tea

 Pu’er Tea
                          Pu’er City         Pu’er City           Service                   40.00%                15.00% Establishment
 Exchange Center

Explanation on share-holding ratio in subsidiary different from ratio of voting right: Nil
Basis of the invested unit control by the Company though holds half or below voting rights; and the invested unit
without controls by the Company but with over half voting rights hold: Nil
Major structured entity included in consolidate statement: Nil
Basis of termination of agent or consigner: Nil
Other note: Nil

(2) Important non-wholly-owned subsidiary

                                                                                                                                     In RMB

                               Share-holding ratio of       Gains/losses attributable    Dividend distribute for      Accumulated equity of
           Subsidiary
                                        minority            to minority in the Period    minority in the Period       minority at period-end

 Shenzhen Shenbao Tea
                                                   35.00%              -1,629,321.11                                           -4,664,070.01
 Culture

 Pu’er Tea Exchange
                                                   45.00%                  -940,290.71                                         20,192,618.85
 Center

Explanation on holding ratio different from the voting right ratio for minority shareholders: Nil

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                                                                                             深圳市深宝实业股份有限公司 2017 年半年度报告全文


Other note: Nil

(3) Main finance of the important non-wholly-owned subsidiary

                                                                                                                                                         In RMB
                                       Closing balance                                                             Opening balance
 Subsidia                 Non-curr                              Non-curr                               Non-curr                           Non-curr
             Current                    Total       Current                   Total      Current                    Total     Current                     Total
       ry                   ent                                    ent                                   ent                                 ent
              assets                   assets       liability                liability       assets                 assets    liability                  liability
                           assets                               liability                               assets                             liability
 Shenzhe
 n
             6,408,56 2,792,03 9,200,59 22,526,5                            22,526,5 7,991,35 3,888,99 11,880,3 20,551,0                                 20,551,0
 Shenbao
                   6.36         1.73       8.09        12.36                    12.36           8.34       5.58       53.92      65.05                      65.05
 Tea
 Culture

 Yunnan
 Tea         37,726,7 12,106,8 49,833,6 4,961,13                            4,961,13 35,223,3 12,263,3 47,486,7 524,687.                                 524,687.
 Trading          30.55      89.52       20.07          3.72                     3.72          79.95      29.01       08.96          71                           71
 Center

                                                                                                                                                         In RMB
                                            Current Period                                                             Last Period
                                                                            Cash flow                                                              Cash flow
                                                           Total                                                                   Total
     Subsidiary     Operation                                                 from             Operation                                                from
                                       Net profit      comprehensi                                               Net profit    comprehensi
                       Income                                               operation           Income                                             operation
                                                        ve income                                                               ve income
                                                                             activity                                                                  activity
 Shenzhen
 Shenbao Tea       3,052,329.52 -4,655,203.14 -4,655,203.14                  -19,820.18 3,256,699.36 -7,695,232.77 -7,695,232.77                   -892,934.59
 Culture

 Yunnan Tea
                                                                         -31,729,663.8
 Trading             556,614.78 -2,089,534.90 -2,089,534.90                                       1,509.43 -2,030,153.47 -2,030,153.47 -1,839,025.23
                                                                                         2
 Center

Other note: Nil

2. Equity in joint venture and cooperative enterprise

(1) Financial summary for un-important joint venture or cooperative enterprise

                                                                                                                                                         In RMB

                                                                Closing balance /Current Period                      Opening balance /Last Period

 Joint venture:                                                                  --                                                  --

 Total numbers measured by share-holding
                                                                                 --                                                  --
 ratio

 Cooperative enterprise:                                                         --                                                  --




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                                                                             深圳市深宝实业股份有限公司 2017 年半年度报告全文


 Total book value of investments                                              5,707,237.59                             5,866,481.63

 Total numbers measured by share-holding
                                                                   --                                        --
 ratio

 -- Net profit                                                                 -159,244.04                            -2,144,995.21

 -- Total comprehensive income                                                 -159,244.04                            -2,144,995.21

Other note: Nil

(2) Excess losses from joint venture or cooperative enterprise

                                                                                                                           In RMB

                                                                         Un-confirmed losses not
                                   Cumulative un-confirmed                                              Cumulative un-confirmed
                 Name                                              recognized in the Period (or net
                                           losses                                                         losses at period-end
                                                                        profit enjoyed in the Period)
 Changzhou Shenbao Chacang
                                                    7,710,869.12                           269,729.81                  7,980,598.93
 E-commence Co., Ltd

 Shenzhen Shichumingmen
 Restaurant Management Co.,                         2,533,011.85                           330,991.44                  2,864,003.29
 Ltd.

Other note: Nil

IX. Disclosure of risks relating to financial instruments

Our business operation makes the Company exposed to various financial risks: credit risk, liquidity risk and
market risk (mainly refers to exchange risk and interest risk). The general risk management policy of the
Company is to minimize potential negative effects on our financial performance in view of the unforeseeable
financial market.


1. Credit risk
The credit risk mainly arises from monetary capital, notes receivables, trade receivables and other receivables.
The management has established adequate credit policies and continues to monitor exposure of these credit risks.


Monetary capital held by the Company is mainly deposited with financial institutions such as commercial banks.
Management believes that these banks are relatively highly rated and possess sound assets and there is low credit
risk. The Company adopts amount-limitation policy to prevent credit risk from any financial institution.


For trade receivables, other receivables and note receivables, the Company establishes relevant policies to control
exposure of credit risk. The Company appraises customers’ credit quality based on their financial position,
possibility to obtain guarantee from third parties, credit history and other factors such as prevailing market
conditions, and set corresponding credit terms. Customers’ credit history would be regularly monitored by the
Company. For those customers who have bad credit history, the Company will call collection in written form,


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shorten credit term or cancel credit term to ensure its overall credit risk is under control.


Up to 30th June 2017, the top five client’s account receivable takes 18.79% in total account receivable of the
Company (2016: 35.08%)


The maximum credit risk exposure equals to the carrying value of each financial asset in balance sheet (including
derivative financial instrument). The Company has not provided any guarantee which would otherwise make the
Company exposed to credit risk.


2. Liquidity risk
Liquidity risk represents the possibility that the Company is not able to acquire sufficient fund to satisfy business
requirement, settle debt when it is due and perform other obligation of payment.


The finance department continues to monitor capital requirement for short and long term, to ensure adequate cash
reserve. In addition, it continues to monitor whether borrowing agreement is complied with, and seeks for
commitment from major financial institutions for provision of sufficient back-up fund, so as to satisfy capital
requirement in a short and long term.


3. Market risk
(1) Exchange risk
The major operation of the Company is located in the PRC, and its major operation is settled in Renminbi.
However, there is also exchange risk in respect of the recognized foreign currency assets and liabilities and future
foreign currency transactions which are mainly denominated in US dollar. Our finance department is responsible
for monitoring scale of foreign currency assets and liabilities and foreign currency transactions, to minimize its
exposure to exchange risks. In 2016 and 2015, the Company did not sign any forward exchange contract or
monetary exchange contract.


(2) Interest risk
Our interest risk mainly arises from bank borrowings. Financial liabilities at floating rate expose the Company to
cash flow interest risk, and financial liabilities at fixed rate expose the Company to fair value interest risk. The
Company determines the respective proportion of contracts at fixed rate and floating rate based on prevailing
market conditions.


Finance department continues to monitor the Company’s interest rate level. Appreciation of interest rate will
increase cost of our new interest-bearing debts and interest expenditure attributable to floating interest-bearing
debts which the Company has not cleared yet. The management would make prompt adjustment according to the
latest market conditions.




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(3) Price risk
The Company purchases and sells products at market prices, therefore it is affected by fluctuation of these prices.


X. Disclosure of fair value

1. Ending fair value of the assets and liabilities measured by fair value

                                                                                                                                     In RMB
                                                                              Ending fair value
             Items
                                      First-order               Second-order                 Third-order                     Total
I. Sustaining measured by
                                          --                          --                            --                        --
fair value

(I)Financial             assets
measured by fair value
and       with        variation           2,260,176.36                                                                         2,260,176.36
reckoned       into    current
gains/losses

Total assets sustaining
                                          2,260,176.36                                                                         2,260,176.36
measured by fair value

II. Non-persistent measure                --                          --                            --                        --


2. Recognized basis for the market price sustaining and non-persistent measured by fair value on
first-order

Determination baisis refers to the open market price

XI. Related party and related transactions

1. Parent company

                                                                                                  Ratio of shareholding Ratio of voting right
      Parent company        Registration place      Business nature         Registered capital
                                                                                                    on the Company       on the Company
                                                 Development,
                                                 established, operated
 Shenzhen                                        and management the
 Agricultural              Shenzhen              agricultural              169,696.41                          19.09%                19.09%
 Products Co., Ltd.                              wholesale market,
                                                 operates marketing
                                                 leasing business etc.

Explanation on parent company of the enterprise
Ultimate controller of the Company is Shenzhen Municipal People’s Government State-Owned Assets Supervison
and Administration Commission.
Other note: Nil



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2. Subsidiary

Subsidiary of the Company found more in Note VIII-(I) equity in subsidiary

3. Cooperative enterprise and joint venture

Joint Venture of the Company found more in Note VIII-(II) equity in joint Venture
Other cooperative enterprise and joint venture that have related transaction with the Company in the Period or
occurred in previous period
                                   Name                                                            Relationship
Other note: Nil

4. Other related party

                             Other related party                                         Relationship with the Enterprise
 Shenzhen Investment Management Company                                  Former first largest shareholder of the Company
 Shenzhen Investment Holding Co., Ltd.                                   Second largest shareholder of the Company
 Shenzhen Nongdimei Investment Management Co., Ltd.                      Minority shareholder of the Holding subsidiary

 Shenzhen Shichumingmen Restaurant Management Co., Ltd.                  Cooperative enterprise

 Changzhou Shenbao Chacang E-commence Co., Ltd                           Cooperative enterprise

 Shenzhen Shenbao Manan Biotechnology Co., Ltd                           Cooperative enterprise

 Guangzhou Shenbao Mendao Tea Co., Ltd.                                  Cooperative enterprise

Other note: Nil

5. Related transaction

(1) Goods purchased and labor service received

Goods purchasing, labor service providing and receiving
                                                                                                                                    In RMB
                                                                      Approved transaction   Whether more than
    Related party               Content            Current Period                                                     Amount of last period
                                                                             limit           the transaction limit

 Shenzhen
 Shichumingmen
 Restaurant             Raw material                         927.50                          N                                          0.00
 Management Co.,
 Ltd.

Goods sold/labor service providing
                                                                                                                                    In RMB

             Related party                         Content                     Current Period                        Last Period

 Shenzhen Investment Holding
                                      Sales of tea                                                                                 13,233.97
 Co., Ltd.


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 Shenzhen Agricultural Products
                                  Sales of tea                                                                               175,626.91
 Co., Ltd.
 Shenzhen Shichumingmen
 Restaurant Management Co.,       Active service income                                  6,442.74                               2,840.10
 Ltd.

Note of sale of goods/rendering of labor services/labor service offering: Nil

(2) Related lease

As a lessor for the Company:
                                                                                                                                 In RMB

                                                                     Lease income in recognized in Lease income in recognized last
              Lessee                        Assets type
                                                                                 the Period                        the Period

 Shenzhen Shichumingmen
 Restaurant Management Co.,       Operating site                                          409,500.00                         423,150.00
 Ltd.

As lessee:
                                                                                                                                 In RMB

                                                                     Lease income in recognized in Lease income in recognized last
              Lesser                        Assets type
                                                                                 the Period                        the Period

Explanation on related lease: Nil

(3) Related guarantee

As guarantor
                                                                                                                                 In RMB

                                                                                                              Whether the guarantee
        Secured party         Guarantee amount            Guarantee start date       Guarantee expiry date
                                                                                                                   has been fulfilled

 Shenbao Huacheng                     30,000,000.00 2016-7-26                      2017-7-25                 No

As secured party
                                                                                                                                 In RMB

                                                                                                              Whether the guarantee
         Guarantor            Guarantee amount            Guarantee start date       Guarantee expiry date
                                                                                                                   has been fulfilled

 Shenbao Huacheng                       5,000,000.00 2016-10-24                    2017-1-28                 Yes

 Shenbao Huacheng                     10,000,000.00 2017-1-11                      2018-1-10                 No

Related guarantee note: Nil

 (4) Related party’s borrowed funds

                                                                                                                                 In RMB



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         Related party                Loan amount                 Start date                 Expiry date                   Note

 Borrowing

 Shenzhen Nongdimei
 Investment Management                     5,250,000.00 2015-12-01                   2017-12-31
 Co., LTD.

 Loans


(5) Other related transactions: Nil

6. Balance of intercourse funds between related parties

(1) Account receivable

                                                                                                                                  In RMB
                                                               Closing balance                              Opening balance
           Item                Related party
                                                    Book balance        Bad debt provision         Book balance        Bad debt provision
                         Shenzhen
                         Shichumingmen
 Account receivable      Restaurant                         25,984.00                                      13,965.00
                         Management Co.,
                         Ltd.
                         Changzhou Shenbao
 Other account           Chacang
                                                       19,745,382.18             8,839,247.89        19,540,618.68            8,634,484.39
 receivable              E-commence Co.,
                         Ltd
                         Shenzhen
                         Shichumingmen
 Other account
                         Restaurant                     2,006,499.85                                  2,048,972.70
 receivable
                         Management Co.,
                         Ltd.




(2) Account payable

                                                                                                                                  In RMB

                  Item                         Related party                     Closing balance                  Opening balance

                                      Shenzhen Investment
 Dividend payable                                                                          2,690,970.14                       2,690,970.14
                                      Management Company
                                      Shenzhen Investment
 Other payable                                                                             3,510,297.20                       3,510,297.20
                                      Management Company
                                      Shenzhen Nongdimei
 Other payable                                                                             5,538,429.19                       5,423,607.31
                                      Investment Management



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                                      Company
                                      Shenzhen Shichumingmen
 Account payable                      Restaurant Management Co.,                                927.50
                                      Ltd.



XII. Commitment or contingency

1. Other

 The Company did not have major committements or contingency that need to disclosured till end of 30 June2017

XIII. Events after balance sheet date

1. Other events after balance sheet date

 The Company did not have events after balance sheet date that need to disclosured till end of 30 June2017



XIV. Other important events

1. Other

 The Company did not have events shall be released without disclosure till end of 30 June2017

XV. Annotation to main items in financial statements of parent company

1. Account receivables

(1) Disclosed by type

                                                                                                                               In RMB
                                             Closing balance                                         Opening balance
                             Book balance        Bad debt provision                 Book balance       Bad debt provision
           Type                                                         Book
                                                            Accrual                                              Accrual    Book value
                           Amount Ratio          Amount                 value    Amount Ratio         Amount
                                                               ratio                                               ratio
 Account      receivable
 withdrawal bad debt
                           26,791,4                                    26,791,49 40,123,                                    40,123,423.
 provision by group of                  99.89%                                              99.93%
                              98.16                                         8.16 423.12                                             12
 credit             risk
 characteristics
 Account      receivable
 with     single   minor 28,453.0                28,453.0                         28,453.
                                         0.11%              100.00%                         0.07% 28,453.08       100.00%
 amount              but        8                       8                             08
 withdrawal bad debt


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                                                                                     深圳市深宝实业股份有限公司 2017 年半年度报告全文


 provision for single
 item

                           26,819,9                28,453.0                26,791,49 40,151,                                           40,123,423.
 Total                                 100.00%                100.00%                            100.00% 28,453.08             0.07%
                               51.24                      8                     8.16 876.20                                                    12

Account receivable with single significant amount and withdrawal bad debt provision separately at period end :
□ Applicable √ Not applicable
Account receivable provided for bad debt reserve under aging analysis method in the groups:
√ Applicable □ Not applicable
                                                                                                                                          In RMB
                                                                                       Closing balance
                 Age
                                              Account receivable                     Bad debt provision                   Accrual ratio (%)

 Subitem within 1 year

 Within 1 year                                           26,791,498.16

 Total                                                   26,791,498.16

Explanations on combination determine: Nil
In combination, withdrawal proportion of bad debt provision based on balance proportion for account receivable:
□ Applicable √ Not applicable
In combination, withdrawal proportion of bad debt provision based on other methods for account receivable: Nil

(2) Top five receivables at Period-end

                                                                                             Proportion in total
                       Name                                   Closing balance              receivables at closing   Bad debt provision accrual
                                                                                                balance (%)
Customer 1                                                                 5,824,108.00                     21.72                              ---
Customer 2                                                                 5,163,160.00                     19.25                              ---
Customer 3                                                                 4,166,420.22                     15.53                              ---
Customer 4                                                                 1,895,350.00                      7.07                              ---
Customer 5                                                                  971,040.00                       3.62                              ---
                       Total                                              18,020,078.22                     67.19                              ---


2. Other receivables

(1) Disclosed by type

                                                                                                                                          In RMB
                                                Closing balance                                            Opening balance
                               Book balance        Bad debt provision                     Book balance       Bad debt provision
         Types                                                               Book
                                                               Accrual                                                     Accrual     Book value
                           Amount       Ratio      Amount                    value     Amount     Ratio     Amount
                                                                  ratio                                                      ratio
 Other           account
                           19,115,3                8,776,24                10,339,13 18,910,               8,571,484                   10,339,134.
 receivable        with                  8.02%                  45.91%                             8.33%                      45.33%
                               82.18                   7.89                     4.29 618.68                         .39                        29
 single major amount



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                                                                                    深圳市深宝实业股份有限公司 2017 年半年度报告全文


 and withdrawal bad
 debt     provision      for
 single item
 Other             account
 receivable
 withdrawal bad debt 213,929,                       42,123.0              213,886,9 202,534                                             202,482,75
                                          89.69%                  0.02%                          89.26% 52,150.03             0.03%
 provision by group of 088.07                              3                    65.04 ,906.30                                                 6.27
 credit               risk
 characteristics
 Other             account
 receivable           with
 single minor amount 5,472,39                       5,472,39                          5,472,3               5,472,398
                                           2.29%                100.00%                             2.41%                  100.00%
 but withdrawal bad      8.91                            8.91                            98.91                    .91
 debt     provision      for
 single item

                               238,516,             14,290,7              224,226,0 226,917                 14,096,03                   212,821,89
           Total                          100.00%                 5.99%                          100.00%                      6.21%
                                869.16                69.83                     99.33 ,923.89                    3.33                         0.56

Other receivable with single significant amount and withdrawal bad debt provision separately at end of period:
√Applicable □Not applicable
                                                                                                                                          In RMB
                                                                                  Closing balance
  Other receivables (unit)
                                     Other receivables          Provision for bad debt           Accrue ratio           Accrue reason
 Changzhou Shenbao                                                                                                      estimated due received
 Chacang E-commence                          19,115,382.18                   8,776,247.89                    45.91% maybe lower than book
 Trading Co., Ltd                                                                                                       balance

 Total                                       19,115,382.18                   8,776,247.89              --                          --
Other receivable with bad debt provision withdrawal by age analysis in group:
√Applicable □Not applicable
                                                                                                                                          In RMB
                                                                                     Closing balance
                   Age
                                                Other receivable                   Bad debt provision                   Accrual ratio (%)

 Subitem within 1 year

 Subtotal within 1 year                                  213,593,798.96

 1-2 yeas                                                       35,600.00                           1,780.00                               5.00%

 2-3years                                                       91,747.70                           9,174.77                              10.00%

 Over 3 years                                                   207,968.41                          31,195.26                              15.00%

 4-5 years                                                      207,968.41                          31,525.26                              15.00%

 Total                                                   213,929,115.07                             42,150.03                               0.02%

Explanations on combination determine:
In combination, withdrawal proportion of bad debt provision based on balance proportion for other account
receivable
□ Applicable √ Not applicable


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In combination, withdrawal proportion of bad debt provision based on other methods for other account receivable
□ Applicable √ Not applicable

(2) Bad debt provision accrual, collected or reversed

Accrual bad debt provision 204,763.50 Yuan; collected or reversed 10,000.00 Yuan.
Major bad debt provision collected or switch back:
                                                                                                                                  In RMB

                     Name                                         Amount                                           Method


(3) Other receivables by nature

                                                                                                                                  In RMB

                     Nature                                 Ending book balance                         Opening book balance

 Deposit                                                                           111,502.00                                  280,986.43

 Tax refund for export                                                             296,913.30

 Intercourse accounts and other                                             238,108,453.86                                  226,636,937.46

 Total                                                                      238,516,869.16                                  226,917,923.89


(4) Top five clients of other receivable at period-end

                                                                                                                                  In RMB
                                                                                            Ratio in total ending
                                                                                                                      Ending balance of
         Company                 Nature          Ending balance            Book age             balance of other
                                                                                                                       bad bet provision
                                                                                                  receivables
 Huizhou         Shenbao
                           Intercourse funds        128,835,736.38 Within 1 year                           54.01%
 Technologies

 Shenbao Sanjing           Intercourse funds         26,205,575.88 Within 1 year                           10.99%

 Changzhou Shenbao
 Chacang E-commence Intercourse funds                19,115,382.18 1-3 years or above                       8.02%             8,776,247.89
 Co., Ltd

 Shenbao Technology
                           Intercourse funds          3,500,000.00 Within 1 year                            1.47%
 Centre

 Shenshenbao Tea
                           Intercourse funds            271,396.29 Within 1 year                            0.11%
 Culture

 Total                              --              177,928,090.73            --                           74.60%             8,776,247.89


3. Long-term equity investment

                                                                                                                                  In RMB
         Items                            Closing balance                                           Opening balance


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                                                                           深圳市深宝实业股份有限公司 2017 年半年度报告全文


                        Book balance       Impairment         Book value       Book balance      Impairment        Book value
 Investment for
                        917,313,300.84                       917,313,300.84    911,813,300.84                      911,813,300.84
 subsidiary
 Investment for
 associates and            7,579,282.26     2,927,628.53       4,651,653.73       7,736,539.93      2,927,628.53     4,808,911.40
 joint venture

 Total                  924,892,583.10      2,927,628.53     921,964,954.57    919,549,840.77       2,927,628.53   916,622,212.24


(1) Investment for subsidiary

                                                                                                                         In RMB
                                                                                                 Impairment      Closing balance
                                                                Current
    Investee unit       Opening balance Current increased                     Closing balance reserve accrual in of impairment
                                                               decreased
                                                                                                  the Period         reserve
 Shenbao
                           2,550,000.00                                          2,550,000.00
 Properties
 Shenbao Industrial
 Trading            &      5,500,000.00                                          5,500,000.00
 Development

 Shenbao Sanjing          80,520,842.36                                         80,520,842.36

 Shenbao
                         168,551,781.80                                        168,551,781.80
 Huacheng
 Huizhou Shenbao
                          60,000,000.00                                         60,000,000.00
 Technologies
 Wuyuan
                         280,404,134.35                                        280,404,134.35
 Jufangyong
 Hangzhou
                         176,906,952.42                                        176,906,952.42
 Jufangyong
 Shenbao
                          54,676,764.11                                         54,676,764.11
 Technology Center
 Shenzhen Shenbao
                          50,000,000.00                                         50,000,000.00
 Investment
 Yunnan Supply
                          14,500,000.00     5,500,000.00                        20,000,000.00
 Chain

 Pu’er Trading
                          18,202,825.80                                         18,202,825.80
 Center

 Total                   911,813,300.84     5,500,000.00                       917,313,300.84


(2) Investment for associates and joint venture

                                                                                                                         In RMB

              Opening                             Increase & decrease in this period                           Ending    Ending
 Company
              balance Additiona Capital       Investme      Other    Other       Cash    Impairme    Other     balance   balance



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                                l       reduction nt gains comprehe         equity   dividend nt accrual                            of
                            investmen              recognize     nsive      change   or profit                                   impairme
                                t                  d under      income               announce                                       nt
                                                    equity     adjustmen                  d to                                   provision
                                                                   t                     issued
 I. Joint venture
 II. Associated enterprise
 Shenzhen
 Shenbao
 (Liaoyuan
              57,628.53                                                                                              57,628.53 57,628.53
 )
 Industrial
 Company
 Shenzhen
 Shenbao
              2,870,000                                                                                              2,870,000 2,870,000
 (Xinmin)
                      .00                                                                                                  .00           .00
 Food Co.,
 Ltd
 Changzho
 u
 Shenbao
 Chacang
 E-comme
 nce Co.,
 Ltd

 Guangzho
 u
 Shenbao      4,808,911                            -157,257.                                                         4,651,653
 Mendao               .40                                67                                                                .73
 Tea Co.,
 Ltd.

              7,736,539                            -157,257.                                                         7,579,282 2,927,628
 Subtotal
                      .93                                67                                                                .26           .53

              7,736,539                            -157,257.                                                         7,579,282 2,927,628
 Total
                      .93                                67                                                                .26           .53


4. Operating income and operating cost

                                                                                                                                  In RMB
                                                    Current Period                                         Last Period
              Items
                                          Income                         Cost                     Income                  Cost

 Main business income                      49,271,727.89                 45,987,989.13             62,551,615.75           59,896,259.51




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 Other business income                                                                     2,581,509.43

 Total                                    49,271,727.89       45,987,989.13               65,133,125.18             59,896,259.51

Other note: Nil

5. Investment earnings

                                                                                                                         In RMB

                       Item                               Current Period                              Last Period

 Investment income of long-term equity
                                                                           -157,257.67                                -564,801.46
 based on equity

 Financial products revenue                                                1,252,661.10                               665,169.36

 Total                                                                     1,095,403.43                               100,367.90


XVI. Supplementary information

1. Current non-recurring gains/losses

√ Applicable □ Not applicable
                                                                                                                         In RMB
                       Item                                  Amount                                   Statement
 Gains/losses from the disposal of
                                                                             -21,015.26
 non-current asset
 Governmental subsidy calculated into
 current gains and losses(while closely related
 with the normal business of the Company,
                                                                           1,002,062.22
 excluding the fixed-amount or
 fixed-proportion governmental subsidy
 according to the unified national standard)
 Profit and loss of assets delegation on others’
                                                                           1,252,661.10
 investment or management
 Gains and losses from change of fair values
 of held-for-transaction financial assets and
 financial liabilities except for the effective
 hedge business related to normal business of
                                                                           -990,762.24
 the Company, and investment income from
 disposal of transactional financial assets and
 liabilities and financial assets available for
 sale
 Other non-operating income and expenditure
                                                                            370,612.55
 except for the aforementioned items
 Less: Impact on income tax                                                  11,131.51

 Affect on minority equity(after taxation)                                    4,643.68



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 Total                                                                           1,597,783.18                       --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure
for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as
recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on
Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss,
explain reasons
□ Applicable √ Not applicable

2. ROE and earnings per share

                                                                                                     Earnings per share
      Profits during report period               Weighted average ROE
                                                                                       Basic EPS (RMB/Share) Basic EPS (RMB/Share)
 Net profits belong to common stock
                                                                             -1.74%                    -0.0357                   -0.0357
 stockholders of the Company
 Net profits belong to common stock
 stockholders of the Company after
                                                                             -1.89%                    -0.0390                   -0.0390
 deducting nonrecurring gains and
 losses


3. Difference of accounting data under CAS and IAS

(1) Difference of net profit and net assets disclosed in financial report based on IAS and CAS

√ Applicable □ Not applicable
                                                                                                                                 In RMB
                                                      Net profit                                            Net assets
                                     Current Period                Last Period            Closing balance            Opening balance
 By Chinese Accounting
                                         -17,759,776.83               -15,099,180.63            991,427,598.24           1,031,768,388.87
 Standards
 Items and amount adjusted by IAS:
 Other adjustment on
 regulated funds payable in                                                                       1,067,000.00              1,067,000.00
 share market
 By             International
                                         -17,759,776.83               -15,099,180.63            992,494,598.24           1,032,835,388.87
 Accounting Standards




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                Section XI. Documents available for Reference

The office of board in the company had the complete reference file for CSRC, Shenzhen Stock
Exchange and shareholders of the company to query, including:
1. Text of financial statement with signature and seals of legal person, person in charge of
accounting works and person in charge of accounting institution;
2. Original and official copies of all documents which have been disclosed on Securities Times,
China Securities Journal, and Hong Kong Commercial Daily in the report period;
3. Original text of 2017 Semi-Annual Report with signature of the Chairman.




                                                            Shenzhen Shenbao Industrial Co., Ltd.
                                                                           Chairman: Zheng Yuxi
                                                                           24 August 2017




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