深圳南山热电股份有限公司 2018 年半年度报告全文 深圳南山热电股份有限公司 Shenzhen Nanshan Power Co., Ltd. Semi-annual Report 2018 2018-024 August 2018 1 深圳南山热电股份有限公司 2018 年半年度报告全文 Section I Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen Nanshan Power 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. President Li Xinwei - principal of the Company, Director GM Chen Yuhui, CFO- Dai Xiji and Deputy GM Wang Yi(acting manager of the financial management dept.), the person in charge of accounting works (accounting principal), hereby confirm that the Financial Report of Semi-Annual Report 2017 is authentic, accurate and complete. All directors are attended the Board Meeting for annual report deliberation Concerning the forward-looking statements with future planning involved in the Semi-Annual Report, they do not constitute a substantial commitment for investors. Investors are advised to exercise caution of investment risks. The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either. The report has been prepared in both Chinese and English, for any discrepancies, the Chinese version shall prevail. Please read the full report seriously. 2 深圳南山热电股份有限公司 2018 年半年度报告全文 Content Section I Important Notice, Contents and Paraphrase .................................................................. 2 Section II Company Profile and Main Financial Indexes .............................................................. 5 Section III Summary of Company Business .................................................................................... 8 Section IV Discussion and Analysis of the Operation ................................................................... 10 Section V Important Events ............................................................................................................ 20 Section VI Changes in shares and particular about shareholders .............................................. 33 Section VII Preferred Stock ............................................................................................................ 37 Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees ..... 38 Section IX Corporate -bond ............................................................................................................ 38 Section X Financial report .............................................................................................................. 38 Section XI Documents available for reference .............................................................................. 39 3 深圳南山热电股份有限公司 2018 年半年度报告全文 Paraphrase Items Refers to Definition Company, the Company, Shen Nan Dian, the Refers to Shenzhen Nanshan Power Co., Ltd. Listed Company Shen Nan Dian Zhongshan Co., Refers to Shen Nan Dian (Zhongshan) Electric Power Co., Ltd. Shen Nan Dian Dongguan Co., Refers to Shen Nan Dian (Dongguan) Weimei Electric Power Co., Ltd Shen Nan Dian Engineering Co., Refers to Shenzhen Shennandian Turbine Engineering Technology Co., Ltd. Shen Nan Dian Environment Protection Co., Refers to Shenzhen Shen Nan Dian Environment Protection Co., Ltd. Server Co., Refers to Shenzhen Server Petrochemical Supplying Co., Ltd. New Power Co., Refers to Shenzhen New Power Industrial Co., Ltd. Singapore Company Refers to Shen Nan Energy (Singapore) Co., Ltd. Nanshan Thermal Plant Refers to Nanshan Thermal Plant of Shenzhen Nanshan Power Co., Ltd. Zhongshan Nam Long Power Plant of Shen Nan Dian (Zhongshan) Zhongshan Nam Long Power Plant Refers to Electric Power Co., Ltd. Dongguan Gaobu Power Plant of Shen Nan Dian (Dongguan) Weimei Dongguan Gaobu Power Plant Refers to Electric Power Co., Ltd Syndisome Company Refers to Hong Kong Syndisome Co., Ltd. Article of Association Refers to Article of Association of Shenzhen Nanshan Power Co., Ltd. Except the special description of the monetary unit, the rest of the Yuan, ten thousand Yuan, one hundred million Refers to monetary unit is RMB Yuan, ten thousand Yuan Reporting period Refers to 1 January 2018 to 30 June 4 深圳南山热电股份有限公司 2018 年半年度报告全文 Section II Company Profile and Main Finnaical Indexes I. Company Profile Short form of the stock Shen Nandian A, Shen Nandian B Code for share 000037, 200037 Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in Shenzhen Nanshan Power Co., Ltd. Chinese) Short form of the Company Shen Nandian (in Chinese) (if applicable) Foreign name of the Company Shenzhen Nanshan Power Co., Ltd. (if applicable) Short form of foreign name of Shen Nan Dian the Company (if applicable) Legal representative Li Xinwei II. Contact person/ways Secretary of the Board Rep. of securities affairs Name Zhang Jie 16/F-17/F, Hantang Building, OCT, Contact adds. Nanshan District, Shenzhen, Guangdong Province Tel. 0755-26003611 Fax. 0755-26003684 E-mail investor@nspower.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 2017. 5 深圳南山热电股份有限公司 2018 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 2017. IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □ Yes √ No Increase/decrease in this Current period Same period of last year report y-o-y Operating revenue (RMB) 1,079,760,214.80 872,962,697.33 23.69% Net profit attributable to shareholders of 30,012,095.22 -22,629,201.38 -232.63% the listed Company (RMB) Net profit attributable to shareholders of the listed Company after deducting 28,904,372.78 -25,113,210.11 -215.10% non-recurring gains and losses (RMB) Net cash flow arising from operating 52,590,634.28 -65,448,855.27 -180.35% activities (RMB) Basic earnings per share (RMB/Share) 0.050 -0.040 -225.00% Diluted earnings per share (RMB/Share) 0.050 -0.040 -225.00% Weighted average ROE 1.46% -1.30% -212.31% Increase/decrease in this End of current period End of last period report-end over that of last period-end Total assets (RMB) 3,264,506,507.10 2,883,804,392.70 13.20% Net assets attributable to shareholder of 1,988,630,180.61 1,958,618,085.39 1.53% listed Company (RMB) V. Difference of the accounting data under accounting rules in and out of China 1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 6 深圳南山热电股份有限公司 2018 年半年度报告全文 2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period. VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the -849,018.73 Abandonment loss of fixed assets write-off that accrued for impairment of assets) Governmental subsidy calculated into current gains and losses (while closely related with the normal business of the Company, Government grants with assets 2,122,867.64 excluding the fixed-amount or fixed-proportion governmental concerned are amortized subsidy according to the unified national standard) Other non-operating income and expenditure except for the -5,225.00 aforementioned items Less: impact on income tax -113,500.37 Impact on minority shareholders’ equity (post-tax) -47,401.10 Total 1,107,722.44 -- 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 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, the Company has no such items in the reporting period for the aforesaid 7 深圳南山热电股份有限公司 2018 年半年度报告全文 Section III Summary of Company Business I. Main businesses of the Company in the reporting period Does the Company need to comply with the disclosure requirement of the special industry No The Company is specialized in power and thermal supply, as well as providing technical consulting and technical services for power plant (stations). The Company has three wholly-owned or holding gas turbine plants, which equipped with seven sets of 9E gas steam combined cycle power generating units, with total installed capacity up to 1260 MW (Nanshan Thermal Plant: 3×180 MW, Zhongshan Nam Long Power Plant : 2×180 MW, Dongguan Gaobu Power Plant: 2×180 MW). These three gas turbine plants are all located in the power load center of Pearl River Delta area, which are the main peaking power sources in their areas. During the reporting period, the Company is specialized in business of gas-steam combined cycle power generation, and its subsidiary Nanshan Thermal Plant, Zhongshan Nam Long Power Plant and Dongguan Gaobu Power Plant are all in the state of normal production and operation. On the basis of paying close attention to safety management, the Company closely followed the pace of power market reform in Guangdong Province, and organized Zhongshan Nam Long Power Plant and Dongguan Gaobu Power Plant to actively participate in the marketing competition of power market and achieved remarkable results. In the first half of the year, the Company completed the electric quantity settlement of 2.073 billion KWH. Among them, the subordinate power plants completed the actual on-grid power of 1.59 billion KWH, an increase of 19.82% on a year-on-year basis; Zhongshan Nanlang Power Plant and Dongguan Gaobu Power Plant totally completed the contractual power transfer of 483 million KWH. Except for the aboved mentioned generation business, subordinate Shen Nan Dian Engineering Company continued to open up the technical consultation and technical services for domestic and international gas turbine power station construction projects, the Shen Nan Dian Environment Protection Company used the waste heat generated by the gas turbine to conduct the drying treatment of wet sewage sludge of the sewage treatment plant, and realized the sludge reduction, harmless treatment, and comprehensive utilization of resources. II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Equity assets N/A Fixed assets N/A Intangible assets N/A The expenses of technical improvement from Shen Nan Dian Zhongshan Company and Construction in process Shen Nan Dian Dongguan Company increased 8 深圳南山热电股份有限公司 2018 年半年度报告全文 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis Does the Company need to comply with the disclosure requirement of the special industry No 1. Competitiveness improvement of the power market: During the reporting period, while actively striving for the base electric quantity, the Company increased the efforts in the power marketing, innovated the business management model, set up the power selling centers, and devoted research on the trading rules of power market, formulated the power trading strategy, and built mathematical models with practical operability through a large number of data analysis, which effectively improved the competitiveness of power market and provided strong supports for Zhongshan Nam Long Power Plant and Dongguan Gaobu Power Plant to fight for contractual power transfer and make success in concentrated competition trading. 2. Up and running of ShenRan natural gas terminal station: During the reporting period, the Company overcame the pressure of tight time and heavy tasks, completed the construction of technical transformation project for ShenRan natural gas terminal station of Nanshan Thermal Plant in a short period of time, broadened the natural gas supply channels of the plant, improved the stability and reliability of the gas supply, created favorable conditions for reducing the Company’s natural gas procurement cost, and effectively improved the operational efficiency of the Company’s stock assets. Found more other core competitiveness analysis in Annual Report 2017 9 深圳南山热电股份有限公司 2018 年半年度报告全文 Section IV Discussion and Analysis of the Operation I. Introduction In the first half of 2018, China’s macro-economy continued the overall smooth and stable development trend, the structural adjustments were further advanced, the new and old kinetic energy continued to be transformed, and the quality and efficiency improved steadily. The economic operation of Guangdong Province is also steadily improving, and the main leading indicators of the industrial economy are generally better than the same period last year. At the same time, since the beginning of this year, especially the middle of May, the continuous hot weather has increased the demand for electricity. According to the statistics and analysis of relevant departments, from January to June, the whole province’s total electricity consumption reached 293.049 billion kwh, an increase of 9.28% on a year-on-year basis, and the power demand grew rapidly. However, due to the tight supply of upstream gas sources and the difficulty in purchasing incremental gas sources, gas turbine power plants have the risks of out of gas and outage during the summer. During the reporting period, the Company overcame the pressure of shortage of gas, fierce market competition and aging equipment, and continued to adhere to the “1+5” strategic roadmap as the guideline, took “focusing on benefits, increasing gas sources, and promoting transformation” as the management policy, strived to improve the operational benefits of main business, continuously improved the core competitiveness, and innovated and carried out a series of fruitful work, and achieved a year-on-year turnaround in operating results. First is to pay close attention to the safety production, environmental protection and economic operation of subordinate power plants, which achieved the safety “five no” and reached the environmental protection standards. Second is to set up the electricity selling centers, while striving for the base electric quantity, the Company thoroughly studied the trading rules of electricity market in Guangdong Province and conscientiously formulated the trading strategies for contractual electricity quantity transfer transactions and monthly concentrated bidding transactions to maximize the production efficiency. Third is to cooperate with Shenzhen Gas Group Co., Ltd. to complete the construction of technical transformation project for ShenRan natural gas terminal station of Nanshan Thermal Plant, and signed the Natural Gas Purchase and Sale Agreement with it, which not only broadened the supply channels of natural gas but also eased the short supply of upstream gas sources. Fourth is to establish a fuel center, give full play to the advantages of large-scale procurement, and coordinate the procurement of natural gas in various power plants within the system, which enhanced the Company’s bargaining power; Fifth is to establish a fund center which not only guaranteed the fund security but also effectively saved the financial costs by strengthening the fund management within the system. The sixth is to steadily promote the various wok of the “Shenzhen Blue” technical transformation project in the early stages according to the relevant government policies, and strive to complete the upgrade of at least one set of low-nitrogen burners in accordance with the requirements of the government. The seventh is to track the government’s policy dynamics and related work progress on the land of Qianhai and do its utmost to protect the interests of the Company’s shareholders and employees. The eighth is to further promote the Company’s standardized operation level and management performance, we revised the Company’s “Articles of Association” and other six corporate governance systems, formulated and improved relevant management regulations and business processes, and set up an information center to provide supports for further enhancing the management efficiency. Ninth is to strengthen the party building work, and incorporate the relevant regulations of party building work into the “Articles of Association” to organically combine the strengthening of party leadership with the improvement of corporate governance. During the reporting period, the Company achived operating income of 1079.76 million Yuan, net profit attributable to parent Company amounted as 30.01 million Yuan, which increased 52.64 million Yuan over that of last period noted as (22.63) million Yuan, basic earnings per share comes to 0.05 Yuan. 10 深圳南山热电股份有限公司 2018 年半年度报告全文 II. Main business analysis Found more in “I. Introduction” in “Discussion and Analysis of the Operation”. Y-o-y changes of main financial data In RMB Y-o-y Current period Same period of last year Reasons for changes increase/decrease Mainly due to the increase of Operating revenue 1,079,760,214.80 872,962,697.33 23.69% income from generating Mainly due to the increase of costs Operating costs 969,695,053.03 827,761,559.33 17.15% from generating The sludge disposal expenses from Sales expenses 1,650,238.04 1,413,079.30 16.78% Shen Nan Dian Environment Protection Company increased Remuneration and additional Administration expenses 46,681,650.04 41,191,218.46 13.33% insurance increased Finance expenses 22,294,285.93 31,679,390.45 -29.63% Size of the loans declined Income tax expenses 8,092,879.62 920,495.87 779.19% Total profit increased R & D revenue 0.00 0.00 0.00% - Net cash flow arising 52,590,634.28 -65,448,855.27 -180.35% The electricity income increased from operating activities Net cash flow arising from investment -55,487,860.52 -39,051,315.46 42.09% Purchased more fixed assets activities Net cash flow arising The net in-flow from bank loans 354,946,385.41 -964,425,970.10 -136.80% from financing activities increased Net increase of cash and Net cash flow from operating and 352,124,110.16 -1,069,082,845.45 -132.94% cash equivalent financing activity increased Constitution of main business In RMB Increase or Increase or Increase or decrease of decrease of decrease of gross Operating Operating cost Gross profit ratio operating revenue operating cost profit ratio over revenue over same period over same period same period of of last year of last year last year According to industries Energy industry 1,029,148,179.65 938,086,620.78 8.85% 22.22% 16.50% 4.48% Engineering labor 18,700,792.84 12,077,533.63 35.42% 133.47% 76.99% 20.61% Sludge drying 30,181,205.77 18,555,258.51 38.52% 43.71% 23.46% 10.08% 11 深圳南山热电股份有限公司 2018 年半年度报告全文 According to products Power marketing 1,029,148,179.65 938,086,620.78 8.85% 22.22% 16.50% 4.48% Engineering labor 18,700,792.84 12,077,533.63 35.42% 133.47% 76.99% 20.61% Sludge drying 30,181,205.77 18,555,258.51 38.52% 43.71% 23.46% 10.08% According to region Shenzhen 589,753,220.23 522,731,356.48 11.36% 25.74% 17.05% 6.58% Zhongshan 239,056,530.40 214,543,154.75 10.25% 3.81% -1.64% 4.98% Dongguan 249,220,427.63 231,444,901.69 7.13% 45.13% 42.55% 1.69% III. Analysis of the non-main business √Applicable □ Not applicable In RMB Amount Ratio in total profit Note Whether be sustainable (Y/N) Long-term equity investment Investment income -1,076,904.31 -2.92% Y income based on Equity Changes in fair 0.00 0.00% value Asset impairment 0.00 0.00% Non-operating 4,775.00 0.01% income Non-operating Abandonment loss of fixed 859,018.73 2.33% N expenditure assets IV. Assets and liability 1. Major changes of assets composition In RMB End of same period of last End of the Period year Ratio Notes of major changes Ratio in total Ratio in total changes Amount Amount assets assets Monetary fund 774,980,279.97 23.74% 438,316,169.81 15.20% 8.54% Increase of the bank loans Account 277,917,141.93 8.51% 113,349,775.76 3.93% 4.58% Electricity charge receivable increased receivable Inventory 69,716,098.15 2.14% 77,834,903.89 2.70% -0.56% Deposit spare declined 12 深圳南山热电股份有限公司 2018 年半年度报告全文 Investment Accumulated depreciation increased in 2,704,371.51 0.08% 2,802,440.31 0.10% -0.02% property the period Long-term equity The investment losses recognized 17,177,769.09 0.53% 18,254,673.40 0.63% -0.10% investment under the Equity in the period 1,414,281,661. 1,420,620,565. Accumulated depreciation increased in Fix assets 43.32% 49.26% -5.94% 43 05 the period The expenses of technical Construction in improvement from Shen Nan Dian 68,499,522.92 2.10% 50,958,741.92 1.77% 0.33% process Zhongshan Company and Shen Nan Dian Dongguan Company increased Short-term loans 911,500,000.00 27.92% 515,850,000.00 17.89% 10.03% Increase of the bank loans Long-term loans 25,940,000.00 0.79% 25,940,000.00 0.90% -0.11% 2. Assets and liability measured by fair value □ Applicable √ Not applicable 3. Assets rights restricted till end of the period Not applicable. V. Investment 1. Overall situation In January 2010, the Company invested to CPI Jiangxi Nuclear Power Co., Ltd. in nuclear power project and holds 5% stake. As to the end of the reporting period, the investment of the Company amounted to RMB 60,615,000. The preparatory work of the project is in progress. 2. The major equity investment obtained in the reporting period □ Applicable √ Not applicable 3. The major non-equity investment caring in the reporting period □ Applicable √ Not applicable 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable 13 深圳南山热电股份有限公司 2018 年半年度报告全文 The Company had no securities investment in Period. (2) Derivative investment □ Applicable √ Not applicable The Company has no derivatives investment in Period. VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company has no sales of major assets in Period-end. 2. Sales of major equity □ Applicable √ Not applicable VII. Analysis of main Holding Company and stock-jointly companies √Applicable □Not applicable In RMB Register Operating Operating Name Type Main business Total assets Net Assets Net profit capital revenue profit Technology RMB 215,278,995.0 167,586,876. 203,631,106. 951,862.23 647,113.52 development 113.85 3 15 73 regarding to million application of remaining heat Shenzhen (excluding New Power restricted items) Subsidiary Industrial and power Co., Ltd. generation with remaining heat. Add: power generation through burning machines. Shenzhen RMB 79 138,483,201.3 103,365,140. 30,879,369.4 10,015,105 7,626,412.19 Shen Nan million 3 17 8 .16 Dian Subsidiary Sludge drying Environment Protection 14 深圳南山热电股份有限公司 2018 年半年度报告全文 Co., Ltd. Engaged in the 33,170,508.43 22,898,881.9 18,700,792.8 4,615,443. 4,615,443.80 technology 6 4 80 consultant service of gas-steam combined cycle power plant (station), maintenance and Shenzhen overhaul of Shennandian running Turbine equipment for RMB 10 Subsidiary Engineering gas-steam million Technology combined cycle Co., Ltd. power plant (station). Import and export of goods and technology (excluding distribution and monopolized commodity of the State) Self-operation of 131,265,061.0 95,212,058.1 500,076.21 -2,512,426. -2,512,426.25 fuel oil or import 1 4 25 agent business; Trading(manufac ture, storage and transportation excluded) of Shenzhen diesel, Server lubricating, RMB 53.3 Petrochemica Subsidiary liquefied million l Supplying petroleum gas, Co., Ltd. natural gas, compressed gas & liquefied gas and chemical products(chemic al hazard excluded); investment, 15 深圳南山热电股份有限公司 2018 年半年度报告全文 construction and technical assistance of relevant supporting facility of liquefied petroleum gas and natural gas; import and export of cargo and technologies, domestic trading(monopol ized commodity and commodity under special government control excluded); leasing business. Licensing project: fuel oil warehousing (refined oil products excluded); ordinary freight, cargo specific transportation (container) and cargo specific transportation (pot-type) Power 742,638,445.9 -60,449,414. 239,056,530. 1,978,342. 1,968,342.26 generation by 4 67 40 26 Shen Nan burning Dian machines, power (Zhongshan) RMB 746.8 Subsidiary generation by Electric million remaining heat, Power Co., power supply Ltd. and heat supply (excluding 16 深圳南山热电股份有限公司 2018 年半年度报告全文 pipeline network of heat supply), lease of dock and oil storage (excluding oil products, dangerous chemicals and inflammable and explosive materials). Shen Nan 731,535,829.3 99,460,765.7 249,516,171. -1,065,959. -1,065,959.31 Dian 4 3 77 31 Construction and (Dongguan) operation of US $ 35.04 Weimei Subsidiary natural gas million Electric power plants. Power Co., Ltd Shen Nan Oil product 344,352,056.9 341,853,709. / 155,214.19 155,214.19 Energy trading, spare US $ 0.9 0 78 Subsidiary (Singapore) part of the gas million Co., Ltd. turbine agent Development, RMB 3,705,302,370 1,197,574,23 9,222,121.41 2,497,851. 2,517,851.69 building & 1193.27 .27 5.52 69 operating and million management of the nuclear power project; producing electricity and relevant CPI Jiangxi Stock products; foreign Nuclear jointly trade Power Co., Company operation(exclud Ltd. ing the import and export business of cargo exercise state-run trading management); (except for the projects with special 17 深圳南山热电股份有限公司 2018 年半年度报告全文 permission from the State) VIII. Structured vehicle controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January – September 2018 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation on reason □ Applicable √ Not applicable X. Risks and countermeasures 1. Safety production: various degrees of ageing signs of the power generating equipment in the subsidiary power plants of the Company continue to emerging, potential failures and security risks are increasing by years, which raise higher demands on equipment management and service input, furthermore, the age structure of the Company is gradually ageing, we are facing great challenges in aspect of safety management. The Company shall strengthen the maintenance and regular examination of the equipment, enhance the security education and training of the employees, improve the responsibility system of safety production, strictly implement safety management system, raise the awareness of safety and responsibility of personnel at all levels, to ensure the normal operation of equipment and eliminate the potential failures and accidents in the bud. 2. Fuel Supplying: According to the pre-judgment of the power market situation in Guangdong Province, the whole province’s electric power supply shall be tight in the third quarter, and the maximum load demand is adjusted to 120 million kilowatts, a year-on-year growth of 10.5%. However, due to the tight supply of upstream gas sources and the continuous hot weather, the demand for power generation load has exceeded expectations, the Company’s existing contracted quantity of natural gas is expected to be difficult to meet the demand for power generation in the second half of the year, and the supply of natural gas is uncertain. At the same time, affected by factors such as the international situation and tight source gas supply, the price of natural gas is expected to rise in the second half of the year, which will cause certain pressure on the Company’s production and operation. In the second half of the year, the Company will give full play to the advantages of large-scale procurement and the multiple gas source regulatory function to reduce the procurement cost of natural gas while meeting the demand for electricity production. On the basis of considering both the supply and the cost of natural gas, the Company will earnestly do a good job in the marketing analysis of power market, and do its utmost to improve the profitability of the main business of electric power in line with the principle of “benefit first”. 3. Environmental protection policy: During the reporting period, the Shenzhen Municipal Government formulated the “Shenzhen Blue” Sustainable Action Plan and clarified that “the whole city’s seven gas-fired power plants will be supervised and urged to respectively complete the upgrade of low-nitrogen burners or the transformation of flue gas denitrification of more than one gas turbine set before October 31, 2018. From November 1 st, 2018, the gas turbine sets that have not completed low-nitrogen burner upgrade or flue gas denitrification transformation shall not be dispatched to generate electricity.” (For details, please refer to the Notice About Received the Notification of Shenzhen Municipal People’s Government on Printing and Issuing the 2018 “Shenzhen Blue” (Notice No.: 2018-015) Sustainable Action Plan that the Company disclosed on China Securities Journal, Securities Times, Hong Kong Commercial Daily and www.cninfo.com.cn), which increased the Company’s environmental pressure to a certain extent. At present, the Company has started the preliminary work of related technical transformation, and strives to complete the upgrade of at least one set of low-nitrogen burners within the prescribed time limit according to the government requirements. However, as of 18 深圳南山热电股份有限公司 2018 年半年度报告全文 the end of the reporting period, the government’s relevant financial subsidy policy has not yet been introduced. The Company will actively follow the implementation of government subsidy policy and formulate the technical reform plan for the remaining sets based on the actual conditions. 4. Main business operation: Although the Company achieved a turnaround in operating performance in the first half of the year, the Company’s main business direction and operating environment have not fundamentally changed; there are still some uncertainties about whether it can achieve the continuous profitability, in addition, the relevant matters concerning the land where Nanshan Thermal Plant is located have not yet been clarified, therefore, the Company’s main business operation still faces challenges. The Company will strive to improve the profitability and overall operating efficiency of its main business by strengthening the management of its existing assets. Meanwhile, the Company will actively explore diversified business models and transformational development opportunities to create better conditions for the Company’s sustainable operation and healthy development. The Company reminds investors to pay attention to the major risks and other risks that the Company may face in this report and in previous periodic reports so as to prudently make rational investment decisions. 19 深圳南山热电股份有限公司 2018 年半年度报告全文 Section V Important Events I. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting 1. Shareholders’ General Meeting in the report period Ratio of investor Session of meeting Type Opening date Date of disclosure Index of disclosure participation “Resolution Notice of Annual General Meeting 2017” No.:2018-014, Annual General released on “China Meeting (AGM) of AGM 38.81% 2018-04-12 2018-04-13 Securities Journal” 2017 “Securities Times” “Hong Kong Commercial Daily” and Juchao Website 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 has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the semi-annual year. 20 深圳南山热电股份有限公司 2018 年半年度报告全文 III. Commitments that the committed party as the Company, actual controller, shareholders, related party and buyer have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period □ Applicable √ Not applicable There are no commitments that the committed party as the Company, actual controller, shareholders, related party and buyer have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period IV. Appointment and non-reappointment (dismissal) of CPA Financial report has been audit or not □ Yes √ No Not been audited V. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion” that issued by CPA □ Applicable √ Not applicable VI. Explanation from the Board for “Qualified Opinion” of last year’s □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization for the Company in Period. 21 深圳南山热电股份有限公司 2018 年半年度报告全文 VIII. Lawsuits Material lawsuits and arbitration □Applicable √Not applicable There are no material lawsuits and arbitration in the period Other litigation items □Applicable √Not applicable IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in Period. X. Integrity of the Company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or other emplo □ Applicable √ Not applicable The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period. XII. Major related transaction 1. Related transaction with routine operation concerned □ Applicable √ Not applicable The Company had no related transaction with routine operation concerned in Period. 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in Period. 3. Main related transactions of mutual investment outside □ Applicable √ Not applicable No main related transactions of mutual investment outside for the Company in Period. 4. Contact of related credit and debt √Applicable □ Not applicable 22 深圳南山热电股份有限公司 2018 年半年度报告全文 Whether has non-operational contact of related liability and debts or not √ Yes □ No Claim receivable from related party: Whether has Balance at Current Current Current Ending non-busines period-begin newly added recovery interest Related balance (10 Relationship Causes s capital (10 (10 (10 Interest rate (10 party thousand occupying thousand thousand thousand thousand Yuan) or not (Y/N) Yuan) Yuan) Yuan) Yuan) Shen Nan Routine Dian Subsidiary current N 60,793.38 20,050.16 10,042 5.20% 1,501.98 72,303.52 Zhongshan account Co., Shen Nan Routine Dian Subsidiary current N 28,809.47 40,818.72 20,031.82 5.20% 760.22 50,356.59 Dongguan account Co., Shen Nan Dian Routine Environmen Subsidiary current N 1,275.39 640.91 645.32 1,270.98 t Protection account Co., Shen Nan Routine Dian Subsidiary current N 134.96 95.47 134.96 95.47 Engineering account Co., Routine Singapore Subsidiary current N 147.71 147.71 Company account Influence on business performance and financial Current assets RMB 329.1789 million increased in the Period. status of the Company from related liabilities Debts payable to related party: Balance at Current Current Current Ending period-begin newly added recovery interest balance (10 Related party Relationship Causes Interest rate (10 thousand (10 thousand (10 thousand (10 thousand thousand Yuan) Yuan) Yuan) Yuan) Yuan) Routine New Power Subsidiary current 6,380.34 33,207.95 31,209.97 8,378.32 Co., account 23 深圳南山热电股份有限公司 2018 年半年度报告全文 Routine Server Co., Subsidiary current 7,000 68.51 3.92% 137.78 7,069.27 account Routine Syndisome Subsidiary current 361.77 22.55 17.7 366.62 Company account Influence on business performance and financial Current liability RMB 20.721 million increased in the Period status of the Company from related debts 5. Other major related transactions □Applicable √Not applicable There are no other major related transactions in the period XIII. Non-business capital occupying by controlling shareholders and its related parties □ Applicable √ Not applicable No non-business capital occupied by controlling shareholders and its related parties in Period. XIV. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship √Applicable □ Not applicable In line with the Genset Asset Trusteeship Contract of Shenzhen New Power Industrial Co., Ltd. re-signed with New Power Company in August 2017, the Company was entrusted to operate and manage the power generation machine unit owned by its wholly-owned subsidiary New Power Company. The custody business service charge RMB 7.3922 million was obtained by the Company in reporting period. Gains/losses to the Company from projects that reached over 10% in total profit of the Company in reporting period □Applicable √Not applicable The Company has no gains/losses that reached over 10% in total profit of the Company in reporting period (2) Contract □ Applicable √ Not applicable No contract for the Company in Period. (3) Leasing □ Applicable √ Not applicable 24 深圳南山热电股份有限公司 2018 年半年度报告全文 No leasing for the Company in Period. 2. Major guarantees √Applicable □ Not applicable (1) Guarantees In 10 thousand Yuan Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) Guarante Related Actual date of e for Name of the Announce Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related of signing guarantee limit type term guaranteed disclosure limit ted (Y/N) agreement) party date (Y/N) Total actual occurred external Total approving external 0 guarantee in report period 0 guarantee in report period (A1) (A2) Total approved external Total actual balance of guarantee at the end of report 0 external guarantee at the end 0 period ( A3) of report period (A4) Guarantee of the Company for the subsidiaries Guarante Related Actual date of e for Name of the Announce Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related limit of signing guarantee limit type term guaranteed disclosure ted (Y/N) agreement) party date (Y/N) Shen Nan Dian General 2017-03-28 5,000 2017-07-07 1,108 One year N Y Zhongshan Co., assurance Shen Nan Dian General 2017-03-28 4,400 2017-05-27 2,594 Five years N Y Zhongshan Co., assurance Shen Nan Dian General 2017-03-28 5,000 2017-08-17 3,150 One year N Y Zhongshan Co., assurance Shen Nan Dian General 2017-03-28 13,500 2017-12-13 1,067 One year N Y Dongguan Co., assurance Shen Nan Dian 2017-03-28 10,000 2017-07-27 5,000 General One year N Y 25 深圳南山热电股份有限公司 2018 年半年度报告全文 Dongguan Co., assurance Shen Nan Dian General 2017-03-28 10,000 2017-07-14 5,000 One year N Y Dongguan Co., assurance General New Power Co., 2017-03-28 10,000 2018-03-09 2,000 One year N Y assurance Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in 57,900 19,919 subsidiaries in report period report period (B1) (B2) Total balance of actual Total amount of approved guarantee for subsidiaries at guarantee for subsidiaries at the 57,900 19,919 the end of reporting period end of reporting period (B3) (B4) Guarantee of the subsidiary for the subsidiaries Guarante Related Actual date of e for Name of the Announce Guarantee happening (Date Actual Guarantee Guarantee Implemen Company ment related limit of signing guarantee limit type term guaranteed disclosure ted (Y/N) agreement) party date (Y/N) Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in 0 0 subsidiaries in report period report period (C1) (C2) Total balance of actual Total amount of approved guarantee for subsidiaries at guarantee for subsidiaries at the 0 0 the end of reporting period end of reporting period (C3) (C4) Total amount of guarantee of the Company (total of three abovementioned guarantee) Total amount of approving Total amount of actual guarantee in report period 57,900 occurred guarantee in report 19,919 (A1+B1+C1) period (A2+B2+C2) Total amount of approved Total balance of actual guarantee at the end of report 57,900 guarantee at the end of report 19,919 period (A3+B3+C3) period (A4+B4+C4) The proportion of the total amount of actually guarantee in the 10.02% net assets of the Company (that is A4+ B4+C4) Including: Amount of guarantee for shareholders, actual controller and its 0 26 深圳南山热电股份有限公司 2018 年半年度报告全文 related parties (D) The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or 17,919 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) 17,919 Explanations on possibly bearing joint and several liquidating N/A responsibilities for undue guarantees (if applicable) Explanations on external guarantee against regulated N/A procedures (if applicable) (2) Guarantee outside against the regulation □ Applicable √ Not applicable No entrust financing and entrust loans for the Company in reporting period. 3. Other material contracts √Applicable □Not applicable The The assesse book d The The value Whethe value The The name name The of the Name of r of the base Bargain perform The of the of the date of assets the Pricing connect Inciden contract assets date price(R ance by date of contrac contract signatur involve evaluation principl ed ce Index object involve evaluati MB’00 the end disclos ting ed e of the d in the organizatio es transact relation d in the on (if 00) of the ure Compa Compa contract contract n(if any) ion(Y/ contract any) term ny ny (RMB’ N) (RMB’ 0000)(i 0000)(i f any) f any) China The Compo Compo Notice offshor master sed of sed of of e oil agreem natural liquefie Purchas and gas Liquefi ent gas d 15 Dec. ing The Not In Refco ed signed prices, natural 2012; Changy Compa N applica progres Group natural on 15 the cost gas 22 Aug. ue ny ble s Ltd gas January of prices, 2017 Natural Guangd 2013 integrat the cost Gas ong with ed of (Notice Branch( valid services integrat No.: 27 深圳南山热电股份有限公司 2018 年半年度报告全文 China until 31 and tax. ed 2012-0 offshor Decem services 54) and e oil ber and tax. Resolut and gas 2017. ion Refco The Notice Group two of the Ltd parties Extraor Guangd are dinary ong entered 21st Sales into Meetin Branch, supple g of 7th Zhuhai mentar BOD Sales y (Notice Branch) agreem No.: ) ent on 2017-0 22 54) August release 2017, d on and China renewe Securiti d the es master Journal, agreem Securiti ent for es one Times, year. Hong Kong Comme rcial Daily and Juchao Website Compo Compo Notice CNOO sed of sed of of Shen C natural liquefie Major Nan Refco Liquefi gas d Contrac Not In Dian Group ed 2013-1 prices, natural 2013-1 t N applica progres Dongg Ltd natural 2-21 the cost gas 1-30 (Notice ble s uan Guangd gas of prices, No.: Co., ong integrat the cost 2013-0 Branch ed of 44) services integrat release 28 深圳南山热电股份有限公司 2018 年半年度报告全文 and tax. ed d on services China and tax. Securiti es Journal, Securiti es Times, Hong Kong Comme rcial Daily and Juchao Website Notice of Major Contrac t (Notice No.: Compo 2014-0 Compo sed of 30) sed of liquefie release CNOO natural d d on Shen C gas natural China Nan Liquefi Refco prices, gas Not In Securiti Dian ed 2014-5- 2014-4- Group the cost prices, N applica progres es Zhongs natural 31 25 Ltd of the cost ble s Journal, han gas Zhuhai integrat of Securiti Co., Branch ed integrat es services ed Times, and tax. services Hong and tax. Kong Comme rcial Daily and Juchao Website 。 29 深圳南山热电股份有限公司 2018 年半年度报告全文 It was a It was a framew framew ork ork agreem agreem ent, the ent, the price of price of Fail to NG NG release The will will d for Shenzh Compa make make special en Gas Not In ny, Pipelin 2018-5- by the by the disclos Corpor N applica progres New e gas 14 two two ure ation ble s Power parties parties conditi Ltd. Co., accordi accordi on ng to ng to un-qual the the ified supple supple mentar mentar y y agreem agreem ent ent XV. Social responsibility 1. Major environmental protection The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department Pollutant Distribution Enterprise Main Number of Emission discharge Total Way of of the Total Excessive or pollutant discharge concentratio standard approved discharge discharge discharge emission subsidiary and features outlet n implemente emissions outlet d Shenzhen Concentrate In plant area Nanshan emission of Nanshan GB13223-2 Oxynitride 2 <25 mg/m3 149.49 ton 457.5 ton 0 Power Co., from boiler Thermal 011 Ltd. uptake Plant Shenzhen Concentrate In plant area New Power emission of Nanshan GB13223-2 Oxynitride 1 <25 mg/m3 55.87 ton 228.75 ton 0 Industrial from boiler Thermal 011 Co., Ltd. uptake Plant Shen Nan In plant area Concentrate Dian of GB13223-2 Oxynitride emission 2 <25 mg/m3 19.8 ton 438.9 ton 0 (Dongguan) Dongguan 011 from boiler Weimei Gaobu 30 深圳南山热电股份有限公司 2018 年半年度报告全文 Electric uptake Power Plant Power Co., Ltd Shen Nan In plant area Dian Concentrate of (Zhongshan emission GB13223-2 Oxynitride 2 Zhongshan <25 mg/m3 42.6 ton 324.50 ton 0 ) Electric from boiler 011 Nam Long Power Co., uptake Power Plant Ltd. (2) Construction and operation of the pollution controlling instruments All pollution prevention and control facilities are operating normally, and all pollutant discharges are stable and up to standard. (3) Environmental impact assessment of construction projects and other environmental protection administrative licenses All the above four legal entities have passed the environmental impact assessment and have been filed in Guangdong Environmental Protection Department. (4) Emergency plan for sudden environmental incidents The emergency plan for sudden environmental incidents has been filed in Guangdong Environmental Protection Department and the corresponding Municipal Environmental Protection Bureau. (5) Environmental self-monitoring program The environmental self-monitoring program has been prepared and reviewed by the environmental protection department; the information on the monitoring data is disclosed on the website of the environmental protection department on time. (6) Other environmental information that should be disclosed Nil (7) Relevant other information Nil 2. Fulfill the precise social responsibility for poverty alleviation The Company has no precision poverty alleviation temporary in the year, and no subsequent program either XVI. Other major events √Applicable □ Not applicable 1. T102-0011, T102-0155 land related matters. During the reporting period, the Company closely tracked the situation of the comprehensive planning of the Qianhai Shekou Free Trade Zone and the work dynamics of the Shenzhen Municipal Government and other relevant departments. On March 5, 2018, after learned the notice on the Public Participation Publicity About the Social Stability Risk Analysis of Yueliangwan Avenue Rapid Transformation Project from the public website of “Transport Commission of Shenzhen Municipality”, the Company immediately conferred with the Company’s special legal counsel, drafted the reply according to the relevant requirements of the notice, and submitted to the construction unit “Shenzhen Transportation Public Facilities Construction Center” and the social stability risk assessment agency undertaking the evaluation work “Guizhou Transportation Planning Survey and Design Academe Co., Ltd.” before the specified deadline, and put forward opinions and suggestions on the significant impacts that the project construction may have on the Company and its subsidiaries. In addition, considering that the Company’s Statement of Objection on the “Comprehensive Planning of Qianhai Shekou Free Trade Zone” submitted to the Urban Planning, Land & Resources 31 深圳南山热电股份有限公司 2018 年半年度报告全文 Commission of Shenzhen Municipality on August 10, 2017 has received no reply, in order to re-declare the Company’s standpoint, the Company submitted the Application for Shennandian Company to Amend the Comprehensive Planning of China (Guangdong) Pilot Free Trade Zone Shenzhen Qianhai Shekou Zone to the Urban Planning, Land & Resources Commission of Shenzhen Municipality on April 13, 2018, reaffirmed the impacts that the Comprehensive Planning of China (Guangdong) Pilot Free Trade Zone Shenzhen Qianhai Shekou Zone (hereinafter referred to as “Planning”) may make on the Company, and proposed to modify the planning contents involving the Company’s land in the “Planning”. Since then, the Company has continued to maintain contact with relevant government departments. The Company will continue to actively carry out relevant work with the participation and cooperation of legal counsel, closely track the situation of the comprehensive planning of the Qianhai Shekou Free Trade Zone, and do its utmost to safeguard the rights and interests of the Company’s shareholders and employees. 2. “Shenzhen Blue” renovation project. During the reporting period, the Shenzhen Municipal Government formulated the “Shenzhen Blue” Sustainable Action Plan and clarified that “the whole city’s seven gas-fired power plants will be supervised and urged to respectively complete the upgrade of low-nitrogen burners or the transformation of flue gas denitrification of more than one gas turbine set before October 31, 2018. From November 1st, 2018, the gas turbine sets that have not completed low-nitrogen burner upgrade or flue gas denitrification transformation shall not be dispatched to generate electricity.” (For details, please refer to the Notice About Received the Notification of Shenzhen Municipal People’s Government on Printing and Issuing the 2018 “Shenzhen Blue” (Notice No.: 2018-015).At present, the Company has started the preliminary work of related technical transformation, and strives to complete the upgrade of at least one set of low-nitrogen burners within the prescribed time limit according to the government requirements. 3. Refunds of the “Project Technical Reform Benefit Fund”. During the reporting period, the Company continued to carry out the relevant collection work for the refunds of the “Project Technical Reform Benefit Fund”, and contacted and communicated with related parties, but the work has not yet made substantial progress. In addition to the above matters, the Company’s #7, #9 unit asset transfer work, and the Company’s participation in the Xingjiang Aid Project of Guangdong Province, and the Company’s plan to apply to National Association of Financial Market Institutional Investors for the registration and issuance of medium term notes with total amount not more than 500 million Yuan (including 500 million Yuan) and for the private placement of corporate bonds not exceeding 2 billion Yuan (including 2 billion Yuan) did not make progress or change during the reporting period. XVII. Major event of the subsidiaries □Applicable √Not applicable 32 深圳南山热电股份有限公司 2018 年半年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital In Share Before the Change Increase/Decrease in the Change (+, -) After the Change New Capitalization Bonus Subtot Proportio Amount Proportion shares of public Others Amount shares al n issued reserve I. Restricted shares 14,138 0.0023% 14,138 0.0023% 3. Other domestic shares 14,138 0.0023% 14,138 0.0023% Domestic nature 14,138 0.0023% 14,138 0.0023% person shares II. Unrestricted shares 602,748,458 99.9977% 602,748,458 99.9977% 1. RMB Ordinary shares 338,894,012 56.2235% 338,894,012 56.2235% 2. Domestically listed 263,854,446 43.7742% 263,854,446 43.7742% foreign shares III. Total shares 602,762,596 100.00% 602,762,596 100.00% Reasons for share changed □ Applicable √ Not applicable Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changes □ Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable Other information necessary to disclose or need to disclosed under requirement from security regulators □ Applicable √ Not applicable 2. Changes of restricted shares □ Applicable √ Not applicable 33 深圳南山热电股份有限公司 2018 年半年度报告全文 II. Securities issuance and listing □ Applicable √ Not applicable III. Number of shares and shares held In Share Total preference shareholders with Total common shareholders at voting rights recovered at end of 30,739 0 period-end reporting period (if applicable) (note8) Particulars about common shares held above 5% by shareholders or top ten common shareholders Amount of Number of share Changes Amount of Proportion Number of restricted pledged/frozen in un-restricted Shareholders Nature of shareholder of shares common shares common reporting common State of Amoun held held at period-end shares period shares held share t held HONG KONG NAM HOI Overseas corporate 15.28% 92,123,248 0 0 92,123,248 (INTERNATIO NAL) LTD Shenzhen Guangju State-owned corporate 12.22% 73,666,824 0 0 73,666,824 Industrial Co., Ltd. SHENZHEN ENERGY State-owned corporate 10.80% 65,106,130 0 0 65,106,130 (GROUP) CO., LTD. BOCI SECURITIES Overseas corporate 1.44% 8,690,627 0 0 8,690,627 LIMITED Domestic nature Zeng Ying 1.14% 6,878,096 0 0 6,878,096 person China Merchants State-owned corporate 1.13% 6,823,369 0 0 6,823,369 Securities (HK) Co., Limited Domestic nature Liu Fang 0.93% 5,604,273 0 0 5,604,273 person 34 深圳南山热电股份有限公司 2018 年半年度报告全文 Meiyi Domestic Investment non-state-owned 0.77% 4,615,800 0 0 4,615,800 Property Co., corporate Ltd. Domestic nature Li Baoqin 0.66% 3,989,100 0 0 3,989,100 person Domestic nature Zhang Heping 0.64% 3,840,300 0 0 3,840,300 person 1. Shenzhen Energy (Group) Co., Ltd. holds indirectly 100% equities of Hong Kong Nam Explanation on associated relationship Hoi (International) Limited; 2. Among other social public shareholders, the Company did among the aforesaid shareholders not know whether there were associated relationships or belonging to consistent actors. Particular about top ten common shareholders with un-restrict shares held Amount of un-restrict common shares held at Type of shares Shareholders period-end Type Amount Domestically HONG KONG NAM HOI 92,123,248 listed foreign 92,123,248 (INTERNATIONAL) LTD shares RMB ordinary Shenzhen Guangju Industrial Co., Ltd. 73,666,824 73,666,824 shares SHENZHEN ENERGY (GROUP) CO., RMB ordinary 65,106,130 65,106,130 LTD. shares Domestically BOCI SECURITIES LIMITED 8,690,627 listed foreign 8,690,627 shares Domestically Zeng Ying 6,878,096 listed foreign 6,878,096 shares Domestically China Merchants Securities (HK) Co., 6,823,369 listed foreign 6,823,369 Limited shares RMB ordinary 2,659,373 shares Liu Fang 5,604,273 Domestically listed foreign 2,944,900 shares RMB ordinary Meiyi Investment Property Co., Ltd. 4,615,800 4,615,800 shares RMB ordinary Li Baoqin 3,989,100 949,800 shares 35 深圳南山热电股份有限公司 2018 年半年度报告全文 Domestically listed foreign 3,039,300 shares RMB ordinary 2,600,000 shares Zhang Heping 3,840,300 Domestically listed foreign 1,240,300 shares Expiation on associated relationship or 1. 100% equity of HONG KONG NAM HOI (INTERNATIONAL) LIMITED was held consistent actors within the top 10 by SHENZHEN ENERGY (GROUP) CO., LTD un-restrict shareholders and between top 2. Among other social public shareholders, the Company did not know whether there were 10 un-restrict shareholders and top 10 associated relationships or belonging to consistent actors. shareholders Explanation on top 10 shareholders Among the top ten shareholders, Ms. Liu Fang holds 2,659,373 shares through credit involving margin business transaction guarantee securities account Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period. IV. Changes of controlling shareholders or actual controller Change of controlling shareholders in reporting period □ Applicable √ Not applicable Controller of the Company has no changes in the reporting period Change of actual controller in reporting period □ Applicable √ Not applicable Actual controller of the Company has no changes in the reporting period 36 深圳南山热电股份有限公司 2018 年半年度报告全文 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting. 37 深圳南山热电股份有限公司 2018 年半年度报告全文 Section VIII. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report 2017. II. Resignation and dismissal of directors, supervisors and senior executives □ Applicable √ Not applicable Directors, supervisors and senior executives have no changes in the period, found more in Annual Report 2017 Section IX Corporation Bonds Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when annual report approved for released or fail to cash in full on due Nil Section X. Financial Report I. Auditing report Whether the semi-annual report have been audited or not □ Yes √ No The financial report of the semi-annual report has not been audited (attached) 38 深圳南山热电股份有限公司 2018 年半年度报告全文 Section XI. Documents Available for Reference I. Original semi-annual Report of 2018carried with the personnel signature of Legal Representative; II. Accounting Statements carried with the signature and seals of the person in charge of the Company (Legal Representative), person in charge of accounting (General Manager and CFO) and person in charge of accounting department (chief accountants); III. All the original Company’s documents and public notices disclosed in Securities Times, China Securities Journal and Hong Kong Commercial Daily in the report period; IV. Place for inspection: Shenzhen Stock Exchange, Secretariat of the Board of Director of the Company. Shenzhen Nanshan Power Co., Ltd. Legal Representative: Li Xinwei 11 August 2018 39 深圳南山热电股份有限公司 2018 年半年度报告全文 Shenzhen Nanshan Power Co., Ltd. Financial Statement Semi-Annual Report (ended as 30 June 2018) 40 深圳南山热电股份有限公司 2018 年半年度报告全文 Consolidated Balance Sheet In RMB/CNY Liabilities and owners’ Asset 2018-6-30 2017-12-31 2018-6-30 2017-12-31 equity Current assets: Current liabilities: Monetary funds 774,980,279.97 438,316,169.81 Short-term loans 911,500,000.00 515,850,000.00 Notes receivable 100,000.00 6,702,500.00 Notes payable - 51,439,580.56 Accounts receivable 277,917,141.93 113,349,775.76 Accounts payable 54,333,872.94 15,094,912.60 Accounts paid in Accounts received in advance 58,522,566.11 119,069,891.55 advance - - Interest receivable - - Wage payable 46,502,561.49 48,337,588.25 Dividend receivable - - Taxes payable 16,782,515.76 15,437,758.76 Other receivables 45,683,216.71 38,771,888.74 Interest payable 3,403,850.17 3,006,993.33 Inventories 69,716,098.15 77,834,903.89 Dividend payable - - Long-term debt Other accounts investment due within - - payable 86,175,436.00 83,214,183.57 1 year Other current Long-term liabilities assets 401,276,677.02 452,184,523.24 due within 1 year - 32,400,000.00 Total current Total current assets 1,628,195,979.89 1,246,229,652.99 liabilities 1,118,698,236.36 764,781,017.07 Non-current assets: Non-current liabilities: Financial assets available for sale 60,615,000.00 60,615,000.00 Long-term loans 25,940,000.00 25,940,000.00 Long-term account receivable - - Accrual liabilities 26,766,590.38 26,788,590.38 Long-term equity investment 17,177,769.09 18,254,673.40 Deferred income 39,925,363.48 41,948,231.12 Investment Other non-current property 2,704,371.51 2,802,440.31 liabilities - - Total non-current Fixed assets 1,414,281,661.43 1,420,620,565.05 liabilities 92,631,953.86 94,676,821.50 Construction in progress 68,499,522.92 50,958,741.92 Total liabilities 1,211,330,190.22 859,457,838.57 Disposal of fixed 1,314.60 - Owners’ equity: asset Intangible assets 47,226,669.23 48,470,500.60 Share capital 602,762,596.00 602,762,596.00 Long-term Capital public expenses to be - - reserve 362,770,922.10 362,770,922.10 apportioned Deferred income Other comprehensive tax asset 2,922,036.65 2,922,036.65 income - - Other Surplus public non-current asset 22,882,181.78 32,930,781.78 reserve 332,908,397.60 332,908,397.60 Total non-current asset 1,636,310,527.21 1,637,574,739.71 Retained profit 690,188,264.91 660,176,169.69 Total owner’s equity 1,988,630,180.61 1,958,618,085.39 attributable to parent 41 深圳南山热电股份有限公司 2018 年半年度报告全文 Company Minority interests 64,546,136.27 65,728,468.74 Total shareholders’ equity 2,053,176,316.88 2,024,346,554.13 Total liabilities and Total assets 3,264,506,507.10 2,883,804,392.70 shareholders’ equity 3,264,506,507.10 2,883,804,392.70 Balance Sheet of the Company In RMB/CNY Liabilities and owners’ Asset 2018-6-30 2017-12-31 2018-6-30 2017-12-31 equity Current assets: Current liabilities: Monetary funds 513,661,278.18 159,883,551.05 Short-term loans 760,000,000.00 50,000,000.00 Notes receivable - - Notes payable - 38,863,779.64 Accounts receivable 136,717,345.45 17,599,743.80 Accounts payable 33,651,889.87 1,467,087.08 Accounts paid in Accounts received in advance 14,859,188.54 72,042,056.16 advance - - Interest receivable - - Wage payable 25,480,387.21 23,669,295.53 Dividend receivable - - Taxes payable 7,639,768.86 5,703,576.67 Other receivables 1,244,150,689.68 913,646,990.47 Interest payable 1,116,698.61 175,740.00 Inventories 59,226,898.69 68,187,593.73 Dividend payable - - Long-term debt investment due within 1 - - Other accounts payable 202,216,771.64 176,793,775.07 year Other current Non current liabilities assets 370,795,974.30 406,616,846.60 due within one year - - Total current assets 2,339,411,374.84 1,637,976,781.81 Total current liabilities 1,030,105,516.19 296,673,253.99 Non-current assets: Non-current liabilities: Financial assets available for sale 60,615,000.00 60,615,000.00 Long-term loans - - Long-term equity investment 691,982,849.76 691,982,849.76 Deferred income 22,340,902.29 23,665,762.95 Investment Other non-current property - - liabilities - - Total non-current Fixed assets 269,752,767.00 220,519,962.58 liabilities 22,340,902.29 23,665,762.95 Construction in progress 774,060.84 755,227.83 Total liabilities 1,052,446,418.48 320,339,016.94 Disposal of fixed - - Owners’ equity: asset Intangible assets 2,120,473.64 2,726,256.15 Share capital 602,762,596.00 602,762,596.00 Long-term expenses to be - - Capital public reserve 289,963,039.70 289,963,039.70 apportioned 42 深圳南山热电股份有限公司 2018 年半年度报告全文 Deferred income Other comprehensive tax asset - - income - - Other non-current asset - 1,516,600.00 Surplus public reserve 332,908,397.60 332,908,397.60 Total non-current asset 1,025,245,151.24 978,115,896.32 Retained profit 1,086,576,074.30 1,070,119,627.89 Total shareholders’ equity 2,312,210,107.60 2,295,753,661.19 Total liabilities and Total assets 3,364,656,526.08 2,616,092,678.13 shareholders’ equity 3,364,656,526.08 2,616,092,678.13 Consolidated Profit Statement In RMB/CNY Item Jan.-Jun. 2018 Jan.-Jun.2017 I. Total operation income 1,079,760,214.80 872,962,697.33 Including: operation income 1,079,760,214.80 872,962,697.33 II. Total operation cost 1,045,043,229.77 905,059,018.04 Including: operation cost 969,695,053.03 827,761,559.33 Operation tax and surcharge 4,722,002.73 3,494,481.47 Sales expense 1,650,238.04 1,413,079.30 Management expense 46,681,650.04 41,191,218.46 Financial expense 22,294,285.93 31,679,390.45 Loss of assets impairment - -480,710.97 Add: Changing income of fair value (Loss is listed with “-”) - - Investment income (Loss is listed with “-”) -1,076,904.31 -1,019,420.00 Including: Investment income on affiliated Company and joint venture - - Other income 4,136,805.38 3,489,863.10 III. Operating profit (Loss is listed with “-”) 37,776,886.10 -29,625,877.61 Add: Non-operating income 4,775.00 5,796.00 Incl: Gains of non-current asset scrap and damage - - Less: Non-operating expense 859,018.73 172,009.57 Incl: Loss of non-current asset scrap and damage 849,018.73 160,729.35 IV. Total Profit (Loss is listed with “-”) 36,922,642.37 -29,792,091.18 Less: Income tax expense 8,092,879.62 920,495.87 V. Net profit (Net loss is listed with “-”) 28,829,762.75 -30,712,587.05 Net profit attributable to owner’s of parent Company 30,012,095.22 -22,629,201.38 43 深圳南山热电股份有限公司 2018 年半年度报告全文 Minority shareholders’ gains and losses -1,182,332.47 -8,083,385.67 VI. Net after-tax of other comprehensive income - - VII. Total comprehensive income 28,829,762.75 -30,712,587.05 Total comprehensive income attributable to owners of parent 30,012,095.22 -22,629,201.38 Company Total comprehensive income attributable to minority -1,182,332.47 -8,083,385.67 shareholders VIII. Earnings per share: - - (i) Basic earnings per share 0.05 -0.04 (ii) Diluted earnings per share 0.05 -0.04 Profit Statement of the Company In RMB/CNY Item Jan.-Jun.2018 Jan.-Jun.2017 I. Operation income 406,846,441.84 328,400,559.49 Less: Operation cost 373,230,061.12 353,421,168.22 Tax and surcharge 854,057.24 698,660.66 Sales expense - - Management expense 21,014,208.00 19,400,916.35 Financial expense -9,527,151.94 -10,302,383.72 Loss of assets impairment - -480,710.97 Add: Changing income of fair value (Loss is listed with “-”) - - Investment income (Loss is listed with “-”) Including: Investment income on affiliated Company and joint venture - - Other income 1,424,860.66 1,520,540.66 II. Operating profit (Loss is listed with “-”) 22,700,128.08 -32,816,550.39 Add: Non-operating income 1,775.00 1,000.00 Including: Disposal gains of non-current asset - - Less: Non-operating expense 759,974.53 159,602.00 Incl: Loss of non-current asset scrap and damage 759,974.53 159,602.00 III. Total Profit (Loss is listed with “-”) 21,941,928.55 -32,975,152.39 Less: Income tax expense 5,485,482.14 IV. Net profit (Net loss is listed with “-”) 16,456,446.41 -32,975,152.39 V. Other comprehensive income 44 深圳南山热电股份有限公司 2018 年半年度报告全文 VI. Total comprehensive income 16,456,446.41 -32,975,152.39 Consolidated Cash Flow Statement In RMB/CNY Item Jan.-Jun.2018 Jan.-Jun.2017 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor services 1,094,708,553.42 905,687,628.86 Write-back of tax received 1,532,247.09 1,458,413.85 Other cash received concerning operating activities 6,010,380.05 376,088,275.79 Subtotal of cash inflow arising from operating activities 1,102,251,180.56 1,283,234,318.50 Cash paid for purchasing commodities and receiving labor service 900,058,280.99 1,015,783,468.71 Cash paid to/for staff and workers 72,787,871.66 63,335,884.67 Taxes paid 50,929,658.40 247,951,334.11 Other cash paid concerning operating activities 25,884,735.23 21,612,486.28 Subtotal of cash outflow arising from operating activities 1,049,660,546.28 1,348,683,173.77 Net cash flows arising from operating activities 52,590,634.28 -65,448,855.27 II. Cash flows arising from investing activities: Net cash received from disposal of fixed, intangible and other long-term assets 262,500.00 - Other cash with investment concerned from disposal subsidiary and other operational unit - - Other cash received concerning investing activities - - Subtotal of cash inflow from investing activities 262,500.00 - Cash paid for purchasing fixed, intangible and other long-term assets 55,750,360.52 39,051,315.46 Cash paid for investment - - Other cash paid for acquiring subsidiary and other operation unit - - Other cash paid concerning investing activities - - Subtotal of cash outflow from investing activities 55,750,360.52 39,051,315.46 Net cash flows arising from investing activities -55,487,860.52 -39,051,315.46 45 深圳南山热电股份有限公司 2018 年半年度报告全文 III. Cash flows arising from financing activities Cash received by absorbing investment - - Cash received from loans 910,000,000.00 229,440,000.00 Other cash received concerning financing activities 15,460,000.00 11,309,958.60 Subtotal of cash inflow from financing activities 925,460,000.00 240,749,958.60 Cash paid for settling debts 546,750,000.00 1,171,790,000.00 Cash paid for dividend and profit distributing or interest paying 23,763,614.59 33,385,928.70 Other cash paid concerning financing activities - - Subtotal of cash outflow from financing activities 570,513,614.59 1,205,175,928.70 Net cash flows arising from financing activities 354,946,385.41 -964,425,970.10 IV. Influence on cash due to fluctuation in exchange rate 74,950.99 -156,704.62 V. Net increase of cash and cash equivalents 352,124,110.16 -1,069,082,845.45 Add: Balance of cash and cash equivalents at the period-begin 411,613,377.07 1,389,482,327.86 VI. Balance of cash and cash equivalents at the period-end 763,737,487.23 320,399,482.41 Cash Flow Statement of the Company In RMB/CNY Item Jan.-Jun.2018 Jan.-Jun.2017 I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor services 510,374,571.27 448,272,760.70 Write-back of tax received - - Other cash received concerning operating activities 311,662,404.45 450,213,916.09 Subtotal of cash inflow arising from operating activities 822,036,975.72 898,486,676.79 Cash paid for purchasing commodities and receiving labor service 340,094,480.46 518,637,387.55 Cash paid to/for staff and workers 44,228,041.55 33,867,598.79 Taxes paid 10,150,486.72 226,823,834.53 Other cash paid concerning operating activities 726,578,528.72 348,786,679.61 Subtotal of cash outflow arising from operating activities 1,121,051,537.45 1,128,115,500.48 Net cash flows arising from operating activities -299,014,561.73 -229,628,823.69 II. Cash flows arising from investing activities: Net cash received from disposal of fixed, intangible and other long-term assets 262,500.00 - Other cash received from disposing subsidiary and other operation unit - Other cash received concerning investing activities - - Subtotal of cash inflow from investing activities 262,500.00 - Cash paid for purchasing fixed, intangible and other long-term assets 47,402,174.44 37,751.00 Cash paid for investment - - Net cash received from subsidiaries and other units obtained - - 46 深圳南山热电股份有限公司 2018 年半年度报告全文 Other cash paid concerning investing activities - - Subtotal of cash outflow from investing activities 47,402,174.44 37,751.00 Net cash flows arising from investing activities -47,139,674.44 -37,751.00 III. Cash flows arising from financing activities Cash received from absorbing investment - - Cash received from loans 740,000,000.00 - Other cash received concerning financing activities 11,660,000.00 - Subtotal of cash inflow from financing activities 751,660,000.00 - Cash paid for settling debts 30,000,000.00 680,500,000.00 Cash paid for dividend and profit distributing or interest paying 10,068,299.31 14,136,466.93 Other cash paid concerning financing activities - - Subtotal of cash outflow from financing activities 40,068,299.31 694,636,466.93 Net cash flows arising from financing activities 711,591,700.69 -694,636,466.93 IV. Influence on cash due to fluctuation in exchange rate 262.61 -652.36 V. Net increase of cash and cash equivalents 365,437,727.13 -924,303,693.98 Add: Balance of cash and cash equivalents at the period-begin 148,223,551.05 1,119,323,850.36 VI. Balance of cash and cash equivalents at the period-end 513,661,278.18 195,020,156.38 47 深圳南山热电股份有限公司 2018 年半年度报告全文 Consolidated Statement on Changes of Owners’ Equity In RMB/CNY Jan.-Jun. 2018 2017 Item Equity attributable to Shareholder of parent Company Equity attributable to Shareholder of parent Company Total owners’ Minority’s Total owners’ Minority’s equity equity equity equity Share capital Capital reserve Surplus reserves Retained profit Share capital Capital reserve Surplus reserves Retained profit I. Balance at the end of 602,762,596.00 362,770,922.10 332,908,397.60 660,176,169.69 65,728,468.74 2,024,346,554.13 602,762,596.00 362,770,922.10 332,908,397.60 644,271,987.22 81,255,574.45 2,023,969,477.37 last year Add: Changes of - - - - - - - - - - - - accounting policy II. Balance at the 602,762,596.00 362,770,922.10 332,908,397.60 660,176,169.69 65,728,468.74 2,024,346,554.13 602,762,596.00 362,770,922.10 332,908,397.60 644,271,987.22 81,255,574.45 2,023,969,477.37 beginning of this year III. Increase/ Decrease - - - 30,012,095.22 -1,182,332.47 28,829,762.75 - - - 15,904,182.47 -15,527,105.71 377,076.76 in this year (i) Total - - - 30,012,095.22 -1,182,332.47 28,829,762.75 - - - 15,904,182.47 -15,527,105.71 377,076.76 comprehensive income (ii) Owners’ devoted - - - - - - - - - - - - and decreased capital 1. Owners’ devoted - - - - - - - - - - - - capital 2. Other - - - - - - - - - - - - (III) Profit distribution - - - - - - - - - - - - 1. Withdrawal of - - - - - - - - - - - - surplus reserves 2. Distribution for owners (or - - - - - - - - - - shareholders) 3. Other - - - - - - - - - - - - (IV) Carrying forward - - - - - - - - - - - - internal owners’ equity (V) Other - - - - - - - - - - - - IV. Balance at the end 602,762,596.00 362,770,922.10 332,908,397.60 690,188,264.91 64,546,136.27 2,053,176,316.88 602,762,596.00 362,770,922.10 332,908,397.60 660,176,169.69 65,728,468.74 2,024,346,554.13 of the Period 48 深圳南山热电股份有限公司 2018 年半年度报告全文 Statement on Changes of Owners’ Equity of the Company In RMB/CNY Jan.- Jun.2018 2017 Item Share capital Capital reserve Surplus reserves Retained profit Total owners’ equity Share capital Capital reserve Surplus reserves Retained profit Total owners’ equity I. Balance at the end of last year 602,762,596.00 289,963,039.70 332,908,397.60 1,070,119,627.89 2,295,753,661.19 602,762,596.00 289,963,039.70 332,908,397.60 1,059,120,630.04 2,284,754,663.34 Add: Changes of accounting policy - - - - - - - - - - II. Balance at the beginning of this 602,762,596.00 289,963,039.70 332,908,397.60 1,070,119,627.89 2,295,753,661.19 602,762,596.00 289,963,039.70 332,908,397.60 1,059,120,630.04 2,284,754,663.34 year III. Increase/ Decrease in this year - - - 16,456,446.41 16,456,446.41 - - - 10,998,997.85 10,998,997.85 (i) Total comprehensive income - - - 16,456,446.41 16,456,446.41 - - - 10,998,997.85 10,998,997.85 (ii) Owners’ devoted and - - - - - - - - - - decreased capital 1. Owners’ devoted and capital - - - - - - - - - - 2. Other - - - - - - - - - - (III) Profit distribution - - - - - - - - - - 1. Withdrawal of surplus reserves - - - - - - - - - - 2. Other - - - - - - - - - - (IV) Carrying forward internal - - - - - - - - - - owners’ equity 1. Capital reserves conversed to - - - - - - - - - - share capital) 2. Surplus reserves conversed to - - - - - - - - - - share capital 49 深圳南山热电股份有限公司 2018 年半年度报告全文 (V) Other - - - - - - - - - - IV. Balance at the end of the year 602,762,596.00 289,963,039.70 332,908,397.60 1,086,576,074.30 2,312,210,107.60 602,762,596.00 289,963,039.70 332,908,397.60 1,070,119,627.89 2,295,753,661.19 50 深圳南山热电股份有限公司 2018 年半年度报告全文 Shenzhen Nanshan Power Co., Ltd. Notes to financial statement semi-annual 2018 I. Company Profile Shenzhen Nanshan Power Co., Ltd (hereinafter called as “Company”) was reorganized to be a joint-stock enterprise from a foreign investment enterprise on 25 November 1993, upon the approval of General Office of Shenzhen Municipal Government with Document Shen Fu Ban Fu [1993] No.897. After approved by Document Shen Zhu Ban Fu [1993] No.897 issued by Shenzhen Securities Regulatory Office, on 3 January 1994, the Company offered 40,000,000 RMB common shares and 37,000,000 domestically listed foreign shares in and out of China. And the RMB common shares (A-stock) and domestically listed foreign listed shares (B-stock) were listed in Shenzhen Securities Exchange successively on July 1, 1994 and Nov. 28, 1994. Headquarter of the Company located on 16/F, 17/F, Han Tang Building, OCT, Nanshan District, Shenzhen City, Guangdong Province, P.R.C. The financial statement was approved and decided by the Broad of the Company on 9 August 2018. Totally 9 subsidiaries included in consolidate scope for the half year of 2018. The Company together with its subsidiaries (hereafter referred as the Company) is mainly engaged in businesses as production of power and heat, plant constructional, oil trader, property developmental, construction technology consultation and sludge drying. II. Preparation basis of Financial Statements 1. Basis of preparation The Group’s financial statements have been prepared based on the going concern assumption. The financial statements have been prepared based on actual transactions and events, in accordance with the Accounting Standards for Business Enterprises- Basic Norms (Ministry of Finance Order No.33 Issued, Ministry of Finance Order No.76 Revised) promulgated by the Ministry of Finance of PRC on 15 February 2006 and 41 specific accounting standards, the subsequently promulgated application guidelines of the Accounting Standards for Business Enterprises, interpretations and other related rules of the Accounting Standards for Business Enterprises (hereinafter referred to as “ASBEs”), and the disclosure requirements of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15- General Requirements for Financial Reports” (revised in 2010) of China Securities Regulatory Commission. The Group’s financial statements have been prepared on an accrual basis in accordance with the - 51 - 深圳南山热电股份有限公司 2018 年半年度报告全文 ASBEs. Except for certain financial instruments, the financial statements are prepared under the historical cost convention. In the event that depreciation of assets occurs, a provision for impairment is made accordingly in accordance with the relevant regulations. III. Declaration of obedience to corporate accounting principles The Financial Statements are up to requirements of corporate accounting principles, and also a true and thorough reflection to the Group together with its financial information as financial position on 30th June 2018, and the Company together with its operation results, and cash flow for the semi-annual of 2018. In addition, the financial statements of the Group also comply with, in all material respects, the disclosure requirements of the “Regulation on the Preparation of Information Disclosures of Companies Issuing Public Shares, No. 15--General Requirements for Financial Reports” revised by the China Securities Regulatory Commission in 2014 and the notes thereto. IV. The main accounting policies and accounting estimates The Company and its subsidiaries are mainly engaged in power and thermal generation, construction of power plant, fuel trading, real estate development, engineering technology consultancy and sludge desiccation operation. According to the actual production and operation characteristics, the Company and its subsidiaries establish certain specific accounting policies and accounting estimates in respect of their transactions and matters such as sales revenue recognition pursuant to relevant business accounting principles. Details are set out in Note 24 Description of revenue items under section IV. For explanation on material accounting judgment and estimate issued by the management, please refer to Note 30 Material accounting judgment and estimate under section IV. 1. Accounting period Accounting period of the Group divide into annual and medium-term, and the medium-term is the reporting period that shorter than one completed accounting year. The Group’s accounting year is Gregorian calendar year, namely from 1st January to 31st December. 2. Operating cycle Normal operating cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents. Our operation cycle is 12 months which is also serving as the standard for current or non- current assets and liabilities. 3. Bookkeeping standard currency RMB is the currency in the Group’s main business economic environment and the bookkeeping standard one, which is adopted in preparation of the financial statements. - 52 - 深圳南山热电股份有限公司 2018 年半年度报告全文 4. Accounting treatment on enterprise combine under the same control and under the different control Enterprise combination refers to a trading or event that two or over two independent enterprise/s combined to one reporting body. The combination was divided into enterprise consolidation under the same control and the one not under the same control. (1) Consolidation of enterprises under the same control The enterprises involved in the consolidation are all under the final control of one party or parties and the control is not temporary. That is the corporate consolidation under the common control. For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of another enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being absorbed. The combination date is the date on which one combining enterprise effectively obtains control of the other combining enterprises. Assets and liabilities obtained by the absorbing party are measured at their carrying amount at the combination date as recorded by the party being merged. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate nominal value of shares issued as consideration) is charged to the capital reserve (share capital premium). If the capital reserve (share capital premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings. Cost incurred by the absorbing party that is directly attributable to the business combination shall be charged to profit or loss in the period in which they are incurred. (2) Consolidation of enterprises not under the same control The enterprises involved in the consolidation are ones not under the same final control of the common party or parties before and after the consolidation. That is the corporate consolidation under the different control. For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree. The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. For business combination involving entities not under common control, the cost of a business combination is the aggregate of the fair values, on the date of acquisition, of assets given, liabilities incurred or assumed, and equity instruments issued by the acquirer to be paid by the acquirer, in exchange for control of the acquire plus agency fee such as audit, legal service and evaluation consultation and other management fees charged to the profit or loss for the period when incurred. As equity or bond securities are issued by the acquirer as consideration, any - 53 - 深圳南山热电股份有限公司 2018 年半年度报告全文 attributable transaction cost is included in their initial costs. Involved or contingent consideration charged to the combination cost according to its fair value on the date of acquisition, the combined goodwill would be adjusted if new or additional evidence existed about the condition on the date of acquisition within twelve months after the acquisition date, which is required to adjust the contingent consideration. The combination cost incurred by the acquirer and the identifiable net assets acquired from the combination are measured at their fair values. Where the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets on the acquisition date, the difference is recognized as goodwill. Where the cost of a business combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer shall first reassess the measurement of the fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of combination. If after such reassessment the cost of combination is still less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is charged to profit or loss for the period. Where the acquiree’s deductible temporary difference acquired by the acquirer is not yet recognized as it does not satisfy the recognition conditions of the deferred income tax assets on the acquisition date, but new or additional information proves that the relevant circumstances have already existed on the acquisition date within twelve months after the acquisition date, which estimates that the economic benefits incurred from the deductible temporary difference at the acquisition date of acquirer can be realized, then the relevant deferred income tax assets will be recognized, and the goodwill will be reduced at the same time, if the goodwill is not sufficient to be absorbed, any excess shall be recognized in the profit or loss for the period. Except as disclosed above, the deferred income tax assets related to the business combination are charged to the profit or loss for the period. For a business combination not under common control is finished by a stage-up approach with several transactions, these several transactions will be judged whether they fall within “transactions in a basket” in accordance with the judgment standards on “transactions in a basket” as set out in the Notice of the Ministry of Finance on Issuing Accounting Standards for Business Enterprises Interpretation No. 5 (Cai Kuai [2012] No. 19) and Article 51 of the “Accounting Standards for Business Enterprise No.33- Consolidated Financial Statement” (see Note IV. 5(2)). If they fall within “transactions in a basket”, they are accounted for with reference to the descriptions as set out in the previous paragraphs of this section and Note IV. 13 “Long-term equity investments”, and if they do not fall within “transactions in a basket”, they are accounted for in separate financial statements and consolidated financial statements: In separate financial statement, 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 - 54 - 深圳南山热电股份有限公司 2018 年半年度报告全文 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, which means that other than the changes arising from re-measuring the acquiree’s net liabilities or net assets under defined benefit plan under equity method, it shall be included in investment income of the current period. In consolidated financial report, for equity of bought party held before purchasing, re-measured by fair value on purchased date, and the difference of fair value and its book value should reckoned into current investment income; 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, which means that other than the changes arising from re-measuring the acquiree’s net liabilities or net assets under defined benefit plan under equity method, it shall be included in investment income of the current period dated purchasing day. 5. Preparation methods for corporate consolidated statements (1) Determining principle for consolidated financial report scope The scope is determined on the basis of control. Control refers to the Company possess rights over the investee party, and enjoyed variable return through participate in the relevant activities of the investee party, and the Company has ability to impact the amount of returns by using the rights over investee party. The consolidated scope includes the Group and all the subsidiaries. Subsidiary is referring to the enterprise or the subject controlled by the Company. Once change of relevant facts and conditions results in change to relevant factors involved in the above definition, the Company will make further assessment. (2) Preparation methods for corporate consolidated statements Subsidiaries are consolidated from the date on which the Group obtains net assets and the effective control of decision making of production and operation are deconsolidated from the date that such control ceases. For disposal of subsidiaries, the operating results and cash flows of such subsidiaries before the date of disposal are properly included in the consolidated income statement and consolidated cash flow statements; for disposal of subsidiaries during the reporting period, no adjustment shall be made to the opening balance of the consolidated balance sheet. For those subsidiaries acquired through business combination not under common control, the operating results and cash flows after the acquisition date have been properly included in the consolidated income statements and consolidated cash flow statements. No adjustments shall be made to the opening balance and the comparative figures of the consolidated financial statements. For those subsidiaries acquired through business combination under common control and acquiree absorbed through combination, the operating results and cash flows from the beginning - 55 - 深圳南山热电股份有限公司 2018 年半年度报告全文 of the consolidation period to the consolidation date are also presented in the consolidated income statement and the consolidated cash flow statements. The comparative figures presented in the consolidated financial statements are also adjusted accordingly. The financial statements of the subsidiaries are adjusted in accordance with the accounting policies and accounting period of the Company in the preparation of the consolidated financial statements, where the accounting policies and the accounting periods are inconsistent between the Company and the subsidiaries. For subsidiaries acquired from business combination not under common control, the financial statements of the subsidiaries will be adjusted according to the fair value of the identifiable net assets at the acquisition date. All intra-group significant balances, transactions and unrealized profit are eliminated in the consolidated financial statements. As for the subsidiary’s shareholders’ equity and the parts that does not owned the Group in current net gains/losses, listed out independently as minority shareholders’ equity and minority shareholders gains/losses in item of shareholders’ equity and net profit contained in consolidated financial statement separately. The amount attributable to minority shareholders’ equity of current net loss/gains of subsidiaries is listed in the net profit item of consolidated profit as minority shareholders’ equity. When the share of losses attributable to the minor shareholders has exceeded their shares in the owners’ equity at the beginning of term attributable to minority shareholders in the subsidiary, the balance shall offset the minor shareholders’ equity. For control rights loss in original subsidiary for partial equity investment disposal or other reasons, the remained equity should re-measured based on the fair value at date of control losses. The difference between the net assets of original subsidiary share by proportion held that sustainable calculated since purchased date and sum of consideration obtained by equity disposal and fair value of remain equity, reckoned into the current investment income of control rights loss. Other comprehensive income relating to equity investment in original subsidiary shall be accounted for, upon lost of control, under the same basis as the acquiree would otherwise adopt when relevant assets or liabilities are disposed directly by the acquiree, which means that other than the changes arising from re-measuring the original subsidiary’s net liabilities or net assets under defined benefit plan, it shall be included in investment income of the current period. The remaining equity interests are measured subsequently according to “Accounting Standard for Business Enterprises No. 2 – Long-term Equity Investments” or “Accounting Standard for Business Enterprises No. 22 – Recognition and Measurement of Financial Instruments”. See Note IV.13 “Long-term equity investments” or Note IV.9 “Financial instruments” for details. When the Company disposes of equity investment in a subsidiary by a stage-up approach with several transactions until the control over the subsidiary is lost, it shall determine whether these several transactions related to the disposal of equity investment in a subsidiary until the control - 56 - 深圳南山热电股份有限公司 2018 年半年度报告全文 over the subsidiary is lost fall within “transactions in a basket”. Usually, these several transactions related to the disposal of equity investment in a subsidiary are accounted for as transactions in a basket when the terms, conditions and economic impacts of these several transactions meet the following one or more conditions: ① these transactions are entered into at the same time or after considering their impacts on each other; ② these transactions as a whole can reach complete business results; ③ the occurrence of a transaction depends on at least the occurrence of an other transaction; ④ an individual transaction is not deemed as economic, but is deemed as economic when considered with other transactions. If they are not transactions in a basket, each of which are accounted for in accordance with applicable rules in “partial disposal of long-term equity investment of a subsidiary without losing control over a subsidiary” (see Note IV. 13 (2) ④) separately, and “the control over a subsidiary is lost due to partial disposal of equity investment or other reasons” (see the preceding paragraph). When several transactions related to the disposal of equity investment in a subsidiary until the control over the subsidiary is lost fall within transactions in a basket, each of which is accounted for as disposal of a subsidiary with a transaction until the control over a subsidiary is lost; however, the different between the amount of disposal prior to the loss of control and the net assets of a subsidiary attributable to the disposal investment shall be recognized as other comprehensive income in consolidated financial statements and transferred to profit or loss for the period at the time when the control is lost. 6. Classification of joint arrangement and accounting treatment on conduct joint operation Joint arrangement refers to such arrangement as jointly controlled by two or more participators. The Company classifies joint arrangement into joint operation and joint venture according to the rights it is entitled to and obligations it assumes. Under joint operation, the Company is entitled to relevant assets under the arrangement and assumes relevant liabilities under the arrangement. Joint venture refers to such joint arrangement under which the Company is only entitled to the net assets of the arrangement. Equity method is adopted for investment in joint ventures, and it is accounted for under the accounting policies set out in Note 13(2) ② “long term equity investment under equity method” under section IV. As a joint party under joint operation, the Company recognizes the assets and liabilities it separately holds and assumes, the assets and liabilities it jointly holds and assumes under the proportion, the revenue from disposal of the output which the Company is entitled to under the proportion, the revenue from disposal of the output under the proportion and the separately occurred expenses as well as expenses occurred for joint operations under its proportion. For injection to or disposal of assets of joint operations (other than those assets constituting - 57 - 深圳南山热电股份有限公司 2018 年半年度报告全文 business operation) or for purchase of assets from joint operations, 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 that asset occur asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes this loss in full in connection with injection to or disposal of assets of joint operations, and recognizes this loss based on the proportion in connection with purchase of assets from joint operations. 7. Determination criteria of cash and cash equivalent Cash and cash equivalents of the Group include cash on hand, deposits readily available for payment purpose and short-term (normally fall due within three months from the date of acquisition) and highly liquid investments held the Group which are readily convertible into known amounts of cash and which are subject to insignificant risk of value change. 8. Foreign currency business and foreign currency statement translation (1) Foreign currency business translation Foreign currency transactions are translated into the Company’s functional currency at the spot rate on transaction date (generally refers to the middle rate of prevailing foreign exchange rate released by the PBOC) when the transactions are initially measured. However, foreign currency exchange business or transaction involving foreign currency exchange occurred by the Company are translated into functional currency at the effective exchange rate adopted. (2) Translation of foreign currency monetary items and foreign currency non-monetary items On balance sheet date, foreign currency monetary items are translated at the spot rate as of balance sheet date, and the exchange difference shall be included in current period gains and losses, except ①exchange difference arising from foreign currency special borrowings relating to purchasing assets satisfying capitalization conditions is stated under capitalization principle of borrowing expenses; ②exchange difference arising from hedge instruments used as effective hedging of net investment in overseas operation (such difference shall be included in other comprehensive income and recognized as current period gains and losses when the net investment is disposed); and ③exchange difference arising from change of carrying balance of available for sale foreign currency monetary items other than amortized cost is included in other comprehensive income. When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange rate fluctuation shall be included in other comprehensive income; and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of. - 58 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Non-monetary items measured in historical cost are still measured by sum on the bookkeeping standard currency at the current exchange rate. The items measured by the fair value are converted at the current rate on the fair value recognition day. The difference is dealt as the fair value change and reckoned into the current loss/gain or recognized as the other consolidated income and reckoned into the reserve. (3) Translation of foreign currency financial statement When preparing consolidated financial statement involving overseas operation, in case there is foreign currency monetary items which substantially constitute net investment in overseas operation, the exchange difference arising from exchange rate fluctuation shall be included in other comprehensive income as “translation difference of foreign currency statement”; and shall transfer to gains and losses from disposal for the current period when the overseas operation is disposed of. Foreign currency financial statement for overseas operation is translated into RMB statement by the following means: assets and liabilities in balance sheet are translated at the spot rate as of balance sheet date; owner’s equity items (other than undistributed profit) are translated at the spot rate prevailing on the date of occurrence. Income and expense items in profit statement are translated at the spot rate prevailing on the date of transactions. Beginning undistributed profit represents the translated ending undistributed profit of previous year; ending undistributed profit is allocated and stated as several items upon translation. Upon translation, difference between assets, liabilities and shareholders’ equity items shall be recorded as foreign currency financial statement translation difference and recognized as other comprehensive income. In case of disposal of overseas operation where control is lost, foreign currency financial statement translation difference relating to the overseas operation as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of disposal in full or under the proportion it disposes. Foreign currency cash flow and cash flow of overseas subsidiary are translated at the spot rate prevailing on the date of occurrence of cash flow. Influence over cash from exchange rate fluctuation is taken as adjustment items to separately stated in cash flow statement. The beginning figure and previous year actual figures are stated at the translated figures in previous year financial statement. If the Company loses control over overseas operation due to disposal of all the owners’ equity or part equity investment in the overseas operation or other reasons, foreign currency financial statement translation difference relating to the overseas operation attributable to owners’ equity of parent company as stated under shareholders’ equity in balance sheet shall be transferred to current gains and losses of disposal in full. If the Company reduces equity proportion while not loses control over overseas operation due to - 59 - 深圳南山热电股份有限公司 2018 年半年度报告全文 disposal of part equity investment in the overseas operation or other reasons, foreign currency financial statement translation difference relating to the disposed part will be vested to minority interests and will not transfer to current gains and losses. When disposing part equity interests of overseas operation which is the associate or joint venture, foreign currency financial statement translation difference relating to the overseas operation shall transfer to current disposal gains and losses according to the disposed proportion. 9. Financial instruments Financial asset or financial liability is recognized when the Company becomes a party to financial instrument contract. Financial assets and liabilities are initially measured at fair value. For financial assets and liabilities at fair value through profit or loss, the relevant transaction fee shall be included in profit or loss directly. For other types of financial assets and liabilities, the relevant transaction fee is included in initial measurement amount. (1) Recognition of fair value for financial assets and financial liabilities Fair value represents the price that market participator can receive for disposal of an asset or he should pay for transfer of a liability in an orderly transaction happened on the measurement date. As for instrument in active market, the fair value is adopted according to the quotation in the active market. Quote in active market refers to the price easy to obtain regularly from exchange; broker’s agency, industry association and pricing service authority etc., and such quote represent a price that actually occurred in market trading during the fair transaction. As for the instruments not in the active market, the fair value is recognized by the estimation technology. The technology is composed of the price in the latest fair trade, fair value according to the fundamentally same instruments, cash flow discount and stock price-setting model. (2) Classification, recognition and measurement of financial assets By way of buying and selling the financial assets in a regular way, recognition and derecognition are carried out according to the accounts on the transaction day. Financial assets are divided into financial assets at fair value through profit or loss, held-to-maturity investments, loans and accounts receivable and available for-sale financial assets when they are initially recognized. Financial assets are initially recognized at fair value. For financial assets classified as fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial assets classified as other categories, relevant transaction costs are included in the amount initially recognized. ① Financial assets carried at fair value through profit or loss for the current period They include financial assets held for trading and financial assets designated as at fair value through profit or loss for the current period. Financial assets may be classified as financial assets held for trading if one of the following - 60 - 深圳南山热电股份有限公司 2018 年半年度报告全文 conditions is met: A. the financial assets is acquired or incurred principally for the purpose of selling it in the near term; B. the financial assets is part of a portfolio of identified financial instruments that are managed together and for which there is objective evidence of a recent pattern of short-term profit-taking; or C. the financial assets is a derivative, excluding the derivatives designated as effective hedging instruments, the derivatives classified as financial guarantee contract, and the derivatives linked to an equity instrument investment which has no quoted price in an active market nor a reliably measured fair value and are required to be settled through that equity instrument. A financial asset may be designated as at fair value through profit or loss upon initial recognition only when one of the following conditions is satisfied: A. Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise result from measuring assets or recognizing the gains or losses on them on different bases; or B. The financial asset forms part of a group of financial assets or a group of financial assets and financial liabilities, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is reported to key management personnel on that basis. Financial assets carried at fair value through profit or loss for the current period is subsequently measured at fair value. The gain or loss arising from changes in fair value and dividends and interest income related to such financial assets are charged to profit or loss for the current period. ② Held-to-maturity investments They are non-derivative financial assets with fixed maturity dates and fixed or determinable payments that the Company has positive intent and ability to hold to maturity. Held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. Gain or loss on derecognition, impairment or amortization is recognized through profit or loss for the current period. The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income or expense over each period based on the effective interest of a financial asset or a financial liability (including a group of financial assets or financial liabilities). The effective interest is the rate that discounts future cash flows from the financial asset or financial liability over its expected life or (where appropriate) a shorter period to the carrying amount of the financial asset or financial liability. In calculating the effective interest rate, the Company will estimate the future cash flows (excluding future credit losses) by taking into account all contract terms relating to the financial assets or financial liabilities whilst considering various fees, transaction costs and discounts or premiums which are part of the effective interest rate paid or received between the parties to the financial assets or financial liabilities contracts. - 61 - 深圳南山热电股份有限公司 2018 年半年度报告全文 ③ Loans and receivables They are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets, including bills receivable, accounts receivable, the Group classifies interest receivable, dividends receivable and other receivables as loans and receivables. Loans and receivables are measured subsequently at the amortized cost by using the effective interest rate method. Gains or losses incurred at the time of derecognition, impairment or amortization are charged to profit or loss for the current period. ④ Available-for-sale financial assets They include non-derivative financial assets that are designated in this category on initial recognition, and the financial assets other than the financial assets at fair value through profit and loss, loans and receivables and held-to-maturity investments. The closing cost of available-for-sale debt instruments are determined based on amortized cost method, which means the amount of initial recognition less the amount of principle already repaid, add or less the accumulated amortized amount arising from the difference between the amount initially recognized and the amount due on maturity using effective interest rate method, and less the amount of impairment losses recognized. The closing cost of available-for-sale equity instruments is equal to its initial acquisition cost. Available-for-sale financial assets are subsequently measured at fair value. The gain or loss on change in fair value are recognized as other comprehensive income and charged to capital reserves, except for impairment loss and exchange differences arising from foreign monetary financial assets and amortized cost which are accounted for through profit or loss for the current period. The financial assets will be transferred out of the financial assets on derecognition and accounted for through profit or loss for the current period. However, equity instrument investment which is not quoted in active market and whose fair value cannot be measured reliably, and derivative financial asset which is linked to the equity instrument and whose settlement is conditional upon delivery of the equity instrument, shall be subsequently measured at cost. Interests received from available-for-sale financial assets held and the cash dividends declared by the investee are recognized as investment income. (3) Impairment of financial assets Except for financial assets accounted at fair value and variation accounted into current gain/loss account, the Group undertakes inspection on the book value of other financial assets at each balance sheet day, whenever practical evidence showing that impairment occurred with them, impairment provisions are provided. The Group performs impairment test separately on individual financial assets with major - 62 - 深圳南山热电股份有限公司 2018 年半年度报告全文 amounts; for financial assets without major amounts, the Group performs impairment test separately or inclusively in a group of financial assets with similar characteristics of risks. Those financial assets (individual financial assets with or without major amounts) tested separately with no impairment found shall be tested again along with the group of financial assets with similar risk characteristics. Financial assets confirmed for impairment individually shall not be tested along with the group of financial assets with similar risk characteristics. ① Impairment of held-to-maturity investments and loans and receivables The carrying amount of financial assets measured as costs or amortized costs are subsequently reduced to the present value discounted from its projected future cash flow. The reduced amount is recognized as impairment loss and recorded as profit or loss for the period. After recognition of the impairment loss from financial assets, if there is objective evidence showing recovery in value of such financial assets impaired and which is related to any event occurring after such recognition, the impairment loss originally recognized shall be reversed to the extent that the carrying value of the financial assets upon reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for impairment. ② Impairment of available-for-sale financial assets In the event that decline in fair value of the available-for-sale equity instrument is regarded as “severe decline” or “non-temporary decline” on the basis of comprehensive related factors, it indicates that there is impairment loss of the available-for-sale equity instrument. When the available-for-sale financial assets impair, the accumulated loss originally included in the capital reserve arising from the decrease in fair value was transferred out from the capital reserve and included in the profit or loss for the period. The accumulated loss that transferred out from the capital reserve is the balance of the acquired initial cost of asset, after deduction of the principal recovered, amortized amounts, current fair value and the impairment loss originally included in the profit or loss. After recognition of the impairment loss, if there is objective evidence showing recovery in value of such financial assets impaired and which is related to any event occurring after such recognition in subsequent periods, the impairment loss originally recognized shall be reversed. The impairment loss reversal of the available-for-sale equity instrument will be recognized as other consolidated income, and the impairment loss reversal of the available-for-sale debt instrument will be included in the profit or loss for the period. When an equity investment that is not quoted in an active market and the fair value of which cannot be measured reliably, or the impairment loss of a derivative financial asset linked to the equity instrument that shall be settled by delivery of that equity instrument, then it will not be reversed. - 63 - 深圳南山热电股份有限公司 2018 年半年度报告全文 (4) Recognition basis and measurement method for transfer of financial assets As for the financial assets up to the following conditions, the recognition termination is available: ①Termination of the contract right to take the cash flow of the financial assets; ② transferred to the transferring-in part nearly all risk and compensation; ③ all risk and compensation neither transferred nor retained, and with the give-up of the control over the financial assets. As for financial assets of almost all risk and compensation neither transferred nor retained, and without the give-up of the control over the financial assets, it was recognized according to the extension of the continual entry into the transferred financial assets and relevant liabilities are correspondingly recognized. The continual entry into the transferred financial assets is risk level which the enterprise faces up to due to the assets changes. As for the whole transfer of the financial assets up to the recognition termination conditions, the book value of the transferred assets, together with the difference between the consideration value and the accumulative total of the fair value change of the other consolidated income, is reckoned into the current gain/loss. As for the partial transfer of the financial assets up to the recognition termination conditions, the book value of the transferred assets is diluted on the relative fair value between the terminated part and the un-terminated part; and reckoned into the current loss/gain is the difference between the sum of the consideration value and the accumulative sum of the valuation change ought to be diluted into the recognition termination part but into the other consolidated income, and the above diluted book value, is reckoned into the current loss/gain. For financial assets that are transferred with recourse or endorsement, the Group needs to determine whether the risk and rewards of ownership of the financial asset have been substantially transferred. If the risk and rewards of ownership of the financial asset have been substantially transferred, the financial assets shall be derecognized. If the risk and rewards of ownership of the financial asset have been retained, the financial assets shall not be derecognized. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset, the Group shall assess whether the control over the financial asset is retained, and the financial assets shall be accounted for according to the above paragraphs. (5) Categorizing and measuring of financial liabilities At initial recognition, financial liabilities are classified into financial liabilities measured by fair value with changes counted into current gains/losses and other financial liabilities. Financial liabilities are initially recognized at fair value. For financial liabilities classified as fair value through profit or loss, relevant transaction costs are directly recognized in profit or loss for the period. For financial liabilities classified as other categories, relevant transaction costs are included in the amount initially recognized. - 64 - 深圳南山热电股份有限公司 2018 年半年度报告全文 ① Financial liabilities at fair value through profit or loss for the period The criteria for a financial liability to be classified as held for trading and designated as financial liabilities at fair value through profit or loss are the same as those for a financial asset to be classified as held for trading and designated as financial assets at fair value through profit or loss. Financial liabilities at fair value through profit or loss for the period are subsequently measured at fair value. The gain or loss arising from changes in fair value and dividends and interest income related to such financial liabilities are included in profit or loss for the period. ② Other financial liabilities Derivative financial liabilities which are linked to equity instruments that are not quoted in an active market and the fair value of which cannot be measured reliably measured, and which shall be settled by delivery of equity instruments are subsequently measured at cost. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Gains or losses arising from derecognition or amortization is recognized in profit or loss for the period. ③ Financial Guarantee Contracts and loan commitment Financial guarantee contracts other than those designated as financial liabilities at fair value through profit or loss or loan commitment other than those designated measured by fair value and with its variation for gains/losses reckoned as well as the loans lower than the market rates are initially recognized at fair value, and shall be subsequently measured at the higher of the following: the amount determined in accordance with Accounting Standard for Business Enterprises No. 13 “Contingencies” and the amount initially recognized less cumulative amortization recognized in accordance with the principles set out in “Accounting Standard for Business Enterprises No. 14- Revenue”. (6) Termination recognition of financial liabilities Only is released the whole or part of the current duties, the termination of the liabilities or part of it is available. The Group (the creditor) signed the agreement with the debtor: the existing liabilities are replaced by the bearing of the new liabilities; and the contract terms are fundamentally different of the new liabilities and the existing ones; the termination of the recognition of the existing ones is available; and the recognition of new ones is available. As for the whole or partial termination of the recognition of the liabilities, the difference between the book value of the part of recognition termination and the consideration value paid (including the non-cash assets transferred out or the liabilities newly beard) is reckoned into the current loss/gain. (7) Derivatives and embedded derivatives Derivative instruments are initially recognized at fair value on the date on which a derivative - 65 - 深圳南山热电股份有限公司 2018 年半年度报告全文 contract is entered into and are subsequently measured at fair value. Any gains or losses arising from changes in fair value of derivatives are taken directly to profit or loss for the period, except for derivative instruments that are designated as hedging instruments and which are highly effective in hedging, gains or losses arising from changes in their fair value are taken to the profit or loss for the period in accordance with the hedge accounting requirement based on the nature of hedging relationships. For combined instruments contain embedded derivatives which are not designated as financial assets or financial liabilities at fair value through profit or loss, and the embedded derivative and the main contract does not have a material relation in terms of risk and economic attributes, and when an individual instrument which is the same as the embedded derivative can be defined as derivative, the embedded derivative shall be separated from the combined instrument and treated as an individual derivative. If the embedded derivative cannot be separately measured at acquisition or subsequent balance sheet date, the combined instrument shall be designated as financial assets or financial liabilities at fair value through profit or loss. (8) Balance-out between the financial assets and liabilities As the Group has the legal right to balance out the financial liabilities by the net or liquidation of the financial assets, the balance-out sum between the financial assets and liabilities is listed in the balance sheet. In addition, the financial assets and liabilities are listed in the balance sheet without being balanced out. (9) Equity instrument The equity instrument is the contract to prove the holding of the surplus stock of the assets with the deduction of all liabilities in the Group. The Company issues (including refinancing), repurchases, sells or cancels equity instruments as movement of equity. No fair value change of equity instrument would be recognized by the Company. Transaction fees relating to equity transactions are deducted from equity. The Group’s all distribution (shares dividend excluded) to the holders of the stock instrument will decrease the shareholders’ equity. The Group does not recognize the fair value change sum of the stock instrument. 10. Account receivable Account receivable included account receivable and other account receivable. (1) Recognition of bad debt provision The Group reviews carrying value of account receivables on balance sheet date, and make impairment provision for account receivables which are proven to be impaired by the following objective evidences: ①debtor experiences material financial difficulties; ②debtor is in breach of contract terms (for instance: default or expiration of payment for principal or interest); ③ debtor - 66 - 深圳南山热电股份有限公司 2018 年半年度报告全文 is likely to face bankruptcy or other financing restructuring; ④other objective evidence showing account receivables are impaired. (2) Provision for bad debt reserves ① Recognition criteria and accrual method on accounts with major amount and withdrawal bad debt provision independently The single account receivable above RMB 2 million is recognized as single substantive account receivable The Company takes the independent impairment test on the single substantive account. As for the account receivable without the impairment in the test, it is included in the account receivable portfolio of the similar credit risk characters for the impairment test. As for the account receivable with the recognition of impairment loss, it is not included in the account receivable portfolio of the similar credit risk characters for the impairment test ② Determination bases for account receivables for which bad debt provision is made according to category of credit risks, and provision for bad debt The Group determines categories of account receivables according to the similarity of credit risk characteristics. Account receivables consist of those with insignificant single amount and those with significant single amount which is not impaired based on separate impairment test. The Group is of the view that account receivables with insignificant single amount and those with significant single amount which is not impaired based on separate impairment test are exposed to low credit risks, thus it is not necessary to make bad debt provision, unless there is evidence showing that account receivables have relatively substantial credit risks. ③ Account receivables with insignificant single amount for which bad debt provision is made separately For account receivables with insignificant single amount, if there is evidence showing that account receivables are exposed to relatively substantial credit risks, bad debt provision shall be made for such account receivables under specific identification method. (3) Reversal of bad debt If there is objective evidence showing recovery in value of account receivables impaired and which is related to any event occurring after such recognition, the impairment loss originally recognized shall be reversed to the extent that the carrying value of the account receivables upon reversal will not exceed the amortized cost as at the reversal date assuming there is no provision for impairment. 11. Inventory (1) Categories of inventory The Company’s inventory mainly consists of fuels, raw materials and developing products in - 67 - 深圳南山热电股份有限公司 2018 年半年度报告全文 process and so on. (2) Valuation method of inventory delivered The inventories are initially measured at cost. The costs of developing products include land grant fee, expenditures for auxiliary facilities, expenses on construction and installation, borrowing costs incurred before the completion of the subject project and other related expenses during the course of the development. Other cost of inventories comprises purchase costs, processing costs and other costs incurred in bringing the inventories to their present location and condition. The actual cost of the property development products delivered is recognized by the individual valuation method. The actual cost of other inventories delivered is recognized by the weighted average method. (3) Recognition of net realizable value of inventory, and accrual methods of preparation for depreciation On the balance sheet day, the inventory is measured by the lower one between the cost and the net realizable value. As the net realizable value is lower than the cost, the inventory depreciation provision is accrued. The net realizable value is balance of the estimated sale price less the estimated forthcoming cost upon the completion, the estimated sale expense, and the relevant tax in the daily activities. Upon the recognition of net realizable value of the inventory, the concrete evidence is based on and the purpose of holding the inventory and the influence of events after the balance sheet day are considered. As for the inventory of large sum and lower price, the inventory depreciation provision is accrued by the inventory categories. As for the inventory related to the product series produced and sold in the same district, of the same or similar final use or purpose and impossible to be separated from the other items, the provision is consolidated and accrued. The provision for other inventory is accrued by the difference between the cost and net realizable value. Upon the accrual of the inventory depreciation provision, if the previous influence factors on the inventory deduction disappeared, which resulted in the net realizable value being higher than its book value; the accrual is transferred back within the previous accrual of the provision and reckoned into the current gain/loss. (4) The inventory system is perpetual inventory system. 12. Non-current assets and disposal groups held for sale If the Group takes back its book value mainly by selling (including the non-monetary assets exchange with commercial substance, the same as below) rather than noncontiguous use of a non-current asset or disposal group, it shall be divided into the held-for-sale category. The - 68 - 深圳南山热电股份有限公司 2018 年半年度报告全文 specific criteria are to meet the following conditions: a certain non-current asset or disposal group can be sold immediately under the current conditions based on the practice of selling such assets or disposal groups in similar transactions; the Company has made resolutions on the sale plan and has obtained decided purchase commitments; the sale is expected to be completed within one year. Thereinto, the disposal group refers to a set of assets that are disposed along with all the others as a whole by sale or other methods in a transaction and the liabilities that are directly related to those assets transferred in the transaction. The group of assets or asset groups to which the disposal group belongs share the goodwill achieved in the business combination in accordance with the Accounting Standards for Business Enterprises No. 8 - Impairment of Assets, the disposal group should include the goodwill assigned to the disposal group. When the initial measurement or the remeasurement at the balance sheet date of the Group is divided into the non-current asset and disposal group held for sale, if the book value is higher than the net amount after subtracting the selling fees from the fair value, write down the book value to the net amount after subtracting the selling fees from the fair value, the write-down amount is recognized as asset impairment losses and is included in the current profits and losses, meanwhile making provisions for impairment of assets held for sale. For the disposal group, the recognized assets impairment losses firstly offset the book value of goodwill in the disposal group, then offset the book value of various non-current assets specified by the measurement applicable for Accounting Standards for Business Enterprises No. 42 - Non-current Assets, Disposal Group, and Discontinued Operation Held for Sale (Hereinafter referred to as the Guidelines Held for Sale) in the disposal group. If the net amount after subtracting the selling fees from the fair value of the disposal group at the subsequent balance sheet date has an increase, the amount of the previous write-down should be restored and transferred back in the amount of assets impairment loss recognized by non-current assets and applicable for held-for-sale standards after being classified as the held-for-sale, the transferred amount should be included in the current profits and losses, and increase its book value in proportion according to the proportion of book value of various non-current assets applicable for the measurement and specification of held-for-sale standards in the disposal group except for the goodwill; the book value of which the goodwill has been offset and the assets impairment losses confirmed before the non-current assets applicable for the measurement and specification of held-for-sale standards being classified as available-for-sale assets cannot be transferred back. The non-current assets held for sale or the non-current assets in the disposal group shall not be accrued for depreciation or amortization, continue to confirm the indebted interest and other expenses in the disposal group held for sale. When the non-current assets or disposal groups no longer meet the requirements of held-for-sale categories, the Company shall not continue to classify them as the held-for-sale categories or - 69 - 深圳南山热电股份有限公司 2018 年半年度报告全文 remove the non-current assets from the held-for-sale disposal group, and measure according to the lower one of the following: (1) For the book value before being classified as held-for-sale category, the amount of the depreciation, amortization or impairment that should be confirmed when not being classified as held-for-sale category according to the assumptions after being adjusted; (2) Recoverable amount. 13. Long-term equity investment Long-term equity investments under this section refer to long-term equity investments in which the Company has control, joint control or significant influence over the investee. Long-term equity investment without control or joint control or significant influence of the Group is accounted for as available-for-sale financial assets or financial assets measured at fair value with any change in fair value charged to profit or loss. Details on its accounting policy please refer to Note 9. “Financial instruments” under section IV. Joint control is the Company’s contractually agreed sharing of control over an arrangement, which relevant activities of such arrangement must be decided by unanimously agreement from parties who share control. Significant influence is the power of the Company to participate in the financial and operating policy decisions of an investee, but to fail to control or joint control the formulation of such policies together with other parties. (1) Determination of investment cost For a long-term equity investment acquired through a business combination involving enterprises under common control, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the cash paid, non-cash assets transferred as well as the book value of the debts borne by the absorbing party shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. If the consideration of the merger is satisfied by issue of equity securities, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. With the total face value of the shares issued as share capital, the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall be used to offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For business combination resulted in an enterprise under common control by acquiring equity of the absorbing party under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a - 70 - 深圳南山热电股份有限公司 2018 年半年度报告全文 transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment shall be the absorbing party’s share of the carrying amount of the owner’s equity under the consolidated financial statements of the ultimate controlling party on the date of combination. The difference between the initial cost of the long-term equity investment and the aggregate of the carrying amount of the long-term equity investment before merging and the carrying amount the additional consideration paid for further share acquisition on the date of combination shall offset against the capital reserve. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted. Other comprehensive income recognized as a result of the previously held equity investment accounted for using equity method on the date of combination or recognized for available-for-sale financial assets will not be accounted for. For a long-term equity investment acquired through a business combination involving enterprises not under common control, the initial investment cost of the long-term equity investment shall be the cost of combination on the date of acquisition. Cost of combination includes the aggregate fair value of assets paid by the acquirer, liabilities incurred or borne and equity securities issued. For business combination resulted in an enterprise not under common control by acquiring equity of the acquiree under common control through a stage-up approach with several transactions, these transactions will be judged whether they shall be treat as “transactions in a basket”. If they belong to “transactions in a basket”, these transactions will be accounted for a transaction in obtaining control. If they are not belong to “transactions in a basket”, the initial investment cost of the long-term equity investment accounted for using cost method shall be the aggregate of the carrying amount of equity investment previously held by the acquiree and the additional investment cost. For previously held equity accounted for using equity method, relevant other comprehensive income will not be accounted for. For previously held equity investment classified as available-for-sale financial asset, the difference between its fair value and carrying amount, as well as the accumulated movement in fair value previously included in the other comprehensive income shall be transferred to profit or loss for the current period. Agent fees incurred by the absorbing party or acquirer for the acquisition such as audit, legal service, and valuation and consultation fees, and other related administration expenses are charged to profit or loss in the current period at the time such expenses incurred. The long-term equity investment acquired through means other than a business combination shall be initially measured at its cost. Such cost is depended upon the acquired means of long-term equity investments, which is recognized based on the purchase cost actually paid by the Company in cash, the fair value of equity securities issued by the Group, the agreed value of investment contract or agreement, the fair value or original carrying amounts of the - 71 - 深圳南山热电股份有限公司 2018 年半年度报告全文 non-monetary asset exchange transaction which the asset will be transferred out of the Company, and the fair value of long-term equity investment itself. The costs, taxes and other necessary expenses that are directly attributable to the acquisition of the long-term equity investments are also included in the investment cost. For additional equity investment made in order to obtain significant influence or common control over investee without resulted in control, the relevant cost for long-term equity investment shall be the aggregate of fair value of previously held equity investment and additional investment cost determined according to “Accounting Standard for Business Enterprises No. 22 – Recognition and measurement of Financial Instruments”. (2) Follow-up measurement and gain/loss recognition As for the long-term equity investment with common control (except for the common operators) over or significant influence on the invested units, measured by the cost method. In addition, long-term equity investment to the invested units that control by the Company adopted the cost method for calculation in financial statement. ① Long-term equity investment checked by the cost Upon the cost check, the investment is valuated on the initial cost. In addition to the actual prices or the announced but yet undistributed cash dividend or profit in consideration valuation, the current investment return is recognized by the announced cash dividend or profit by the invested units. ② Long-term equity investment checked by the equity When equity basis is adopted, if the initial cost of the long-term equity investment is greater than the share of fair value of the receiver’s recognizable net asset, the initial investment cost of the long-term equity investment will not be adjusted; if the initial cost of the long-term equity investment is less than the share of fair value of the receiver’s recognizable net asset, the balance shall be counted into current income account, and the cost of long-term equity investment shall be adjusted. Under the equity method, investment gain and other comprehensive income shall be recognized based on the Group’s share of the net profits or losses and other comprehensive income made by the investee, respectively. Meanwhile, the carrying amount of long-term equity investment shall be adjusted. The carrying amount of long-term equity investment shall be reduced based on the Group’s share of profit or cash dividend distributed by the investee. In respect of the other movement of net profit or loss, other comprehensive income and profit distribution of investee, the carrying value of long-term equity investment shall be adjusted and included in the capital reserves. The Group shall recognize its share of the investee’s net profits or losses based on the fair values of the investee’s individual separately identifiable assets at the time of acquisition, after making appropriate adjustments thereto. In the event of inconformity between the accounting policies and accounting periods of the investee and the Company, the financial - 72 - 深圳南山热电股份有限公司 2018 年半年度报告全文 statements of the investee shall be adjusted in conformity with the accounting policies and accounting periods of the Company. Investment gain and other comprehensive income shall be recognized accordingly. In respect of the transactions between the Group and its associates and joint ventures in which the assets disposed of or sold are not classified as operation, the share of unrealized gain or loss arising from inter-group transactions shall be eliminated by the portion attributable to the Company. Investment gain shall be recognized accordingly. However, any unrealized loss arising from inter-group transactions between the Group and an investee is not eliminated to the extent that the loss is impairment loss of the transferred assets. In the event that the Group disposed of an asset classified as operation to its joint ventures or associates, which resulted in acquisition of long-term equity investment by the investor without obtaining control, the initial investment cost of additional long-term equity investment shall be the fair value of disposed operation. The difference between initial investment cost and the carrying value of disposed operation will be fully included in profit or loss for the current period. In the event that the Group sold an asset classified as operation to its associates or joint ventures, the difference between the carrying value of consideration received and operation shall be fully included in profit or loss for the current period. In the event that the Company acquired an asset which formed an operation from its associates or joint ventures, relevant transaction shall be accounted for in accordance with “Accounting Standards for Business Enterprises No. 20 “Business combination”. All profit or loss related to the transaction shall be accounted for. Recognition of the share of net loss by the investment receiver shall be limited to when the book value of long-term equity investment and other long-term equity forms substantial net investment has been reduced to zero. Beside, if the Company is responsible for other losses of the investment receiver, predicted liability shall be recognized upon the prediction of responsibilities and recorded into current investment loss account. If the receiver realized net profit in the period thereafter, the share of gains is recovered after making up of share of losses which has not been recognized. For long equity investment in associate and joint venture held by the Company prior to first implementation of the new accounting principles on 1 January 2007, equity investment debtor difference relating to the investment (if any) shall be amortized and included in current gains and losses against the remaining period under straight line method. ③ Acquisition of minority equity When preparing consolidated financial statements, the difference between the increase in long-term equity investment due to acquisition of minority interest of a subsidiary and the share of net asset of the subsidiary since the acquisition date (or combination date) calculated under the new ownership ratio shall be adjusted to the capital surplus, when capital surplus is insufficient, the excess shall be adjusted to retained profits. - 73 - 深圳南山热电股份有限公司 2018 年半年度报告全文 ④ Disposal of long-term equity investment In these consolidated financial statements, where the parent company disposes part of its subsidiary without loss of control, the difference between the consideration received and the share of net asset for the disposed portion of long-term equity investment shall be recognized in shareholders’ equity; where the parent company disposes part of its subsidiary with loss of control, the accounting treatment should be in accordance with the accounting policies stated at Note IV 5 (2) “Preparation of consolidated financial statements”. For disposal of long-term equity investment in other situations, the difference between the considerations received and the carrying amount of the disposed investment shall be recognized in profit or loss. In respect of long-term equity investment at equity with the remaining equity interest after disposal also accounted for using equity method, other comprehensive income previously under owners’ equity shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee on pro rata basis at the time of disposal. The owners’ equity recognized for the movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis. In respect of long-term equity investment at cost with the remaining equity interest after disposal is also accounted for at cost, other comprehensive income recognized due to measurement at equity or recognition and measurement for financial instruments prior to obtaining control over investee shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee and carried forward to current gains and losses on pro rata basis. The movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution of investee) shall be transferred to profit or loss for the current period on pro rata basis. In the event of loss of control over investee due to partial disposal of equity investment by the Group, in preparing separate financial statements, the remaining equity interest which can apply common control or impose significant influence over the investee after disposal shall be accounted for using equity method. Such remaining equity interest shall be treated as accounting for using equity method since it is obtained and adjustment was made accordingly. For remaining equity interest which cannot apply common control or impose significant influence over the investee after disposal, it shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing control shall be included in profit or loss for the current period. In respect of other comprehensive income recognized using equity method or the recognition and measurement standard of financial instruments before the Group obtained control over the - 74 - 深圳南山热电股份有限公司 2018 年半年度报告全文 investee, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee at the time when the control over investee is lost. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when the control over investee is lost. Of which, for the remaining equity interest after disposal accounted for using equity method, other comprehensive income and other owners’ equity shall be transferred on pro rata basis. For the remaining equity interest after disposal accounted for using the recognition and measurement standard of financial instruments, other comprehensive income and other owners’ equity shall be fully transferred. In the event of loss of common control or significant influence over investee due to partial disposal of equity investment by the Group, the remaining equity interest after disposal shall be accounted for using the recognition and measurement standard of financial instruments. The difference between its fair value and carrying amount as at the date of losing common control or significant influence shall be included in profit or loss for the current period. In respect of other comprehensive income recognized under previous equity investment using equity method, it shall be accounted for in accordance with the same accounting treatment for direct disposal of relevant asset or liability by investee at the time when equity method was ceased to be used. Movement of other owners’ equity (excluding net profit or loss, other comprehensive income and profit distribution under net asset of investee accounted for and recognized using equity method) shall be transferred to profit or loss for the current period at the time when equity method was ceased to be used. The Group disposes its equity investment in subsidiary by a stage-up approach with several transactions until the control over the subsidiary is lost. If the said transactions belong to “transactions in a basket”, each transaction shall be accounted for as a single transaction of disposing equity investment of subsidiary and loss of control. The difference between the disposal consideration for each transaction and the carrying amount of the corresponding long-term equity investment of disposed equity interest before loss of control shall initially recognized as other comprehensive income, and subsequently transferred to profit or loss arising from loss of control for the current period upon loss of control. 14. Investment real estate Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including the rented land use rights and the land use rights which are held and prepared for transfer after appreciation, the rented buildings. Besides, vacant buildings held by the Company for operating or lease purposes would be also stated as investment property provided that board of directors (or similar authority) pass written resolution which definitely - 75 - 深圳南山热电股份有限公司 2018 年半年度报告全文 expresses that the buildings will be held for operating or lease purposes and the intention for holding will not change shortly. Investment real estate is measured according to the initial cost. The follow-up expenses that are related to investment real estate, if the economic interests related to the assets are is likely to inflow cost and its costs can be reliably measured, shall be included in the cost of investment real estate. The other follow-up expense shall be included in the current gains/losses. The Company adopts the cost model to have follow-up measurements of the investment real estate, and to conduct depreciation or amortization according to the policies that are in consistent with the land use rights. Impairment test method and impairment provision method in relation to investment property is detailed in Note IV.20 “Long term assets impairment”. Where property for own use or inventory transfers to investment property, or investment property transfers to property for own use, carrying value before such transfer shall be taken as book value after such transfer. In the event that an investment property is converted to an owner-occupied property, such property shall become fixed assets or intangible assets since the date of its conversion. In the event that an owner-occupied property is converted to real estate held to earn rentals or for capital appreciation, such fixed assets or intangible assets shall become an investment property since the date of its conversion. Upon the conversion, investment property which is measured at cost is accounted for with the carrying value prior to conversion, and investment property which is measured at fair value is accounted for with the fair value as of the conversion date. If an investment property is disposed of or if it withdraws permanently from use and no economic benefit will be obtained from the disposal, the recognition of it as an investment property shall be terminated. When an investment property is sold, transferred, retired or damaged, the amount of proceeds on disposal of the property net of the carrying amount and related tax and surcharges is recognized in profit or loss for the current period. 15. Fixed assets (1) Recognition conditions for the 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 fiscal year of service life. The fixed assets recognized on the condition of economy benefit probably in-flow into the Company and the cost should measured reliably only. Initial measurement shall be conducted on fixed assets according to the actual cost when obtain them and also considering the expected costs for disposal. (2) Depreciation of various fixed assets - 76 - 深圳南山热电股份有限公司 2018 年半年度报告全文 From the next month since reaching the intended use state, depreciations on fixed assets shall be accounted by using the method of average life length except the steam turbine generating unit that accounted by withdrawal the working volume method. Life expectancy, expected net impairment value and annual depreciation rate of all assets are as follows: Item Life expectancy Salvage value rate Annual depreciation rate Houses and buildings 20 years 10% 4.50% Equipment (fuel machinery group excluded) 15-20 years 10% 4.5%-6% Equipment-fuel machinery group (note) 10% The work quantity method Transportation tools 5 years 10% 18% Other equipment 5 years 10% 18% Estimated salvage value refers to the amount of value retrieved after deducting of predicted disposal expense when the expected using life of a fixed asset has expired and in the expected state of termination. Note: gas turbine generator set is provided with depreciation under workload method, namely to determine the depreciation amount per hour of gas turbine generator set based on equipment value, predicted net remaining value and predicted generation hours. Details are set out as follows: Name of the Company Fixed assets Depreciation amount (RMB/Hour) Generating unit 1# 391.26 The Company Generating unit 3# 397.15 Shenzhen New Power Industrial Co., Ltd.(“New Generating unit 10# 411.15 Power”) Shen Nan Dian (Zhongshan) Power Co., Generating unit 1# 4,246.00 Ltd.(“Zhongshan Power”) Generating unit 3# 4,160.83 Shen Nan Dian (Dongguan) Weimei Power Co., Generating unit 1# 4,490.64 Ltd.(“Weimei Power”) Generating unit 3# 4,217.56 (3) Impairment test on fixed asset and providing of impairment provision Found more in Note IV-20.”Impairment of long-term assets”. (4) Recognition basis and measurement method of fixed assets under finance lease Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Title may or may not eventually be transferred. The depreciation policy for fixed asset held under finance lease is consistent with that for its owned fixed asset. When a leased asset can be reasonably determined that its ownership will be transferred at the end of the lease term, it is depreciated over the period of expected use; otherwise, the leased asset is depreciated over the shorter period of the lease term and the period of expected use. - 77 - 深圳南山热电股份有限公司 2018 年半年度报告全文 (5) Other remarks Concerning the follow-up expenses related to fixed assets, if the relevant economy benefit of fixed assets probably in-flow into the Company and can be measured reliably, reckoned into cost of fixed assets and terminated the recognition of the book value of the parts that been replaced. Others follow-up expenses should reckoned into current gains/losses while occurred. Terminated the recognition of fixed assts that in the status of disposal or pass through the predicted usage or without any economy benefits arising from disposal. Income from treatment of fixed asset disposing, transferring, discarding or damage, the balance after deducting of book value and relative taxes is recorded into current income account. The Company re-reviews useful life, expected net residual value and depreciation method of fixed assets at least at each year end. Any change thereof would be recorded as change of accounting estimates. 16. Construction-in-progress Cost of construction in process is determined at practical construction expenditures, including all expenses during the construction, capitalized loan expenses before the construction reaches useful status, and other relative expenses. It is transferred to fixed asset as soon as the construction reaches the useful status. Impairment testing method and accrual method for impairment reserves found in Note IV-20”Impairment of long-term assets” 17. Borrowing expenses Borrowing expenses include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. Borrowing expenses that can be directly attributed for purchasing or construction of assets that are complying with capitalizing conditions start to be capitalized when the payment of asset and borrowing expenses have already occurred, and the purchasing or production activities in purpose of make the asset usable have started; Capitalizing will be terminated as soon as the asset that complying with capitalizing conditions has reached its usable or saleable status. The other borrowing expenses are recognized as expenses when occurred. 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. - 78 - 深圳南山热电股份有限公司 2018 年半年度报告全文 During the capitalization period, exchange differences on a specific purpose borrowing denominated in foreign currency shall be capitalized. Exchange differences related to general-purpose borrowings denominated in foreign currency shall be included in profit or loss for the current period. Qualifying assets are assets (fixed assets, investment property, inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale. Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months, until the acquisition, construction or production of the qualifying asset is resumed. 18. Intangible assets (1) Intangible assets An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company. An intangible asset shall be initially measured at cost. The expenditures incurred on an intangible asset shall be recognized as cost of the intangible asset only if it is probable that economic benefits associated with the asset will flow to the Company and the cost of the asset can be measured reliably. Other expenditures on an item asset shall be charged to profit or loss when incurred. Land use right acquired shall normally be recognized as an intangible asset. Self-constructed buildings (e.g. plants), related land use right and the buildings shall be separately accounted for as an intangible asset and fixed asset. For buildings and structures purchased, the purchase consideration shall be allocated among the land use right and the buildings on a reasonable basis. In case there is difficulty in making a reasonable allocation, the consideration shall be recognized in full as fixed assets. An intangible asset with a finite useful life shall be stated at cost less estimated net residual value and any accumulated impairment loss provision and amortized using the straight-line method over its useful life when the asset is available for use. Intangible assets with indefinite life are not amortized. The Group shall review the useful life of intangible asset with a finite useful life and the amortization method applied at least at each financial year-end. A change in the useful life or amortization method used shall be accounted for as a change in accounting estimate. For an intangible asset with an indefinite useful life, the Group shall review the useful life of the asset in each accounting period. If there is evidence indicating that the useful life of that intangible - 79 - 深圳南山热电股份有限公司 2018 年半年度报告全文 asset is finite, the Company shall estimate the useful life of that asset and apply the accounting policies accordingly. (2) Impairment test method of intangible assets & calculation method of depreciation reserve Found more in Note IV-20”Impairment of long-term assets”. 19. Long-term expenses to be amortized Long-term amortizable expenses are those already occurred and amortizable to the current term and successive terms for over one year. Long-term amortizable expenses are amortized by straight-line method to the benefit period. 20. Impairment of long-term assets The Group will judge if there is any indication of impairment as at the balance sheet date in respect of non-current non-financial assets such as fixed assets, construction in progress, intangible assets with an infinite useful life, investment properties measured at cost, and long-term equity investments in subsidiaries, joint ventures and associates. If there is any evidence indicating that an asset may be impaired, recoverable amount shall be estimated for impairment test. Goodwill, intangible assets with an indefinite useful life and intangible assets beyond working conditions will be tested for impairment annually, regardless of whether there is any indication of impairment. If the impairment test result shows that the recoverable amount of an asset is less than its carrying amount, the impairment provision will be made according to the difference and recognized as an impairment loss. The recoverable amount of an asset is the higher of its fair value less costs of disposal and the present value of the future cash flows expected to be derived from the asset. An asset’s fair value is the price in a sale agreement in an arm’s length transaction. If there is no sale agreement but the asset is traded in an active market, fair value shall be determined based on the bid price. If there is neither sale agreement nor active market for an asset, fair value shall be based on the best available information. Costs of disposal are expenses attributable to disposal of the asset, including legal fee, relevant tax and surcharges, transportation fee and direct expenses incurred to prepare the asset for its intended sale. The present value of the future cash flows expected to be derived from the asset over the course of continued use and final disposal is determined as the amount discounted using an appropriately selected discount rate. Provisions for assets impairment shall be made and recognized for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the Group shall determine the recoverable amount of the asset group to which the asset belongs. The asset group is the smallest group of assets capable of generating cash flows independently. For the purpose of impairment testing, the carrying amount of goodwill presented separately in the financial statements shall be allocated to the asset groups or group of assets benefiting from - 80 - 深圳南山热电股份有限公司 2018 年半年度报告全文 synergy of business combination. If the recoverable amount is less than the carrying amount, the Group shall recognize an impairment loss. The amount of impairment loss shall first reduce the carrying amount of any goodwill allocated to the asset group or set of asset groups, and then reduce the carrying amount of other assets (other than goodwill) within the asset group or set of asset groups, pro rata on the basis of the carrying amount of each asset. An impairment loss recognized on the aforesaid assets shall not be reversed in a subsequent period in respect of the restorable value. 21. Staff remuneration Staff remuneration includes short term staff remuneration, post office benefit, dismissal benefit and other long term staff benefits, among which: Short term staff remuneration mainly consists of salary, bonus, allowance and subsidy, staff benefits, medical insurance, maternity insurance, work related injury insurance, housing funds, labor unit fee and education fee, non-monetary benefits, etc. short term staff remuneration actually happened during the accounting period in which staff provides services to the Company is recognized as liability, and shall be included in current gains and losses or relevant asset cost. Non-monetary benefits are measured at fair value. Post office benefits mainly consist of defined withdraw plan and defined benefit plan. Defined withdraw plan mainly includes basic pension insurance, unemployment insurance and annuity, and the contribution payable is included in relevant asset cost or current gains and losses when occurs. When the Company terminates the employment relationship with employees before the end of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, the Company shall recognize employee compensation liabilities arising from compensation for staff dismissal and included in profit or loss for the current period, when the Company cannot revoke unilaterally compensation for dismissal due to the cancellation of labor relationship plans and employee redundant proposals; and the Company recognize cost and expenses related to payment of compensation for dismissal and restructuring, whichever is earlier. However, if the compensation for termination of employment is not expected to be fully paid within 12 months from the reporting period, it shall be accounted for other long-term staff remuneration. The early retirement plan shall be accounted for in accordance with the accounting principles for compensation for termination of employment. The salaries or wages and the social contributions to be paid for the employees who retire before schedule from the date on which the employees stop rendering services to the scheduled retirement date, shall be recognized (as compensation for termination of employment) in the current profit or loss by the Group if the recognition principles for provisions are satisfied. - 81 - 深圳南山热电股份有限公司 2018 年半年度报告全文 For other long-term employee benefits provided by the Company to its employees, if satisfy with the established withdraw plan, then the benefits are accounted for under the established withdraw plan, otherwise accounted for under defined benefit scheme. 22. Accrued liabilities When responsibilities connected to contingent issues meet the follow conditions at the same time, than recognized as accrued liability: (1) the liability is the current liability that undertaken by the Company; (2) the liability has the probability of result in financial benefit outflow; and (3) the responsibility can be measured reliably for its value. At balance sheet day, with reference to the risks, uncertainty and periodic value of currency that connected to the contingent issues, the predicted liabilities are measured according to the best estimation on the payment to fulfill the current responsibility. 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. The compensated amount shall not be greater than the book value of the predictive liability. (1) Contact in loss Contact in loss is identified when the inevitable cost for performance of the contractual obligation exceeds the inflow of expected economic benefits. When a contract in loss is identified and the obligations thereunder are qualified by the aforesaid recognition criterion for contingent liability, the difference of estimated loss under contract over the recognized impairment loss (if any) of the subject matter of the contract is recognized as contingent liability. (2) Restructuring obligations For detailed, official and publicly announced restructuring plan, the direct expenses attributable to the restructuring are recognized as contingent liabilities, provided that the aforesaid recognition criterion for contingent liability is met. For restructuring obligations arising from disposal of part business, the Company will recognize the obligations relating to restructuring only when it undertakes to dispose part business (namely entering into finalized disposal agreement). 23. Share-based Payments (1) Accounting treatment Share-based payment refers to a transaction in which an enterprise grants equity instruments or undertakes equity-instrument- based liabilities in return for services from employee or other parties. The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments. ① Equity-settled Share-based Payment The equity-settled share-based payment in return for employee services shall be measured at the - 82 - 深圳南山热电股份有限公司 2018 年半年度报告全文 fair value of the equity instruments granted to the employees as at the date of grant. For equity instruments that cannot be exercised until the services are fully rendered during vesting period or specified performance targets are met, within the vesting period, the fair value of such instrument shall, based on the best estimate of the number of exercisable instruments, be calculated with the straight- line method and recognized in relevant costs or expenses. For equity instruments that may be exercised immediately after the grant, the fair value of such instrument shall, on the date of the grant, be recognized in relevant costs or expenses with the increase in the capital reserve accordingly. On each balance sheet date during the vest period, the Company makes the best estimate based on subsequent information such as the latest available information about change of number of exercisable employees, thus to amend the number of equity instruments which are expected to be exercisable. Impact of the above estimate is included in relevant cost or expense for the current period, with corresponding adjustment in capital reserve. The equity-settled share-based payment in return for services from other parties, if the fair value of services from other parties can be reliably measured, shall be measured at the fair value of such services as at the date of acquisition; if the fair value of services from other parties cannot be reliably measured but the fair value of equity instruments can be reliably measured, shall be measured at the fair value of such equity instruments as at the date of acquisition of such services recognized in relevant costs or expenses with the increase in the capital reserve accordingly. ② Cash-settled Share-based Payment The cash-settled share-based payment shall be measured at the fair value of liabilities identified on the basis of shares or other equity instruments undertaken by the Group. For the instruments that may be exercised immediately after the grant, the fair value shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For instruments that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Group. The Group shall, on each balance sheet date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the profit or loss for the period. (2) Accounting treatment in respect of the modification and termination of share-based payment scheme If any modification made by the Group to the share-based payment scheme increases the fair - 83 - 深圳南山热电股份有限公司 2018 年半年度报告全文 value of the equity instrument awarded, services obtained shall be increased accordingly. The increase in fair value of such equity instrument equals to the difference between the fair values before and after the date of modification. If any modification reduces the total fair value of share-based payment or is otherwise unfavorable to employees, services obtained shall be treated as if such modification had never been made, unless the Group has canceled part or the entire equity instrument award. During the vesting period, where an equity instrument award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is included immediately into the profit or loss for the period and capital reserve is recognized. Where employees or other parties are permitted to choose to fulfill non-vesting conditions but have not fulfilled during the vesting period, equity instrument award are deemed cancelled. (3) Accounting for share based payment concerning the Company, its shareholders or actual controllers As for share based payment concerning the Company, its shareholders or actual controllers, with either the settlement entity or service-acceptance entity in the Company or not, it is accounted for in our consolidated financial statement under the following provisions: ① for settlement entity making settlement with its own equity instruments, the transaction is accounted for as equity settled share based payment, otherwise it shall be accounted for as cash settled share based payment. If the settlement entity is an investor of the service-acceptance entity, the transaction is recognized as long term equity investment in the service-acceptance entity based on the fair value of the equity instruments as at the grant date or the fair value of assumed liabilities, with recognition of capital reserve (other capital reserve) or liabilities. ② If service-acceptance entity is not obliged to settle or grant its own equity instruments to its employees, the share based payment transaction is accounted for as equity settled share based payment. If service-acceptance entity is obliged to settle or the equity instruments granted to its employee are not the own instruments of the entity, the share based payment transaction is accounted for as cash settled share based payment. For intra-company share based payment transactions, if the service-acceptance entity and settlement entity are not the same enterprise, the share based payment transaction shall be recognized and measured in the respective financial statement of the two entities under the aforesaid principles. 24. Income When significant risks and rewards of ownership of goods have been transferred to buyer, no continuous management right regularly related to ownership is retained, no effective control is - 84 - 深圳南山热电股份有限公司 2018 年半年度报告全文 conducted on goods sold, moreover, amount of income may be measured in a reliable way, relevant economic profit may have flown into enterprise and relevant incurred cost or to be incurred may be measured in a reliable way, implementation of goods sales revenue will be confirmed. Detail recognization according to specific revenue: (1) Power sales revenue The Group generates electricity by thermal power, and realizes sales through incorporation into Guangdong power grid. As for power sales, the Group realizes revenue when it produces electricity and obtains the grid power statistics table confirmed by the power bureau. (2) Revenue from providing labor service Under the condition of service providing business can be estimated in a reliable way, relevant economic benefit is likely to flow into enterprise, completion degree of business may be estimated in a reliable way and relevant incurred cost and to be incurred may be measured in a reliable way, the revenue from labor service providing recognized. Relevant service revenue may be confirmed by the Company as percentage-of-completion method on balance sheet date. Completion degree of service business will be determined as share of incurred service cost in estimated general cost. If result of service providing business can’t be estimated in a reliable way, service revenue should be confirmed as amount of incurred service cost expected to be compensated, where incurred service cost is taken as period charge. If no compensation is expected for incurred service cost, income won’t be confirmed. 25. Government subsidy Government subsidy refers to the monetary asset and non-monetary asset that the Company obtains from the government free of charge, excluding the capital that the government invests as an investor and enjoys the corresponding owner's equity. Government subsidies are divided into the asset-related government subsidy and the income-related government subsidy. If the government subsidy is a monetary asset, it shall be measured according to the received or receivable amount. If the government subsidy is a non-monetary asset, it shall be measured at fair value. If the fair value cannot be obtained reliably, it shall be measured according to the nominal amount. Government subsidy measured by nominal amount is directly included in the current profits and losses. The government subsidy related to the assets is recognized as deferred income and is recorded into the current profits and losses or the book value of the relevant assets in a reasonable and systematic manner within the useful life of the relevant assets. Revenue-related government grants are used to compensate for the related costs or losses incurred during the subsequent period and are recognized as deferred income and are recognized in the current profit or loss or - 85 - 深圳南山热电股份有限公司 2018 年半年度报告全文 related expenses during the period of recognition of the relevant cost expense or loss; Incurred costs or losses incurred, directly included in the current profits and losses or offset the relevant costs. For the government subsidy containing both asset-related parts and income-related parts at the same time, distinguish the different parts and make the accounting treatment, classify the parts which are difficult to be distinguished as the income-related government subsidy. The government subsidy related to the Company’s daily activities is included in other incomes or offsets related costs in accordance with the essence of economic business; while the government subsidy unrelated to the Company’s daily activities is included in non-operating income and expenditure. When the recognized government subsidy needs to be refunded or has balance of related deferred income, offset the book balance of related deferred income, and include the excess parts in the current profits and losses or (the asset-related government subsidy for offsetting the book value of underlying assets in initial recognition) adjust the book value of assets; directly include these belong to other situations in the current profits and losses. The basis for confirming the relevant public subsidies of the Company and its subsidiaries is as follows: Shenzhen Shennandian Environmental Protection Co., Ltd. (Hereinafter referred to as the "Environmental Protection Company"), a subsidiary of the Company, is a sludge treatment unit, according to the (CS No. [2015] 78) notice of Ministry of Finance and the State Administration of Taxation about printing and issuing the "comprehensive utilization of resources and labor services VAT discounts directory", Environmental Protection Company can enjoy the value-added tax refund policy for sludge treatment with 70% recognized as the public subsidy income. 26. Deferred income tax asset/ deferred income tax liability (1) Current income tax On balance sheet date, current income tax liability (or asset) formed during and before current period will be measured as amount of income tax payable (or repayable) as specified by tax law. Assessable income on which current income expense is based represents the profit before tax for the year upon adjustment against relevant tax rules. (2) Deferred income tax asset & deferred income tax liability For balance of book value of some asset/liability item and its tax base, or temporary difference derived from balance of book value and tax base of the item, which is not confirmed as asset or liability but tax base can be fixed as specified by tax law, deferred income tax asset & deferred income tax liability will be confirmed in balance sheet liability approach. - 86 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Deferred income tax liabilities are not recognized for taxable temporary differences related to: the initial recognition of goodwill; and the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction. In addition, the Group recognizes the corresponding deferred income tax liability for taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, except when both of the following conditions are satisfied: the Company able to control the timing of the reversal of the temporary difference; and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are not recognized for deductible temporary differences related to the initial recognition of an asset or liability in a transaction which is neither a business combination nor affects accounting profit or taxable profit (or deductible loss) at the time of the transaction. In addition, the Group recognizes the corresponding deferred income tax asset for deductible temporary differences associated with investments in subsidiaries, associates and joint ventures to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized, except when both of the following conditions are satisfied: it is not probable that the temporary difference will reverse in the foreseeable future; and it is not probable that taxable profits will be available in the future, against which the temporary difference can be utilized. For deductible loss and taxation decrease which can be carried over to following fiscal year, relevant deferred income tax asset may be confirmed subject to amount of taxable income which is likely to be acquired to deduct deductible loss and taxation decrease in the future. On balance sheet day, those deferred income tax assets and income tax liabilities, according to the tax law, calculation will be on tax rate applicable to retrieving period of assets or clearing of liabilities. On balance sheet day, verification will be performed on the book value of differed income tax assets. If it is not possible to obtain enough taxable income to neutralize the benefit of differed income tax assets, then the book value of the differed income tax assets shall be reduced. Whenever obtaining of taxable income became possible, the reduced amount shall be restored. (3) Income tax expenses Income tax expense includes current income tax and deferred income tax. Current deferred income tax and deferred income tax expenses or income shall reckoned into current gains/losses other that those current income tax and deferred income tax with transactions and events concerned, that reckoned into shareholder’s equity directly while recognized as other comprehensive income; and the book value of the goodwill adjusted for deferred income tax arising from enterprise combination. - 87 - 深圳南山热电股份有限公司 2018 年半年度报告全文 (4) Offset of income tax When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis. When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis. 27. Leasing Finance lease is too virtually transfer all risks and rewards related to ownership of asset, the ownership is may transfer ultimately or not. Leases other than finance lease are operating leases. (1) Lease business with the Company as the rentee The rental is reckoned into the relevant assets cost or the current loss/gain in the straight-line method. The initial direct expenses are reckoned into the current gain/loss, or the actual rental into the current loss/gain. (2) Lease business with the Company as the renter The rental is reckoned into the relevant assets cost or the current loss/gain in the linear way. The initial direct substantive expenses are capitalized and reckoned into the current gain/loss, or the actual rental into the current loss/gain. The initial direct small expenses are reckoned into the current actual gain/loss, or the actual rental into the current loss/gain. (3) Financing lease business with the Group recorded as lessee On the beginning date of the lease, the entry value of leased asset shall be at the lower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date of the lease. Minimum lease payment shall be the entry value of long-term accounts payable, with difference recognized as unrecognized financing expenses. In addition, initial direct costs attributable to leased items incurred during the process of lease negotiation and signing of lease agreement shall be included in the value of leased assets. The balance of minimum lease payment after deducting unrecognized financing expenses shall be accounted for long-term liability and long-term liability due within one year. Unrecognized financing expenses shall be recognized as financing expenses for the current period using effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the current period at the time it incurred. - 88 - 深圳南山热电股份有限公司 2018 年半年度报告全文 (4) Financing lease business with the Group recorded as lessor On the beginning date of the lease, the entry value of lease receivable shall be the aggregate of minimum lease receivable and initial direct costs at the beginning date of the lease. The unsecured balance shall be recorded. The aggregate of minimum lease receivable, initial direct costs and unsecured balance and the different between their present values shall be recognized as unrealised financing income. The balance of lease receivable after deducting unrecognized financing income shall be accounted for long-term debt and long-term debt due within one year. Unrecognized financing income shall be recognized as financing income for the current period using effective interest method during the leasing period. Contingent rent shall be included in profit or loss for the current period. 28. Other main accounting policies and estimations (1) Discontinued operation The discontinued operation refers to the component that meets one of following conditions and has been disposed by the Company or classified as held-for-sale and can be individually distinguished when operating and preparing the financial statements: ① the component represents an independent main Business or a major operating area; ② the component is a parts that intends to dispose or arrange an independent main business or a major operating area; ③ the component is a subsidiary obtained only for re-sale. For details of the accounting treatment methods of discontinued operation, please refer to Annotation IV. 12 “Classify as assets held for sale”. (2) Debt restructures ① Obligation of recording debt restructuring as debtor For debt liquidated with cash, balance between book value of debt to be restructured and amount of actual payment will be included in current gain and loss. On the contrary, for debt liquidated with non-cash asset, balance between book value of debt to be restructured and fair value of non-cash asset transferred will be included in current gain and loss. Balance between fair value of non-cash asset transferred and book value of debt to be restructured will be included in current gains and loss. When debt is transferred to capital, balance between book value of debt to be restructured and fair value of loaner’s share derived from disclaim will be included in current gains and loss. When other terms of debt are modified, fair value of debt after modification will be taken as entry value of restructured debt. Balance between book value of debt prior to restructuring and debt restructured will be included in current gain and loss. When combination of multiple modes is applied, book value of debt to be restructured will be offset by cash for payment, fair value of non-cash asset transferred and fair value of loaner’s - 89 - 深圳南山热电股份有限公司 2018 年半年度报告全文 share successively, then applicable method under modification mentioned above will be applied. ② Obligation of recording debt restructuring as loaner For debt liquidated with cash, balance between book balance of credit to be restructured and cash received will be included in current gain and loss. On the contrary, for debt liquidated with non-cash asset, balance between book balance of credit to be restructured and fair value of non-cash asset received will be included in current gain and loss. When debt is transferred to capital, balance between fair value of loaner’s share and book balance of credit to be restructured will be included in current gain and loss. When other terms of debt are modified, fair value of credit after modification will be taken as book value of credit to be restructured. Balance between book balance of debt prior to restructuring and book value of credit restructured will be included in current gain and loss. When combination of multiple modes is applied, book balance of credit to be restructured will be offset by cash received, fair value of] non-cash asset received and fair value of loaner’s share successively, applicable method under modification mentioned above will be applied. When depreciation reserve has been accrued in credit to be restructured, accrual depreciation reserve will be offset by balances above. Remnant after offset will be included in current gain and loss. 29. Changes in significant accounting policies and accounting estimates (1) Changes in accounting policies No changes of accounting policies in the period (2) Change of accounting estimate No changes of accounting estimate in the period 30. Major accounting judgment and estimation When using the accounting policies discussed in note IV, the Group needs to made judgment, estimation and assumption for carrying value of certain items which cannot be measured adequately due to inherent uncertainty of economic activities. Such judgment, estimation and assumption are based on historical experiences of the Group’s management, together with consideration of other relevant factors. These judgments, estimations and assumption would affect the reported amount of income, expense, asset and liability and disclosure of contingent liabilities on balance sheet date. However, actual results resulting from the uncertainty of these estimates may differ from the current estimation made by management of the Company, which would in turn lead to material adjustments to the carrying value of assets or liabilities which will be affected in future. The Group conducts regular re-review on the aforesaid judgment, estimation and assumption on a continued operation basis. If the change of accounting estimation only affect current period, the - 90 - 深圳南山热电股份有限公司 2018 年半年度报告全文 affected amount is recognized in the period when change occurs. If the change affects current and future periods both, the affected amount is recognized in the period when change occurs and future periods. On balance sheet date, major aspects in the statement need to judge, estimate and consumption by the Company are as: (1) Fixed assets are provided for depreciation by output method The Group recognizes depreciation for unit electricity based on values of power generation machine sets, projected power sales volume and projected net remaining value, and provides for depreciation according to depreciation of unit electricity and actual power sales volume. Taking into account the prevailing industry policies, technologies, consumption, allocation method of power management authorities and past experiences, and the Group management believes that it is adequate for utilization life of such power generation machine sets, projected power sales volume, projected net remaining value and provision method for depreciation. If the future actual power sales volume differs substantially from the projected one, the Group would make adjustment to unit electricity depreciation, which would bring affects to the depreciation expenses included in profit and loss for the current and future periods. (2) The provisional estimated value of fixed assets As for the power generation machine sets and related buildings reaching the condition for intended use, due to the long construction period of power plant projects, high prices and long completion settlement time, they are accounted provisional based on project budget, project pricing or project actual costs before process of project completion settlement. And upon such settlement, the Company adjusts the original provisional value according to the actual costs. If provisional estimated values of power generation machine sets and related buildings differ materially from the actual costs, the Company may have to make corresponding adjustments to the values of fixed assets. (3) Provision for bad debts The Group use allowance method to state bad debt losses according to the accounting policies of accounts receivable. Impairment of receivables is based on the assessment of the recoverability of accounts receivable. Identification of impairment of receivables requires management judgments and estimates. The differences between actual results and the original estimate will affect the book value of accounts receivable as well as the recognition or reversal of provision for bad debts in the period in which the estimate is changed. (4) Allowance for inventories Under the accounting policies of inventories and by measuring at the lower of cost and net realizable value, the Group makes allowance for inventories that have costs higher than net - 91 - 深圳南山热电股份有限公司 2018 年半年度报告全文 realizable value or become obsolete and slow moving. Write-down of inventories to their net realizable values is based on the salability of the evaluated inventory and their net realizable values. Identification of inventories requires management to make judgments and estimates on the basis of obtaining conclusive evidence, and considering the purpose of holding inventory and the events after balance sheet date. The differences between actual results and the original estimate will affect the book value of inventories as well as the recognition or reversal of provision for inventories in the period in which the estimate is changed. (5) Impairment provision for non-financial non-current assets The Company makes judgment on each balance sheet date on whether there is indication of impairment in respect of non-current assets other than financial assets. Intangible assets with indefinite useful life shall also be further tested for impairment when there is indication of impairment, in addition to the annual impairment test. Other non-current assets other than financial assets would be test for impairment when there is indication showing its carrying value in not likely to be recovered. Impairment exists when carrying value of asset or assets group is higher than recoverable amount, namely the higher of fair value less disposal cost and present value of expected future cash flow. The calculation of the fair value less costs of disposal is based on available data from binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental costs for disposing of the asset. In assessing value in use, significant judgments are exercised over the asset’s production, selling price, related operating expenses and discount rate to calculate the present value. All relevant materials which can be obtained are used for estimation of the recoverable amount, including the estimation of the production, selling price and related operating expenses based on reasonable and supportable assumptions. The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose a suitable discount rate in order to calculate the present value of those cash flows. (6) Depreciation and amortization Assets such as investment properties, fixed assets and intangible assets are depreciated and amortized over their useful lives under straight line method after taking into account residual value. The estimated useful lives of the assets are regularly reviewed to determine the depreciation and amortization costs charged in each reporting period. The useful lives of the - 92 - 深圳南山热电股份有限公司 2018 年半年度报告全文 assets are determined based on historical experience of similar assets and the estimated technical changes. If there have been significant changes in the factors used to determine the depreciation or amortization, the rate of depreciation or amortization is revised prospectively. (7) Deferred income tax assets Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred income tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. (8) Early retirement pension plan and supplementary social pension plan Expense and liability resulted from early retirement pension plan and supplementary social pension plan are determined based on a variety of assumptions, including the discount rate, the growth rate of average medical cost, the growth rate of retired employees’ subsidies and other factors. Differences between actual and estimated results will be recognized accordingly as current expense. Although management believes that the assumptions are reasonable, the changes in actual empirical value and assumptions will affect the amount of expenses and the balance of liabilities resulted from early retirement pension plan and supplementary social pension plan. (9) Projected liability Provision for product quality guarantee, estimated onerous contracts, and delay delivery penalties shall be recognized in terms of contract, current knowledge and historical experience. If the contingent event has formed a practical obligation which probably results in outflow of economic benefits from the Group, a projected liability shall be recognized on the basis of the best estimate of the expenditures to settle relevant practical obligation. Recognition and measurement of the projected liability significantly rely on the management’s judgments inconsideration of the assessment of relevant risks, uncertainties, time value of money and other factors related to the contingent events. In addition, the Company would project liabilities for after-sale quality maintenance commitment provided to customers in respect of goods sold, maintained and reconstructed by the Company. Recent maintenance experience of the Company has been considered when projecting liabilities, while the recent maintenance experience may not reflect the future maintenance. Any increase or decrease of this provision may affect profit or loss for future years. V. Taxes 1. Main taxation items and its tax rate - 93 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Taxation items Tax rate Output tax calculated based on the 5%, 6%, 10% or 16% of the taxable income, VAT VAT based on the difference after deducted the current input tax City maintenance tax Taxed by 5% and 7% of the turnover tax actually paid Education surtax Taxed by 3% of the turnover tax actually paid Local education surtax Taxed by 2% of the turnover tax actually paid Enterprise income tax Taxed by 16.5% to 25% of the taxable income amount As for the taxed by residual value, paid with the 1.2% of the residual value after Real estate tax original value deducted 30%; as for the taxed by house rental, taxed with 12% of the rental income Land-use tax of town 2.5 Yuan ~ 9Yuan per square meter for the land area actually occupied Tax by the Value-added amount from transferring state-owned land use right, landing Land VAT construction and its affiliates with four super-rate progressive tax rate Rate for the income tax for the Company and subsidiaries as: Taxpaying body Rate of income tax Shenzhen Nanshan Power Co., Ltd. (“The Company”) 25% Shenzhen New Power Industrial Co., Ltd. (“New Power”) 25% Shenzhen Shennan Power Gas Turbine Engineering Technique Co., Ltd. (“Engineering 25% Company”) Shenzhen Server Energy Co., Ltd. (“Shenzhen Server”) 25% Shenzhen Shennan Power Environment Protection Co., Ltd. (“Environment Protection 25% Company”) Shennandian (Zhongshan) Power Co., Ltd. (“Zhongshan Power”) 25% Shennandian (Dongguan) Weimei Power Co., Ltd. (“ Weimei Power”) 25% Shennan Energy (Singapore) Co., Ltd. (“ Singapore company”) 17% Zhongshan Shennandian Storage Co., Ltd. (“Shen Storage ”) 25% Hong Kong Syndisome Co., Ltd. (“Syndisome”) 16.50% 2. Taxes preferential and approvals Name of the Relevant regulation and policies Approval Approval Exemption Period of Tax company basis institution documents range validity ” Notice of adjustment and Environment VAT free for perfection on resources Not Not VAT Protection Not applicable sludge comprehensive usage and labor applicable applicable Co., treatment VAT policy”(CS No.115[2011]) - 94 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Shenzhen Notice on "contents of products Provincial Resource Environment with comprehensive utilization of Office, 2015-8-1 SGSQHBA comprehensive VAT Protection resources and value-added tax SAT to No.[2015]0002 utilization of Co., privilege of labor service" (CS (Qianhai 2018-7-31 VAT refund No. [2015] 78) SAT) ” Arrangement of avoidance of double-taxation and prevention of Levy income Enterprise tax free in mainland China and Not tax by 10% of Not income SYNDISOME Not applicable Hong Kong Special applicable total share applicable tax Administrative Region”(GSH No. interests 884[2006]) No enterprise State Tax income tax Shen Guo Sui Enterprise Bureau of should pay for ’Enterprise Income Tax Law of Nan Kou Jiao Not income SYNDISOME Nanshan the dividend People’s Republic of China” Bei Zi No.: applicable tax Distinct before 31 [2011]0011 Shenzhen December 2007 Note: "Notice about adjusting and improving the products with comprehensive utilization of resources and value-added tax policy of labor service" (CS No. [2011] 115) has been abolished since July 1, 2015, the preferential policy of exempting environmental companies from added-value tax of labor services for sludge treatment has been abolished since August 2015, and environmental companies enjoy the drawback policy of added-value tax for comprehensive utilization of resources in accordance with the notice about printing and distributing "contents of products with comprehensive utilization of resources and value-added tax privilege of labor service" (CS No. [2015] 78). VI. Annotation of the items in consolidate financial statement With respect to the notes item (including Main item annotations of Financial Statements) disclosed below, unless otherwise specified, “year-beginning” refers to 1 January 2018 (in RMB/CNY) 1. Monetary fund Item 30 June 2018 Balance at year-begin Cash on hand 142,604.63 81,491.35 Bank savings 430,415,610.30 337,821,258.42 Other monetary fund 344,422,065.04 100,413,420.04 Total 774,980,279.97 438,316,169.81 Including: total amount saving aboard 6,048,593.68 5,963,066.07 - 95 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Note: among the above other monetary capital, there are totally 11,242,792.74 Yuan guarantee draft margin and guarantee deposit included (on 31 December 2017: 26,702,792.74 Yuan). 2. Note receivable Item 30 June 2018 Balance at year-begin Bank acceptance 100,000.00 6,702,500.00 3. Account receivable (1) Account receivable classified according to types: 30 June 2018 Book Balance Bad debt provision Type Book Proporti Proporti Amount Amount value on (%) on (%) Account receivable with individual major amount and withdrawal 3,474,613 3,474,6 1.23 100.00 0.00 bad debt provision independently .06 13.06 Account receivable with bad debt provision accrual based on 276,963, 276,963, 97.96 - - similar credit risk charateristics of a portfolio 225.52 225.52 Account receivable with individual minor amount but withdrawal 2,292,02 1,338,1 953,916. bad debt provision independently 0.81 58.38 7.78 11.37 41 282,729,8 4,812,7 277,917,1 Total 100.00 1.70 66.36 24.43 41.93 (Continued) Amount at year-begin Type Book Balance Bad debt provision Book Proporti Amoun Proporti value Amount on (%) t on (%) Account receivable with individual major amount and withdrawal bad 3,474,61 3,474,6 2.94 100.00 0.00 debt provision independently 3.06 13.06 Account receivable with bad debt provision accrual based on 106,116, 106,116, 89.81 0.00 0.00 similar credit risk charateristics of a portfolio 231.59 231.59 Account receivable with individual minor amount but withdrawal bad 8,571,65 1,338,1 7,233,54 7.25 15.61 debt provision independently 5.54 11.37 4.17 118,162, 4,812,7 113,349, Total 100.00 4.07 500.19 24.43 775.76 (2) Age analysis of account receivable: 30 June 2018 Amount at year-begin Age Amount Proportion (%) Amount Proportion (%) Within 1year 276,960,336.52 97.96 112,392,970.35 95.12 1 to 2years - - 0.00 0.00 2 to 3years - - 442,000.00 0.37 Over 3 years 5,769,529.84 2.04 5,327,529.84 4.51 Total 282,729,866.36 100.00 118,162,500.19 100.00 (3) Bad debt provision withdrawal collected or switch back in the Period (4) No account receivable verified actually in the period - 96 - 深圳南山热电股份有限公司 2018 年半年度报告全文 (5) There are no account receivable of the shareholders or related party who hold over 5 %( 5% included) voting rights in report period. (6)Balance of top five receivables in debtors at end of the period Total balance of the top five receivables in debtors dated 30 June 2018 amounted as 274,440,936.52 Yuan, takes 97.07% in total numbers of balance of receivables at period-end. 4. Account paid in advance (1) Account paid in advance classified according to age: 30 June 2018 Amount at year-begin Account age Amount Proportion (%) Amount Proportion (%) Within 1year 58,460,979.67 99.90 119,008,304.61 99.94 1 to 2years - - - - 2 to 3years 19,082.24 0.03 18,304.20 0.02 Over 3 years 42,504.20 0.07 43,282.74 0.04 Total 58,522,566.11 100.00 119,069,891.55 100.00 (2) Top five account paid in advance by collector Total top five account paid in advance by collector on 30 June 2018 amount to 56,020,706.54 Yuan, a 95.72% in total year-end account paid in advance 5. Other account receivable (1) Other account receivable classified according to type: 30 June 2018 Book Balance Bad debt provision Type Book Proporti Proporti Amount Amount value on (%) on (%) Other account receivable with individual major amount and withdrawal 20,341, 20,341, 26.24 100.00 - bad debt provision independently 666.46 666.46 Other account receivable with bad debt provision accrual based 44,840, 44,840, 57.84 - on similar credit risk charateristics of a portfolio 654.82 654.82 Other account receivable with individual minor amount but withdrawal 12,345, 11,502, 842,561 15.92 93.18 bad debt provision independently 315.87 753.98 .89 77,527, 31,844, 45,683, Total 100.00 41.07 637.15 420.44 216.71 (Continued) Amount at year-begin Book Balance Bad debt provision Type Book Proporti Proporti Amount Amount value on (%) on (%) Other account receivable with individual major amount and withdrawal 20,341, 20,341, 28.81 100.00 - bad debt provision independently 666.46 666.46 Other account receivable with bad debt provision accrual based 37,929, 37,929, 53.71 - - on similar credit risk charateristics of a portfolio 326.85 326.85 Other account receivable with individual minor amount but withdrawal 12,345, 11,502, 842,561 17.48 93.18 bad debt provision independently 315.87 753.98 .89 70,616, 31,844, 38,771, Total 100.00 45.09 309.18 420.44 888.74 - 97 - 深圳南山热电股份有限公司 2018 年半年度报告全文 ① Other account receivable with individual major amount and withdrawal bad debt provision independently Other account receivable Carrying amount Bad debt provision Proportion (%) Reason Huiyang County Kangtai Industrial 14,311,626.70 14,311,626.70 100.00 Un-collectible Company Shandong Jinan Power Equipment 3,560,000.00 3,560,000.00 100.00 Un-collectible Factory Individual income tax 2,470,039.76 2,470,039.76 100.00 Un-collectible Total 20,341,666.46 20,341,666.46 100.00 ② Account receivable with individual minor amount but withdrawal bad debt provision independently at period-end Withdrawal Item Carrying amount Bad debt provision proportion (%) Dormitory amount receivable 2,083,698.16 1,736,004.16 83.31 Deposit receivable 1,769,842.84 1,312,974.95 74.19 Bureau of Finance of Zhongshan 219,192.00 219,192.00 100.00 Municipality Administrative Office of Nanshan 50,000.00 12,000.00 24.00 District Shenzhen Individual 7,498,997.87 7,498,997.87 100.00 Other 723,585.00 723,585.00 100.00 Total 12,345,315.87 11,502,753.98 93.18 (2)Bad debt provision withdrawal, collected or switch back in the Period (3) No other account receivable verified actually in the period (4) Other account receivable classified according to age: 30 June 2018 Amount at year-begin Account age Amount Proportion (%) Amount Proportion (%) Within 1year 17,122,595.28 22.08 11,017,914.66 15.60 1 to 2years 3,393,612.13 4.38 2,586,964.78 3.66 2 to 3years - - 328,508.03 0.47 Over 3 years 57,011,429.74 73.54 56,682,921.71 80.27 Total 77,527,637.15 100.00 70,616,309.18 100.00 (5) There are no other account receivables of the shareholders who hold over 5 % ( 5% included) voting rights in report period. (6) Account receivable from related parties found more in Note X-5. Account receivable/payable with related party (7) Top five other account receivables at year-end balance listed by arrears party Proportion Year-end balance of bad debt Name of the company Relationship Amount Duration in total provision - 98 - 深圳南山热电股份有限公司 2018 年半年度报告全文 other account receivable (%) Huidong Server Harbor Related Comprehensive 23,711,275.01 Over 3 years 30.58 - party Development Company Huiyang Kangtai Non-related 14,311,626.70 Over 3 years 18.46 14,311,626.70 Industrial Company party Dongguang Feng Gas Storage and Non-related 5,000,000.00 Within 2 years 6.45 - Transportation Co., party Ltd. Shandong Jinan Non-related Generation 3,560,000.00 Over 3 years 4.59 3,560,000.00 party Equipment Plant China National Machinery Non-related 3,424,972.03 Within 2 years 4.42 Equipment party Engineering Ltd. Total 50,007,873.74 64.50 17,871,626.70 6. Inventory (1) Classification of inventory 30 June 2018 Amount at year-begin Item Depreciation Depreciation Book Balance Book value Book Balance Book value provision provision Raw 122,436,891.15 52,720,793.00 69,716,098.15 130,555,696.89 52,720,793.00 77,834,903.89 materials Total 122,436,891.15 52,720,793.00 69,716,098.15 130,555,696.89 52,720,793.00 77,834,903.89 (2) Inventory falling price reserve Carrying balance at Decreased Carrying balance on 30 Type Accrual year-begin Switch back Written-off June 2018 Raw materials 52,720,793.00 - - - 52,720,793.00 Total 52,720,793.00 - - - 52,720,793.00 (3) Accrual basis and reasons for switch back or written-off Reasons for switch Item Specific basis Reasons for written-off back Raw materials Cost higher than the net realizable value Not-applicable Raw materials reception 7. Other current assets Item 30 June 2018 Balance at year-begin VAT input tax deductible 394,094,957.94 446,786,369.31 Enterprise income tax deductible 7,151,719.08 5,368,153.93 - 99 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Other 30,000.00 30,000.00 Total 401,276,677.02 452,184,523.24 8. Financial assets available for sale (1) Financial assets available for sale 30 June 2018 Balance at year-begin Item Book Depreciatio Book Depreciatio Book value Book value Balance n reserves Balance n reserves Equity instrument available for 63,115,000.0 2,500,000.0 60,615,000.0 63,115,000.0 2,500,000.0 60,615,000.0 sale 0 0 0 0 0 0 63,115,000.0 2,500,000.0 60,615,000.0 63,115,000.0 2,500,000.0 60,615,000.0 Including: measured by cost 0 0 0 0 0 0 63,115,000.0 2,500,000.0 60,615,000.0 63,115,000.0 2,500,000.0 60,615,000.0 Total 0 0 0 0 0 0 (2) Measured by cost Book Balance Depreciation reserves Investee company +, 30 June +, 30 June Year-begin 2018 Year-begin 2018 - - 60,615,000.0 60,615,000.0 CPI Jiangxi Nuclear Power Co., Ltd. - - - - 0 0 Shenzhen Petrochemical Products Bonded Trading 2,500,000.0 2,500,000.0 2,500,000.00 - 2,500,000.00 - Co., Ltd. 0 0 63,115,000.0 63,115,000.0 2,500,000.0 2,500,000.0 Total - - 0 0 0 0 (Continued) Investee company Shareholding ratio in investee company (%) Cash bonus CPI Jiangxi Nuclear Power Co., Ltd. 5.00 - Shenzhen Petrochemical Products Bonded Trading Co., Ltd. 4.00 - 9. Long-term equity investment +,- Investment Balance of Balance at gains/losses depreciation Investee company 30 June 2018 year-begin Other reserves on 30 recognized by June 2018 equity method Affiliated business Huidong Server 18,254,673.40 -1,076,904.31 - 17,177,769.09 - Total 18,254,673.40 -1,076,904.31 - 17,177,769.09 - 10. Investment real estate House, Land use Construction in Item Total buildings right process - 100 - 深圳南山热电股份有限公司 2018 年半年度报告全文 I. Original book value 9,708,014.9 1. Balance at year-begin 9,708,014.96 - - 6 2.Current increased - - - - 3.Current decreased - - - - 9,708,014.9 4. Balance on 30 June 2018 9,708,014.96 - - 6 II. accumulated depreciation and accumulated - amortization 6,905,574.6 1. Balance at year-begin 6,905,574.65 - - 5 2. Current increased 98,068.80 - - 98,068.80 (1) accrual or amortization 98,068.80 - - 98,068.80 3. Current decreased - - - - 7,003,643.4 4. Balance on 30 June 2018 7,003,643.45 - - 5 III. depreciation provision - 1. Balance at year-begin - - - - 2. Current increased - - - - 3.Current decreased - - - - 4. Balance on 30 June 2018 - - - - IV. Book value - 2,704,371.5 1. Balance on 30 June 2018 2,704,371.51 - - 1 2,802,440.3 2. Book value at year-begin 2,802,440.31 - - 1 11. Fixed assets (1) Fixed assets House and Machinery Transportation Other Item Total buildings equipment tools equipment I. Original book value 1. Balance at year-begin 450,244,770.68 4,040,500,312.08 21,308,218.22 48,167,921.16 4,560,221,222.14 2. Current increased 36,801,321.17 17,301,918.19 3,284,554.59 742,308.57 58,130,102.52 (1) Purchase 36,801,321.17 864,957.27 3,284,554.59 742,308.57 41,693,141.60 (2) Construction in process - 16,436,960.92 - - 16,436,960.92 transfer-in (3) increased by enterprise - - - - - combination 3. Current decreased 583,553.00 57,562,794.22 890,442.00 13,146.00 59,049,935.22 (1) Disposal or scrap 583,553.00 57,562,794.22 890,442.00 13,146.00 59,049,935.22 4. Balance at 30 June 2018 486,462,538.85 4,000,239,436.05 23,702,330.81 48,897,083.73 4,559,301,389.44 - 101 - 深圳南山热电股份有限公司 2018 年半年度报告全文 II. Accumulated depreciation 1. Balance at year-begin 282,063,887.10 2,649,610,431.93 16,993,672.09 40,811,456.40 2,989,479,447.52 2. Current increased 6,465,964.24 57,038,778.65 452,620.25 520,650.40 64,478,013.54 (1) accrual 6,465,964.24 57,038,778.65 452,620.25 520,650.40 64,478,013.54 3. Current decreased 360,687.06 48,897,726.91 801,397.80 11,831.40 50,071,643.17 (1) Disposal or scrap 360,687.06 48,897,726.91 801,397.80 11,831.40 50,071,643.17 4. Balance at 30 June 2018 288,169,164.28 2,657,751,483.67 16,644,894.54 41,320,275.40 3,003,885,817.89 III. impairment provision 1. Balance at year-begin 14,860,025.13 135,261,184.44 - - 150,121,209.57 2. Current increased (1) accrual - - - - - 3. Current decreased 8,987,299.45 - - 8,987,299.45 (1) Disposal or scrap - 8,987,299.45 - - 8,987,299.45 4. Balance at 30 June 2018 14,860,025.13 126,273,884.99 0.00 0.00 141,133,910.12 IV. Book value 1. Balance at 30 June 2018 183,433,349.44 1,216,214,067.39 7,057,436.27 7,576,808.33 1,414,281,661.43 2. Book value at year-begin 153,320,858.45 1,255,628,695.71 4,314,546.13 7,356,464.76 1,420,620,565.05 (2) Idle fixed assets temporary Accumulate Original Impairment Item d Book value Note book value provision depreciation Houses and 137,799,917. 100,821,833. 19,008,224. 17,969,859. Wharf, processing workshop of heavy oil buildings 53 59 87 07 594,477,563. 500,135,626. 53,555,257. 40,786,679. Processing equipment of heavy oil and Equipment 61 57 36 68 generation unit Transport 256,300.00 230,670.00 - 25,630.00 Idle vehicles equipment 732,533,781. 601,188,130. 72,563,482. 58,782,168. Total 14 16 23 75 (3) Fixed assets without property license obtained Item Book value Reasons Booster station 5,567,100.88 Procedures uncompleted Steam turbine workshop 2,014,811.08 Procedures uncompleted Chemical water tower 3,327,665.86 Procedures uncompleted Treatment shop for heavy oil 650,123.93 Procedures uncompleted Start-up boiler house 146,191.99 Procedures uncompleted Fire pump room 339,374.37 Procedures uncompleted Circulating water pump house 2,134,592.90 Procedures uncompleted - 102 - 深圳南山热电股份有限公司 2018 年半年度报告全文 Comprehensive building 3,557,285.99 Procedures uncompleted Production and inspection building 5,745,308.85 Procedures uncompleted Administrative building 5,907,084.49 Procedures uncompleted Mail room of the main entrance 239,379.05 Procedures uncompleted Turbine building and annex building 10,745,357.65 Procedures uncompleted Plant’s ventilating system 558,407.71 Procedures uncompleted Office building 5,375,147.82 Procedures uncompleted Comprehensive building 1,192,940.72 Procedures uncompleted Draft cooling tower 3,452,423.42 Procedures uncompleted Chemical water workshop and foundation of water 1,640,829.43 tank Procedures uncompleted Industry pool and industry pump house 720,128.52 Procedures uncompleted Start-up boiler house 120,327.67 Procedures uncompleted Oil treatment room and oil un-loading platform 337,538.98 Procedures uncompleted Comprehensive building canteen 314,580.33 Procedures uncompleted Total 54,086,601.64 12. Fixed assets disposal Item 30 June 2018 Balance at year-begin Fixed assets ready for disposal 1,314.60 - Total 1,314.60 - - 103 - 13. Construction in process (1) Construction in process 30 June 2018 Amount at year-begin Item Book Balance Impairment provision Book value Book Balance Impairment provision Book value Oil to Gas Works 32,871,600.26 32,871,600.26 - 32,871,600.26 32,871,600.26 - Cogeneration of heat and electricity Project 62,923,817.59 - 62,923,817.59 47,221,713.47 - 47,221,713.47 Other technical innovation project 5,575,705.33 - 5,575,705.33 3,737,028.45 - 3,737,028.45 Total 101,371,123.18 32,871,600.26 68,499,522.92 83,830,342.18 32,871,600.26 50,958,741.92 (2) Changes of significant projects in construction in the year Transferred fixed Other decrease Item Budget Amount at year-begin Increase of this year 30 June 2018 assets in this year in the year Oil to Gas Works - - - 32,871,600.26 74,400,000.00 32,871,600.26 Cogeneration of heat and electricity Project 15,702,104.12 - - 62,923,817.59 120,000,000.00 47,221,713.47 Technological transformation project - 18,275,637.80 16,436,960.92 - 5,575,705.33 3,737,028.45 Total 194,400,000.00 83,830,342.18 33,977,741.92 16,436,960.92 - 101,371,123.18 (3) Impairment provision Item Amount at year-begin Increase Decreased 30 June 2018 Reasons of accrual Oil to Gas Works 32,871,600.26 - - 32,871,600.26 In idle condition (4) Idle construction in progress temporary 30 June 2018 Amount at year-begin Item Book Balance Impairment provision Net book value Book Balance Impairment provision Net book value Oil to Gas Works 32,871,600.26 32,871,600.26 - 32,871,600.26 32,871,600.26 - 104 14. Intangible assets Item Land use right Software Total I. Original book value 1. Balance at year-begin 91,253,625.27 3,678,109.85 94,931,735.12 2. Current increased - (1) purchase - - 3. Current decreased - (1) disposal - - - 4. Balance at 30 June 2018 91,253,625.27 3,678,109.85 94,931,735.12 II. Accumulated amortization 1. Balance at year-begin 42,793,252.98 3,667,981.54 46,461,234.52 2. Current increased 1,099,620.36 144,211.01 1,243,831.37 (1) accrual 1,099,620.36 144,211.01 1,243,831.37 3. Current decreased - (1) disposal - - - 4. Balance at 30 June 2018 43,892,873.34 3,812,192.55 47,705,065.89 III. Impairment provision 1. Balance at year-begin - - - 2. Current increased (1) accrual - - - 3. Current decreased (1) disposal - - - 4. Balance at 30 June 2018 - - - IV. Book value 1. Balance at 30 June 2018 47,360,751.93 -134,082.70 47,226,669.23 2. Book value at year-begin 48,460,372.29 10,128.31 48,470,500.60 15. Deferred income tax assets Item 30 June 2018 Amount at year-begin Deferred income tax assets: Bad debt provision of account receivable 1,159,926.83 1,159,926.83 Other provision for bad debts of accounts receivable 180,896.25 180,896.25 Staff salary payable 830,621.00 830,621.00 Provision for devaluation of long-term equity investment 625,000.00 625,000.00 Others 125,592.57 125,592.57 Total 2,922,036.65 2,922,036.65 16. Other non-current assets Item 30 June 2018 Amount at year-begin Project of LNG(Note) 22,882,181.78 22,882,181.78 Account for engineering and equipment paid in advance - 10,048,600.00 - 105 - Total 22,882,181.78 32,930,781.78 Note: the project was jointly constructed by Weimei Power Company and Guangdong Dapeng Liquid Natural Gas Co., Ltd.(hereinafter referred to as Dapeng LNG). According to the contract signed between the two parties, before the project involved by this construction acquired approval from the relevant national authorities, the ownership belongs to both parties. After such approval, Dapeng LNG will acquire LNG project. Thus, Weimei Power Company recorded it under the item of “other non-current assets”. 17. Short-term loans Item 30 June 2018 Amount at year-begin Guarantee loans 100,000,000.00 465,850,000.00 Credit loans 811,500,000.00 50,000,000.00 Total 911,500,000.00 515,850,000.00 18. Note payable Type 30 June 2018 Amount at year-begin Trade acceptance - - Bank acceptance - 51,439,580.56 Total - 51,439,580.56 19. Account payable (1) Details of account payable Item 30 June 2018 Amount at year-begin Natural gas 41,996,987.91 - Materials 3,274,274.35 13,670,020.13 Electricity 1,777,099.99 811,442.78 Engineering funds 5,685,183.33 0.00 Others 1,600,327.36 613,449.69 Total 54,333,872.94 15,094,912.60 (2) There is no fund of shareholders with 5 %( including 5%) or more of the voting shares in the Group in the report period. 20. Wages payable (1) Wages payable Item Balance at year-begin Increase this year Decrease this year 30 June 2018 I. Short-term remuneration 44,460,199.34 73,010,147.23 75,842,903.46 41,627,443.11 II. Post-employment welfare-defined 3,877,388.91 10,372,785.90 9,375,056.43 4,875,118.38 contribution plans III. Severance Pay - - - - IV. Other welfare due within one year - - - - - 106 - Total 48,337,588.25 83,382,933.13 85,217,959.89 46,502,561.49 (2) Short-term remuneration Item Balance at year-begin Increase this year Decrease this year 30 June 2018 1. Wages, bonuses, allowances and 41,922,487.80 60,406,392.81 62,896,080.00 39,432,800.61 subsidies 2. Welfare for employee 0.00 642,162.22 641,787.22 375.00 3. Social insurance 246,699.75 3,297,969.51 3,222,647.31 322,021.95 Including: Medical insurance 215,069.63 3,115,401.00 3,051,626.07 278,844.56 Work injury insurance 23,713.77 111,283.97 104,494.87 30,502.87 Maternity insurance 7,916.35 71,284.54 66,526.37 12,674.52 Wages in arrears - - - - 4. Housing provident fund 698,573.20 7,892,093.10 7,854,454.80 736,211.50 5.Union funds and staff education 1,592,438.59 771,529.59 1,227,934.13 1,136,034.05 expenses Total 44,460,199.34 73,010,147.23 75,842,903.46 41,627,443.11 (3) Defined contribution plans Item Balance at year-begin Increase this year Decrease this year 30 June 2018 1. Basic Endowment insurance 541,656.23 7,758,457.20 7,600,353.85 699,759.58 2. Unemployment insurance 13,335.68 98,581.70 91,564.58 20,352.80 3. Enterprise annuities 3,322,397.00 2,515,747.00 1,683,138.00 4,155,006.00 Total 3,877,388.91 10,372,785.90 9,375,056.43 4,875,118.38 21. Taxes payable Item 30 June 2018 Amount at year-begin VAT 4,219,913.98 5,660,770.59 Enterprise income tax 7,219,203.43 3,959,377.93 Individual income tax 2,076,589.47 2,064,852.00 Land-use tax of town 566,975.50 1,405,156.40 Real estate tax 2,246,238.86 1,435,820.81 Others 453,594.52 911,781.03 Total 16,782,515.76 15,437,758.76 22. Interest payable Item 30 June 2018 Amount at year-begin Long-term loan interest of installment and interest charges 138,616.88 108,741.19 Interest payable of short-term loan 3,265,233.29 2,898,252.14 Total 3,403,850.17 3,006,993.33 23. Other account payable - 107 - Item 30 June 2018 Amount at year-begin Project expense 21,722,183.53 24,040,896.76 Quality guarantee deposit 12,511,146.03 13,632,891.13 Equipment amount 3,910,071.02 439,237.63 Material amount 1,495,078.48 - Land use right charge 752,198.28 423,005.75 Fund of the Board 481,370.27 479,659.27 Accrued expenses 29,567,922.10 34,865,705.80 Other 15,735,466.29 9,332,787.23 Total 86,175,436.00 83,214,183.57 24. Non-current liability due within one year Item 30 June 2018 Balance at year-begin Long-term loans due within one year - 32,400,000.00 Total - 32,400,000.00 25. Long-term loans Item 30 June 2018 Amount at year-begin Guarantee loans 25,940,000.00 58,340,000.00 Credit loans - - Less: Long-term loans due within one year - 32,400,000.00 Total 25,940,000.00 25,940,000.00 26. Accrued liabilities Item 30 June 2018 Amount at year-begin Reason Offering guarantee outside 26,766,590.38 26,788,590.38 Note Note: On 29 November 2013, Shenzhen Server and Jiahua Building Products (Shenzhen) Co., Ltd. (Jiahua Building) signed a supplementary term aiming at equity transfer over equity attribution and division of Yapojiao Dock, which belongs to Shenzhen Server, Huidong Server, and Huidong Nianshan Town Government as well as its subordinate Nianshan Group. In order to solve this remaining historic problem, Shenzhen Server saved RMB 12,500,000.00 in condominium deposit account as guarantee. In addition, Server pledged its 20% of equity holding from Huidong Server to Jiahua Architecture with pledge duration of 2 years. The amount of collateral on loans could not exceed RMB 15,000,000.00. Relevant losses with the event concerned predicted amounting to RMB 27,500,000.00. It was estimated that 27,500,000.00 Yuan will lost in related with the above mentioned events. In concerned with the attorney fees for deal with problems left over from history, totally 733,409.62 Yuan costs from 2014 to 30 June 2018, the ending balance amounted as 26,766,590.38 Yuan - 108 - 27. Deferred income Item Amount at year-begin Current increased Current decreased 30 June 2018 Deferred income 41,948,231.12 - 2,022,867.64 39,925,363.48 Including, items with government grants involved: Current decreased Amount at Current Amount Assets /income Liability Other 30 June 2018 year-begin increase related reckoned in changes other revenue Subsidy for energy-saving 5,283,816.88 - 57,018.66 - 5,226,798.22 Assets related technology reform Subsidy for low-nitrogen 917,121.50 - 189,986.86 - 727,134.64 Assets related transformation project Treasury subsidies for sludge 3,336,250.00 - 127,500.00 - 3,208,750.00 Assets related drying Support fund of recycling 8,745,279.79 - 323,501.46 - 8,421,778.33 Assets related economy for sludge drying Subsidy for project of low-nitrogen transformation for 22,894,446.91 - 1,276,992.42 - 21,617,454.49 Assets related welcoming the Universidad Support fund of enterprise 270,196.04 - 30,588.24 - 239,607.80 Assets related informationalization Funded of energy efficiency improvement for electric 501,120.00 17,280.00 - 483,840.00 Assets related machine in SZ Total 41,948,231.12 - 2,022,867.64 - 39,925,363.48 28. Share capital Changes in this year(+ -) Balance at Item New Capitalizing Balance at 30 June 2018 year-begin Bonus shares from Other Subtotal shares issued reserves Total shares 602,762,596.00 - - - - - 602,762,596.00 29. Capital reserve Item Balance at year-begin Increase in the year Decrease in the year 30 June 2018 Capital premium 233,035,439.62 - - 233,035,439.62 Other capital reserve 129,735,482.48 - - 129,735,482.48 Other 362,770,922.10 - - 362,770,922.10 30. Surplus reserve Item Balance at year-begin Increase in the year Decrease in the year 30 June 2018 Legal surplus reserve 310,158,957.87 - - 310,158,957.87 Discretionary surplus reserve 22,749,439.73 - - 22,749,439.73 Total 332,908,397.60 - - 332,908,397.60 31. Retained profit - 109 - Item 30 June 2018 Balance at year-begin Retained profit of last year before adjusted 660,176,169.69 644,271,987.22 Total retained profit adjusted (increased with +, decreased with -) - - Retained profit at beginning of the year after adjusted 660,176,169.69 644,271,987.22 Add: net profit attributable to shareholders of parent company 30,012,095.22 15,904,182.47 Retained profit at year-end 690,188,264.91 660,176,169.69 32. Operating income and operating cost Jan. – Jun. 2018 Jan. – Jun. 2017 Item Income Cost Income Cost Main business 1,078,030,178.26 968,719,412.92 871,032,443.81 827,070,339.40 Other business 1,730,036.54 975,640.11 1,930,253.52 691,219.93 Total 1,079,760,214.80 969,695,053.03 872,962,697.33 827,761,559.33 33. Tax and surcharge Item Jan. – Jun. 2018 Jan. – Jun. 2017 City maintenance tax 2,286,803.77 1,076,429.84 House duty 1,275,543.49 918,709.23 Stamp tax 520,484.00 344,854.98 Educational surcharge 572,820.01 953,710.38 Land use tax 50,960.52 200,777.04 Vehicle and vessel use tax 15,390.94 Total 4,722,002.73 3,494,481.47 34. Management expenses Item Jan. – Jun. 2018 Jan. – Jun. 2017 Salary 23,190,344.99 20,156,152.48 Leasing expenses 3,092,069.50 3,014,660.30 Entertainment expense 1,558,869.52 1,654,048.96 Expenses for agency appointment 646,103.90 1,160,974.45 Vehicles expenses 1,861,732.77 1,837,717.51 Expenses from the Board 546,064.70 1,006,497.20 Housing fund 1,842,356.95 1,736,661.05 Depreciation expense 1,987,153.39 1,351,420.01 Amortization of intangible assets 935,811.89 938,591.10 - 110 - Item Jan. – Jun. 2018 Jan. – Jun. 2017 Specific expenses 14,584.43 119,679.73 Environmental expense 874,452.57 900,528.44 Sundry expenses 1,387,173.86 1,283,195.42 Expenses for enterprise culture 103,725.00 87,511.70 Property expense 455,396.71 447,758.12 Office expenses 346,790.68 166,523.48 Pension insurance 2,015,878.90 2,184,952.61 Communication charge 647,596.16 598,622.04 Business traveling charge 259,624.12 216,806.54 Stock charge 29,929.33 40,377.36 Medicare 877,227.73 867,818.90 Labor union dues 290,467.56 457,849.20 Personnel education fund 61,044.53 141,084.34 Others 3,657,250.85 821,787.52 Total 46,681,650.04 41,191,218.46 35. Financial expenses Item Jan. – Jun. 2018 Jan. – Jun. 2017 Interest expenditure 24,038,132.91 39,088,778.10 Less : interest income 2,187,166.10 7,910,187.73 Exchange gains/losses -73,770.20 184,715.46 Others 517,089.32 316,084.62 Total 22,294,285.93 31,679,390.45 36. Investment gains/losses Item Jan. – Jun. 2018 Jan. – Jun. 2017 Gains of long-term equity investment on Equity -1,076,904.31 -1,019,420.00 Investment gains from long-term equity investment disposal - - Total -1,076,904.31 -1,019,420.00 37. Assets impairment loss Item Jan. – Jun. 2018 Jan. – Jun. 2017 Loss on bad debt - -480,710.97 Total - -480,710.97 38. Other income Item Jan. – Jun. 2018 Jan. – Jun. 2017 - 111 - Item Jan. – Jun. 2018 Jan. – Jun. 2017 Government bond subsidy for sludge drying 1,276,992.42 1,276,992.42 Support fund of enterprise informationalization 30,588.24 30,588.24 Subsidy for energy-saving technology reform 247,005.52 246,169.87 Government bond subsidy for sludge drying 127,500.00 127,500.00 Support fund of recycling economy for sludge drying 323,501.46 323,501.46 Energy efficiency improvement for electric machine 17,280.00 12,960.00 VAT refund 2,013,937.74 1,272,151.11 Other 100,000.00 200,000.00 Total 4,136,805.38 3,489,863.10 39. Non-operating income Item Jan. – Jun. 2018 Jan. – Jun. 2017 Gains of non-current assets damaged or scrapped - - Others 4,775.00 5,796.00 Total 4,775.00 5,796.00 40. Non-operating expense Item Jan. – Jun. 2018 Jan. – Jun. 2017 Expenses from external donation - 10,000.00 Total loss from disposal of non-current assets 849,018.73 160,729.35 Other 10,000.00 1,280.22 Total 859,018.73 172,009.57 41. Income tax expenses Item Jan. – Jun. 2018 Jan. – Jun. 2017 Current income tax measured by tax law and relevant 8,092,879.62 920,495.87 regulation 42. Cash flow statement (1) Cash received with other operating activities concerned Item Jan. – Jun. 2018 Jan. – Jun. 2017 Open credit received - 367,531,301.56 Interest income 2,166,649.41 7,910,187.73 Others 3,843,730.64 646,786.50 Total 6,010,380.05 376,088,275.79 (2) Cash paid for other operating activities Item Jan. – Jun. 2018 Jan. – Jun. 2017 - 112 - Item Jan. – Jun. 2018 Jan. – Jun. 2017 Expense on agency appointment 646,103.90 1,160,974.45 Fund for the Board 546,064.70 1,006,497.20 Leasing expense 3,547,466.21 3,462,418.42 Entertainment expense 1,558,869.52 1,654,048.96 Vehicles expense 1,861,732.77 1,837,717.51 Enterprise culture 103,725.00 87,511.70 Communication fee 647,596.16 598,622.04 Environment protection fee 874,452.57 900,528.44 Others 16,098,724.40 10,904,167.56 Total 25,884,735.23 21,612,486.28 (3) Cash received with financing activities concerned Item Jan. – Jun. 2018 Jan. – Jun. 2017 Deposit received 15,460,000.00 11,309,958.60 43. Supplementary information on cash flow statement (1) Regulate the net profit into the cash flow of operating activities Supplementary information Jan. – Jun. 2018 Jan. – Jun. 2017 1. Regulate the net profit into the cash flow of operating activities Net profit 28,829,762.75 -30,712,587.05 Add: Asset impairment provision - -480,710.97 Depreciation of fixed assets 64,478,013.54 61,654,099.55 Amortization of intangible assets 1,243,831.37 1,305,344.19 Amortization of long-term deferred expenses - - Loss (gain) from disposing fixed assets, intangible assets and - - other long-term assets Abandonment loss from fixed assets 849,018.73 160,729.35 Financial expenses(gain) 24,038,132.91 39,088,778.10 Investment loss(gain) 1,076,904.31 1,019,420.00 Decrease (increase) of deferred income tax assets - - Decrease (increase)of inventory 8,118,805.74 -4,727,006.55 Decrease (increase) of receivable operating items -60,023,522.47 214,908,295.24 Increase (decrease) of payable operating items -16,020,312.60 -347,665,217.13 Net cash flow from operation activities 52,590,634.28 -65,448,855.27 2. Major investment and financing activities not involving cash income and expenditure: Debt capitalization - - - 113 - Supplementary information Jan. – Jun. 2018 Jan. – Jun. 2017 Convertible company bond due within one year - - Fixed assets acquired under finance leases - - 3. Net change of cash and cash equivalents: Year-end balance 763,737,487.23 320,399,482.41 Less: Balance of cash at period-begin 411,613,377.07 1,389,482,327.86 Net increase of cash and cash equivalents 352,124,110.16 -1,069,082,845.45 (2) Composition of cash and cash equivalent Item Jan. – Jun. 2018 Jan. – Jun. 2017 I. Cash 763,737,487.23 320,399,482.41 Including: Cash on hand 142,604.63 112,358.49 Bank savings available for payment needed 430,415,610.30 319,842,865.25 Other monetary capital available for payment needed 333,179,272.30 444,258.67 II. Cash equivalent III. Balance of cash and cash equivalent at period-end 763,737,487.23 320,399,482.41 44. Assets of ownership or use right restricted Item 30 June 2018 Restricted reason Monetary Fund 11,242,792.74 Deposit Total 11,242,792.74 45. Foreign currency Item Foreign currency balance on 30 June 2018 Conversion rate RMB converted Monetary fund Including: USD 855,607.48 6.6166 5,661,212.47 Euro 1,017.87 7.6516 7,788.30 HKD 599,173.75 0.8431 505,163.20 SGD 5,374.81 4.8386 26,006.56 VII. Change of consolidate scope No change of consolidate scope in the year. VIII. Equity in other entity 1. Equity in subsidiaries (1) Composition of the Group Main operation Registration Business Shareholding ratio Subsidiary Acquired way place place nature (%) Shenzhen Server (note ) Shenzhen Shenzhen Trading 50 Establishment New Power Company Shenzhen Shenzhen Power 100 Establishment - 114 - Subsidiary Main operation Registration Business Shareholding ratio Acquired way place place nature (%) generation Zhongshan Power Power Zhongshan Zhongshan 80 Establishment Company generation Engineering Engineering Company Shenzhen Shenzhen 100 Establishment consulting Power Weimei Power Company Dongguan Dongguan 70 Establishment generation Environment Protection Shenzhen Shenzhen Engineering 100 Establishment Company Singapore company Singapore Singapore Trading 100 Establishment Shen Storage Zhongshan Zhongshan Storage 80 Establishment Import & SYNDISOME Hong Kong Hong Kong 100 Not under the same control export trading Note : The Company holds 50% equity of Shenzhen Server, and takes majority voting rights in Shenzhen Server, thus, the Company owes substantial control; Shenzhen Server included in the consolidate scope of the financial statement. (2) Important non-wholly-owned subsidiary Gains/losses Dividend announced to Share-holding ratio of Subsidiary attributable to distribute for minority Ending equity of minority minority (%) minority in the Period in the Period Zhongshan Power 393,668.45 - -12,089,882.94 Company 20 Weimei Power Company -319,787.79 - 29,838,229.72 30 (3) Main finance of the important non-wholly-owned subsidiary Balance on 30 June 2018 Subsidiary Non-current Current assets Non-current assets Total assets Current liability Total liability liability Zhongshan Power 170,537,865.52 572,100,580.42 742,638,445.94 771,193,927.75 31,893,932.86 803,087,860.61 Company Weimei Power 221,277,012.49 510,258,816.85 731,535,829.34 632,075,063.61 - 632,075,063.61 Company (Continued) Subsidiary Balance at year-begin - 115 - Non-current Non-current Current assets Total assets Current liability Total liability assets liability Zhongshan Power 168,596,429.57 592,847,484.20 761,443,913.77 791,720,732.32 32,140,938.38 823,861,670.70 Company Weimei Power 229,231,009.01 528,619,381.52 757,850,390.53 657,323,665.49 - 657,323,665.49 Company (Continued) Current period Subsidiary Total comprehensive Cash flow from operation Operation Income Net profit income activity Zhongshan Power Company 239,056,530.40 1,968,342.26 1,968,342.26 130,078,167.14 Weimei Power Company 249,516,171.77 -1,065,959.31 -1,065,959.31 28,275,188.27 (Continued) Last period Subsidiary Total comprehensive Cash flow from operation Operation Income Net profit income activity Zhongshan Power Company 230,866,147.88 -13,385,377.59 -13,385,377.59 -14,568,572.01 Weimei Power Company 171,896,422.01 -12,478,369.20 -12,478,369.20 -6,869,702.57 2. Equity in joint venture and cooperative enterprise (1) Joint venture or cooperative enterprise Joint venture and Share-holding ratio (%) cooperative Main operation Registered Business Accounting treatment place place nature enterprise Directly Indirectly Huidong Server Huizhou Huizhou Wharf 40 Equity method (2)Financial information for minor joint venture and cooperative enterprise Closing balance/amount in the Item Opening balance/amount in last year year Joint venture Total investment book value 17,177,769.09 18,254,673.40 Total of the follow counted by share-holding ratio —Net profit -1,076,904.31 -1,019,420.00 —Other comprehensive benefits —Total comprehensive income -1,076,904.31 -1,019,420.00 Note: The 60% equity of Huidong Server, held by controlling subsidiary Shenzhen Server are transferred on 9 December 2013, the other 40% equity will re-measured by appraisal value when losing the controlling right. - 116 - IX. Risks associated with financial instruments The Company's main financial instruments include equity investment, borrowings, accounts receivable, accounts payable, etc., see details of each financial instrument in related items of this annotation xi. The risks associated with these financial instruments and the risk management policies adopted by the Company to reduce these risks are described as below. The management of the Company manages and monitors these risk exposures to ensure that the above risks are controlled within the limit range. The Company uses the sensitivity analysis technique to analyze the possible impact of the risk variable on the current profit and loss or the shareholders' equity. Since any risk variable rarely changes in isolation, and the correlation existing among the variables shall have a significant effect on the final amount of changes about a certain risk variable, therefore, the following proceeds by assuming that the change in each variable is independent. (i) Risk management objectives and policies The objective of the Company's risk management is to gain a proper balance between risks and profits, minimize the negative impact of risks on the Company's operating results, and maximize the benefits of shareholders and other equity investors. Based on the risk management objective, the basic strategy of the Company's risk management is to identify and analyze the risks faced by the Company, establish appropriate bottom line to bear the risks and carry out risk management, and timely and reliably supervise the risks so as to control the risks within the limit range. 1 Market risk (1) Foreign exchange risk Foreign exchange risk refers to the risk of losses due to exchange rate changes. The Company’s foreign exchange risk is mainly related to the US dollar. On June 30, 2018, except for the balance of foreign currency monetary items, the assets and liabilities of the Company are RMB balance. The foreign exchange risk arising from the assets and liabilities of such foreign currency balances may have an impact on the Company's operating results. (2) Interest rate risk - cash flow change risk The Company's cash flow change risk of financial instruments arising from interest rate change is mainly related to the floating interest rate bank loans (see details in annotation xi, 17, annotation xi, 25). Interest rate risk sensitivity analysis: The interest rate risk sensitivity analysis is based on the following assumptions: Changes in market interest rates affect the interest income or expense of financial instruments with variable interest rate; For financial instruments with fixed rate by fair value measurement, the changes in market interest rates only affect their interest income or expense; For derivative financial instruments designated as hedging instruments, the changes in market interest - 117 - rates affect their fair value, and all interest rate hedging prediction is highly effective; Calculate the changes in fair value of derivative financial instruments and other financial assets and liabilities by using the cash flow discount method at the market interest rate at the balance sheet date. On the basis of above assumptions, in case that other variables keep unchanged, the pre-tax effect of possible reasonable changes in interest rates on current profits and losses and shareholders' equity is as follows: The period Last period Rate changes Net profit Shareholder’ interest Net profit Shareholder’ interest 5% increased 1,180,390.92 1,019,303.74 1,952,727.44 1,698,182.60 5% decreased -1,180,390.92 -1,019,303.74 -1,952,727.44 -1,698,182.60 2. Credit risk On June 30, 2018, the maximum credit risk exposure that could cause financial loss to the Company is mainly due to the failure of the other party to fulfill the obligations, resulting in losses to the Company's financial assets, including: The book value of financial assets confirmed in the consolidated balance sheet; for the financial instrument measured by fair value, the book value reflects its risk exposure but not the maximum risk exposure, and its maximum risk exposure will change with the changes in future fair value. To reduce the credit risk, the Company has set up a team to determine the credit lines, examine and approve the credit, and perform other monitoring procedures to ensure that necessary measures are taken to recover the expired claims. In addition, the Company reviews the recovery of each account receivable at each balance sheet date to ensure that sufficient provision for bad debts is made for uncollectible funds. As a result, the Company's management believes that the Company's credit risk has been greatly reduced. The company's working capital is deposited in banks with high credit ratings, so the credit risk of working capital is rather low. 3. Liquidity risk In managing the liquidity risk, the Company keeps the cash and cash equivalents that the management considers to be sufficient and supervise them so as to meet the Company's operating needs and reduce the impact of fluctuations in cash flows. The Company’s management monitors the use of bank loans and ensures to comply with the loan agreement. The Company uses bank loans as the main source of funds. X. Related party and related transactions 1. Parent company of the Group Share holding proportion of any shareholder of the Company didn't reach 50%, and couldn't form a holding relationship of the Company through any methods. The Company has no parent company. - 118 - 2. Subsidiaries of the Company Found more in 1. Subsidiary in Note VIII 3. Joint venture and affiliated enterprise of the Group Found more in 2. Equity in joint venture or affiliate business in Note VIII 4. Other related party Other related party Relationship with the Group Shareholders have major influence on the Shenzhen Energy Group Co., Ltd. (“Energy Group ”) Company Dongguan Weimei Ceramics Industrial Park Co., Ltd. (” Weimei Ceramics”) Minority shareholders of the subsidiaries Shenzhen Mawan Power Co., Ltd. (“Mawan Power Company”) Subsidiary of ultimate controller of Energy Group Shenzhen Moon Bay Oil Harbor Co., Ltd. (“Moon Bay Oil Company”) Subsidiary of ultimate controller of Energy Group Shenzhen Energy Group Holding Co., Ltd. (” Energy Holding”) Subsidiary of ultimate controller of Energy Group Shenzhen Pipe Energy Technology Development Co., ltd. (“Pipe Technology”) Others Related party Alltrust Insurance Co., Ltd. (“Alltrust Insurance”) Other Related party Director of the Company and other senior executives Key management staff 5. Account payable/receivable from related parties (1) Account receivable Balance on 30 June 2017 Balance at year-begin Item Bad debt Bad debt Book balance Book balance provision provision Other account receivable: Huidong Server 10,794,801.42 - 11,022,401.44 - Huidong Server managed account 12,916,473.59 - 12,829,734.22 - Total 23,711,275.01 - 23,852,135.66 - XI. Commitment 1. Major commitment Till the balance sheet day, the condition of irrevocable operating lease contract the Group externally signed is as follow: In RMB Item 30 June 2018 Amount at year-begin Minimum lease payments of irrevocable operating lease: The first year after balance sheet day 765,519.21 1,517,717.46 - 119 - The second year after balance sheet day 1,557,680.33 1,557,680.33 The third year after balance sheet day 1,557,680.33 1,557,680.33 Subsequent years 58,171,101.39 58,171,101.39 Total 62,051,981.26 62,804,179.51 2. Contingency Nil XII. Events Occurring after the Balance Sheet Date Nil XIII. Other important events 1. Segment information (1) Determining basis and accounting policies of reportable segments According to the Group's internal organization structure, management requirements and internal reporting system, the Group's business is divided into three operating segments including power and heat supply, fuel oil trade and other business, the Group's management periodically evaluates the operating results of these segments so as to determine the allocation of resources and assess their performances. Segmental reporting information is disclosed in accordance with the accounting policies and measurement standards adopted by each segment for reporting to the management, the measurement basis keep pace with the accounting and measurement basis used for preparing financial statements. (2) Financial information of reportable segment Item Power supply and heat supply Fuel oil trade Other Offset between segments Total Main business income 1,029,148,179.65 - 48,881,998.61 - 1,078,030,178.26 Main business cost 996,279,249.67 30,632,792.14 58,192,628.89 968,719,412.92 Total assets 5,054,109,796.39 131,265,061.01 516,005,766.66 2,436,874,116.96 3,264,506,507.10 Total liabilities 2,535,301,461.58 36,053,002.87 47,888,034.75 1,407,912,308.98 1,211,330,190.22 2. Other events Nil XIV. Note to main items of financial statements of the Parent Company 1. Account receivable (1) Classification of accounts receivable 30 June 2018 Bad debt Category Book Book Balance provision value Proportio Amo Proportio Amount n (%) unt n (%) - 120 - Account receivable with individual major amount and withdrawal bad debt - - - - - provision independently Account receivable with bad debt provision accrual based on similar 136,717,3 136,717,3 100.00 - - credit risk charateristics of a portfolio 45.45 45.45 Account receivable with individual minor amount but withdrawal bad debt - - - - - provision independently 136,717,3 136,717,3 Total 100.00 - - 45.45 45.45 (Continued) Amount at year-begin Bad debt Category Book Book Balance provision value Proportio Amo Proportio Amount n (%) unt n (%) Account receivable with individual major amount and withdrawal bad debt - - - - - provision independently Account receivable with bad debt provision accrual based on similar 17,599,7 17,599,7 100.00 - - credit risk charateristics of a portfolio 43.80 43.80 Account receivable with individual minor amount but withdrawal bad debt - - - - - provision independently 17,599,7 17,599,7 Total 100.00 - - 43.80 43.80 (2) Age analysis of account receivable 30 June 2018 Amount at year-begin Age Amount Proportion (%) Amount Proportion (%) Within 1year 136,714,456.45 100.00 17,596,854.80 99.98 1 to 2years - - - - 2 to 3years - - - - Over 3 years 2,889.00 0.00 2,889.00 0.02 Total 136,717,345.45 100.00 17,599,743.80 100.00 (3) Bad debt provision withdrawal ,collected or switch back in the period. (4) No account receivable verified actually in the period. (5) There are no account receivable of the shareholders who hold over 5 % (5% included) voting rights in report period. (6) Top five account receivables at period-end balance listed by arrears party The total amount of the Company’s top 5 year end balance of receivables in this year collected by debtors is 136,717,345.45 Yuan, accounting for 100% of the total amount of year end balance of receivables; the total amount of year end balance of the corresponding provision for bad debts is 0.00 Yuan. 2. Other account receivable (1) Other account receivable classified 30 June 2018 Category Book Balance Bad debt provision Book - 121 - Proporti Proporti value Amount on (%) Amount on (%) Other account receivable with individual major amount and withdrawal bad 16,781,66 16,781,6 1.32 100.00 - debt provision independently 6.46 66.46 Other account receivable with bad debt provision accrual based on 1,243,346, 1,243,346, 97.79 - - similar credit risk charateristics of a portfolio 127.79 127.79 Other account receivable with individual minor amount but withdrawal bad 11,352,53 10,547,9 804,561.8 0.89 92.91 debt provision independently 8.87 76.98 9 1,271,480, 27,329,6 1,244,150, Total 100.00 333.12 43.44 689.68 (Continued) Amount at year-begin Category Book Balance Bad debt provision Book Proportio Proportio value Amount n (%) Amount n (%) Other account receivable with individual major amount and withdrawal bad 16,781,6 16,781,6 1.78 100.00 - debt provision independently 66.46 66.46 Other account receivable with bad debt provision accrual based on 912,842, 912,842, 97.01 - - similar credit risk charateristics of a portfolio 428.58 428.58 Other account receivable with individual minor amount but withdrawal bad 11,352,5 10,547,9 804,561. 1.21 92.91 38.87 76.98 89 debt provision independently 940,976, 27,329,6 913,646, Total 100.00 633.91 43.44 990.47 ① Other account receivable with individual major amount and withdrawal bad debt provision independently Accruing Other account receivable Book value Bad debt provision Accrual reason proportion (%) Huiyang Kangtai Industrial Company 14,311,626.70 14,311,626.70 100.00 Un-collectible Individual income tax 2,470,039.76 2,470,039.76 100.00 Un-collectible Total 16,781,666.46 16,781,666.46 100.00 ② Other account receivable with individual minor amount but withdrawal bad debt provision independently Accruing proportion Other account receivable Book balance Bad debt provision (%) Dormitory amount receivable 2,083,698.16 1,736,004.16 83.31 Deposit receivable 1,769,842.84 1,312,974.95 74.19 Personal account receivable 7,498,997.87 7,498,997.87 100.00 Total 11,352,538.87 10,547,976.98 92.91 (2) Bad debt provision accrual, collected or switch-back in the period (3) No other accounts receivable that had actually written off in the period (4) Other account receivable classified according to age: - 122 - 30 June 2018 1 January 2017 Age Amount Proportion (%) Amount Proportion (%) Within 1year 645,798,750.24 50.79 294,822,751.50 31.33 1 to 2years 134,777,480.57 10.60 224,125,985.68 23.82 2 to 3years 117,019,897.15 9.21 67,673,287.81 7.19 Over 3 years 373,884,205.16 29.40 354,354,608.92 37.66 Total 1,271,480,333.12 100.00 940,976,633.91 100.00 (5) Receivable from related parties proportion in total other Name of the company Relationship with the Company Amount Year account receivable (%) Zhongshan Power Company Subsidiary 723,035,163.94 Within 1year to Over 3 years 56.87 Weimei Power Company Subsidiary 503,565,940.68 Within 1year to Over 3 years 39.60 Environment Protection Company Subsidiary 12,709,842.10 1 year 1.00 Singapore company Subsidiary 1,477,071.99 Over 3 years 0.12 Engineering Company Subsidiary 954,698.92 Within 1year 0.08 Total 1,241,742,717.63 97.66 (6) Top 5 other account receivables at period-end listed by arrears party proportion in total Balance of other Name of the company Relationship with the Company Amount Year bad debts account provision receivable (%) Zhongshan Power Company Related party 723,035,163.94 1-3 years 56.87 Weimei Power Company Related party 503,565,940.68 1-3 years 39.60 Huiyang Kangtai Industrial Company Non-related party 14,311,626.70 Over 3 years 1.13 14,311,626.70 Environment Protection Company Related party 12,709,842.10 Within 1year 1.00 Dormitory receivable Non-related party 2,083,698.16 Over 3 years 0.16 1,736,004.16 Total 1,255,706,271.58 98.76 16,047,630.86 3. Long-term investment (1) Category of long-term equity investment 30 June 2018 Balance at year-begin Item Impairme Impairme Book Balance nt Book value Book Balance nt Book value provision provision 691,982,849. 691,982,849. 691,982,849. 691,982,849. Investment to subsidiary - - 76 76 76 76 Investment to joint venture and affiliate - - - - - - enterprise - 123 - 691,982,849. 691,982,849. 691,982,849. 691,982,849. Total - - 76 76 76 76 (2) Investment to subsidiary Impairment Impairment Balance at Increased in Decreased in provision provision Investee company 30 June 2018 year-begin the Year the Year accrual in the Year-end Year balance Shenzhen Server 26,650,000.00 - - 26,650,000.00 - - New Power 71,270,000.00 - - 71,270,000.00 - - Company Zhongshan Power 410,740,000.00 - - 410,740,000.00 - - Company Engineering 6,000,000.00 - - 6,000,000.00 - - Company Weimei Power 115,319,049.76 - - 115,319,049.76 - - Company Singapore 6,703,800.00 - - 6,703,800.00 - - company Environment Protection 55,300,000.00 - - 55,300,000.00 - - Company Total 691,982,849.76 - - 691,982,849.76 - - 4. Operation revenue/operation cost Jan. – Jun. 2018 Jan. – Jun. 2017 Item Revenue Cost Revenue Cost Main business 337,240,114.89 361,394,602.84 316,769,674.55 351,127,940.47 Other business 69,606,326.95 11,835,458.28 11,630,884.94 2,293,227.75 Total 406,846,441.84 373,230,061.12 328,400,559.49 353,421,168.22 5. Supplement of cash flow statement Supplement information Jan. – Jun. 2018 Jan. – Jun. 2017 1. Net profit adjusted as cash flow from operation activities: Net profit 16,456,446.41 -32,975,152.39 Add: Assets for impairment - -480,710.97 Depreciation of fixed assets 6,633,429.02 5,591,404.56 Amortization of intangible assets 605,782.51 665,244.42 - 124 - Amortization of long-term expenses to be amortized - - Loss from disposal of fixed assets, intangible assets and other - - long-term assets Abandonment loss from fixed assets 759,974.53 159,602.00 Financial expenses (income) 1,326,830.82 16,331,788.60 Decrease of inventory (increased) -8,960,695.04 2,307,025.70 Decrease of operational receivable (increased) -356,617,560.94 58,970,055.19 Increase of operational payable (decreased) 40,781,230.96 -280,198,080.80 Other - - Net cash flow from operation activities -299,014,561.73 -229,628,823.69 2. Major investment and financing activities not involved with cash income and expenses: Conversion of debt into capital - - Convertible bonds due within one year - - Fixed assets under finance leases - - 3. Net changes of cash and cash equivalent: Balance of cash and cash equivalent at period-end 513,661,278.18 195,020,156.38 Less: period-beginning balance of cash and cash equivalent 148,223,551.05 1,119,323,850.36 Net increase of cash and cash equivalent 365,437,727.13 -924,303,693.98 XV. Supplementary information 1. Statement of non-recurring gains/losses Item Jan. – Jun. 2018 Jan. – Jun. 2017 Gains/losses from the disposal of non-current asset -849,018.73 -203,276.08 Governmental subsidy calculated into current gains and losses, with closely related with the normal business of the Company, excluding the 2,122,867.64 9,839,892.03 fixed-amount or fixed-proportion governmental subsidy according to the unified national standard) Gain/loss of debt reorganization - - Switch-back of the impairment reserves of receivables that has - - impairment test independently Natural gas import VAT refund - - Other non-operating income and expenditure except for the -5,225.00 1,961,448.64 aforementioned items Subtotal 1,268,623.91 11,598,064.59 Impact on income tax -113,500.37 -246,556.08 Impact on minority shareholders’ equity (post-tax) -47,401.10 -1,737,656.57 Total 1,107,722.44 9,613,851.94 2. ROE and EPS EPS Weighted average ROE Profit in the Period (%) Basic EPS Diluted EPS - 125 - Net profit attributable to shareholders of the listed company 1.52% 0.05 0.05 Net profit attributable to shareholders of the listed company 1.46% 0.05 0.05 after deducting non-recurring gains and losses - 126 -