CHENGDE NANJIANG CO., LTD.
REPORT OF THE AUDITORS
DAHUASHENZI [2016]NO.005872(EN)
CHENGDE NANJIANG CO., LTD.
REPORT OF THE AUDIORS & FINANCIAL STATEMENTS
YEAR 2015
CONTENTS PAGES
1. AUDITOR’S REPORT ------------------------------------------------------------------------------------- 1-2
2. THE (CONSOLIDATED) FINANCIAL STATEMENTS
STATEMENT OF (CONSOLIDATED) FINANCIAL POSITION -------------------------------------------1-3
STATEMENT OF (Parent Company) FINANCIAL POSITION ----------------------------------------- 4-6
STATEMENT OF (CONSOLIDATED) COMPREHENSIVE INCOME-------------------------------------7-8
STATEMENT OF (Parent Company) COMPREHENSIVE INCOME---------------------------------------9
STATEMENT OF (CONSOLIDATED) CHANGES IN OWNERS’ EQUITY -----------------------------10-13
STATEMENT OF (Parent Company) CHANGES IN OWNERS’ EQUITY ----------------------------14-17
STATEMENT OF (CONSOLIDATED) CASH FLOWS ---------------------------------------------------------18
STATEMENT OF (Parent Company) CASH FLOWS---------------------------------------------------------19
3.NOTES TO (CONSOLIDATED) FINANCIAL STATEMENTS ------------------------------------------1-72
The auditors’ report and the accompanying financial statements are English translations
of the Chinese auditors’ report and financial statements.
In case the English version does not conform to the Chinese version, the Chinese version is the standard.
.
Auditors’ Report
DAHUASHENZI [2016] NO. 005872(EN)
To all shareholders of CHENGDE NANJIANG CO., LTD.,
We have audited the accompanying financial statements of CHENGDE NANJIANG CO., LTD.
(hereinafter referred to as ―“CDNJ”), including the consolidated and company’s balance sheets on
December 31, 2015, the consolidated and company’s income statements, the consolidated and
company’s cash flow statements and the consolidated and company’s statements of changes in
owners’ equity for the year 2015 and notes to financial statements.
I. Management's Responsibility for the Financial Statements
The management of CDNJ is responsible for the preparation and the true and fair presentation
of these financial statements. These responsibilities include: (1) prepare the financial statements in
accordance with Accounting Standard for Business Enterprises and China Accounting System For
Business Enterprises to fairly and truly reflect situation of the Company; (2) design, implement and
maintain the internal control relevant to the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
II. Auditor’s responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audits in accordance with Auditing Standards for CPAs of China. We conducted our
audit in accordance with the Standards on Auditing for Certified Public Accountants. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial statements and fair statement in order to design
audit procedures that are appropriate in the circumstances.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
III. Audit opinion
In our opinion, the above financial statements of CDNJ have been prepared in accordance with
2
the Accounting Standards for Business Enterprises in all material respects and give a fair view of the
Company and its subsidiaries’ consolidated financial positions as at 31 Dec. 2015 and the consolidated
business results and cash flows for the year 2015, as well as the Company’s financial positions as at 31
Dec. 2015 and business results and cash flows for the year then ended.
Da Hua Certified Public Accountants
(Special General Partnership)
Certified Public Accountants：Fan Rong
Han Junmin
Beijing, the People’s Republic of China
April 26, 2016
3
STATEMENT OF (CONSOLIDATED) FINANCIAL POSITION
December 31, 2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Item Note Ending balance Beginning balance
Current assets:
Monetary funds 1 88,237,416.98 36,998,545.17
Derivative financial assets
Financial assets measured at fair value with changes included in
current profits and losses
Notes receivable
Accounts receivable 2 156,113.53 2,722,676.66
Prepayments 3 1,105,122.95 7,780,145.39
Interest receivable
Dividends receivable
Other receivables 4 88,149,302.51 11,008,292.44
Inventory 5 619,241,374.72 515,713,286.09
Divided into assets held for sale
Non-current assets due within one year
Other current assets 6 33,761,457.51 24,131,851.80
Total current assets 830,650,788.20 598,354,797.55
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investments 7 2,343,974.43 6,684,960.46
Investment property
Fixed assets 8 8,905,699.17 10,294,681.90
Construction in progress
Biological assets 9 148,509.76 640,727.71
Engineering material
Liquidation of fixed assets
Intangible assets 10 6,392,510.57 11,902,512.97
Development expenses 172,416.18
Goodwill 11
Long-term deferred expenses 12 202,353.97 8,588,027.16
Deferred income tax assets 13 775,645.41 834,223.19
Other non-current assets 14 5,201,365.53 5,201,365.53
Total non-current assets 24,142,475.02 44,146,498.92
Total assets 854,793,263.22 642,501,296.47
The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative:zhaoyongsheng Accounting supervisor: zhaoyongsheng Legal representative of the accounting firm: liufengguo
4
STATEMENT OF (CONSOLIDATED) FINANCIAL POSITION（Continued）
December 31, 2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Item Note Ending balance Beginning balance
Current liabilities:
Short-term loans
Financial liabilities measured at fair value with changes included in
current profits and losses
Notes payable 16
Accounts payable 17 35,013,234.30 10,425,920.41
Advance received 18 435,991,938.57 290,954,152.81
Payroll payable 19 9,929.42 6,233,580.16
Tax payable 20 21,343.61 10,023,172.67
Interests payable
Dividends payable
Other payables 21 12,746,101.70 14,624,828.17
Divided into liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 483,782,547.60 332,261,654.22
Non-current liabilities:
Long-term loans
Bonds payable
Including: preferred shares
Perpetual capital securities
Long-term payables
Long-term payroll payable
Special payables
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 483,782,547.60 332,261,654.22
Owners' equity:
Share capital 22 706,320,000.00 706,320,000.00
Other equity instruments
Including: preferred shares
Perpetual capital securities
Capital reserve 23 452,767,424.55 456,470,388.64
Less: treasury stocks
Other comprehensive income
Special reserves
5
Item Note Ending balance Beginning balance
Surplus reserve 24 76,791,550.17 76,791,550.17
Undistributed profits 25 -883,628,320.90 -949,599,922.37
Total owners' equity attributable to parent company 352,250,653.82 289,982,016.44
Minority shareholders' equity 18,754,592.06 20,257,625.81
Total shareholders' equity 371,005,245.88 310,239,642.25
Total liabilities and shareholders' equity 854,787,793.48 642,501,296.47
The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative:zhaoyongsheng Accounting supervisor: zhaoyongsheng Legal representative of the accounting firm: liufengguo
6
STATEMENT OF (Parent Company) FINANCIAL POSITION
December 31, 2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Item Note Ending balance Beginning balance
Current assets:
Monetary funds 25,647,536.08 18,291,266.59
Derivative financial assets
Financial assets measured at fair value with changes included
in current profits and losses
Notes receivable
Accounts receivable
Prepayments 10,000.00 1,372,194.98
Interest receivable
Dividends receivable
Other receivables 1 13,893,565.73 16,638,184.13
Inventory 599,128,751.32 490,087,338.82
Divided into assets held for sale
Non-current assets due within one year
Other current assets 32,139,201.03 19,420,345.47
Total current assets 670,819,054.16 545,809,329.99
Non-current assets:
Available-for-sale financial assets
Held-to-maturity investment
Long-term accounts receivable
Long-term equity investments 2 202,284,836.37 157,284,836.37
Investment property
Fixed assets 1,906,708.89 1,183,425.73
Construction in progress
Biological assets
Engineering material
Liquidation of fixed assets
Intangible assets
Development expenses
Goodwill
Long-term deferred expenses 130,322.92 172,589.80
Deferred income tax assets 750.00 750.00
Other non-current assets
Total non-current assets 204,322,618.18 158,641,601.90
Total assets 875,141,672.34 704,450,931.89
The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
Legal representative:zhaoyongsheng Accounting supervisor: zhaoyongsheng Legal representative of the accounting firm: liufengguo
7
STATEMENT OF (Parent Company) FINANCIAL POSITION（Continued）
December 31, 2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Item Note Ending balance Beginning balance
Current liabilities:
Short-term loans
Financial liabilities measured at fair value with changes included in current profits and losses
Notes payable
Accounts payable 25,479,538.71 3,625,964.00
Advance received 430,730,271.19 277,140,032.59
Payroll payable 628.22 628.22
Tax payable 2,174.06 49,975.30
Interests payable
Dividends payable
Other payables 246,243,610.32 243,993,740.20
Divided into liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 702,456,222.50 524,810,340.31
Non-current liabilities:
Long-term loans
Bonds payable
Including: preferred shares
Perpetual capital securities
Long-term payables
Long-term payroll payable
Special payables
Estimated liabilities
Deferred income
Deferred income tax liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities 702,456,222.50 524,810,340.31
Owners' equity:
Share capital 706,320,000.00 706,320,000.00
Other equity instruments
Including: preferred shares
Perpetual capital securities
Capital reserve 452,767,424.55 449,366,024.55
Less: treasury stocks
Other comprehensive income
Special reserves
Surplus reserve 76,791,550.17 76,791,550.17
8
Item Note Ending balance Beginning balance
Undistributed profits -1,063,193,524.88 -1,052,836,983.14
Total owners' equity attributable to parent company
Minority shareholders' equity
Total shareholders' equity 172,685,449.84 179,640,591.58
Total liabilities and shareholders' equity 875,141,672.34 704,450,931.89
The Notes are the integral part of the financial statement, and the financial statement is signed by the following persons
L Legal representative:zhaoyongsheng Accounting supervisor: zhaoyongsheng Legal representative of the accounting firm: liufengguo
9
STATEMENT OF (CONSOLIDATED) COMPREHENSIVE INCOME
2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Amount
Amount incurred in
Item Note incurred in this
previous year
year
I. Total operating income 141,221,936.00 322,502,631.63
Including: operating income 26 141,221,936.00 322,502,631.63
II. Total operating cost 175,958,802.74 358,297,490.43
Including: operating cost 26 132,726,960.01 325,795,009.31
Operating taxes and surcharges 27 3,682,470.14 608,376.03
Sales expenses 28 2,411,839.88 4,299,230.07
Management expenses 28 30,697,053.62 21,550,755.68
Financial expenses 28 33,089.91 1,816,023.18
Assets impairment losses 29 6,407,389.18 4,228,096.16
Add: income from changes in fair value (―-‖ indicates the loss)
Investment profit (―-‖ indicates the loss) 30 11,424,439.83 229,054.97
III. Operating profit (“-” indicates the loss) -23,312,426.91 -35,565,803.83
Add: non-operating income 31 104,222,251.52 117,700,572.71
Including: gains from disposal of non-current assets 104,222,251.52
Less: non-operating expenditure 32 6,184,684.92 7,947,685.38
Including: loss from disposal of non-current assets 776,688.73
IV. Total profit (“-” indicates the total loss) 74,187,083.50
74,725,139.69
Less: income tax 33 22,360,936.07 951,857.73
V. Net profit (―-‖ indicates the net loss) 73,235,225.77
52,364,203.62
Net profits attributable to the parent company shareholders 58,872,707.12 80,280,395.81
Gain and loss of minority shareholders -6,503,033.76 -7,045,170.04
VI. After-tax net of other comprehensive incomes
After-tax net of other comprehensive incomes owned by the owner of the parent company
(I) Other comprehensive incomes that cannot be classified into profit and loss in the future
1. Re-measurement of changes in net liabilities or net assets in defined benefit plan
2. Share in other comprehensive incomes that cannot be reclassified into profit and loss in investee by
equity method
(II) Other comprehensive incomes that would be classified into profit and loss in the future
1. Shares in other comprehensive incomes that can be reclassified into profit and loss in investee by equity
method in the future
2. Loss and profit of change in fair value of available-for-sale financial assets
3. Loss and profit of available-for-sale financial assets of held-to-maturity investments
4. Effective part of hedge profit and loss of cash flow
5. Translation difference in the foreign currency financial statement
6. Others
Net of tax from other comprehensive incomes owned by minority stockholders
VII. Total comprehensive income 59,468,567.71 73,235,225.77
Total consolidated income attributable to the shareholder of the parent company 65,971,601.47 80,280,395.81
10
Total consolidated income attributable to minority shareholders -6,503,033.76 -7,045,170.04
VIII. Earnings per share:
(I) Basic earnings per share 0.11
0.08
(II) Diluted earnings per share 0.11
0.08
11
STATEMENT OF (Parent Company) COMPREHENSIVE INCOME
2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Amount incurred in Amount incurred
Item Note
this year in previous year
I. Total operating income 43,323,398.13 8,217,142.76
Including: operating income 3 43,323,398.13 8,217,142.76
II. Total operating cost 44,782,333.72 14,127,309.81
Including: operating cost 3 28,048,885.03 988,187.82
Operating taxes and surcharges 3,540,970.51 396,000.00
Sales expenses 185,090.00 529,129.10
Management expenses 12,727,362.70 11,207,134.69
Financial expenses -143,391.30 961,779.78
Assets impairment losses 423,416.78 45,078.42
Add: income from changes in fair value (―-‖ indicates the loss)
Investment profit (―-‖ indicates the loss) -4608125.64
III. Operating profit (“-” indicates the loss) -6,067,061.23 -5,910,167.05
Add: non-operating income 50,000.00 168,058,111.85
Including: gains from disposal of non-current assets
Less: non-operating expenditure 4,339,480.51 4,870,865.53
Including: loss from disposal of non-current assets
IV. Total profit (“-” indicates the total loss) -10,356,541.74 157,277,079.27
Less: income tax
V. Net profit (―-‖ indicates the net loss) -10,356,541.74 157,277,079.27
VI. After-tax net of other comprehensive incomes
After-tax net of other comprehensive incomes owned by the owner of the parent company
(I) Other comprehensive incomes that cannot be classified into profit and loss in the
future
1. Re-measurement of changes in net liabilities or net assets in defined benefit plan
2. Share in other comprehensive incomes that cannot be reclassified into profit and
loss in investee by equity method
(II) Other comprehensive incomes that would be classified into profit and loss in the
future
1. Shares in other comprehensive incomes that can be reclassified into profit and loss
in investee by equity method in the future
2. Loss and profit of change in fair value of available-for-sale financial assets
3. Loss and profit of available-for-sale financial assets of held-to-maturity
investments
4. Effective part of hedge profit and loss of cash flow
5. Translation difference in the foreign currency financial statement
6. Others
VII. Total comprehensive income -10,356,541.74 157,277,079.27
12
STATEMENT OF (CONSOLIDATED) CHANGES IN OWNERS’ EQUITY
2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Current year
Total shareholders' equity attributed to parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Capital Special Surplus Undistributed shareholde
Share capital Preferred treasury comprehensiv risk equity
capital Others reserve reserve reserve profits rs' equity
share stocks e income provisions
securities
I. Balances at the end of previous year 706,320,000.00 456,470,388.64 76,791,550.17 -949,599,922.37 20,257,625.81 310,239,642.25
Add: profit or loss from accounting
policy changes
Fund for corrections of errors of
previous period
Corporate combination under common
control
Others
II. Balances at the beginning of this year 706,320,000.00 456,470,388.64 76,791,550.17 -949,599,922.37 20,257,625.81 310,239,642.25
III. Increased/decreased amount this
3,401,400.00 65,971,601.47 -1,503,033.76 60,765,603.62
year (“-” indicates decrease)
(I) Total comprehensive income 65,971,601.47 -6,503.033.76 59,468,567.71
(II) Capital paid in and reduced by
3,401,400.00 5,000,000 1,297,035.91
shareholders
1. Ordinary share invested by
3,401,400.00 5000000 5000000
shareholders
13
2. Capital invested by other equity
instruments holders
3. Amounts of share-based payments
recognized in shareholders' equity
4. Others -3702964.09
(III) Profit distribution
1. Appropriation to surplus reserves
2. Appropriation of general risk
reserves
3. Distribution to owners (or
shareholder)
4. Others
(IV) Internal carry-forward of
shareholders’ equity
1. Capital reserves transferred to share
capital
2. Surplus reserves transferred to share
capital
3. Surplus reserves for making up
losses
4. Others
(V) Special reserve
1. Withdrawn amount of this year
2. Utilization amount of this year
(VI) Others
IV. Balance at the end of this year 706,320,000.00 459,871,788.64 76,791,550.17 -883,628,320.90 18,754,592.05 371,005,245.87
14
STATEMENT OF (CONSOLIDATED) CHANGES IN OWNERS’ EQUITY
2014
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Current year
Total shareholders' equity attributed to parent company
Other equity instruments Minority
Item Less: Other General Total owners'
Perpetual Capital Special Surplus Undistributed shareholde
Share capital Preferred treasury comprehensiv risk equity
capital Others reserve reserve reserve profits rs' equity
share stocks e income provisions
securities
I. Balances at the end of previous year 706,320,000.00 456,470,250.78 76,791,550.17 -1,029,880,318.18 27,302,795.85 237,004,278.62
Add: profit or loss from accounting
policy changes
Fund for corrections of errors of
previous period
Corporate combination under common
control
Others
II. Balances at the beginning of this year 706,320,000.00 456,470,250.78 76,791,550.17 -1,029,880,318.18 27,302,795.85 237,004,278.62
III. Increased/decreased amount this
137.86 80,280,395.81 -7,045,170.04 73,235,363.63
year (“-” indicates decrease)
(I) Total comprehensive income 80,280,395.81 -7,045,170.04 73,235,225.77
(II) Capital paid in and reduced by
137.86 137.86
shareholders
1. Ordinary share invested by
shareholders
15
2. Capital invested by other equity
instruments holders
3. Amounts of share-based payments
recognized in shareholders' equity
4. Others 137.86 137.86
(III) Profit distribution
1. Appropriation to surplus reserves
2. Appropriation of general risk
reserves
3. Distribution to owners (or
shareholder)
4. Others
(IV) Internal carry-forward of
shareholders’ equity
1. Capital reserves transferred to share
capital
2. Surplus reserves transferred to share
capital
3. Surplus reserves for making up
losses
4. Others
(V) Special reserve
1. Withdrawn amount of this year
2. Utilization amount of this year
(VI) Others
IV. Balance at the end of this year 706,320,000.00 456,470,388.64 76,791,550.17 -949,599,922.37 20,257,625.81 310,239,642.25
16
STATEMENT OF (Parent Company) CHANGES IN OWNERS’ EQUITY
2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Current year
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owners'
Share capital Preferre Perpetual capital Capital reserve treasury comprehensive
Others reserve reserve profits equity
d share securities stocks income
76,791,550.
I. Balances at the end of previous year 706,320,000.00 449,366,024.55 -1,052,836,983.14 179,640,591.58
17
Add: profit or loss from accounting policy
changes
Fund for corrections of errors of previous
period
Others
II. Balances at the beginning of this year 76,791,550.
706,320,000.00 449,366,024.55 -1,052,836,983.14 179,640,591.58
17
III. Increased/decreased amount this year (“-”
3,401,400.00 -10,356,541.74 -6,955,141.74
indicates decrease)
(I) Total comprehensive income -10,356,541.74 -10,356,541.74
(II) Capital paid in and reduced by
3,401,400.00 3,401,400.00
shareholders
1. Ordinary share invested by shareholders 3,401,400.00
2. Capital invested by other equity
instruments holders
17
Current year
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owners'
Share capital Preferre Perpetual capital Capital reserve treasury comprehensive
Others reserve reserve profits equity
d share securities stocks income
3. Amounts of share-based payments
3,401,400.00
recognized in shareholders' equity
4. Others
(III) Profit distribution
1. Appropriation to surplus reserves
2. Distribution to owners (or shareholder)
3. Others
(IV) Internal carry-forward of shareholders’
equity
1. Capital reserves transferred to share
capital
2. Surplus reserves transferred to share
capital
3. Surplus reserves for making up losses
4. Others
(V) Special reserve
1. Withdrawn amount of this year
2. Utilization amount of this year
(VI) Others
IV. Balance at the end of this year 76,791,550.
706,320,000.00 452,767,424.55 -1,063,193,524.88 172,685,449.84
17
18
STATEMENT OF (Parent Company) CHANGES IN OWNERS’ EQUITY
2014
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Current year
Other equity instruments Less: Other
Item Capital Special Surplus Undistributed Total owners'
Share capital Preferred Perpetual capital treasury comprehensive
Others reserve reserve reserve profits equity
share securities stocks income
I. Balances at the end of previous year 706,320,000.00 449,365,886.69 76,791,550.17 -1,210,114,062.41 22,363,374.45
Add: profit or loss from accounting policy
changes
Fund for corrections of errors of previous
period
Others
II. Balances at the beginning of this year 706,320,000.00 449,365,886.69 76,791,550.17 -1,210,114,062.41 22,363,374.45
III. Increased/decreased amount this year (“-”
137.86 157,277,079.27 157,277,217.13
indicates decrease)
(I) Total comprehensive income 137.86 157,277,079.27 157,277,079.27
(II) Capital paid in and reduced by
137.86
shareholders
1. Ordinary share invested by shareholders
2. Capital invested by other equity
instruments holders
19
Current year
Other equity instruments Less: Other
Item Capital Special Surplus Undistributed Total owners'
Share capital Preferred Perpetual capital treasury comprehensive
Others reserve reserve reserve profits equity
share securities stocks income
3. Amounts of share-based payments
recognized in shareholders' equity
4. Others 137.86 137.86
(III) Profit distribution
1. Appropriation to surplus reserves
2. Distribution to owners (or shareholder)
3. Others
(IV) Internal carry-forward of shareholders’
equity
1. Capital reserves transferred to share
capital
2. Surplus reserves transferred to share
capital
3. Surplus reserves for making up losses
4. Others
(V) Special reserve
1. Withdrawn amount of this year
2. Utilization amount of this year
(VI) Others
IV. Balance at the end of this year 706,320,000.00 449,366,024.55 76,791,550.17 -1,052,836,983.14 179,640,591.58
20
STATEMENT OF (CONSOLIDATED) CASH FLOWS
2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Amount incurred in
Item Note Amount incurred in previous year
this year
I. Cash flows from operating activities:
Cash received from sales of commodities and provision of services 283,465,295.71 554,077,939.01
Refunds of taxes and levies 302,041.39 1175356.96
Cash received from other operating activities 34 43,239,009.63 31,593,592.22
Sub-total of cash inflows from operating activities 327,006,346.73 586,846,888.19
Cash paid for purchasing goods and services 179,630,816.56 599,771,483.46
Cash paid to and on behalf of employees 11,308,046.10 10,237,228.89
Payments of taxes and rates 41,378,704.14 34,673,738.35
Other cash paid relating to operating activities 34 74,876,722.08 76,494,361.57
Sub-total of cash outflows from operating activities 307,194,288.88 721,176,812.27
Net cash flows from operating activities 19,812,057.85 -134,813,943.32
II. Cash flows from investing activities:
Cash received from withdrawal of investments 38,000,000.00
Cash received from returns on investments 171,000.00
Net cash received from disposal of fixed assets, intangible assets & other long-term assets 28,598,914.86 85,000,000.00
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities 34
Sub-total of cash inflows from investing activities 28,598,914.86 123,171,000.00
Cash paid to acquire fixed assets, intangible assets and other long-term assets 2,421,206.16 3,149,781.23
Cash paid to acquire investments 38000000
Net cash received from payment of subsidiaries and other business units
Cash payments relating to other investment activities
Sub-total of cash outflows from investing activities 2,421,206.16 41,149,781.23
Net cash flows from investing activities 26,177,708.70 82,021,218.77
III. Cash flows from financing activities:
Cash received from capital contribution 5,000,000
Cash received from borrowings
Cash from issue of bonds
Other cash received relating to financing activities 34 10029217.89
Sub-total of cash inflows from financing activities 5,000,000.00 10,029,217.89
Cash repayments of amounts borrowed
Cash payments for interest expenses and distribution of dividends or profit
Other cash payments relating to financing activities 34 2,277,554.26
Sub-total of cash outflows from financing activities 2,277,554.26
Net cash flows from financing activities 2,722,445.74 10,029,217.89
IV. Influence of exchange rate change on cash and cash equivalents 249,105.26 -119640.74
V. Net increase of cash and cash equivalents 48,961,317.55 -42,883,147.40
Add: balance of cash and cash equivalents at the beginning of period 35,582,359.90 77,981,488.06
VI. Balance of cash and cash equivalents at the end of period 84,543,677.45 35,582,359.90
21
STATEMENT OF (Parent Company) CASH FLOWS
2015
Prepared by: CHENGDE NANJIANG Co., Ltd. Unit: Yuan
Item Note Amount incurred in this year Amount incurred in previous year
I. Cash flows from operating activities:
Cash received from sales of commodities and provision of services 167,953,196.30 187,363,242.41
Refunds of taxes and levies 191094.28
Cash received from other operating activities 50,972,901.14 38,138,466.36
Sub-total of cash inflows from operating activities 219,117,191.72 225,501,708.77
Cash paid for purchasing goods and services 73,096,022.78 201,137,420.79
Cash paid to and on behalf of employees 6,559,550.54 5,802,550.51
Payments of taxes and rates 17,931,811.23 22,685,179.55
Other cash paid relating to operating activities 68,128,661.55 96,706,176.51
Sub-total of cash outflows from operating activities 165,716,046.10 326,331,327.36
Net cash flows from operating activities 53,401,145.62 -100,829,618.59
II. Cash flows from investing activities:
Cash received from withdrawal of investments
Cash received from returns on investments
Net cash received from disposal of fixed assets, intangible assets & other long-term assets 85,000,000.00
Net cash received from disposal of subsidiaries and other business units
Other cash received relating to investing activities
Sub-total of cash inflows from investing activities 85,000,000.00
Cash paid to acquire fixed assets, intangible assets and other long-term assets 1,044,876.13 60,090.00
Cash paid to acquire investments 45,000,000.00 5,000,166.64
Net cash received from payment of subsidiaries and other business units
Cash payments relating to other investment activities
Sub-total of cash outflows from investing activities 46,044,876.13 5,060,256.64
Net cash flows from investing activities -46,044,876.13 79,939,743.36
III. Cash flows from financing activities:
Cash received from capital contribution
Cash received from borrowings 43,700,000.00
Cash from issue of bonds
Other cash received relating to financing activities
Sub-total of cash inflows from financing activities 43,700,000.00
Cash repayments of amounts borrowed 10,200,000.00
Cash payments for interest expenses and distribution of dividends or profit
Other cash payments relating to financing activities 2,309,878.89 665,866.06
Sub-total of cash outflows from financing activities 2,309,878.89 10,865,866.06
Net cash flows from financing activities -2,309,878.89 32,834,133.94
IV. Influence of exchange rate change on cash and cash equivalents
V. Net increase of cash and cash equivalents 5,046,390.60 11,944,258.71
Add: balance of cash and cash equivalents at the beginning of period 17,625,400.53 5,681,141.82
VI. Balance of cash and cash equivalents at the end of period 22,671,791.13 17,625,400.53
22
NOTES TO FINANCIAL STATEMENTS
December 31, 2015
CURRENCY UNIT: RMB
I. Company Profile
1. Background
The predecessor of ChengDe NanJiang Corporation, Ltd. (“the Company”) was ChengDe DiXian
Textile Corporation, Ltd (“DiXian”). According to the approval of JiGuBan(1999) No.36 issued by the
People’s Government of HeBei Province, DiXian was established in the People’s Republic of China
(the “PRC”) and obtained the Corporate Business License from HeBei Administration for Industry and
Commerce (“CSRC”). The initial registered capital of DiXian was RMB 100,000,000 (divided into
100,000,000 shares, one Yuan per share): ShuXian Wang contributed RMB 85,100,000, accounting for
85.1% of the total; HeBei province ChengDe County North Industrial Company contributed RMB
7,564,400, accounting for 7.56% of the total; ZhengSong Wang contributed RMB 5,444,400,
accounting for 5.44% of the total; ChengDe LongFeng Cosmetic Co., Ltd. contributed RMB 945,600,
accounting for 0.95% of the total; Chengde County Board Town of Red Star plastic products factory
contributed RMB 945,600, accounting for 0.95% of the total.
According to the issue [2000] 121 by the China Securities Regulatory Commission on August 29,
2000, the company issued 100,000,000 foreign capital stocks listed in China (hereinafter referred to as
the " B ")on September 19, 2000 on Shenzhen stock exchange; and excised the overallotment option to
increase issuing 15,000,000 B shares from September 29 to October 29, 2000. The registered capital of
the company after the issuance of B shares was RMB 215,000,000, and was divided into 215,000,000
shares with one Yuan of face value per share.
According to the resolution of the shareholder’s meeting on March 12, 2002, The Company
allotted 43,000,000 bonus shares to all of the shareholders according to the proportion of 2 free shares
for every 10 shares, and meanwhile increased 107500000 shares to all of the shareholding by
transferring from capital reserve according to 5 shares free for every 10 shares. The registered capital
of the company was changed to RMB 365,500,000 after it allotted bonus shares and increased by
transferring.
According to the resolution of the shareholder’s meeting on July 22, 2003, The Company allotted
73,100,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for every
10 shares, and the registered capital of the company was changed to RMB 438,600,000 after such
bonus shares were allotted.
On March 11, 2004, approved by the Ministry of Commerce of the People's Republic of China,
the company was allowed to be changed to Foreign-Funded Joint Stock Companies Limited.
On July, 2004, the company increased 150,000,000 B shares directionally, during which
91,300,000 shares were subscribed in HK$, and another 58,700,000 shares were subscribed in RMB,
upon check by China Securities Regulatory Commission with the issue [2004] No.101.
According to the resolution of the shareholder’s meeting on June 8, 2006, The Company allotted
117,720,000 bonus shares to all of the shareholders according to the proportion of 2 free shares for
every 10 shares,
On August 4, 2008, according to the judgment ruled by Shenzhen Intermediate People's court,
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112,324,800 sponsor shares held by ShuXian Wang was compensated to Rong Chen for RMB
45,491,544 Yuan, and on August 15, 2008, 96,000,000 sponsor shares held by ShuXian Wang was
compensated to Rong Chen for RMB 38,880,000 Yuan according to the judgment ruled by Dalian
Intermediate People's court.
On November 11, 2009, according to “reply to the approval of capital increase, and change of
share as well as name of Chengde DiXian Knitting Co., Ltd” with No.143 [2009] by Bureau of
Commerce of Hebei Province, it agreed that the company increased 150,000,000 foreign shares listed
in China in 2004 and allotted 2 bonus shares free for every 10 shares in 2006; and it agreed that
208324800 shares of DiXian stock held by ShuXian Wang. DiXian was changed to Rong Chen; as well
as the name of the company changed to Chengde DaLu Co., Ltd. The total share capital was
706,320,000 shares and the registered capital of the company was RMB 706,320,000 Yuan after the
company increased and allotted, which has been validated by ZhongLei CPA Co., Ltd, who provided
the capital verification report with [2010] No. 10009.
On August 23 ,2011, the company renewed its Corporate Business License that was issued by
HeBei Administration for Industry and Commerce. The new registration number was
130000400001225. Both registered capital and paid-in capital are RMB 706,320,000. The company
type was a foreign joint stock limited company.
On April 6, 2012, an equity transfer agreement was signed between corporate shareholder Rong
Chen and Dong Wang. According to the agreement, Rong Chen transferred 208,324,800 shares, which
occupied 29.49% of the total share capital, to Dong Wang. After the transfer of equity, Shareholders
proportion of capital contribution was: Dong Wang (RMB 208,324,800, accounted for 29.49%); HeBei
province ChengDe County North Industrial Company (RMB 18,517,651, accounted for 2.62%);
Zhengsong Wang(RMB 13,327,891, accounted for 1.89%); ChengDe City LongFeng Cosmetic
company (RMB 2,314,829, accounted for 0.33%); Chengde County Board Town of Red Star plastic
products factory (RMB 2,314,829, accounted for 0.33%), shareholders of domestically listed foreign
shares (RMB 461,520,000, accounted for 65.34%).
On September 19, 2012, with the authorization of HeBei Administration for Industry and
Commerce, the company name was changed from ChengDe DaLu Corporation, Ltd. to ChengDe
NanJiang Corporation, Ltd.
2. Business scope
New energy , R&D of new material product、sales and technology promotion、technology service ;
R&D of modern agricultural production,technology promotion service, wholesale of ecological
agricultural products; international trading of products and technology; project HuiJingTianDi
(2013-12 , 2013-13) : the development and construction of common residence and supporting
commercial facilities based on two land、sales and operation; property management.
3. Nature of Business
The company major in real estate development and management; Subsidiaries engage in real
estate development,international trading and ecological agriculture planting and breeding.
4. Major products and labour service
Sales of real estate,plastic raw material trading and sales of products of ecological agriculture
planting and breeding.
24
5. Fundamental structure of the company
The highest authority is board minutes and the company adopts the managerial responsibility
system. According to requirements from the business, the company set up Securities Department,
Administrative Department, Human Resource Department, Financial Department, Auditing Department,
Sales Department, Research and Development Department.
II. Scope of consolidated financial statements
The consolidated financial statements of the Group involve 8 companies ,including Chengde
Nanjiang Real Estate Development Co., Ltd, Runhua Rural Water (Tianjin) International Trade Co.,
Ltd., Chengde Nanjiang Investment Co., Ltd., Chengde Nanjiang Ecological Agriculture Co., Ltd.,
Hangzhou Dongfeng Stealth Technology Co., Ltd., Nanjiang Asia Investment Co., Ltd., Chengde
Morsh Technology Co., Ltd.and Chengde HuiJing property Co., Ltd.
One subsidiary- Hangzhou Dongfeng Stealth Technology Co., Ltd has been set up in the year
2015 and One subsidiary - Chengde XingYe Paper Co., Ltd.has been made in liquidation and
cancellation in the reporting period .
For details, see Note VII Change in consolidation scope and VIII Rights and interests in other
parties.
III. Basis for preparation of financial statements
1. Preparation basis
The financial statements were prepared on the basis of transactions and other events that actually
occurred,in accordance with
issued by the Ministry of Finance and revised with the specific accounting standards, the Application
Guidance of Accounting Standards for Business Enterprises, the Interpretation of Accounting Standards
for Business Enterprises and other regulations (hereinafter jointly referred to as “the Accounting
Standards for Business Enterprises”), as well as the Rules for Preparation Convention of Disclosure of
Public Offering Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by
China Securities Regulatory Commission.
2. Continuation
There will be no such events or situations in the 12 months from the end of the reporting period
that will cause material doubts as to the continuation capability of the Company.
IV. Significant Accounting Policies and Accounting Estimates
1. Statement for Compliance with Enterprise Accounting System
The financial statements prepared by the Company fully comply with Accounting Standards for
Business Enterprise and demonstrate truly and completely the financial status of the Company and the
25
Group, operating performance and cash flow.
2. Accounting period
The fiscal year of the Group runs from January 1 to December 31 of each calendar year.
3. Reporting Currency
RMB is adopted as the functional currency of the Group.
4. Accounting methods for corporate merger under the same control and not under
the same control
(1)The terms, conditions and economic impact of the various transactions in the process of
enterprise merger are in accordance with one or more of the following conditions, we will deal
with multiple transactions as a package deal when making accounting treatment：
a.These transactions are made at the same time or considering the effects of each other
b.These transactions only in entirety can achieve a complete business results only when
c.The occurrence of a transaction depends on the happening of at least one other transaction
d.A single transaction is not economical, but it is economical when being considered together with
other transactions
(2)Business combinations involving entities under common control
For a business combination involving enterprises under common control, assets and liabilities that
are obtained in a business combination is measured at the carrying amount of the owners’ equity of the
party being absorbed in the consolidated financial statements of the ultimate controlling party at
combination date, except for the adjustments of different accounting policies. The difference between the
carrying amount of the net assets obtained and the carrying amount of the consideration paid for the
combination (or total par value of shares issued) is adjusted to capital reserve, if the capital reserve is not
sufficient to absorb the difference, any excess is adjusted against retained earnings.Business
combinations involving entities under common control achieved in stages that involves multiple
transactions.
In the separate financial statements, the initial investment cost is the absorbing party’s share of the
carrying amount of the owners’ equity of the party being absorbed in the consolidated financial
statements of the ultimate controlling party at combination date. The difference between initial
investment cost and original investment carrying amount prior combination plus newly paid
consideration at the combination date is adjusted to capital reserve (share/capital premium), if the capital
reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings.
In the consolidated financial statements, assets and liabilities that are obtained in a business
combination are measured at their carrying amount of the owners’ equity of the party being absorbed in
the consolidated financial statements of the ultimate controlling party at combination date, except for the
adjustments of different accounting policies. The difference between the original investment carrying
amount prior combination plus newly paid consideration at the combination date and the carrying
amount of the net assets obtained is adjusted to capital reserve (share/capital premium), if the capital
reserve is not sufficient to absorb the difference, any excess is adjusted against retained earnings. The
long-term equity investment of the absorbing party prior to combination, profit or loss, other
comprehensive income and changes of other owners’ equity recognized between the later of combination
date and the date that the absorbing party and the absorbed party are under common ultimate control are
offset the opening retained earnings or profit or loss for the current period in the comparative statement.
(3)Business combination involving entities not under common control
For business combinations involving entities not under common control, the consideration for each
combination is measured at the aggregate of the fair values, at the acquisition date, of assets given,
liabilities incurred or assumed, and equity securities issued by the acquirer in exchange for control of the
acquiree. At the acquisition date, the acquired assets, liabilities and contingent liabilities of the acquire
are measured at their fair value.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s
identifiable net assets, the difference is recognized as goodwill, and measured on the basis of its costs
minus the accumulative impairment provisions. Where the cost of combination is less than the
26
acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognized
in profit or loss for the current period after reassessment.
Business combinations involving entities not under common control achieved in stages that
involves multiple transactions.In the separate financial statements, the initial investment cost is the sum
of the carrying amount of equity investment of the acquiree held prior to the acquisition date and the
additional investment cost at the acquisition date. When the previously-held equity investment is
accounted for under the equity method, any other comprehensive income previously recognized
is not changed on the combination date and is accounted for on the same basis as would have been
required if the investor had directly disposed of the related assets or liabilities. The owners’ equity
recognized as the changes of the investee’s other owners’ equity except for net profit or loss, other
comprehensive income and profit distribution are transferred to profit or loss for the current period when
disposing the investment. For the previously-held equity investment which was accounted for using fair
value, the accumulated changes in fair value included in other comprehensive income is transferred to
profit or loss for the current period upon commencement of the cost method.
In the consolidated financial statements, the cost of business combination is the sum of the
consideration paid at the acquisition date plus the fair value of equity investment of the acquiree held
prior to the acquisition date. The cost of equity investment of the acquiree held prior to the acquisition
date is re-measured at the fair value at the acquisition date, the difference between the fair value and
carrying value is recognized as profit or loss for the current period. Other comprehensive income and
changes of other owners’ equity from the equity interest held in the acquire prior to the acquisition date
are transferred to profit or loss for the current period except for other comprehensive income due to the
movement of net liabilities or assets in the investee’s re-measurement defined benefit plan.
(4)Transaction costs for business combination
The intermediary and other relevant administrative expenses such as audit, legal and valuation
advisory for business combinations are recognized in profit or loss for the current year when incurred.
Transaction costs of equity or debt securities issued as the considerations of business combination are
included in the initial recognition amounts.
The assets and debts acquired by the Group (as the merging party) through merging with other
enterprises under common control shall be measured as per the book value of the merged party in the
consolidated financial statements of the ultimate controller on the day of merger. The difference between
the book value of net assets acquired and the book value of the combination paid is used to adjust the
capital reserves, and the retained earnings are adjusted in case of insufficient capital reserves.
Regarding combination not under common control, the recognizable assets, liabilities and
contingent liabilities of the seller are measured upon fair value on the purchase day. The merger cost is
the sum of cash or the fair value of non-cash assets, issued or borne debts and issued equity securities
paid by the Group for acquiring the control over the acquired on the purchase day and all of the expenses
incurred to the Group directly relevant to the merging. In case of merging by step, the merger cost is the
sum of the cost of every single transaction. Where the merger cost is more than acquired definable net
assets fair proportion of the acquired, the balance is recognized as goodwill. Where the merger cost is
less than acquired definable net assets fair proportion of the acquired, the definable assets, debts, fair
value of contingent liabilities and the fair value of the non-cash assets or issued equity securities as
merger consideration are rechecked first, and in case the merger cost is less than acquired definable net
assets fair proportion of the acquired after recheck, the balance is included in current nonrevenue receipt.
27
5. Preparation method of consolidated financial statements
The consolidation scope for financial statements is determined on the basis of control. The
consolidated financial statements comprise the financial statements of the Group and its subsidiaries.
A subsidiary is an enterprise or entity controlled by the Group.
The Group incorporates all of the subsidiaries and structured entities under its control into the
consolidated financial statements.
For any difference occurring in accounting policies and accounting periods between the Company
and its subsidiaries when preparing consolidated financial statements, necessary adjustments shall be
made based on accounting policies and periods of the Company.
The company prepare consolidated financial statements based on its own and the subsidiaries’
financial statements as well as other relevant information. In the preparation of the consolidated financial
statements, the group are identified as an accounting entity to reflect the overall financial position,
operating results and cash flow,according to the requirements of the related accounting standards for
business enterprises recognition, measurement and presentation, in accordance with the unified
accounting policy.
All the subsidiaries in the consolidation scope are as consistent in subsidiary accounting policies,
accounting period with the company. If those above are inconsistent, when preparing the consolidated
financial statements, it need make necessary adjustments according to the company's accounting policies
and accounting period .
In the process of consolidation,it is necessary to offset the impact on consolidated income statement,
consolidated cash flow statement, consolidated statement of changes in equity which are caused by
occurrence of insider trading between the company and subsidiary and also between each subsidiary.If
there is different opinion on the identity of the same transaction when standing on the point of the
consolidation statement on the enterprise group or which the company and subsidiary are the main body
of accounts , it need make adjust from the perspective of the enterprise group.
The balance which are formed because that the loss minority shareholders bear in the current period
are more than the share of the owner's equity minority shareholders have in the early period,offset the
interests minority shareholders have.For the subsidiary acquired in a business consolidation under the
same control , adjustment is made based on its book value in the financial statements with ultimate
control. For the subsidiary acquired in a business consolidation not under the same control, adjustment is
made based on the fair value of the identifiable net assets on purchasing day.
The acquired in a business combination under the same control subsidiary, with its assets and
liabilities (including the ultimate controlling party acquisition of the subsidiaries and the formation of
goodwill) adjustment is based on its financial statements on financial statements in the book value of
ultimate control.
For the subsidiary companies under the control of non identical control, the fair value of the identifiable
net assets of the company is adjusted on the basis of the fair value of the net assets.
Where the Group disposed part of long-term equity investment in the subsidiaries without losing
control over of such subsidiaries, in the financial statements, the balance between the income from
disposal and the net assets proportion of the subsidiaries entitled by the disposed long-term equity
investment and continually calculated from the purchase day or day of merger is adjusted as the capital
stock premium of the capital public reserve and retained earnings is adjusted in case of the capital public
reserve not enough for deduction.
Where the Group lost the control over the invested party for such reason as disposing partial equity
28
investment, the remaining equity was re-measured as per the fair value of such equity on the day of losing
controlling right when preparing the consolidated financial statements. The balance between the sum of
the consideration from the disposal of equity and the fair value of the remaining equity and the net assets
proportion of the subsidiaries entitled by the disposed long-term equity investment and continually
calculated from the purchase day or day of merger is included in the investment income for the period
and the goodwill is deducted. Other consolidated income related to the equity investment of the original
subsidiary shall be transferred into current investment profit and loss upon losing control.
Where the Group lost control over a subsidiary through multiple transactions and step-by-step
disposal of the equity of the subsidiary, and such multiple transactions to a package deal, the multiple
transactions shall be deemed one transaction in which the control in the subsidiary was lost; however, the
balance between the disposal price and the net assets proportion of the subsidiaries entitled by the
disposed long-term equity investment prior losing control over the subsidiary was recognized as other
comprehensive income and was transferred to the profits and losses of current period at the time of losing
control.
6. Classification of joint arrangement and accounting methods for joint operation
The joint arrangement of the Group includes joint operation and joint venture. For jointly operated
projects, the Group as a partner recognizes the assets and debts it holds independently and
proportionally as well as recognizes the income and expenses as agreed. Where purchase and sale of an
asset during joint operation does not constitute a business, only the part in the profits and losses from
the transaction belonging to other partners is recognized.
(1) Category of the joint arrangement
A joint arrangement refers to an arrangement jointly controlled by two participants or above.
The Group classifies joint arrangements into joint operations and joint ventures according to its rights
and duties in the joint arrangements. A joint operation refers to a joint arrangement where the Group
enjoys assets and has to bear liabilities related to the arrangement. A joint venture refers to a joint
arrangement where the Group is only entitled to the net assets of the arrangement.
The joint arrangement achieves not through the individual main body should be divided as
joint operation. Individual main body refers to the entity owns individual distinguishable financial
structure, including the individual legal entities and the entities without legal entity qualification but
gains the legal permits. The joint arrangement achieves through individual main body is usually
divided into the joint venture, but for the joint arrangement with definite evidence vindicates that
meet with any condition of the followings and meet with the regulations of the relevant laws and
regulations should be divided into joint operation; the legal form of other joint arrangement indicates
that, the jointly owned party respectively enjoys the rights and burdens the obligations of the relevant
assets and liabilities among the arrangement; the clauses of the contacts of the joint arrangement
agrees that, the jointly owned party respectively enjoys the rights and burdens the obligations of the
relevant assets and liabilities among the arrangement; other relevant facts and situation indicates that,
the jointly owned party respectively enjoys the rights and burdens the obligations of the relevant
assets and liabilities among the arrangement, for example, the jointly owned party enjoys almost all
of the output related to the joint arrangement and the liquidation of the liabilities of the arrangement
constantly depends on the support of the jointly owned party. It’s forbidden to regard the jointly
owned party which provides the liabilities for the joint arrangement as it has the responsibility to bear
the relevant liabilities. For the jointly owned party takes the responsibility to pay the attributive
obligations for the joint arrangement, not be considered to undertake the relevant liabilities related to
29
the arrangement. For the relevant facts and the changes of the situation leads the rights enjoyed and
the liabilities undertook amount the joint arrangement change, the Group should re-assess the
category of the joint arrangement. For the structure agreement setting various joint arrangements for
achieving different activities, the Group respectively recognizes each category of the joint
arrangement.
For the details of the basis of recognizing the joint control and the accounting policies of
the measurement of the joint venture, please refer to Notes (IV) 13.
(2) Accounting treatment of joint operations
The following projects related to the interests portion among the joint operation recognized by
the Group and be executed according to the regulations of the relevant ASBE: recognizes the assets
held alone and the assets joint held by recognizing according to the portion; recognizes the
jointly-held assets and jointly-borne liabilities according to the Group’s stake in the joint operation;
recognizes the income from sale of the Group’s share in the output of the joint operation;
recognizes the income from sale of the joint operation’s outputs according to the Group’s stake in it;
and recognizes the expense solely incurred to the Group and the expense incurred to the joint
operation according to the Group’s stake in it.
When the Group, as a joint operator, transfers or sells assets (except for the assets
constituing business) to the joint operation, before the assets are sold to a third party, the Group
only recognizes the share of the other joint operators in the gains and losses arising from the sale.
Where impairment occurs to the assets as prescribed in < The Accounting Standard No. 8 for
Business Enterprises—Asset Impairment>, the Group shall fully recognizes the loss. When the
Group, purchases assets from the joint operation (except for the assets constituing business) to the
joint operation, before the assets are sold to a third party, the Group only recognizes the share of the
other joint operators in the gains and losses arising from the sale. Where impairment occurs to the
assets as prescribed in , the Group shall fully recognizes the loss according to its stake in the joint operation for
a purchase of assets from the joint operation.
If the Group attributes to the participate party without joint control on the joint operation,if
enjoys the relevant assets and undertakes the relevant liabilities of the joint operation, should execute
accounting treatment according to the above principles; otherwise, should execute the accounting
treatment according to the accounting policies of the measurement of the financial instruments or the
long-term equity investment formulated by the Group.
7. Recognition standard for cash and cash equivalents
Cash in the Cash Flow Statement refers to cash in hold and deposits which can be used for payment
at any time. Cash equivalents in the Cash Flow Statements refer to short-lived (generally not more than 3
months) and highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of change in value.
8. Foreign currency businesses and translation of foreign currency financial
statements
(1) Accounting treatments for translation of foreign currency transactions
The transactions denominated in foreign currency of the Group are converted in the initial
recognition at the rate which is approximate to the spot exchange rate on the transaction day, which shall
30
be the spot exchange rate of the beginning of the month when the transaction occurs.
On the balance sheet date, the monetary items denominated in foreign currency are translated to
RMB at the spot exchange rate at the balance sheet date, and the balance between the spot exchange rate
at the balance sheet date and the rate in the initial recognition or on the last balance sheet date is included
in current profits and losses except for 1) the balance from exchange of specific borrowings that is
capitalized and included as part of the cost qualifying asset; 2) the balance from exchange of hedge
instrument adopted for evading the exchange risks that is treated according to hedge accounting; 3) the
balance from exchange arising from the foreign currency non-monetary items available for sale (e.g. the
stock) and that arising from the change in the book value of the monetary items available for sale except
for amortized cost is recognized as other comprehensive income.Non-monetary items of foreign
currency measured by historical cost still adopt spot exchange rate of transaction date for conversion
with functional currency amount unchanged. As for the foreign currency non-monetary items measured
by fair value, the spot exchange rate on the date when the fair value is confirmed is adopted for
conversion. The amount differences between functional currency amount after conversion and the
original functional currency amount, processed as fair value changes (including change in exchange rate),
are recognized into current profits and losses or recognized into other comprehensive incomes.
(2) Translation of foreign currency financial statements
The asset and liability items in the balance sheets shall be translated at a spot exchange rate
ruling at the balance sheet date. Among the owner's equity items, except the ones as “retained
earnings”, others shall be translated at the spot exchange rate ruling at the time when they
occurred.The income and expense items in the income statements shall be translated at an exchange
rate which is determined in a systematic and reasonable way and is approximate to the spot exchange
rate (calculated by the average of starting rate and closing rate on the reporting period) ruling at the
transaction date. The foreign exchange difference arisen from the translation of foreign currency
financial statements shall be presented separately under the owner's equity in the balance sheet.
Disposal in overseas business, the balance sheet items of other comprehensive income is
presented, and the overseas business translation of foreign currency financial statements related to
difference from other comprehensive income items into the disposal of profits and losses of the
current period; in the disposal of equity investment or other reasons lead to hold environment
operating outside the ratio of equity to reduce but not a loss of overseas business control, and the
offshore disposal operations in part related to the translation of foreign currency statements difference
will belong to minority interests. Do not turn into the profits and losses of the current period. When
dealing with overseas operations as an affiliated enterprise or part of the equity of the joint venture, the
foreign currency statement translation difference with the overseas operation shall be transferred to
the current profit and loss.
9. Financial assets and liabilities
All of or part of the current obligations of financial liabilities have been canceled. Derecognize the
financial liabilities or part with obligations being derecognized. The balance between partial book value
and the consideration paid shall be included in the current profit or loss.
Financial instruments refer to the contracts of forming enterprise financial assets and other entities’
financial liabilities or equity instruments.
31
(1) Financial assets
a. Classification, recognition basis and measurement method of financial assets
The financial assets of the Group are divided into the following categories in accordance with
investment purposes and economic substance: the financial assets at fair value through profit or loss;
held-to-maturity investments, loans and receivables; and available-for-sale financial assets.
The financial assets that are measured by fair value and the changes are recognized into current
profit or loss include trading financial assets and the financial assets that are measured by fair value and
the changes are recognized into current profit or loss when they are initially recognized. This kind of
financial assets designated by the Group includes mainly the financial assets it holds for sale in the short
period of time. For such financial assets, fair value is adopted for subsequent measurement. Variations of
fair value are recognized into current profits and losses are recognized in the fair value variation profits
and losses; interest or cash dividends acquired during the asset holding period are recognized as
investment income; and the difference between its fair value and initial recognition amount shall be
recognized as investment profits and losses upon disposal, and fair value variation profits and losses shall
be adjusted simultaneously.
Held-to-maturity investment refers to non-derivative financial assets which have fixed due date and
fixed or confirmed recovery amount and which the Group is determined and able to hold till maturity. As
to held-to-maturity investment, effective interest method is adopted for subsequent measurement as per
amortized cost. The profit or loss occurred by amortization, impairment or de-recognition are all
recognized into current profit or loss.
Receivables refer to non-derivative financial assets which have no quotation in active market and
fixed or determined recovery amount. Effective interest method is adopted for subsequent measurement
as per amortized cost. The profit or loss occurred by amortization, impairment or de-recognition are all
recognized into current profit or loss.
Available-for-sale financial assets are those non-derivative financial assets that are designated as
available-for-sale at initial measurement or are not classified in any of the three preceding categories.
For this kind of assets, the equity instrument investment with no price in active market and its fair
value not reliably measured and the derivative financial assets linked with the equity instrument and
settled through the delivery of the equity instrument are subsequently measured as per the cost; those
with quotation in active market and the fair value reliably measured are measured as per the fair value
and the changes in fair value are included in other comprehensive income. Fair value is adopted for
subsequent measurement for such financial assets. In addition to exchange gains or losses generated
from impairment loss and foreign currency financial assets, changes in fair value of available-for-sale
financial assets will be directly included in shareholder' equity and the accumulative amount of the
changes in the fair value that is originally directly included in equity shall be transferred in current
profit or loss upon the de-recognition of the financial assets. For the available-for-sale liability
instruments, the interest is calculated with actual interest rate during the holding period, together with
the cash dividend of the available-for-sale equity instrument investments shall be recognized into
current profits and losses as investment incomes when the invested company distributes the dividend.
The investments in equity instruments not quoted in an active market and whose fair value cannot be
reliably measured is subsequently measured based on the cost.
b. Recognition basis and measurement method for financial asset transfer
Where a financial asset satisfies any of the following requirements, the recognition shall be
terminated: (1) the contractual rights for collecting the cash flow of the said financial asset are terminated;
32
(2) the said financial asset has been transferred with almost all risks and remunerations thereof
transferred to the transferee; (3) the said financial asset has been transferred and the Group gives up the
control over the financial assets even though it neither transfers nor retains almost all risks and
remunerations thereof.
Where the Company neither transfers/retains almost all risks and remunerations in connection with
the financial assets nor gives up the control over the financial assets, it shall recognize related financial
assets as well as related financial liabilities according to its continuing involvement in the transferred
financial assets.
If the overall transfer of financial assets meets the conditions for derecognition, the balance between
the following two amounts shall be recognized into current profits and losses: (1) book value of
transferred financial assets; (2)the sum of the consideration received from the transfer and the
accumulative amount of changes in the fair value that is originally and directly recognized into other
comprehensive income.
If the partial transfer of financial assets does not meet the conditions of de-recognition, the overall
book value of transferred financial assets between de-recognition and non-de-recognition shall be
amortized based on relative fair value. The balance between following two amounts shall be recognized
into current loss and profit; (1) the sum of the consideration received from the transfer and the
accumulative amount of changes in fair value that shall be amortized for de-recognition and recognized
into other comprehensive income and (2) the balance of the amortized of the aforesaid carrying amount.
c. Financial asset depreciation test and accounting methods
The Group examines the book value of other financial assets except those which are measured at
their fair value and of which the variation is recorded into the profits and losses of current period on each
balance sheet date and accrues the provisions for impairment if any objective evidences prove the
impairment of the financial assets.
In case of impairment of financial assets measured by amortized cost, the impairment provision of
assets is accrued based on the shortfall of book value over its present value (excluding future credit losses
that have not been incurred). The formerly recognized impairment shall be reversed and recognized into
the current profit or loss if there is objective evidence showing that the financial assets are recovered and
it objectively has relations with the items happened after the impairment is recognized.
If there is impairment loss of available-for-sale financial assets, the accumulated loss due to the
decline of fair value that is previously and directly included in the owners' equity shall be transferred and
recognized into impairment loss. As for available-for-sale debt instruments with impairment affirmed,
the fair value has been increased in the subsequent accounting period and objectively has relations with
the items happened after the recognition of former impairment, the formerly recognized impairment shall
be reversed and recognized into the current profit or loss. As for available-for-sale debt instruments with
impairment affirmed, the increased fair value in the subsequent accounting period shall be directly
included in the shareholder's equity.
(2) Financial liabilities
a. Classification, recognition basis and measurement method of financial liabilities
Financial liabilities are divided into the following categories at the initial recognition: the financial
liabilities that are measured by fair value and whose changes are included in current profit or loss, and
other financial liabilities.
For the financial liabilities measured with fair value and the changes recognized into current profit
33
or loss including trading financial liabilities and the financial liabilities that are measured with fair value
and the changes recognized into current profit or loss on initial recognition, fair value is adopted for
subsequent measurement; and all profits or losses from change in fair value as well as dividend and
interest income relevant to such financial liabilities shall be recognized into current profits and losses.
Other financial liabilities adopt effective interest method for subsequent measurement according to
amortized cost.
b. De-recognition of financial liabilities
All of or part of the current obligations of financial liabilities have been canceled,confirm the
termination of the financial liabilities or part of it. If the company signed an agreement with the creditors
to take on new financial liabilities to replace the existing financial liabilities and ,new financial liabilities
and the existing financial liabilities of the contract clause are essentially different , make the termination
of recognition of the existing financial liability and simultaneous make confirmation of new financial
liabilities.
All or part of the current obligations of financial liabilities has been lifted, confirm the termination
of the financial liabilities or part of it, the company and the creditors signed an agreement, to take on new
financial liabilities to replace the existing financial liabilities, and new financial liabilities and the
existing financial liabilities of the contract clause essentially different, the termination of recognition of
the existing financial liability and simultaneous confirmation of new financial liabilities.
If the existing financial liabilities of all or part of the contract terms make substantive changes,
confirm the termination of existing financial liabilities or part of it, at the same time confirm the financial
liability clause after modification as a new financial liability.
Financial liabilities, in whole or in part, make the termination of recognition, the difference between
the book value of financial liabilities which are in the termination of recognition and payment of price
(including transferred non cash assets or undertake new financial liabilities) , are included in the profits
and losses of the current period.
If the company buy back some of the financial liabilities, the book value of the whole financial
liabilities will be divided according to the relative fair value of the termination part and confirmation
part on repurchase date .The difference between the book value which divide to the termination part
and payment of price (including transferred non cash assets or new financial liabilities borne) , are
included in the profits and losses of the current period.
(3) Offset between financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis or realize the asset and settle the liability simultaneously. Otherwise, financial assets and financial
liabilities are separately shown in the balance sheet and not allowed to offset.
10. Provision for bad debts of accounts receivable
（1）Receivables of individual account with significant amount and accrued provision for bad
debt
Recognition Criterion for individually significant amounts:
The receivables with more than RMB 1 million shall be recognized as the significant receivables;
The accruing method of the receivables with individually significant amounts:
The Group should make the impairment test separately or in combination and accrue the bad debt
34
provisions which shall be recorded into current profit or loss at the end of the period. If there is defined
evidence for the receivables not to or not likely to be received, which shall be recognized as the loss of
bad debt and write off the accrued bad debts provisions after going through the approval procedure of the
Group.
(2) Accounts receivable accrued bad debt provision by portfolio
a. The basis for determining the characteristics of credit risk:
For accounts receivable of which the single amount is not significant, together with which the single
amount is significant by testing alone without impairment,are divided into several portfolio according
to the characteristics of credit risk.considering the the actual loss rate of receivable portfolio of
significant individual amount of receivables with division according to the features of credit risk with
similar credit risk characteristics in previous years and the situation in the year,we determined the
amount of provision.
The basis for determining the portfolio:
Portfolio name provisioning approach The basis for determining the portfolio
Portfolio of
no provision for bad
related party in Portfolio of related party in consolidation
debts
consolidation
According to the nature of the business, identified as
no provision for bad no credit,including employees public reserve fund,
No risk portfolio
debts social security, payment in advance and employee
loan
Accounts receivable besides the portfolio mentioned
Portfolio of the above, company make a best estimate on the
aging analysis aging analysis method proportion of accounts receivable according to the
method previous experience,and carry on the classification on
credit risk portfolio considering the age of receivables
Accounting aging analysis method:
Use the accounting aging of the receivables as the credit risk characteristics to classify the portfolio.
Accrue the bad debt provision by accounting aging analysis method .
Proportion for Provision for bad debt Proportion for Provision for bad debt
Aging
（receivable）% ( other receivable) %
Within 1 year 5 5
1-2 years 20 20
2-3 years 50 50
Over 3 years 100 100
(3) Individually insignificant amount accounts receivable but accrued bad debt provision
Recognition Criterion for individually insignificant amounts:
Where there are obvious evidences suggesting impairment: debtor has been log-out, bankruptcy,
minus net asset, significant poor cash flow and significant nature disaster leads to discontinue production
and the debtors could not pay for the debts within the foreseeable time.
The accruing method of the receivables with individually insignificant amounts:
The Group should make the impairment test separately or in combination and accrue the bad debt
provisions which shall be recorded into current profit or loss at the end of the period. If there is defined
evidence for the receivables not to or not likely to be received, which shall be recognized as the loss of
bad debt and write off the accrued bad debts provisions after going through the approval procedure of the
35
Group.
11. Inventory
The inventories of the Group include mainly property development products, raw materials,
commodity stocks, low-value consumables and others.
The property development products include the properties under construction (including the land to
be developed) and as-built properties (including the leased property available for sale). Actual costs of
real estate development products include land-transferring cost, supporting infrastructure cost,
construction & installation cost, loans before completion of the development projects and other relevant
cost during development. Actual costs of delivered real estate development products are determined by
specific identification of costs.
Actual cost accounting is adopted for construction contract, including direct costs and indirect costs
from contract signing to completion of the contract and related to fulfillment of the contract. The net
amount after the offset of accumulated cost and accumulated recognized gross profits (loss) for the
properties under construction and the settlement is listed as net amount after offset in the balance sheet.
Where the sum of accumulated cost and accumulated recognized gross profits (loss) for the properties
under construction is more than the settlement, the balance is listed as inventories; where the latter is
more than the former, the balance is listed as unearned revenue.
Travel expenses, tender expenses, etc. for construction contract signing can be separately
distinguished and reliably calculated. For contracts probably to be concluded, expenses are recognized
into contract cost upon receiving the contract; otherwise, expenses are recognized into current profits or
losses.
One-off amortization method is adopted for receipt of low-value consumables and other inventories.
The ending inventory is measured by the cost and net reliable value whichever is lower. When the
net reliable value of the property development product is less than the cost, the inventory falling price
reserve shall be withdrawn. Net reliable value refers to the amount of the predicted sale price less
predicted as-built cost and expenses arising from sale and taxes during normal production and operation
process. Estimates of net realizable value are based on the most reliable evidence available at the time the
estimates are made and take into consideration the purpose for which the inventory is held and the
influences of events occurring after the balance sheet day.
After the accrual of devaluation provision for inventory, where affecting factors for former
write-down of inventory value has disappeared, the write-down amount shall be recovered and reversed
in the formerly accrued depreciation provision amount, and reversed amount shall be included in current
profit or loss and reversed amount shall be included in current profit or loss.
12. Divided as assets held for sale
(1)Recognition criteria of the assets held for sale
The Group recognizes the enterprise compose part (or the non-current assets, similarly hereinafter)
that simultaneously meets with the following conditions as assets held for sale:
a. The compose part must be immediately sold only according to the usual terms of selling the
compose part of this kind under the current conditions;
b. The relevant power institutions of the Group had made agreement on disposing the compose part,
36
if receive the approval from the shareholders according to the rules, which equals to had received the
approved of the Annual General Meeting or the corresponding power institution;
c. The Group has signed the irrevocable transfer agreement with the assignee;
d. The sale transaction is highly probable to be completed within one year.
(2) Accounting treatments of the assets held for sale
Non-current assets held for sale include single-item assets and disposal groups. Where a
disposal group is an asset group and the goodwill obtained in the business combination is
apportioned to the asset group according to the “Accounting Standard No. 8 for Business
Enterprises—Asset Impairment”, or a disposal group is an operation in such an asset group, the
disposal group shall include the goodwill in the business combination.
As for the non-current assets and disposal group which be classified held for sale by the
Group, shall be measured at the lower one of the net amounts of the book value and the fair value
after deducting the disposal expense. If the net amount the fair value minuses the disposal expenses
is lower than the original book value, the difference should be included in the current gains and
losses as the assets impairment losses; if the held for sale is the disposal group, the assets
impairment losses should be firstly distributed to the goodwill and then included in the current gains
and losses by amortized according to the proportion and attributed to the other non-current assets
within the held for sale assets scope. The deferred income tax assets, the financial assets
standardized by No.22 of ASBE-Recognition and Measurement of Financial Instruments,
investment property and biological assets measured by fair value, contacts rights occurred from the
insurance contacts and the assets occurred from the employee benefits are not suit for the held.
13. Long-term equity investments
The long-term equity investment of the Group includes mainly the investment to the subsidiaries,
associated enterprises and joint ventures.
The basis for the Group to define joint control is that all participating parties or the combination of
the parties control the arrangement jointly and the policies relevant to the activities of the arrangement
must be agreed by such parties.
The Group will be generally deemed to have significant impact on the invested entity if the Group
holds 20% (inclusive) to 50% of voting right of an invested entity directly or indirectly through its
subsidiaries. Where the Group holds less than 20% of voting right of an invested entity, the Group’s
significant impact on the invested entity will depend on whether the Group has its representative in the
Board of Director or any similar organ of power of the invested entity, whether the Group participates in
the formulation of financial and operation policies of the invested entity, whether the Group has
important deals with the invested entity, whether the Group dispatches management personnel to the
invested entity or whether the Group provides the invested entity with key technical data.
Any entity under the control of the Group is the subsidiary of the Group. The long-term equity
investment acquired through merging with an enterprise under common control, the book value of net
asset of the acquire in the consolidated financial statements of the ultimate controller on the day of
merger is taken as the initial investment cost of the long-term equity investment. Where the book value of
net asset of the acquiree on the day of merger is negative, the cost of the long-term equity invest is
recognized as zero.
Where the long-term equity investment is acquired thorough merging with an enterprise not under
common control, the merger cost is taken as initial investment cost. The merger cost is the fair value of
37
the assets given, debt occurred or borne and equity securities issued by the Group for acquiring the
controlling right of the acquiree on the day of merger
Aside from the above long-term equity investment acquired by the merger of enterprises, long-term
equity investment acquired by cash payment adopts the actual paid purchase amount as the investment
cost; long-term equity investment acquired by issuance of equity securities adopts the fair value of issued
equity securities as the investment cost; long-term equity investment invested by investors adopts the
value reached in the investment contract or agreement as the investment cost.
The investment of the Group to the subsidiaries is calculated with cost method, and equity method is
applied for joint ventures and associated enterprises.
For the long-term equity investment with cost method applied for subsequent measurement, in case
investment is added, the book value of the long-term equity investment cost is added with the fair value
of additional investment cost and resulting transaction expenses. The cash dividend or profit distributed
by an invested entity is recognized as current return on investment based on the distributed amount.
For the long-term equity investment with equity method applied for subsequent measurement, the
book value of the long-term equity investment is increased or decreased with the change in the ownership
equity of the invested entity. The proportion of net profit or loss of the invested company to be enjoyed or
assumed by the Group is confirmed by taking the fair value of recognizable assets of the invested
company upon obtaining the investments as the base, and offsetting the proportion of internal transaction
profits and losses occurring between the associated enterprises and joint ventures which is due to the
investing enterprise according to shareholding proportion and adjusting the net profit of the invested unit.
For disposal of long-term equity investment, the difference between the book value and the actual
received payment shall be recognized into current income. For the disposal of the long-term equity
investments which are calculated with equity method and recognized into the owner equity due to the
changes in owner equity other than the net profits and losses of the invested company, the part initially
recognized into the owner equity shall be carried over to current income and losses in corresponding
proportion.
Where losing joint control over or significant impact on the invested entity is a result of such fact as
disposing partial equity investment, the remaining equity is calculated as the finance asset available for
sale and the balance between the fair value and the book value of the remaining equity on the day of
losing joint control or significant impact is included in current profits and losses. For other
comprehensive income of the original equity investment recognized with equity method, the basis same
as that of the invested entity directly disposing relevant asset or debts is applied for accounting when the
equity method is ceased to be used.
Where losing control over the invested entity is a result of disposing partial long-term equity
investment and the Group has a common control over or have significant impact on the invested entity by
using the remaining equity, the equity method is applied, the balance between the book value and
disposal consideration of the disposed equity is included in the return on investment, and the remaining
equity is adjusted as if it was calculated with equity method since the acquiring of such equity. In case the
Group cannot have a common control over or have significant impact on the invested entity by using the
remaining equity, regulations for financial assets available for sale are applied and the balance between
the book value and disposal consideration of the disposed equity is included in the return on investment,
and the balance between the fair value and book value of the remaining equity on the day of losing
control is included in current profits and losses.
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14. Investment property
The investment property of the Group includes the leased land use right, the land use right it is
entitled to for assignment after appreciation, the leased properties and the properties it holds for sale.
Cost model is applied for measurement.
The investment property of the Group is amortized with the average service life method. Estimated
service life, net residual value rate and annual amortization rate of investment property are as follows:
Items Useful Lives Residual Rates (%) Annual Depreciation Rates (%)
land usage rights 50 years 0.00-10.00 1.80-2.00
House and Building 20-28 years 0.00-10.00 3.56-4.50
After initial recognition, the Company adopts the cost model to measure its investment properties.
The Company amortizes or depreciates its investment properties measured using cost model in the same
way as fixed assets and intangible assets If the Group had definite evidence indicated the usage of
the property had changed, when transferring the self-used real estate or the inventories as the
investment real estate or transferring the investment real estate as the self-used real estate, the book value
before the transfer should be regarded as the entry value after transfer.
The Group values the investment property measured using cost model at the lower of its cost and its
recoverable amount at the end of the period. Where the cost exceeds the recoverable amount, the
difference shall be recognized as impairment loss. Once a provision for impairment loss is made, it
cannot be reversed.
An investment real estate is derecognized on disposal or when the investment real estate is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment real estate less
its carrying amount and related taxes and expenses is recognized in profit or loss in the period in which it
is incurred.
15. Fixed assets
The Group's fixed assets are tangible assets that: (1)are held for use in the production or supply of
goods or services, for rental to others, or for administrative purposes; (2) have useful lives more than one
year; and (3) have unit value more than RMB 2,000.
The fixed assets can be recognized only when their economic interests may flow into the Group and
their costs can be reliably measured. Fixed assets of the Group are classified as houses and buildings,
machines and equipment, transportation equipment, office facility, etc.
All fixed assets, apart from those fixed assets that have been depreciated and accrued but are still in
use and those lands that are transferred into fixed assets separately according to actual values, are
depreciated and accrued by the Group. The average service life method is applied for accrual of
depreciation.
The classification, depreciation years, estimated net residual value rate and depreciation rate of
fixed assets are as follows:
Items Useful Lives Residual Rates (%) Annual Depreciation Rates (%)
House and Building 20-28 years 5.00 3.39-4.75
Machinery equipment 4-5 years 5.00 19.00-23.75
Transportation 5-20 years
5.00 4.75-19.00
equipment
39
Items Useful Lives Residual Rates (%) Annual Depreciation Rates (%)
Other equipment 3.0-5 years 5.00 19.00-31.67
The Group shall check the useful life of fixed assets, expected net salvage value and depreciation
method not later than the end of the year. Any change will be disposed as accounting estimation change.
16. Construction in progress
The valuation of the construction in progress: recognizes the engineering cost according to the
cost actual occurred. The cost of construction in progress also includes the borrowing expenses and
exchange gains and losses which should be capitalized.
The company should transfer the construction in progress into fixes assets when the construction
in progress is ready for their intended use. If the built construction had reached the state ready for
intended use but had not settled the fixed assets of completion settlement, should recognized as fixed
assets according to the estimated value as well withdrew and depreciated; after execute the
completion settlement procedure, it should adjust the original provisional estimate value according to
the actual cost but not the original withdrew depreciation amount.
Impairment of construction in progress refers to accounting policy “Long-term assets
impairment” of the Group.
17. Biological Assets
The biological assets in the company are consumptive biological assets and productive biological
assets. Consumptive biological assets include baby breeding and fat breeding. Productive biological
assets are hens.
Biological assets are recognized only when the following criteria are met simultaneously:
(1) The company acquired the biological assets because of past transactions or events.
(2) The potential economic benefits generated by the biological assets may flow into the company
(3) The cost of biological assets can be calculated reliably
The purchase and disposal of biological assets: the costs of biological assets after the transfer of
purpose are same as the book value before the transfer of purpose; When biological assets are sold,
destroyed or have inventory loss, the differences between the proceeds of disposal and the book value
plus relevant taxes are included in the profit and loss of the current period.
The initial cost of biological assets includes purchase price, transportation cost, insurance cost, and
other cost directly attributed to purchasing the assets. The initial cost of self-breeding productive
biological assets (before the expected condition for use) includes breeding cost, wages and other indirect
costs. Before the expected condition for use, cost of biological assets, including breeding and protection,
are recorded in profits and losses of the current period.
Biological assets are depreciated using the straight-line method to allocate the cost of the assets to
their estimated useful lives. For the biological assets being provided for impairment loss, the related
depreciation charge is prospectively determined based upon the adjusted carrying amounts over their
remaining useful lives.
The estimated useful lives, residual rates and annual depreciation rates are as follows:
Items Useful Lives Residual Rates (%) Annual Depreciation Rates (%)
Chicken and Eggs 1 years 5.00 95
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boar、sheep for breeding 3 years 5.00 31.67
At the balance sheet date, if potential impairment of biological assets exists, estimation of its net
realizable value shall be made. Recognizing impairment loss where net realizable value below its book
value. Once an impairment loss is recognized, it is not reversed in a subsequent period.
When biological assets are sold, destroyed or have inventory loss, the difference between the
revenue from disposal and its book value plus relevant taxation are recorded into profits and losses of
the current period.
18. Borrowing costs
(1) Recognition principles for capitalization of borrowing costs and capitalization period
The borrowing costs shall include interest on borrowings, amortization of discounts or premiums on
borrowings, ancillary expenses, and exchange balance on foreign currency borrowings. When the
borrowing costs can be directly attributable to the construction or production of assets eligible for
capitalization, and the asset disbursements or the borrowing costs have already incurred, and the
construction or production activities which are necessary to prepare the asset for its intended use or sale
have already started, the capitalization of borrowing costs begins. When the asset eligible for
capitalization under acquisition and construction or production is ready for the intended use or sale, the
capitalization of the borrowing costs shall be ceased. Other borrowing costs shall be recognized as
expenses when incurred.
The assets which can fulfill the principles for capitalization refers to fixed assets, investment
property and inventories which need a long time to be in use or for sale .Capitalization of borrowing
costs starts when:
a. The assets expenditures have incurred.Asset expenditures include the payment of cash, transfer
of non-cash assets or the occurrence of interest bearing debt in the form of assets that are in line with the
conditions of capitalization for the purchase and construction or production;
b. The borrowing costs have incurred;
c. The acquisition and construction activities that are necessary to bring the asset to its
expected usable condition have commenced.
(2) Capitalization of borrowing costs
The period of capitalization refers to the period from the start point of capitalization to the stop point
of capitalization , the suspension period is not included.
When the assets in construction or production which can meet the capitalization conditions were in
use or sale status, the cost of borrowing need stop the capitalization.
When the assets in construction or production which can meet the capitalization conditions were
partly completed and can be used separately, the cost of borrowing need stop the capitalization.
Each part of the assets in construction or production are respectively completed, and it can only be
used or sold after the completion of the whole,at the time when the asset wholly completed need the cost
of borrowing stop the capitalization.
(3) Suspended during the period of capitalization
Capitalization of borrowing costs should be suspended during periods in which the acquisition or
construction is interrupted abnormally, and the interruption period is three months or longer. These
borrowing costs should be recognized directly in profit or loss during the current period. However,
capitalization of borrowing costs during the suspended periods should continue when the interruption is a
41
necessary part of the process of bringing the asset to working condition for its intended use.
(4)Calculation method of capitalized amount of borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a
qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is determined as
the actual borrowing costs incurred on that borrowing during the period less any investment income on
the temporary investment of the borrowing.
To the extent that funds are borrowed generally and used for the purpose of acquiring or constructing
a qualifying asset, the amount of borrowing costs eligible for capitalization shall be determined by
applying a capitalization rate to the weighted average of excess of accumulated expenditures on
qualifying asset over that on specific purpose borrowing. The capitalization rate is the weighted average
rate of the general borrowings.
During the period of capitalization, the exchange balance on foreign currency special borrowings
shall be capitalized; the exchange balance on foreign currency general borrowings shall be recorded into
current profits and losses.
19. Intangible assets
The intangible assets of the Group include the land use right and software acquired for the
construction of self-used properties. The land use right acquired for daily operation is calculated as the
inventory. Intangible assets are measured at actual cost upon acquisition, where, the actual cost of
intangible assets purchased consists of the actual payment and relevant expenses; and the cost input by
the investors in intangible assets is determined in accordance with the value stipulated in the investment
contract or agreement; unless the contract or agreement stipulates that the value is not fair, then the actual
cost is measured at the fair value.
Land use right is amortized averagely according to transfer term counted from transferring date;
software and other intangible assets shall be amortized averagely according to the shortest term among
anticipated service life, beneficiary years stipulated in contract and valid terms formulated by law.
Amortized amount is included in relevant asset cost and current profit or loss by beneficiaries. Estimated
service life and amortization method of intangible assets with limited service life are recheck at the end
of each year, treatment of changes in accounting estimates is adopted for any change.
As for the intangible assets with limited life, its service life shall be estimated at the year-end
Item Amortisation periods Basis
Less than the period stated at contracts or
Land use rights 50 years
included in other legal rights
Patent, brand, software Less than the period stated at contracts or
5 years
and technology included in other legal rights
20. Impairment of long-term assets
For non-current financial Assets of fixed Assets, projects under construction, intangible Assets
with limited service life, investing real estate with cost model, long-term equity investment of
subsidiaries, cooperative enterprises and joint ventures, the Group should judge whether decrease in
value exists on the date of balance sheet. Recoverable amounts should be tested for decrease in value
if it exists. Other intangible Assets of reputation and uncertain service life and other non-accessible
42
intangible assets should be tested for decrease in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be the
higher of net value of asset fair value deducting disposal charges or present value of predicted cash
flow. Asset fair value should be determined according to negotiated sales price of fair trade. If no sales
agreement exists but with asset active market, fair value should be determined according to the
Buyer’s price of the asset. If no sales agreement or asset active market exists, asset fair value could be
acquired on the basis of best information available. Disposal expenses include legal fees, taxes,
cartage or other direct expenses of merchantable Assets related to asset disposal. Present value of
predicted asset cash flow should be determined by the proper discount rate according to Assets in
service and predicted cash flow of final disposal. Asset depreciation reserves should be calculated on
the basis of single Assets. If it is difficult to predict the recoverable amounts for single Assets,
recoverable amounts should be determined according to the belonging asset group. Asset group is the
minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared to
beneficial asset group and asset group combination in collaboration of business merger. It is shown in
the test that if recoverable amounts of shared business reputation asset group or asset group
combination are lower than book value, it should determine the impairment loss. Impairment loss
amount should firstly be deducted and shared to the book value of business reputation of asset group
or asset group combination, then deduct book value of all assets according to proportions of other
book value of above assets in asset group or asset group combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be returned
in future.
21. Goodwill
The balance of the equity investment costs or consolidation costs not under the same control
greater than the fair value of the share of net assets or recognizable net assets of the invested unit or seller
acquired from enterprise consolidation is recognized as goodwill.
Goodwill related to the subsidiary is separately listed on the consolidated financial statements;
goodwill related to the associated enterprises and joint ventures is included in the book value of
long-term equity investment.
Impairment test is carried out for goodwill at the end of the year, no matter whether there is any
sign of impairment. The goodwill was, together with the related asset group or combination of asset
groups, subject to the impairment test. That is, the book value of goodwill was reasonably apportioned to
the asset group or combination of asset groups which benefit from the synergy of business merger from
the purchase date. If the recoverable amount of the asset group or combination of asset groups of
goodwill with apportionment is less than its book value, the related impairment loss shall be recognized.
Impairment loss is firstly amortized to the carrying values of goodwill in asset group or asset group
portfolio, and then deducted for the carrying value of other assets in according to the percentage occupied
of other assets (except goodwill) in the asset group or asset group portfolio.
22. Long-term deferred expenses
The Company recognizes all expenses which have occurred during the period but shall be
amortized beyond one year, such as improvement expenditures of operating leased fixed assets, as
43
long-term deferred expenses. The Company amortizes long-term deferred expenses using straight-line
method according to relevant beneficial periods.
Long term deferred expenses which have a clear benefit period are made according to the average
amortization period, in other situation , amortization need be made according to the average amortization
period of 5 years.
23. Employee remuneration
(1) Accounting treatment of short-term compensation
Employee compensation refers to the reward or compensation of various modes provided by the
Group which wants to receive the service offering by the employees or to execute the release of the labor
relationship. The employee compensation including the short-term salary, departure benefits, demission
benefits and other long-term employee benefits. The Group provides the benefits for the spouses,
children, supported families of the employees, the members of the deceased's employees and other
beneficiaries, which are also employee compensations.
The short-term compensation actually happened during the accounting period when the active
staff offering the service for the Group should be recognized as liabilities and is included in the current
gains and losses or relevant assets cost except for those be required or permitted to included in the
assets cost by other ASBE.
(2) Accounting treatment of the welfare after demission
The Group divides the departure benefits plan into defined contribution plans and defined benefit
plans. Benefits plan of after demission refer to the agreement between the Group and employees on the
departure benefits, or the regulations or methods formulated by the Group for providing welfare after
demission for the employees. Of which, defined contribution plans refers to the departure benefits plan
that the Group no more undertake the further payment obligations after the payment and deposit of the
fixed expenses for the independent funds; defined benefit plans refers to the departure benefits plan
except for the defined contribution plans.
a. Defined contribution plans
During the accounting period when providing the service for the employees, the Group will
recognize the deposited amount as the liabilities which measured by defined contribution plans and
include in the current gains and losses or the relevant assets cost.
b. Defined benefit plans
Other long-term employee benefits the Group had not executed the defined contribution plans or
met with the conditions of defined benefit plans.
(3) Accounting treatment of the demission welfare
When the Company is unable to unilaterally withdraw the plan on the cancellation of labor
relationship or the layoff proposal, or when recognizing the costs or expenses (the earlier one between
the two) related to the reorganization of paying the demission welfare, should recognize the payroll
liabilities from the demission welfare and include in the current gains and losses.
24. Estimated liabilities
When the businesses related to contingencies like external guarantee and pending actions or
arbitration conform to the following conditions at the same time, they will be recognized as the debt by
the Group: the obligation is the current obligation undertaken by the Group; the implementation of such
obligation may probably cause the outflow of economic interests from the Group; and the amount of that
44
obligation can be measured reliably.
(1) Recognition criteria of estimated liabilities
The company should recognize the related obligation as a provision for liability when the
obligation meets the following conditions:That obligation is a present obligation of the enterprise;It is
probable that an outflow of economic benefits from the enterprise will be required to settle the
obligation;A reliable estimate can be made of the amount of the obligation.
(2)Measurement of estimated liabilities
To fulfill the present obligations, which initially measured by the best estimate of the expenditure
required to settle the liability. Where there is a continuous range of possible amounts of the expenditure
required to settle the liability, as all kinds of possibilities are at same level, the best estimate should be
determined according to the average of the lower and upper limit of the range. In other cases, the best
estimate should be determined in accordance with the following methods:
Where the contingency involves a single item, the best estimate involves a singe item, the best
estimate should be determined according to the most likely outcome;
Where the contingency involves several items; The best estimate should be determined by weighting
all possible outcomes by their associated probabilities of occurrence.
To determine the best estimate, it should be considered with factors such as: related contingency
risks, uncertain matters and time value of currency. If time value of currency has a significant
impact, the best estimate should be measured at its converted present value through the relevant
future cash outflows.
Where some or all of the expenditures are expected to be reimbursed by a third party, the
reimbursement should be separately recognized as an asset only when it is virtually received. The
amount of the reimbursement should not exceed the carrying amount of the liability recognized.
25. Share payment
The equity-settled share-based payment to exchange the provision of service by employees is
measured by the fair value of the equity instrument conferred to the employees on the grant date. Where
it is exercisable upon finishing the service within the waiting period or satisfying the regulated
performance conditions, based on the optimal estimation of the exercisable equity instrument quantity
within the waiting period, the fair value amounts are included in relevant cost or expense after calculation
by the method of line, with relevant capital surplus increased.
26. Recognition and measurement of income
The operation revenue of the Group mainly include the sales revenue, lease revenue and property
management revenue of real estate development products and revenue recognition policies are as
follows:
(1) The revenue of real estate development products are recognized under the following
conditions:
a. Seller and Purchaser sign the sales contract and file a record in the land department;
b. The revenue of real estate development products are completed and are qualified in acceptance;
c. The company has received full house-purchase price or obtained the right of collecting the full
purchase price (e.g. the written commitment letter for releasing mortgage payment from bank);
d. The formalities of property delivery are handled or the customers are deemed to accept the
property according to the terms in the purchase contract.
45
(2) Lease revenue:
The lease revenue of investment property is recognized as the lease revenue by the method of line
according to rent agreed in the contract or agreement over the lease term.
(3) Property management revenue:
When property management service has been provided and its relevant economic benefit has
obtained by the Company, meanwhile, relevant revenue and cost can be measured reliably, the realization
of utilities revenue is recognized.
27. Government subsidies
Government subsidies refer to monetary assets and non-monetary assets acquired without any
charge from the government. Government subsidies can only be recognized upon meeting the condition
that the Company meets all conditions of government subsidy and is able to receive the government
subsidy.
If government subsidies are monetary assets, it shall be calculated according to the received; if the
government subsidy is distributed subject to fixed quota standard or if there is definite evidence showing
that it is in conformity with relevant requirements of the financial support policies, it shall be calculated
according to the receivable amount; and if the government subsidy is non-monetary assets, it shall be
measured at the fair value; and if the fair value fails to be obtained reliably, it shall be calculated
according to nominal amount (RMB 1).
Government subsidies in relation to assets are recognized as deferred income and allocated equally
within the service life of relevant assets, which will then be included in current profit or loss.
Government subsidies relevant with incomes and that are used to make up future expenses or losses will
be recognized as deferred income and recognized into current profits and losses within the recognition
period of relevant expenses; government subsidies used to make up incurred relevant expenses or losses
are included into current profits or losses directly.
28. Deferred income tax assets and deferred income tax liabilities
The Company executes the accounting treatments of the income tax by adopting the balance sheet
liability method.
(1) Deferred income tax assets
Where there are deductible temporary differences between the carrying amount of assets or
liabilities in the balance sheet and their tax bases, a deferred tax asset shall be recognized for all those
deductible temporary differences to the extent that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilized. Deferred tax assets arising from
deductible temporary differences should be measured at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled.
At the balance sheet date, where there is strong evidence showing that sufficient taxable profit
will be available against which the deductible temporary difference can be utilized, the deferred tax
asset unrecognized in prior period shall be recognized.
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If
it’s probable that sufficient taxable profit will not be available against which the deductible
temporary difference can be utilized, the Company shall write down the carrying amount of deferred
tax asset, or reverse the amount written down later when it’s probable that sufficient taxable profit
will be available.
46
(2) Deferred income tax liabilities
A deferred tax liability shall be recognized for all taxable temporary differences, which are
differences between the carrying amount of an asset or liability in the balance sheet and its tax base,
and measured at the tax rates that are expected to apply to the period when the asset is realized
or the liability is settled.
(3)Other notes
The current income tax assets and liabilities of the Group should be listed by the written-off net
amount which intend to executes the net amount settlement as well as the assets acquiring and
liabilities liquidation at the same time while owns the legal rights of settling the net amount.
The deferred income tax assets and liabilities of the Group should be listed as written-off net
amount when having the legal rights of settling the current income tax assets and liabilities by net
amount and the deferred income tax and liabilities is relevant to the income tax which be collected
from the same taxpaying bodies by the same tax collection and administration department or is
relevant to the different taxpaying bodies but during each period which there is significant reverse of
the deferred income assets and liabilities in the future and among which the involved taxpaying
bodies intend to settle the current income tax and liabilities by net amount or are at the same time
acquire the asset as well as liquidate the liabilities.
29. Leasing
The leasing business of the Group is operating lease.
The rent paid by the Group as the Lessee in the operating lease is included in related asset costs or
current profits and losses by the method of line over the lease term.
30. Change in significant accounting policies and accounting estimates
(1) Changes in significant accounting policies
Not Applicable.
(2) Significant changes in accounting estimates
Not Applicable.
31.early error correction
Not Applicable.
V. Taxation
1. Main taxes and tax rates
Tax category Tax basis Tax rate
Business tax Housing prepayment; taxable income 5%
Land value-added tax Land VAT or pre-requisitioned Super rate progressive rate
City maintenance and construction tax Transfer tax payable 5%
Education surcharge Transfer tax payable 3%
Local education surcharge Transfer tax payable 2%
Rental income or original value of real
Housing property tax 12% or 1.2%
estate
47
2. Corporate income tax
Company Tax rate
Parent company 25%
Chengde Nanjiang Real Estate Development Co., Ltd 25%
Runhua Rural Water (Tianjin) International Trade Co., Ltd. 25%
ChengDe NanJiang Investment Co., Ltd. 25%
ChengDe NanJiang Ecological Agriculture Co., Ltd. 25%
Hangzhou Dongfeng Stealth Technology Co., Ltd. 25%
NanJiang Asia Investment Co., Ltd. 16.5%
Chengde Morsh Technology Co., Ltd 25%
Chengde HuiJing property Co., Ltd 25%
NOTE：NanJiang Asia Investment Co., Ltd. is in special administrative region, and the applicable
corporate income tax rate is 16.5%.
3. The company withhold individual income tax.
V. Notes to Major Items in Consolidated Financial Statement
With respect to the following data disclosed in the Financial Statements, unless otherwise stated,
"the beginning of the year" refers to January 1, 2015; "the end of the year" refers to December 31, 2015;
"this year" refers to the period between January 1, 2015 to December 31, 2015, and the "previous year"
refers to the period between January 1, 2014 to December 31, 2014. The currency unit is RMB.
1. Monetary fund
Items Closing Balance Opening Balance
Cash on hand 70,613.10 33,252.06
Bank deposit 84,473,064.35 35,549,107.84
Other monetary fund 3,693,739.53 1,416,185.27
Total 88,237,416.98 36,998,545.17
Of which: the total amount
--- ---
deposited overseas
At the end of December 31, 2015, the company does not exist pledging , freezing and Monetary
fund with recycling risk.
(1)Restricted monetary fund during the reporting period are shown below:
Item Closing Balance Opening Balance
guaranteed deposit for housing mortgages 3,693,739.53 1,416,185.27
deposit for notes payable --- ---
Total 3,693,739.53 1,416,185.27
48
NOTE: Compared to the Opening Balance, the Closing Balance of monetary fund increased by RMB
51,238,871.81, with the increased rate of 138.49%. The main reason for the increase was: the income
of house pre-sale grew.
2. Accounts receivable
(1) Types of accounts receivable
Closing Balance
Book balance Provision for bad debts
Categories
Proportio Proportion Book value
Amount Amount
n (%) (%)
Accounts receivable with
significant single amount with
2,320,047.40 92.86 2,320,047.40 100.00 ---
bad debt provision separately
accrued
Accounts receivable
withdrawn bad debt provision 178,497.35 7.14 22,383.82 12.54 156,113.53
by portfolio
Accounts receivable with
insignificant single amount for
--- --- --- --- ---
which bad debt provision
separately accrued
Total 2,498,544.75 100.00 2,342,431.22 93.75 156,113.53
Continued:
Opening Balance
Book balance Provision for bad debts
Categories
Proportio Proportion Book value
Amount Amount
n (%) (%)
Accounts receivable with
significant single amount with
--- --- --- --- ---
bad debt provision separately
accrued
Accounts receivable
withdrawn bad debt provision 2,876,727.75 100.00 154,051.09 5.36 2,722,676.66
by portfolio
Accounts receivable with
insignificant single amount
--- --- --- --- ---
for which bad debt provision
separately accrued
Total 2,876,727.75 100.00 154,051.09 5.36 2,722,676.66
Notes for Category:
a. Accounts receivable with significant single amount with bad debt provision separately accrued:
49
Closing balance
Accounts receivable
(classified by units) Accounts Bad debt Proportion
Reason
receivable provision （%）
Beijing xiang e qing
industry and trade co., 2,320,047.40 2,320,047.40 100 Uncollectible
LTD
Total 2,320,047.40 2,320,047.40 --- ---
b. In the groups, accounts receivable adopting aging analysis method to withdraw bad debt provision:
Closing balance
Aging Withdrawal
Accounts receivable Bad debt provision
proportion（%）
Within 1 year 106,167.00 5,308.35 5
1 to 2 years 63,632.35 12,726.47 20
2 to 3 years 8,698.00 4,349.00 50
Total 178,497.35 22,383.82 12.54
c. Accounts receivable with insignificant single amount for which bad debt provision separately
accrued are inapplicable.
(2) Accounts receivable withdraw, reversed or collected during the reporting period.
The withdrawal amount of the bad debt provision during the reporting period was of RMB
2,225,917.63; the amount of the reversed or collected part during the reporting period was of RMB
37,537.50.
(3) There was no write-off the accounts receivable during the reporting period.
(4) Top 5 of the closing balance of the accounts receivable collected according to the arrears
party.
Proportion of the total year
Closing balance of bad
Name of units Closing balance end balance of the accounts
debt provision
receivable(%)
Beijing xiang e qing industry
2,320,047.40 92.86 2,320,047.40
and trade co., LTD
Chengde Great wall Group 12,611.00 0.5 3,277.30
Electricity Authority of
65,886.35 2.64 14,106.52
Chengde county
50
Inner Mongolia A Jin Nai Ma
culture development co., 100,000.00 4 5,000.00
LTD
合计 2,498,544.75 100 2,342,431.22
(5)There was no account receivable which terminate the recognition owning to the transfer of
the financial assets during the reporting period.
(6)There was no amount of the assets and liabilities formed by the transfer and the continues
involvement of accounts receivable during the reporting period.
3.Prepayments
(1)The aging analysis of prepayments is as follows:
Closing Balance Opening Balance
Aging Proportion
Amount Proportion (%) Amount
(%)
Within 1 year 1,105,122.95 100 7,748,545.39 99.60
1-2 years --- --- --- ---
2-3 years --- --- 3,400.00 0.04
Over 3 years --- --- 28,200.00 0.36
Total 1,105,122.95 100 7,780,145.39 100
(2) There was no prepayment with an aging above 1 year as.
(3) Top 5 of the closing balance of the prepayment collected according to the prepayment
target
Closing balance
Closing
Name of Units of bad debt Aging Reason
balance
provision
Hangzhou KangNuo
before the
Electromechanical 5,490,100.00 5,490,100.00 Within 1 year
settlement period
Technology Co. Ltd.
science and Trade of
the credit period
Xiong County Co., 759,994.98 759,994.98 Within 1 year
in transit
Ltd.
Qinhuangdao Shun the credit period
520,000.00 520,000.00 Within 1 year
Hao Trading Co., Ltd. in transit
51
Prepaid
before the
expenses-decoration 508,750.00 508,750.00 Within 1 year
settlement period
cost
Surveying and
before the
Mapping Center of 270,616.50 270,616.50 Within 1 year
settlement period
Chengde County
Total 7,549,461.48 7,549,461.48 --- ---
NOTE:compared to the opening balance, the amount of prepayment decreased by RMB 6,675,022.44
at the end of 2015 , with the drop of 85.8%. The main reason for the decrease was the prepayment of
goods has reduced for the period.
4. Other receivables
（1）Classification of other receivables
Closing Balance
Type Book balance Provision for bad debts
Proportion Proportion Book value
Amount Amount
(%) (%)
Other receivables
of individual
account with
significant amount 2,709,273.00 2.90 2,709,273.00 100.00 ---
and accrued for
provision for bad
debts
Other accounts
receivable
withdrawn
provision for bad 88,424,018.54 94.90 274,716.03 0.31 88,149,302.51
debts based on
credit risk feature
combination
Other receivables
of individual
account with
insignificant
2,046,957.70 2.20 2,046,957.70 100.00 ---
amount and
accrued for
provision for bad
debts
Total 93,180,249.24 100.00 5,030,946.73 5.40 88,149,302.51
Continued:
Opening Balance
Type Book balance Provision for bad debts
Proportion Proportion Book value
Amount Amount
(%) (%)
Other receivables
of individual
account with
2,709,273.00 17.08 2,709,273.00 100.00 ---
significant amount
and accrued for
provision for bad
52
Opening Balance
Type Book balance Provision for bad debts
Proportion Proportion Book value
Amount Amount
(%) (%)
debts
Other accounts
receivable
withdrawn
provision for bad 11,220,393.72 70.76 212,101.28 1.89 11,008,292.44
debts based on
credit risk feature
combination
Other receivables
of individual
account with
insignificant
1,927,957.70 12.16 1,927,957.70 100.00 ---
amount and
accrued for
provision for bad
debts
Total 15,857,624.42 100.00 4,849,331.98 30.58 11,008,292.44
a. Other receivables which single amount is significant and bad debts reserve is withdrawn at the
end of the year
Closing Balance
Name of Units Provision for bad Accruing proportion Reasons for
Other receivables
debts (%) Accrual
Chengde county
Expected
administration of non-tax 1,500,000.00 1,500,000.00 100
irrecoverable
revenue
Expected
Creditor’s right from auctions 1,209,273.00 1,209,273.00 100
irrecoverable
Total 2,709,273.00 2,709,273.00 100
Other receivables which single amount is significant refer to receivables which the single amount
is not less than RMB 1,000,000. After specific identification of those which single amount is
significant,the receivables from Chengde county administration of non-tax revenue( RMB
1,500,000.00 ) and Creditor’s right from auctions( RMB1,209,273.00 ) are identifed irrecoverable and
were made Provision for bad debts totally.
b. Other receivable with provisions of bad debts accrued by aging analysis method in the portfolio
Closing Balance
Aging
Other receivables Provision for bad debts Accruing proportion (%)
Within 1 year 781,665.96 39,083.31 5.00
1 to 2 years 911,108.61 182,221.72 20.00
53
2 to 3 years 20,000.00 10,000.00 50.00
Over 3 years 43,411.00 43,411.00 100.00
Total 1,756,185.57 274,716.03 15.64
c. Other receivable with provisions of bad debts accrued by other method in the portfolio
Closing Balance
Aging
Other receivables Provision for bad debts Accruing proportion (%)
The prepayment of
98,836.28 --- ---
oil company
The purchase
payment of land
86,025,400.00 --- ---
of Chengde county
land reserve center
Special fund of
90,421.00 --- ---
cement
Staff’s loan 453,175.69 --- ---
Total 86,667,832.97 --- ---
d.Other receivables of individual account with insignificant amount and accrued for provision for
bad debts at the end of the year
Accrui
Aging(ye ng
Bad debt
Accounts Receivable Book Amount propor Reasons for Accrual
provision ar) tion(%
)
Expected
Qizhong Yan 270,000.00 270,000.00 3-4 100.00
irrecoverable
100.00 Expected
Ansheng Wang 141,005.79 141,005.79 2-3
irrecoverable
100.00 Expected
Degang Bao 356,838.00 356,838.00 2-4
irrecoverable
100.00 Expected
Chengquan Liu 300,000.00 300,000.00 2-3
irrecoverable
100.00 Expected
Tianhong Li 217,424.66 217,424.66 3-4
irrecoverable
100.00 Expected
Haihong Zhou 642,689.25 642,689.25 1-2
irrecoverable
100.00 Expected
Guang Tong Company 119,000.00 119,000.00 2-3
irrecoverable
2,046,957.70 2,046,957.70 --- ---
Total
(2) Provision for bad debts withdrawn and returned back (taken back) in this year
Provision for bad debts extract in this year is RMB 538,117.72; bad debts reserve returned back or
taken back in this year is RMB 356,502.97.
54
(3) Classification of other receivables by nature
Book balance at the end of the Book balance at the beginning
Fund nature
year of the year
Earnest money 1,550,000.00 4,753,400.00
Employees deposit 3,883,802.72 4,091,754.69
Creditor’s right from auctions 1,209,273.00 1,209,273.00
The purchase payment of land 86,025,400.00 3,678,200.00
To offset tariff --- 430,723.08
Others 511,773.52 1,694,273.65
Total 93,180,249.24 15,857,624.42
（4）The top five other accounts receivable
Proportion in Year-end
Debtors total year-end balance of
Fund nature Ending balance Aging
Ranking balance of other provision for
receivables (%) bad debts
Within 1
Land
Customer I 86,025,400.00 year,1-2year 92.32 ---
acquisition
s
bid fund use
Customer II 1,500,000.00 1-2years 1.61 1,500,000.00
for land
Within 1
Customer III deposit 965,087.36 year,1-2year 1.04 152,334.17
s
Within 1
Customer I V deposit 200,000.00 0.21 10,000.00
year
Within 1
Customer IV others 98,836.28 0.11 ---
year
Total --- 88,789,323.64 --- 95.29 1,662,334.17
NOTE: Compared to the opening balance, the closing balance of other receivables increased by RMB
77,322,624.82, with the increase rate of 487.61%. The purchase payment of land and increasing
guarantee for project increased was the main reason.
5. Inventories
(1)Inventories Classification
Closing Balance Opening Balance
Items Book Net Book Provisio Net Book
Provision Book Balance
Balance Balance n Balance
Raw
596,830.85 --- 596,830.85 906,724.95 --- 906,724.95
Material
Cost of
production 61,739.48 --- 61,739.48 565,568.78 --- 565,568.78
Finished 13,571,110.1 161,182.
127,945.20 13,443,164.95 16,200,791.75 16,039,609.55
goods 5 20
Circulation
materials 18,498.40 --- 18,498.40 18,498.40 --- 18,498.40
55
Items Closing Balance Opening Balance
Consumpti
ve
669,082.
biological 130,431.42 5,795.58 124,635.84 2,827,887.88 2,158,805.69
19
assets
Developme 432,613,281.
--- 432,613,281.99 490,087,338.82 --- 490,087,338.82
nt costs 99
Product
172,383,223.
developme --- 172,383,223.21 5,936,739.90 --- 5,936,739.90
21
nt
619,375,115. 830,264.
Total 133,740.78 619,241,374.72 516,543,550.48 515,713,286.09
50 39
(2)Provision for diminution in value of inventories
Increase during the
Decrease during the current
current accounting Closing
Category Opening Balance accounting period
period Balance
Accrual Other Reversal Written off Other
Finished goods 161,182.20 --- --- --- 33,237.00 --- 127,945.20
Consumptive
biological 669,082.19 --- --- --- 663,286.61 --- 5,795.58
assets
Total 830,264.39 --- --- --- 696,523.61 --- 133,740.78
Note:After a comprehensive check of inventories at end of the year, provision for obsolete stock would
be extracted or adjusted depend on the less one between the cost and the net realizable.Provision for
inventory was made by single item at the end of the year.
(3) Development Cost
Time for Estimation of Estimation of
Closing Opening
Item commenceme time for total investment
Balance Balance
nt completion amount
HuiJingTian 432,613,281.9 490,087,338.8
2013 2016 5.7bilion
Di 9 2
432,613,281.9 490,087,338.8
Total --- --- ---
9 2
(4)Product development
Increase during the Decrease during
Time for Opening Closing
Item current accounting the current
completion Balance Balance
period accounting period
QianY December
5,936,739.90 --- 68,986.02 5,867,753.88
uan 2012
56
Increase during the Decrease during
Time for Opening Closing
Item current accounting the current
completion Balance Balance
period accounting period
Area
HuiJin
August 166,446,483.
gTian --- 166,446,483.31 ---
2015 31
Di
172,314,237.
Total --- 5,936,739.90 166,446,483.31 68,986.02
19
(5)Consumptive biological assets
Item Closing Balance Opening Balance
Chick 7,854.00 421,413.94
Hybrid boar --- 1,348,806.41
Dual boar --- 949,176.52
Boer goat 122,577.42 108,491.01
Total 130,431.42 2,827,887.88
NOTE: Compared to the opening balance , the closing balance of inventories increased by RMB
103,528,088.63,with the increased rate of 20.07%.
6. Other Current Assets
Items Closing Balance Opening Balance
Provisional tax 33,761,457.51 24,131,851.80
Total 33,761,457.51 24,131,851.80
NOTE: Compared to the opening balance , the closing balance of inventories increased by RMB
9,629,605.71,with the increased rate of 39.9%.The provisional tax increased for the growth of the
advance from HuiJing TianDi was the main reason .
7. Long-term equity investments
Increase,decrease in
Accountin Investment at Opening
Invested Company this period(decrease Closing
g method cost Balance
-)
RunHua (TianJin) Water Saving Equity
2,000,000.00 2,229,410.53 114,563.90 2,3
Tech Co., Ltd. method
MinFeng (TianJin) Material
Equity
Industry Chemical Trading Co., 4,410,000.00 4,455,549.93 --- 4,4
method
Ltd.
Total --- 6,410,000.00 6,684,960.46 114,563.90 6,7
Stake ratio Voting right ratio Provision for
Cash Di
Invested Company Provision impairment loss in
（%） （%） this p
this period
57
Increase,decrease in
Accountin Investment at Opening
Invested Company this period(decrease Closing
g method cost Balance
-)
RunHua (TianJin) Water Saving
31.75 31.75 --- --- -
Tech Co., Ltd.
MinFeng (TianJin) Material
Industry Chemical Trading Co., 49.00 49.00 --- 4,455,549.93 -
Ltd.
Total --- --- --- 4,455,549.93 -
(1) On October 14 2011, RunHua (TianJin) Water Saving Tech Co., Ltd. was established and obtained
the business liscence, with the registered capital of RMB 6,300 thousand, including RunHua
developing Co., Ltd. Contribute RMB 3000 thousand, accounting for 47.619% of the total share capital,
subsidiary RunHua contribute RMB 2000 thousand, accounting for 31.746% of the total share capital,
LangFang ChunYuan irrigating prject Co., Ltd contribute RMB 1000 thousand, accounting for 15.873%
of total share capital, HePing Zhang contribute RMB 300 thousand, accounting for 4.7619% of total
share capital.
(2) On December 21 2012, MinFeng (TianJin) Material Industry Chemical Trading Co., Ltd. was
established, with the registered capital of RMB 9000 thousand, including MinFeng (ShanXi) Material
Industry Chemical Trading Co., Ltd contribute 459 thousand, accounting for 51% of the total share
capital, subsidiary RunHua contribute RMB 4410 thousand, accounting for 49% of the total share
capital.
8. Fixed assets
(1) Statement of Fixed Assets
Machinery Transportatio Other
Item Buildings Total
equipment n vehicles equipment
I. Original carrying value
1. Beginning
8,095,437.08 1,246,415.43 3,836,318.14 740,355.25 13,918,525.90
balance
2. Increase in the
--- 64,400.00 887,371.42 186,639.71 1,138,411.13
year
(1) Purchasing --- 64,400.00 887,371.42 186,639.71 1,138,411.13
(2) Carried over
from
inventory/fixed --- --- --- --- ---
assets/ intangible
assets
(3) Other increases --- --- --- --- ---
(4) Increase of
corporate --- --- --- --- ---
combination
3. Decrease in the
--- --- 716,610.41 171,162.59 887,773.00
year
58
Machinery Transportatio Other
Item Buildings Total
equipment n vehicles equipment
(1) Disposal --- --- 716,610.41 171,162.59 887,773.00
(2) Carried over to
inventory/fixed
--- --- --- --- ---
assets/ intangible
assets
(3) Other decreases --- --- --- --- ---
4. Ending balance 8,095,437.08 1,310,815.43 4,007,079.15 755,832.37 14,169,164.03
II. Accumulative depreciation and amortization
1. Beginning
1,538,133.00 175,842.36 1,571,208.32 338,660.32 3,623,844.00
balance
2. Increase in the
307,626.60 1,005,288.46 506,566.82 227,528.51 2,047,010.39
year
(1) Withdrawing or
307,626.60 1,005,288.46 506,566.82 227,528.51 2,047,010.39
amortization
(2) Carried over
from
inventory/fixed --- --- --- --- ---
assets/ intangible
assets
(3) Other increases --- --- --- --- ---
3. Decrease in the
--- --- 322,387.72 85,001.81 407,389.53
year
(1) Disposal --- --- 322,387.72 79,479.46 401,867.18
(2) Other
--- --- --- --- ---
transfer-out
(3) Other decreases --- --- --- 5,522.35 5,522.35
4. Ending balance 1,845,759.60 1,181,130.82 1,755,387.42 481,187.02 5,263,464.86
III. Provision for impairment
1. Beginning
--- --- --- --- ---
balance
2. Increase in the
--- --- --- --- ---
year
(1) Withdrawing --- --- --- --- ---
(2) Carried over
from
inventory/fixed --- --- --- --- ---
assets/ intangible
assets
(3) Increase of
corporate --- --- --- --- ---
combination
59
Machinery Transportatio Other
Item Buildings Total
equipment n vehicles equipment
3. Decrease in the
--- --- --- --- ---
year
(1) Disposal --- --- --- --- ---
(2) Carried over to
inventory/fixed
--- --- --- --- ---
assets/ intangible
assets
4. Ending balance --- --- --- --- ---
IV. Book value
1. Ending book
6,249,677.48 129,684.61 2,251,691.73 274,645.35 8,905,699.17
value
2. Beginning book
6,557,304.08 1,070,573.07 2,265,109.82 401,694.93 10,294,681.90
value
(2)Fixed assets which has not completed the property right certificate at the end of the period
The estimated time of
The reason for not completing the
Item Book value obtaining property
property right certificate
certificate
All assets are released of the mortgage,
Houses and
6,249,677.48 transfer procedures have not been Can not expected
buildings
completed yet
合 计 6,249,677.48 --- ---
NOTES: Houses and buildings were originally the collateral for a bank loan of the company’s
predecessor - ChengDe DiXian Textile Corporation and its subsidiary in bankruptcy.They were totally
transferred to the company in bankruptcy reorganization of 2009 . Although the intermediate people's
court of Chengde City in Hebei Province, has issued a “people's court notice for assistance in execution”
to Chengde County Housing and Urban Construction Bureau , The notice requested for assistance in
execution to transfer the Chengde County No.000196 and No.000108 building to the company.
Because many departments are involved , procedures relevant to the release of the collateral are still in
process and cannot do the property transfer.
9. Productive Biological Assets
Planting industr Fishing
Item Husbandry industry Total
y industry
I. Original
carrying value
1. Beginning
--- 1,786,621.96 --- 1,786,621.96
balance
2. Increase in
--- 1,146,405.24 --- 1,146,405.24
the year
(1)Purchasing --- ---
(2）cultivate --- 1,146,405.24 --- 1,146,405.24
60
Planting industr Fishing
Item Husbandry industry Total
y industry
3. Decrease in
--- 2,743,363.59 --- 2,743,363.59
the year
1) Disposal or
discard as --- 2,743,363.59 --- 2,743,363.59
useless
4. Ending
--- 189,663.61 --- 189,663.61
balance
II. Accumulated
depreciation
1. Beginning
--- 1,145,894.25 --- 1,145,894.25
balance
2. Increase in
--- 662,332.37 --- 662,332.37
the year
(1)
--- 662,332.37 --- 662,332.37
Withdrawing
3. Decrease in
--- 1,767,072.77 --- 1,767,072.77
the year
(1) Disposal or
discard as --- 1,767,072.77 --- 1,767,072.77
useless
4. Ending
--- 41,153.85 --- 41,153.85
balance
III. Provision
for impairment
1. Beginning
--- --- --- ---
balance
2. Increase in
--- --- --- ---
the year
3. Decrease in
--- --- --- ---
the year
4. Ending
--- --- --- ---
balance
IV. Book value
1. Ending book
--- 148,509.76 --- 148,509.76
value
2. Beginning
--- 640,727.71 --- 640,727.71
book value
10. Intangible assets
(1) Details of intangible assets
Item Land use rights Software other Total
61
I. Original
carrying value
1. Beginning
13,238,578.04 228,000.00 --- 13,466,578.04
balance
2. Increase in the
968,608.96 --- --- 968,608.96
year
(1) Purchasing 968,608.96 --- --- 968,608.96
(2) Increase of
corporate --- --- --- ---
combination
(3) Other
--- --- --- ---
increases
3. Decrease in the
7,164,395.99 --- --- 7,164,395.99
year
(1) Disposal 7,164,395.99 --- --- 7,164,395.99
(2) Decrease of
corporate --- --- --- ---
combination
(3) Other
--- --- --- ---
decreases
4. Ending balance 7,042,791.01 228,000.00 --- 7,270,791.01
II. Accumulated amortization
1. Beginning
1,375,465.07 188,600.00 --- 1,564,065.07
balance
2. Increase in the
202,790.98 39,400.00 --- 242,190.98
year
(1) Withdrawing 202,790.98 39,400.00 --- 242,190.98
(2) Increase of
corporate --- --- --- ---
combination
(3) Other
--- --- --- ---
increases
3. Decrease in the
927,975.61 --- --- 927,975.61
year
(1) Disposal 927,975.61 --- --- 927,975.61
(2) Decrease of
corporate --- --- --- ---
combination
(3) Other
--- --- --- ---
decreases
62
4. Ending balance 650,280.44 228,000.00 --- 878,280.44
III. Provision for impairment
1. Beginning --- --- --- ---
balance
2. Increase in the --- --- --- ---
year
(1) Withdrawing --- --- --- ---
(2) Other --- --- --- ---
increases
3. Decrease in the --- --- --- ---
year
(1) Disposal --- --- --- ---
(2) Other --- --- --- ---
decreases
4. Ending balance --- --- --- ---
IV. Book value
1. Ending book
6,392,510.57 --- --- 6,392,510.57
value
2. Beginning
11,863,112.97 39,400.00 --- 11,902,512.97
book value
NOTE: Compared to the opening balance, the closing balance of Intangible assets decreased by RMB
5,510,002.40, with the decrease rate of 46.29%. The main reason for the increase was some land had
been taken back by Chengde County land reserve center.
11.Development expenditure
Increase in the year Decrease in the year
Beginning Development Included in the Ending
Item fix as intangible
balance expenditure Other current profits and balance
assets
inside losses
The airship
--- 172,416.18 --- --- --- 172,416.18
project
Total --- 172,416.18 --- --- --- 172,416.18
12. Goodwill
(1) Original value of goodwill
The company Increase in the year Decrease in the year
be invested or Beginning Ending
Fromed of
the events balance Other Disposal Other balance
corporate
formed
63
goodwill combination
RunHua 1,809,762.89 --- --- --- --- 1,809,762.89
Total 1,809,762.89 --- --- --- --- 1,809,762.89
(2)Provision for goodwill
Decrease of this
Beginning Increase of this year Ending
Invested company year
balance balance
Withdrawing Others Disposal Others
1,809,762.8
RunHua --- 1,809,762.89 --- --- ---
9
1,809,762.8
合 计 --- 1,809,762.89 --- --- ---
9
NOTE: Runhua was under deficit in the year 2014,2015,and failed to meet the performance
objectives.Goodwill impairment has already happened.
13. Long Term Deferred Expenses
Amortization
Opening Increase in Other decrease Closing
Items amount in
Balance this period in this period Balance
this period
Office’s
388,069.20 --- 185,715.23 --- 202,353.97
Decoration fee
Factory
8,199,957.96 --- 8,199,957.96 --- ---
Decoration fee
Total 8,588,027.16 --- 8,385,673.19 --- 202,353.97
14. Deferred income tax assets and deferred income tax liabilities
(1) Non-offset deferred income tax assets
Ending balance Beginning balance
Item Deductible Deferred Deductible Deferred
temporary income tax temporary income tax
difference assets difference assets
Provision for assets impairment 775,645.41 3,102,581.64 834,223.19 3,336,892.76
Total 775,645.41 3,102,581.64 834,223.19 3,336,892.76
(2) Unconfirmed details of deferred income tax assets
Item Ending balance Beginning balance
Deductible temporary
2,369,994.88 1,588,068.88
difference
Deductible losses 79,895,176.78 105,931,221.32
Total 82,265,171.66 107,519,290.20
Whether sufficient taxable income in the future can be obtained is uncertain, so there is no deductible
temporary difference and deductible losses deferred income tax assets which can be recognized as
64
deferred income tax assets in this period.
(3) Unrecognized deductible losses of deferred income tax assets will be expired at the end of
following years
Amount at the end of Amount at the
Year Remarks
the year beginning of the year
2015 --- 1,707,747.80 ---
2016 --- --- ---
2017 12,891,377.63 22,943,240.64 ---
2018 --- --- ---
2019 30,576,125.82 81,280,232.88 ---
2020 34,719,925.53 --- ---
Total 79,895,176.78 105,931,221.32 ---
15. Other non-current assets
Items Closing Balance Opening Balance
Advance payment of housing 5,201,365.53 5,201,365.53
Total 5,201,365.53 5,201,365.53
NOTE:the balance of other non-current assets were the advance payment of housing from Runhua.
16. Provision for assets impairment
Decrease in this
Opening Increase in Closing
Items period
Balance this period Balance
Reversal Written off
Bad debt provision 5,003,383.07 2,764,035.35 394,040.47 --- 7,373,377.95
Provision for
obsolete stock 830,264.39 --- 696,523.61 --- 133,740.78
Impairment
provision for 1,809,762.89 --- --- --- 1,809,762.89
goodwill
1,090,564.
Total 7,643,410.35 2,764,035.35 --- 9,316,881.62
08
17. Accounts payable
(1) Accounts payable
Item Ending balance Beginning balance
Payment of construction 22,867.00 318,150.00
Payment of raw material 25,947,762.55 4,613,124.04
Payment of goods 8,813,034.75 5,494,646.37
Payments of equipments 80,000.00 ---
Others 149,570.00 ---
65
Total 35,013,234.30 10,425,920.41
(2) Significant accounts payable aging over one year
Company Name Closing Balance Reason for unsettle
HanYi(Handan) Construction Co., Ltd. 2,400,000.00 before settlement period
XingCheng(Chengde) Construction Co.,
146,058.39 before settlement period
Ltd.
LiCheng(Chengde) Construction Co., Ltd. 44,129.43 before settlement period
Hebei Fire Products and Quality
37,170.00 before settlement period
Experience Station
Chao Xiang(Chengde)Water Conservancy
22,867.00 before settlement period
Construction Team
Long Teng(Chengde) Concrete Barrier
14,562.65 before settlement period
Construction Co., Ltd.
Total 2,664,787.47 ---
NOTE:Compared to the opening balance, the closing balance increased by RMB 24,587,313.89,
with the increase rate of 235.83%, the main reason for the increase was that the projects payable and
goods payable are still before the settlement date .
18. Advance from customers
(1) List of advance from customers by aging：
Aging Closing Balance Opening Balance
Within 1 year 435,991,938.57 290,954,152.81
Total 435,991,938.57 290,954,152.81
(2) List of advance from customers by item：
Propotion
Opening Closing Completion
Item of pre-sale
Balance Balance time estimated
(%)
House’ receivable in 430,730,271. 277,140,032.
December 2016 54.70
advance-Project Of HuiJing TianDi 19 59
12,929,706.1
Goods’ receivable in advance 3,955,757.50 --- ---
5
Heating fee receivable in advance 1,113,841.30 --- --- ---
Others 192,068.58 884,414.07 --- ---
Total 435,991,938. 290,954,152.
--- ---
57 81
(3) There is no receivable in advance from the company where shareholders with more than 5%
(including 5%) voting share belong to at the end of year.
(4) There is no receivable in advance from any related parties.
(5) Other notes:
Advance from customers increased by RMB 145,037,785.76,comparing the beginning balance,
with a rise of 49.85%.Receivable from HuiJingTianDi’s house pre-sale increased was the main reason.
66
19. Payroll payable
(1) List of Payroll payable:
Opening Increase in Decrease in this Closing
Item
Balance this period period Balance
The short-term salary 126,700.56 4,165,645.67 4,288,609.11 3,737.12
Post-employment
9,393.00 918,749.69 921,950.39 6,192.30
benefit-defined contribution
Termination benefits 6,097,486.60 --- 6,097,486.60 ---
Total 6,233,580.16 5,084,395.36 11,308,046.10 9,929.42
NOTE:Termination benefits RMB 6,097,486.60 was the resettlement fee paid for staffs by
subsidiary company XingYe Paper .
(2) List of the short-term salary:
Opening Increase in Decrease in
Item Closing Balance
Balance this period this period
1.Wage, bonus, allowance and
105,516.34 3,234,954.58 3,340,470.92 ---
subsidy
2.Employee welfare --- 318,612.60 318,612.60 ---
3.Social insurance charges 20,556.00 289,514.29 306,961.39 3,108.90
Including：a. Essential medical
20,180.70 210,540.87 227,860.07 2,861.50
insurance charges
b.Supplement medical
--- --- --- ---
insurance charges
c. Work related injury --- 59,050.77 59,050.77 ---
d. Maternity insurance 375.30 19,922.65 20,050.55 247.40
4.Housing fund --- 314,161.56 314,161.56 ---
5.Trade union and educational
628.22 8,402.64 8,402.64 628.22
fees
6.Short-term accumulation
--- --- --- ---
of absence with pay
7.Short-term profit sharing
--- --- --- ---
plan
8.Other --- --- --- ---
Total 126,700.56 4,165,645.67 4,288,609.11 3,737.12
（3）List of Defined Contribution Plan(DCP):
Increase in Decrease in
Item Opening Balance Closing Balance
this period this period
Essential endowment
8,624.60 856,770.68 859,709.58 5,685.70
insurance
Unemployment insurance 768.40 61,979.01 62,240.81 506.60
Total 9,393.00 918,749.69 921,950.39 6,192.30
67
20. Tax payable
Items Closing Balance Opening Balance
VAT 971.36 1,923.47
Business tax 3,663.76 94,797.17
Urban construction tax 231.26 6,027.43
Land VAT --- ---
Corporate income tax --- 3,953,440.14
Land use tax --- 2,993,193.91
Individual taxable income 10,315.24 1,433.95
Education surcharge 137.96 3,006.46
Stamp tax 5,930.73 68,843.33
Local education surcharge 93.30 2,004.31
Housing property tax --- 2,897,994.17
River defense fare --- 508.33
Total 21,343.61 10,023,172.67
NOTE: Total tax payable decrease by RMB 10,001,829.06 at the end of the year ,comparing with the
amount in the beginning, with a drop of 99.79%, for the reason that XingYe Paper has make the
process of liquidation and nullification .
21. Other accounts payable
(1) Other accounts payable listed by nature of the account
Categories Closing Balance Opening Balance
Deposit and margin 1,276,413.11 13,859,648.05
Loan --- ---
The intermediary expenses --- 370,000.00
Intercourse funds 10,020,000.00 341,650.42
Withholding and remitting tax 19,480.82 21,518.37
Others 1,430,207.77 32,011.33
Total 12,746,101.70 14,624,828.17
(2) There is no accounts payable from the company where shareholders with more than 5%
(including 5%) voting share belong to at the end of the reporting period.
(3)There is no important accounts payable with an aging of over 1 year at the end of the
reporting period.
(4) Other accounts payable in significant amount：
Item Amount Nature or content
Chengjin Liu 10,000,000.00 Current account
Cheng Jin (ChengDe) Trading Co., Ltd. 500,000.00 Deposit of lease
Ling Rui(ChengDe) Accounting service Co.,
450,000.00 Taxation consultancy fees
Ltd.
Total 10,950,000.00 ---
68
69
22.Share capital
Increase (+) and decrease (-) in this period
Items Opening Balance Issue new Reserves transfer to Closing Balance
Share bonus Other Sub-total
shares shares
1 limited shares
(1)shares held by government --- --- --- --- --- --- ---
(2)shares held by State-own Legal-person --- --- --- --- --- --- ---
(3)shares held by other domestic capital --- --- --- --- --- --- ---
Including: shares held by Legal person 23,147,309.00 --- --- --- --- --- 23,147,309.00
Shares held by natural person 221,652,691.00 --- --- --- --- --- 221,652,691.00
(4)shares held by foreign capital --- --- --- --- --- --- ---
Including: shares held by foreign Legal
--- --- --- --- --- --- ---
person
shares held by foreign nature
--- --- --- --- --- --- ---
person
(5) Other --- --- --- --- --- --- ---
Sub-total for limited shares 244,800,000.00 --- --- --- --- --- 244,800,000.00
2．Unlimited shares ---
(1) Ordinary shares in RMB --- --- --- --- --- --- ---
(2) Domestic listed foreign shares 461,520,000.00 --- --- --- --- --- 461,520,000.00
(3) Foreign listed foreign shares --- --- --- --- --- --- ---
(4) Other --- --- --- --- --- --- ---
Sub-total for unlimited shares 461,520,000.00 --- --- --- --- --- 461,520,000.00
Increase (+) and decrease (-) in this period
Items Opening Balance Issue new Reserves transfer to Closing Balance
Share bonus Other Sub-total
shares shares
Total 706,320,000.00 --- --- --- --- --- 706,320,000.00
23. Capital reserves
Opening Increase in this Decrease in
Items Closing Balance
Balance period this period
1 .Capital premium (share capital premium) --- --- --- ---
(1) Capital from investors 390,597,169.41 3,401,400.00 --- 393,998,569.41
(2) Effect of business combination under the
--- --- --- ---
common control
Sub-total 390,597,169.41 3,401,400.00 --- 393,998,569.41
2.Other capital reserve* 65,873,219.23 --- --- 65,873,219.23
Total 456,470,388.64 3,401,400.00 --- 459,871,788.64
NOTE:The amount increased in this period was RMB3,401,400.00 ,came from the Performance
bonuses for big shareholder.
24. Surplus reserves
Increase in this
Items Opening Balance Decrease in this period Closing Balance
period
Statutory surplus reserves 76,791,550.17 --- --- 76,791,550.17
Total 76,791,550.17 --- --- 76,791,550.17
25. Retained profits
Withdrawal or
Items Closing Balance
allocation proportion
Opening balance of retained profits before
-949,599,922.37 ---
adjustments
Total opening balance of retained profits before
--- ---
adjustments (increase+, decrease -)
Opening balance of retained profits after -949,599,922.37 ---
adjustments
Add: Net profit attributable to owners of the 58,872,707.12 ---
Company
--- ---
Less: Withdrawal of statutory surplus reserves
---
---
Withdrawal of discretional surplus reserves
---
---
Dividend of common stock payable
Dividend of common stock transfer into share --- ---
capital
Add: Other transfer --- ---
Less: surplus reserves for recovery of loss --- ---
Closing Balance -890,727,215.25 ---
72
26. Revenues and operating costs
(1) Classification of Revenues and operating costs
Items This period Last Period
Business income 141,221,936.00 322,502,631.63
Principal business income 139,960,362.91 321,397,845.14
Other business income 1,261,573.09 1,104,786.49
Business cost 132,726,960.01 325,795,009.31
Principal business cost 131,825,386.92 324,806,821.49
Other business cost 901,573.09 988,187.82
(2) Principal business income and cost (by industry)
This period Last Period
Industry
Income Cost Income Cost
Agriculture 3,689,064.91 5,747,403.41 5,642,269.36 7,487,431.46
315,629,299.9
Commerce 99,654,943.04 98,793,309.48 312,436,023.98
5
Real Estate industry 36,501,825.04 27,216,297.96 3,319,551.80 1,690,090.08
Tourism and
114,529.92 68,376.07 --- ---
restaurant
324,806,821.4
Total 139,960,362.91 131,825,386.92 321,397,845.14
9
(3) Principal business income and cost (by products)
This period Last Period
Product
Income Cost Income Cost
Agriculture product 3,689,064.91 5,747,403.41 5,642,269.36 7,487,431.46
315,629,299.9
Chemical Material 97,624,160.58 97,500,069.15 312,436,023.98
5
Heating and Property
2,030,782.46 1,293,240.33 --- ---
management
Robots and robot
114,529.92 68,376.07 --- ---
vision system
Real Estate 36,501,825.04 27,216,297.96 3,319,551.80 1,690,090.08
Including:
90,000.00 68,986.02 3,319,551.80 1,690,090.08
QianYuan Aera
Hui Jing Tian Di 36,411,825.04 27,147,311.94 --- ---
324,806,821.4
Total 139,960,362.91 131,825,386.92 321,397,845.14
9
(4) Principal business income and cost (by district)
73
This period Last Period
District
Income Cost Income Cost
Chengde District 42,221,672.41 34,256,941.70 8,961,821.16 9,177,521.54
315,629,299.9
Tianjin District 97,624,160.58 97,500,069.15 312,436,023.98
5
Zhejiang District 114,529.92 68,376.07 --- ---
324,806,821.4
Total 139,960,362.91 131,825,386.92 321,397,845.14
9
(5) The operating income from the top five customers
Proportion of
Principal business
Customer name company’s total
income
business income(%)
BoLv (BeiJing) Tech Co., Ltd. 13,000,940.17 9.29
RunGuan (ZiBo) chemical industry sale
8,431,330.11 6.02
Co.Ltd
XuXin trading (ShangHai) Co., Ltd. 7,199,414.50 5.14
WeiNaKang (AnHui) Co., Ltd. 6,295,972.23 4.50
Hua Su (Shan Xi) plastic packaging trading
5,103,038.46 3.65
Co., Ltd.
Total 40,030,695.47 28.60
27. Business tax and surcharges
Items This Period Last Period Tax rate
Business tax 2,205,002.33 549,375.17 5%
Urban maintenance and
110,718.39 26,857.53 5%
construction tax
Education surcharge 66,250.23 16,226.65 3%
Local education surcharge 44,168.18 11,817.73 2%
Super rate
Land VAT 773,431.93 3,959.57
progressive rate
Others 482,899.08 139.38 ---
Total 3,682,470.14 608,376.03 ---
NOTE: Compared to the opening balance, the closing balance of business tax and surcharges increased
by RMB 3,074,094.11, with a rise of 505.30% .The main reason for the increase was from the house
sales of HuiJing Tiandi.
74
28. Sales expenses, Administrative expenses and financial expenses
(1)Sales expenses
Item This Period Last Period
Printing expense 1,800.00 16,388.00
Repair expense 10,809.02 37,985.06
Warehouse expense 31,673.06 16,027.89
Wages 179,766.00 333,297.73
Advertise expense 104,790.00 141,992.00
Harbor expense 693,698.50 153,068.85
Manufacturing expense for unfolded plank --- 127,191.00
Contract fee 268,860.30 569,080.62
Transportation expense 1,048,992.17 2,098,042.30
Depreciation/ Amortization 3,580.88 437,332.06
Material consumption 20,800.00 88,314.00
Product packing 19,134.01 90,748.83
Others 27,935.94 189,761.73
Total 2,411,839.88 4,299,230.07
(2)Administrative expenses
Item This Period Last Period
Wages 5,887,235.45 5,157,622.44
Intermediary fees 2,359,318.07 1,157,509.29
Land use tax 993,320.75 2,866,606.56
Business entertainment 1,854,692.89 1,673,528.24
Accumulated amortization 10,181,276.35 1,812,529.94
Travel expense 1,585,708.09 1,292,323.42
Welfare 2,339,685.61 950,060.65
Office expense 914,658.13 629,720.11
Insurance 720,528.82 895,186.95
Stamp tax 117,074.73 515,735.21
Transportation 325,913.19 342,033.01
Low-valued consumption goods 43,284.00 103,321.43
75
Item This Period Last Period
Housing provident fund 239,677.56 201,245.00
Long-term deferred expenses 185,715.23 138,644.68
Repair charge 281,839.19 382,736.95
Material consumption 407,446.75 378,471.90
Educational fund 240.00 692,090.36
Rental fees 293,460.40 311,998.78
Insurance expenses 409,398.55 305,353.89
Others 1,556,579.86 1,744,036.87
Total 30,697,053.62 21,550,755.68
(3) Financial expenses
Item This Period Last Period
Interest expense 541,657.65 1,855,248.49
Less: interest income 562,040.16 354,411.83
Exchange gain or loss --- 126,499.41
Bank charges 53,472.42 188,687.11
Total 33,089.91 1,816,023.18
NOTE: The financial expenses in this period decreased by RMB 1,782,933.27, with the reduction rate
of 98.18%, for the reason of the reduction from the interest expense within the past period .
29. Asset impairment loss
Item This Period Last Period
Provision for bad debt 2,648,362.86 1,588,068.88
Provision for long-term equity investment 4,455,549.93 ---
Provision for inventory -696,523.61 830,264.39
Provision for goodwill --- 1,809,762.89
Total 6,407,389.18 4,228,096.16
NOTE: The asset impairment loss increased by RMB 2,179,293.02, with a rise of 51.54%,for the
reason that the provision for long-term equity increased in this period.
30. Investment income
Item This Period Last Period
1.Financial assets --- ---
Investment income from bank financial
--- 171,000.00
products in this period
76
Item This Period Last Period
2.Long-term equity --- ---
Long-term equity (investment income
114,563.90 58,054.97
accounted by equity)
3.Investment income arising from
11,309,875.93 ---
disposal of long-term equity investments
Total 11,424,439.83 229,054.97
31. Non-operating gains
Recorded in the
amount of the
Item This Period Last Period non-recurring
gains and losses
this period
Disposal of non-current assets 104,022,338.58 113,807,781.40 104,022,338.58
Profit from disposal of fixed
--- 730.00 ---
assets
Profit from disposal of
113,647,960.69
intangible assets 103,610,779.62 103,610,779.62
Profit from disposal of
159,090.71
biological assets 411,558.96 411,558.96
Government subsidies ---
2,720.00 2,720.00
Other 3,892,791.31
197,192.94 197,192.94
Total 104,222,251.52 117,700,572.71 104,222,251.52
(1) Government subsidies recorded into current profits and losses
Relevant to
Items This period Last period
assets/income
Related to the
Financial subsidy 2,720.00 ---
income
Total 2,720.00 --- ---
NOTE:Chengde County land reserve center reserved Cheng County (2013) No.22 Land of company
according to "land reserve management approach" issued by the Ministry of land and resources and the
Chengde County Government. The net revenue of transfer in this period was RMB 103,610,779.62.
32. Non-operating expenses
Recorded in the
amount of the
Item This period Last period non-recurring
gains and losses
in this period
Disposal of non-current assets 776,688.73 989,275.20 776,688.73
Including: Disposal of fixed
263,014.00 --- 263,014.00
assets
Disposal of intangible assets --- 787,348.56 ---
77
Recorded in the
amount of the
Item This period Last period non-recurring
gains and losses
in this period
Disposal of biological assets 513,674.73 201,926.64 513,674.73
Loss on debt restructuring --- --- ---
Loss on exchange of --- ---
---
non-monetary assets
Donations contributed 2,020,000.00 1,500,000.00 2,020,000.00
Including: Public welfare
2,020,000.00 1,500,000.00 2,020,000.00
donations contributed
Compensation and Tax penalty 3,310,100.39 3,469,375.11 3,310,100.39
Inventory loss of fixed assets --- --- ---
Other 72,426.06 1,989,035.07 72,426.06
Total 6,179,215.18 7,947,685.38 6,179,215.18
NOTE: Non-operating expense decreased by RMB1,768,470.20, with a drop of 22.25% in this period.
33. Income tax expense
(1) Lists of income tax expense
Item This Period Last Period
Current income tax calculated based on tax
22,302,358.29 951,857.73
law and relevant rules
Deferred income tax adjustment 58,577.78 ---
Total 22,360,936.07 951,857.73
(2)Adjustment process of accounting profit and income tax expense
Item This period
Total profits 81,834,973.52
Current income tax expense accounted by tax and
23,311,916.06
relevant regulations
Influence of different tax rate suitable to subsidiary ---
Influence of income tax adjustment for the internal
---
transaction
Impact from tax preferential rate in certain subsidiaries ---
Influence of income tax before adjustment 58,577.78
Influence of non taxable income ---
78
Influence of not deductible costs, expenses and losses ---
Influence of deductible losses of deferred income tax
-1,009,557.77
assets derecognized used in previous period
Influence of deductible temporary difference or
deductible losses of deferred income tax assets ---
derecognized in reporting period.
Income tax expense 22,360,936.07
NOTE: Income tax expense increase by RMB 21,409,078.34, with the growth of 2249.19%. It brought
by the income from land reserve in this period.
34. Supplementary information to cash flow statement
(1) Other cash receive relevant from operating activities
Item This Period Last Period
Interest income 562,040.16 354,411.83
Current accounts received 40,681,464.92 27,346,389.08
Subsidy income 2,720.00 ---
Other 1,992,784.55 3,892,791.31
Total 43,239,009.63 31,593,592.22
(2) Other cash paid relevant to operating activities
Item This Period Last Period
Expenditure 16,080,175.32 11,849,634.17
Donation expense 2,020,000.00 1,500,000.00
Intercourse funds 51,364,514.05 57,686,317.22
Penalty and late fee 3,310,100.39 3,469,375.11
Other expense 2,101,932.32 1,989,035.07
Total 74,876,722.08 76,494,361.57
(3) Other cash receive relevant from investment activities
Item This Period Last Period
Restricted cash at bank and in hand --- 10,029,217.89
Total --- 10,029,217.89
(4) Other cash paid relevant to investment activities
Item This Period Last Period
79
Item This Period Last Period
Restricted cash at bank and in hand 2,277,554.26 ---
Total 2,277,554.26 ---
(5) Supplemental information for statement of cash flow：
Supplemental information This Period Last Period
1.Adjustments to reconcile net profit to net cash
provided by operating activities:
Net profit 52,369,673.36 73,235,225.77
Add: impairment provision for assets 6,407,389.18 4,228,096.16
Depreciation of fixed assets, consumption & 2,528,200.02
depreciation of fuel and gas, depreciation of
productive biological assets 936,747.64
Amortization for intangible assets 242,190.98 578,052.57
Amortization for long-term prepayment 8,385,673.19 2,280,843.52
Loss on disposal of fixed assets, intangible assets
-112,818,506.20
and other long-term assets -102,834,090.89
Loss upon rejection of fixed assets --- ---
Loss on variance of fair value --- ---
Finance cost -281,429.89 1,855,248.49
Loss in investment -11,424,439.83 -229,054.97
Decrease of deferred tax assets 58,577.78 ---
Increase of deferred tax liability --- ---
Decrease of inventories -102,831,565.02 -325,973,586.16
Decrease of operating receivable account items 17,262,437.97 31,682,338.60
Increase of operating payable account items 151,520,893.38 188,303,218.12
Other --- ---
Net cash flow from operating activities 19,812,057.85 -134,329,924.08
2 Significant investing and financing activities for
non-cash items
Liabilities capitalized --- ---
Convertible bonds payable mature in one year --- ---
Financing leased fixed assets --- ---
3. Net increase (decrease) for cash and cash
equivalents
Closing balance for cash 84,543,677.45 35,582,359.90
80
Supplemental information This Period Last Period
Less: opening balance for cash 35,582,359.90 77,981,488.06
Add: closing balance for cash equivalent --- ---
less：opening balance for cash equivalent --- ---
Net increase (decrease) for cash and cash
48,961,317.55 -42,399,128.16
equivalents
(6) Cash and cash equivalent
Item This Period Last Period
1 Cash 84,543,677.45 35,582,359.90
Including: Cash in hand 70,613.10 33,252.06
Cash at bank 84,473,064.35 35,549,107.84
Other cash and cash equivalents --- ---
2 Cash equivalent --- ---
Including: Bond matured within three months --- ---
3 Closing balance for cash and cash equivalents 84,543,677.45 35,582,359.90
35. Restricted the right of use of assets
Item Closing balance Reason
Cash at bank and in hand 3,693,739.53 Housing mortgage deposit
Total 3,693,739.53
VI. Consolidation scope change
1.Set up a subsidiary through the investment in this period
Name of Invest The date to Shareholding Net assets at the end of Net profit at the
subsidiary method set up ratio(%) the period end of the period
HangZhou newly October 13
100 49,998,200.00 -1,800.00
Dongfeng established 2015
Total --- --- --- 49,998,200.00 -1,800.00
Hangzhou Dong Feng was established in October 13, 2015, with a registered capital of RMB 100
million and a paid-in capital of RMB 50 million .
2. The subsidiary which is no longer included in the consolidated scope in this period is
as follows:
Net profit from
Name of Reason for The date to Shareholding Net assets on the date
the beginning to
subsidiary transfer set up ratio(%) of disposal
the date of
81
disposal
Liquidation December 8
Xing Ye Paper 100% -15,918,001.58 0
cancellation 2015
Total --- --- --- -15,918,001.58 0
On October 26 2001, Chengde XingYe Paper Limited company was established by the company
together with (Hong Kong) Zhanxi International Group Co., Ltd. the registered capital of Chengde
XingYe Paper Limited company was 250 million U.S. dollars，the paid-in capital was $100,000,000.00,
Shareholders' contribution accounted for 40% of the registered capital, and in which the company
invested 75,000,000.00 dollar ( accounting for 75%), (Hong Kong)Zhanxi invested 25,000,000.00
dollar ( proportion 25%).On October 28, 2002, according to the regulation of “ reply to investment
increase of joint ventures of Chengde XingYe Paper Limited company” approved by the people's
Republic of China Ministry of foreign trade and Economic Cooperation ( the former of the Ministry of
Commerce ) with the issuance of No.[2001]969, the registered capital was increased to $ 250 million
from $ 10,000 million, The new registered capital had been paid by the two sides in accordance with
the contract, articles of agreement within three years from the date of the business license renewal. The
registered capital of Chengde XingYe Paper Limited Company was not paid fully within the prescribed
period. Chengde XingYe Paper Limited company had been shut down completely suffered from
December 2006 serious loss since the original largest shareholder Wang Shuxian and senior executives
involved in smuggling effect, On December 8, 2008, Hebei province Chengde City Intermediate
People's Court issued the No (2008)13 Chengde Civil Award and confirmed the bankruptcy liquidation
of the application of Chengde XingYe Paper Limited company. On March 11, 2009, Hebei province
Chengde City Intermediate People's Court approved the settlement request of Chengde XingYe Paper
Limited Company according to the Civil Award with No. (2008)13. On May 10, 2009, Hebei province
Chengde City Intermediate People's Court confirmed the settlement agreement reached on May 8, 2009
between Chengde XingYe Paper Limited Company and the creditors and terminated the reconciliation
procedure. On April 23, 2009, the Hebei Provincial Higher People's Court issued No.(2009) 44
Hebei ”criminal Award” and confirmed that Chengde XingYe Paper Limited company was a false
foreign investment enterprise which was registered in the name of the Hong Kong ZhanXi by the
company's original shareholders of Wang Shuxian. In October 2012, the company received civil
conciliation No.[2011]76 from ChengDe Intermediate People's court. The civil conciliation confirmed
the dispute settlement between the company and ShuXian Wang: ShuXian Wang was responsible for
coordinating minority of ChengDe XingYe Paper Co., Ltd to abandon their equity, assisting the
company to complete the liquidation and cancellation of XingYe. After the above works were done, the
company agreed to transfer 20% equity of Suning Banhe Chemical Fiber Facsimile Fabric Co., Ltd,
land of industrial park (34.03 acre), factory (25596.87 square meter) and land of No.131 (44.4 acre) to
ShuXian Wang. On December 8,2015, XingYe Paper made Liquidation cancellation.
VI. Rights and interests in other parties
1. Rights and interests in subsidiary
（1）Organization of enterprise group
82
hareholding ratio
Name of Main Registered Acquisition
Business nature (%)
subsidiary businesses address method
Directly Indirectly
Real Estate
Chengde Development；
Corporate
Nanjiang Real ChengDe textile, clothes
Real Estate consolidation
Estate County, HeBei manufacture, 100 ---
Development under the
Development Province import & export of
same control
Co.,Ltd. *1 clothes, leasing
service
Investment of
new energy, new
material, mining
industry, modern
agriculture project,
ChengDe
ChengDe Real Estate,
NanJiang
Investment County, HeBei construction 100 --- set up
Investment Co.,
Province project; investment
Ltd. *2
management,
investment
consultancy, trade
of import and
export
Production of
ChengDe coarse cereals and
Ecological
NanJiang ChengDe edible fungus;
Agriculture
Ecological County, HeBei Planting of fruit、 --- 100 set up
Planting and
Agriculture Province vegetable and
Breeding
Co., Ltd. *3 Chinese medical
herbs
Production and
Hangzhou
marketing of
Dongfeng ChengDe
Stealth high-grade coated
Stealth County, HeBei 90 --- set up
Technology paper and kraft
Technology Province
liner board paper
Co., Ltd. *4
series
NanJiang Asia International
Investment Co., Trading HongKong,China investment and 100 --- set up
Ltd. *5 trading
83
Research,
development, sales,
technical
Chengde Morsh Energy ChengDe
marketing and
Technology Research and County, HeBei --- 90 set up
technical services
Co., Ltd. *6 Development Province
of grapheme and
its application
materials
Chengde
Property ChengDe Property
HuiJing
management County, HeBei management --- 100 set up
property Co.,
service Province service
Ltd. *7
Runhua Rural
Corporate
Water (Tianjin) International
International consolidation
International TianJing trading of plastic 30 ---
trading not under the
Trade Co., material
same control
Ltd*8
*1. On February 20 2009, Chengde Rongyida Real Estate Development Co., Ltd was established with
registered capital of RMB 10,000,000.00 (Fei Wang contributed RMB 9,000,000.00, accounted for 90%
of the total equity; LiPing Chen contributed RMB 1,000,000.00, accounted for 10% of the total equity).
On July 27 2009, Fei Wang and LiPing Chen transfer 90% of Rongyida’s and 10% of RongYiDa’s
equity to former largest shareholder Rong Chen at the price of RMB 9,000,000.00 and RMB
1,000,000.00 respectively. At the same day, Rong Chen transfer 100% of RongYiDa’s equity to the
company at the price of RMB 1.00. After the transfer, the company held 100% of RongYiDa’s equity.
On April 3, 2014, Chengde Rongyida Real Estate Development Co., Ltd was renamed Chengde
Nanjiang Real Estate Development Co.,Ltd.
*2. On October 9 2012, ChengDe NanJiang Investment Co., Ltd. was established and invested by
Chengde Rongyida Real Estate Development Co., Ltd. The registered capital was RMB 50,000,000.00
and RongYiDa accounted for 100% of NanJiang Investment’s equity. On December 21 2012,
RongYiDa transfer 100% of NanJiang Investment’s equity to the company at the price of RMB
50,000,000.00. After the transfer, the company held 100% of NanJiang Investment’s equity. On
January 6 2013, NanJiang increase share capital of NanJiang Investment by RMB 40,000,000.00. After
the increment, the registered capital of NanJiang Investment reach RMB 90,000,000.00.
*3. On October 24 2012, ChengDe NanJiang Ecological Agriculture Co., Ltd. established and invested
by ChengDe NanJiang Investment Co., Ltd. The registered capital was RMB 5,000,000.00 and
NanJiang Investment held 100% of Ecological Agriculture’s equity. On April 18 2013, NanJiang
Investment increase share capital of NanJiang Ecological Agriculture by RMB 5,000,000.00. After the
increment, the registered capital of NanJiang Ecological Agriculture reach RMB 10,000,000.00.
*4. On October 13, 2015, Hangzhou Dongfeng Stealth Technology Co., Ltd.(“Hangzhou Dongfeng”)
was invested by NanJiang and Eagles Men Aeronautic Science and Technology Group Co.,Ltd , with
the register capital of RMB 100,000,000.00,and the paid-in capital of RMB 50,000,000.00: NanJiang
contribute RMB 45,000,000.00, accounting for 90% of the total share capital; agles Men Aeronautic
84
Science and Technology Group Co.,Ltd contribute RMB 5,000,000.00, accounting for 10% of the total
share capital.
*5. On November 14, 2013, NanJiang Asia Investment Co., Ltd. (“NanJiang Asia”) was invested by
NanJiang, with the register capital of USD 20 million. Paid-in share capital is USD 797,538.34 and the
register place is Hong Kong.
*6. On January 24, 2013, Chengde Morsh Technology Co., Ltd. (“Morsh Technology”) was invested
by NanJiang and Morsh (NingBo) Technology Co., Ltd, with the register capital of RMB
50,000,000.00: NanJiang contribute RMB 45,000,000.00, accounting for 90% of the total share capital;
Morsh (NingBo) Technology contribute RMB 5,000,000.00, accounting for 10% of the total share
capital.
*7. On November 18, 2013, Chengde HuiJing property Co., Ltd (“HuiJing Property”) was invested by
NanJiang Investment, with the register capital of RMB 500,000.00. NanJiang Investment contributes
RMB 500,000.00, accounting for 100% of share capital.
*8. Runhua Rural Water (Tianjin) International Trade Co., Ltd. (“RunHua”) is a limited liability
company registered through TianJing BinHai New District Administration for Industry and Commerce
(Runhua’s business license is 120192000028688). The initial registered capital is RMB 30 million,
including: Runhua Rural Water developing Co., Ltd contribute 4 million, accounting for 13.34% of the
total registered capital, BaoSheng Yang contribute 1 million, accounting for 3.33% of the total
registered capital, QianYing Wang contribute 2 million, accounting for 6.67% of the total registered
capital, PeiWen Ren contribute 2.01 million, accounting for 6.70% of the total registered capital,
XiaoFan Zhang contribute 1 million, accounting for 3.33% of the total registered capital, ChunHong
Lan contribute 9.03 million, accounting for 30.10% of the total registered capital, QinHua Zhao
contribute 7 million, accounting for 23.33% of the total registered capital, ZhengHong Jia contribute 3
million, accounting for 10.00% of the total registered capital, Kai Li contribute 0.96 million,
accounting for 3.20% of the total registered capital.
On June 25 2013, according to the equity’s transfer agreement, ChunHong Lan and QinHua Zhao
transfer 6.67% and 23.33% of share capital respectively to NanJiang. After the transfer, Nanjiang
contribute 9 million, accounting for 30% of the total share capital. After the transfer, the capital ratio is:
Runhua Rural Water developing Co., Ltd contribute 4 million, accounting for 13.34% of the total
registered capital, BaoSheng Yang contribute 1 million, accounting for 3.33% of the total registered
capital, QianYing Wang contribute 2 million, accounting for 6.67% of the total registered capital,
PeiWen Ren contribute 2.01 million, accounting for 6.70% of the total registered capital, XiaoFan
Zhang contribute 1 million, accounting for 3.33% of the total registered capital, ChunHong Lan
contribute 7.03 million, accounting for 23.43% of the total registered capital, ZhengHong Jia contribute
3 million, accounting for 10.00% of the total registered capital, Kai Li contribute 0.96 million,
accounting for 3.20% of the total registered capital, Nanjiang contribute 9 million, accounting for 30%
of the total share capital.
2. Change of owner’s equity share in subsidiaries and subsidiaries still under control
Not Applicable.
3. Equity in joint ventures or associated enterprises
Important joint ventures or associated enterprises
85
Name of joint hareholding ratio Accounting
Main
ventures or (%)
business Registered place Business nature treatment
associated
place method
enterprises Directly Indirectly
Joint venture
MinFeng (TianJin)
Material industry
Tianjin Tianjin International trade --- 31.75 equity
chemical industry
Co.Ltd
Agricultural water
Runhua Rural Water
saving technology
(Tianjin)Water
Tianjin Tianjin development, --- 49 equity
Saving Technology
transfer, promotion
Co., Ltd
services
VII. Related parties and related transaction
1. Relation of affiliated parties
（1） Controlling shareholder and ultimate controller
The company has no parent company. The related parties with controlling relationship of the
Company refer to Mr. Rong Chen, who held 29.49% equity of the Company.
（2）Subsidiary
See VIII-1-(1) - Organization of enterprise group.
（3） Joint ventures and associated enterprises
Name of related parties Relationship Organizational Code
MinFeng (TianJin) Material industry chemical
Joint venture 05874083-7
industry Co.Ltd
Runhua Rural Water (Tianjin)
Joint venture 58327621-9
Water Saving Technology Co., Ltd
（4）Other related party:
Name of related parties Relationship
Runhua Rural Water Industrial development Co. The controller of Joint venture
MinFeng (ShanXi) Material industry chemical industry
The controller of Joint venture
Co.Ltd
2. Related transactions
（1）The subsidiaries which are under control in the consolidation ,its transaction with each other
and with parent company and have already been set off in consolidation scope.
（2）Related transaction regarding purchasing products and obtaining labor services
Not Applicable.
（3）Related transactions regarding selling goods and providing services
Name of related parties Trading content This period Last Period
86
Name of related parties Trading content This period Last Period
MinFeng (TianJin) Material
industry chemical industry Sale goods --- 168,562,321.06
Co.Ltd
Total --- --- 168,562,321.06
（4）Associated managed enterprise
Not Applicable.
（5）Related contract situation
Not Applicable.
（6）Associated rental condition
Not Applicable.
（7） Status of Associated Guarantee
Not Applicable.
（8） Inter-bank lending of affiliated parties
Not Applicable.
（9） Important related transactions with joint investments
Not Applicable.
（10） Re-numeration for key management personnel
Not Applicable.
（11）Key management personnel compensation Unit: RMB 10,000
Item name This period Last period
Key management personnel compensation 190.62 144.29
（12）Accounts receivable from related parties
a. Receivables
Not Applicable.
b . payables
Item name Related party Ending balance Beginning balance
MinFeng (TianJin) Material
Other payables industry chemical industry --- 12,000,000.00
Co.Ltd
MinFeng (TianJin) Material
Deferred revenue industry chemical industry --- 12,032,434.62
Co.Ltd
VIII. Contingency
By the end of December 31, 2015, the closing balance of housing mortgage deposit, for the
purchaser of commercial houses, was RMB 32,470,000.
IX. Other significant events
Not Applicable.
87
X. Commitment
Not Applicable.
XI. Events after the Balance Sheet Date
Not Applicable.
XII. Notes to Main Items of Financial Statements of Parent Company
1. Other receivable
(1)Disclosure of other receivables by category
Closing Balance
Book balance Bad debt provision
Categories
Ratio Book value
Amount Amount Ratio（%）
（%）
Other receivables of individual
account with significant amount
--- --- --- --- ---
and accrued for provision for
bad debts
Other accounts receivable
withdrawn provision for bad
14,087,692.95 99.51 194,127.22 1.38 13,893,565.73
debts based on credit risk
feature combination
Other receivables of individual
account with insignificant
70,000.00 0.49 70,000.00 100.00 ---
amount and accrued for
provision for bad debts
Total 14,157,692.95 100.00 264,127.22 1.87 13,893,565.73
Continue:
Opening Balance
Categories Book balance Bad debt provision
Book value
Amount Ratio（%） Amount Ratio（%）
Other receivables of individual
account with significant amount
--- --- --- --- ---
and accrued for provision for
bad debts
Other accounts receivable
withdrawn provision for bad
16,687,262.55 99.58 49,078.42 0.29 16,638,184.13
debts based on credit risk
feature combination
Other receivables of individual
account with insignificant
70,000.00 0.42 70,000.00 100.00 ---
amount and accrued for
provision for bad debts
119,078.4
Total 16,757,262.55 100.00 0.71 16,638,184.13
2
a. Other receivables which single amount is significant and bad debts reserve is withdrawn at the
end of the year.
Not Applicable.
b. Other receivable with provisions of bad debts accrued by aging analysis method in the portfolio
88
Closing Balance
Aging
Other receivables Provision for bad debts Accruing proportion (%)
Within 1 year 660,362.94 33,018.15 5
1 to 2 years 805,545.36 161,109.07 20
2 to 3 years --- --- 50
Over 3 years --- --- 100
Total 1,465,908.30 194,127.22 13.24
C. Other receivable with provisions of bad debts accrued by other method in the portfolio
Closing Balance
Aging Other Provision for bad Accruing
receivables debts proportion (%)
ChengDe NanJiang
Ecological Agriculture 8,012,123.82 --- ---
Co., Ltd.
Chengde Morsh
284,228.00 --- ---
Technology Co., Ltd.
NanJiang Asia Investment
4,799.86 --- ---
Co., Ltd.
Prepaid for oil 98,836.28 --- ---
Balance payment of land
acquisition Chengde
County Land Reserve 3,678,200.00 --- ---
Center land acquisition
tail
Cement special fund 90,421.00 --- ---
Employee loan 453,175.69 --- ---
Total 12,621,784.65 --- ---
Notes for determining the basis of the portfolio:
In the portfolio, provision for bad debts by other method amounted to RMB0.00,mainly taking
into account of their estimated irrecoverable risk is extremely low.
d.Other receivables of individual account with insignificant amount and accrued for provision for
bad debts at the end of the year
Accruin
g
Accounts Receivable Book Amount Bad debt provision Reasons for Accrual
proport
ion(%)
Expected
Qizhong Yan 70,000.00 70,000.00 100.00
irrecoverable
70,000.00 70,000.00 ---
Total
(2) Provision for bad debts withdrawn and returned back (taken back) in this year
89
Provision for bad debts extract in this year is RMB423,416.78,bad debts reserve returned back or
taken back in this year is RMB278,367.98.
(3) Classification of other receivables by nature
Book balance at the end of the Book balance at the beginning of
Fund nature
year the year
Intercourse fund 8,301,151.68 6,537,617.91
Earnest money --- 3,203,400.00
Employees deposit 1,862,870.77 3,139,131.81
The purchase payment of land 3,678,200.00 3,678,200.00
Others 315,470.50 198,912.83
Total 14,157,692.95 16,757,262.55
（4）The top five other accounts receivable
Year-end
Proportion in total
balance of
year-end balance of
Debtors Ranking Fund nature Ending balance Aging provision
other receivables
for bad
(%)
debts
ChengDe NanJiang
Ecological Agriculture Intercourse fund 8,012,123.82 Within 1 year 56.59 ---
Co., Ltd.
Land Reserve Center
Land acquisition 3,678,200.00 1-2years 25.98 ---
of Chengde County
Within 1
Haipeng Ma Deposit 965,087.36 6.82 152,334.17
year,1-2years
Chengde Morsh Within 1
Intercourse fund 284,228.00 2.01 ---
Technology Co., Ltd. year,1-2years
Guishuang Wu Deposit 200,000.00 Within 1 year 1.41 10,000.00
Total --- 13,139,639.18 --- 92.81 162,334.17
(5) No other receivables are derecognized for the transfer of financial assets.
(6) There was no other receivables which are in termination due to the transfer of financial
assets .
(7) There was no amount of assets and liabilities that are formed by the transfer of other
receivables and the continued involvement.
2. Long-term equity investments
opening balance
Nature
Book balance Bad debt provision Book value Book balance
Subsidiaries 783,852,164.40 626,567,328.03 157,284,836.37 202,284,8
Joint venture/affiliated concern --- --- --- ---
Total 783,852,164.40 626,567,328.03 157,284,836.37 202,284,8
90
(1) Subsidiaries
Im
Accounting Initial Opening Closing
Invested Company Increase decrease a
method investment cost Balance Balance
th
53,114,299.
NanJiang Real Estate 53,114,299.73 --- --- 53,114,299.73 ---
73
90,000,000.
NanJiang Investment 90,000,000.00 --- --- 90,000,000.00 ---
00
626,567,328 626,567,328.0
XingYe Paper 626,567,328.03 --- --- ---
.03 3
9,170,370.0
RunHua Water 9,170,370.00 --- --- 9,170,370.00 ---
0
NanJiang Asia --- 5,000,166.64 --- --- 5,000,166.64 ---
45,000,000.
HangZhou DongFeng --- 45,000,000.00 --- 45,000,000.00 ---
00
823,851,997 626,567,328.0 202,284,836.3
Total 783,852,164.40 45,000,000.00 ---
.76 3 7
(2) No long-term equity investments of Joint venture/affiliated concern.
3. Revenues and operating costs
(1) Classification of Revenues and operating costs
Items This period Last Period
Business income 43,323,398.13 8,217,142.76
Principal business income 36,411,825.04 ---
Other business income 6,911,573.09 8,217,142.76
Business cost 28,048,885.03 988,187.82
Principal business cost 27,147,311.94 ---
Other business cost 901,573.09 988,187.82
(2) Principal business income and cost (by industry)
This period Last Period
Industry
Income Cost Income Cost
Real Estate industry 36,411,825.04 27,147,311.94 --- ---
Total 36,411,825.04 27,147,311.94 --- ---
(3) Principal business income and cost (by products)
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This period Last Period
Product
Income Cost Income Cost
Hui Jing Tian Di 36,411,825.04 27,147,311.94 --- ---
Total 36,411,825.04 27,147,311.94 --- ---
(4) Principal business income and cost (by district)
This period Last Period
District
Income Cost Income Cost
Chengde District 36,411,825.04 27,147,311.94 --- ---
Total 36,411,825.04 27,147,311.94 --- ---
(5) The operating income from the top five customers
Proportion of
Principal business
Customer name company’s total
income
business income(%)
YaLi Wang 2,429,720.00 5.61
LiChao Liu 1,227,800.00 2.83
Wanhai He 842,580.00 1.94
XiaoLe Zhang 668,400.73 1.54
HuaiCheng Li 665,330.19 1.54
Total 5,833,830.92 13.46
4. Supplemental information for statement of cash flow
Supplemental information This period Last Period
1.Adjustments to reconcile net profit to net cash provided by
operating activities:
Net profit -10,356,541.74 157,277,079.27
Add: impairment provision for assets 423,416.78 45,078.42
Depreciation of fixed assets, consumption & depreciation of fuel
193,855.14 155,256.08
and gas, depreciation of productive biological assets
Amortization for intangible assets --- 245,889.05
Amortization for long-term prepayment 42,266.88 38,744.64
Loss on disposal of fixed assets, intangible assets and other
--- -113,647,960.69
long-term assets
Loss upon rejection of fixed assets --- ---
Loss on variance of fair value --- ---
Finance cost --- 572,000.00
Loss in investment -4,608,125.64 ---
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Supplemental information This period Last Period
Decrease of deferred tax assets --- ---
Increase of deferred tax liability --- ---
Decrease of inventories -109,041,412.50 -328,486,677.42
Decrease of operating receivable account items 4,106,813.38 5,934,406.38
Increase of operating payable account items 172,640,873.32 177,036,565.68
Other --- ---
Net cash flow from operating activities 53,401,145.62 -100,829,618.59
2 Significant investing and financing activities for non-cash items --- ---
Liabilities capitalized --- ---
Convertible bonds payable mature in one year --- ---
Financing leased fixed assets --- ---
3. Net increase (decrease) for cash and cash equivalents --- ---
Closing balance for cash 22,671,791.13 17,625,400.53
Less: opening balance for cash 17,625,400.53 5,681,141.82
Add: closing balance for cash equivalent --- ---
less：opening balance for cash equivalent --- ---
Net increase (decrease) for cash and cash equivalents 5,046,390.60 11,944,258.71
XIII. Supplemental information
1. Current non-recurring gains and losses
Items This period Notes
1 Losses/gains on disposal of non-current assets 103,245,649.85 ---
2. Government subsidies included in the current profits and
losses (government subsidies which are closely related to the
2,720.00 ---
Company’s business and received at national statutory
standard and amount are excluded)
3. Gains or loss from delegation investment --- ---
4. Other non- recurring loss and profits other than the above --- ---
5.Gains or loss from the contingency irrelevant with normal
11,309,875.93
operation
6.Other non-operating revenue and expense -5,205,333.51
7. Effect of minority interest on non-recurring losses or gains -6,503,033.76 ---
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Items This period Notes
8. Effect of income tax on non-recurring losses and gains 25,812,092.46 ---
Total 90,043,853.57 ---
Notes: All non-recurring items are disclosed before taxation.
2. Return on equity and earnings per share
Earnings per share
Weighted average of
Profit in the reporting period
Return on equity（%） Basic earnings Diluted earnings
per share per share
Net profit attributable to shareholders holding
18.43 0.08 0.08
ordinary shares of the Company
Net profit attributable to shareholders holding
ordinary shares of the Company after -9.76 --- ---
deducting non-recurring gains and losses
Legal representative: zhaoyongsheng Accounting supervisor: zhaoyongsheng Legal representative of
the accounting firm:liufengguo
Chengde NanJiang Co., Ltd. April 26, 2016
94
