东沣科技集团股份有限公司 2017 年半年度报告全文 Dongfeng Sci-Tech Group CO., LTD SEMI-ANNUAL REPORT 2017 August 2017 1 东沣科技集团股份有限公司 2017 年半年度报告全文 Section I Important Notice, Contents and Paraphrase Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Dongfeng Sci-Tech Group CO., LTD. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole contents. Zhao Yongsheng, Principal of the Company, Zhao Yongsheng, person in charger of accounting works and Liu Fengguo, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of 2017 Semi-annual Report is authentic, accurate and complete. All directors are attended the Board Meeting for report deliberation. The Company has no plan of cash dividends carried out, bonus issued and capitalizing of common reserves either. If the Report related to the forward-looking statements about future business environment and business planning, and benefit forecasting of investment projects, it does not constitute a substantive commitment to investors of the Company, investors pay attention to investment risks. Note: The Report is prepared in bilingual versions of Chinese and English respectively, in the event of any discrepancy in understanding the two 2 东沣科技集团股份有限公司 2017 年半年度报告全文 aforementioned versions, the Chinese version shall prevail. 3 东沣科技集团股份有限公司 2017 年半年度报告全文 Content Section I Important Notice, Contents and Paraphrase .................................................................. 2 Section II Company Profile and Main Finnaical Indexes .............................................................. 6 Section III Summary of Company Business .................................................................................... 9 Section IV Discussion and Analysis of the Operation ................................................................... 11 Section V Important Events ............................................................................................................ 20 Section VI. Changes in Shares and Particulars about Shareholders .......................................... 25 Section VII. Preferred Stock ........................................................................................................... 29 Section VIII. Directors, Supervisors and Senior Executives ........................................................ 30 Section IX Corporate Bonds ........................................................................................................... 31 Section X. Financial Report ............................................................................................................ 32 Section XI. Documents available for reference ........................................................................... 144 4 东沣科技集团股份有限公司 2017 年半年度报告全文 Paraphrase Items Refers to Contents CSRC, SRC Refers to China Securities Regulatory Commission SZ Stock Exchange, Exchange Refers to Shenzhen Stock Exchange Company, The Company Refers to Dongfeng Sci-Tech Group CO., LTD Dongfeng Investment Refers to Chengde Dongfeng Investment Co., Ltd. Nanjiang Trading Refers to Chengde Nanjiang Trading Co., Ltd. Nanjiag Technology Refers to Chengde Nanjiag Technology Co. Ltd. Kefeng Trading Refers to Chengde Kefeng Trading Co., Ltd. Chengde Kefeng Refers to Chengde Kefeng Aerospace Technology Development Co. Ltd. Kefeng Engineering Refers to Chengde Kefeng Engineering Project Management Co. Ltd. Ecological Agriculture, Refers to Chengde Dongfeng Ecological Agriculture Co., Ltd. Asia Investment, Nanjiang Asia Refers to Nanjiang Asia Investment Co., Ltd. Runhua RW Refers to Runhua Rural Water (Tianjin) International Trade Co., Ltd. Hangzhou Dongfeng Refers to Hangzhou Dongfeng Technology Co. Ltd. Huijing Property Refers to Chengde Huijing Property Services Co., Ltd. Dongfeng New Energy Refers to Dongguan Dongfeng New Energy Technology Co. Ltd. Company Law Refers to Company Law of the People’s Republic of China Securities Law Refers to Securities Law of the People’s Republic of China Listing Rules Refers to Rules Governing the Listing of Securities on Shenzhen Stock Exchange Yuan, 10 thousand Yuan Refers to RMB, RMB 10 thousand 5 东沣科技集团股份有限公司 2017 年半年度报告全文 Section II Company Profile and Main Finnaical Indexes I. Company Profile Short form of the stock Dongfeng-B Stock code 200160 Short form of the Stock after Dongfeng-B changed (if applicable) Stock exchange for listing Shenzhen Stock Exchange Name of the Company (in 东沣科技集团股份有限公司 Chinese) Short form of the Company 东沣 B (in Chinese) (if applicable) Foreign name of the Company DongfengSci-Tech Group CO.,LTD (if applicable) Short form of foreign name of DONGFENG-B the Company (if applicable) Legal representative Zhao Yongsheng II. Contact person and ways Secretary of the Board Rep. of security affairs Name Li Wenying Wang Haijian XiaBanCheng Town, Chengde County, XiaBanCheng Town, Chengde County, Contact add. Hebei Province Hebei Province Tel. 0314-3115048 0314-3115048 Fax. 0314-3111475 0314-3111475 E-mail liwy@dftechgroup.com wanghj@dftechgroup.com III. Others 1. Way of contact Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or not □ Applicable √ Not applicable Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period, found more details in Annual Report 2016. 6 东沣科技集团股份有限公司 2017 年半年度报告全文 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation place for semi-annual report have no change in reporting period, found more details in Annual Report 2016. 3. Other relevant information Whether the other relevant information changed during the reporting period √Applicable □ Not applicable On May 16, 2017, the company changed its name from “Chengde Nanjiang Co., Ltd.” to “Dongfeng Sci-Tech Group Co., Ltd.”, the shortened form of the company securities changed from “Nanjiang B” to “Dongfeng B”. See details on the relevant announcements the company disclosed on Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn on May 16, 2017. On July 3, 2017, the company received the approval of Chengde Market Supervision Authority, the company's business scope changed to the research and development, sales, technology promotion and technical services of new energies and new materials products; the research and development, technology promotion and technical services of modern ecological agriculture, the wholesale of eco-agricultural products; import and export trading of goods and technology; real estate development and management approved by the qualification certificates; property management. (Projects need to be approved according to law can only carry out the operating activities after being approved by relevant departments). IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data or not □ Yes √ No Increase/decrease in this Current period Same period of last year report y-o-y Operating revenue (RMB) 101,563,994.47 191,414,481.74 -46.94% Net profit attributable to shareholders of -3,145,668.96 1,801,869.94 -274.58% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting -3,168,677.19 2,072,748.29 -252.87% non-recurring gains and losses (RMB) Net cash flow arising from operating 28,687,301.69 76,854,983.97 -62.67% activities (RMB) Basic earnings per share (RMB/Share) -0.004 0.003 -233.33% Diluted earnings per share (RMB/Share) -0.004 0.003 -233.33% Weighted average ROE -0.88% 0.51% -1.39% End of current period End of last period Increase/decrease in this 7 东沣科技集团股份有限公司 2017 年半年度报告全文 report-end over that of last period-end Total assets (RMB) 571,444,743.94 626,756,827.34 -8.83% Net assets attributable to shareholder of 355,700,272.96 359,826,450.98 -1.15% listed company (RMB) V. Difference of the accounting data under accounting rules in and out of China 1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period. 2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not applicable The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or Chinese GAAP (Generally Accepted Accounting Principles) in the period. VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable In RMB Item Amount Note Other non-operating income and expenditure except for the 23,008.23 aforementioned items Total 23,008.23 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □ Applicable √ Not applicable In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss 8 东沣科技集团股份有限公司 2017 年半年度报告全文 Section III Summary of Company Business I. Main businesses of the Company in the reporting period Does the Company need to comply with the disclosure requirement of the special industry Yes Real estate industry During the reporting period, the company's main business was the real estate, business model was the development and sale of commercial housing, and the business scope was mainly in Chengde. The products of the company's real estate business were mainly the commercial residential building, focused on high-rise, supplemented by small high-rise, duplex and garden house and other forms. The residence community currently for sale is Nanjiang Huijing Tiandi project. Key performance driving factors: Influenced by the national strategy of Beijing-Tianjin-Hebei integration, and required by the evacuation and industrial transfer of the capital to peripheral areas, the value of real estate in the cities around Beijing is highlighted; the real estate shows good market prospects. Chengde is close to Beijing and Tianjin in the south and next to Liaoning and Neimenggu in the back, and has peculiar regional advantages, the construction of Beijing-Shenyang high-speed rail makes Chengde enter into the “capital one hour economic circle” and brings major opportunities to the local economic development. In the future, the company will take this development opportunity to actively expand business areas, continuously promote service quality, build high-end boutique residence, and improve market competitiveness. II. Major changes in main assets 1. Major changes in main assets Major assets Note of major changes Equity assets N/A Fixed assets No major change Intangible assets No major change Construction in process N/A 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis Does the Company need to comply with the disclosure requirements of the special industry Yes 9 东沣科技集团股份有限公司 2017 年半年度报告全文 Real estate industry During the reporting period, the core competitiveness of the Company has not changed significantly. See 2016 Annual Report. 10 东沣科技集团股份有限公司 2017 年半年度报告全文 Section IV Discussion and Analysis of the Operation I. Introduction (I) Situation analysis of the real estate industry during the reporting period In the first half of 2017, the national real estate macro-control continued to strengthen, different cities implemented corresponding policies to actively deepen the real estate policy control and carry out the housing price controlling and destocking at the same time. On the one hand, the hot cities continued the strong regulation pattern, the third and fourth-tier cities around also regulated and controlled synchronously, the traditional restrictions on purchase and loans continued to upgrade, the credit funds for both supply and demand ends of real estate gradually tightened, and the effects of policy since the beginning of the year gradually appeared; on the other hand, most of the third and fourth-tier cities continued the destocking, some cities with significant decrease in stock pressure also timely introduced the market stabilizing measures. During the reporting period, Hebei Province implemented the real estate control from the provincial level, successively introduced a series of regulatory policies such as the purchase restriction, loan restriction, and price restriction, the real estate market gradually returned to be rational. In the long run, with the continuous promotion of Beijing-Tianjin-Hebei integration and the requirements of the capital to the evacuation and industrial transfer in peripheral areas, the market prospects of the cities around Beijing are still good. (II) The operation of the company during the reporting period During the reporting period, in the face of severe policy and market situation of real estate, the company complied with the changes in the market and accelerated the sale of existing inventories, and planned to promote the construction of new projects according to the market situation at the same time; on the other hand, on the basis of ensuring the steady development of existing businesses, actively promoted the company's business transformation, expanded and cultivated the new business growth point. During the reporting period, the company achieved main business income of RMB 101,564,000, net profits attributable to the parent company of RMB -3,145,700. Up to the end of the reporting period, the total assets of the company were RMB 571,444,700 and the net assets were RMB 355,700,300. Sales of the property (Nanjiang Huijing Tiandi) for Jan.-June 2017 are as: Operation Operation cost Gross Clearing the Type of Ratio Area presale in income (in 10 (in 10 profit Item area in the operation (%) the period (㎡) thousand thousand margin period (㎡) Yuan) Yuan) (%) Nanjiang Residence 9408.24 22989.40 9946.52 8384.18 15.71 100 Huijing 2263.01 - - - - Commerce Tiandi Total 11671.25 22989.40 9946.52 8384.18 15.71 The Company has no new land reserves and new constructed property in the Period 11 东沣科技集团股份有限公司 2017 年半年度报告全文 II. Main business analysis Found more in “I. Introduction” in “Discussion and Analysis of the Operation”. Y-o-y changes of main financial data In RMB Current period Same period of last year Y-o-y increase/decrease Reasons for changes The real estate revenue carry-over in the period Operating revenue 101,563,994.47 191,414,481.74 -46.94% decreased on a y-o-y basis Costs of real estate Operating costs 86,769,226.19 163,182,686.63 -46.83% carry-over decreased on a y-o-y basis Sales expenses 315,835.82 314,718.06 0.36% Labor charges in the Administration expenses 10,548,195.52 13,829,541.30 -23.73% period declined from a year earlier Interest income increased Finance expenses -691,269.95 -101,786.84 -579.13% from a year earlier Income tax expenses 8,991.27 -100.00% Payment collection from Net cash flow arising real estate business 28,687,301.69 76,854,983.97 -62.67% from operating activities decreased from a year earlier Net cash flow arising Account paid for from investment -1,391,915.91 -26,994,960.98 94.84% investment decreased activities from a year earlier The margin paid for Net cash flow arising mortgage loans -663,800.00 -873,435.54 24.00% from financing activities decreased from a year earlier Payment collection from Net increase of cash and real estate business 26,631,585.78 48,986,587.45 -45.63% cash equivalent decreased from a year earlier Major changes on profit composition or profit resources in reporting period □ Applicable √ Not applicable No major changes on profit composition or profit resources occurred in reporting period. Constitution of main business In RMB 12 东沣科技集团股份有限公司 2017 年半年度报告全文 Increase or Increase or Increase or decrease of decrease of decrease of gross Operating Operating cost Gross profit ratio operating revenue operating cost profit ratio over revenue over same period over same period same period of of last year of last year last year According to industries Real estate 99,465,192.85 83,841,835.73 15.71% -44.62% -44.32% -0.46% industry Other industry 2,098,801.62 2,927,390.46 -39.48% 20.21% -8.20% 43.17% According to products Real estate sales 99,465,192.85 83,841,835.73 15.71% -44.62% -44.32% -0.46% Property management and 2,098,801.62 2,927,390.46 -39.48% 20.21% -8.20% 43.17% other According to region Chengde region 101,563,994.47 86,769,226.19 14.57% -44.17% -43.78% -0.58% III. Analysis of the non-main business □ Applicable √ Not applicable IV. Assets and liability 1. Major changes of assets composition In RMB End of same period of last End of the Period year Ratio Notes of major changes Ratio in total Ratio in total changes Amount Amount assets assets 160,265,548.0 Fund invested in real estate business Monetary fund 28.05% 138,135,232.83 17.57% 10.48% 1 decreased from a year earlier Account 80,084.75 0.01% 173,815.53 0.02% -0.01% receivable The development products are carry 287,218,307.9 Inventory 50.26% 478,454,283.19 60.86% -10.60% over to revenue, than the inventory 2 declined Investment 4,774,873.63 0.84% 0.84% property Long-term equity 2,331,040.66 0.30% -0.30% 13 东沣科技集团股份有限公司 2017 年半年度报告全文 investment Fix assets 14,634,378.09 2.56% 9,385,790.29 1.19% 1.37% 2. Assets and liability measured by fair value □ Applicable √ Not applicable 3. Assets rights restricted till end of the period Limited assets rights: Item Closing balance Opening balance Margin of the housing mortgage 6,663,127.40 5,999,327.40 Total 6,663,127.40 5,999,327.40 V. Investment 1. Overall situation √Applicable □ Not applicable Investment in the same period of last year Investment in the reporting (RMB) Changes ( RMB) 0.00 25,000,000.00 -100.00% 2. The major equity investment obtained in the reporting period □ Applicable √ Not applicable 3. The major non-equity investment doing in the reporting period □ Applicable √ Not applicable 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable The Company had no securities investment in Period. (2) Derivative investment □ Applicable √ Not applicable The Company has no derivatives investment in Period. 14 东沣科技集团股份有限公司 2017 年半年度报告全文 VI. Sales of major assets and equity 1. Sales of major assets □ Applicable √ Not applicable The Company has no sales of major assets in Period. 2. Sales of major equity □ Applicable √ Not applicable VII. Analysis of main holding company and stock-jointly companies √Applicable □ Not applicable Particular about main subsidiaries and stock-jointly companies net profit over 10% In RMB Company Main Register Operating Operating Type Industry Total assets Net Assets Net profit name business capital revenue profit Hardware mechanical and electrical, building Chengde materials, Nanjiang Commercia 12,473,771. -1,429,08 Subsidiary machinery 1,000,000.0 128,898.51 0.00 -1,408,883.60 Trading l trade 99 9.39 and 0 Co., Ltd. equipment sales; housing rental services Industrial investment, investment Chengde managemen Dongfeng t, Industrial 90,000,000. 79,042,074. 79,042,074. -108,011. Subsidiary 0.00 -108,011.81 Investment investment investment 00 10 10 81 Co., Ltd. consulting and import & export trading Chengde Cultivation 10,890,569. -13,564,790 -544,173. Subsidiary Agriculture 61,073.78 -520,617.62 Dongfeng and sales of 10,000,000. 25 .81 41 15 东沣科技集团股份有限公司 2017 年半年度报告全文 Ecological field crop, 00 Agriculture edible Co., Ltd. mushrooms, fruit and vegetables as well as Chinese Herbs; breeding and sales of livestock Internationa l investment Nanjiang and trading, Asia Internationa US$ 20 5,687,480.8 5,682,509.6 Subsidiary ship sales 0.00 -306.00 -306.00 Investment l investment million 6 4 and Co., Ltd. purchase and lease R&D, manufactur e and sales of inflatable capsule, grapheme, grapheme application materials, power cell & battery Chengde materials, Nanjiang high-perfor New energy 50,000,000. 48,856,394. 48,072,166. Subsidiary 0.00 -999.57 -999.57 Technology mance materials 00 85 85 Co., Ltd. membrane material and nano materials as well as the technology promotion and technical service for the above said 16 东沣科技集团股份有限公司 2017 年半年度报告全文 products. Chengde Huijing Property Property 1,550,639.0 -5,294,173. 2,001,623.8 -1,299,36 Property Subsidiary managemen managemen 500,000.00 -1,299,367.80 3 14 7 7.80 Services t service t Co., Ltd. New energy, new materials and applied products Hangzhou research High-tech Dongfeng 50,000,000. 29,137,621. 28,901,831. -661,342. Subsidiary and developmen 0.00 -660,499.64 Technology 00 06 96 88 developmen t Co., Ltd. t, sales and technical promotion, technical services Technology R&D, technology Chengde consulting Kefeng and High-tech Aerospace 30,000,000. 0.00 Subsidiary promotion developmen 59,710.39 -289.61 -289.61 -289.61 Technology 00 and transfer t Developme service of nt Co. Ltd. the aerospace products Sales of machinery and machine Chengde parts and Kefeng Commercia 8,500,000.0 322,505,44 260,185,64 0.00 -945,880. Subsidiary mechanical -945,880.08 Trading l trade 0 2.62 7.62 08 & electrical Co., Ltd. products; real estate leasing service Chengde Engineering Engineering -180,380. Subsidiary 500,000.00 475,174.19 319,619.43 -180,380.57 Kefeng managemen Project 57 17 东沣科技集团股份有限公司 2017 年半年度报告全文 Engineering t and Manageme 0.00 Project consulting nt Managemen service; t Co. Ltd. infrastructu re constructio n and house leasing service Import trade, domestic Runhua agents and Rural Water distribution (Tianjin) of the Internationa 30,000,000. 3,271,855.2 3,268,363.5 -88,149.2 Subsidiary 0.00 -88,149.25 Internationa plastic raw l Trade 00 3 3 5 l Trade Co., materials of Ltd. polyethylen e (PE) and polypropyle ne (PP) Particular about subsidiaries obtained or disposed in report period √Applicable □ Not applicable The method of obtaining and handling The influence to the whole production and Company Name subsidiaries during the report period performance Chengde Kefeng Trading Co., Ltd. Derivate by subsidy Nanjiang Trading No influence Chengde Kefeng Engineering Project Derivate by subsidy Nanjiang Trading No influence Management Co. Ltd. Runhua Rural Water (Tianjin) International Without controls after release the No influence Trade Co., Ltd. consistent action Notes of holding and shareholding companies On March 6, 2017, approved by Chengde Administration for Industry and Commerce, Chengde Nanjiang Trading Co., Ltd. was divided into Chengde Kefeng Trading Co., Ltd., Chengde Kefeng Project Management Co., Ltd. and Chengde Nanjiang Trading Co., Ltd. Among them, the registered capital of Chengde Kefeng Trading Co., Ltd. is RMB 8.5 million,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope includes the sale of mechanical equipment, machine parts, and mechanical and electrical products, and the housing leasing services; the registered capital of Chengde Kefeng Project Management Co., Ltd. is RMB 500,000.00,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope includes the project management and consulting services, the infrastructure construction, and the housing leasing services; the registered capital of Chengde Nanjiang Trading Co., Ltd. is changed to RMB one million,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope includes the sale of hardware and mechanical products, building materials, and mechanical equipment, and the housing rental services. On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan 18 东沣科技集团股份有限公司 2017 年半年度报告全文 Chunhong of Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of losing the control power to it, and check and calculate by equity method. VIII. Structured vehicle controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January – September 2017 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation on reason □ Applicable √ Not applicable X. Risks and countermeasures 1. Policy risk. The real estate industry is affected by the macro policy, land policy, real estate tax policy, financial policy for the real estate industry will have a direct impact on the real estate business. The company will pay close attention to the macro situation, strengthen the research and tracking policy, rational analysis of the market, to adapt to changes in market adjustment, and to improve the company's ability to resist risks. 2. Market risk. In the background of economic slowdown, real estate market turns to have obvious differentiation. Under the increasingly fierce in competition, the Company will continue to improve the self-owned construction, strength management ability, and continuously enhance the competitiveness of the Company. Meanwhile, accelerate the strategic transformation of the Company and exploiting new growth of profit. 19 东沣科技集团股份有限公司 2017 年半年度报告全文 Section V Important Events I. In the report period, the Company held annual shareholders’ general meeting and extraordinary shareholders’ general meeting 1. Shareholders’ General Meeting in the report period Ratio of investor Session of meeting Type Date Date of disclosure Index of disclosure participation Securities Times, Hong Kong Annual General Commercial Daily AGM 11.11% 2017-06-15 2017-06-16 Meeting of 2016 and Juchao Website http://www.cninfo.co m.cn 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore □ Applicable √ Not applicable II. Profit distribution plan and capitalizing of common reserves plan for the Period □ Applicable √ Not applicable The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for the semi-annual year. III. Commitments that the actual controller, shareholders, related party, buyer and relevant committed party as the Company have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period √Applicable □ Not applicable Type of Commitm Commitm Implementa Commitments Promise commitment Content of commitments ent date ent term tion s Commitments for share merger reform Commitments in Controlli Commitmen 1. Commitments in aspect of independency of Duration report of ng ts in listed company: 2012-04-2 Implementi of the acquisition or equity sharehol horizontal For the equity changes, that is 208,324,800 4 ng Company change der competition, shares of Chengde Dalu Co., Ltd held by Chen 20 东沣科技集团股份有限公司 2017 年半年度报告全文 related Rong was transfer, Wang Dong guarantee there transactions, are no influence on the independent of and capital employee, financial, institution, business and occupying integrity of assets of Chengde Dalu Co., Ltd. After transaction, Chengde Dalu Co., Ltd still has the ability of independent operation and owes independent legal person, and continues to owes the independency of institution, assts, employees, production and financial. 2. Commitments for horizontal competition: after 208,324,800 shares of Chengde Dalu Co., Ltd held by Chen Rong was transfer, Wang Dong guarantee there are no or potential horizontal competition between the Chengde Dalu Co., Ltd and Wang Dong and related parties of Wang Dong Commitments in assets reorganization Commitments in initial public offering or re-financing Commitments in stock option incentive plan Other commitments for medium and small shareholders Completed on time Yes If the commitments is not fulfilled on time, shall explain the N/A specify reason and the next work plan IV. Appointment and non-reappointment (dismissal) of CPA Financial report has been audit or not □ Yes √ No Not been audited. 21 东沣科技集团股份有限公司 2017 年半年度报告全文 V. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion” that issued by CPA □ Applicable √ Not applicable VI. Explanation from the Board for “Qualified Opinion” of last year’s □ Applicable √ Not applicable VII. Bankruptcy reorganization □ Applicable √ Not applicable No bankruptcy reorganization for the Company in Period. VIII. Lawsuits Material lawsuits and arbitration □ Applicable √ Not applicable No significant lawsuits and arbitrations occurred in the reporting period. Other lawsuits □ Applicable √ Not applicable IX. Penalty and rectification □ Applicable √ Not applicable No penalty and rectification for the Company in Period. X. Integrity of the Company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or other employee incentives □ Applicable √ Not applicable The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period. XII. Major related transaction 1. Related transaction with routine operation concerned □ Applicable √ Not applicable The Company had no related transaction with routine operation concerned in Period. 22 东沣科技集团股份有限公司 2017 年半年度报告全文 2. Related transactions by assets acquisition and sold □ Applicable √ Not applicable No related transactions by assets acquisition and sold for the Company in Period. 3. Main related transactions of mutual investment outside □ Applicable √ Not applicable No main related transactions of mutual investment outside for the Company in Period. 4. Contact of related credit and debt □ Applicable √ Not applicable The Company had no contact of related credit and debt in the reporting period. 5. Other related transactions □ Applicable √ Not applicable The Company had no other related transaction in the reporting period. XIII. Non-business capital occupying by controlling shareholders and its related parties □ Applicable √ Not applicable No non-business capital occupied by controlling shareholders and its related parties in Period. XIV. Significant contract and implementations 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable No trusteeship for the Company in reporting period. (2) Contract □ Applicable √ Not applicable No contract for the Company in Period. (3) Leasing □ Applicable √ Not applicable No leasing for the Company in Period. 23 东沣科技集团股份有限公司 2017 年半年度报告全文 2. Major guarantees □ Applicable √ Not applicable No guarantee for the Company in reporting period 3. Other material contracts □ Applicable √ Not applicable No other material contracts for the Company in reporting period. XV. Social responsibility 1. Fulfill the social responsibility for targeted poverty alleviation The Company has no targeted poverty alleviation temporary in the year, and no subsequent program either 2. Major environmental protection The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department No XVI. Other major events □ Applicable √ Not applicable XVII. Major event of the subsidiaries □ Applicable √ Not applicable 24 东沣科技集团股份有限公司 2017 年半年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital In Share Before the Change Increase/Decrease in the Change (+, -) After the Change Capitalizat New Bonus ion of Amount Proportion shares Others Subtotal Amount Proportion shares public issued reserve 244,800,0 244,800,0 I. Unlisted shares 34.66% 34.66% 00 00 244,800,0 244,800,0 1. Sponsor’s shares 34.66% 34.66% 00 00 Domestic legal 23,147,30 23,147,30 3.28% 3.28% person’s shares 9 9 221,652,6 221,652,6 Other 31.38% 31.38% 91 91 461,520,0 461,520,0 II. Listed shares 65.34% 65.34% 00 00 2. Domestically listed 461,520,0 461,520,0 65.34% 65.34% foreign shares 00 00 706,320,0 706,320,0 III. Total shares 100.00% 100.00% 00 00 Reasons for share changed □ Applicable √ Not applicable Approval of share changed □ Applicable √ Not applicable Ownership transfer of share changes □ Applicable √ Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period □ Applicable √ Not applicable Other information necessary to disclose or need to disclosed under requirement from security regulators 25 东沣科技集团股份有限公司 2017 年半年度报告全文 □ Applicable √ Not applicable 2. Changes of restricted shares □ Applicable √ Not applicable II. Securities issuance and listing □ Applicable √ Not applicable III. Number of shares and shares held In Share Total preference shareholders Total common shareholders at with voting rights recovered at 19,555 0 period-end end of reporting period (if applicable) (note8) Particulars about common shares held above 5% by shareholders or top ten common shareholders Total Number of share pledged/frozen Amount sharehol Amount Changes of Full name of Nature of Proportion of ders at of listed in report un-listed Shareholders shareholder shares held the end shares State of share Amount period shares of report held held period Domestic nature 208,324, 208,324, Wang Dong 29.49% 0 0 person 800 800 Everbright Overseas legal 93,833,0 93,833,0 Securities 13.28% 0 0 person 93 93 (H.K.) Co., Ltd. GUOTAI JUNAN Overseas legal 48,524,0 48,524,0 SECURITIES( 6.87% 0 0 person 62 62 HONGKONG) LIMITED Chengde North Domestic 18,517,6 18,517,6 Industrial non-state owned 2.62% 0 0 51 51 Corporation legal person Wang Domestic nature 13,327,8 13,327,8 1.89% 0 0 Zhengsong person 91 91 Wang Domestic nature 1.03% 7,258,00 0 0 7,258,00 26 东沣科技集团股份有限公司 2017 年半年度报告全文 Wensheng person 7 7 Domestic nature 6,708,49 6,708,49 Zhou Haihong 0.95% 0 0 person 5 5 Domestic nature 5,158,00 5,158,00 Li Tianyun 0.73% 0 0 person 0 0 Shanghai Overseas legal 4,995,92 4,995,92 Wanguo (H.K) 0.71% 0 0 person 0 0 Securities Domestic nature 4,023,25 4,023,25 Chen Yan 0.57% 0 0 person 6 6 Strategy investors or general legal person becomes top 10 shareholders N/A due to rights issued (if applicable) (see note 3) Explanation on associated The Company is unknown whether there exists associated relationship or belongs to consistent relationship among the aforesaid actor regulated by “management method for acquisition of listed company” among the above shareholders said shareholders. Particular about top ten circulated shareholders Type of shares Shareholders’ name Amount of listed shares held at period-end Type Amount Domestically Everbright Securities (H.K.) Co., 93,833,093 listed foreign 93,833,093 Ltd. shares GUOTAI JUNAN Domestically SECURITIES(HONGKONG) 48,524,062 listed foreign 48,524,062 LIMITED shares Domestically Wang Wensheng 7,258,007 listed foreign 7,258,007 shares Domestically Zhou Haihong 6,708,495 listed foreign 6,708,495 shares Domestically Li Tianyun 5,158,000 listed foreign 5,158,000 shares Domestically Shanghai Wanguo (H.K) Securities 4,995,920 listed foreign 4,995,920 shares Domestically Chen Yan 4,023,256 4,023,256 listed foreign 27 东沣科技集团股份有限公司 2017 年半年度报告全文 shares Domestically Zhao Ziying 3,286,616 listed foreign 3,286,616 shares VANGUARD TOTAL Domestically INTERNATIONAL STOCK 3,182,875 listed foreign 3,182,875 INDEX FUND shares Domestically Peng Wei 2,978,525 listed foreign 2,978,525 shares Expiation on associated relationship or consistent actors within the top The Company is unknown whether there exists associated relationship or belongs to consistent 10 un-restrict common shareholders actor regulated by “management method for acquisition of listed company” among the above and between top 10 un-restrict said shareholders. common shareholders and top 10 common shareholders Explanation on shareholders involving margin business about top ten common shareholders with N/A un-restrict shares held (if applicable) (see Note 4) Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □Yes √No Top ten common shareholders or top ten common shareholders with un-restrict shares not held have a buy-back agreement dealing in reporting period. IV. Changes of controlling shareholders or actual controller Changes of controlling shareholders in reporting period □ Applicable √ Not applicable The Company had no changes of controlling shareholders in reporting period. Changes of actual controller in reporting period □ Applicable √ Not applicable No changes of actual controllers for the Company in reporting period. 28 东沣科技集团股份有限公司 2017 年半年度报告全文 Section VII. Preferred Stock □ Applicable √ Not applicable The Company had no preferred stock in the reporting. 29 东沣科技集团股份有限公司 2017 年半年度报告全文 Section VIII. Directors, Supervisors and Senior Executives I. Changes of shares held by directors, supervisors and senior executives □ Applicable √ Not applicable Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report 2016. II. Resignation and dismissal of directors, supervisors and senior executives √Applicable □ Not applicable Name Title Type Date Reasons Chen Gang Director Leave office 2017-03-13 Voluntary turnover Chen Gang Vice GM Dismissal 2017-03-13 Resign voluntarily 30 东沣科技集团股份有限公司 2017 年半年度报告全文 Section IX Corporate Bonds Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when semi-annual report approved for released or fail to cash in full on due No 31 东沣科技集团股份有限公司 2017 年半年度报告全文 Section X. Financial Report I. Audit reports Whether the semi-annual report was audited or not □ Yes √ No The financial report of this semi-annual report was unaudited II. Financial statements Units in Notes of Financial Statements is RMB 1. Consolidated balance sheet Prepared by Dongfeng Sci-Tech Group CO., LTD 2017-06-30 In RMB Item Closing balance Opening balance Current assets: Monetary funds 160,265,548.01 132,970,162.23 Settlement provisions Capital lent Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable Accounts receivable 80,084.75 77,884.75 Accounts paid in advance 107,838.08 18,250,328.13 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable Dividend receivable Other receivables 68,070,707.68 67,805,513.40 Purchase restituted finance asset 32 东沣科技集团股份有限公司 2017 年半年度报告全文 Inventories 287,218,307.92 341,740,059.14 Divided into assets held for sale Non-current asset due within one 333,716.08 333,716.08 year Other current assets 9,368,662.98 19,177,045.07 Total current assets 525,444,865.50 580,354,708.80 Non-current assets: Loans and payments on behalf Finance asset available for sales 22,784,131.93 22,784,131.93 Held-to-maturity investment Long-term account receivable Long-term equity investment 1,022,730.46 Investment property 4,774,873.63 4,831,153.75 Fixed assets 14,634,378.09 14,980,260.33 Construction in progress Engineering material Disposal of fixed asset Productive biological asset 16,229.01 42,133.76 Oil and gas asset Intangible assets 1,052,848.17 1,073,407.21 Expense on Research and 1,831,791.81 641,604.82 Development Goodwill Long-term expenses to be 129,980.39 160,010.87 apportioned Deferred income tax asset 775,645.41 775,645.41 Other non-current asset 91,040.00 Total non-current asset 45,999,878.44 46,402,118.54 Total assets 571,444,743.94 626,756,827.34 Current liabilities: Short-term loans Loan from central bank Absorbing deposit and interbank deposit Capital borrowed Financial liability measured by fair value and with variation reckoned into current gains/losses 33 东沣科技集团股份有限公司 2017 年半年度报告全文 Derivative financial liability Notes payable Accounts payable 20,774,299.85 12,889,329.86 Accounts received in advance 188,143,498.26 243,917,918.70 Selling financial asset of repurchase Commission charge and commission payable Wage payable 221,277.50 1,937,682.44 Taxes payable 403,722.99 1,359,022.01 Interest payable Dividend payable Other accounts payable 6,201,672.38 4,476,864.40 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Divided into liability held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 215,744,470.98 264,580,817.41 Non-current liabilities: Long-term loans Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable Special accounts payable Projected liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 215,744,470.98 264,580,817.41 34 东沣科技集团股份有限公司 2017 年半年度报告全文 Owner’s equity: Share capital 706,320,000.00 706,320,000.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 463,681,309.55 463,681,309.55 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 76,791,550.17 76,791,550.17 Provision of general risk Retained profit -891,092,586.76 -886,966,408.74 Total owner’s equity attributable to 355,700,272.96 359,826,450.98 parent company Minority interests 2,349,558.95 Total owner’s equity 355,700,272.96 362,176,009.93 Total liabilities and owner’s equity 571,444,743.94 626,756,827.34 Legal Representative: Zhao Yongsheng Person in charge of Accounting Works: Zhao Yongsheng Person in charge of Accounting Institution: Liu Fengguo 2. Balance Sheet of Parent Company In RMB Item Closing balance Opening balance Current assets: Monetary funds 10,172,167.50 69,381,131.38 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable Accounts receivable Account paid in advance 5,000.33 18,240,099.06 Interest receivable Dividends receivable Other receivables 29,724,078.94 23,582,767.33 35 东沣科技集团股份有限公司 2017 年半年度报告全文 Inventories 287,081,113.95 341,419,337.97 Divided into assets held for sale Non-current assets maturing within one year Other current assets 8,746,046.75 18,152,929.82 Total current assets 335,728,407.47 470,776,265.56 Non-current assets: Available-for-sale financial assets 22,784,131.93 22,784,131.93 Held-to-maturity investments Long-term receivables Long-term equity investments 178,114,466.37 178,114,466.37 Investment property Fixed assets 1,962,245.05 2,100,122.12 Construction in progress Project materials Disposal of fixed assets Productive biological assets Oil and natural gas assets Intangible assets Research and development costs Goodwill Long-term deferred expenses 117,830.39 142,798.37 Deferred income tax assets 750.00 750.00 Other non-current assets Total non-current assets 202,979,423.74 203,142,268.79 Total assets 538,707,831.21 673,918,534.35 Current liabilities: Short-term borrowings Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable Accounts payable 20,506,024.52 12,777,756.02 Accounts received in advance 187,840,560.64 242,747,445.35 36 东沣科技集团股份有限公司 2017 年半年度报告全文 Wage payable 398.22 576,458.22 Taxes payable 393,513.74 1,340,388.72 Interest payable Dividend payable Other accounts payable 149,326,089.31 237,841,253.38 Divided into liability held for sale Non-current liabilities due within 1 year Other current liabilities Total current liabilities 358,066,586.43 495,283,301.69 Non-current liabilities: Long-term loans Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable Special accounts payable Projected liabilities Deferred income Deferred income tax liabilities Other non-current liabilities Total non-current liabilities Total liabilities 358,066,586.43 495,283,301.69 Owners’ equity: Share capita 706,320,000.00 706,320,000.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 456,569,124.55 456,569,124.55 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus reserve 76,791,550.17 76,791,550.17 Retained profit -1,059,039,429.94 -1,061,045,442.06 37 东沣科技集团股份有限公司 2017 年半年度报告全文 Total owner’s equity 180,641,244.78 178,635,232.66 Total liabilities and owner’s equity 538,707,831.21 673,918,534.35 3. Consolidated Profit Statement In RMB Item Current Period Last Period I. Total operating income 101,563,994.47 191,414,481.74 Including: Operating income 101,563,994.47 191,414,481.74 Interest income Insurance gained Commission charge and commission income II. Total operating cost 104,794,376.13 190,180,369.70 Including: Operating cost 86,769,226.19 163,182,686.63 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Operating tax and extras 7,852,986.54 12,955,210.55 Sales expenses 315,835.82 314,718.06 Administration expenses 10,548,195.52 13,829,541.30 Financial expenses -691,269.95 -101,786.84 Losses of devaluation of asset -597.99 Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is listed -12,933.77 with “-”) Including: Investment income on affiliated company and joint venture Exchange income (Loss is listed 38 东沣科技集团股份有限公司 2017 年半年度报告全文 with “-”) Other income III. Operating profit (Loss is listed with -3,230,381.66 1,221,178.27 “-”) Add: Non-operating income 30,121.27 69,070.59 Including: Disposal gains of non-current asset Less: Non-operating expense 7,113.04 339,948.94 Including: Disposal loss of non-current asset IV. Total Profit (Loss is listed with “-”) -3,207,373.43 950,299.92 Less: Income tax expense 8,991.27 V. Net profit (Net loss is listed with “-”) -3,207,373.43 941,308.65 Net profit attributable to owner’s of -3,145,668.96 1,801,869.94 parent company Minority shareholders’ gains and -61,704.47 -860,561.29 losses VI. Net after-tax of other comprehensive income Net after-tax of other comprehensive income attributable to owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which 39 东沣科技集团股份有限公司 2017 年半年度报告全文 will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income -3,207,373.43 941,308.65 Total comprehensive income -3,145,668.96 1,801,869.94 attributable to owners of parent Company Total comprehensive income -61,704.47 -860,561.29 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share -0.004 0.003 (ii) Diluted earnings per share -0.004 0.003 Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and realized 0 Yuan at last period for combined party. Legal Representative: Zhao Yongsheng Person in charge of Accounting Works: Zhao Yongsheng Person in charge of Accounting Institution: Liu Fengguo 4. Profit Statement of Parent Company In RMB Item Current Period Last Period I. Operating income 99,528,159.94 180,141,392.89 Less: Operating cost 83,879,550.47 151,288,325.84 Operating tax and extras 7,838,404.44 12,822,979.94 Sales expenses 201,716.00 114,165.00 40 东沣科技集团股份有限公司 2017 年半年度报告全文 Administration expenses 5,588,635.68 8,380,621.85 Financial expenses -7,755.36 -67,570.12 Losses of devaluation of asset 4,585,185.00 Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is listed with “-”) Including: Investment income on affiliated company and joint venture Other income II. Operating profit (Loss is listed 2,027,608.71 3,017,685.38 with “-”) Add: Non-operating income 0.02 Including: Disposal gains of non-current asset Less: Non-operating expense 21,596.61 178,654.01 Including: Disposal loss of non-current asset III. Total Profit (Loss is listed with 2,006,012.12 2,839,031.37 “-”) Less: Income tax expense IV. Net profit (Net loss is listed with 2,006,012.12 2,839,031.37 “-”) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 41 东沣科技集团股份有限公司 2017 年半年度报告全文 1. Share of the other comprehensive income of the investee accounted for using equity method which will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other VI. Total comprehensive income 2,006,012.12 2,839,031.37 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 49,648,921.18 137,650,745.69 services Net increase of customer deposit and interbank deposit Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original 42 东沣科技集团股份有限公司 2017 年半年度报告全文 insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Net increase of amount from disposal financial assets that measured by fair value and with variation reckoned into current gains/losses Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Write-back of tax received 36.00 Other cash received concerning 9,487,446.88 8,055,810.61 operating activities Subtotal of cash inflow arising from 59,136,368.06 145,706,592.30 operating activities Cash paid for purchasing commodities and receiving labor 2,657,862.72 30,339,142.70 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 8,045,025.91 10,973,577.47 Taxes paid 5,542,118.14 10,536,340.72 Other cash paid concerning 14,204,059.60 17,002,547.44 operating activities Subtotal of cash outflow arising from 30,449,066.37 68,851,608.33 operating activities Net cash flows arising from operating 28,687,301.69 76,854,983.97 43 东沣科技集团股份有限公司 2017 年半年度报告全文 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment income Net cash received from disposal of fixed, intangible and other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing activities Cash paid for purchasing fixed, 1,391,915.91 1,994,960.98 intangible and other long-term assets Cash paid for investment 25,000,000.00 Net increase of mortgaged loans Net cash received from subsidiaries and other units obtained Other cash paid concerning investing activities Subtotal of cash outflow from investing 1,391,915.91 26,994,960.98 activities Net cash flows arising from investing -1,391,915.91 -26,994,960.98 activities III. Cash flows arising from financing activities Cash received from absorbing investment Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans Cash received from issuing bonds Other cash received concerning 753,264.46 44 东沣科技集团股份有限公司 2017 年半年度报告全文 financing activities Subtotal of cash inflow from financing 753,264.46 activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning 663,800.00 1,626,700.00 financing activities Subtotal of cash outflow from financing 663,800.00 1,626,700.00 activities Net cash flows arising from financing -663,800.00 -873,435.54 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 26,631,585.78 48,986,587.45 equivalents Add: Balance of cash and cash 126,970,834.83 84,543,677.45 equivalents at the period-begin VI. Balance of cash and cash 153,602,420.61 133,530,264.90 equivalents at the period-end 6. Cash Flow Statement of Parent Company In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 48,417,004.47 125,007,492.84 services Write-back of tax received 36.00 Other cash received concerning 16,464,467.95 17,073,078.15 operating activities Subtotal of cash inflow arising from 64,881,472.42 142,080,606.99 operating activities 45 东沣科技集团股份有限公司 2017 年半年度报告全文 Cash paid for purchasing commodities and receiving labor 158,077.41 20,218,504.45 service Cash paid to/for staff and workers 2,981,492.09 6,323,092.84 Taxes paid 5,123,209.48 9,928,150.19 Other cash paid concerning 115,820,458.32 31,528,674.54 operating activities Subtotal of cash outflow arising from 124,083,237.30 67,998,422.02 operating activities Net cash flows arising from operating -59,201,764.88 74,082,184.97 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment income Net cash received from disposal of fixed, intangible and other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning investing activities Subtotal of cash inflow from investing activities Cash paid for purchasing fixed, 7,199.00 10,788.00 intangible and other long-term assets Cash paid for investment 25,000,000.00 Net cash received from subsidiaries and other units Other cash paid concerning investing activities Subtotal of cash outflow from investing 7,199.00 25,010,788.00 activities Net cash flows arising from investing -7,199.00 -25,010,788.00 activities III. Cash flows arising from financing 46 东沣科技集团股份有限公司 2017 年半年度报告全文 activities Cash received from absorbing investment Cash received from loans Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing activities Cash paid for settling debts Cash paid for dividend and profit distributing or interest paying Other cash paid concerning 663,800.00 1,626,700.00 financing activities Subtotal of cash outflow from financing 663,800.00 1,626,700.00 activities Net cash flows arising from financing -663,800.00 -1,626,700.00 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -59,872,763.88 47,444,696.97 equivalents Add: Balance of cash and cash 63,381,803.98 22,671,791.13 equivalents at the period-begin VI. Balance of cash and cash 3,509,040.10 70,116,488.10 equivalents at the period-end 7. Statement of Changes in Owners’ Equity (Consolidated) This Period In RMB This Period Owners’ equity attributable to parent company Other Item Less: Other Provisio Minorit Total equity instrument Reason Share Capital Invento compre Surplus n of Retaine y owners’ able interests equity capital Prefer Perpet reserve ry hensive reserve general d profit reserve red ual Other shares income risk stock capita 47 东沣科技集团股份有限公司 2017 年半年度报告全文 l securi ties 706,32 -886,96 I. Balance at the 463,681 76,791, 2,349,5 362,176 0,000. 6,408.7 end of the last year ,309.55 550.17 58.95 ,009.93 00 4 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 706,32 463,681 76,791, -886,96 2,349,5 362,176 beginning of this 0,000. 6,408.7 ,309.55 550.17 58.95 ,009.93 year 00 4 III. Increase/ Decrease in this -4,126,1 -2,349,5 -6,475,7 year (Decrease is 78.02 58.95 36.97 listed with “-”) (i) Total -3,145,6 -3,145,6 comprehensive 68.96 68.96 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of 48 东沣科技集团股份有限公司 2017 年半年度报告全文 general risk provisions 3. Distribution for owners (or shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period -980,50 -2,349,5 -3,330,0 (VI) Others 9.06 58.95 68.01 IV. Balance at the 706,32 463,681 76,791, -891,09 355,700 end of the report 0,000. 2,586.7 ,309.55 550.17 ,272.96 period 00 6 Last Period In RMB Last Period Owners’ equity attributable to the parent Company Other equity instrument Minorit Item Less: Other Provisio Total Perpet Reason y Share Capital Invento compre Surplus n of Retaine interest owners’ ual able capital Prefer reserve ry hensive reserve general d profit equity capita reserve s red Other shares income risk l stock securi ties 49 东沣科技集团股份有限公司 2017 年半年度报告全文 706,32 -890,72 I. Balance at the 459,871 76,791, 18,754, 371,010 0,000. 7,215.2 end of the last year ,788.64 550.17 592.06 ,715.62 00 5 Add: Changes of accounting policy Error correction of the last period Enterprise combine under the same control Other II. Balance at the 706,32 459,871 76,791, -890,72 18,754, 371,010 beginning of this 0,000. 7,215.2 ,788.64 550.17 592.06 ,715.62 year 00 5 III. Increase/ Decrease in this 3,801,7 1,801,8 -860,56 4,743,0 year (Decrease is 00.00 69.94 1.29 08.65 listed with “-”) (i) Total 1,801,8 -860,56 941,308 comprehensive 69.94 1.29 .65 income (ii) Owners’ 3,801,7 3,801,7 devoted and 00.00 00.00 decreased capital 1.Common shares 3,801,7 3,801,7 invested by 00.00 00.00 shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4 Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 50 东沣科技集团股份有限公司 2017 年半年度报告全文 3. Distribution for owners (or shareholders) 4. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI) Others IV. Balance at the 706,32 463,673 76,791, -888,92 17,894, 375,753 end of the report 0,000. 5,345.3 ,488.64 550.17 030.77 ,724.27 period 00 1 8. Statement of Changes in Owners’ Equity (Parent Company) This Period In RMB This Period Other equity instrument Other Total Item Share Less: Retaine Perpetu Capital comprehe Reasonab Surplus Inventory owners’ capital Preferre al reserve nsive le reserve reserve d profit shares equity capital Other income d stock securiti es I. Balance at the 706,320, 456,569,1 76,791,55 -1,061,0 178,635,2 51 东沣科技集团股份有限公司 2017 年半年度报告全文 end of the last year 000.00 24.55 0.17 45,442. 32.66 06 Add: Changes of accounting policy Error correction of the last period Other II. Balance at the 706,320, -1,061,0 456,569,1 76,791,55 178,635,2 beginning of this 45,442. 000.00 24.55 0.17 32.66 year 06 III. Increase/ Decrease in this 2,006,0 2,006,012 year (Decrease is 12.12 .12 listed with “-”) (i) Total 2,006,0 2,006,012 comprehensive 12.12 .12 income (ii) Owners’ devoted and decreased capital 1.Common shares invested by shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 52 东沣科技集团股份有限公司 2017 年半年度报告全文 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI) Others IV. Balance at the 706,320, -1,059,0 456,569,1 76,791,55 180,641,2 end of the report 39,429. 000.00 24.55 0.17 44.78 period 94 Last period In RMB Last period Other equity instrument Other Total Item Share Less: Retaine Perpetu Capital comprehe Reasonab Surplus Inventory owners’ capital Preferre al reserve nsive le reserve reserve d profit capital Other shares equity income d stock securiti es -1,063,1 I. Balance at the 706,320, 452,767,4 76,791,55 172,685,4 93,524. end of the last year 000.00 24.55 0.17 49.84 88 Add: Changes of accounting policy Error correction of the last period Other 53 东沣科技集团股份有限公司 2017 年半年度报告全文 II. Balance at the 706,320, -1,063,1 452,767,4 76,791,55 172,685,4 beginning of this 93,524. 000.00 24.55 0.17 49.84 year 88 III. Increase/ Decrease in this 3,801,700 2,839,0 6,640,731 year (Decrease is .00 31.37 .37 listed with “-”) (i) Total 2,839,0 2,839,031 comprehensive 31.37 .37 income (ii) Owners’ 3,801,700 3,801,700 devoted and .00 .00 decreased capital 1.Common shares 3,801,700 3,801,700 invested by .00 .00 shareholders 2. Capital invested by holders of other equity instruments 3. Amount reckoned into owners equity with share-based payment 4. Other (III) Profit distribution 1. Withdrawal of surplus reserves 2. Distribution for owners (or shareholders) 3. Other (IV) Carrying forward internal owners’ equity 1. Capital reserves conversed to capital (share capital) 2. Surplus reserves conversed to capital (share capital) 3. Remedying loss with surplus 54 东沣科技集团股份有限公司 2017 年半年度报告全文 reserve 4. Other (V) Reasonable reserve 1. Withdrawal in the report period 2. Usage in the report period (VI) Others IV. Balance at the 706,320, -1,060,3 456,569,1 76,791,55 179,326,1 end of the report 54,493. 000.00 24.55 0.17 81.21 period 51 III. Company profile 1. Registered place, organization structure and head office of the Company Dongfeng Sci-Tech Group CO., LTD (Hereinafter referred to as " Dongfeng Group " or the "the Company") was formerly known as Chengde Dixian Knitting Co., Ltd., and was reorganized on 3 November 1999 by sponsorship, approved by the People's Government of Hebei Province with the issue of Ji Gu Ban [1999] No.: 36 with license of the business corporation obtained from Hebei Administration for Industry & Commerce; registered capital while established amounting as RMB 100,000,000, and RMB 1.00 per share. Among the abovementioned, RMB 85.10 million contributed by Wang Shuxian, representing 7.56 percent of the registered capital; Wang Zhengsong invested RMB 5.4444 million with 5.44 percent in total registered capital presented; Chengde Longfeng Cosmetics Co., Ltd. contributed RMB 0.9456 million, a 0.95 percent in registered capital and RMB 0.9456 million contributed by Chengde Xiabancheng Hongxing Plastics Products Plant with 0.95 percent in registered capital presented. On 29 August 2000, according to the Zheng Jian Fa Xing Zi [2000] No.: 121 issued by the China Securities Regulatory Commission, the Company issued 100,000,000 domestically listed foreign shares in Shenzhen Stock Exchange dated 19 September 2000; and excised the over-allotment option to increase issuing 15,000,000 B shares from September 29, 2000 to October 29, 2000. The registered capital of the Company after the issuance of B shares was RMB 215,000,000 with one Yuan of face value per share. According to the resolution of the shareholder’s general 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 107,500,000 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 general 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 as a foreign investment limited liability company. In July 2004, the Company increased 150,000,000 B shares directionally, during which 91,300,000 shares were subscribed in HK$, 55 东沣科技集团股份有限公司 2017 年半年度报告全文 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 general 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, 112,324,800 sponsor shares held by Wang Shuxian was compensated to Chen Rong for 45,491,544 Yuan, and on August 15, 2008, 96,000,000 sponsor shares held by Wang Shuxian was compensated to Chen Rong for 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 domestically listed foreign shares in 2004 and allotted 2 bonus shares free for every 10 shares in 2006; and it agreed that 208,324,800 shares of Dixian stock held by Wang Shuxian was changed to Chen Rong ; as well as the name of the Company changed to Chengde Dalu Co., Ltd. Total share capital of the Company was 706,320,000 shares and the registered capital of the Company was 706,320,000 Yuan after the Company’s share increased and allotted, On 23 August 2011, the Company received the enterprise corporate business license issued from Chengde Administration for Industry and Commerce, register serial was No.: 130000400001225; registered capital and paid-up capital was 706.32 million Yuan with corporate type of limited liability company (Sino-foreign joint venture, listed) On April 6, 2012, Chen Rong, shareholder of Company, signed a share transfer agreement with Mr. Wang Dong for transferred all of the 208,324,800 shares held by himself (accounting for 29.49% of total capital of the Company) to Mr. Wang Dong; After equity transfer the above mentioned, capital contribution proportion of the shareholders of the Company were: 208.3248 million Yuan invested by Wang Dong, representing 29.49 percent of the register capital; 18517651 Yuan contributed by Hebei Chengde Northern Industrial Corporation, representing 2.62 percent of the register capital; 13327891 Yuan invested by Wang Zhengsong, a 0.33 percent in register capital; 2314829 Yuan invested by Chengde Xiabancheng Hongxing Plastics Products Plant, a 0.33 percent in register capital and 461.52 million Yuan contributed by shareholders of domestically listed foreign shares, representing 65.34 percent of the register capital. On 19 September 2012, being verified and approved by Chengde Administration for Industry and Commerce, the Company’s name changed asDongfeng Sci-Tech Group CO., LTD. Over the years of bonus issue, rights issue and capitalization, up to 31st December 2014, the issued shares totally amounting to 706.32 million shares, registered capital of the Company was 706.32 million Yuan; registered address: Xiabancheng Town, Chengde County, Hebei Province; HQ: Xiabancheng Town, Chengde County, Hebei Province. The Company has no parent company and Mr. Wang Dong is the first largest shareholder of the Company and also is the controller of the Company. On 15 May 2017, approved by Administration Bureau for Industry and Commerce of Chengde City, name of the Company agreed to changed as Dongfeng Sci-Tech Group CO., LTD (II) Business scope R&D and sales of new energy, and new material products as well as technology promotion and technical service; scientific research of modern eco-agriculture and technology promotion service, wholesales of eco-agriculture products; import and export trade of 56 东沣科技集团股份有限公司 2017 年半年度报告全文 goods and technology; Engage in the real estate development and management in the scope approved by the qualification certificates; property management. (Projects need to be approved according to law can only carry out the operating activities after being approved by relevant departments). (III) Business nature and main operating activities of the Company Dongfeng Group belongs to the development operation of real estate business, subsidy engaged in commerce trading, property management and agricultural fariming and breeding etc. (IV) Report approval for the financial statement The statement has been approved by all Directors of the Company dated 28 August 2017 for reporting. Totally 10 subjects are included in consolidate financial statement, mainly including: Shareholding Voting rights ratio Subsidiaries Type Level ratio (%) (%) Chengde Nanjiang Trading Co. Ltd. (Nanjiang Wholly-owned 2 100.00 100.00 Trading for short) subsidiary Chengde Dongfeng Investment Co., Ltd. (Dongfeng Wholly-owned 2 100.00 100.00 Investment for short) subsidiary Chengde Dongfeng Ecological Agriculture Co., Ltd. Wholly-owned 3 100.00 100.00 (Ecological Agriculture for short) sub-subsidiary Nanjiang Asia Investment Co., Ltd. (Nanjiang Asia Wholly-owned 2 100.00 100.00 for short) subsidiary Chengde Nanjiang Technology Co. Ltd. (Nanjiang Wholly-owned 3 100.00 100.00 Technology for short) subsidiary Chengde Huijing Property Service Co., Ltd. Wholly-owned 3 100.00 100.00 (Huijing Property for short) sub-subsidiary Hangzhou Dongfeng Technology Co., Ltd. Wholly-owned 2 100.00 100.00 (Hangzhou Dongfeng for short) subsidiary Chengde Kefeng Aerospace Technology Wholly-owned 2 100.00 100.00 Development Co. Ltd. (Chengde Kefeng for short) subsidiary Chengde Kefeng Trading Co., Ltd. (Kefeng Trading Wholly-owned 2 100.00 100.00 for short) subsidiary Chengde Kefeng Engineering Project Management Wholly-owned 2 100.00 100.00 Co. Ltd. (Kefeng Engineering for short) subsidiary Note: 1. Former Hangzhou Hangfeng Technology Co., Ltd. renamed as Hangzhou Dongfeng Technology Co., Ltd. in June 2017; 2. Former Chengde Nanjiang Investment Co., Ltd. renamed as Chengde Dongfeng Investment Co., Ltd. in June 2017; 3. Former Chengde Nanjiang Ecological Agriculture Co., Ltd. renamed as Chengde Dongfeng Ecological Agriculture Co., Ltd. in June 2017; 4. In March 2017, the company separated the wholly owned subsidiary Chengde Nanjiang Trading Co., Ltd. (hereinafter referred to as “Nanjiang Trading”), Nanjiang Trading continued to exist, with the registered capital of RMB 1 million, and derived to establish Chengde Kefeng Project Management Co., Ltd., with the registered capital of RMB 500,000, and Chengde Kefeng Trading Co. Ltd., with the registered capital of RMB 8.5 million. Approved by Chengde Market Supervision Authority, Nanjiang Trading has completed the relevant industrial and commercial registration for separation. Chengde Kefeng Project Management Co., Ltd. and Chengde Kefeng Trading Co. Ltd. established by derivation are the company’s wholly-owned subsidiaries and are included in the 57 东沣科技集团股份有限公司 2017 年半年度报告全文 consolidated financial statements. Subsidiary, special purpose vehicle and operational entity with control over by means of entrusted management or lessee newly included in the consolidate scope in the Period: Name Reason for changes Kefeng Trading Enterprise derivated Kefeng Engineering Enterprise derivated Subsidiary, special purpose vehicle and operational entity with control lost by means of entrusted management or rent-out, which no longer include in consolidate scope in the Period: Name Reason for changes Runhua RW The Company release the consistent action with shareholder Lan Chunhong Note: On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan Chunhong of Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of losing the control power to it, and check and calculate by equity method. IV. Basis of preparation of financial statements 1. Preparation basis The Company conducts recognition and measurement according to actual occurrence of transactions and issues, pursuant to the accounting principles for enterprise-basic rules and specific accounting principle as well as the application guidance for the accounting principles for enterprise, interpretation to the accounting principles for enterprise and other related requirements (hereinafter referred to as Enterprise Accounting Principles) issued by the ministry of finance, on that basis, combining the Information Disclosure Preparation Rules for Company Public Issuing Securities No.15-General Rules for Financial Report (amended in 2014) of the CSRC for statement preparation. 2. Going concern We evaluated the sustainable management ability for 12 months since end of the period, and found out that there was not a significant doubt on sustainable management ability of the entity in consolidate statement range. Therefore, the financial statement is prepared based on the continuing operation assumption. V. Major accounting policy and accounting estimation Notice of specific accounting policy and estimation: Nil 58 东沣科技集团股份有限公司 2017 年半年度报告全文 1. Statement of Compliance with the Accounting Standards for Business Enterprises The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises; truthfully and completely reflect the financial status, operation results and cash flow etc. of the Company. 2. Fiscal period The fiscal year of the Company is from 1 January to 31 December on basis of Gregorian calendar. 3. Operating cycle One operating cycle for the Company is 12 months 4. Standard currency The Company and its subsidiaries take RMB as the standard currency for bookkeeping. 5. Accounting treatment for business combinations under the same control and those not under the same control 1. If the terms, conditions, and economic impact of each transaction involved in business combination achieved in stages fall within one or more of the following situations, such transactions will be accounted for as a package deal: (1) Such transactions are entered into simultaneously or in the case of considering the impact of each other; (2) Such transactions as a whole in order to reach a complete business results; (3) The occurrence of a transaction subject to that of at least one other transaction; (4) One transaction alone is not economic, but otherwise when considered with other transactions. 2. Business combination under the same control The Company’s assets and liabilities acquired in a business combination are measured by the book value in the consolidated financial statements of ultimate controlling party in accordance with the assets and liabilities (including the goodwill formed by the ultimate controlling party’s acquisition to the combined party) of combined party on combining date. If there is balance between the book value of net assets obtained in merger and the book value of paid merger consideration (or total face value of issued shares), adjust the stock premium in capital reserve, and adjust the retained earnings if the stock premium in capital reserve is not enough for writing down. If there is a contingent consideration needs to confirm the expected liabilities or assets, and there is balance between the expected liabilities or assets amount and the settlement amount of follow-up contingent consideration, adjust the capital reserve (capital premium or stock premium), and adjust the retained earnings if the capital reserve is not enough. As for business combination realized through numbers of transactions, and if these transactions belong to a bundle of transactions, then each of them shall be accounted as a transaction to acquire controlling right; and if not belong to a bundle of transactions, then the difference between the initial investment cost of the long term equity investment as of the date on which the Company obtains controlling right and the carrying value of the long term equity investment prior to combination plus the carrying value of the new consideration paid for further acquisition of shares as of the combination date shall be used to adjust capital reserve; in case of insufficient capital reserve, adjust retained earnings. For equity investment held prior to the combination date, the other comprehensive income recognized due to calculation by equity method or based on recognition and measurement principles for 59 东沣科技集团股份有限公司 2017 年半年度报告全文 financial instruments would not be accounted for temporarily until the Company disposes of this investment on the same basis as the investee directly disposes of relevant assets or liabilities; other changes of owners’ equity in the net assets of investee as recognized under equity method, except for net profit or loss, other comprehensive income and profit distribution, shall not be accounted for until being transferred to current profit or loss when this investment is disposed of. 3. Business combination not under the same control The Company's assets paid as the consideration of business merger or liabilities occurred or assumed on the acquisition date are measured by the fair value, and the balance between fair value and its book value is included in the current profit and loss. The Company confirms the balance that the combined cost is greater than the fair value shares of acquiree’s recognizable net assets obtained in the combination as the goodwill; the balance that the combined cost is less than the fair value shares of acquiree’s net identifiable assets obtained in the combination is included in the current profit and loss after re-checking. As for the business combination not under the same control realized through several exchange transactions step by step, part of the package deal, than carrying accounting treatment on transactions with controlling rights obtained through vary transactions; for equity investment held prior to combination date which is calculated under equity method, the sum between carrying value of the equity investment prior to acquisition date and cost of additional investment made on the acquisition date is deemed to be the initial investment cost of this investment. Other comprehensive income recognized for equity investment held prior to combination date under equity method shall be accounted for when the Company disposes of this investment on the same basis as the investee directly disposes of relevant assets or liabilities. In case that equity investment held prior to combination date is calculated based on recognition and measurement principles for financial instruments, then the fair value of this equity investment as of combination date plus new investment cost shall be deemed as initial investment cost. The difference between fair value and carrying value of the originally held equity interests and the accumulated fair value movements as originally recorded in other comprehensive income shall be all transferred to investment income of the period in which the combination date falls. 4. Relevant expenses from combination The intermediate expenses occurred for business combination such as audit, legal service and appraisal consultation expenses and other related expenses shall be recorded in current gains and losses when occurred; the trading expenses for equity securities offering shall be excluded while reckoned into equity transaction directly. 6. Methods for preparation of consolidated financial statements 1. Consolidated scope The consolidation scope of the consolidated financial statements of the Company is fixed on the basis of control, and all subsidiaries (including the independent subject control by the Company) have been consolidated. 2. Consolidated procedure Based on financial statements of its own and the subsidiaries, the Company establishes the consolidated financial statements according to other relevant data. The consolidated financial statements established by the Company regard the whole enterprise group as an accounting subject, and reflect the overall financial situation, operating results and cash flow of the enterprise group by the uniform accounting policies in accordance with the relevant confirmation, measurement and presentation requirements of accounting standards. The accounting policies and accounting period adopted by the subsidiaries taken into account of the consolidation scope are in line with the Company. If it is not the same as the Company, necessary adjustments will be made when preparing consolidated financial statements according to the accounting policy and accounting period of the Company. When consolidating financial statements, the Company shall offset all effects upon consolidated balance sheet, consolidated profit statement, consolidated cash flow statement and consolidated statement of changes in equity arising from the internal transactions between the Company and each subsidiary and between various subsidiaries. If there is difference between the point of view of consolidated financial statements of enterprise group and the affirmation to the same transaction by taking the Company or its subsidiaries as the accounting subject, adjust the transaction from the enterprise group’s point of view. 60 东沣科技集团股份有限公司 2017 年半年度报告全文 The ownership interests of subsidiaries, current net profits or losses and shares of current comprehensive income belonging to minority shareholders are respectively and separately listed under the ownership interest item of consolidated balance sheet, the net profit item of consolidated profit statement and the total comprehensive income item. The balance that the current losses shared by the subsidiary's minority shareholders is greater than the shares in the ownership interests held by the minority shareholders in the beginning period of this subsidiary offsets against the minority stockholders' interests. For the subsidiaries acquired through business combination under the same control, take the fair value of its assets and liabilities (including the goodwill formed by the ultimate controlling party’s acquisition to the combined party) in the financial statements of ultimate controlling party as a basis to adjust its financial statements. For the subsidiaries acquired through business combination not under the same control, take the fair value of net identifiable assets on acquisition date to adjust its financial statements. (1) Increase subsidiaries or businesses During the reporting period, if there are subsidiaries or businesses increased by the business combination under the same control, adjust the opening balance of consolidated balance sheet; include the income, expenses and profits of the subsidiaries or business combination from the beginning of the period to the end of the reporting period into the consolidated profit statement; include the cash flow of the subsidiaries or business combination from the beginning of the period to the end of the reporting period into the consolidated statement of cash flows, adjust the relevant items of comparative statements at the same time, and regard that the reporting entity after combination has been exiting since the ultimate controller starts controlling. If the control can be implemented to the investees under the same control due to the additional investment, it can be regarded that all partied in the combination can be adjusted when the ultimate controller starts controlling, i.e. by the current status and existence. For the equity investment held before obtaining the control power of combined party, the relevant profit and loss, other comprehensive income and other changes in net assets from the later date between the acquisition date of original stock right and the date when the combining party and combined party are under the same control to the combination date respectively offset against the retained earnings at the beginning of the period or the current profit and loss in the comparative statement period. During the reporting period, if there are subsidiaries or businesses increased by the business combination not under the same control, don’t adjust the opening balance of consolidated balance sheet; include the income, expenses and profits of the subsidiaries or business combination from the purchase date to the end of the reporting period into the consolidated profit statement; include the cash flow of the subsidiaries or business combination from the purchase date to the end of the reporting period into the consolidated statement of cash flows. If the control can be implemented to the investees not under the same control due to the additional investment, the Company re-measures the stock right of acquiree held before the purchase date according to the fair value of this stock right on the purchase date, the balance between fair value and its book value is included in the current investment income. Other comprehensive income that the stock right of acquiree held before the purchase date involving in equity method business accounting and other changes in ownership interest except for net profit or loss, other comprehensive income and profits distribution, together with its relevant other comprehensive income and other changes in ownership interest are transferred into the current investment income attributable to the purchase date, besides the other comprehensive income generated by the changes in the net indebtedness and net assets re-measured and defined benefit plans by investees. (2) Disposal of subsidiaries or businesses 1) General approaches During the reporting period, if the Company disposes a subsidiary or business, the income, expense and profit of this subsidiary or business from the beginning of the period to the disposal date are included in the consolidated income statement; the cash flow of this subsidiary or business from the beginning of the period to the disposal date are included in the consolidated statement of cash flows. When control power over investees are lost due to disposal of some equity investment or other reasons, the Company re-measure the remaining equity investment after disposal in accordance with its fair value on the date to lose the control power. The balance by subtracting the sum of consideration obtained by disposing stock right and fair value of residual equity from the sum of the shares of 61 东沣科技集团股份有限公司 2017 年半年度报告全文 net assets continuously calculated according to the original shareholding ratio since the purchase date or combination date of the original subsidiary and the goodwill are included in the investment income of the current period of losing control power. Other comprehensive income related to the equity investment of original subsidiary and other changes in ownership interest except for other net profit and loss, other comprehensive income and profits distribution are transferred into current investment income when losing the control power, besides the other comprehensive income generated by the changes in the net indebtedness and net assets re-measured and defined benefit plans by investees. 2) Dispose subsidiaries step by step Dispose a subsidiary's equity investment until losing the control power step by step through multiple transactions, if the terms, conditions and economic impact of the disposal to various transactions of the subsidiary's equity investment conform to following one or various conditions, it means that the multiple transactions should have accounting treatment as a package deal: A. These transactions are made by considering each other’s impacts; B. These transactions can only reach a complete business result as a whole; C. The occurrence of one transaction depends on the occurrence of at least one other transaction; D. One transaction alone is not economical, but it is economical when it is considered together with other transactions. The various transactions that dispose a subsidiary's equity investment until losing the control power belong to a package deal, the Company handles accounting treatment to various transactions by taking them as a transaction disposing a subsidiary's equity investment and losing the control power; however, the balance between every disposal price before losing control power and net asset shares of the subsidiary corresponding to disposal of investment should be confirmed as other comprehensive income in the consolidated financial statements and transferred into the profit and loss of the current period of losing control power when losing the control power. The various transactions that dispose a subsidiary's equity investment until losing the control power and don’t belong to a package deal, before losing control power, are handled with accounting treatment according to relevant policies which used to partly dispose the subsidiary's equity investment on the condition of not losing the control power; when losing the control power, they are handled with accounting treatment according to the general handling methods used to dispose the subsidiary. (3) Purchase the minority shareholding of a subsidiary If there is balance between the Company’s long-term equity investment newly obtained by purchasing the minority shareholding and the net asset shares of the subsidiary continuously calculated from the acquisition date (or combination date) according to the newly increased shareholding ratio, adjust the capital stock premium in capital reserve on consolidated balance sheet, if the capital stock premium in capital reserve is not enough for offset, adjust the retained earnings. (4) The partial disposal of equity investments in subsidiaries without losing the control power If there is balance between the disposal price obtained by the partial disposal of long-term equity investments in subsidiaries without losing the control power and the net asset shares of the subsidiary continuously calculated from the acquisition date or combination date corresponding to the disposal of long-term equity investments, adjust the capital stock premium in capital reserve on consolidated balance sheet, if the capital stock premium in capital reserve is not enough for offset, adjust the retained earnings. 7. Classification of joint arrangement and accounting for joint operations 1. Classification of joint arrangement The Company classifies joint venture arrangement into joint operations and joint ventures based on the structure, legal form, agreed terms of the arrangement and other related facts and conditions. Joint venture arrangement not concluded through separate entity is classified as joint operation; and those concluded through separate entity are generally classified as joint ventures. However, joint venture arrangement which meets any of the following conditions as proven by obvious evidence and satisfies relevant laws and rules is grouped as joint operation: 1. The legal form of the arrangement shows that parties to the arrangement are entitled to and assume rights and obligations in respect of the relevant assets and liabilities. 62 东沣科技集团股份有限公司 2017 年半年度报告全文 2. It is agreed by the terms of the arrangement that parties to the arrangement are entitled to and assume rights and obligations in respect of the relevant assets and liabilities. 3. Other related facts and conditions show that parties to the arrangement are entitled to and assume rights and obligations in respect of the relevant assets and liabilities. For instance, joint parties are entitled to almost all the output related to joint venture arrangement and settlement of the liabilities under the arrangement continues to rely on supports from the joint parties. 2. Accounting for joint operations The Company recognizes its proportion of interests in joint operation as related to the Company, and accounts for under relevant business accounting principles: 1. To recognize separately-held assets and jointly-held assets under its proportion; 2. To recognize separately-assumed liabilities and jointly-assumed liabilities under its proportion; 3. To recognize revenue from disposal of the output which the Company is entitled to under the proportion; 4. To recognize revenue from disposal of the output under the proportion; 5. To recognize separately occurred expenses, and to recognize expenses occurred for joint operations under its proportion. For injection to or disposal of assets of joint operations (other than those assets constituting business operation), gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint operation before the joint operation is sold to any third party. In case those assets injected or disposed satisfy the condition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes this loss in full. For acquisition of assets from joint operations (other than those assets constituting business operation), gain or loss arising from the transaction is only recognized to the extent it is attributable to other parties to the joint operation before the relevant assets are sold to any third party. In case that the acquired assets satisfy the condition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes relevant loss according to the proportion it assumes. The Company exercises no common control over joint operations. If the Company is entitled to relevant assets of the joint operation and assure relevant liabilities, it shall be accounted for under the above principle, otherwise it would be accounted for under the relevant business accounting principles. 8. Recognition standards for cash and cash equivalents When preparing cash flow statement, the Company recognized the stock cash and deposits available for payment at any time as cash, and investments featuring with the following four characters at the same time as cash equivalents: short term (expire within 3 months commencing from purchase day), active liquidity, easy to convert to already-known cash, and small value change risks. 9. Foreign currency business and conversion of foreign currency statement 1. Foreign currency business For the foreign currency business, the Company converts the foreign currency into RMB for book-keeping based on spot exchange rate at date of trading occurred while initially recognized. On balance sheet date, balance of foreign currency monetary items shall be converted based on the spot rate as at the balance sheet date, and the arising exchange difference shall be recorded in current gains and losses other than those arising from the special foreign currency borrowings related to purchasing assets qualifying for capitalization which is treated under the principle of borrowing expense capitalization. As for the foreign currency non-monetary items measured in historical cost, conversion is still conducted with the spot rate as at the transaction date, without any change to its functional currency. As for the foreign currency non-monetary items measured in fair value, conversion is conducted with the spot rate as at the date for determination of fair value, and the arising exchange difference shall be recorded in current gains and losses as the changes of fair value. if the foreign currency non-monetary items belong to foreign currency available for sale, the arising exchange difference shall be recorded in other comprehensive income. 63 东沣科技集团股份有限公司 2017 年半年度报告全文 2. Translation of foreign currency financial statement Assets and liabilities in balance sheet are translated at the spot exchange rate at the balance sheet date. Equity items, excluding “undistributed profit”, are translated at the spot exchange rates at the transaction dates. As for those translated at the spot exchange rates at the transaction dates or those recognized in line with the reasonable method in system, translated at the similar exchange rate as at the transaction date. The resulting translation differences are recognized in other comprehensive income. When disposing overseas operations, the foreign currency financial statement translation differences listed under items of other comprehensive income in balance sheet and which are directly related to the overseas operations are transferred to profit or loss in the period when the overseas operation is disposed; In case of partial disposal or the overseas business, which has lower operation ratio overseas without operation controlling loss due to other reason, the translation differences related to disposal part shall including in equity of minority shareholders, no need to transfer into current gains/losses. In case of partial disposal of associated or joint venture, foreign currency translation differences shall be calculated in respect of the disposed part under disposal proportion and transferred to profit or loss in the period when the overseas operation is disposed. 10. Financial instruments Financial instruments include financial assets, financial liabilities and equities instruments. 1. Categories of financial instruments According to the contract terms of the financial instrument issued and economic substance reflects by such instrument, not only in form of law, combine with purposes held for financial assets and liabilities, the management categorizes financial assets and liability into different types at the time of initial confirmation: financial assets (or financial liabilities) at fair value through current gains and losses; accounts receivable; financial assets available for sale; other financial liabilities, etc. 2. Recognition and measurement for financial instrument (1) Financial assets or liabilities at fair value through profit or loss Financial assets or liabilities at fair value through profit or loss include transactional financial assets or financial liabilities and financial assets or liabilities directly designated at fair value through profit or loss. Transactional financial assets or financial liabilities refer to those meeting any of the following conditions: 1) Purpose for holding the assets or liabilities are to disposal, repurchase or redemption in a short time; 2) Constitute part of the identifiable financial instrument group for central management, and there is objective evidence proving that the Company manages this group in a short-time-return way recently; 3) Belong to derivative financial instrument, other than those derivatives designated as effective hedge instruments, belonging to financial guarantee contracts and those linked to equity instrument investment which is not quoted in an active market and whose fair cannot be measured reliably and the settlement of which is conditional upon delivery of the equity instrument. Subject to satisfaction of any of the following conditions, financial assets or liabilities can be designated as financial assets or liabilities at fair value through profit or loss upon initial measurement: 1) The designation can eliminate or substantially eliminate the inconsistencies between profit or loss from the financial assets arising from different measurement basis; 2) The portfolio of financial assets and liabilities in which the financial asset belongs to are designated as measured at fair value in the risk management report or investment strategic report handed in to key management personnel; 3) Hybrid instruments which contains one or more embedded derivatives, unless the containing of embedded derivatives does not have substantial effect on the cash flows of the hybrid instruments, or the embedded derivatives obviously should not be separated from relevant hybrid instruments; 4) Hybrid instruments which contains embedded derivatives that should split, but cannot be measured separately when acquired or on the subsequent balance sheet date. Amount is initially measured by the sum of fair value (deducted bond interest expired without received) while obtained and relevant transaction expenses. 64 东沣科技集团股份有限公司 2017 年半年度报告全文 Interest or cash dividend in period of holding shall be recognized as investment income, and reckoned into current gains/losses with the variation of fair value at period-end. In case of disposal, the difference between the amount while obtained and book value of the investment shall reckon into investment income, and gains/loses of variation of the fair value shall be adjusted correspondingly. (2) Account receivables Account receivables refer to the non-derivative financial assets in active market, which has no quoted but has fixed amount or amount can be determined in collection. The contract price charged to the buyers shall be recognized as initial value for those account receivables which mainly comprise the receivable creditor’s right caused by the sale of goods and providing of labor service to external customers by the Company, and receivables in other companies excluding debt instruments priced in active markets, includes but not limited to trade receivables, notes receivables, account paid in advance and other receivables. If characterized as of financing nature, the initial recognition shall be priced at the present value. Upon disposal, the difference between the sale value and the book value of the receivables shall be accounted into current profit or loss on its recovery or disposal. (3) Held-to-maturity investment The non-derivative financial assets with maturity date, fix return amount or amount able to determined, and the Company held with specific intention and ability. The Company takes the sum of fair value (after deducting bond interests which is due for interest payment but not received) and related transaction fee as initial recognition amount in respect of held-to-maturity investment upon acquisition of the investment. During the holding period, the Company recognizes interest income at amortized cost and effective interest rate which is included in investment income. The effective interest rate is determined upon acquisition of the investment and remains unchanged for the expected continuous period or appropriate shorter period. Difference between sale price and carrying value of the investment is included in investment income. If held-to-maturity investment is disposed or reclassified as other types of financial asset, and the relevant amount is relatively bigger than the total amount of our all held-to-maturity investments prior to disposal or reclassification, the remaining held-to-maturity investments shall be reclassified as available-for-sale financial assets immediately following such disposal or reclassification. On the reclassification date, difference between the carrying value and fair value of the investment is included in other comprehensive income and is transferred out into current profit or loss when the available-for-sale financial assets experience impairment or derecognition. However, the followings are exceptions: 1) The date of disposal or reclassification is approaching to the date of expiration or redemption of the investment (such as three months prior to expiration), and change of market rate has no material influences over the fair value of the investment. 2) Company has already recovered nearly all initial principal under the repayment means as agreed in contract. 3) Disposal or reclassification is arising from separate matters which are out of our control, which are expected not to occur repeatedly and which are difficult to predict reasonably. (4) Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale upon initial recognition and financial assets other than other categories of financial assets. The Company initially measures available-for-sale financial assets at the sum between their fair values when acquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond interests which is due for interest payment but not received) and the relevant transaction fee. Interest or cash dividend acquired during the holding period shall be recognized as investment income. Gains or losses arising from movement of fair value is directly included in other comprehensive income except for impairment loss and exchange difference arising from foreign currency monetary financial assets. When disposing available-for-sale financial assets, the Company includes the difference between the acquired price and carrying value of the financial assets into investment profit or loss. Meanwhile, accumulated fair value movement attributable to the disposed 65 东沣科技集团股份有限公司 2017 年半年度报告全文 part which is originally directly included in other comprehensive income is transferred out and included investment profit or loss. For equity instrument investment which is not quoted in an active market and whose fair value cannot be reliably measured, and derivative financial assets which are linked to the equity instrument and whose settlement is conditional upon delivery of the equity instrument, they are stated at cost by the Company. (5) Other financial liabilities Initial recognition amount is determined at the sum of fair value and relevant transaction fee. Subsequent measurement is conducted at amortized cost. (6) Held-to-maturity investment for sales or reclassify as financial assets available for sale: In case that the amount of held-to-maturity investments disposed or reclassified into other categories of financial assets is greater than the total amount of all the held-to-maturity investment of the Company before the disposal or reclassification, the remaining held-to-maturity investment shall be recorded as financial assets available for sale immediately after such disposal or reclassification, unless: 1) The date of disposal or reclassification is relatively close to the maturity date or redemption date of the investment (such as three months before expiration), and change of market rate has no material affects on the fair value of the investment. 2) The enterprise has nearly recovers the entire initial principal under the payment method as agreed by contract. 3) The disposal or reclassification is due to such independent matter that the enterprise is not able to control, will not happen again as expected and can not predicted reasonably. 3. Confirmation evidence and measurement methods for transfer of financial assets When transfer of financial assets occurs, the Company shall stop recognition of such financial assets if all risks and remunerations related to ownership of such financial assets have almost been transferred to the receiver; while shall continue to recognize such financial assets if all risks and remunerations related to ownership of such financial assets have almost been retained. When judging whether or not the aforesaid terminal recognition condition for financial assets is arrived at for transfer of financial assets, the Company generally adopts the principle that substance overweighs format. The Company divides such transfer into entire transfer and part transfer. As for the entire transfer meeting condition for discontinued recognition, balance between the following two items is recorded in current gains and losses: (1) Carrying value of financial assets in transfer; (2) Aggregate of the consideration received from transfer and accumulative movements of fair value originally recorded in owners’ equity directly (applicable when financial assets involved in transfer belong to financial assets available for sale). As for the part transfer meeting condition for discontinued recognition, entire carrying value of financial assets in transfer is shared by discontinued recognition part and continued recognition part, in light of their respective fair value. Balance between the following two items is recorded in current gains and losses: (1) Carrying value of discontinued recognition part; (2) Aggregate of the consideration of discontinued recognition part and amount of such part attributable to accumulative movements of fair value originally recorded in owners’ equity directly (applicable when financial assets involved in transfer belong to financial assets available for sale). Financial assets are still subject to recognition if transfer of such assets doesn’t satisfy the condition for discontinued recognition. And consideration received is recognized as financial liability. 4. De-recognition condition for financial liability As for the financial liabilities with its whole or part present obligations released, the company shall de-realize such financial liabilities or part of it. if the company enters into agreement with its creditor to substitute for the existing financial liabilities by means of assuming new financial liabilities, then the company shall de-realize the existing financial liabilities and realize the new financial liabilities provided that the contract clauses of the new and the existing financial liabilities are different in substance. If the company makes substantial amendment to the whole or part contract clauses of the existing financial liabilities, it shall de-realize the existing financial liabilities or part of it. Meanwhile, the financial liabilities with amendment to its clauses shall be realized as new financial liabilities. 66 东沣科技集团股份有限公司 2017 年半年度报告全文 In case of derecognizing of financial liabilities in whole or part, the difference between the carrying value of such de-realized financial liabilities and consideration paid (including the non-cash assets exchanged or new financial liabilities assumed) shall be recorded in current gains and losses. In case that the company repurchases part of financial liabilities, based on the comparative fair value of the continuing recognition part and the derecognizing part, the company shall allocate the carrying value of the financial liabilities in whole on the repurchase date. Difference between the carrying value allocated to the derecognizing part and the consideration paid (including the non-cash assets exchanged or new financial liabilities assumed) shall be recorded in current gains and losses. 5. Determination method for fair value of financial assets and financial liabilities As for the financial assets or financial liability for which there is an active market, the quoted prices in the active market shall be used to determine the fair value thereof; the quoted prices in the active market refers to the prices, which are easily available from the stock exchanges, brokers, industry associations, pricing service institutions and etc. at a fixed term, and which represent the prices at which actually occurred market transactions are made under fair conditions. As for the financial assets and financial liabilities measured by fair value and in case that there are active market for those assets and liabilities, then the fair value shall be determined based on the quotation on active market; as for the financial assets initially acquired or financial liabilities assumed, their fair value are determined based on the market transaction prices; in case that there are no such active market for financial assets and financial liabilities, the fair value shall be determined by evaluation technology. At time of evaluation, the applicable evaluation technology, in the prevailing circumstance, and those have available date and other information supporting shall be adopted, choose the input value, same with the assets or liability features that consider in transaction by market participants, and use the relevant observable input values as far as possible. Use the un-observable input values when relevant observable input values unable to obtained or obtained without feasible. 6. Provision of impairment reserve for impairment of financial assets (excluding account receivables) The company reviews the carrying value of the financial assets (excluding those measured by fair value and the change thereof is recorded in current gains and losses) on the balance sheet date, if there is objective evidence showing impairment of the financial assets, it shall provide impairment reserve. Objective evidence that a financial asset is impaired includes the following observable events: Significant financial difficulty of the issuer or obligor; A breach of contract by the borrower, such as a default or delinquency in interest or principal payments; The creditor, for economic or legal reasons relating to the borrower’s financial difficulty, granting a concession to the borrower; It becoming probable that the borrower will enter bankruptcy or other financial reorganizations; The disappearance of an active market for that financial asset because of financial difficulties of the issuer; Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including: adverse changes in the payment status of borrowers in the group, an increase in the unemployment rate in the country or geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, or adverse changes in industry conditions that affect the borrowers in the group; Significant adverse changes in the technological, market, economic or legal environment in which the issuer operates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor; A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost; Details for impairment of financial assets are set out below: (1) Impairment provision for available-for-sale financial assets The Group has separately tested various available-for-sale equity instruments at the balance sheet date. It will be defined as impairment if the fair value is lower than the initial investment cost by more than 50% (including 50%) or the low state has lasted for no less than 1 year. While the lower proportion is between 20% and 50%, the Group will take other factors such as price fluctuation into consideration to estimate whether the equity instrument has impaired or not. Cost stated in the above paragraph is determined based on the initial acquisition cost of available for sale equity instrument 67 东沣科技集团股份有限公司 2017 年半年度报告全文 investment less recovered principal and amortized amount as well as impairment loss originally included in profit or loss; fair value is determined at the closing price quoted on stock exchange at period end, unless the available for sale equity instrument investment is limited for sale for certain periods. For available for sale equity instrument investment which is limited for sale for certain periods, fair value is determined at the closing price quoted on stock exchange at period end less the compensation required by market participator who would otherwise assume risks due to impossibility of selling the equity instrument on open market in designated period. When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value that had been recognized in other comprehensive income is reclassified to the profit or loss even though the financial asset has not been derecognized. The amount of the cumulative loss that is removed from equity is the difference between the acquisition cost (net of any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss. If there are objective evidences showing that the value of available-for-sale debt instrument is recovered and it relates to the matters happened after the impairment loss recognition, the impairment loss recognized shall be reversed and accounted in current profit or loss. Impairment losses recognized for equity instrument investments classified as available-for-sale are reversed through equity. However, impairment loss occurred by equity instrument investment which is not quoted in an active market and whose fair value cannot be measured reliably and derivative financial assets which are linked to the equity instrument and whose settlement is conditional upon delivery of the equity instrument, shall not be reversed. (2) Impairment provision for held-to-maturity investment For held-to-maturity investment, if there is object evidence showing the investment is impaired, then impairment loss is determined based on the difference between its fair value and present value of predicted future cash flow. After provision, if there is evidence showing its value has been restored, the originally recognized impairment loss can be reversed and included in current profit or loss, provided that the reversed carrying value shall not exceed the amortized cost of the financial asset as at reversal date assuming no impairment provision had been made. 7. Offset of financial assets and financial liabilities Financial assets and financial liabilities are stated in balance sheet separately without inner-offset. However, the net amount after inner offset is stated in balance sheet date when the following conditions are all met: (1) The Company has legal right to offset recognized amount and the right is enforceable; (2) The Company plans to settle on a net basis, or simultaneously realize the financial assets and settle the financial liabilities. 11. Account receivable (1) Account receivable with single significant amount and withdrawal single item bad debt provision Determine basis or amount standards for single significant Account with single significant amount not less than RMB 1 million amount Conducted impairment testing separately, balance between the present value of future cash flow and its carrying value, bad debt Withdrawal method for bad debt provision of account receivable provision withdrawal and reckoned into current gains/losses. As with single significant amount: for the receivable without impairment being out in test, accrual bad debt provision in corresponding group 68 东沣科技集团股份有限公司 2017 年半年度报告全文 (2) Accounts receivable whose bad debts provision was accrued by combination of credit risk characteristics portfolio Combination Methods on withdrawal of bad debt provision Age combination Age analysis method No risk portfolio Other method Related party combination in combined range Other method Accrued for provision of bad debt by aging analysis method in portfolio: √ Applicable □Not-applicable Account age Rate for receivables Rate for other receivables Within one year (one year included) 5.00% 5.00% 1-2 years 20.00% 20.00% 2-3 years 50.00% 50.00% Over 3 years 100.00% 100.00% In combination, withdrawal proportion of bad debt provision based on balance proportion: □ Applicable √ Not-applicable In combination, withdrawal proportion of bad debt provision based on other methods √Applicable □ Not applicable Name Rate for receivables Rate for other receivables No risk portfolio 0.00% 0.00% Related party combination in combined 0.00% 0.00% range (3) Accounts receivable with single significant amount and bad debts provision accrued individually There is an objective evidence of impairment which is probably about to occurred, such as revocation from the debtor, Reasons for withdrawal single item bad debt provision bankruptcy or dead, and still able to recover after liquidated by the bankruptcy property or heritage as well as serious insufficient cash flow etc. For those account receivable with objective evidence of impairment been found, separated them from the relevant groups for impairment testing independently, and impairment losses Withdrawal method for bad debt provision shall recognized and withdrawal bad debt reserves on the difference between the present values of estimated future cash flow which is lower than its carrying value, 69 东沣科技集团股份有限公司 2017 年半年度报告全文 12. Inventories Whether the company needs to comply with the disclosure requirements of the particular industry Yes Real estate industry 1. Classification of inventories Inventories are categorized into development cost, development products, relocation housing animals & plants aquaculture plant products and low value consumables etc. 2. Valuing of inventory The Company adopts the historical cost for obtaining or the planned cost to value the inventory according to its actual situation, and specific identification method for the development projects. 3. Confirmation of net realizable value for the inventory and provision for inventory impairment Making an overall check of the inventory at end of the year, withdrawal the lower one according to the cost or the net realizable value, or adjusted the provision for inventory impairment. Withdrawal the impairment provisions for the single inventory at end of the year. In case the influencing factor for write-down of the inventory values has disappeared, the amount which has been written down can be recover, and shall switch back within the inventory falling price reserves which has been accrual originally, the amount switch back shall reckoned into current gains/losses. 4. Inventory System Perpetual inventory system 5. Low-value consumables are amortized on one-off amortization method 6. Relocation housing refers to the house for turnover purpose to arrange for relocation of residents, and amortized evenly in 50 years. 7. Calculation method of the lands for development purpose As for the pure land development project, the costs constitute costs of the land development; the project develops along with the real estate, costs with clear burden of objects shall split into commercial house costs with actual area. 8. Calculation method of the expenses of public supporting facilities Public supporting facilities cannot be transfer with compensation: reckoned into commercial house costs by the benefit ratio; Public supporting facilities can transfer with compensation: take all supporting facilities as the cost calculation subject, summarize the costs occurred. 13. Classified as assets held for sale 1. Recognition criteria of assets held for sale The Company’s component (or non-current asset) will recognize as held-for-sale while satisfied the followed conditions simultaneously: (1) The component can be promptly sold at its existing status only according to the practice terms in connection with disposal of this kind of assets; (2) The Company has already made resolution on disposal of such component, such as approved by shareholders in line with regulations, have already approved by general meeting or relevant authority; (3) The Company entered into irrevocable transfer agreement with the transferee; (4) And this transfer will be completed within one year. 2. Accounting for assets held for sale The company will adjust the predicted net residual value of the held for sale fixed assets so that the predicted net residual value can 70 东沣科技集团股份有限公司 2017 年半年度报告全文 reflect its fair value minus the costs of disposal, but the predicted net residual value should not exceed the book value of the fixed asset when it was recognized as held for sale. If the book value is higher, the difference between them should be charged into profit or loss for the current period as asset impairment loss. Fixed assets held for sale shall not be depreciated or amortized, and is measured at carrying value and fair value less costs of disposal (whichever is lower). Other non-current assets like equity investments and intangible assets satisfying condition for held for sale should be accounted for as shown above, other than deferred income tax assets, financial assets under Business Accounting Standard No. 22-Measurement and Recognition of Financial Instruments, investment property measured at fair value, biological assets, and rights from insurance contract. 14. Long-term equity investment 1. Recognition of investment cost (1) As for the long-term equity investment formed from business combination under the same control, accounting policy found in Note I - Accounting method for business combination (not) under the same control. (2) Long-term equity investment obtained by other means For long-term equity investments obtained through payment with cash, then the actual payment shall be viewed as initial investment cost. Initial investment cost including the expenses, taxes and other necessary costs that directly concerned with the long-term equity investment that acquired. For long-term equity investments obtained through issuance of equity securities, then the fair value of such securities shall be viewed as initial investment cost; for transaction expenses from issuing or own equity instrument acquired, it can be deducted from the equity when such expenses attributable directly to equity transaction. Under the precedent condition that non-monetary assets exchanges are featured with commercial nature and fair values of exchange-in or exchange-out assets can be reliably measured, long-term equity investment exchange-in through non-monetary assets exchange shall be recognized with initial investment cost on the basis of the fair value of the assets exchange-out, unless there is obvious evidence showing that fair value of exchange-in assets is more reliable; as for non-monetary assets exchanges not satisfying such precedent condition, initial investment cost of exchange-in long-term equity investment falls to the carrying value of exchange-out assets and relevant taxes payable. For long-term equity investments obtained through debt reorganization, its initial investment cost is recognized based on fair value. 2. Subsequent measurement and recognition of gains and losses (1) Subsequent measurement (1) Cost method The long-term equity investment control by invested entity shall counted by cost method, and pricing on initial investment cost, cost of the long-term equity investment shall be adjusted while additional investment or dis-investment. Other than payment actually paid for obtaining investment or cash dividend or profit included in consideration which has been declared while not granted yet, the Company recognizes investment income according to its share in the cash dividend or profit declared for grant by the invested unit. (2) Equity method The Company calculates long term equity investment in associates and joint ventures under equity method. For certain equity investments in associates indirectly held through risk investment institutions, joint funds, trust companies or similar entities including investment linked insurance fund, the Company measures the investment at fair value through profit or loss. Where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period. 71 东沣科技集团股份有限公司 2017 年半年度报告全文 Return on investments and other comprehensive income is recognized respectively by shares of net gains and losses realized by the invested company and other comprehensive income after acquisition of long-term equity, and book value of such investment is adjusted accordingly. Profit or cash dividends pro rata distributed by the invested company are to minus book value of the relative long-term investment. Book value of long-term investment is adjusted when changes occur other than net gains and losses, other comprehensive income and profit distribution of the invested company, and is to reported in owners’ equity accordingly The Company should recognized net profit of invested unit after adjustment, based on fair value of vary identifiable assets of invested unit while obtained investment, while recognized net profit or net losses of invested units that should be enjoy by investment enterprise. the un-realized transaction gains/losses attributable to investment enterprise, internally occurred between the Company, affiliated units and joint-ventures should calculated by proportion of shares-holding which should be offset, than recognized investment gains/losses. When the Company is confirmed to share losses of the invested units, the following order shall prevail for disposal: first of all, offset carrying value of long-term equity investment. Second, for long-term equity investment whose carrying value is not enough for offset, investment loss should be continued to recognize within the limit of carrying value of other long-term equity which substantially forms net investment to invested units, to offset carrying value of long-term items receivable. At last, after the aforesaid treatment, if enterprise still bears additional duties according to investment contract or agreement, projected liabilities are recognized in accordance to the obligations which are expected to undertake, and then recorded in current gains and losses. In the event that the invested unit realizes profit in later periods, the Company will adopt disposal adverse to the above order after deduction the unrecognized share of loss, i.e. write off the carrying value of the recognized projected liabilities, recover carrying value of long-term equity which substantially forms net investment to invested unit and long-term equity investment, and recognize investment income at the same time. 3. Transfer of calculation for long term equity investment (1) Measure at fair value transfer to equity method For the equity investment originally held by the Company in which it has no control, common control or significant influence over the investee and which is accounted for under recognition and measurement principle as financial assets, in case that the Company becomes able to exercise significant influence or common control upon the investee due to additional investment while no control is reached, the sum of fair value of the originally held equity investment as determined under Business Accounting Principles No.22- Recognition and Measurement Principle as Financial Assets plus cost of the new investment shall be deemed as the initial investment cost upon calculation under equity method. If the originally held equity investment is classified as available for sale financial assets, the difference between its fair value and carrying value and the accumulated fair value movement which is originally included in other comprehensive income shall be transferred to current period gains and losses under equity method. In case that the initial investment cost under equity method is lesser than share of fair value of the investee’s net identifiable assets as of the date when additional investment is made as calculated based on the latest shareholding proportion upon additional investment, carrying value of the long term equity investment shall be adjusted against such difference which is included in current period non-operating income. (2) Measure at fair value or calculation under equity method transfer to calculation under cost method For the equity investment originally held by the Company in which it has no control, common control or significant influence over the investee and which is accounted for under recognition and measurement principle as financial instrument, or for long term equity investment originally held in associates or joint ventures, in case that the Company becomes able to exercise control over investee not under common control due to additional investment, the sum of fair value of the originally held equity investment plus cost of the new investment shall be deemed as the initial investment cost upon calculation under cost method when preparing separate financial statement. For other comprehensive income as recognized under equity method in respect of equity investment held prior to acquisition date, when the Company disposes this investment, the aforesaid income shall be accounted for on the same basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities. 72 东沣科技集团股份有限公司 2017 年半年度报告全文 For equity investment held prior to acquisition date which is accounted for under Business Accounting Principles No.22- Recognition and Measurement of Financial Assets, the accumulated fair value movement which originally included in other comprehensive income shall be transferred to current period gains and losses upon calculation under cost method. (3) Calculation under equity method transfer to fair value measurement In case that the Company lost common control or significant influence upon investee due to disposal of part equity investment, the remaining equity investment shall be calculated under Business Accounting Principles No.22- Recognition and Measurement of Financial Assets, and the difference between its fair value and carrying value as of the date when the Company lost common control or significant influence shall be included in current period gains and losses. For other comprehensive income as recognized under equity method in respect of the original equity investment, when the Company ceases calculation under equity method, the aforesaid income shall be accounted for on the same basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities. (4) Cost method transfer to equity method In case that the Company lost control upon investee due to disposal of part equity investment, and if the remaining equity investment can exercise common control or significant influence over the investee, equity method shall be adopted when preparing separate financial statement, and the remaining equity investment shall be adjusted as if it had been stated under equity method since the acquisition. (5) Cost method transfer to fair value measure In case that the Company lost control upon investee due to disposal of part equity investment, and if the remaining equity investment cannot exercise common control or significant influence over the investee, Business Accounting Principles No.22- Recognition and Measurement of Financial Assets shall be adopted for accounting treatment when preparing separate financial statement, and the fair value and carrying value as of the date when control is lost shall be included in current period gains and losses. 4. Disposal of long term equity investment Difference between carrying value and actual acquisition price in respect of disposal of long term equity investment shall be included in current period gains and losses. For long term equity investment under equity method, the Company shall adopt the same basis as the investee directly disposes relevant assets or liabilities when disposing this investment, and account for the part originally included in other comprehensive income under appropriate proportion. If the terms, conditions and economic impact of each transaction involved in the disposal by steps of investment in subsidiaries fall into one or more of the following situations, such transactions will be accounted for as a package deal: 1. Such transactions are entered into simultaneously or in the case of considering the impact of each other; 2. Such transactions as a whole in order to reach complete commercial results; 3. The occurrence of one transaction is subject to that of at least one other transaction; 4. A transaction alone is not economic, but otherwise when considered with other transactions. Enterprises that lose control of their original subsidiaries due to the disposal of partial equity investment or otherwise, and therefore disqualify a package deal, should prepare the relevant accounting treatment in differentiation with individual financial statements and consolidated financial statement: (1) In separate financial statement, as for disposal of equity interest, difference between carrying value and actual acquisition price shall be included in current period gains and losses. In case that the remaining equity interests can exercise common control or significant influence over investee, it shall be stated under equity method in stead, and shall be adjusted as if the remaining equity interests had been stated under equity method since the acquisition. In case that the remaining equity interests cannot exercise common control or significant influence over investee, it shall be accounted for under Business Accounting Principles No.22- Recognition and Measurement Principle of Financial Instruments, and the difference between its fair value and carrying value as of the date then the Company lost control shall be included in current period gains and losses. (2) In consolidated financial statement, for those transactions occurred before lost of control in subsidiaries, the difference between disposal price and share of net assets of subsidiaries since purchase date or combination date shall be used to adjust capital reserve (equity premium), and if capital reserve is insufficient to offset, then it shall adjust retained earnings; when the Company lost control 73 东沣科技集团股份有限公司 2017 年半年度报告全文 in a subsidiary, the remaining equity interests would be re-measured at the fair value as of the control-lost date. The sum of consideration gained from the disposal of equity and the fair value of remaining equity minus the share of net assets of original subsidiaries since the day of purchase and based on its original shareholding ratio is credited into investment gain for the current period, and off-set the goodwill at the same time. Other comprehensive income in relation to equity investments of original subsidiaries should be transferred to investment gain for the period at the time of loss of control. Each transaction involved in the disposal of equity investments of subsidiaries until loss of control falls into a package deal, carrying accounting treatment on transaction of losing control rights and disposing the company, and should be accounted for accordingly in differentiation with individual financial statements and consolidated financial statements: (1) In consolidated financial statements, difference between each payment from disposal of an equity and the book value of such long-term equity investment before the loss of control should be recognized as other comprehensive income and at the time of loss of control, transferred to profit or loss for the current period. (2) In consolidated financial statements, difference between each payment from disposal of a subsidiary and the share of its net assets through investment before the loss of control should be recognized as other comprehensive income and at the time of loss of control, transferred to profit or loss for the current period. 5. Criteria for common control and significant influence Where the Company jointly controls an arrangement with other participators under agreed terms, and decisions which materially affect return of such arrangement can only exist when other participators unanimously agree on the decisions, the Company is deemed to jointly control this arrangement with other participators, and the arrangement belongs to joint venture arrangement. In case of a joint venture arrangement concluded through separate entity, when the Company is judged to be entitled to the net assets of the separate entity under relevant agreements, the entity shall be viewed as a joint venture under equity method. However, when the Company is judged to be not entitled to the net assets of the separate entity under relevant agreements, the entity shall be viewed as a joint operation, in which case, the Company recognizes items relating to its share of interests from the joint operation and accounts for according to relevant business accounting rules. Significant influence refers to that investor has right to participate in making decisions relating to the financial and operational policies of the investee, while not able to control or jointly control (with others) establishment of these policies. The following one or more conditions are based to judge whether the Company has significant influence over investee with consideration of all facts and situations: (1) Has delegate in the board of directors or similar authority organs of investee; (2) Participate in establishing financial and operational policies of the investee; (3) Occur material transactions with the investee; (4) Delegate management to the investee; (5) Provide key technical data to the investee. 15. Investment real estate Measurement model of investment real estate Measure by cost Depreciation or amortization method Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including the rented land use rights and the land use rights which are held and prepared for transfer after appreciation, the rented buildings. The investment property of the Company is accounted at its cost. Cost of investment property purchased from the external sources includes purchase payment, related taxes and other expenditures which can be directly attributable to such assets; Cost of investment property constructed by the Company comprise of the necessary expenditure occurred during the construction for reaching the condition of planned use. Consequent measurement of investment estate shall be measured by cost method. Depreciation and amortization are provided to the buildings and land use right pursuant to the predicted service life and net rate of salvage value. The predicted service life and net rate of salvage value and annual depreciation (amortization) are listed as follows: 74 东沣科技集团股份有限公司 2017 年半年度报告全文 Type Expected operating life Predicted rate of net salvage Depreciation(amortization) rate per (year) value annum Land Use Right 50 0%-10% 1.80%-2.00% House and buildings 20-28 0%-10% 3.56%-4.50% When investment real estate turns to be used by holders, it shall switch to fixed assets or intangible assets commencing from the date of such turning. And when self-used real estate turns to be leased out for rental or additional capital, the fixed assets or intangible assets shall switch to investment real estate commencing from the date of such turning. In situation of switch, the carrying value before the switch shall be deemed as the credit value after the switch. Indication of impairment is assessed, the recoverable amount shall be estimated and the impairment shall be recognizing while the recoverable amount lower than its book value. Impairment loss once recognized shall not be reversed. When investment is disposed, or out of utilization forever and no economic benefit would be predicted to obtain through the disposal, the Company shall terminate recognition of such investment real estate. The amount of income from disposal, transfer, discarding as scrap or damage of investment real estate after deducting the asset’ s carrying value and relevant taxation shall be written into current gains and losses. 16. Fixed asset (1) Recognition Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation & management, and have more than one year of service life. Fixed assets should be recognized for qualified the followed conditions at the same time: (1) It is probable that the economic benefits associated with the assets will flow into the Company; and (2) The cost of the assts can be measured reliably. (2) Depreciation method Category Depreciation method Estimated useful life Estimated residual rate Annual depreciation rate Houses and buildings Straight-line depreciation 20.00-28.00 5.00 3.39%-4.75% Machinery equipment Straight-line depreciation 4.00-5.00 5.00 19.00%-23.75% Transportation Straight-line depreciation 5.00-20.00 5.00 4.75%-19.00% equipment Other equipment Straight-line depreciation 3.00-5.00 5.00 19.00-31.67% Straight-line depreciation (3) Basis of asserting, pricing and depreciation method on fixed assets under financing lease A fixed asset leased by the Company is recognized as the fixed asset held under finance lease if one or more of the following criteria are met: (1) Upon the expiry of the lease term, the ownership is transferred to the Company. (2) The Company has the option to purchase the asset at a predetermined price that is expected to be sufficiently lower than the fair value at the date the option becomes exercisable and it is reasonably ascertained at the inception of lease that the option will be exercised. (3) The lease term approximates the useful life of the relevant asset even if the ownership is not transferred. (4) At the inception of the lease, the present value of the minimum lease payments is substantially equivalent to the fair value of the leased asset. (5) The leased assets are of such a specialized nature that only the Company can use them without major modification. A fixed asset held under finance lease is initially 75 东沣科技集团股份有限公司 2017 年半年度报告全文 recognized at the lower of fair value of the leased asset and the present value of the minimum lease payments, while the amount of the minimum lease payments will be recognized as the entry value of long-term account payable, the difference between them will be recognized as unrecognized financing costs. The initial direct costs such as commissions, attorney’s fees, and travelling expenses, stamp duties attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be recorded in the asset value. Unrealized finance costs will be amortized using actual interest rate method over each period during the lease terms. The Company adopts depreciation policies for leased assets consistent with those of self-owned fixed assets for the purpose of calculating the depreciation of a leased asset. If it is reasonable to be certain that the lessee will obtain the ownership of the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully depreciated over the shorter one of the lease term or its useful life. 17. Construction in process 1. Classification of constructions under progress The constructions under progress of the Company are accounted for by fund project. 2. Standard and point of time for construction in process carrying forward to fixed assets Fixed asset is booked with the entire expenditures occurred in the construction in process till it arrives at predicted state for use. For those constructions in process of fixed assets which have already arrived at the predicted state for use, while still with absence of completion settlement, they shall be carried forward to fixed assets at the estimated value based on engineering budget, construction cost or actual cost commencing from the date of arrival of the predicted state for use. Meanwhile, they shall be also subject to the depreciation policies applicable to fixed assets of the Company for provision of depreciation. Once completion settlement is made, the original temporary estimated value shall be adjusted at the effective cost. However, the original provision of depreciation remains unchanged. 3. Impairment test and impairment provision for construction in process The Company determines whether there is evidence of impairment that may occur upon construction in progress at end of each period. If there is indication of impairment of construction in progress, the Company shall estimate its recoverable amount. The recoverable amount is to be determined by the higher between the net price of the fair value of construction in progress after subtracting costs of disposal and the present value of expected future cash flow from construction in progress. When the recoverable amount of construction in progress is below their book value, the book value of construction in progress shall be written down to its recoverable amount, and the amount of write-down shall recognized as impairment loss of construction in progress, and included into current profits and losses. At the same time, the provision for depreciation of construction in progress shall be accrued. After the recognition, the impairment loss of construction in progress shall not be reversed in subsequent accounting period. If there are indications showing that impairment of certain construction in progress is possible, the Company shall estimate its recoverable amount based on individual construction. If difficult to do so, the Company shall determine the recoverable amount of the assets group on basis of the asset groups to which the construction in progress belongs. 18. Borrowing expenses 1. Recognition of the borrowing expenses capitalization Borrowing expenses that attributed for purchasing or construction of assets that are complying with capitalizing conditions start to be capitalized and counted as relevant assts cost; other borrowing expenses, reckoned into current gains and losses after expenses recognized while occurred. 76 东沣科技集团股份有限公司 2017 年半年度报告全文 Assets satisfying the conditions of capitalization are those assets of fixed, investment real estate etc. which need a long period of time to purchase, construct, or manufacturing before becoming usable. Capitalizing for borrowing expenses by satisfying the followed at same time: (1) Assets expense occurred, and paid as expenses in way of cash, non-cash assets transfer or debt with interest taken for purchasing, constructing or manufacturing assets that complying with capitalizing condition; (2) Borrowing expenses have occurred; (3) Necessary activities occurred for reaching predicted usable statues or sale-able status for assets purchased, constructed or manufactured. 2. Period of capitalization Capitalizing period was from the time star capitalizing until the time of suspended capitalization. The period for borrowing expensed suspended excluded in the period. If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization reached its predicted usable status or sale-able status, capitalization suspended for borrowing expenses. If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization completed projects and usable independently for part of the projects, borrowing expenses for this kind of assts shall suspended capitalization. If the assets have been completed in every part, but can be reached the useful status or sale-able status while completed entirely, the borrowing expense shall be suspended for capitalization while the assets completely finished in whole. 3. Period of suspended If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization is suspended abnormally for over 3 months, capitalizing of borrowing expenses shall be suspended; the suspended assets that satisfying the conditions of capitalization meets the necessary procedure of reaching predicted usable status or sellable status, capitalizing of borrowing expenses shall be resumed. The borrowing expenses occurred during the period of suspended shall reckon into current gains and losses until the purchasing, construction, or manufacturing process is resumed for capitalizing. 4. Calculation for capitalization amount Interest expenses practically occurred at the current term of a special borrowing are capitalized after deducting of the bank saving interest of unused borrowed fund or provisional investment gains Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of accumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common borrowings adopted. Capitalization rates are decided by the weighted average of common borrowings. For those expenses with discount or premium, determined the amortizable discount or premium in every fiscal year by effective interest method, than adjusted interest amount in every period. 19. Biological assets The biological assets of the Company refer to consumptive biological assets and productive biological assets. The consumptive biological assets including young and livestock etc., productive biological assets including eggs etc. Biological assets are recognized upon satisfaction of the following conditions: (1) The company owns or controls the biological asset due to the past transaction or proceeding; (2) The economic benefits or service potential related to the biological assets are likely to flow into the company; (3) Cost of the biological assets can be measured reliably. Acquisition and disposal of biological assets: cost of biological assets upon change of use is determined based on the carrying value when use changes; the disposal income arising from disposal, damage or inventory losses of biological assets less the carrying value and related taxes shall be recorded in current profit and loss. The productive biological assets are initially measured according to the cost. The cost of the outsourcing productive biological assets includes purchase cost, related taxes and dues, transportation charge, insurance expenses and other expenses directly belonging to the 77 东沣科技集团股份有限公司 2017 年半年度报告全文 purchase of this asset. The book value of the productive biological assets of the investors is measured by adding the value on the investment contract or the value stipulated by agreement to the payable taxes and dues, but if the contract or agreement appoints the value as unfair, the actual cost is determined by the fair value. The cost of the progenitive productive biological assets is determined according to the necessary expenses occurred before achieving the anticipated production and management purposes, including the feed cost, labor cost and indirect expenses to be shared, etc. The closing or the management and feeding costs occurred after achieving the predetermined production and management purposes of the productive biological assets of the Company are reckoned in the current profit and loss. The Company withdraws and depreciates the productive biological assets, and the depreciation adopts the straight-line depreciation method. The Company determines its service life and anticipated net residual value according to the nature and service condition of the productive biological assets and the anticipated implementation way of the related economic interests. At the end of the year, the Company re-checks the service life, anticipated net residual value and depreciation method of the productive biological assets, and adjusts correspondingly if it differs from the original assessment. The expected service life, anticipated net residual value and yearly depreciation of the productive biological assets of the Company are as follows: Category Estimated useful life (Year) Estimated residual rate Annual depreciation rate Eggs 1 5% 95% Sheep and pigs 3 5% 31.67% On balance sheet date, the Company measures the productive biological assets in accordance with the lower one of its book value and the recoverable amount, withdraws the provision for impairment of productive biological assets according to the balance between the book value and the recoverable amount of the single assets. The impairment loss of the productive biological assets cannot be reversed in the subsequent accounting periods once recognized. Gain and disposal of the biological assets: The cost of the biological assets after changing the purposes are recognized according to the book value at the time when changing the purposes; when the biological assets being sold, damaged or having inventory losses, reckon the balance after deducting the book value and related taxes and dues from the disposal consideration in the current profit and loss. 20. Oil and gas assets Nil 21. Intangible assets (1) Pricing method, service life and impairment test An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company, including land use right and non-patented technology etc. 1. Initial measurement of intangible assets For those intangible assets purchased from outside, the purchase value, relevant taxes and other payments attributable to predicted purpose obtained should recognized as cost for this assts. For those purchased amount that paid overdue exceeded the normal credit condition, owns financing natures actually, the cost should be recognized based on the current value while purchased As for the intangible assets acquired from the debtor in debt restructuring for the purpose of settlement of debt, the fair value of the intangible assets shall be based to determine the accounting value. The difference between the carrying value of restructured debt and the fair value of the intangible assets use for settlement of debt shall be recorded in current gains and losses. 78 东沣科技集团股份有限公司 2017 年半年度报告全文 With the preceding conditions that non-monetary assets exchange has commerce nature and the fair value of the assets exchanged in or out can be measured reliably, the intangible assets exchanged in through non-monetary assets exchange are accounted at the value based on the fair value of assets exchanged out, unless there is obvious evidence showing the fair value of assets exchanged in is more reliable; for non-monetary assets exchange not qualifying for the preceding conditions, the carrying value of assets exchanged out and related taxes payable shall be viewed as the cost of intangible assets exchanged in, without recognition of gains and losses. Intangible assets obtained by means of enterprise mergered under common control, recognized book-keeping value by the book value of mergered party; Intangible assets obtained by means of enterprise mergered under different control, recognized book-keeping value by the its fair value. For those cost of intangible assets development internally including: the used materials, labor cost and register charge for development; amortization for other patent and concession used and interest expense satisfying the capitalization condition during process of development; other directly expense before reached its predated useful purpose. 2. Subsequent measurement Analysis and determined the service life for intangible assts while obtained. And classified into intangible assets with limited useful life and assets without certain service life (1) Intangible assets with limited useful life Those intangible assets with limited useful life are evenly amortized on straight basis from the date when they become useable to the end of expected useful life. Particular about the estimation on intangible assets with limited service life: Item Predicted useful life Basis Patent right, trademark right, non-patents 5-year Within the terms of contractual rights or other statutory rights and outsourcing software Land use right 50-year Within the terms of contractual rights or other statutory rights At end of year, revising will be performed on the useful life of intangible assets with limited useful life and the methods of amortizing. Being revised, the useful life of intangible assets and amortization method at period-end shows the same as previous. (2) Judgment basis of criterion for intangible assets without certain service life Intangible assets for which it is impossible to predict the term during which the assets can bring in economic benefits are viewed as intangible assets with indefinite life. Intangible assets with indefinite life are not amortized during the holding period, and useful life is re-reviewed at the end of each accounting period. In case that it is still determined as indefinite after such re-review, then impairment test will be conducted continuously in every accounting period. At end of year, revising will be performed on the useful life of intangible assets with uncertain life. The Company has no such intangible assets without certain service life after review. (2) Accounting policy for expenditure of internal R&D 1. Detail standard for classification on research stage and exploitation stage Research stage: stage of the investigation and research activities exercising innovative-ness for new science or technology knowledge obtained and understanding. Exploitation stage: stage of the activities that produced new or material advance materials, devices and products that by research results or other knowledge adoption in certain plan or design before the commercial production or usage. The expenditure of the research stage in R&D project internally shall reckon into current gains and losses while occurred. 2. Standards for capitalization satisfaction of expenditure in exploitation state Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time: (1) Owes feasibility in technology and completed the intangible assets for useful or for sale; 79 东沣科技集团股份有限公司 2017 年半年度报告全文 (2) Owes the intention for completed the intangible assets and for sale purpose; (3) Way of profit generated including: show evidence that the products generated from the intangible assets owes a market or owes a market for itself; if the intangible assets will use internally, than show evidence of useful-ness; (4) Possess sufficient technique, financial resources and other resources for the development of kind of intangible assets and has the ability for used or for sale; (5) The expenditure attributable to the exploitation stage for intangible assets could be measured reliably. 22. Impairment of long term assets Long term asset is judged whether for which there is indication of impairment on balance sheet date. If there is indication of impairment, the Company would estimate its recoverable amount based on single asset; if it is difficult to estimate the recoverable amount of single asset, then the assets group which the single asset belongs to is based to determine the recoverable amount of the assets group. Recoverable amount of an asset is determined at the higher of its fair value less disposal fee and present value of its predicted future cash flow. If measurement of recoverable amount shows that the recoverable amount of long term asset is lower than carrying value, and then the carrying value shall be deducted to recoverable amount, with the deducted amount recognized as impairment loss which is included in current period gains and losses, meanwhile, asset impairment provision shall be made accordingly. Once recognized, asset impairment loss would not be reversed in future accounting period. Once an asset is recognized for impairment loss, its depreciation or amortization expense would be adjusted in future periods, so as to systematically allocate the adjusted asset carrying value (after deduction of predicted net residual value) during the remaining useful life. Goodwill arising from business combination and intangible assets with indefinite useful life shall be tested annually for impairment whether or not there is indication of impairment. Goodwill is tested for impairment with the related assets group. When conducting impairment test for relevant asset group with inclusion of goodwill, in case that there is indication of impairment for such asset group, impairment test would be firstly conducted in respect of the asset groups without inclusion of goodwill. Then, it shall calculate the recoverable amount and determine the corresponding impairment loss as compared to its carrying value. Second, asset group with inclusion of goodwill would be tested for impairment. If it is found after comparison between the carrying value and recoverable amount of the asset group that the recoverable amount is less than carrying value, the Company would recognize impairment loss for goodwill. 23. Long term prepaid expense 1. Amortization method Long term prepaid expense represents the expense which the Company has occurred and shall be amortized in the current and later periods with amortization period exceeding one year. Long term prepaid expense amortized on straight-line method by stages in benefit period. 2. Amortization term Amortized equally during the benefit period for those long-term expenses whose has a defined benefit period, for those without a defined benefit period, amortized equally within 5 years. 80 东沣科技集团股份有限公司 2017 年半年度报告全文 24. Staff remuneration (1) Accounting treatment of short-term remuneration Short term remuneration refers to all the staff remuneration payable by the Company to its staff within 12 months after the end of annual reporting period in which staff provides relevant services, other than post office benefit and dismissal benefits. The Company recognizes short term remuneration payables as liabilities during the accounting period during which staff provides services, and includes in cost and expense of relevant asset according to the beneficial parties of such services. (2) Accounting treatment of post office benefits Post office benefits refer to kinds of remuneration or benefits granted by the Company to staff for their provision of service upon retirement or release of employment, other than short term remuneration and dismissal benefits. Post benefit plan is categorized as defined withdraw plan and defined benefit plan. Defined withdraw plan under post office benefit mainly represents participation into social basic pension insurance and unemployment insurance operated by labor and social security authorities. During the accounting period when employee provides services for the Company, the contribution calculated under defined withdraw plan would be recognized as liabilities and included in current gains and losses or relevant asset cost. Defined benefit plans for post-employment benefits are primarily clear and standard outside-plan welfare to pay the retirees and pay the living expenses for the deceased employees’ family members. For the obligation assumed in the defined benefit plans, the independent actuaries will accurately calculate by using the expected cumulative actuarial unit credit method on the balance sheet date, attribute the benefit obligations arising from defined benefit plan to the period of employee providing services, and include in the current profit or loss or associated asset cost, thereinto, unless other accounting standards require or allow the employee benefits costs to be included in the asset cost, the service costs of defined benefit plans and the net interest of net indebtedness and net assets of defined benefit plans should be included in the current profit and loss in the current occurrence period; changes in the net indebtedness and net assets of re-measured defined benefit plans should be included in the other comprehensive income in the current occurrence period, and are not allowed to switch back to profit and loss in the follow-up accounting period. (3) Accounting treatment of dismissal benefit Dismissal benefit represents compensation paid to employees for release of employment before expiration or as compensation for their willing of cut, if the Company cannot recall the dismissal unilaterally or re-organization-related costs with dismissal benefit involved in cutting down, the liability arising from compensation for recognition of labor relationship released, reckoned into current gains/losses at the same time. (4) Accounting treatment of other long term staff benefits The Company has no other long term staff benefits. 25. Accrual liability When the Company is involved in proceedings, debt guarantees, onerous contracts and reorganization events, if such events may require delivery of assets or rendering of services in the future and the amounts of such events can be reliably measured, accrued liabilities are recognized. 1. Recognition criteria of accrued liability 81 东沣科技集团股份有限公司 2017 年半年度报告全文 The Company recognizes the accrued liabilities when obligations related to contingencies satisfy all the following conditions: This obligation is a present obligation of the Company; The performance of such obligation is likely to result in outflow of economic benefits from the Company; and The amount of the obligation can be measured reliably. 2. Method of measuring of accrued liabilities Accrued liabilities shall be initially measured at the best estimate of the expenditure required to settle the related present obligation. The Company, when determining the best estimate, has had a comprehensive consideration of risks with respect to contingencies, uncertainties and the time value of money. If the time value of money is significant, the best estimate shall be determined after discounting the relevant future outflow of cash. The best estimate will be dealt with separately in the following circumstances: The expenses required have a successive range (or band), in which the possibilities of occurrence of each result are the same, and the best estimate should be determined as the middle value for the range, i.e. the average of the upper and lower limit. The expenses required does not have a successive range (or band), or although there is a successive range (or band), the possibilities of occurrence of each result are not the same, if the contingency is related to individual item, the best estimate should be determined as the most likely amount; where the contingency is related to a number of items, the best estimate should be calculated and determined according to the possible results and the relevant possibilities. When all or part of the expenses necessary for the settlement of an estimated liability of the Company is expected to be compensated by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the compensation will be received. The amount recognized for the compensation should not exceed the book value of the estimated liability. 26. Share-based payment 1. Category of share-based payment Share-based payment of the Company divided into share-based payment settled by equity and by cash 2. Determination of fair value of equity instruments If there is an active market for an equity instrument granted such as share option, the quoted price in the active market is used to establish the fair value of the equity instrument. If there is no active market for the equity instrument granted such as share option, the option pricing model is used to determine the fair value. Option pricing model is elected after taking into account the following factors: (1) Exercise price of the option; (2) Effective period of the option; (3) Prevailing price of the subject shares; (4) Predicted fluctuation rate of share prices; (5) Predicted dividend of shares; (6) Risk-free interest rate of the option in effective period. When determining fair value of equity instruments on the date of grant, influences from market conditions among conditions available for exercising rights and those not available for exercising rights as provided in share-based payment agreement should be considered. If there is condition not available for exercising rights in respect of share-based payment, cost expenses attributable to services received can be recognized provided that employees or other parties satisfy all the non-market conditions among conditions available for exercising rights (such as service term). 3. Bases for determining the best estimate for exercisable equity instruments On each balance sheet date during the vesting period, best estimate shall be made based on the latest available information on change of employees who are entitled to exercise right, and number of exercisable equity instruments shall be amended accordingly. On exercise date, number of the final predicted exercisable equity instruments shall accord to the actual number of exercisable instruments. 4. Accounting treatment method Equity-settled share-based payment is measured at fair value of equity instruments granted to staff. For equity instruments which are exercisable immediately upon grant, they are included in relevant costs or expenses at fair value of the instruments as of the date of grant, with increase of capital reserve accordingly. For instruments for which exercise is conditional upon completion of service in vesting period or satisfaction of required results, services received in current period are included in relevant costs or expenses and 82 东沣科技集团股份有限公司 2017 年半年度报告全文 capital reserve at the fair value of the equity instrument as of the date of grant based on the best estimate of the numbers of exercisable equity instruments on each balance sheet date during the vesting period. Recognized relevant costs or expense and total owners’ equity will not be adjusted after the exercise date. The cash-settled share-based payment shall be measured at the fair value of liabilities identified on the basis of shares or other equity instruments undertaken by the Group. For the instruments that may be exercised immediately after the grant, the fair value shall, on the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For instruments that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of the liability incurred by the Group. The Group shall, on each balance sheet date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the profit or loss for the period. 5. Amendment and relevant accounting treatment for those with amendment clauses and condition concerned During the vesting period, where an equity instrument award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognized for the award is included immediately into the profit or loss for the period and capital reserve is recognized. Where employees or other parties are permitted to choose to fulfill non-vesting conditions but have not fulfilled during the vesting period, equity instrument award are deemed cancelled. 27. Other financial instruments, such as preferred stock, perpetual debt, etc. Nil 28. Revenue Whether the company needs to comply with the disclosure requirements of the particular industry Yes Real estate industry Revenue of the Company mainly including revenue from goods selling, sale of real estate, and revenue from property rent-out and labor service revenue etc. 1. Recognition standards of income from commodity sales: When main risks and rewards attached to the ownership of goods have been transferred to the buyer, reserved neither continuous management power nor effective control over the goods, incoming payment can be measured reliably, relative financial benefit possibly inflow to the company, cost occurred or will occur can be reliably measured, sales income of goods is recognized. 2. Sales revenue recognition for property industry: (1) Construction completion and qualified acceptance of properties; (2) Commercial property pre-sale license granted by relevant state resources and housing bureau; (3) Enter into sales contract; (4) Sales contract has been certified and confirmed by property exchange center; (5) Receive property price or obtain payment certificate from buyers; (6) Complete deliver procedure for commercial properties. Upon satisfaction of all the above conditions, the Company recognizes sales revenue 3. Recognition of property leasing revenue: Property leasing revenue is recognized when the Company receives rental or obtain payment certificate from buyers based on the payment date and rental amount to be paid by lessee as provided in the contract or agreement entered into between the Company and the lessee. 83 东沣科技集团股份有限公司 2017 年半年度报告全文 4. Labor service revenue (1) Income of the contract can be measured reliably (2) Financial benefit attached to the contract is possibly inflow to the company (3) Schedule of the contracted project can be determined reliably; (4) And the relevant amount of cost incurred or to be incurred can be measured reliably 5. Recognition basis of revenue from transferring the use right of assets The economic benefits related to transactions are probable to flow into the Company; and amount of revenue can be measured reliably. 29. Government grants (1) Criterion and accounting treatment on government grants with assets concerned Government grants means the monetary or non-monetary assets obtained free by an enterprise from the government, but excluding the capital invested by the government as the owner of the enterprise. According to the subsidy object from relevant government documents, the government grants consist of the government grants pertinent to assets and government grants pertinent to income. The government grants with assets concerned, will recognized as deferred income, and reckoned into non-operation revenue by the use of terms for those assets constructed or purchased (2) Criterion and accounting treatment on government grants with revenue concerned As for the government grants with income concerned, the relevant expenses or losses compensate in follow period, shall be recognized as deferred income while required, and reckoned into non-operation revenue in period when relevant expenses recognized; the relevant expenses or losses compensate, reckoned into current non-operation revenue while acquired. 30. Deferred income tax assets / Deferred income tax liabilities Deferred tax assets and deferred tax liabilities are calculated and recognized according to the balance between the tax base and the book value of assets and liabilities (temporary differences). At the balance sheet date, the deferred tax assets and deferred tax liabilities are measured by the applicable tax rate during the period of expected recovery of assets or clearing off the liability. (1) The basis for confirming deferred tax assets The Company takes the taxable income which is likely to be obtained for deducting the deductable temporary differences and can carry over the deductable loss and tax credits as the limit to confirm the deferred income tax assets generated by deductable temporary differences. However, the deferred income tax assets generated by the initial recognition of assets or liabilities in the transactions with following characteristics shall not be recognized: (1) The transaction is not a business combination; (2) The occurrence of transaction affects neither the accounting profit nor the taxable income or deductible loss. For the deductible temporary differences associated with investments in associated enterprises and satisfying the following conditions, confirm the corresponding deferred income tax assets: temporary difference is likely to be reversed back in the foreseeable future, and it is likely to obtain the taxable income used for deducting the deductable temporary differences in the future. (2) The basis for confirming deferred tax liabilities The company recognizes the currently and previously payable but not paid taxable temporary differences as the deferred income tax liabilities. But not including: (1) The temporary differences formed in the initial recognition of goodwill; (2) Transactions or events formed by non-business combination, and it affects neither the accounting profit nor the temporary differences formed by taxable income (or deductible loss) when the transactions or events occur; 84 东沣科技集团股份有限公司 2017 年半年度报告全文 (3) For the taxable temporary differences related to the subsidiary companies and investments in associated enterprises, the reversal time of this temporary difference can be controlled and this temporary difference is unlikely to be reversed back in the foreseeable future. (3) Deferred tax assets and liabilities are offset if all the following conditions are met (1) An enterprise has the legal rights to settle the income tax assets and income tax liabilities for the current period by net amount; (2) They relate to income taxes levied by the same tax authority on either the taxable entity has a legally enforceable right or set off current income tax assets against current income tax liabilities, and different taxable entities which either intend to settle the current income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. 31. Lease (1) Accounting treatment of operation lease In terms of tenancy, if all risks and remuneration with ownership of the leasing assets concerned are transfer to the lessee substantially, the leasing will consider as finance lease, otherwise consider as operation lease. (1) The lease payment paid for leasing assets is amortized under straight line method in the entire lease period without deduction of lease-for-free period, and is recorded in current expenses. The initial direct expenses paid by the Company related to lease transactions shall be recorded in current expenses. If asset leaser assumes the lease related expenses which shall be assumed by the Company, the Company shall deduct such expenses from the total rental and amortize based on the deducted rental expenses during the lease period and record in current expenses. (2) The lease fee collected by the Company for assets lease is amortized under straight line method in the entire lease period without deduction of lease-for-free period, and is realize as lease income. The initial direct expenses paid by the Company related to lease transactions shall be recorded in current expenses; for significant amount, it shall be capitalized and recorded in current income in phases under the same basis as realization of lease income in the entire lease period. If the Company assumes the lease related expenses which shall be assumed by the lessee, the Company shall deduct such expenses from the total rental income and allocate based on the deducted rental expenses during the lease period. (2) Accounting treatment of financing lease (1) Assets leased by financing lease: the Company accounts the leased assets at the lower of the fair value of leased assets and present value of the minimum lease payment on the inception date of the lease, and the minimum lease payment is deemed as the accounting value of long term account payables, and the difference is taken as unrealized financing expenses. The Company amortizes the unrealized financing expenses at effective interest rate method in the asset lease period and records in finance expenses. (2) Assets leased out by financing lease: on the inception date of the lease, the Company realizes the difference between the sum of financing lease account receivables and unguaranteed remaining value and its present value as unrealized financing income which is conformed as lease income in future periods involving lease. The initial direct expenses occurred by the Company related to lease transaction shall be recorded in the initial measurement of financing lease account receivables. And income realized in lease period shall be reduced accordingly. 32. Other important accounting policies and accounting estimates Nil 85 东沣科技集团股份有限公司 2017 年半年度报告全文 33. Changes of main accounting policy and estimate (1) Changes of accounting policies □ Applicable √ Not-applicable (2) Changes in accounting estimates □ Applicable √ Not-applicable 34. Other Nil VI. Taxes 1. Main tax category and tax rate Taxes Basis Rate Sales of goods, taxable sales service VAT income, intangible assets or immovable 3%-17% property Urban maintenance and construction tax Turnover tax payable 5% Enterprise income tax Taxable income 16.5%, 25% Educational surtax Turnover tax payable 3% Local educational surtax Turnover tax payable 2% Rental income or original value of the Property tax 12% or 1.2% property Land appreciation tax Appreciation value or pre-requisitioned Progressive rates As for the taxpaying body with different tax rate for enterprise income tax, disclosed explanations: Taxpaying body Rate for income tax The Company 25% Nanjing Trade 25% Dongfeng Investment 25% Ecological Agriculture 25% Hangzhou Dongfeng 25% Nanjiang Asia 16.5% Nanjiang Technology 25% Huijing Property 25% 86 东沣科技集团股份有限公司 2017 年半年度报告全文 Kefeng Engineering 25% Kefeng Trade 25% Chengde Kefeng 25% 2. Tax preference 3. Other Nanjiang Asia tax in Hong Kong Special Administrative Region with rate of 16.5% for income tax. VII. Notes to the main items of consolidate financial statements 1. Monetary funds In RMB Item Ending balance Opening balance Cash 39,802.86 33,804.54 Bank deposit 153,562,617.75 126,937,030.29 Other monetary funds 6,663,127.40 5,999,327.40 Total 160,265,548.01 132,970,162.23 Other explanation Monetary fund with restrictions: Item Ending balance Opening balance Margin of housing mortgage 6,663,127.40 5,999,327.40 Total 6,663,127.40 5,999,327.40 Closing balance of monetary fund increased 27,295,385.78 Yuan over that of period-begin with 520.53% up, mainly because revenue from real estate in the period increased than the input declined. 2. Accounts receivable (1) Accounts receivable by type In RMB Ending balance Opening balance Provision for bad Book balance Book balance Provision for bad debts Type debts Book Book value Proportio Provision value Proportio Provision Amount Amount Amount Amount ratio ratio n n 87 东沣科技集团股份有限公司 2017 年半年度报告全文 Accounts receivable with large single 2,320,04 2,320,04 2,320,0 2,320,047 amount and accrued 94.66% 100.00% 94.74% 100.00% 7.40 7.40 47.40 .40 for provision of bad debt on a single basis Accounts receivable accrued for provision 130,971. 50,887.1 128,771 5.34% 38.85% 80,084.75 5.26% 50,887.10 39.52% 77,884.75 of bad debt by 85 0 .85 portfolio 2,451,01 2,370,93 2,448,8 2,370,934 Total 100.00% 96.73% 80,084.75 100.00% 96.82% 77,884.75 9.25 4.50 19.25 .50 Accounts receivable with large single amount and accrued for provision of bad debt on a single basis at period-end: √ Applicable □ Not-applicable In RMB Accounts receivable Ending balance (unit) Accounts receivable Provision for bad debts Provision ratio Reasons Beijing Xiangeqing Industrial & Trade Co., 2,320,047.40 2,320,047.40 100.00% Estimated uncollectible Ltd. Total 2,320,047.40 2,320,047.40 -- -- Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio: √ Applicable □ Not-applicable In RMB Ending balance Aging Accounts receivable Provision for bad debts Provision ratio Within 1 year Subtotal within one year 8,302.51 305.13 3.68% 1-2 years 50,339.00 10,067.80 20.00% 2-3 years 63,632.35 31,816.18 50.00% Over 3 years 8,697.99 8,697.99 100.00% Total 130,971.85 50,887.10 38.85% Portfolio recognized: Accounts receivable accrued for provision of bad debt by percentage of balance in portfolio: □ Applicable √ Not-applicable Accounts receivable accrued for provision of bad debt by other methods in portfolio: (2) Provision for bad debts accrued, regain or switch back in the Period In the Period, 0 Yuan accrued for provision of bad debts; 0 Yuan provision for bad debts regains or switch back in the Period. 88 东沣科技集团股份有限公司 2017 年半年度报告全文 Including major amount of bad debt provision regain or switch back in the Period: In RMB Unit Amount regain or switch back Way of regain (3) Account receivable actual charge off in the Period In RMB Item Amount written off Written-off for the major receivable: In RMB Arising from related Unit Nature Amount written off Reasons Procedures transaction (Y/N) Explanation on written off: (4) Top five account receivables collected by arrears party at ending balance Unit Ending balance Ratio in account receivable Bad debt provision at period-end (%) accrued Customer I 2,320,047.40 94.66% 2,320,047.40 Customer II 74,188.85 3.03% 34,488.70 Customer III 44,172.00 1.80% 8,834.40 Customer IV 12,611.00 0.51% 7,564.00 Total 2,451,019.25 100.00% 2,370,934.50 (5) Account receivable de-recognition due to financial assets transfer (6) Assets and liabilities resulted by account receivable transfer and continues involvement Other explanation: 3. Prepayments (1) Aging analysis of repayment In RMB Ending balance Opening balance Aging Amount Proportion Amount Proportion Within 1 year 97,609.01 90.51% 18,243,428.68 99.96% 2-3 years 10,229.07 9.49% 6,899.45 0.04% Total 107,838.08 -- 18,250,328.13 -- 89 东沣科技集团股份有限公司 2017 年半年度报告全文 Reasons for significant repayment with over one year age without settle: (2) Top five prepayment collected by objects at ending balance Unit Ending amount Ratio in prepayment Time of repayment Un-settle (%) reasons Unit I 48,510.00 44.98% Within 1 year Un-settled Unit II 37,795.80 35.05% Within 1 year Un-settled Unit III 6,537.13 6.06% 1-2 years Un-settled Unit IV 5,000.00 4.64% Within 1 year Un-settled Unit V 3,370.00 3.13% Within 1 year Un-settled Total 101,212.93 93.86% --- --- Other explanation: Prepayment decreased 18,142,490.05 Yuan over that of period-begin with 99.41% down, mainly because the account paid to Emast and Shan’xi Emast for the airship last period are refund in the period 4. Other account receivables (1) Other account receivables by type In RMB Ending balance Opening balance Provision for bad Book balance Book balance Provision for bad debts Type debts Book Book value Proportio Provision value Proportio Provision Amount Amount Amount Amount ratio ratio n n Other receivables with large single 2,709,27 2,709,27 2,709,2 2,709,273 amount and accrued 3.71% 100.00% 3.72% 100.00% 3.00 3.00 73.00 .00 for provision of bad debt on a single basis Other receivables accrued for provision 68,241,0 170,334. 68,070,70 67,638, 170,334.5 67,467,772. 93.48% 0.25% 93.00% 0.25% of bad debt by 42.23 55 7.68 107.30 5 75 portfolio Other receivables with minor single 2,046,95 2,046,95 2,384,6 2,046,957 amount but accrued 2.81% 100.00% 3.28% 85.84% 337,740.65 7.70 7.70 98.35 .70 for provision of bad debt on a single basis Total 72,997,2 100.00% 4,926,56 6.84% 68,070,70 72,732, 100.00% 4,926,565 6.77% 67,805,513. 90 东沣科技集团股份有限公司 2017 年半年度报告全文 72.93 5.25 7.68 078.65 .25 40 Other receivables with large single amount and accrued for provision of bad debt on a single basis at period-end: √ Applicable □ Not-applicable In RMB Other account Ending balance receivables (by unit) Other account receivable Provision for bad debts Provision ratio Reason for provision Non-Taxable Revenue Authority of Chengde 1,500,000.00 1,500,000.00 100.00% Estimated uncollectible County Claims obtained from 1,209,273.00 1,209,273.00 100.00% Estimated uncollectible auction Total 2,709,273.00 2,709,273.00 -- -- Other receivables accrued for provision of bad debt by aging analysis method in portfolio: √ Applicable □ Not-applicable In RMB Ending balance Aging Other account receivable Provision for bad debts Provision ratio Within 1 year Subtotal within one year 1,725,202.66 40,891.12 2.37% 1-2 years 146,639.04 29,421.80 20.06% 2-3 years 85,043.25 42,521.63 50.00% Over 3 years 57,500.00 57,500.00 100.00% Total 2,014,384.95 170,334.55 8.46% Portfolio recognized: Other accounts receivable accrued for provision of bad debt by percentage of balance in portfolio: □ Applicable √ Not-applicable Other accounts receivable accrued for provision of bad debt by other methods in portfolio: √Applicable □ Not applicable Portfolio Ending balance Other accounts receivable Provision for bad debts Provision ratio (%) Land reserve center of Chengde County 66,025,400.00 --- --- Chengde Petroleum Branch 110,836.28 --- --- Office of material reformation for wall 90,421.00 --- --- in the County Total 66,226,657.28 --- --- 91 东沣科技集团股份有限公司 2017 年半年度报告全文 (2) Bad debt provision accrual collected or switch back There is 0 Yuan provision for bad debts accrued in the Period; and 0 Yuan regains or switch back in the Period. Including the followed significant amount: In RMB Unit Regains or switch back Way of regain (3) Other receivables actually written-off during the reporting period In RMB Item Amount written-off Major other account receivables written-off: In RMB Arising from related Name Nature Amount written-off Reasons Procedures transaction (Y/N) Explanation on other account receivable: (4) Other account receivables category by nature of money In RMB Nature of money Ending book balance Beginning book balance Land acquisition account 66,025,400.00 66,025,400.00 Margin 1,550,000.00 1,570,000.00 Debt auction 1,209,273.00 1,209,273.00 Other 4,212,599.93 3,927,405.65 Total 72,997,272.93 72,732,078.65 (5) Top five other account receivables collected by arrears party at ending balance In RMB Proportion in total Ending balance of Unit Nature Ending balance Aging other receivables bad debt provision Payment for land Unit I 66,025,400.00 2-3 years 90.45% acquisition Margin for land Unit II 1,500,000.00 2-3 years 2.05% 1,500,000.00 bidding Unit III Other 642,689.25 3-4 years 0.88% 642,689.25 92 东沣科技集团股份有限公司 2017 年半年度报告全文 Unit IV Other 356,838.00 4-5 years 0.49% 356,838.00 Unit V Other 300,000.00 4-5 years 0.41% 300,000.00 Total -- 68,824,927.25 -- 94.29% 2,799,527.25 (6) Account receivables related to government subsidies In RMB Time and amount Unit Item Ending balance Ending age collected and basis (7) Other receivable for termination of confirmation due to the transfer of financial assets (8) The amount of assets and liabilities that are transferred other receivable and continued to be involved Other explanation: 5. Inventories Whether the company needs to comply with the disclosure requirements of the particular industry Yes (1) Classification of inventories The Company is comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange No.3-engaged in real estate business for the listed companies” By nature: In RMB Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserve reserve Development cost 279,423,016.25 279,423,016.25 Development 285,724,897.50 285,724,897.50 61,074,784.71 61,074,784.71 products Raw materials 85,993.85 85,993.85 205,531.64 205,531.64 Production costs 1,392,589.77 1,392,589.77 83,168.30 83,168.30 Stock products 18,786.95 3,960.15 14,826.80 1,158,462.11 229,002.27 929,459.84 Revolving 18,498.40 18,498.40 materials Consumptive 5,600.00 5,600.00 biological assets 93 东沣科技集团股份有限公司 2017 年半年度报告全文 Total 287,222,268.07 3,960.15 287,218,307.92 341,969,061.41 229,002.27 341,740,059.14 Disclose of “development cost” and interest capitalization rate: In RMB Cumulati Including: Increase Estimated Switch to ve amount of Estimated Other in Period Name of Time to total Opening developm Ending amount of interest Source of completio decrease (develop project start investmen balance ent balance interest capitalizat funds n time in Period ment t products capitalize ion in costs) d Period Disclose of “Development products”: In RMB Time of Name of project Opening balance Increased in Period Decreased in Period Ending balance completion Huijing Tiandi 2016-12-31 61,074,784.71 308,491,948.52 83,841,835.73 285,724,897.50 Total -- 61,074,784.71 308,491,948.52 83,841,835.73 285,724,897.50 Disclosed the “installment development products”, “rental development products” and “relocation housing”: In RMB Item Opening balance Increased in Period Decreased in Period Ending balance (2) Inventory depreciation reserve Accrual of the inventory depreciation reserve: By nature: In RMB Increased in Period Decreased in Period Opening Item Reversing or Ending balance Note balance Accrual Other Other write-off Stock products 229,002.27 225,042.12 3,960.15 Total 229,002.27 225,042.12 3,960.15 -- By project: In RMB Increased in Period Decreased in Period Opening Item Reversing or Ending balance Note balance Accrual Other Other write-off 94 东沣科技集团股份有限公司 2017 年半年度报告全文 (3) Explanation on capitalization of borrowing costs at ending balance of inventory (4) Inventory constrained Disclosure by items: In RMB Item Opening balance Ending balance Reasons of restricted (5) Assets completed without settlement from construction contract at period-end In RMB Item Amount Other explanation: Does the Company comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange No.4 – Listed Companies Engaged in Seed Industry and Planting Business” or not No 6. Non current assets due within one year In RMB Item Ending balance Opening balance Gains/losses of assets ready for disposal 333,716.08 333,716.08 Total 333,716.08 333,716.08 Other explanation: Refers to the gains/losses of assets ready for disposal from third –grade subsidiary Chengde Dongfeng Ecological Agriculture Co., Ltd. in the period 7. Other current assets In RMB Item Ending balance Opening balance Taxes paid in advance 9,368,662.98 19,177,045.07 Total 9,368,662.98 19,177,045.07 Other explanation: Decreased 9,808,382.09 Yuan over that of period-begin with 51.15% down, mainly because amount paid in advance from Huijing Tiandi are transfer to income, the taxes declined as a result. 95 东沣科技集团股份有限公司 2017 年半年度报告全文 8. Financial assets available for sale (1) Financial assets available for sale In RMB Closing balance Opening balance Item Depreciation Depreciation Depreciation Book balance Book balance Book balance reserves reserves reserves Instrument equity 25,000,000.00 2,215,868.07 22,784,131.93 25,000,000.00 2,215,868.07 22,784,131.93 available for sale: Measured by cost 25,000,000.00 2,215,868.07 22,784,131.93 25,000,000.00 2,215,868.07 22,784,131.93 Total 25,000,000.00 2,215,868.07 22,784,131.93 25,000,000.00 2,215,868.07 22,784,131.93 (2) Financial assets available for sale measured by fair value at period-end In RMB Instrument equity Instrument debt available Type Total available for sale for sale (3) Financial assets available for sale measured by cost at period-end In RMB Book balance Depreciation reserves Ratio of share-holdi Current Investee Current Current Current Current ng in cash unit Opening Closing Opening Closing increased decreased increased decreased invested dividend entity Dongguan Dongfeng New 25,000,000 25,000,000 2,215,868. 2,215,868. 2.44% Energy .00 .00 07 07 Technolog y Co. Ltd. 25,000,000 25,000,000 2,215,868. 2,215,868. Total -- .00 .00 07 07 (4) Change of financial assets depreciation for sale during reporting period In RMB Instrument equity Instrument debt available Type Total available for sale for sale 96 东沣科技集团股份有限公司 2017 年半年度报告全文 (5) Fair value of the available-for-sale equity instrument drops significantly or not contemporarily without depreciation reserves accrued In RMB Decline range of Equity instrume Times continued fair value Amount accrual Reasons for nts project Investment cost Ending fair value to declined compare with the for impairment un-accrual l available for sale (Month) cost Other explanation 9. Long-term equity investment In RMB Changes in Period Investme nt Adjustme Impairme Cash Additiona gains/loss nt of Provision nt Invested Opening Other dividend Ending l Capital es other for provision company balance equity or profit Other balance investmen reduction recognize comprehe impairme at ending changes declare to t d by nsive nt losses balance issue equity income method I. Joint venture II. Associated enterprise Runhua RW (Tianjin) Water-sav 1,022,730 -1,022,73 0.00 0.00 ing .46 0.46 Technolo gy Co., Ltd. Wuchan Minfeng 4,455,549 (Tianjin) -4,455,54 .93 0.00 0.00 Chemical 9.93 Trade Co., Ltd. Runhua 2,790,271 2,790,271 2,790,271 RW .96 .96 .96 (Tianjin) Internatio 97 东沣科技集团股份有限公司 2017 年半年度报告全文 nal Trade Co., Ltd. 5,478,280 -2,688,00 2,790,271 2,790,271 Subtotal .39 8.43 .96 .96 5,478,280 -2,688,00 2,790,271 2,790,271 Total .39 8.43 .96 .96 Other explanation (1) Runhua RW (Tianjin) Water-Saving Technology Co., Ltd obtained the corporation certificate on 14th Oct. 2011 with register capital of RMB 6.3 million included, Runhua RW Industrial Development invested RMB 3 million with ratio of 47.62%. The original company Runhua RW (Tianjin) International Trade Co., Ltd. invested RMB 2 million with ratio of 31.75% in registered capital; Langfang ChunYuan Minor Watering Engineer Co., Ltd invested RMB one million with ratio of 15.87% and Zhang Heping invested RMB 300,000 with ratio of 4.76% in registered capital. (2) Wuchan Minfeng (Tianjin) Chemical Trade Co., Ltd had risen up the register capital of shareholders on 21 st Dec. 2012, totaling RMB 9 million included, Shanxi Wuchan Minfeng Chemistry Co., Ltd invested RMB 4.59 million with ratio of 51%. The original company Runhua RW (Tianjin) International Trade Co., Ltd. invested RMB 4.41 million with ratio of 49% in registered capital. (3) On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan Chunhong of original subsidiary Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of losing the control power to it, and check and calculate by equity method. 10. Investment real estate (1) Investment real estate measured at cost √ Applicable □ Not-applicable In RMB Item Houses, buildings Land use right Construction in process Total I. Original book value: 1.Opening balance 5,475,870.75 5,475,870.75 2. Increased in Period (1) Outsourcing (2) Inventory \ Fixed assets \ Transferred from construction in process 98 东沣科技集团股份有限公司 2017 年半年度报告全文 (3) Increased by enterprise combination 3. Decreased in Period (1) Disposal (2) Other transfer-out 4. Ending balance 5,475,870.75 5,475,870.75 II. Accumulated depreciation and accumulated amortization 1. Opening balance 644,717.00 644,717.00 2. Increased in Period 56,280.12 56,280.12 (1) Provision or 56,280.12 56,280.12 amortization 3. Decreased in Period (1) Disposal (2) Other transfer-out 4. Ending balance 700,997.12 700,997.12 III. Depreciation reserves 1. Opening balance 2. Increased in Period (1) Accrual 3. Decreased in Period (1) Disposal (2) Other transfer-out 99 东沣科技集团股份有限公司 2017 年半年度报告全文 4. Ending balance IV. Book value 1. Ending book value 4,774,873.63 4,774,873.63 2. Opening book value 4,831,153.75 4,831,153.75 (2) Investment real estate measured by fair value □ Applicable √ Not applicable The Company needs to comply with the disclosure requirement of “Guidelines for the Information Disclosure of the Shenzhen Stock Exchange No.3 – Listed Company Engaged in Real Estate Business” Investment real estate measured by fair value released by items as: In RMB Fair value Geographi Rental Covered at Fair value at Change of fair Reasons of changes Item cal income in area period-begi period-end value and report index position the period n Whether the Company has new real estate measured by fair value in the period or not □ Yes √ No (3) Investment real estate without ownership certification completed yet In RMB Item Book value Reasons Other note 11. Fixed assets (1) Fixed assets In RMB Houses and Machinery Transportation Item Other Total buildings equipment equipment I. Original book value: 1.Opening balance 13,678,422.66 2,032,443.28 4,288,676.71 801,523.65 20,801,066.30 2. Increased in 194,529.92 12,296.58 206,826.50 Period (1) Purchase 194,529.92 12,296.58 206,826.50 100 东沣科技集团股份有限公司 2017 年半年度报告全文 (2) Transferred from construction in process (3) Increased by enterprise combination 3. Decreased in 673,859.00 178,432.47 852,291.47 Period (1) Disposal or scrap (2) Other 673,859.00 178,432.47 852,291.47 transfer-out 4. Ending balance 13,678,422.66 2,226,973.20 3,614,817.71 635,387.76 20,155,601.33 II. Accumulated depreciation 1. Opening 2,157,487.89 1,195,831.33 1,918,422.13 549,064.62 5,820,805.97 balance 2. Increased in 264,051.79 43,718.58 160,589.10 34,660.25 503,019.72 Period (1) Accrual 264,051.79 43,718.58 160,589.10 34,660.25 503,019.72 3. Decreased in 640,236.58 162,365.87 802,602.45 Period (1) Disposal or scrap (2) Other 640,236.58 162,365.87 802,602.45 transfer-out 4. Ending balance 2,421,539.68 1,239,549.91 1,438,774.65 421,359.00 5,521,223.24 III. Depreciation reserves 1. Opening balance 2. Increased in Period (1) Accrual 3. Decreased in 101 东沣科技集团股份有限公司 2017 年半年度报告全文 Period (1) Disposal or scrap 4. Ending balance IV. Book value 1. Ending book 11,256,882.98 987,423.29 2,176,043.06 214,028.76 14,634,378.09 value 2. Opening book 11,520,934.77 836,611.95 2,370,254.58 252,459.03 14,980,260.33 value (2) Temporarily idle fixed assets In RMB Cumulative Depreciation Item Original book value Book value Note depreciation reserves (3) Fixed assets acquired by financing lease In RMB Item Original book value Cumulative depreciation Depreciation reserves Book value (4) Fixed assets acquired by operating lease In RMB Item Ending book value (5) Fixed assets without property certificates In RMB Item Book value Reasons Other explanation 12. Productive biological assets (1) Measured by cost √ Applicable □ Not-applicable In RMB Item Plantation Livestock Forestry Aquaculture Total 102 东沣科技集团股份有限公司 2017 年半年度报告全文 I. Original book 214,802.68 214,802.68 value 1. Opening balance 2. Increased in 28,563.30 28,563.30 Period (1) Outsourcing 28,563.30 28,563.30 (2) Self-cultivation 3. Decreased in 197,843.42 197,843.42 Period (1) Disposal 197,843.42 197,843.42 (2) Other 4. Ending balance 45,522.56 45,522.56 II. Accumulated depreciation 1. Opening 172,668.92 172,668.92 balance 2. Increased in 18,019.35 18,019.35 Period (1) Accrual 18,019.35 18,019.35 3. Decreased in 161,394.72 161,394.72 Period (1) Disposal 161,394.72 161,394.72 (2) Other 4. Ending balance 29,293.55 29,293.55 III. Depreciation reserves 1. Opening balance 2. Increased in Period 103 东沣科技集团股份有限公司 2017 年半年度报告全文 (1) Accrual 3. Decreased in Period (1) Disposal (2) Other 4. Ending balance IV. Book value 1. Ending book 16,229.01 16,229.01 value 2. Opening book 42,133.76 42,133.76 value (2) Measured by fair value □ Applicable √ Not-applicable 13. Intangible assets (1) Intangible assets In RMB Non-patent Item Land use right Patent right Software Total technology I. Original book value 1. Opening 1,197,567.36 228,000.00 1,425,567.36 balance 2. Increased in Period (1) Purchase (2) Internal R&D (3) Increased by enterprise combination 3. Decreased in 228,000.00 228,000.00 104 东沣科技集团股份有限公司 2017 年半年度报告全文 Period (1) Disposal (2) Other 228,000.00 228,000.00 transfer-out 4. Ending 1,197,567.36 1,197,567.36 balance II. Accumulated amortization 1.Opening 124,160.15 228,000.00 352,160.15 balance 2. Increased in 20,559.04 20,559.04 Period (1) Accrual 20,559.04 20,559.04 3. Decreased in 228,000.00 228,000.00 Period (1) Disposal (2) Other 228,000.00 228,000.00 transfer-out 4. Ending 144,719.19 144,719.19 balance III. Depreciation reserve 1. Opening balance 2. Increased in Period (1) Accrual 3. Decreased in Period (1) Disposal 4. Ending balance IV. Booking value 1. Ending book 1,052,848.17 1,052,848.17 105 东沣科技集团股份有限公司 2017 年半年度报告全文 value 2. Beginning 1,073,407.21 1,073,407.21 book value Intangible assets formulated no by means of internal R&D in balance of total intangible assets at period-end (2) Land use right without property certificate In RMB Item Book value Reasons Other explanation: 14. Development expenditure In RMB Opening Ending Item Increased in Period Decreased in Period balance balance Airship 641,604.82 1,190,186.99 1,831,791.81 Other explanation 15. Goodwill (1) Original book value of goodwill In RMB Name of invested company or items Opening balance Increased in Period Decreased in Period Ending balance formed goodwill Runhua RW 1,809,762.89 1,809,762.89 Total 1,809,762.89 1,809,762.89 (2) Impairment loss of goodwill In RMB Name of invested company or items Opening balance Increased in Period Decreased in Period Ending balance formed goodwill Runhua RW 1,809,762.89 1,809,762.89 Total 1,809,762.89 1,809,762.89 Process of impairment testing, parameter and recognization method for impairment losses: Other explanation 106 东沣科技集团股份有限公司 2017 年半年度报告全文 Runhua RW has deficit in 2014 and 2015 continuously, and did not complete the performance commitment; goodwill has impairment. 16. Long-term unamortized expenses In RMB Item Opening balance Increased in Period Amortized in 2015 Other decrease Ending balance Office remodeling 105,268.54 26,654.27 78,614.27 costs Outdoor project cost 49,500.04 2,472.41 47,027.63 for boiler room Color steel room 5,242.29 903.80 4,338.49 Total 160,010.87 30,030.48 129,980.39 Other explanation 17. Deferred income tax assets and deferred income tax liabilities (1) Deferred income tax assets un-offset In RMB Ending balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Preparations of assets 3,102,581.64 775,645.41 3,102,581.64 775,645.41 depreciation Total 3,102,581.64 775,645.41 3,102,581.64 775,645.41 (2) Deferred income tax liabilities un-offset In RMB Ending balance Opening balance Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax differences liabilities differences liabilities (3) Deferred income tax assets and deferred income tax liabilities listed after off-set In RMB Ending balance of Trade-off between the Opening balance of Trade-off between the deferred income tax deferred income tax deferred income tax Item deferred income tax assets or liabilities after assets and liabilities at assets or liabilities after assets and liabilities off-set period-begin off-set 107 东沣科技集团股份有限公司 2017 年半年度报告全文 Deferred income tax 775,645.41 775,645.41 assets (4) Details of unrecognized deferred income tax assets In RMB Item Ending balance Opening balance Deductible temporary differences -75,878.20 -75,878.20 Deductible losses 88,611,454.74 96,377,902.07 Total 88,535,576.54 96,302,023.87 (5) Deductible losses of un-recognized deferred income tax assets expired on the followed year In RMB Year Ending amount Opening amount Note 2017 12,891,377.63 2018 2019 30,576,125.82 30,576,125.82 2020 33,429,382.84 33,429,382.84 2021 19,481,015.78 19,481,015.78 2022 5,124,930.30 Total 88,611,454.74 96,377,902.07 -- Other explanation: 18. Other non-current assets In RMB Item Ending balance Opening balance Account paid in advance for equipment 91,040.00 Total 91,040.00 Other explanation: 19. Account payable (1) Account payable In RMB Item Ending balance Opening balance 108 东沣科技集团股份有限公司 2017 年半年度报告全文 Account payable for engineering 20,029,823.67 12,446,199.86 Account payable for equipment 364,700.00 8,700.00 Account payable for materials 11,781.49 5,080.00 Other 367,994.69 429,350.00 Total 20,774,299.85 12,889,329.86 (2) Accounts payable with major amount and aging of over one year In RMB Item Ending balance Reasons of un-paid or carry-over Handan Hanyi Construction Engineering 400,000.00 Settlement un-completed Co., Ltd. Total 400,000.00 -- Other explanation: Account payable increased 7,884,969.99 Yuan over that of period-begin with 61.17% up, mainly because real estate was basically completed, the payable enginneering account in settlement increased 20. Account received in advance (1) Account received in advance In RMB Item Ending balance Opening balance Deposit received for house-Huijing Tiandi 187,840,560.64 242,747,445.35 Resident heating fees received in advance 98,363.28 962,488.89 Other 204,574.34 207,984.46 Total 188,143,498.26 243,917,918.70 (2) Major account received in advance for over one year age In RMB Item Ending balance Reasons (3) Project closed for account without complete in construction from construction contract at period-end In RMB Item Amount Other explanation: Account received in advance decreased 55,774,420.44 Yuan over that of period-begin with 22.87% down, mainly because the 109 东沣科技集团股份有限公司 2017 年半年度报告全文 prepayment account from Huijing Tiandi project are carry forward to revenue in the period 21. Wages payable (1) Wages payable In RMB Item Opening balance Increased in Period Decreased in Period Ending balance I. Short-term employee 1,915,411.19 5,476,441.95 7,216,453.26 175,399.88 benefits II. Post-employment benefits - defined 22,271.25 750,534.96 726,928.59 45,877.62 contribution plans Total 1,937,682.44 6,226,976.91 7,943,381.85 221,277.50 (2) Short-term employee benefits In RMB Item Opening balance Increased in Period Decreased in Period Ending balance 1. Salary, bonus, 1,897,065.74 5,009,546.39 6,731,610.47 175,001.66 allowance and subsidy 3. Social insurance 17,419.23 181,931.04 199,350.27 premium Of which: including: medical insurance 15,226.28 156,291.18 171,517.46 expenses Work injury insurance 742.83 14,384.10 15,126.93 expenses Maternity 1,450.12 11,255.76 12,705.88 insurance 4. Housing provident 528.00 282,575.20 283,103.20 funds 5. Labor union expenditures and 398.22 2,389.32 2,389.32 398.22 employee education expenses 110 东沣科技集团股份有限公司 2017 年半年度报告全文 Total 1,915,411.19 5,476,441.95 7,216,453.26 175,399.88 (3) Details of defined contribution plans In RMB Item Opening balance Increased in Period Decreased in Period Ending balance 1.Basic endowment 20,791.36 736,218.86 711,477.07 45,533.15 insurance expenses 2.Unemployment 1,479.89 14,316.10 15,451.52 344.47 insurance expenses Total 22,271.25 750,534.96 726,928.59 45,877.62 Other explanation: 22. Tax payable In RMB Item Ending balance Opening balance VAT 389,575.42 565,795.13 Individual income tax 10,199.23 1,417.40 Urban maintenance and construction tax 684.49 Educational surtax 410.70 Local educational surtax 273.80 Stamp tax 3,853.10 9,123.40 Deed tax 781,317.09 Property tax 95.24 Total 403,722.99 1,359,022.01 Other explanation: 23 .Other account payables (1) Other account payables by nature In RMB Item Ending balance Opening balance Intercourse funds 4,716,778.66 2,710,112.00 Deposit and margin 456,000.00 587,221.20 Agency fee 130,000.00 400,000.00 111 东沣科技集团股份有限公司 2017 年半年度报告全文 Withhold and remit tax 20,477.03 28,669.69 Other 878,416.69 750,861.51 Total 6,201,672.38 4,476,864.40 (2) Other payables with large amount and aging of over one year In RMB Item Ending balance Reason for non-repayment or carryover Other explanation 24. Share capital In RMB Increased (decreased) in Period Opening Shares New shares Ending balance balance Bonus shares converted from Other Sub-total issued public reserve Total shares 706,320,000.00 706,320,000.00 Other explanation: 25. Capital reserves In RMB Item Opening balance Increased in Period Decreased in Period Ending balance Capital premium (share 397,808,090.32 397,808,090.32 premium) Other capital reserves 65,873,219.23 65,873,219.23 Total 463,681,309.55 463,681,309.55 Other explanation, including changed in Period as well as reasons for changes: 26. Surplus reserves In RMB Item Opening balance Increased in Period Decreased in Period Ending balance Statutory surplus 76,791,550.17 76,791,550.17 reserves Total 76,791,550.17 76,791,550.17 Explanation on surplus reserve, including changed in Period as well as reasons for changes: 112 东沣科技集团股份有限公司 2017 年半年度报告全文 25. Retained profits In RMB Item The Period Last Period Retained profits at the end of last period before -886,966,408.74 -890,727,215.25 adjustment Retained profits at the beginning of the period -886,966,408.74 -890,727,215.25 after adjustment Add: The net profits belong to owners of patent -3,145,668.96 3,760,806.51 company of this period Retained profits at the end of the period -891,092,586.76 -886,966,408.74 Details about adjusting the retained profits at the beginning of the period: 1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the undistributed profits at the beginning of the year amounting to 0 Yuan. 2) The changes in accounting policies affect the undistributed profits at the beginning of the year amounting to 0 Yuan. 3) The major accounting error correction affects the undistributed profits at the beginning of the year amounting to 0 Yuan. 4) Merge scope changes caused by the same control affect the undistributed profits at the beginning of the year amounting to 0 Yuan. 5) Other adjustments affect the undistributed profits at the beginning of the year amounting to 0 Yuan. 28. Operating income and operating cost In RMB The Period Last Period Item Income Cost Income Cost Main business 101,493,229.09 86,731,511.45 191,078,889.32 163,101,369.56 Other business 70,765.38 37,714.74 335,592.42 81,317.07 Total 101,563,994.47 86,769,226.19 191,414,481.74 163,182,686.63 29 .Business tax and surcharges In RMB Item The Period Last Period Urban maintenance and construction tax 360,349.17 497,164.44 Educational surtax 360,349.18 497,014.47 Property tax 838.10 Land use tax 127,235.53 Vehicle and vessel tax 9,880.00 Stamp duty 67,598.20 113 东沣科技集团股份有限公司 2017 年半年度报告全文 Business tax 4,938,432.50 8,296,366.53 Land VAT 1,988,303.86 3,664,665.11 Total 7,852,986.54 12,955,210.55 Other explanation: 30. Sales expense In RMB Item The Period Last Period Advertising fees 88,066.00 71,975.00 Business promotion fee 113,450.00 Product packing fee 114,119.82 Transport charge 176,729.02 Lump sum 4,483.49 Salary 60,190.00 Storage fee 1,140.47 Other 200.00 200.08 Total 315,835.82 314,718.06 Other explanation: 31. Administration expenses In RMB Item The Period Last Period Employee wages 3,921,799.98 6,748,266.03 Intermediary organs fee 927,762.26 1,085,483.77 Business entertainment 1,220,199.01 818,553.45 Business-travel expense 551,869.73 812,495.35 Welfare expenses 372,685.72 661,214.54 Social insurance fee 784,247.48 526,608.65 Depreciation and amortization 540,961.54 421,693.46 Office allowance 228,411.68 429,394.93 Housing fund 235,434.20 168,697.60 Low value consumables 280,130.27 219,071.44 Material consumption 339,236.49 98,279.84 Repair charge 117,778.09 98,964.60 114 东沣科技集团股份有限公司 2017 年半年度报告全文 Long-term deferred expenses 46,203.48 78,609.04 Water and electricity 38,644.36 19,077.73 Union dues 4,009.32 3,971.32 Land use tax 590,196.79 Property tax 20,558.29 Stamp tax 126,417.27 Other expense 938,821.91 901,987.20 Total 10,548,195.52 13,829,541.30 Other explanation: 32. Financial expenses In RMB Item The Period Last Period Interest expenses Less: Interest income 709,763.28 121,643.23 Profit/loss on exchange Bank handling charges 18,493.33 19,856.39 Total -691,269.95 -101,786.84 Other explanation: 33. Asset impairment loss In RMB Item The Period Last Period I. Bad debt loss -597.99 Total -597.99 Other explanation: 34. Investment income In RMB Item The Period Last Period Long-term equity investment income -12,933.77 calculated on equity method Total -12,933.77 Other explanation: 115 东沣科技集团股份有限公司 2017 年半年度报告全文 35. Non-operating income In RMB Amount reckoned into current Item The Period Last Period non-recurring gains/losses Other 30,121.27 69,070.59 Total 30,121.27 69,070.59 Government grants reckoned into current gains/losses: In RMB Impact on Assets-relate Distributed current Special d Item Reasons Nature The Period Last Period by gains/losses grants (Y/N) /income-relat (Y/N) ed Other explanation: 36. Non-operating expenditure In RMB Amount reckoned into current Item The Period Last Period non-recurring gains/losses Other 7,113.04 339,948.94 Total 7,113.04 339,948.94 Other explanation: 37. Income tax expense (1) Statement of income tax expenses In RMB Item The Period Last Period Current income tax 8,991.27 Total 8,991.27 (2) Adjustment on accounting profit and income tax expenses In RMB Item The Period Total profit -3,207,373.43 Income tax based on statutory/applicable tax rate -801,843.36 116 东沣科技集团股份有限公司 2017 年半年度报告全文 The impact of deductible losses of deferred income tax assets is 801,843.36 not confirmed in the previous period Other explanation 38. Other comprehensive income Found in Note 39. Notes to statement of cash flow (1) Other cash received in relation to operation activities In RMB Item The Period Last Period Intercourse funds 2,737,235.86 6,619,861.33 Interest income 709,446.69 122,433.28 Other 6,040,764.33 1,313,516.00 Total 9,487,446.88 8,055,810.61 Explanation on other cash received in relation to operation activities: (2) Other cash paid in relation to operation activities In RMB Item The Period Last Period Disbursement costs 4,634,876.43 10,713,299.72 Intercourse funds 832,000.00 3,632,456.94 Other 8,737,183.17 2,656,790.78 Total 14,204,059.60 17,002,547.44 Explanation on other cash paid in relation to operation activities: (3) Cash received from other investment activities In RMB Item The Period Last Period Explanation on cash received from other investment activities: (4) Cash paid related with other investment activities In RMB 117 东沣科技集团股份有限公司 2017 年半年度报告全文 Item The Period Last Period Explanation on cash paid related with other investment activities: (5) Cash received from other financing activities In RMB Item The Period Last Period Collected the margin of housing mortgage 753,264.46 Total 753,264.46 Explanation on cash received from financing activities: (6) Cash paid related with other financing activities In RMB Item The Period Last Period Paid the margin of housing mortgage 663,800.00 1,626,700.00 Total 663,800.00 1,626,700.00 Note of cash paid related with other financing activities: 40. Supplementary information to statement of cash flow (1) Supplementary information to statement of cash flow In RMB Supplementary information The Period Last Period 1. Net profit adjusted to cash flow of -- -- operation activities: Net profit -3,207,373.43 941,308.65 Depreciation of fixed assets, consumption of oil assets and depreciation of productive 521,039.05 464,795.45 biology assets Amortization of intangible assets 30,461.06 65,377.98 Amortization of long-term deferred expenses 86,310.60 94,093.00 Loss from disposal of fixed assets, intangible assets and other long-term assets(gain is -21,731.42 74,717.58 listed with “-”) Investment losses(gain is listed with “-”) 12,933.77 Decrease of inventory (increase is listed with 54,521,751.22 140,787,091.53 “-”) 118 东沣科技集团股份有限公司 2017 年半年度报告全文 Decrease of operating receivable accounts 17,625,680.12 -1,126,508.10 (increase is listed with “-”) Increase of operating payable accounts -40,868,835.51 -64,458,825.89 (decrease is listed with “-”) Net cash flow arising from operating 28,687,301.69 76,854,983.97 activities 2. Material investment and financing not -- -- involved in cash flow 3. Net change of cash and cash equivalents: -- -- Balance of cash at period end 153,602,420.61 133,530,264.90 Less: Balance of cash equivalent at 126,970,834.83 84,543,677.45 year-begin Net increase of cash and cash equivalents 26,631,585.78 48,986,587.45 (2) Net cash payment for the acquisition of a subsidiary of the current period In RMB Amount Including: -- Including: -- Including: -- Other explanation: (3) Net cash received from the disposal of subsidiaries In RMB Amount Including: -- Including: -- Including: -- Other explanation: (4) Constitution of cash and cash equivalent In RMB Item Ending balance Opening balance Ⅰ. Cash 153,602,420.61 126,970,834.83 Ⅲ. Balance of cash and cash equivalent at 153,602,420.61 126,970,834.83 119 东沣科技集团股份有限公司 2017 年半年度报告全文 period-end Other explanation: 41. Notes on items of changes of owner’s equity Name and adjusted amount on “Other” at balance of year-end of last year: 42. Assets with ownership or right-to-use restricted In RMB Item Ending book value Restriction reasons Monetary fund 6,663,127.40 Margin for housing mortgage Total 6,663,127.40 -- Other explanation: 43. Foreign currency monetary items (1) Foreign currency monetary items In RMB Balance of foreign currency at Item Exchange rate convert RMB concert at Period-end period-end Including: USD 819,785.69 6.7744 5,553,556.18 Other explanation: (2) Explanation on foreign operational entity, as for major foreign operational entity, disclosed foreign main operation land, book-keeping currency and basis; and disclosed reasons if the book-keeping currency changed □ Applicable √ Not-applicable 44. Other VIII. Changes of consolidation range 1. Enterprise merger not under the same control (1) Enterprise merger not under the same control in the period In RMB Time for Cost for Ratio of Way to Purchasing Basis of the Revenue of Net profit of Acquiree equity equity equity obtained date purchasing the acquiree the acquiree 120 东沣科技集团股份有限公司 2017 年半年度报告全文 obtained obtained obtained date from from purchasing purchasing date to date to period-end period-end Other explanation: (2) Combined cost and goodwill In RMB Combine cost Explanation on determination method for fair value of combine cost, contingent consideration and its changes: Reason of major goodwill resulted: Other explanation: (3) Acquiree's identifiable assets and liabilities on purchasing date In RMB Fair value on purchasing date Book value on purchasing date Determination method for fair value of the identifiable assets and liabilities: Contingent liability of the acquiree taken during enterprise merger: Other explanation: (4) Gains/losses arising from re-calculation on fair value for the equity held before purchasing date Whether the enterprise combine through multiple transaction by steps or not and obtained controlling rights during the reporting period □Yes √No (5) Explanation on the combination consideration, which is unable to confirm rationally on purchasing date or combination date or on the fair value of identifiable assets and liabilities for the acquiree (6) Other explanation 2. Enterprise merger under the same control (1) Enterprise merger under the same control in the period In RMB Equity ratio Basis for Basis of Revenue of Net profit of Revenue of Net profit of Combined Combination in merger under combination the combined the combined the combined the combined party date combination the same date party from party from party during party during 121 东沣科技集团股份有限公司 2017 年半年度报告全文 control period of period of comparative comparative combined to combined to period period combination combination date date Other explanation: (2) Combine cost In RMB Combine cost Explanation on contingent consideration and its changes: Other explanation: (3) Book value of the combined party's assets and liabilities on combine date In RMB Combination date End of last period Contingent liability of the combined party taken in combination: Other explanation: 3. Counter purchase The basic information of transactions, the basis of transactions constituting counter purchase, whether the assets and liabilities reserved by listed company constitute business and the basis, the confirmation of combined costs, the amount and its calculation of adjusted equity when handling according to the equity transaction. 4. Subsidiary disposal Whether there is a single disposal of the investment in subsidiaries that is the loss of control □ Yes √ No Whether there is disposal of the investment in subsidiaries through multiple transactions step by step and loss of control in the current period □ Yes √ No 5. Other reasons for consolidation range changed Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.)And relevant information: (1) Subsidiary, special purpose vehicle and operational entity with control over by means of entrusted management or lessee newly included in the consolidate scope in the Period: Name Change reason Kefeng Trade Enterprise derivated 122 东沣科技集团股份有限公司 2017 年半年度报告全文 Kefeng Engineering Enterprise derivated On March 6, 2017, approved by Chengde Administration for Industry and Commerce, Chengde Nanjiang Trading Co., Ltd. was divided into Chengde Kefeng Trading Co., Ltd., Chengde Kefeng Project Management Co., Ltd. and Chengde Nanjiang Trading Co., Ltd. Among them, the registered capital of Chengde Kefeng Trading Co., Ltd. is RMB 8.5 million,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope includes the sale of mechanical equipment, machine parts, and mechanical and electrical products, and the housing leasing services; the registered capital of Chengde Kefeng Project Management Co., Ltd. is RMB 500,000.00,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope includes the project management and consulting services, the infrastructure construction, and the housing leasing services; the registered capital of Chengde Nanjiang Trading Co., Ltd. is changed to RMB 1 million,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope includes the sale of hardware and mechanical products, building materials, and mechanical equipment, and the housing rental services. (2) Subsidiary, special purpose vehicle and operational entity with control lost by means of entrusted management or rent-out, which no longer include in consolidate scope in the Period: Name Change reason Runhua RW The Company release the consistent action with shareholder Lan Chunhong On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan Chunhong of Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of losing the control power to it, and check and calculate by equity method. 6. Other IX. Equity in other entity 1. Equity in subsidiary (1) Constitute of enterprise group Main operation Share-holding ratio Subsidiary Registered place Business nature Acquired way place Directly Indirectly Enterprise merger Nanjing Chengde City Chengde City Commercial trade 100.00% under the same Trading*1 control Dongfeng Industrial Chengde City Chengde City 100.00% Establishment Investment*2 investment 123 东沣科技集团股份有限公司 2017 年半年度报告全文 Ecological Animal Chengde City Chengde City 100.00% Establishment Agriculture*3 husbandry International Nanjiang Asia*4 Hong Kong Hong Kong 100.00% Establishment investment Inflatable Morsh capsule, Chengde City Chengde City 100.00% Establishment Technology *5 production and sale of Grapheme Huijing Property Property Chengde City Chengde City 100.00% Establishment *6 management Hangzhou High-tech Hangzhou Hangzhou 100.00% Establishment Dongfeng*7 development Aerospace Chengde product Chengde City Chengde City 100.00% Establishment Kefeng*8 technology development The derived Kefeng Trade*9 Chengde City Chengde City Commercial trade 100.00% discrete Engineering Kefeng The derived Chengde City Chengde City project 100.00% Engineering*10 discrete management Explanation on share-holding ratio in subsidiary different from ratio of voting right: Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over half and over voting rights: Controlling basis for the structuring entity included in consolidated range: Basis on determining to be an agent or consignor: Other explanation: *1 Nanjiang Trade (“Chengde Rongyida Real Estate Development Co., Ltd.” for original name) was established on 20 February 2009 with registered capital of 10 million Yuan, of which, Wang Fei invested 9 million Yuan, representing 90 percent of the registered capital while one million Yuan contributed by Chen Liping, presenting 10 percent of the registered capital; On 27 th July 2009, Wang Fei and Chen Liping transferred all their shares to the controlling shareholder Chen Rong. At the same time, Chen Rong transferred 100% shares to Nanjiang Company with RMB1.00. After the transfer, Nanjiang Company wholly owned the Rongyida. On 3 April 2014, as approved by Industry & Commercial Bureau of Chengde County, Rongyida changed its name to Chengde Nanjiang Real Estate Development Co., Ltd. (“Nanjiang Real Estate” for short). On 12 December 2016, being approved from Chengde Administration for Industry and Commerce, the name of the enterprise are re-named as Chengde Nanjiang Trade and Business Co., Ltd (hereinafter referred to as Nanjiang Trade and Business), business cope: sales of hardware electrical, construction material and mechanical equipment; house leasing services. In March 2017, the company separated Nanjiang Trading, Nanjiang Trading continued to exist, with the registered capital of RMB 1 million, and derived to establish Chengde Kefeng Project Management Co., Ltd., with the registered capital of RMB 500,000, and Chengde Kefeng Trading Co. Ltd., with the registered capital of RMB 8.5 million. Approved by Chengde Market Supervision Authority, Nanjiang Trading has completed the relevant industrial and commercial registration for separation. 124 东沣科技集团股份有限公司 2017 年半年度报告全文 *2 Dongfeng Investment was funded and established by Nanjiang Real Estate on October 9, 2012, its original registered capital was RMB 50 million, and the shareholder Nanjiang Real Estate invested RMB 50 million, accounting for 100% of the registered capital; on December 21, 2012, Nanjiang Real Estate transferred 100% equity stake to Chengde Nanjiang at the cost of RMB 50 million, after the equity transfer, Chengde Nanjiang held 100% equity stake of Nanjiang Investment, on January 6, 2013, Chengde Nanjiang increased capital of RMB 40 million to Nanjiang Investment, and the registered capital was RMB 90 million after the capital increase. In June 20117, approved by Chengde Administration for Industry and Commerce, the company’s name was changed to Chengde Dongfeng Investment Co., Ltd. *3 Ecological Agriculture was established by Nanjiang Investment on 24 October 2012, original registered capital was 5 million Yuan, shareholder Nanjiang Investment contributes 5 million Yuan with 100 percent held in total registered capital. On 18 April 2013, Nanjiang Investment increase 5 million Yuan to Ecological Agriculture and the registered capital turns to 10 million Yuan after increased. In June 21017, the Company changed it’s name to Chengde Dongfeng Ecological Agriculture Co., Ltd after approved by Administrative Bureau of Industry and Commerce of Chengde County *4 Nanjiang Asia was founded by Nanjiang Company on 14th Nov. 2013, located in Hong Kong, with register capital of US$ 20 million, the paid-up was US$ 797, 583.34. *5 Nanjiang Technology was jointly funded the established by Nanjiang Investment and Ningbo Morsh Tech Co., Ltd. on January 24, 2013 with registered capital of RMB 50 million, of which Nanjiang Investment invested RMB 45 million in cash, accounting for 90% of the total amount of investment, Ningbo Morsh Tech Co., Ltd. invested RMB 5 million in cash, accounting for 10% of the total amount of investment. On September 26, 2016, approved by Chengde Administration for Industry and Commerce, agreed to change the name of the company to Chengde Nanjiang Technology Co., Ltd. (“Nanjiang Technology” for short), the business scope changed to the research and development, production, and sales of inflatable capsule, grapheme, grapheme application materials, power battery and battery materials, high-performance membrane materials, and nano-materials and the technology promotion and technical services of above-mentioned products. On July 4, 2016, Chengde Nanjiang Investment and Ningbo Morsh Tech signed an equity transfer agreement, the agreement appointed to transfer 10% equity stake held by Ningbo Morsh Tech to Chengde Nanjiang Investment Co., Ltd., and Chengde Nanjiang Investment would hold 100% equity stake of Nanjiang Technology after the transfer. *6 Huijing Property was founded by Nanjiang Investment on 18th Nov. 2013 with register capital of RMB500,000. Shareholder Nanjiang Investment invested RMB500, 000 wholly owning it. *7 Hangzhou Dongfeng established on 21 September 2016 by Nanjiang Co., Ltd., registered capital was 50 million Yuan; actually paid-in capital was 30 million Yuan. Former Hangzhou Hangfeng Technology Co., Ltd. Re-named as Hangzhou Dongfeng Technology Co., Ltd. *8Chengde Kefeng estalibished by contribution from Nanjiang Co., Ltd. on 12 Dec. 2016. Registered captial amounted to 30 millionYuan, there are actually no fund ivnested ended as 31 Dec. 2016. *9Kefeng Trade derivated from Nanjiang Trading on 6 March 2017, registered captial amounted as 8.5 million Yuan. *10Kefeng Engineering derivated from Nanjiang Trading on 6 March 2017, registered captial amounted as 0.5 million Yuan. 125 东沣科技集团股份有限公司 2017 年半年度报告全文 (2) Important non-wholly-owned subsidiary In RMB Dividend announced to Share-holding ratio of Gains/losses attributable Ending equity of Subsidiary distribute for minority in minority to minority in the Period minority the Period Explanation on share-holding ratio of minority different from ratio of voting right: Other explanation: (3) Main finance of the important non-wholly-owned subsidiary In RMB Ending balance Opening balance Subsidia Non-curr Non-curr Non-curr Non-curr Current Total Current Total Current Total Current Total ry ent ent ent ent assets assets liability liability assets assets liability liability assets liability assets liability In RMB The Period Last Period Cash flow Cash flow Total Total Subsidiary Operation from Operation from Net profit comprehensi Net profit comprehensi Income operation Income operation ve income ve income activity activity Other explanation: (4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group (5)Financial or other supporting offer to structuring body included in consolidate statement scope Other explanation: 2. Transaction that has owners equity shares changed in subsidiary but still with controlling rights (1) Explanation on changes in owner's equity in subsidiaries (2) Impact on minority interest and owner's equity attributable to parent company from transaction In RMB Other explanation 126 东沣科技集团股份有限公司 2017 年半年度报告全文 3. Equity in joint venture and cooperative enterprise (1) Important joint venture and cooperative enterprise Share-holding ratio Accounting treatment on Main operation investment for Name Registered place Business nature place Directly Indirectly joint venture and cooperative enterprise Runhua RW (Tianjin) International Tianjin City Tianjin City 30.00% Equity method International trading trading Co., Ltd. Share-holding ratio or shares enjoyed different from voting right ratio: Basis of the voting rights with 20% below but with major influence, or without major influence but with over 20% (20% included) voting rights hold: (2) Main financial information of the important joint venture In RMB Ending balance/The Period Opening balance/Last Period Other explanation (3) Main financial information of the important affiliated business In RMB Ending balance/ The Period Opening balance/ Last Period Other explanation (4) Financial summary for non-important Joint venture and affiliate enterprise In RMB Ending balance/ The Period Opening balance/ Last Period Joint venture: -- -- Total on below item by shareholding ratio -- -- Affiliated enterprise: -- -- Total on below item by shareholding ratio -- -- 127 东沣科技集团股份有限公司 2017 年半年度报告全文 Other explanation (5) Major limitation on capital transfer ability to the Company from joint venture or affiliates (6) Excess loss occurred in joint venture or affiliates In RMB Losses un-determined in the Cumulated previous losses Cumulated losses Name Period(net profit share in the determined un-determined at period-end Period) Other explanation (7) Unconfirmed commitment with joint venture investment concerned (8) Intangible liability with joint venture or affiliates investment concerned 4. Major conduct joint operation Shareholding ratio/quota enjoy Joint operation Main operation site Register place Business Directly Indirectly Explanation on shareholding ratio or quota enjoy in joint operation different from voting rights: If the joint operation was the independent body, basis of classification of joint operation: Other explanation 5. Structured body excluding in consolidate financial statement Relevant explanation: 6. Other X. Risk related with financial instrument XI. Disclosure of fair value 1. Ending fair value of the assets and liabilities measured by fair value In RMB Ending fair value Item First-order Second-order Third-order Total I. Sustaining measured by -- -- -- -- fair value II.Non-sustaining -- -- -- -- 128 东沣科技集团股份有限公司 2017 年半年度报告全文 measured by fair value 2. Basis for determining the market price of the sustained and non-sustained first-level fair value measurement projects 3. The qualitative and quantitative information of the valuation techniques and important parameters adopted for the sustained and non-sustained second-level fair value measurement projects 4. The qualitative and quantitative information of the valuation techniques and important parameters adopted for the sustained and non-sustained third-level fair value measurement projects 5. The adjustment information about book value between the beginning and the end of the period and the unobservable parameter sensitivity analysis of the sustained third-level fair value measurement projects 6. The sustained third-level fair value measurement projects that conversion has occurred among various levels in the current period, the reasons for change and the policy determining the conversion point 7. Valuation techniques change occurred during the current period and the reasons for change 8. The fair value situations of the financial assets and financial liabilities not measured by the fair value 9. Other XII. Related party and related transactions 1. Parent company of the enterprise Share-holding ratio Voting right ratio on Parent company Registration place Business nature Registered capital on the enterprise for the enterprise parent company Explanation on parent company of the enterprise The Company has no parent company; controller refers to the first largest shareholder Mr. Wang Dong, who holds 29.49% equity of the Company. Ultimate controller of the Company: Mr. Wang Dong Other explanation: 2. Subsidiary of the Enterprise Found more in Note IX. 3. Cooperative enterprise and joint venture Found more in Note IX. Other cooperative enterprise and joint venture that have related transaction with the Company in the Period or occurred in pervious 129 东沣科技集团股份有限公司 2017 年半年度报告全文 period: Name Relationship Runhua RW (Tianjin) International Trade Co., Ltd. Joint venture Other explanation On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan Chunhong of original subsidiary Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of losing the control power to it, and check and calculate by equity method. 4. Other related party Other related party Relationship with the Enterprise Eagles Men Aeronautic Science and Technology Group Co., Ltd. Related legal person of the Company Shanxi Eagles Men Aeronautic Science and Technology Co., Ltd. Related legal person of the Company Other explanation 5. Related transaction (1) Goods purchasing, labor service providing and receiving Goods purchasing/labor service receiving In RMB Whether over the Related party Content The Period Amount approved Last Period transaction limit Eagles Men Aeronautic Science Merchandise -2,970,000.00 No and Technology returns Group Co., Ltd. Shanxi Eagles Men Aeronautic Science Merchandise -21,159,500.00 No and Technology returns Co., Ltd. Goods sold/labor service providing In RMB Related party Content The Period Last Period 130 东沣科技集团股份有限公司 2017 年半年度报告全文 Explanation on goods purchasing, labor service providing and receiving On 15 November 2016,Dongfeng Sci-Tech Group CO., LTD. (hereinafter referred to as “the Company”) holding a 14th session of 6th BOD, for deliberated and approved the Proposals of Routine Related Transactions. The Company entered into a Sales Contract for Ground Protection System and Sales Contract for Stratospheric Satellite Ground Protection System with EMAST Group (hereinafter referred to as “EMAST”) and its wholly-owned subsidiary - Shanxi Eagles Men Aeronautic Science and Technology Co., Ltd. (hereinafter referred to as Shanxi Eagles) respectively. Purchasing equipment as airship ground protection produced by EMAST and Shanxi Eagles, total contract amounting as 24.1295 million Yuan. Till end of 31 December 2016, actually money paid for products are 21.7166 million Yuan. On 3 December 2016, according to the Escrow Letter agreed for payment and delivery on time in the contract, the equipments purchased are full custody by Shanxi Eagles on behalf of the Company. After investigation from the technician of the Company, we found that the technical proposal and drawings, attaché with original contract, has an unforeseeable difference with the critical success factors that in original plans, the purpose of contract has not been realized. The three parties terminate the original sales contract by negotiation, after technology validation by EMAST and Shanxi Eagles, for purpose of avoiding potential risks and the losses to both parties. Returns processing of goods and money are temporary implemented. On 15 March 2017, the Company entered into a Release Agreement on Sales Contract for Ground Protection System and Release Agreement on Sales Contract for Stratospheric Satellite Ground Protection System with EMAST Group and Shanxi Eagles respectively. The former contract will release while the agreement take into effect. And the two parties are implemented returns processing of goods and money in duty. On 16 March 2017, 17 March and 20 March, the Company received the payment for goods as 3.5 million Yuan, 15.5436 million Yuan and 2.673 million Yuan in three times, 21.7166 million Yuan in total. (2) Related trusteeship management/contract & entrust management/ outsourcing Trusteeship management/contract: In RMB Income Client/contract-ou Commissioned Assets type Start date Expire date Pricing basis recognized in the t party party/contractor period Explanation Entrust management/ outsourcing: In RMB Expenses Client/contract-ou Commissioned Assets type Start date Expire date Pricing basis recognized in the t party party/contractor period Explanation (3) Related leasing As a lessor for the Company: In RMB Lessee Assets type Lease income recognized in the Lease income recognized in last 131 东沣科技集团股份有限公司 2017 年半年度报告全文 Period Period As a lessee for the Company: In RMB Rental fee recognized in the Rental fee recognized in last Lessor Assets type Period Period Explanation on related lease (4) Related guarantee The Company acts as a secured party In RMB Whether the guarantee Secured party Guarantee amount Start date Expiry date implemented or not As a secured party by the Company In RMB Whether the guarantee Guarantor Guarantee amount Start date Expiry date implemented or not Explanation on related guarantee (5) Borrowed funds from related party In RMB Related party Borrowing amount Start date Expiry date Note Inter-bank borrowing Lending transaction (6) Related party’s assets transfer and debt reorganization In RMB Related party Content The Period Last Period (7) Remuneration of key management personnel In RMB Item The Period Last Period Remuneration of key management 783,050.00 898,000.00 personnel 132 东沣科技集团股份有限公司 2017 年半年度报告全文 (8) Other related transaction 6. Account receivable/payable from/to related party (1) Account receivables In RMB Ending balance Opening balance Item Related party Book balance Bad debt provision Book balance Bad debt provision Advance payment Eagles Men Aeronautic Science 2,241,461.40 and Technology Group Co., Ltd. Shanxi Eagles Men Aeronautic Science 15,969,092.73 and Technology Co., Ltd. (2) Account payable In RMB Item Related party Ending book balance Opening book balance 7. Commitment of related party 8. Other XIII. Share-based payment 1. Share-based payment □ Applicable √ Not applicable 2. Share-based payment settled by equity □ Applicable √ Not applicable 3. Share-based payment settled by cash □ Applicable √ Not applicable 133 东沣科技集团股份有限公司 2017 年半年度报告全文 4. Modification and termination of the share-based payment 5. Other XIV. Commitment and contingency 1. Important commitment Important commitment on balance sheet date 2. Contingency (1) Important contingency on balance sheet date As of 30 June 2017, the balance of guarantee of the mortgage for commercial housing owner amounted as 166,451,200 Yuan (2) If the Company has no important contingency need to disclosed, explain reasons The Company has no important contingency that need to disclose. 3. Other XV. Events after balance sheet date 1. Important non adjustment matters In RMB Impact on financial status and Reasons of fails to estimate the Item Content operation results impact 2. Profit distribution In RMB 3. Sales return 4. Other events after balance sheet date XVI. Other important events 1. Previous accounting errors collection (1) Retrospective restatement In RMB 134 东沣科技集团股份有限公司 2017 年半年度报告全文 Items impact during vary Content Treatment procedure Accumulated impact comparative period (2) Prospective application Content Approval procedure Reasons 2. Debt restructuring 3. Assets replacement (1) Non-monetary assets (2) Other assets 4. Pension plan 5. Discontinuing operation In RMB Profit of discontinuing operation Item Revenue Expenses Total profit Income tax Net profit attributable to owners of parent company Other explanation 6. Segment (1) Recognition basis and accounting policy for reportable segment (2) Financial information for reportable segment In RMB Item Offset of segment Total 135 东沣科技集团股份有限公司 2017 年半年度报告全文 (3) The Company has no segment, or unable to disclose total assets and liability of the segment, explain reasons (4) Other explanation 7. Major transaction and events makes influence on investor’s decision 8. Other XVII. Principle notes of financial statements of parent company 1. Accounts receivable (1) Accounts receivable by type In RMB Ending balance Opening balance Provision for bad Book balance Book balance Provision for bad debts Type debts Book Book value Proportio Provision value Proportio Provision Amount Amount Amount Amount ratio ratio n n Accounts receivable with large single amount and accrued for provision of bad debt on a single basis at period-end: □ Applicable √ Not-applicable Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio: □ Applicable √ Not-applicable Accounts receivable accrued for provision of bad debt by percentage of balance in portfolio: □ Applicable √ Not-applicable Accounts receivable accrued for provision of bad debt by other methods in portfolio: (2) Provision for bad debts accrued, regain or switch back in the Period In the Period, 0 Yuan accrued for provision of bad debts; 0 Yuan provision for bad debts regains or switch back in the Period. Including major amount of bad debt provision regain or switch back in the Period: In RMB Unit Amount regain or switch back Way of regain (3) Account receivable actual charge off in the Period In RMB Item Amount written off Written-off for the major receivable: 136 东沣科技集团股份有限公司 2017 年半年度报告全文 In RMB Arising from related Unit Nature Amount written off Reasons Procedures transaction (Y/N) Explanation on written off: (4) Top five account receivables collected by arrears party at ending balance (5) Account receivable de-recognition due to financial assets transfer (6) Assets and liabilities resulted by account receivable transfer and continues involvement Other explanation: 2. Other account receivables (1) Other account receivables by type In RMB Ending balance Opening balance Provision for bad Book balance Book balance Provision for bad debts Type debts Book Book value Proportio Provision value Proportio Provision Amount Amount Amount Amount ratio ratio n n Other receivables accrued for provision 29,791,9 67,905.7 29,724,07 23,650, 23,582,767. 99.77% 0.23% 99.51% 67,905.78 0.56% of bad debt by 84.72 8 8.94 673.11 33 portfolio Other receivables with minor single 70,000.0 70,000.0 70,000. amount but accrued 0.23% 100.00% 0.49% 70,000.00 100.00% 0 0 00 for provision of bad debt on a single basis 29,861,9 137,905. 29,724,07 23,720, 137,905.7 23,582,767. Total 100.00% 0.46% 100.00% 1.05% 84.72 78 8.94 673.11 8 33 Other receivables with large single amount and accrued for provision of bad debt on a single basis at period-end: □ Applicable √ Not-applicable Other receivables accrued for provision of bad debt by aging analysis method in portfolio: √ Applicable □ Not-applicable In RMB Aging Ending balance 137 东沣科技集团股份有限公司 2017 年半年度报告全文 Other account receivable Provision for bad debts Provision ratio Within 1 year Subtotal within one year 1,574,385.00 32,046.24 2.04% 1-2 years 130,597.72 26,119.54 20.00% 2-3 years 19,480.00 9,740.00 50.00% Total 1,724,462.72 67,905.78 3.94% Portfolio recognized: Other accounts receivable accrued for provision of bad debt by percentage of balance in portfolio: □ Applicable √ Not-applicable Other accounts receivable accrued for provision of bad debt by other methods in portfolio: √ Applicable □ Not-applicable Portfolio Ending balance Other accounts receivable Provision for bad debts Provision ratio (%) Ecological agriculture 16,467,846.58 --- --- Huijing Property 6,091,523.19 --- --- Tail payment of the land reserves from 3,678,200.00 --- --- Land Reserve Center of Chengde County Nanjiang Trade 1,129,495.73 --- --- Nanjiang Technology 284,228.00 --- --- Kefeng Engineering 150,000.00 --- --- Kefeng Aerospace 60,000.00 --- --- Nanjiang Asia 4,971.22 --- --- Oil prepaid to Petroleum Company 110,836.28 --- --- Cement special fund 90,421.00 --- --- Total 28,067,522.00 --- --- (2) Bad debt provision accrual collected or switch back There is 0 Yuan provision for bad debts accrued in the Period; and 0 Yuan regains or switch back in the Period. Including the followed significant amount: In RMB Unit Regains or switch back Way of regain (3) Other receivables actually written-off during the reporting period In RMB Item Amount written-off Major other account receivables written-off: 138 东沣科技集团股份有限公司 2017 年半年度报告全文 In RMB Arising from related Name Nature Amount written-off Reasons Procedures transaction (Y/N) Explanation on other account receivable: (4) Other account receivables category by nature of money In RMB Nature of money Ending book balance Beginning book balance Intercourse current 24,188,064.72 18,676,237.99 Land acquisition account 3,678,200.00 3,678,200.00 Other 1,995,720.00 1,366,235.12 Total 29,861,984.72 23,720,673.11 (5) Top five other account receivables collected by arrears party at ending balance In RMB Proportion in total Ending balance of Unit Nature Ending balance Aging other receivables bad debt provision Nanjiang Ecological Within one year; 1-2 Intercourse current 16,467,846.58 55.15% Agriculture years Land Reserve Center Final payment for 3,678,200.00 2-3 years 12.32% of Chengde County land acquisition Huijing Property Intercourse current 6,091,523.19 Within one year 20.40% Company Nanjiang Technology Within one year; 2-3 Intercourse current 284,228.00 0.95% Company years Kefeng Engineering Intercourse current 150,000.00 Within one year 0.50% Total -- 26,671,797.77 -- 89.32% (6) Account receivables related to government subsidies In RMB Time and amount Unit Item Ending balance Ending age collected and basis 139 东沣科技集团股份有限公司 2017 年半年度报告全文 (7) Other receivable for termination of confirmation due to the transfer of financial assets (8)The amount of assets and liabilities that are transferred other receivable and continued to be involved Other explanation: 3. Long-term equity investment In RMB Ending balance Opening balance Item Depreciation Depreciation Book balance Book value Book balance Book value reserves reserves Investment for 178,114,466.37 178,114,466.37 187,284,836.37 9,170,370.00 178,114,466.37 subsidiary Investment in joint ventures and 2,790,271.96 2,790,271.96 0.00 associated enterprise Total 180,904,738.33 2,790,271.96 178,114,466.37 187,284,836.37 9,170,370.00 178,114,466.37 (1) Investment for subsidiary In RMB Depreciation Ending balance of Increased in Decreased in Invested company Opening balance Ending balance reserves accrual depreciation Period Period in the Period reserves Nanjiang Trading 53,114,299.73 47,802,869.76 5,311,429.97 Dongfeng 90,000,000.00 90,000,000.00 Investment Nanjiang Asia 5,000,166.64 5,000,166.64 Hangzhou 30,000,000.00 30,000,000.00 Dongfeng Kefeng Trade 45,147,154.77 45,147,154.77 Kefeng 2,655,714.99 2,655,714.99 Engineering Ruihua RW 9,170,370.00 9,170,370.00 0.00 Total 187,284,836.37 47,802,869.76 56,973,239.76 178,114,466.37 140 东沣科技集团股份有限公司 2017 年半年度报告全文 (2) Investment for joint venture and associated enterprise In RMB Changes in Period Investme Cash Ending Other nt dividend balance Unit of Additiona comprehe Depreciat Opening Negative gains/loss Other or profit Ending of investmen l nsive ion balance investmen es equity announce Other balance depreciati t investmen income reserves t recognize changes d to on t adjustmen accrual d by distribute reserves t equity d I. Joint venture II. Associated enterprise Ruihua 2,790,271 2,790,271 2,790,271 RW .96 .96 .96 2,790,271 2,790,271 2,790,271 Subtotal .96 .96 .96 2,790,271 2,790,271 2,790,271 Total .96 .96 .96 (3) Other explanation In March 2017, the company separated the wholly owned subsidiary Chengde Nanjiang Trading Co., Ltd. (hereinafter referred to as “Nanjiang Trading”), Nanjiang Trading continued to exist, with the registered capital of RMB 1 million, and derived to establish Chengde Kefeng Project Management Co., Ltd., with the registered capital of RMB 500,000, and Chengde Kefeng Trading Co. Ltd., with the registered capital of RMB 8.5 million. Approved by Chengde Market Supervision Authority, Nanjiang Trading has completed the relevant industrial and commercial registration for separation. On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan Chunhong of original subsidiary Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of losing the control power to it, and check and calculate by equity method. 4. Operation income and operation cost In RMB Item The Period Last Period 141 东沣科技集团股份有限公司 2017 年半年度报告全文 Income Cost Income Cost Main business 99,465,192.85 83,841,835.73 179,229,459.06 150,397,967.36 Other business 62,967.09 37,714.74 911,933.83 890,358.48 Total 99,528,159.94 83,879,550.47 180,141,392.89 151,288,325.84 Other explanation: 5. Investment gains In RMB Item The Period Last Period 6. Other XVIII. Supplementary information 1. Details of current non-recurring profits and losses √ Applicable □ Not-applicable In RMB Item Amount Remark Other non-operating income and expense 23,008.23 other than the abovementioned ones Total 23,008.23 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □ Applicable √ Not-applicable 2. REO and earnings per share Earnings per share Profits during report period Weighted average ROE Diluted EPS Basic EPS (Yuan/share) (Yuan/share) Net profits belong to common stock -0.88% -0.004 -0.004 stockholders of the Company Net profits belong to common stock -0.88% -0.004 -0.004 stockholders of the Company after 142 东沣科技集团股份有限公司 2017 年半年度报告全文 deducting nonrecurring gains and losses 3. Difference of the accounting data under accounting rules in and out of China (1) Difference of the net profit and net assets disclosed in financial report, under both IAS (International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not-applicable (2) Difference of the net profit and net assets disclosed in financial report, under both foreign accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) □ Applicable √ Not-applicable (3) Explanation on data differences under the accounting standards in and out of China; as for the differences adjustment audited by foreign auditing institute, listed name of the institute 4. Other 143 东沣科技集团股份有限公司 2017 年半年度报告全文 Section XI. Documents available for reference 1. Financial statement carried with the signature and seal of the Person in charge of the Company, person in charge of the accounting works and accountant in charge. 2. Text and original draft of the notice that disclosed in reporting period on newspapers appointed by CSRC. 144