山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Shandong Zhonglu Oceanic Fisheries Co., Ltd. SEMI-ANNUAL REPORT 2013 July 2013 1 山东省中鲁远洋渔业股份有限公司 2013 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 Shandong Zhonglu Oceanic Fisheries 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. All directors are attended the Board Meeting for report deliberation. The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either. Li Wenyi, principal of the Company, Zhang Weiping, person in charger of accounting works and Lei Lixin, person in charge of accounting organ (accounting principal) hereby confirm that the Financial Report of Semi-Annual Report 2013 is authentic, accurate and complete. Concerning the forward-looking statements with future planning involved in the Semi-Report, they do not constitute a substantial commitment for investors. Investors are advised to exercise caution of investment risks. 2 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Content Section I Important Notice, Contents and Paraphrase .................................................. 2 Section II Company Profile........................................................................................... 5 Section III Accounting data and summary of finnaical indexes ................................... 7 Section IV Report of the Board of Directors................................................................. 9 Section V Important Events......................................................................................... 16 Section VI Changes in shares and particular about shareholders ............................... 20 Section VII Directors, Supervisors and Senior Executives ....................................... 23 Section VIII Financial Report ..................................................................................... 21 Section IX Documents Available for Reference ...................................................... 110 3 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Paraphrase Items Refers to Definition “Zhonglu Company”, “The Company” Refers to Shandong Zhonglu Oceanic Fisheries Company Limited or “Company” “State-owned Assets Investment” Refers to Shandong State-owned Assets Investment Holding Company Limited "“Luxin Group” Refers to Luxin Investment Holding Company Limited “Fisheries Enterprise” Refers to Shandong Group Corp. of Fisheries Enterprises State-owned Assets Supervision and Administration Commission of “SASAP” Refers to Shandong Provincial Government State-owned Assets Supervision and Administration Commission of the “SASAC” Refers to State Council “CSRC” Refers to China Securities Regulatory Commission “Shandong SRB” Refers to CSRC, Shandong Securities Regulatory Bureau “The report” Refers to Semi-Annual Report for 2013 compiled by the Company 4 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Section II Company profile I. Company Profile Short form for share Zhonglu B Code for share 200992 Listing stock exchange Shenzhen Stock Exchange Chinese name of the Company 山东省中鲁远洋渔业股份有限公司 Abbr. of Chinese name of the 中鲁远洋 Company(if applicable) English name of the Shandong Zhonglu Oceanic Fisheries Company Limited Company(if applicable) Abbr. of English name of the zlyy Company(if applicable) Legal Representative Li Wenyi II. Contact person and ways Secretary of the Board Rep. of securities affairs Name Zhou Feng Li Ying; Li Feng No.43 Heping Rd, Jinan City, Shangdong No.43 Heping Rd, Jinan City, Shangdong Contact adds. Province Province Tel. 0531-86553278 0531-86553276 Fax. 0531-86982906 0531-86982906 E-mail zlzqb@163.com zlzqb@163.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 2012. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in reporting period or not □ Applicable √ Not applicable 5 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 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 2012. 3. Registration changes of the Company Whether registration has changed in reporting period or not □ Applicable √ Not applicable Date/place for registration of the Company, registration number for enterprise legal license, number of taxation registration and organization code have no change in reporting period, found more details in Annual Report 2012. 4. Other relevant information Whether other relevant information has changed in reporting period or not □ Applicable √ Not applicable 6 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Section III. Accounting data and summary of financial indexes I. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not □Yes √ No Increase/decrease in this Current period Same period of last year report y-o-y (%) Operating revenue (RMB) 264,728,360.22 250,900,094.03 5.51% Net profit attributable to shareholders of 23,102,972.94 26,409,180.75 -12.52% the listed company(RMB) Net profit attributable to shareholders of the listed company after deducting 21,965,338.55 34,610,915.52 -36.54% non-recurring gains and losses(RMB) Net cash flow arising from operating -20,915,097.21 42,161,318.81 -149.61% activities(RMB) Basic earnings per share (RMB/Share) 0.09 0.1 -10% Diluted earnings per share (RMB/Share) 0.09 0.1 -10% Weighted average ROE (%) 4.73% 5.87% -1.14% Increase/decrease in this End of current period End of last period report-end over that of last period-end (%) Total assets (RMB) 700,683,103.00 646,521,696.71 8.38% Net assets attributable to shareholder of 500,551,998.76 476,824,979.57 4.98% listed company(RMB) II. Items and amounts of extraordinary profit (gains)/loss In RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the 1,091,226.17 write-off that accrued for impairment of assets) Other non-operating income and expenditure except for the 46,408.22 aforementioned items Total 1,137,634.39 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies 7 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 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 8 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Section IV. Report of the Board of Directors I. Introduction In the light of annual primary mission of “continues to remain stable development, seize opportunity proactively and development promotion” and around the “catch production, strengthen management and promoting stability” as work center, the Company reinforce production operation, conscientiously implement the safety management, consolidate internal control and push for implementation of main investment/financing projects with more efforts in order to accelerate the optimization of structure adjustment. Actively implement the strategy of “talents to make enterprises strong”, gradually enhance core competiveness of the Company, which contribute to achieve a good result in aspect of annual operation target and the sustainable and healthy development for the Company. Operation revenue achieved RMB 264.7284 million in this period, a 5.51% up compare with same period of last year. Operation cost amounted as RMB 219.7414 million with 0.40% growth over same period the year before. Net profit attributable to parent company in this period realized RMB 23.103 million, a 12.52% down compare with same period of last year and the fishing production yield to 6,484.84 tons in this period. II. Main business analysis Operation revenue earns a 5.51% over same period of last year, which mainly because production and sales show a sharp increase after the purse seine production recover. However, due to major down in the price of ultralow temperature tuna, the inventory growth and the sales decreased, than overall revenue of the Company has increased slightly. Period charge shows a decrease of 15.36% compare with same period of last year, among which sales expenses increased 13% mainly due to the increase of freight and miscellaneous charges and travelling expenses generate from fish boat discharge after reach port. Administrative expenses have a 16.99% down mainly because the performance pay and public accumulation funds for employees decreased. Financial cost decrease 60.09%, mainly because the return of interest income for equity transfer of Qingdao Double Whale Company increased. Income tax expense has a 95.74% down compare with same period of last year, which mainly because according to the regulation of enterprise income tax law, the primary processing of agricultural products are exempted from enterprise income tax in advance. Net cash flow arising from operation activities has 149.61% down compare with same period of last year, which mainly because no fuel subsidy received in this period and part of the sales have not return yet. Net cash flow arising from investment activities increase 121.27% over same period of last year, which mainly because the insurance indemnity for Taifu 102 has been received. Net cash flow arising from financing activities increase 11.24% over same period of last year mainly because more bank loans occurred in the Period. The net profit attributable to parent company of the Company achieved RMB 23.103 million in this period, a 12.52% down compare with same period of last year, which mainly because the price of longline tuna drop dramatically, the net realizable value for stock fish was lower than the cost, Allotted provision for inventory preparation. Y-o-y changes of main financial data In RMB Y-o-y increase/decrease Current period Same period of last year Reasons for changes (%) 9 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Operation revenue 264,728,360.22 250,900,094.03 5.51% Operation cost 219,741,407.16 218,874,259.05 0.4% Sales expenses 2,162,304.33 1,913,459.71 13% Administrative expenses 13,721,691.25 16,530,420.03 -16.99% The return of interest income for equity Financial cost 244,394.62 612,320.50 -60.09% transfer of Qingdao Double Whale Company was increased The primary processing of agricultural products Income tax expense 28,100.00 660,166.07 -95.74% are exempted from enterprise income tax in advance No fuel subsidy received Net cash flow arising in this period and part of -20,915,097.21 42,161,318.81 -149.61% from operation activities the sales have not return yet Net cash flow arising The insurance indemnity from investment 9,392,667.50 -44,167,850.71 121.27% for Taifu 102 has been activities received Net cash flow arising 32,716,152.93 29,409,272.97 11.24% from financing activities Net increase of cash and 20,966,388.76 27,429,901.32 -23.56% cash equivalent 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 The future development and planning extended to reporting period that published in disclosure documents as prospectus, private placing memorandum and recapitalize statement □ Applicable √ Not applicable No future development and planning extended to reporting period that published in disclosure documents as prospectus, private placing memorandum and recapitalize statement Review on the previous business plan and its progress during reporting period The main construction of Phase III project of Zhonglu (Yantai) Food Co., Ltd. was completed currently, and the project still in last stage of construction; accomplish follow-up investment of RMB 7,515,820.00 in this period. 10 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 III. Constitution of main business In RMB Increase or Increase or Increase or decrease of decrease of decrease of gross Operating Gross profit ratio Operating cost 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 Pelagic fishery 74,020,865.36 51,153,852.24 30.89% -6.86% -23.65% 15.2% and reprocess Management and rent of refrigerated 39,743,558.52 30,632,659.79 22.92% 17.27% 18.67% -0.91% transportation ships Aquatic product process, freeze, 147,224,452.49 137,175,578.42 6.83% 9.68% 9.64% 0.04% etc According to products Tuna 74,020,865.36 51,153,852.24 30.89% -6.86% -23.65% 15.2% Ship Rental 39,743,558.52 30,632,659.79 22.92% 17.27% 18.67% -0.91% Aquatic product process and cold 147,224,452.49 137,175,578.42 6.83% 9.68% 9.64% 0.04% storage According to region Mainland China 70,125,569.27 61,224,936.88 12.69% 53.92% 82.66% -13.74% Taiwan China 73,341,550.52 48,151,686.19 34.35% 48.5% 26.47% 11.43% H.K. China 11,581,030.32 10,801,572.70 6.73% Japan 75,549,131.86 70,464,321.21 6.73% -26.14% -28.39% 2.93% Singapore 7,679,886.56 7,162,994.20 6.73% -56% -57.22% 2.66% Ghana 5,922,454.23 5,497,321.11 7.18% -9.4% -7.18% -2.22% South Korea 16,789,253.61 15,659,258.16 6.73% -36.3% -38.04% 2.62% IV. Core competitive-ness analysis The world economic situation is intricate and complex since year of 2013, emerging economies growth slowing including China. In regards to the external environment, the influence of global financial crisis presents to be permanent and intensification. The economic upswings is underpowered and trade protectionism beginning to show; from the view of internal environment, the slumping domestic demand as well as the cost pressure, which was increased every year, cause negative effect for the enterprise’s operation. At the same time, global monetary 11 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 remain easing, due to the quantitative easing policy adoption to cope with debt problems from Unite States and Japanese etc., the Renminbi force to appreciated, therefore, major influence on price fluctuation in China emerged. As a pelagic fishery with export-oriented comes increasingly prominent, and strongly depend on Japanese market particularly, domestic enterprise of distant-water fishery suffer a rough adjustment period, effected by economic situation in first half year in particular. According to the above situation, leadership of the Company actively take actions, adhere to the core of ocean-going fishing, assisted by ocean shipping and food process trading, take more efforts to enlarge the fleet, create new way of operation with purpose of improving the ability in aspect of fishing, transportation and food processing. Operation measures for development of the Company since first half year are as follow: (1) Enlarge the fleet, enhance operational capability. Fishing operation is a crucial support for the operation and soaring benefits of the Company. As for the operation layout, the Company persists in oceanic purse seine and production of long liner fishing as center, assisted by distant water trawl fishing, optimized resource allocation and continues to strengthen the establishment of fishing ability of deep-sea fishing. Currently, the Company owns 15 long liner and purse seiner in total. Among which, 8 tuna long liners, completed in second half year of 2012, and 2 tuna purse seiner purchased have put into operation successfully with favorable earnings achieved. Also, two sets of great tuna purse seiner, which invested RMB 53 million only in total, maintains a strong growth after resume production since November the year before. Furthermore, yielding 7107 tons in more than half year with output value of RMB 55.18 million; profit amount approximately as RMB 26.65 million with profit margin up to 48%. In addition, the huge ultralow temperature long liner, introduced this year from Japan, is in renovation in Zhoushan Harbor. And the long liner expect to put into production in August after dock repair and naturalization completed, at that time, the fleet of the Company as oceanic tuna purse seiner and long liner comes to 16. (2) Deepen resources integration,diversified operation scale. On 27 August 2012, the Shandong Zhonglu Haiyan Oceanic Co., Ltd., which is in charge of the operation, management and maintenance of the long liner and purse seiner for the Company, was established jointly by the Company and Shandong State-owned Assets Investment Holdings Co., Ltd. with capital of RMB 54 million. During the reporting period, the Company, Shandong State-owned Assets Investment Holdings Co., Ltd. and Shandong Luxin Group reached an agreement for jointly investment of RMB 423 million for expanding share capital of Zhonglu Haiyan, and plan to implement fishery cooperation with riparian state and relevant fisheries organization. The cooperation will enhance the fishing capacity of the Company greatly, and also undoubtedly, plays an important role in improving benefits of the Company as well as consolidating the status in field of tuna in the world. (3) Developed comprehensively, steadily improve benefits. While persevere in high sea fishing as main business, the Company make further improvement on the development of indirect activities, such as refrigerated transport and foods process etc. In terms of refrigerated transport, while persist in past good measures, the Company make a step forward in reforming the way of operation and management, improving relationship between the transport ship and client enterprises, and provided a comprehensive and warm service to clients. Maintained equipment regularly to ensure high-efficiency operation for all equipments, combat extravagance and waste as well as avoid water leakage. In aspect of food processing, increasing investment for “Chinese Tuna Trading Center”, locates in Yantai, Shandong, improving the production and processing equipment. Currently, the hardware engineering of Phase III is nearing completion, and comes in the final stage. The projects will put into operation as a brand new industry development service platform after relevant system debugging completed with its perfected and regulated functions optimize and efficiency service as well as accurate and authoritative information. Zhonglu stands in a period of fast-improvement and in the best growing trend currently. Operation benefits of the Company improved steadily, management standards upgrade constantly and the enterprise getting more and 12 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 stronger apparently along with the obvious strengthen in aspect of corporate image and social influence. The Company continue to implement the operation idea of “one core with two wings” for purpose of laying a solid foundation for further development of the Company, that is core with high sea fishing and assisted by refrigerated transport and process trading. V. Investment analysis 1. Main subsidiaries and joint-stock companies analysis Main subsidiaries and joint-stock companies In RMB Main Industry Registered Operation Operation Name Type products or Total assets Net assets Net profit involved capital revenue profit service Internationa l ocean Shandong Cold shipping, Zhonglu storage, accept for 22,505,600. 41,746,565. 14,712,794. Fishery Subsidiary 671,888.89 381,043.44 411,343.44 transportati carriage of 00 18 50 Shipping on frozen Co., Ltd. aquatic products Self-support Habitat ing business Internationa Refrigerated 12,476,146. 133,780,370 130,368,812 25,030,764. 5,944,309.8 5,944,309.8 Subsidiary of l transport 00 .92 .77 02 0 0 refrigerated Corporation transport Freeze, cold storage, process and Shandong sales of Zhonglu aquatic Oceanic Food products, 75,593,300. 170,262,747 104,180,422 148,203,763 5,142,695.6 4,771,262.1 Subsidiary (Yantai) processing animal 00 .82 .66 .97 3 0 Foods Co., products Ltd. and fruits and vegetables etc. Shandong Offshore Zhonglu Ocean fishing, 54,000,000. 53,962,970. 53,962,970. Subsidiary 0.00 -37,029.99 -37,029.99 Haiyan fishery ocean-going 00 01 01 Oceanic fishing 13 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Co., Ltd. 2. Major project invested by non-raised funds In ten thousand Yuan Amount invested Total investment Amount invested in Project accumulative till end Progress Earnings planned this period of reporting period VI. Prediction of business performance from January – September 2013 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 VII. Explanation from the Board and Supervisory Committee for “Qualified Opinion” from the CPA of this year’s Not applicable VIII. Explanation from the Board for “Qualified Opinion” of last year’s Not applicable IX. Implementation of profit distribution in reporting period Implementation or adjustment of profit distribution plan in reporting period, cash dividend plan and shares converted from capital reserve in particular □Applicable √Not applicable The Company has no profit distribution and shares converted from capital reserve either, which was deliberated and approved in annual shareholders’ general meeting of 2012 X. In the report period, reception of research, communication and interview Contents discussed and Time Place Way Type Reception material provided Operation status of the Telephone 2013-01-24 Jinan Individuals Individual investor Company and with no communication materials provided Operation status of the 2013-02-22 Jinan Telephone Individuals Individual investor Company and with no 14 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 communication materials provided Operation status of the Telephone 2013-03-12 Jinan Individuals Individual investor Company and with no communication materials provided Operation status of the Telephone 2013-04-18 Jinan Individuals Individual investor Company and with no communication materials provided 15 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Section V. Iimportant Events I. Corporate governance In reporting period, by strictly followed requirement of relevant laws and regulations as well as relevant normative documents of “Company Law”, “Securities Laws”, “Rules of Corporate Governance for Listed Company” and “Rules of Stock Listing in Shenzhen Stock Exchange” etc., the Company constantly perfected its corporate governance structure, established and improved the internal control and controlling system, continue to deepen the corporate governance activities in order to enhance standard of regulate operation. The Company considers that: in reporting period, actual corporate governance of the Company shows no difference with the Company Law and requirement of relevant regulations from CSRC. II. Significant lawsuits and arbitrations of the Company □Applicable √Not applicable The Company has no significant lawsuits and arbitrations in reporting period III. Question from media □ Applicable √ Not applicable No universal questioned by media in reporting period IV. Bankruptcy reorganization In reporting period, the Company has no bankruptcy reorganization occurred. V. Transaction in assets 1. Acquisition of assets Ratio of the profit Relationsh Whethe Counterp Trading contribut ip with Assets Impact on Impact on ra arty or price (in ed to counterpar Disclosure acquired Progress operation of the gains/losses of related Disclosure ultimate 10 listed ty (apply date (Note or (Note 2) Company (Note the Company transact index controlli thousand company to related 5) replaced 3) (Note 4) ion or ng party Yuan) in total transaction not net profit ) (%) 2. Assets sold Counter Assets Date for Trading Net Impact Ratio of Pricing Whether Relation Whether Whether Disclos Disclos 16 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 party sold sales price (in profit on the the principl a related ship ownersh the ure date ure 10 contribu Compan profit e transacti with ip of the debts index thousan ted to y (Note contribu on or counter assets and d Yuan) listed 3) ted to not party have liability compan listed (apply been have y from compan to transfer been period-b y in related totally transfer egin to total net transacti or not totally date for profit on) or not sale (in (%) 10 thousan d Yuan) 3. Enterprise mergers VI. Insignificant related transactions Other insignificant related transactions On 28 June 2013, the proposal of Increasing Capital and Shares for Shandong Zhonglu Haiyan Oceanic Fisheries Company Limited and Implemented 2 New Purse Seine Ship for Fisheries Cooperation Project was deliberated and approved in Annual Shareholders’ General Meeting of 2012. In order to seek the sustainable and healthy development of tuna industry and solve the bottleneck of capitals needs in investment projects, the company united controlling shareholder Shandong State-owned Assets Investment Holding Company Limited and shareholder Luxin Investment Holding Company Limited to implement capital increase and share expansion for Shandong Zhonglu Haiyan Oceanic Fisheries Company Limited (hereinafter referred to as “Zhonglu Haiyan”) which the company belongs to. This project plans to raise RMB 424,750,000 funds by capital increase and share expansion, in which State-owned Assets Investment Company invested RMB 124,000,000 in cash, Luxin Group invested RMB 160, 000, 000 in cash, the company invested RMB 140,750,000 for producing and operating in ships and related physical assets, insufficient part was made up with cash. It was predicted that the Company holds 35.35% equity of Zhonglu Haiyan after capital increase, which was still the first big shareholder of Zhonglu Haiyan; Luxin Group holds 33.42%; SDIC company holds 31.33%. Investment projects that the transactions involved need to be audited by competent department of every related party, the actual investment ratio will be adjusted according to specific investment situation. This transaction made up the related transaction, but not made up the material assets reorganization that ruled by Administration Measures of Material Assets Reorganization for Listed Companies. Website for temporary disclosure of the significant related transaction Announcement Date of disclosure Website for disclosure Suggestive announcement on related 2013-06-15 http//www.cninfo.com.cn transactions Announcement of related transactions 2013-06-18 http//www.cninfo.com.cn Resolution Notice of Annual Shareholders’ 2013-06-29 http//www.cninfo.com.cn General Meeting of 2012 17 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 VII. Engagement and non-reappointment of CPA Whether the semi-annual report was audited or not □ Yes √ No VIII. Explanation on other significant events Name The Press for disclosure Dated of disclosed Internet website and retrieval path for disclosed information Resolution Notice of 17th Hong Kong Commercial 2013-01-15 http//www.cninfo.com.cn Daily Meeting of 4th Session of the China Securities Journal Board Announcement on Progressing of Hong Kong Commercial 2013-03-09 http//www.cninfo.com.cn Daily Significant Issues China Securities Journal th Resolution Notice of 18 Hong Kong Commercial 2013-03-13 http//www.cninfo.com.cn th Daily Meeting of 4 Session of the China Securities Journal Board Summary of Annual Report for Hong Kong Commercial 2013-03-13 http//www.cninfo.com.cn Daily year of 2012 China Securities Journal th Resolution Notice of 12 Meeting Hong Kong Commercial 2013-03-13 http//www.cninfo.com.cn Daily of 4th Session of Supervisory China Securities Journal Committee Notice of Guarantee for Hong Kong Commercial 2013-03-13 http//www.cninfo.com.cn Daily Controlling Subsidiary China Securities Journal Notice of Guarantee Terminated Hong Kong Commercial 2013-04-15 http//www.cninfo.com.cn Daily Outside China Securities Journal Text of First Quarterly Report for Hong Kong Commercial 2013-04-27 http//www.cninfo.com.cn Daily yare of 2013 China Securities Journal th Resolution Notice of 20 Hong Kong Commercial 2013-06-06 http//www.cninfo.com.cn th Daily Meeting of 4 Session of the China Securities Journal Board Resolution Notice of 14th Meeting Hong Kong Commercial 2013-06-06 http//www.cninfo.com.cn Daily of 4th Session of Supervisory China Securities Journal Committee Notification of Annual Hong Kong Commercial 2013-06-06 http//www.cninfo.com.cn Daily Shareholders’ General Meeting of China Securities Journal 2012 Suggestive Notice of Related Hong Kong Commercial 2013-06-15 http//www.cninfo.com.cn Daily Transaction China Securities Journal Increase Temporary Proposal in Hong Kong Commercial 2013-06-18 http//www.cninfo.com.cn Daily annual Shareholders’ General 18 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Meeting of 2012 and Opening China Securities Journal Internet Voting Notification of Annual Hong Kong Commercial 2013-06-18 http//www.cninfo.com.cn Daily Shareholders’ General Meeting of China Securities Journal 2012(after proposal increased) Notice of Related Transaction Hong Kong Commercial 2013-06-18 http//www.cninfo.com.cn Daily China Securities Journal Notification of Revising Hong Kong Commercial 2013-06-19 http//www.cninfo.com.cn Daily Shareholders’ General Meeting China Securities Journal Suggestive Notice of Holding Hong Kong Commercial 2013-06-21 http//www.cninfo.com.cn Daily Annual Shareholders’ General China Securities Journal Meeting of 2012 Resolution of Annual Hong Kong Commercial 2013-06-29 http//www.cninfo.com.cn Daily Shareholders’ General Meeting of China Securities Journal 2012 Resolution Notice of 1st Hong Kong Commercial 2013-06-29 http//www.cninfo.com.cn th Daily Meeting of 5 Session of the China Securities Journal Board Resolution Notice of 1st Meeting Hong Kong Commercial 2013-06-29 http//www.cninfo.com.cn Daily of 5th Session of Supervisory China Securities Journal Committee 19 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Section VI. Changes in Shares and Particulars about Shareholders I. Number of shares and shares held In Share Total shareholders at period-end 14,458 Shareholders with over 5% shares held Amount Amount Number of share pledged/frozen Number of of of Changes holding holding Nature of Proportion of shares in Shareholders unlisted listed shareholder shares held (%) held at reportin State of share Amount circulati circulati period-e g period on on nd shares shares Shandong State-owned State-owned 88,000, 88,000, Assets 33.07% corporate 000 000 Investment Holding Co., Ltd Shandong Luxin Investment State-owned 37,731, 37,731, 14.18% Holding Group corporate 320 320 Co., Ltd GUOTAI JUNAN Overseas 13,621, 13,621, SECURITIES(H 5.12% corporate 592 592 ONGKONG) LIMITED Overseas natural 5,760,4 5,760,4 Chen Tianming 2.16% person 27 27 Shanghai HK Overseas 2,851,3 2,851,3 Wanguo 1.07% corporate 00 00 securities China National Heavy Duty State-owned 1,950,0 1,950,0 0.73% Truck Group corporate 00 00 Jinan Truck LLC. Overseas natural 1,531,8 1,531,8 Wang Dongsheng 0.58% person 10 10 Yi Ying Overseas natural 0.41% 1,078,2 1,078,2 20 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 person 00 00 Overseas natural 1,066,3 1,066,3 Zhu Guanhong 0.4% -726257 person 25 25 Overseas natural 1,048,6 1,048,6 Huang Jiayi 0.39% +95000 person 87 87 Strategy investors or general corporate becomes top 10 Not applicable shareholders due to rights issued (if applicable)(Note 3) Shandong State-owned Assets Investment Holding Co., Ltd and Shandong Luxin Investment Explanation on associated Holding Group Co., Ltd are provincial state owned enterprises under the same stock controlling of relationship among the aforesaid Shangdong Provincial Commission, the shareholders just mentioned have no associated shareholders relationships or belong to consistent actors regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. Particulars about the shares held by the top ten unrestricted shareholders Type of shares Shareholders Amount of circulated shares held at period-end Type Amount GUOTAI JUNAN Domestically SECURITIES(HONGKONG) 13,621,592 listed foreign 13,621,592 LIMITED shares Domestically Chen Tianming 5,760,427 listed foreign 5,760,427 shares Domestically Shanghai HK Wanguo securities 2,851,300 listed foreign 2,851,300 shares Domestically Wang Dongsheng 1,531,810 listed foreign 1,531,810 shares Domestically Yi Ying 1,078,200 listed foreign 1,078,200 shares Domestically Zhu Guanhong 1,066,325 listed foreign 1,066,325 shares Domestically Huang Jiayi 1,048,687 listed foreign 1,048,687 shares WANXIANG INTERNATIONAL Domestically 910,000 910,000 INVESTMENT CORPORATION listed foreign 21 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 shares Domestically Lin Mingyu 804,800 listed foreign 804,800 shares Domestically Taifook Securities Company 572,600 listed foreign 572,600 Limited-Account Client shares Expiation on associated relationship It is unknown whether the shareholders just mentioned belong to consistent actors or have or consistent actors within the top 10 associated relationship or regulated by the Management Regulation of Information Disclosure un-restrict shareholders and between on Change of Shareholding for Listed Companies. top 10 un-restrict shareholders and top 10 shareholders Explanation on shareholders involving margin business (if Not applicable applicable)(note 4) Whether has a buy-back agreement dealing in reporting period □Yes √No II. Changes of controlling shareholders or actual controller Changes of controlling shareholders in reporting period □ Applicable √ Not applicable Changes of actual controller in reporting period □ Applicable √ Not applicable 22 山东省中鲁远洋渔业股份有限公司 2013 半年度报告全文 Section VII. 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 2012. II. Resignation and dismissal of directors, supervisors and senior executives Name Title Type Date Reason Mr. Liu Zhihui had been elected as the Company’s Appointment and supervisors of 5th Session of Supervisory Committee in Liu Zhihui Supervisor 2013-06-28 removal Annual Shareholders’ General Meeting of 2012 held on June 28th, 2013 Leave the post Zhou Tianxiang Director while office 2013-06-28 Terms of office expired terms expired Leave the post Chi Mingjie Director while office 2013-06-28 Terms of office expired terms expired Leave the post Chi Weizhen Director while office 2013-06-28 Terms of office expired terms expired Leave the post Independent Xu Haifeng while office 2013-06-28 Terms of office expired director terms expired Leave the post Huang Li Supervisor while office 2013-06-28 Terms of office expired terms expired Leave the post Employee Chi Ming while office 2013-06-28 Terms of office expired supervisor terms expired Leave the post Employee Song Jinghai while office 2013-06-28 Terms of office expired supervisor terms expired 23 Section VIII. 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: Shandong Zhonglu Oceanic Fisheries Co., Ltd In RMB Item Closing balance Opening balance Current assets: Monetary funds 49,253,990.22 28,287,601.46 Settlement funds Lending funds Tradable financial assets Notes receivable Accounts receivable 22,900,642.37 15,811,863.58 Prepayments 13,780,418.36 11,804,226.51 Premium receivable Reinsurance accounts receivable Reinsurance contract reserve receivable Interest receivable Dividend receivable Other account receivable 9,884,257.74 7,720,735.92 Buying back the sale of financial assets Inventory 171,898,314.25 128,159,413.67 Non-current assets due within one 24 year Other current assets Total current assets 267,717,622.94 191,783,841.14 Non-current assets: Issuance of loans and advances Financial assets available for Sale Held-to-maturity investment Long-term receivables Long term equity investment 1,311,900.00 Investment real estate 36,603,721.50 37,213,054.26 Fixed asset 366,561,836.40 374,748,119.53 Project in progress 22,428,431.90 1,454,373.00 Project materials Liquidation of fixed asset 32,504,063.30 Productive biological asset Oil and gas asset Intangible asset 7,084,027.26 7,218,882.48 Development expenditure Goodwill Long-term deferred expenditure 81,778.00 81,778.00 Deferred income tax asset 205,685.00 205,685.00 Other non-current asset Total non-current asset 432,965,480.06 454,737,855.57 Total Assets 700,683,103.00 646,521,696.71 Current Liabilities: Short-term borrowing 34,101,962.54 32,676,887.96 Borrowing from the central bank Deposits and interbank deposit Borrowed capital Transaction financial liabilities Notes payable Accounts payable 66,073,532.00 44,088,346.18 Account received in advance 4,601,070.45 2,423,905.95 Financial assets sold for repurchase 25 Fees and commissions payable Salary payable 11,474,431.95 11,440,281.72 Taxes payable -9,730,452.76 -9,247,959.85 Interest payable 101,386.50 Dividend payable 459,329.80 459,329.80 Other payables 11,324,673.11 24,538,951.79 Reinsurance payables Reserves for insurance contracts Agency securities trading Agency securities underwriting Non-current liabilities due within 7,697,777.78 7,697,777.78 one year Other current liabilities Total current liabilities 126,002,324.87 114,178,907.83 Non-current liabilities Long-term loans 34,542,222.22 26,942,222.22 Bonds payable Long-term payables Special payables Accrued liabilities Deferred income tax liability Other non-current liability 13,600,000.00 28,571,200.00 Total non-current liability 48,142,222.22 55,513,422.22 Total liability 174,144,547.09 169,692,330.05 Owners’ equity (or Shareholder’s equity): Paid-in capital(share capital) 266,071,320.00 266,071,320.00 Capital surplus 281,245,215.96 281,245,215.96 Less: treasury stock Special reserve Surplus reserve 21,908,064.19 21,908,064.19 Reserve for general risks Retained profit -70,310,789.06 -93,413,762.00 Converted difference in foreign 1,638,187.67 1,014,141.42 currency Statements 26 Total owner’s equity attributable to 500,551,998.76 476,824,979.57 parent company Interest of minority shareholders 25,986,557.15 4,387.09 Total owners’ equity (or shareholders 526,538,555.91 476,829,366.66 equity) Total liabilities and owners’ equity (or 700,683,103.00 646,521,696.71 shareholders equity) Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 2. Balance Sheet of Parent Company Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd In RMB Item Closing balance Opening balance Current assets: Monetary fund 26,592,324.84 16,467,806.39 Tradable financial assets Notes receivable Accounts receivable 12,359,927.63 18,850,657.57 Prepayments 7,509,543.22 11,036,487.37 Interest receivable Dividend receivable Other account receivable 35,882,793.57 36,294,347.03 Inventory 105,380,170.71 73,334,822.89 Non-current assets due within one year Other current assets Total current assets 187,724,759.97 155,984,121.25 Non-current assets: Financial assets available for Sale Held-to-maturity investment Long-term receivables 6,246,572.98 5,800,810.98 Long term equity investment 118,793,844.22 92,105,744.22 27 Investment real estate 36,603,721.50 37,213,054.26 Fixed assets 178,052,674.25 185,141,889.75 Project in progress 13,458,238.90 Project materials Liquidation of fixed assets 32,504,063.30 Productive biological asset Oil and gas asset Intangible assets 15,143.18 31,789.88 Development expenditure Goodwill Long-term deferred expenditure Deferred income tax asset Other non-current assets Total non-current assets 353,170,195.03 352,797,352.39 Total assets 540,894,955.00 508,781,473.64 Current liabilities: Short-term borrowing 20,000,000.00 20,000,000.00 Transaction financial liabilities Notes payable Accounts payable 32,242,065.64 22,811,123.30 Account received in advance 4,601,070.45 2,040,339.09 Salary payable 7,093,320.00 6,834,652.55 Taxes payable 600,347.65 144,914.76 Interest payable 101,386.50 Dividend payable 459,329.80 459,329.80 Others payables 44,927,635.37 28,369,884.43 Non-current liabilities due within 7,697,777.78 7,697,777.78 one year Other current liabilities Total current liabilities 117,621,546.69 88,459,408.21 Non- current liabilities: Long-term loans 34,542,222.22 26,942,222.22 Bonds payable Long-term payables 28 Special payables Accrued liabilities Deferred income tax liability Other non-current liability 21,771,200.00 Total non-current liability 34,542,222.22 48,713,422.22 Total liabilities 152,163,768.91 137,172,830.43 Owners’ equity (or Shareholder’s equity): Paid-in capital(share capital) 266,071,320.00 266,071,320.00 Capital surplus 279,130,089.16 279,130,089.16 Less: treasury stock Special reserve Surplus reserve 19,184,672.34 19,184,672.34 Reserve for general risks Retained profit -175,654,895.41 -192,777,438.29 Converted difference in foreign currency Total owners’ equity (or shareholders 388,731,186.09 371,608,643.21 equity) Total liabilities and owners’ equity (or 540,894,955.00 508,781,473.64 shareholders equity) Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 3. Consolidated Income Statements Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd In RMB Item Current Amount Amount of the Previous Period I. Total operation revenue 264,728,360.22 250,900,094.03 Including: Operating revenue 264,728,360.22 250,900,094.03 Interest income Earned premium Fee and commission income II Total Operating cost 264,523,951.61 238,000,212.44 29 Including: Operating costs 219,741,407.16 218,874,259.05 Interest costs Fee and commission costs Cash surrender Net compensation expenses Net extraction reserves for insurance contracts Policy dividend payout Reinsurance expense Business tax and surcharge 553,189.30 401,832.22 Sales expenses 2,162,304.33 1,913,459.71 Administrative expenses 13,721,691.25 16,530,420.03 Financial expenses 244,394.62 612,320.50 Asset impairment losses 28,100,964.35 -332,079.07 Add: gains from changes of fair value (Loss is listed with “-”) Investment gain (Loss is listed with “-”) Including: Investment gains on affiliated Company and joint venture Exchange gains (Loss is listed with “-”) III. Operating profits (Loss is listed 204,408.61 12,899,881.59 with “-”) Add: Non-operating income 23,292,200.92 23,441,013.97 Less: Non-operating expenditure 383,366.53 9,271,548.74 Including: Disposal loss on 383,366.53 4,779,798.56 non-current liability IV Total profits (Total loss is listed with 23,113,243.00 27,069,346.82 “-”) Less: Income tax expenses 28,100.00 660,166.07 V. Net profit (Net loss is listed with “-”) 23,085,143.00 26,409,180.75 Including: Net profit generated by combined party before merged Net profit attribute to owners of 23,102,972.94 26,409,180.75 parent company 30 Minority interest -17,829.94 VI. Earnings per share(EPS) -- -- (i) Basic Earnings per share(EPS) 0.09 0.1 (ii) Diluted Earnings per 0.09 0.1 share(EPS) VII. Other consolidated income 624,046.25 495,931.24 VIII. Total consolidated income 23,709,189.25 26,905,111.99 Total consolidated income attributable to owners of parent 23,727,019.19 26,905,111.99 company Total consolidated income -17,829.94 attributable to minority shareholders Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 4. Profit Statement of parent company Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd In RMB Items Current Amount Amount of the Previous Period I. Operation revenue 77,302,186.47 76,969,574.92 Less: Operating costs 52,558,645.91 63,054,354.15 Business tax and surcharge 408,041.83 214,242.10 Sales expenses 320,070.10 152,247.70 Administrative expenses 8,699,221.16 11,594,044.53 Financial expenses -2,583,406.92 -545,105.83 Asset impairment losses 28,100,964.35 6,940.30 Add: gains from changes of fair value(Loss is listed with “-”) Investment gain(Loss is listed with “-”) Including: Investment gains on affiliated Company and joint venture III. Operating profits (Loss is listed -10,201,349.96 2,492,851.97 with “-”) Add: Non-operating income 27,362,725.84 22,371,200.00 Less: Non-operating expenditure 38,833.00 9,271,548.74 Including: Disposal loss on 31 non-current liability III. Total profit (Loss is listed with “-”) 17,122,542.88 15,592,503.23 Less: Income tax expenses IV. Net profit (net loss is listed with “-”) 17,122,542.88 15,592,503.23 V. Earnings per share(EPS): -- -- (i) Basic Earnings per share(EPS) 0.06 0.06 (ii) Diluted Earnings per 0.06 0.06 share(EPS) VI. Other consolidated income 33,737.59 VII. Total consolidated income 17,122,542.88 15,626,240.82 Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 5. Consolidated Cash Flow Statement Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd In RMB Items Current Amount Amount of the Previous Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 230,660,666.38 248,335,015.05 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 insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Net increase of disposal of transaction financial asset Cash received from interest, commission charge and commission 32 Net increase of capital borrowed Net increase of returned business capital Write-back of tax received 12,189,045.48 11,231,763.77 Other cash received concerning 27,985,523.92 46,600,965.81 operating activities Subtotal of cash inflow arising from 270,835,235.78 306,167,744.63 operating activities Cash paid for purchasing commodities and receiving labor 217,694,025.61 202,727,715.67 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 29,988,312.71 33,250,485.33 Taxes paid 1,645,241.25 2,471,402.64 Other cash paid concerning 42,422,753.42 25,556,822.18 operating activities Subtotal of cash outflow arising from 291,750,332.99 264,006,425.82 operating activities Net cash flows arising from operating -20,915,097.21 42,161,318.81 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 84,260.00 assets 33 Net cash received from disposal of subsidiaries and other units Other cash received concerning 33,974,356.00 investing activities Subtotal of cash inflow from investing 34,058,616.00 activities Cash paid for purchasing fixed, 24,665,948.50 44,167,850.71 intangible and other long-term assets Cash paid for investment Net increase of mortgaged loans Net cash paid for obtaining subsidiaries and other units Other cash paid concerning investing activities Subtotal of cash outflow from investing 24,665,948.50 44,167,850.71 activities Net cash flows arising from investing 9,392,667.50 -44,167,850.71 activities III. Cash flows arising from financing activities Cash received from absorbing 26,000,000.00 investment Including: Cash received from absorbing minority shareholders’ investment by subsidiaries Cash received from loans 14,540,265.98 54,149,101.35 Cash received from issuing bonds Other cash received concerning financing activities Subtotal of cash inflow from financing 40,540,265.98 54,149,101.35 activities Cash paid for settling debts 5,510,969.88 23,930,636.48 Cash paid for dividend and profit 2,313,143.17 809,191.90 distributing or interest paying Including: Dividend and profit of minority shareholder paid by subsidiaries Other cash paid concerning 34 financing activities Subtotal of cash outflow from financing 7,824,113.05 24,739,828.38 activities Net cash flows arising from financing 32,716,152.93 29,409,272.97 activities IV. Influence on cash and cash equivalents due to fluctuation in -227,334.46 27,160.25 exchange rate V. Net increase of cash and cash 20,966,388.76 27,429,901.32 equivalents Add: Balance of cash and cash 28,287,601.46 65,716,267.14 equivalents at the period -begin VI. Balance of cash and cash 49,253,990.22 93,146,168.46 equivalents at the period -end Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 6. Cash Flow Statement of parent company Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd In RMB Item Current Amount Amount of the Previous Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 50,291,346.17 54,285,974.40 services Write-back of tax received Other cash received concerning 22,905,133.04 73,068,096.21 operating activities Subtotal of cash inflow arising from 73,196,479.21 127,354,070.61 operating activities Cash paid for purchasing commodities and receiving labor 59,211,420.68 34,724,904.65 service Cash paid to/for staff and workers 10,679,592.87 16,508,207.38 Taxes paid 457,103.57 547,525.58 Other cash paid concerning 6,689,803.36 1,408,794.82 operating activities 35 Subtotal of cash outflow arising from 77,037,920.48 53,189,432.43 operating activities Net cash flows arising from operating -3,841,441.27 74,164,638.18 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 33,974,356.00 investing activities Subtotal of cash inflow from investing 33,974,356.00 activities Cash paid for purchasing fixed, 13,396,619.50 43,438,239.53 intangible and other long-term assets Cash paid for investment 12,285,800.00 Net cash paid for obtaining subsidiaries and other units Other cash paid concerning investing activities Subtotal of cash outflow from investing 25,682,419.50 43,438,239.53 activities Net cash flows arising from investing 8,291,936.50 -43,438,239.53 activities III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans 7,600,000.00 10,260,000.00 Cash received from issuing bonds Other cash received concerning financing activities 36 Subtotal of cash inflow from financing 7,600,000.00 10,260,000.00 activities Cash paid for settling debts Cash paid for dividend and profit 1,925,976.78 16,051.20 distributing or interest paying Other cash paid concerning financing activities Subtotal of cash outflow from financing 1,925,976.78 16,051.20 activities Net cash flows arising from financing 5,674,023.22 10,243,948.80 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash 10,124,518.45 40,970,347.45 equivalents Add: Balance of cash and cash 16,467,806.39 24,327,292.06 equivalents at the period -begin VI. Balance of cash and cash 26,592,324.84 65,297,639.51 equivalents at the period -end Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 7. Consolidated Statement on Changes of Owners' Equity Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd Current Amount In RMB Current Amount Owners' equity attributable to the parent company Interest of Paid-in Reserve Total Item minority Less: capital(s Capital Special Surplus for Retaine owners’ treasury Other sharehold hare surplus reserve reserve general d profit equity stock ers capital) risks I. Balance at the end of last 266,071 281,245, 21,908, -93,413, 1,014,14 476,829,36 4,387.09 year ,320.00 215.96 064.19 762.00 1.42 6.66 Add: Changes of accounting policy Error correction of 37 previous period Others II. Balance at the beginning of 266,071 281,245, 21,908, -93,413, 1,014,14 476,829,36 4,387.09 this year ,320.00 215.96 064.19 762.00 1.42 6.66 III. Increase/ Decrease in this 23,102,9 624,046. 25,982,17 49,709,189 year (Decrease is listed 72.94 25 0.06 .25 with'"-") 23,102,9 23,102,972 (i) Net profit 72.94 .94 624,046. (ii) Other consolidated income 624,046.25 25 23,102,9 624,046. 23,727,019 Subtotal of (i)and (ii) 72.94 25 .19 (III) Owners' devoted and 25,982,17 25,982,170 decreased capital 0.06 .06 25,982,17 25,982,170 1. Owners' devoted capital 0.06 .06 2. Amount calculated into owners' equity paid in shares 3. Others (IV)Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (shareholders) 4. Others (V) 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. Others (VI) Special reserve 38 1. Withdrawal in this period 2. Usage in this period (VII) Other IV. Balance at the end of the 266,071 281,245, 21,908, -70,310, 1,638,18 25,986,55 526,538,55 report period ,320.00 215.96 064.19 789.06 7.67 7.15 5.91 Amount in last period In RMB Amount in last period Owners’ equity attributable to the parent company Interest of Paid-in Reserve Total Items Less: minority capital(s Capital Special Surplus for Retaine owners’ treasury Other sharehold hare surplus reserve reserve general d profit equity stock ers capital) risks I. Balance at the end of last 266,071 281,233, 21,908, -133,70 919,099. 436,432,65 4,387.09 year ,320.00 795.42 064.19 4,015.43 20 0.47 Add: retroactive adjustment arising from enterprise consolidation under the same control Add: Changes of accounting policy Error correction of previous period Other II. Balance at the beginning of 266,071 281,233, 21,908, -133,70 919,099. 436,432,65 4,387.09 this year ,320.00 795.42 064.19 4,015.43 20 0.47 III. Increase/ Decrease in this 11,420.5 40,290,2 95,042.2 40,396,716 year (Decrease is listed 4 53.43 2 .19 with’”-”) 40,290,2 40,290,253 (i) Net profit 53.43 .43 11,420.5 95,042.2 (II) Other consolidated income 106,462.76 4 2 11,420.5 40,290,2 95,042.2 40,396,716 Subtotal of (i)and (ii) 4 53.43 2 .19 (III) Owners’ devoted and decreased capital 1. Owners’ devoted capital 39 2. Amount calculated into owners’ equity paid in shares 3. Others (IV)Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (shareholders) 4. Others (V) 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. Others ( VI) Special reserve 1. Withdrawal in this period 2. Usage in this period (VII) Other IV. Balance at the end of the 266,071 281,245, 21,908, -93,413, 1,014,14 476,829,36 4,387.09 report period ,320.00 215.96 064.19 762.00 1.42 6.66 Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin 8. Statement on Changes of Owners' Equity of Parent Company Prepared by: Shandong Zhonglu Oceanic Fisheries Co., Ltd Current Amount In RMB Current Amount Paid-in Less: Reserve Total Items Capital Special Surplus Retained capital(sha treasury for general owners’ surplus reserve reserve profit re capital) stock risks equity 40 266,071,32 279,130,08 19,184,672 -192,777,4 371,608,64 I. Balance at the end of last year 0.00 9.16 .34 38.29 3.21 Add: Changes of accounting policy Error correction of previous period Other II. Balance at the beginning of 266,071,32 279,130,08 19,184,672 -192,777,4 371,608,64 this year 0.00 9.16 .34 38.29 3.21 III. Increase/ Decrease in this 17,122,542 17,122,542 year (Decrease is listed with’”-”) .88 .88 17,122,542 17,122,542 (i) Net profit .88 .88 (II) Other consolidated income 17,122,542 17,122,542 Subtotal of (i)and (ii) .88 .88 (III) Owners’ devoted and decreased capital 1. Owners’ devoted capital 2. Amount calculated into owners’ equity paid in shares 3. Others (IV)Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk provisions 3. Distribution for owners (shareholders) 4. Others (V) 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. Others 41 (VI) Special reserve 1. Withdrawal in this period 2. Usage in this period (VII) Other IV. Balance at the end of the 266,071,32 279,130,08 19,184,672 -175,654,8 388,731,18 report period 0.00 9.16 .34 95.41 6.09 Amount in last year In RMB Amount in last yea Paid-in Less: Reserve Total Item Capital Special Surplus Retained capital(sha treasury for general owners’ surplus reserve reserve profit re capital) stock risks equity 266,071,32 279,118,66 19,184,672 -216,841,0 347,533,58 I. Balance at the end of last year 0.00 8.62 .34 73.34 7.62 Add: Changes of accounting policy Error correction of previous period Other II. Balance at the beginning of 266,071,32 279,118,66 19,184,672 -216,841,0 347,533,58 this year 0.00 8.62 .34 73.34 7.62 III. Increase/ Decrease in this 24,063,635 24,075,055 11,420.54 year (Decrease is listed with’”-”) .05 .59 24,063,635 24,063,635 (i) Net profit .05 .05 (II) Other consolidated income 11,420.54 11,420.54 24,063,635 24,075,055 Subtotal of (i)and (ii) 11,420.54 .05 .59 (III) Owners’ devoted and decreased capital 1. Owners’ devoted capital 2. Amount calculated into owners’ equity paid in shares 3. Others (IV)Profit distribution 1. Withdrawal of surplus reserves 2. Withdrawal of general risk 42 provisions 3. Distribution for owners (shareholders) 4. Others (V) 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. Others (VI) Special reserve 1. Withdrawal in this period 2. Usage in this period (VII) Other IV. Balance at the end of the 266,071,32 279,130,08 19,184,672 -192,777,4 371,608,64 report period 0.00 9.16 .34 38.29 3.21 Legal Representative: Li Wenyi Person in Charge of Accounting: Zhang Weiping Person in Charge of Accounting Department: Lei Lixin III. Company profile Shandong Zhonglu Oceanic Fisheries Co., Ltd. (the “Company”) was incorporated as a joint stock limited company in the People’s Republic of China on 30 July 1999 according to the documentation of Lu Ti Gai Zi [1999] No.85 issued by Shandong Development and Reform Commission, and the holding company of the Company is Shandong Fisheries Enterprise Group General Corporation, the main sponsor. On 26 June 2000, the Company issued 120 million domestic listed foreign shares (B shares) to foreign investors with face value of One Yuan per share according to the approval documentation of Zheng Jian Fa Xing Zi [2000] No.82 issued by the China Securities Regulatory Commission. The B shares listed on the Shenzhen Stock Exchange dated 24 July 2000. On 22 August 2000, by the Company’s authorization, lead underwriters fully exercised the 15% over-allotment option and issued 18 million B shares to foreign investors again with face value of 1 Yuan per share, and then the Company's total issued share capital is 266,071,320.00 Yuan. Since 2003, 125,731,320 state-owned legal person shares (representing 47.25% of the total share capital of the Company) held by Shandong Fisheries Enterprise Group General Corporation (“Fisheries Group”) have been frozen by the judiciary, including: A. Fisheries Group provided guarantee for the loan of 11,700,000 Yuan for a 43 subordinate company, but the subordinate company failed to repay the loan on time, so Shandong Yantai Intermediate People's Court froze 8,000,000 shares (representing 3% of the total share capital). B. Fisheries Group borrowed 73,580,680 Yuan from the Agricultural Bank of China Jinan Lixia branch, and Jinan Lixia Court froze 80,000,000 shares (representing 30.07% of the total share capital). On 10 December 2006, shares of the Company 88,000,000 shares held by Fisheries Group were auctioned publicly. According to the auction transaction confirmation (Lu Yin Pai Cheng Zi [2006] No.96) of Shandong Silver Star Auction Ltd., Shandong State-owned Assets Investment Holdings Ltd. bought the shares at the price of 48,400,000 Yuan. Shandong State-owned Assets Investment Holdings Ltd. comes to the first majority shareholder of the Company with 33.07% equity of the Company held after auction. Relevant transfer procedures completed on 20 June 2007. . Fisheries Group borrowed 73,344,932 Yuan from Bank of China Jinan branch (the creditor of the loan was changed to China Xinda Asset Management Corporation from Bank of China in 2004), and Shandong Higher People's Court froze 37,731,320 shares (representing 14.18% of the total share capital). On 7 June 2005, the above 37,731,320 shares were auctioned publicly, according to the auction transaction confirmation (Lu Rui Cheng Zi [2005] No.013) of Shandong Qilu Rui Feng Auction Ltd., Shandong Luxin Investment Holdings Ltd. bought the shares at the price of 8,760,000 Yuan. On 2 February 2007, relevant transfer procedures have been completed. Corporate industry: sea-going fisheries Corporate major products: tuna and its products Corporate registered address: No. 43, Heping Road, Jinan, Shandong Province, PRC Operating scope: marine and oceanic fishing; aquatic products breeding, processing and marketing; merchandise import and export business within approved scope; ice machine manufacture and sale; refrigeration equipment manufacturing, installation, maintenance; refrigeration; load and unload services; housing lease. Basic organization structure of the Company: board of shareholders, board of directors, supervisory committee, office of the board, general affairs department, departments of human resources, financing plan department, corporate operation department and office of auditory supervision. Three branches are Shandong Zhonglu Oceanic Qingdao Haiwei Branch, Shandong Zhonglu Oceanic Qingdao Haiyan Branch and Shandong Zhonglu Oceanic Qingdao Refrigeration Branch. Three wholly-owned subsidiaries are Shandong Zhonglu Fishery Shipping Co., Ltd., Shandong Zhonglu Oceanic (Yantai) Foods Co., Ltd. and HABITAT INTERNATIONAL CORP. The operation entity –YAW ADDO FISHERIES COMPANY LIMITED, is controlled by operation lease. The Company has a new subsidiary Shandong Zhonglu Haiyan Deep-sea Fishery Co., Ltd. in 2013 with equity of 51.85% held. 44 IV.Main accounting policies and estimates and previous errors 1. Preparation basis of Financial Statements Base on the assumption of running continuously and actual transactions and events, in line with the Accounting Standards for Business Enterprise – Basic Standards and No. 38 specific principle of accounting standards issued on 15 February 2006 from the Ministry of Finance as well as the application guidance, interpretational and other relevant regulations of Standards, the Company prepared and formulate the financial statement lies on the followed important accounting policy and estimation. 2. Declaration of obedience to Accounting Standards for Business Enterprise The Financial Statements of the Company are up to requirements of Accounting Standards for Business Enterprise and also a true and thorough reflection to the relevant information as the Company’s financial position dated 30th June 2013 and the operation results as well as cash flow in first half year of 2013. 3. Accounting period The Company’s accounting year is Gregorian calendar year, namely from 1st January to 31st December of every year. 4. Bookkeeping standard currency The Renminbi (RMB) is taken as the book-keeping standard currency 5. Accounting methods for consolidation of enterprises under the same control or otherwise (1) Consolidation of enterprises under the same control As for the consolidation of enterprises under the same control, the assets and liabilities received by the combining party in the consolidation are measured on the book value of the combined party on consolidation day. The difference between the book value of net assets, acquired by combining party, and book value of consideration (or total face value of the shares issued) paid, capital surplus adjusted; if the capital surplus not enough to written down, than retained earning adjusted. Directly expenses occurred in combination from the combining party should be reckoned into current gains/losses. (2) Consolidation of enterprises not under the same control As for the consolidation not under the same control, the consolidation cost is the fair value of the assets paid, liabilities incurred or committed, and equity securities offered, for obtaining the control right over the purchased party. As for the consolidation achieved by several exchange transactions, the consolidation cost is the total of each single transaction. All expenses of the purchasing party for and directly related to the consolidation are reckoned into the corporate consolidation cost. For those agreements that made in consolidation contracts for future events which might have influenced on consolidation cost, on purchased day, if the estimated future events probably going to occurred and the influence amount on consolidation cost should be calculated reliably, than reckoned into consolidation cost. 45 As for acquiree that obtained by consolidation not under the same control, the qualified confirmation of identified assets, liability and contigency liabilities should calculated by fair value on day of purchsaed. If the consolidation cost larger than the fair value amount of indentified net assts from acquiree’s, the differences should be recognized as goodwill. If the consoldiation cost less than the fair value amount of indentified net assts from acquiree’s, the differences should reckoned into current gains/losses after re-examination. 6. Preparation methods for consolidated financial statements (1) Preparation methods for consolidated financial statements For the subsidiaries and special purpose entity whose actual control was held by the Company, included in the range of consolidate financial statement of the Company. As the Company’s financial statements are prepared pursuant to the Accounting Standards for Business Enterprises No. 33 – Consolidated Financial Statements and relevant rules, all substantive inside transactions and dealings within the consolidation scope are balanced out during the consolidation. As for the shareholders’ equity not attributable to the Parent Company in the subsidiaries, it is specifically listed as the minority shareholders’ equity in the shareholders’ equity. As for the inconsistency between the subsidiaries and the Company in the accounting policies and periods, the necessary adjustment is made on the subsidiaries’ financial statements in the preparation of the consolidated financial statements according to the Company’s accounting policies and periods. As for the subsidiaries obtained in the consolidation of enterprises not under the same control, the adjustment is made on the individual financial statements on the basis the fair value of the identifiable assets on the purchase day. As for the subsidiaries obtained under the same control, the consolidation is regarded as starting at the Year-beginning of the consolidation period, and the assets, liabilities, operation results and the cash flow are reckoned into the consolidated financial statements from the year-beginning in the consolidation period. (2)Disclosing the relevant accounting methods on buying to selling or selling to buying of the equity in two successive fiscal year for same subsidiaries 7. Determination criteria of cash and cash equivalent The cash recognized in the preparation of the cash flow statements, is the Company’s storage cash and deposits available for payment anytime. The cash equivalents recognized in the preparation of the cash flow statements refers to the investment held by the Company with characteristic of short-term, strong mobility, easy transfer to known sum cash and has slim risk from value changes. 8. Foreign currency exchange and the conversion of foreign currency statements 46 (1) Foreign currency exchange The foreign currency exchange is booked on the current exchange rate on the transaction day and converted in the bookkeeping standard currency. On the balance sheet day, the monetary items are converted on the current rate on the balance sheet day, concerning the exchange differences between teh spot exchange rate on that date and initial confirmation or the sport exchange rate on previously balance sheet date, should reckoned in to current gains/losses except the capitalizing on exchange differences for foreign specific loans, which was reckoned into cost for capitalizing. The non-monetary items measured on the historic cost are still measured by the original bookkeeping rate with the sum of the bookkeeping standard currency unchanged. Items of non-monetary foreign currency which was calculated by fair value, should converted by spot exchange rate on the confirmation day of fair value, difference between the converted amount of bookkeeping currency and original amount of bookkeeping currency, was treated as changes of fair value (including exchange rate changed) reckoned into current gains/losses or recognized as other consolidated income and reckoned into capital public reserve. (2) Conversion of foreign currency financial statements Upon the conversion of the foreign currency financial statements of the controlling subsidiaries, joint enterprises, and the affiliated enterprises on the bookkeeping standard currency different from the Company’s, the accounting check and preparation of the consolidated financial statements are made. Assets and liabilities items in the balance sheet, are converted on the current rate on the balance sheet day; owners’ equity items besides the “retained profit” item, the other items are converted on the actual rate. Incomes and expenses items in the profit statement are converted on the current rate. The conversion difference of the foreign currency financial statements is listed specifically in the owners’ equity in the balance sheet. The foreign currency cash flow is converted on the current rate on the cash flow actual day. The cash influenced by the rate fluctuation is listed specifically in the cash flow statement. As for the foreign operation, the conversion difference of the foreign currency statement related to the foreign operation is transferred in proportion into the disposal of the current loss/gain. 9. Financial instruments (1) Categories of financial instruments The financial instruments are classified as the financial assets and liabilities. In the initial recognition, the financial assets are classified as, the financial assets measured on fair value and with its changes reckoned into the current loss/gain (including tradable ones and ones designated to be measured on fair value and with its changes reckoned into the current loss/gain), long-term invest-bonds, account receivables, 47 and financial assets available for sale. Categories of the financial assets besides account receivables are dependent on the holding intention and purpose of the Company and its subsidiaries for the financial assets. In the initial recognition, the financial liabilities are classified as the financial liabilities measured on the fair value and with its changes reckoned into the current loss/gain (including tradable ones and ones designated to be measured on fair value and with its changes reckoned into the current loss/gain), other financial liabilities. As the Company becomes one party of the financial instrument contract, the instrument is recognized as one financial asset or liability. (2) Recognition and measurement of financial instruments In the initial recognition, the financial assets or liabilities are measured on fair value; and the follow-up measurements are: financial assets and financial assets available for sale that measured by fair value and with alteration reckoned into current gains/losses together with teh financial liabilities that measured by fair value with alteration reckoned into current gains/losses should meausred by fair value; financial guarantee contract and loan committments, loan by the rates lower than market rates, should conducted follow-up measurement by the higher ones between confirmed amount recognized by “Accounting Standards for Business Enterprises No.13 —Contingencies” after initial confirmation and balance of initial confirmed amount deducting the accumulated amortization amount, based on “Accounting Standards for Business Enterprises No.14—Revenue”; investment held to maturity, loans, account receivable and other financial liabilities should measured by amortized cost. The loss/gain from the fair value changes in the follow-up measurement of the financial assets and liabilities, besides one related to the hedge, is dealt with in the following methods: ① The financial assets or liabilities measured on the fair value and with its changes reckoned into the current loss/gain, are reckoned into the fair value loss/gain; the interest or cash dividend obtained in the assets holding period, is recognized as the investment return; in disposal, the difference between the sum actually received and the one booked initially, is recognized as the investment return with the loss/gain of the fair value change adjusted. ② The fair value change of the financial assets available for sale, is reckoned into the reserve; the interest on the actual rate in the holding period, is reckoned into the investment return; the cash dividend of the stock instrument available for sale is reckoned into the investment return when the invested unit announces to pay the dividend, is reckoned into the investment return; in dividend, the difference between the sum actually received and the book value in deduction of the accumulative fair value change originally booked into the capital reserve. (3) Recognition basis and measurement method for the transfer of financial assets The Company’s recognition basis of the financial assets transfer: As for the financial assets with all risks and compensations on their patent transferred, or all risks and compensations neither maintained nor transferred but the control over the assets given up, the recognition of the financial asset may terminate. The Company’s measurement of the financial assets transfer: For the financial assets are qualified for the 48 recognition of termination conditions, the measurement may be taken on the financial assets transfer, namely the difference is reckoned into the current loss/gain, between the book value of the transferred financial assets and, the total of the consideration value received from the transfer and the fair value change accumulative sum originally booked into the capital reserve. As for the partly transfer of the financial assets qualified for the recognition termination conditions, the whole book value of the transferred financial assets is diluted on the respective relative fair value between the part of recognition termination and the part of no recognition termination, and the difference is reckoned into the current loss/gain, between the book value of the part of recognition termination and, the total of the consideration value of the part of recognition termination and the fair value change accumulative sum originally booked into the capital reserve. (4) Derecognizing conditions of the financial liabilities The Company’s derecognizing conditions of the financial liabilities: For the current obligation of the financial liabilities is relieved whole or partly, the recognition of the financial liabilities or part may be terminated. (5) Recognition methods of the fair values of the financial assets and liabilities The Company’s recognition methods of the fair values of the financial assets and liabilities: as for the financial instrument in the active market, its fair value is recognized on the quotation in the active market; as for the financial instrument in the active market, its fair value is recognized by the evaluation method. The evaluation method consists of as the references to the familiar situation and the price in the latest market transaction between the two voluntary parties, and the references to the current fair value of other substantially same financial assets, and the conversion method of the cash flow. In the evaluation method, the market index is the preferential and uttermost use, and the index specifically related to the Company and its subsidiaries is in less use. (6) Impairment testing method and way of accrual for depreciation reserves for financial assets (account receivables excluded) On the balance sheet day, the impairment check is taken on the book value of the financial assets besides the ones measured on fair value and with changes reckoned into the current loss/gain, and as there is objective evidence to the financial assets impairment, the impairment test may be taken on the financial assets, and the impairment provision is accrued according to the test result. The Company exercise impairment test on financial assets with single major amount independently; for those financial assets with minor single amount, impairment test was exercised or performing test in combination of fianncial assets that with similar charateristic of credit risk. If no impairment found in independent test for those financial assets( including financial assets with single major and minor amount), consolidated into the combination of fianncial assets with similar charateristic of credit risk found for impairment testing again. If 49 impairment found in those fianncial assets, then not going to consolidated into the combination of fianncial assets with similar charateristic of credit risk found for impairment testing. If impairment found in held-to-maturity investment, loans and account receivable, calculated their book value to the current value of predicted future cash flow, the less reckoned amount was recognized as impairment losses and reckoned into curren gains/losses. If impairment found in financial assets available for sale, transfer-out the accumulated losses, reckoned into capital public reserve before, for fair value decreased, and reckoned into current gains/losses, the accumulated losses transfer-out was the balance of initial obtained cost deducting the principal received, amortized amount, current fair value and original impairment losses that reckoned into gains/losses. (7) Explain the holding purpose and basis of changes in ability for those re-classified as financial assets available for sale from held-to-maturity investment whose terms have not matured Main criterion of re-classification of the undue held-to-maturity investment as financial assets available for sale: 1) For there are no financial resources available for the continual capital support for the financial assets, the financial assets has to be due; 2) There is no intention for holding due in the management; 3) Due to the restrictions of the law and the executive rules, or other reasons, it is impossible for holding the financial assets due; 4) And other indications to the Company’s incapability for holding due. The re-classification of the undue held-to-maturity investment as financial assets available for sale needs to be decided by the approval from Board of Directors. 10. Recognition criteria and accrual method of bad debt provision for account receivable The account receivables of the Company mainly consist of the bill receivable, long-term receivables and other account receivable. On the balance sheet day, if there is objective evidence to the actual impairment, the impairment loss is recognized on the difference between the book value and the current value of the estimative future cash flow. (1) Bad debt provision for account receivables with single major amount Account receivable with over one million Yuan(one million Criterion or amount standards of major single amount yean inclusive) Withdrawal method for individual bad debt provision accrual with Recognized on the difference between the book value and the major single amount concerned current value of the estimative future cash flow (2) Account receivable with bad debt provision accrual by portfolio Portfolio Accrued method for bad Portfolio basis 50 debt provision withdrawal by portfolio Accounts with major single amount without withdrawal bad debt Portfolio 1 Aging of accounts provision singly Portfolio 2 Aging of accounts Accounts without major single amount and major risks Withdrawing bad bed provision by aging method in portfolio √ Applicable □Not applicable Accrued proportion of accounts Account ages Accrued proportion of other accounts receivable (%) receivable (%) Within six months 5% 5% Six months to one year (one year 10% 10% inclusive) 1-2 years 30% 30% 2-3years 50% 50% Over three years 100% 100% Withdrawing bad bed provision by percentage of total accounts receivable outstanding in portfolio □Applicable √Not applicable Withdrawing bad bed provision by other methods in portfolio □Applicable √Not applicable (3) Account receivable with minor single amount but has individual bad debt provision accrual Reasons for individual bad debt prevision Account receivable with over three years in account age and has objective evidence accrual of impairment appears Recognized on the difference between the book value and the current value of the Accrued method for bad debt provision estimative future cash flow 11. Inventory (1) Categories of inventory The inventory is goods or manufactured products held for sale, products in process, and materials and matters utilized in the production or supply of labor. It mainly consists of the raw material, turnover material, consumable low-value product, product in process, self-made semi-finished product, and manufactured product (storage goods) etc. (2) Accounting method for inventory delivery Accounting method: weighted average Recognized actual cost for the inventory while deliver by using weighted average method 51 (3) Recognition principle of net realizable value of inventory and accrual method for inventory falling price reserves On the balance sheet day, the inventory is measured on the lower one between the cost and the net realizable value, and the provision for the falling price reserves is accrued on each inventory item; however, as for the inventory of large quantity and low price, the provision is accrued on the inventory category. Recognition principle on net realizable value of inventory: ① net realizable value as the estimative sale price less the relevant tax expenses. ② as for the materials held for production, if the net realizable value of the manufactured product in use of the materials, is higher than the cost, the net realizable value is measured on cost; as the fall-down of the material price shows that the net realizable value of the manufactured product is lower than the cost, recognizable value is recognized on the estimative sale price less the estimative will-be actual cost, estimative sale expenses, and relevant tax expenses.③ As for the materials held on sale, the net realizable value is the market sale price. (4) Inventory system Inventory system: perpetual inventory system Inventory system of the Company is perpetual inventory system (5) Amortization method for the low-value consumables and wrap page Low-value consumables Amortization method: fifty percent (50%) amortization Wrap page Amortization method: fifty percent (50%) amortization 12. Long term equity investment (1) Recognition of investment cost ① initial investment cost of long term equity investment obtained by corporate consolidation: in the case of the consolidation of enterprises under the same control, recognized as the initial cost is the book value of the owners’ equity obtained from the consolidated party; in the case of the consolidation of enterprises not under the same control, recognized as the initial cost is the recognized consolidation cost on the purchase day. ② As for the long term equity investment obtained by cash payment, the initial investment cost is the actual purchase payment. ③ As for the long term equity investment obtained by the equity securities offering, the initial investment cost is the fair value of the equity securities. ④ As for the long term equity investment invested in by the investors, the initial investment cost is the value in the contract agreement. ⑤ As for the long term equity investment obtained by the exchange of the non-monetary assets and the debts restructuring, the initial investment cost is recognized on the relevant rules in the Principles. (2) Follow-up measurement and recognition of gains/losses The follow-up measurement of the long term equity investment is on equity or cost. As for the long term equity 52 investment on, the investment return is recognized on the share of the net gains/loses deserved or distributed; upon the calculation of the deserved share of the profit and cash dividend announced to be distributed, the book value of the long term equity investments decreased correspondingly. As for the long term equity investment on, the book value remains unchanged, besides the investment added or withdrawn. Upon the calculation of the deserved share of the profit or cash dividend announced to be distributed, the investment return is recognized. As for the long term equity investment of common control and significant influence, it is checked on equity; and others are checked on cost. (3) Recognition principle of being has common control and significant influence on the invested unit ① Recognition principle on common control over invested units: the common control is agreed in the contract or agreement by the two or more joint parties that the accounting and operation policy must be decided commonly by the two or several investment parties. ② Recognition principle on the significant influence on invested unit: As above 20% to 50% vote capital is held in the invested unit, the significant influence is recognized; or as 20% below is held, the significant influence is recognized if the following conditions are matched up to: ①there is representative in the invested unit’s board of directors or similar authority organs; ②there is participation in the policy-making of the invested unit; ③there is management person dispatch into the invested unit; ④there is dependence on the invested company’s technology or technologic materials; ⑤and other situations which can prove fully the significant influence on the invested unit (4) Impairment test method and accrual method for impairment provision On the balance sheet day, the check is taken on the long term equity investment to make sure whether there is the indication to the impairment; once there is, the impairment test is taken to recognize the recoverable, and then the provision for the impairment is accrued on the lower one between the book value and the recoverable; once the impairment loss is accrued, it may not be transferred in the future accounting periods. As for the net fair value sold in the long-term stock investment, if there is the agreement price of the fair transaction, it is on the agreement price less the relevant tax expense; or there is no fair transaction agreement but the active market for similar assets, it is on the market price less relevant tax expense. 13. Investment real estate (1) Category and measurement for investment real estate Category of the Company’s investment real estate: rented land use rights, rented buildings and land use rights held for transfer after appreciation. Investment real estate of the Company is initially measured by cost and conducting follow-up measures by cost mode. 53 (2) Policy of the cost calculation mode Accrued on the year averaging is the depreciation of the lease buildings in the Company’s investment property. The detailed check principle is same as that of the fixed assets. The rented land use rights and land use rights held for transfer after appreciation owned by the Company was adopted line amortization method. Detail calculation policy was similar to intangible assets. On balance sheet day, examing impairment evidence on investment real estate, if found evidence of impairement, than conducted impairment test and confirmed its recovered amount. Withdrawal impairment provision by lower amount between its book value and recovered amount, the impairment losses should be transfer-back in subsequent accounting period while been accrued. 14. Fixed assets (1) Recognition of fixed assets The fixed assets are tangible assets held for the goods production, labor supply, lease or operation & management, and with above one-accounting-year service life; meanwhile as up to the following conditions, they are recognized: ①The economic interest related to the fixed assets probably flow into the Company; ②The cost of the fixed assets can be measured reliably. (2) Recognized basis and valuation method for fixed assets that rent-in by financing Recognized basis for fixed assets that rent-in by financing: rents that transfer all risks and remuneration relted to assets ownership actually. Detail recognition for follow one item or more item been qualified: ① while the tenacy expired, ownership of the rented assets transfer to lessee; ② lessee has the right of choice for purchasing rented assets, the purchased price setted was far lower than the fair value of rented assets that exercise option rights by prediction, the option rights was reaonably recognized on date of renting for lessee; ③thought no ownership transfer, rent period takes majority time of the useful life of rented assets; ④ current value of the minimun rented amount payment on date of renting is almost equals to the fair value of rented assets on starting day of purchasing; ⑤ rented assets owes special natures, lessee should not be used this rented asstes if no major changes on this assets. Valuation method for fixed assets that rent-in by financing: initial valuation for the fixed assets rent-in by financing was used the lower ones between faire value of rented assets on starting day of purchasing and minimum rented payment for bookkeeping value; Follow-up valuation for fixed assets that rent-in by financing was used the similar depreciation policies of self-owned fixed assets withdrawal depreciation and impairment provision. (3) Depreciation method for vary fixed assets The Company’s fixed assets are mainly divided as: house buildings, ships & machines & fishing equipment, furniture & office equipment, transportation equipment; the depreciation is in year averaging method. The service life and the net estimative remnant are recognized on the nature and utilization of the fixed assets; and at the year-end, the service life, net estimative remnant, and the depreciation method, of the fixed assets, are checked, 54 and the corresponding adjustment is made if there is inconsistency between the checked ones and the previous ones. The depreciation of all of the Company’s fixed assets is accrued, besides the ones sufficiently accrued and in continuous use, and the land booked specifically. Category Depreciation life (year) Salvage rate (%) Annual depreciation rate (%) House and building 20-40 3-5% 2-5% Machine equipment 8-20 3-5% 5-12% Electronic devices 5 3-5% 19-19% Transportation equipment 5 3-5% 19-19% Vessels 15-30 3-5% 3-6% (4) Impairment test method of fixed assets, and accrual method for provision of impairment At balance sheet day, fixed assets have been examined by the Company whether there has evidence of impairment probably, while impairment evidence be found than impairment test shall be performed and recognized its recoverable amount. Take the lower one between the book value and recoverable amount for impairment provision withdrawal, the withdrawal impairment losses shall not be switch back in subsequent fiscal year. The recoverable amount of fixed assets was recognized as the higher one between the net amount resuled from faire value of assets minor disposal charges and current value of predicted future cash flows. If there exis sales agrement price within fair transaction, net amount resulted from faire value of assets minor disposal charges should recognized as the amount resulted from sales agreement price minor disposal charge directly attributable to this asses; if exits no sales agrement price within fair transaction but exits active market or similar transaction price in assets, then recognized by the amount resulted from market price minor disposal charge. (5) Other explanations 15. Project in progress (1) Category of project in progress The Company’s project in progress is divided as the self-support and contract-out construction. (2) Principle and time for project in progress carried forward as fixed assets The project in progress of the Company carried forward as fixed assets while the construction is ready for the intended use. Criteria of the expected condition for use should apply one of the follow conditions: ① The substance construction (installation included) of the fixed assets has completed all or basically; ② As the projects have been in test production or operation, and the results show that the assets can operate properly and produce the qualified products stably, or the test operation result shows the assets can operate or open properly. ③ The expenditure of the fixed assets on the construction, is a little or little. ④ The fixed assets of the project constructed have been up to the requirements of the design or contract, or basically up to. 55 (3) Impairment test method of project in progress, and accrual method for provision of impairment On the balance sheet day, the check is taken on the projects in progress for the indication to the impairment, and if there is the indication, the impairment test is taken to recognize the recoverable, and the impairment provision is accrued on the lower one between the book value and the recoverable; once the impairment loss is accrued, it cannot be transferred back in the future accounting periods. The recoverable is recognized on the higher one between the net of the assets fair value less the disposal expenses, and the current value of the assets estimative future cash flow. 16. Borrowing expenses (1) Recognition principle on capitalization of borrowing expenses As for the Company’s actual borrowing expenses directly attributable to the assets construction or production, it is capitalized and reckoned into the relevant assets cost; as for other borrowing expenses, it is recognized on the actual sum and reckoned into the current loss/gain. The assets up to the capitalization are assets as the capital assets, investment real estate, and inventory reaching the expectant availability or sale ability. (2) Capitalization term Capitalization term: the period from the time starts to capitalization to the time the capitalization ends. The period of capitalization suspended is not included. (3) Terms for capitalization suspended Terms for capitalization suspended: the capitalization of borrowing expenses should be suspended while the abnormal interrupt, which surpass three months continuously, in the middle of acquisition or construction or production. (4) Calculation of capitalization for borrowing expenses Calculation of capitalization amount: ① As for the borrowing of the specific borrowing, the capitalization sum is recognized on the current actual interest expenses less the interest income of the borrowing capital not utilized but deposited in the bank or the return of the temporary investment; ② As for the appropriation of the general borrowing, the capitalization sum is recognized on the weighted average of, the accumulative assets expenditure above the specific borrowing, and times the capitalization rate of the appropriation; ③ As for the discount or premium of the borrowing, the discount or premium to be diluted in every accounting period is recognized in the actual rate method. The effective interest method is the method for the measurement of the diluted discount or premium or interest expenses on the actual interest rate; and the actual interest rate is the interest rate used in the discount of the future cash flow in the expectant duration period as the current book value of the borrowing. 17. Intangible assets (1) Accounting method for intangible assets 56 The Company’s intangible assets are measured initially on cost. The intangible assets purchased in are taken as the actual cost on the actual payment and relevant expenditure. As for the intangible assets invested in by the investors, the actual cost is recognized on the value stipulated in the contract or agreement; however, if what is stipulated in the contract or agreement is not fair value, the actual cost is recognized on fair value. As for the self-developed intangible assets, their cost is the actual total expenditure before reaching the expectant purpose. The follow-up measurements of the Company’s intangible assets respectively are: ①the line amortization method is taken on the intangible assets of finite service life, and at the yea-end, the check is taken on the service life and dilution of the intangible assets, and the corresponding adjustment is made if there is inconsistency with the previous estimative ones. ② As for the intangible assets of uncertain service life, it is not diluted, however, the service life is checked at year-end; If there is solid evidence to its finite service life, its service life is estimated and diluted in straight line method. (2) Estimation of service life of intangible assets of finite service life As the service life of the intangible assets of finite service life is estimated, the following factors are considered usually: ① the ordinary service life period of products produced by the assets, and the available information of the service life of the similar assets; ② the present situation of the technology, craftsmanship, etc. ③ the market demand for the products produced by the assets and the labor supply; ④ the expectable actions taken by the present or potential competitor; ⑤ expectant maintenance expenditure for the assets’ ability to bring forth the economic interest; ⑥ relevant law rules or similar restrictions on control period of the assets; ⑦ relevancy with the service life of other assets held by the Company. Item Expected service life Basis (3) Recognition principle of intangible assets with uncertain service life Recognized as the intangible assets of uncertain service life is refers to those intangible assets of un-expectable period of economic benefits brought into the Company, or of the uncertain service period. Recognition principle of uncertain service life: ① from contract right or other legal rights, the uncertain service period is stipulated in the contract or law; ② after the integration of the situations and relevant expertise argumentation in the same trade, the period of the economic interest brought into the Company by the intangible assets still cannot be recognized. At every year-end, the check is taken on the intangible assets of uncertain service life, mainly in bottom-up way, namely the basic check is taken by the department relevant to the assets utilization, to assess whether there is change in the recognition principle of the uncertain service life. (4) Accrual of impairment of intangible assets On balance sheet day, the check is made on the intangible assets for the indication to the impairment; as there is 57 the indication, the recoverable is recognized, and the impairment provision is accrued on the lower one between the book value and the recoverable; once the impairment loss is accrued, it may not be transferred back in later accounting periods. The recoverable amount on intangible assets shall recognized as the higher one between the fair value of assets less net amount which have been disposal and current value of future predicted cash flow. (5) Specific division standards of research stage and development stage for internal R&D project of the Company (6) Calculation of the expenditure from internal R&D projects 18. Long-term deferred expenditure The Company’s long-term deferred expenditure are expenses paid out and with one year above (1-year included) benefit period, mainly consisting of the house decoration expenses and the like. The long-term unamortized expenses are diluted by periods according to the benefit period. As the long-term unamortized expenses cannot enable the accounting period’s beneficiary, all dilution values of the project undiluted yet, are transferred into the current loss/gain. 19. Accrued liabilities (1) Recognition principle of accrued liabilities The obligation, which can be measured in a reliable way, will recognize as the accrued liabilities while the duty with contingency concerned is the current obligation for the Company, which may probably causes the outflow of economic interests in fulfillment. (2) Measurement of accrued liabilities The initial measurement is taken according to the best estimator of the expenditure necessary for the fulfillment of the relevant current liabilities; if the necessary expenditure is of a continual scope and of a same chance of all results within the scope, the intermediate value is recognized as the best estimator; if several items are involved in, the best estimator is recognized according to all likely results and relevant possibilities. On the balance sheet day, the check is taken on the book value of the accrued liabilities, and the adjustment is made on the book value according to the current best estimator if there is solid evidence to the inability of the book value for the true reflection to the current best estimator. 58 20. Share-based payment and equity instrument (1) Category of share-based payment Share-based payment refers to a transaction in which an enterprise grants equity instruments or undertakes equity-instrument-based liabilities in return for services from employee or other parties. The share-based payments shall consist of equity-settled share-based payments and cash-settled share-based payments. (2) Recognition of fair value of the equity instrument As there is the active market, it is recognized on the quotation in the active market; As there is no active market, it is recognized by the rational evaluation technology including the reference to the price used in the latest market transaction between the parties familiar to situations and voluntary to the transaction, and the reference to the current value of other financial instruments substantially same, discount of cash flow and the option pricing model. (3) Basis of optimum estimate for recognition of vesting equity instrument (4) Relevant accounting treatment on implementation, modification and termination of the share-based payment plan 21. Revenue (1) Recognition standards for revenue from goods sales The Company shall ascertain the revenue incurred by selling goods in accordance with the received or receivable price stipulated in the contract or agreement signed between the enterprise and the buyer unless the following conditions are met simultaneously: ① the significant risks and rewards of ownership of the goods have been transferred to the buyer by the enterprise; ② the enterprise retains neither continuous management right that usually keeps relation with the ownership nor effective control over the sold goods; ③the relevant amount of revenue can be measured in a reliable way; ④ relevant economic benefits may flow into the enterprise and ⑤ the relevant costs incurred or to be incurred can be measured in a reliable way. If the collection of the price as stipulated in the contract or agreement is delayed and if it has the financing nature, the revenue incurred by selling goods shall be ascertained in accordance with the fair value of the receivable price as stipulated in the contract or agreement. (2) Recognition basis of revenue from abalienating the right to use assets The Company ascertains the revenue from abalienating of right to use assets while relevant economic interest may flow into and the revenue can be measured in a reliable way. (3) Recognition basis of revenue from providing labor services If an enterprise can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the 59 labor services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method. The enterprise can ascertain the schedule of completion (percentage-of-completion) under the transaction concerning the providing of labor services based on calculation of completed works, if an enterprise can not, on the date of the balance sheet, measure the result of a transaction concerning the providing of labor service in a reliable way, it shall be conducted in accordance with the following circumstances, respectively: ①if the cost of labor services incurred is expected to be compensated, the revenue from the providing of labor services shall be recognized in accordance with the amount of the cost of labor services incurred, and the cost of labor services shall be carried forward at the same amount; ②if the cost of labor services incurred is not expected to compensate, the cost incurred should be included in the current profits and losses, and no revenue from the providing of labor services may be recognized. (4) Recognition basis and method of schedule of the contracted project while ascertain the revenue from the providing of labor services by percentage-of-completion method and revenue from construction contract 22. Government subsidy (1) Category Government subsidies consist of the government subsidies pertinent to assets and government subsidies pertinent to income. (2) Accounting method The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in the current gains/losses; the government subsidies measured at their nominal amounts shall e directly included in the current gains/losses. The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows: ①those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as deferred income and shall included in the current gains/losses during the period when the relevant expenses are recognized; ②those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly included in the current gains/losses. 23. Deferred income tax asset and deferred income tax liability (1) Recognition of deferred income tax asset (1) Where there is difference between the carrying amount of the assets or liabilities and its tax base, (as for an item that has not been recognized as an asset or liability, if its tax base can be determined in light of the tax law, the tax base shall recognized as the difference) the deferred income tax and deferred income tax liabilities shall be determined according to the applicable tax rate in period of assets expected to recover or liability expected to pay off. (2) The deferred income tax assets shall be recognized to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary difference. On balance sheet date, if there have concrete evidence of obtaining, in future period, enough taxable amounts to deduct the deductible temporary difference, the un-confirmed deferred income tax assts in previous accounting period shall be recognized. If there has no enough taxable amounts, obtained in future period, to deducted the deferred income 60 tax assets, book value of the deferred income tax assets shall be kept in decreased. (3) the taxable temporary differences related to the investments of subsidiary companies and associated enterprises shall recognized as deferred income tax liability, unless the Company can control the time of the reverse of temporary differences and the temporary differences are unlikely to be reversed in the expected future. As for the deductible temporary difference related to the investment of the subsidiary companies and associated enterprises, deferred income tax assets shall be recognized while the temporary differences are likely to be reversed in the expected future and it is likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary differences. (2) Recognition of deferred income tax liability 24. Operating lease, financial leasing (1) Accounting treatment of operating lease If, essentially, the Leasing Terms and all risks and remuneration related with ownership of the leased assets are transfer to the lessee, the leasing will consider as financial leasing, other leasing beside that will consider as operating lease. As a lessee, the Company rented office houses and pay the rent monthly, which was included in current expenses directly. (2) Accounting treatment of financial leasing (3) Accounting treatment of f leaseback 25. Assets held for sale (1) Recognition criteria of assets held for sale Meet the following requirements simultaneously: the Company has made a resolution for the disposal of such assets; the Company entered into an irrevocable transfer agreement with the transferee and; the transfer of such assets will complete in one year. 61 (2) Accounting treatment of assets held for sale As for the fixed assets held for sale, the net estimative remnant of the capital assets may be adjusted for the reflection of the remnant to the sum of the fair value less the disposal expenses, without above the limit of the previous book value of the capital assets as up to the conditions of holding assets on sale; And the difference of the previous book value above the net estimative remnant adjusted is reckoned into the current loss/gain. As for the holding of other non-current assets on saleable, they are dealt with on the above principles; they consist of the single assets and the disposal group; the disposal group is a group of assets which is sold as a whole or disposed together. 26.Changes in accounting policies and estimates Whether the accounting policies and estimates changed in reporting period or not □Yes √No (1) Changes in accounting policies Whether the accounting policies changed in reporting period or not □Yes √No (2) Changes in accounting estimates Whether the accounting estimates changed in reporting period or not □Yes √No 27. Correction of previous errors Whether the correction of previous errors been found in reporting period or not □Yes √No (1) Retrospective restatement Whether adopted the retrospective restatement on previous errors correction in reporting period or not □Yes √No (2) Prospective application Whether adopted the prospective application on previous errors correction in reporting period or not □Yes √No 62 V. Taxes 1. Major tax and tax rate: Taxes Taxation basis Tax rate Output tax minor the deductible input VAT 17%, 13% tax Business tax Income from leasing 5% Urban maintenance and construction tax Turnover taxes payable 7% Corporate income ax Taxable amount 25% Educational surtax Turnover taxes payable 3% Local educational surtax Turnover taxes payable 2% Income tax rate implemented by vary branches and factories 2. Tax preference and approvals (1) Preferential tax for VAT Pursuant to the Treasury Tax (1997) No. 64 Notice on Taxation on Import of Fishery Equipment and Transport-back of Self-fished Fishery Products of Overseas Fishery Industry Corporation, the self-fished fishery products transported home, is regarded as the non-import domestic products, without taxation of tariff or added-value taxation in the import link. The corresponding domestic sales are attributable to the primary agricultural products sales, and free from added-value tax according to the specific rules of added value tax. (2) Preferential tax for income tax Pursuant to rules of Treasury Tax [1994] No. 001, Treasury Tax [1997] No. 114 , Treasury Agriculture [2010] No. 104 , President Order of People’s Republic of China [2007] No. 63 < Corporate Income Tax Law of People’s Republic of China>, the Company’s income earns from the overseas fishing business and preliminary process of agricultural products are exempted from corporate income tax. The Company’s income besides one from the overseas fishing business and preliminary process of agricultural products will taxed on 25% for the corporate income tax. The subsidiary – Shandong Zhonglu Overseas (Yantai) Food Co., Ltd—is a foreign investment corporation, is implemented the tax preference policies of “Two-free, Three-reduction” on according to the original , but has not enjoyed the preference yet because of no profit, according to the rules of tax preference policies in the transitory period of new , with the preference period starting from 2008. Applicable tax rate for 2010 was 22%, 24% for 2011 and 25% for 2012. The rate for corporate income tax of 2012 was executed by 12.5% actually. 63 3. Others VI. Corporate consolidation and consolidated financial statements 1. Subsidiaries For the subsidiaries and special purpose entity whose actual control was held by the Company, included in the range of consolidate financial statement of the Company. As the Company’s financial statements are prepared pursuant to the Accounting Standards for Business Enterprises No. 33 – Consolidated Financial Statements and relevant rules, all substantive inside transactions and dealings within the consolidation scope are balanced out during the consolidation. As for the shareholders’ equity not attributable to the Parent Company in the subsidiaries, it is specifically listed as the minority shareholders’ equity in the shareholders’ equity. As for the inconsistency between the subsidiaries and the Company in the accounting policies and periods, the necessary adjustment is made on the subsidiaries’ financial statements in the preparation of the consolidated financial statements according to the Company’s accounting policies and periods. As for the subsidiaries obtained in the consolidation of enterprises not under the same control, the adjustment is made on the individual financial statements on the basis the fair value of the identifiable assets on the purchase day. As for the subsidiaries obtained under the same control, the consolidation is regarded as starting at the Year-beginning of the consolidation period, and the assets, liabilities, operation results and the cash flow are reckoned into the consolidated financial statements from the year-beginning in the consolidation period. (1) Subsidiaries obtained from establishment or investment In RMB Balance Balance Amount of other of of items owners’ minority substant equity Actual Whether Interest sharehol Full ially Shareho of Type of Register investm Voting consolid of ders’ name of Register Busines Busines consisti lding parent subsidia ed ent at proporti ated the minority equity subsidia place s nature s scope ng of proporti compan ry capital period-e on (%) stateme sharehol for ry net on (%) y for nd nt or not ders deductin investm deductin g ent in g loss in loss/gai subsidia Period n ry diluted 64 by minority sharehol ders of subsidia ry above share enjoyed in owners’ equity at Period-b eginnin g Internati onal Shando ocean ng shipping Qingdao Cold Zhonglu Limited , accept , storage, 22,505, 22,505, Fishery compan for 100% 100% Yes Shando transpor 600 600.00 Shippin y carriage ng tation g Co., of Ltd. frozen aquatic products Self-sup porting Habitat Refriger business Internati Limited ated 12,476, of 12,476, onal compan Panama 100% 100% Yes transpor 146 refrigera 146.00 Corpora y t ted tion transpor t Freeze, Shando cold ng storage, Zhonglu process Limited Yantai , Food Oceanic 75,593, and 75,593, compan Shando processi 100% 100% Yes (Yantai) 300 sales of 300.00 y ng ng Foods aquatic Co., products Ltd. , animal products 65 and fruits and vegetabl es etc. Shando Offshor ng Qingdao e Zhonglu Limited , Ocean 54,000, fishing, 54,000, 25,982, -17,829. Haiyan compan 51.85% 51.85% Yes Shando fishery 000 ocean-g 000.00 170.06 94 Oceanic y ng oing Co., fishing Ltd. Other explanation on subsidiaries obtained through establishment or investments (2) Subsidiary obtained through enterprise combination under the same control In RMB Balance of owners’ equity of parent compan Balance y for Amount of other deductin of items g loss in minority substant Period Actual Whether Interest sharehol Full ially Shareho diluted Type of Register investm Voting consolid of ders’ name of Register Busines Busines consisti lding by subsidia ed ent at proporti ated the minority equity subsidia place s nature s scope ng of proporti minority ry capital period-e on (%) stateme sharehol for ry net on (%) sharehol nd nt or not ders deductin investm ders of g ent in subsidia loss/gai subsidia ry above n ry share enjoyed in owners’ equity at Period-b eginnin g 66 Other explanation on subsidiaries obtained through enterprise combination under the same control (3) Subsidiary obtained through enterprise combination under different control In RMB Balance of owners’ equity of parent compan Balance y for Amount of other deductin of items g loss in minority substant Period Actual Whether Interests sharehol Full ially Shareho diluted Type of Register investm Voting consolid of ders’ name of Register Busines Busines consisti lding by subsidia ed ent at proporti ated the minority equity subsidia place s nature s scope ng of proporti minority ry capital period-e on (%) stateme sharehol for ry net on (%) sharehol nd nt or not ders deductin investm ders of g ent in subsidia loss/gai subsidia ry above n ry share enjoyed in owners’ equity at Period-b eginnin g Other explanation on subsidiaries obtained through enterprise combination under different control 2. Operating entity with controlling rights emerge by way of entrust operation or lease from special purpose entity In RMB Major business dealing with Balance of major assets and liabilities recognized in Name Company consolidated statement at Period-end YAW ADDO FISHERIES Balance of assets was RMB 8,526,091.75 while liabilities Lease management COMPANY LIMITED was RMB 15,392,464.56 Other explanation on operating entity with controlling rights emerge by way of entrust operation or lease from special purpose entity 67 3. Explanation on changes of the range for consolidation statement Explanation on changes of the range for consolidation statement In consolidation statement range, Shandong Zhonglu Haiyan Oceanic Co., Ltd. (“Zhonglu Haiyan”) was increased till end of 30 June 2013. Zhonglu Haiyan was the enterprise invested jointly by Shandong Zhonglu Oceanic Fisheries Co., Ltd. (“Zhonglu”) and Shandong State-owned Assets Investment Holdings Co., Ltd. (Shandong State-owned Assets Investment) with registered capital of RMB 54 million, among which RMB 28 million invested by Zhonglu, representing 51.85% in registered capital while Shandong State-owned Assets Investment) representing 48.15% with capital of RMB 26 million invested. In accordance with regulation of the Accounting Standard for Business Enterprises No.2 – Long term equity investment and Accounting Standard for Business Enterprises No.33 – Consolidated financial statements, over half of the voting of Zhonglu Haiyan was held by Zhonglu, which has ability of controlling over Zhonglu Haiyan. The Zhonglu Haiyan shall recognize as the subsidiary of Zhonglu within the consolidation scope in aspect of consolidate financial statement. √ Applicable □Not applicable One unit was increased compare with last year (period) for: Found more reasons in “Explanation on changes of the range for consolidation statement” ** unit was decreased compare with last year(period) for: 4. Body included/excluded in consolidate statement in reporting period Subsidiary, special purpose entity and operating entity with controlling rights merge through entrust management or lease that included in consolidated statement in this period In RMB Name Net assets at period-end Current net profit Shandong Zhonglu Haiyan Oceanic Co., Ltd. 53,962,970.01 -37,029.99 Subsidiary, special purpose entity and operating entity with controlling rights merge through entrust management or lease that excluded in consolidated statement in this period In RMB Net profit from year-begin to date Name Net assets at date for disposal of disposal Explanation on entity newly included in consolidation range and entity excluded 5. Conversion rate of main statement items of overseas operation entity (1) Conversion method for statement of overseas subsidiary with foreign currency as bookkeeping standard currency a. The balance item in the balance sheet is converted on the current rate on the balance sheet day; all equity items besides the “retained profit” item, all are converted on the actual rate. b. The income and expense item in the profit statement are converted on the spot rate on the actual transaction day. 68 c. The conversion difference in the foreign currency financial start is listed specifically as “Converted difference in foreign currency” in the owners’ equity in the consolidated balance sheet in the preparation of the financial statement. (2) Rate of conversion of foreign currency statement in Period a. The spot exchange rate of US$ : RMB = 1: 6.1787 on the balance sheet day is used for the balance sheet item in the balance sheet. b. The spot rate on the actual transaction day is used for the income and expense item in the profit statement. VII. Notes to main items in consolidated financial statement 1. Monetary fund In RMB Closing amount Opening amount Item In foreign Conversion In foreign Conversion In RMB In RMB currency rate currency rate Cash: -- -- 409,245.00 -- -- 562,927.25 RMB -- -- 185,196.84 -- -- 257,867.93 USD 36,131.03 6.1787 223,242.80 45,754.89 6.2855 287,592.36 EUR 100.00 8.0536 805.36 2,100.00 8.3176 17,466.96 Bank deposit: -- -- 47,978,104.97 -- -- 26,831,911.66 RMB -- -- 42,960,741.76 -- -- 24,537,135.13 USD 790,017.53 6.1787 4,881,281.31 216,986.50 6.2855 1,363,868.65 JPY 1,342,314.00 0.062607 84,038.25 12,007,806.00 0.073049 877,158.22 EUR 6,462.16 8.0536 52,043.65 6,462.16 8.3176 53,749.66 SGD Other monetary fund: -- -- 866,640.25 -- -- 892,762.55 RMB -- -- 866,640.25 -- -- 892,762.55 Total -- -- 49,253,990.22 -- -- 28,287,601.46 Special statements should be given to the fund of using limitation, disposal aboard and potential risk recovery as mortgage, pledge or freeze: Note: closing balance of other monetary fund was RMB 866,640.25, of which LC margin was RMB 866,640.25 2. Account receivable (1) Category of account receivable In RMB Category Closing amount Opening amount 69 Book balance Bad debt provision Book balance Bad debt provision Proportion Proportion Proportion Proportion Amount Amount Amount Amount (%) (%) (%) (%) Account receivable with bad debt provision accrual by portfolio Portfolio 1: Accounts with major single amount 14,000,463. 11,024,97 47.66% 472,912.13 3.38% 49.47% 3,972,162.97 36.03% without withdrawal bad 40 9.59 debt provision singly Portfolio 2: Accounts 15,373,759. 6,000,668.1 11,260,46 without major single 52.34% 39.03% 50.53% 2,501,417.26 22.21% 20 0 4.22 amount and major risks 29,374,222. 6,473,580.2 22,285,44 Subtotal 100% 22.04% 100% 6,473,580.23 29.05% 60 3 3.81 29,374,222. 6,473,580.2 22,285,44 Total -- -- -- 6,473,580.23 -- 60 3 3.81 Explanation on category of account receivable Explanation on category of account receivable: Account receivable with major single amount refers to the accounts receivable from clients with over RMB one million (RMB one million included), the Company will withdrawal the bad debt provision by account age while no impairment been found in testing. Account receivable of bad debt provision withdrawal by portfolio refers to the account receivable with major single amount without withdrawal bad debt provision singly and the accounts without major single amount and major risks, the Company will withdrawal bad debt provision by account age while no impairment been found in testing. Account receivable with major single amount and withdrawal bad debt provision single at period-end □Applicable √Not applicable Account receivable with bad debt provision withdrawal by method of account age in portfolio √ Applicable □Not applicable In RMB Closing amount Opening amount Book balance Book balance Account age Proportion Bad debt provision Proportion( Bad debt provision Amount Amount (%) %) Within one year Including: -- -- -- -- -- -- Within six months 23,319,634.61 79.39% 748,005.22 16,463,300.06 73.87% 771,249.64 6 months to 1 year 365,569.98 1.24% 36,557.00 133,125.74 0.6% 13,312.58 Within one year 23,685,204.59 80.63% 784,562.22 16,596,425.77 74.47% 784,562.22 Over three years 5,689,018.01 19.37% 5,689,018.01 5,689,018.01 25.53% 5,689,018.01 Total 29,374,222.60 -- 6,473,580.23 22,285,443.81 -- 6,473,580.23 (2Account receivable with bad debt provision withdrawal by method of percentage of balance in portfolio 70 □Applicable √Not applicable Account receivable withdrawing bad bed provision by other methods in portfolio □Applicable √Not applicable Account receivable with minor single amount but has individual bad debt provision accrual at period-end □Applicable √Not applicable (2) Top five clients in account receivable In RMB Proportion in total Name Relations with Company Amount Aging account receivable (%) PANDA Non-related party 3,600,962.12 Over three years 12.26% Hong Kong Liantai Non-related party 3,597,547.95 Within six months 12.25% Seafood South Korea SEA SKY Non-related party 3,455,359.46 Within six months 11.76% Singapore-Zhan Qun Non-related party 2,823,244.79 Within six months 9.61% Nikko Fishery Co., Non-related party 2,345,100.87 Within six months 7.98% Total -- 15,822,215.19 -- 53.86% 3. Other account receivable (1) Category of other account receivable In RMB Closing amount Opening amount Book balance Bad debt provision Book balance Bad debt provision Category Proportio Proportio Proportion Proportio Amount Amount Amount Amount n (%) n (%) (%) n (%) Other account receivable with bad debt provision accrual by portfolio Portfolio 1:Accounts with major single amount 5,200,000.00 35.59% 210,000.00 4.04% 9,481,620.00 56.73% 4,472,162.00 47.17% without withdrawal bad debt provision singly Portfolio 2:Accounts without major single 9,411,364.51 64.41% 4,517,106.77 48% 7,232,708.69 43.27% 4,521,430.77 62.51% amount and major risks 14,611,364.5 16,714,328.6 Subtotal 100% 4,727,106.77 32.35% 100% 8,993,592.77 53.81% 1 9 Total 14,611,364.5 -- 4,727,106.77 -- 16,714,328.6 -- 8,993,592.77 -- 71 1 9 Explanation on category of other account receivable Note: other account receivable with major single amount refers to the other accounts receivable with over RMB one million (RMB one million included), the Company will withdrawal the bad debt provision by account age while no impairment been found in testing. Other account receivable of bad debt provision withdrawal by portfolio refers to the other account receivable with major single amount without withdrawal bad debt provision singly and the accounts without major single amount and major risks, the Company will withdrawal bad debt provision by account age while no impairment been found in testing. Other account receivable with major single amount and withdrawal bad debt provision single at period-end □Applicable √Not applicable Other account receivable with bad debt provision withdrawal by method of account age in portfolio √ Applicable □Not applicable In RMB Closing amount Opening amount Book balance Book balance Account age Proporti Bad debt provision Proporti Bad debt provision Amount Amount on (%) on (%) Within one year Including: Within six months 4,404,539.96 30.15% 74,264.14 7,391,285.00 44.22% 319,564.28 6 months to 1 year 5,904,678.23 40.41% 383,267.31 451,369.80 2.7% 45,136.98 Within one year 10,309,218.19 70.56% 457,531.45 7,842,654.80 46.92% 364,701.26 1-2years 32,571.00 0.22% 341,848.57 2.05% 99,316.19 2-3years 0.00 500.00 250.00 Over three years 4,269,575.32 29.22% 4,269,575.32 8,529,325.32 51.03% 8,529,325.32 Total 14,611,364.51 -- 4,727,106.77 16,714,328.69 -- 8,993,592.77 Other account receivable with bad debt provision withdrawal by method of percentage of balance in portfolio □Applicable √Not applicable Withdrawing bad bed provision by other methods in portfolio □Applicable √Not applicable Other account receivable with minor single amount but has individual bad debt provision accrual at period-end □Applicable √Not applicable (2) Other account receivable switch-back or taken back in reporting period In RMB Reason of switch back Determination basis for Amount of bad bed Amount switch back or Other account receivable or take back original bad debt provision accrual taken back 72 reserves accumulatively before switch-back or taken back Equity transfer amount owed Arrears-recovering in Accrual by age of from Zhongchanjing 4,266,486.00 4,266,486.00 total account receivable Investment Co., Ltd. Total -- -- 4,266,486.00 -- Accrual of bad debt provision for other account receivable with major single amount or with minor amount but have impairment test independently at period In RMB Account receivable Book balance Bad debt Accrual proportion (%) Reasons Explanation on other account receivable with minor single amount but have major risks after combined with risk characteristic of the credit (3) Top five clients in other account receivable In RMB Proportion in total other Name Relations with Company Amount Aging account receivable (%) Zhoushan Customs Non-related party 4,200,000.00 6 months to 1 year 28.74% /margins Qingdao branch of PICC Non-related party 3,157,237.91 Within six months 21.61% Shandong Marine Affairs Non-related party 1,000,000.00 6 months to 1 year 6.84% Bureau Japan Daihatsu Non-related party 288,896.39 Over three years 1.98% Wende Ship Repair Non-related party 200,000.00 Over three years 1.37% Company Total -- 8,846,134.30 -- 60.54% 4. Prepayments (1) Prepayments listed by account age In RMB Closing amount Opening amount Account age Amount Proportion (%) Amount Proportion (%) Within one 13,780,418.36 100% 11,738,461.64 99.44% year 1-2years 50,779.61 0.43% 73 2-3years 14,985.26 0.13% Total 13,780,418.36 -- 11,804,226.51 -- Explanation on account age of prepayment The closing balance of prepayment increased 16.74 compare with opening balance, mainly due to the prepayment of tuna raw materials purchased by Yantai Foods Company and the common-of-piscary paid in advance by Qingdao Haiwei Branch (2) Top five clients in prepayment In RMB Name Relations with Company Amount Aging Un-settled reasons Penglai Jinyuan Food Account for raw Non-related party 4,433,994.00 Within one year Co., Ltd. materials prepaid Common-of-piscary in Common-of-piscary Non-related party 1,187,725.00 Within one year Kiribati prepaid Taiwan Far Eastern Non-related party 1,146,419.00 Within one year Security service prepaid Company Common-of-piscary in Common-of-piscary Non-related party 998,512.02 Within one year Nauru prepaid Common-of-piscary in Common-of-piscary Non-related party 971,254.33 Within one year Micronesia prepaid Total -- 8,737,904.35 -- -- Explanation on clients of prepayment 5. Inventory (1) Category of inventory In RMB Closing amount Opening amount Item Provision for Provision for Book balance Book value Book balance Book value price fall-down price fall-down Raw materials 78,728,597.91 51,082.91 78,677,515.00 66,499,993.74 51,082.91 66,448,910.83 Goods in process 775,653.77 775,653.77 Inventory 124,812,595.83 32,367,450.35 92,445,145.48 60,559,252.98 60,559,252.98 Revolving materials 1,151,249.86 1,151,249.86 Total 204,316,847.51 32,418,533.26 171,898,314.25 128,210,496.58 51,082.91 128,159,413.67 74 (2) Provision for price fall-down In RMB Accrual in this Decreased in this period Decrease in Opening book Items period Accrual in Period Closing book balance balance Period Switch back Written-off Raw materials 51,082.91 51,082.91 Inventory 32,367,450.35 32,367,450.35 Total 51,082.91 32,367,450.35 32,418,533.26 (3) Provision for price fall-down of inventory Ratio of amount switch back in Accrual basis of provision for Reasons of provision for price Item Period in closing balance of the price fall-down fall-down switch back in Period inventory (%) Measure in accordance of lower of cost and net realizable value; net realizable value of the Inventory finished goods is the amount after deducted estimated sales expenses and relevant taxes Explanation on inventory Net value of inventory at period-end increased 34.13% over that of year-beginning mainly because the stock tuna long liners of Qingdao Haiyan Branch increased. Resulted by the wild actions of Somali pirates in Indian Ocean, vessels and crews are being threaded; 3 long liners plans to repair on the dock in China, the out-put from tuna long liners in the Period decreased; Furth more, affected by economic downturn in Japan and sharply depreciation of JP, sales price of tuna long liner was downing all the time, than majority of the tuna from Qingdao Haiyan Branch was stock for sales. At end of period, according to the sales of similar tuna in Japan market, the Company estimate the net realizable value of the aforesaid tuna, and ascertained the cost is high than its net realizable value. According to the principal of “on balance sheet date, inventory shall be measured in accordance of lower of cost and net realizable value”, the difference of cost and its net realizable value, RMB 32,367,450.35 was accrual as provision for price fall-down of inventory, and included in current gains/losses. 6. Long term equity investment (1) Long term equity investment In RMB Sharehold Voting Explanati Accrual Provision Increase/ ing proportio on on of Cash Invested Calculatio Investme Opening Closing for decrease proportio n in inconsiste provision dividend company n method nt cost balance balance depreciati change n in invested ncy in for in Period on invested company proportio impairme 75 company (%) n between nt in (%) the Period sharehold ing and voting South Cost 33,000,00 33,000,00 33,000,00 33,000,00 Securities 0.87% 0.87% method 0.00 0.00 0.00 0.00 Co., Ltd. 33,000,00 33,000,00 33,000,00 33,000,00 Total -- -- -- -- 0.00 0.00 0.00 0.00 (2) Condition of restriction in aspect of transferring capital to investment enterprises In RMB Projects of long term equity investment Amount of investment loss un-confirmed that restricted in capital transfer to Restricted reasons accumulative in this period investment enterprises Explanation on long term equity investment Concerning South Securities Co., Ltd. had been canceled the license for securities business and charged to close down as the administrative punishment by the CSRC on 29 April 2005, it was announced to be bankrupt by Shenzhen Intermediate Court, and the proportion for the impairment of the long-term investment has been accrued on the book value in full sum on the stock in the South Securities Company. Intermediate People’s Court of Shenzhen, Guangzhou, issued a civil ruling paper ((2006) Shen Zhong Fa Min Qi Zi No.: 26-246) dated 17 December 2012 as: “1. terminated the bankruptcy procedure of South Securities Co., Ltd.; 2. Retain part of the members of bankruptcy liquidation group for the liquidation. The ruling will come into force as of today.” The civil ruling paper states that “distribution ratio of the bankruptcy assets from bankruptcy case of South Securities reached to 64%” 7. Investment real estate (1) Investment real estate measure on cost In RMB Item Opening book balance Increase in Period Decrease in Period Closing book balance I. Total original book 47,120,794.80 47,120,794.80 value 1. House, building 47,120,794.80 47,120,794.80 II. Total accumulative 9,021,228.48 609,332.76 9,630,561.24 depreciation and 76 amortization 1. House, building 9,021,228.48 609,332.76 9,630,561.24 III. Total net book value of investment 38,099,566.32 -609,332.76 37,490,233.56 real estate 1. House, building 388,099,566.32 -609,332.76 37,490,233.56 IV. Total accumulative provision for 886,512.06 886,512.06 investment real estate provision 1. House, building 886,512.06 886,512.06 V. Total book value of 37,213,054.26 -609,332.76 36,603,721.50 investment real estate 1. House, building 37,213,054.26 -609,332.76 36,603,721.50 In RMB Current Amount of depreciation and amortization in Period 609,332.76 (2) Investment real estate measure on fair value In RMB Increase in Period Decrease in Period Transfer-in Gains/losses Opening fair from Transfer as Closing fair Item from value Purchased self-used Disposal self-used value changes of property or property fair value inventory Explain the investment real estate with measurement mode changed in reporting period and investment real estate without a property certificate required. Explain the reasons on un-settle certificate and time expected to completed In accordance with the “Civil Ruling Paper” (2005) Li Zhi Zi No.: 1299 from People’s Court of Lixia District, Jinan in July 2006, the comprehensive buildings owned by Shandong Group Corp. of Fisheries Enterprises (totally 7430 M2 including 1/B, 1/F to 3/F and 6/F to 13/F as well as land use right of 1847M2) locates in No. 43, Heping Rd., Lixia District, Jinan City along with the offices supplies are compensate for the arrears to Shandong Zhonglu Oceanic Fisheries Co., Ltd. As RMB 55,129,673.57 (relevant notice was published on Securities Times and Hong Kong Wen Wei Po dated 25 July 2006). The aforesaid lands belongs to the allocated lands without constuction planning permit and has no property certificate hold. The Company still coordinate with local government in aspect of the property certificates currently. 77 8. Fixed assets (1) Fixed assets In RMB Opening book Closing book Item Increase in Period Decrease in Period balance balance I. Total original book value: 506,760,163.40 6,038,391.63 15,556,074.15 497,242,480.88 Including: House and 63,638,771.10 32,470.00 63,606,301.10 building Machine equipment 25,662,199.51 3,024,988.09 631,200.00 28,055,987.60 Transportation 5,820,978.59 649,826.11 482,717.52 5,988,087.18 vehicle Vessels 402,354,380.39 2,231,969.83 14,257,266.07 390,329,084.15 Furniture and office 9,283,833.81 131,607.60 152,420.56 9,263,020.85 appliances Opening book Increase in -- Accrual in Period Decrease in Period Closing balance balance Period II. Total accumulative 124,440,463.87 12,601,428.88 6,361,248.27 130,680,644.48 depreciation Including: House and 12,751,618.58 786,512.80 5,428.72 13,532,702.66 building Machine equipment 9,368,577.16 1,399,323.94 271,709.64 10,496,191.46 Transportation 3,076,128.92 458,984.86 525,992.29 3,009,121.49 vehicle Vessels 92,404,928.19 9,743,389.88 5,425,986.32 96,722,331.75 Furniture and office 6,839,211.02 213,217.40 132,131.30 6,920,297.12 appliances Opening book -- -- Closing balance balance III. Total net book value of 382,319,699.53 -- 366,561,836.40 fixed assets Including: House and 50,887,152.52 -- 50,073,598.44 building Machine equipment 16,293,622.35 -- 17,559,796.14 Transportation 2,744,849.67 -- 2,978,965.69 vehicle Vessels 309,949,452.20 -- 293,606,752.40 78 Furniture and office 2,444,622.79 -- 2,342,723.73 appliances IV. Total provision for 7,571,580.00 -- 0.00 depreciation Vessels 7,571,580.00 -- 0.00 Furniture and office -- appliances V. Total book value of fixed 374,748,119.53 -- 366,561,836.40 assets Including: House and 52,460,424.88 -- 50,073,598.44 building Machine equipment 17,196,572.70 -- 17,559,796.14 Transportation 3,357,464.70 -- 2,978,965.69 vehicle Vessels 189,180,898.55 -- 293,606,752.40 Furniture and office 2,634,436.89 -- 2,342,723.73 appliances Total RMB 11,686,603.28 depreciated in this period; RMB ** was transfer to fixed assets from project in progress in this period (2) Fixed assets without property certificate obtained Item Reasons for certificate un-settled Time expected to completed the certificate Explanation on fixed assets 1. Fixed assets increased RMB 6,038,391.63 in Period, mainly because machine equipment was purchased by Yantai Foods Company and the physical investment (vessels and vehicles for business purpose) in Haiyan Branch was consider as the sales increased; 2. Pledge of fixed assets: In order to obtained the comprehensive credit line of RMB 27 million, the production-used house with original value of RMB 22,651,704.00, and land use right of 33,333.30 M2 were pledge by subsidiary Zhonglu Oceanic (Yantai) Foods Co., Ltd. RMB 13,216,727.52 short-term borrowing has received. 3. In accordance with the “Civil Ruling Paper” (2005) Li Zhi Zi No.: 1299 from People’s Court of Lixia District, Jinan in July 2006, the comprehensive buildings owned by Shandong Group Corp. of Fisheries Enterprises (totally 7430 M2 including 1/B, 1/F to 3/F and 6/F to 13/F as well as land use right of 1847M2) locates in No. 43, Heping Rd., Lixia District, Jinan City along with the offices supplies are compensate for the arrears to Shandong Zhonglu Oceanic Fisheries Co., Ltd. As RMB 55,129,673.57 (relevant notice was published on Securities Times and Hong Kong Wen Wei Po dated 25 July 2006). The aforesaid lands belongs to the allocated lands without constuction planning permit and has no property certificate hold. The Company still coordinate with local government in aspect of the property certificates currently. 79 9. Project in progress (1) Project in progress In RMB Closing amount Opening amount Item Provision for Provision for Book balance Book value Book balance Book value depreciation depreciation Vessels 13,458,238.90 13,458,238.90 Phase III project of the tuna 8,970,193.00 8,970,193.00 1,454,373.00 1,454,373.00 trading center Total 22,428,431.90 22,428,431.90 1,454,373.00 1,454,373.00 (2) Changes of major project in progress In RMB Proportio Accumul Includin n of ative g: Transfer Other project amount Capitaliz Opening Increase Work interest Capital Closing Item Budget to fixed decreasi investme of ing rate amount in Period progress capitaliz resources amount assets ng nt in interest (%) ation in budget capitaliz Period (%) ation Bank loans, 13,458,2 13,458,2 Vessels self-own 38.90 38.90 ed capital Phase III project of the 1,454,37 7,515,82 8,970,19 tuna 3.00 0.00 3.00 trading center 1,454,37 20,974,0 22,428,4 Total -- -- -- -- 3.00 58.90 31.90 Explanation on changes of project in progress 1. With purpose of maintain a certained scale of the operation vessels of the Company and echelon structure of the vessel age, the Company entered into a purchasing agreement for one ocean tuna long liner with total investment of RMB 18 million. RMB 13,458,238.90 was paid for purchasing and other charges till end of this Period. 2. The main construction of Phase III project of Zhonglu (Yantai) Food Co., Ltd. was completed currently, and the 80 project still in last stage of construction; accomplish follow-up investment of RMB 7,515,820.00 in this period. 10. Disposal of fixed assets In RMB Item Opening book value Closing book value Reasons for transfer-in ”Taifu 102” 32,504,063.30 Vessels sunk Total 32,504,063.30 -- Progress of disposal of fixed assets with over one year started transfer-in On 16 May 2012, the “Taifu 102” was sunk along with the netting gear while good transshipment approach completed in anchorage in Rabaul Port. The vessels was originally value RMB 64,274,978.63, accumulative depreciation was RMB 35,479,417.36 and net value was RMB 28,795,561.27; original value for the netting gear was RMB 3,829,778.35, accumulative depreciation was RMB 121,276.32 and net value was RMB 3,708,502.03. As till end of 30 June 2013, the insurance claims with PICC for the vessel was completed, US$ 5.48 million claim was received in March of 2013 and the assets disposal of the vessel was completed. 11. Intangible assets (1) Intangible assets In RMB Item Opening book balance Increase in Period Decrease in Period Closing book balance I. Total original book value 10,164,557.00 10,164,557.00 Land use right of Yantai 9,929,529.00 9,929,529.00 Foods Other 235,028.00 235,028.00 II. Total amount of 2,945,674.52 134,855.22 3,080,529.74 accumulated amortization Land use right of Yantai 2,742,436.40 118,208.52 2,860,644.92 Foods Other 203,238.12 16,646.70 219,884.82 III. Total net book value of 7,218,882.48 -134,855.22 7,084,027.26 intangible assets Land use right of Yantai 7,187,092.60 -118,208.52 7,068,884.08 Foods Other 31,789.88 -16,646.70 15,143.18 Land use right of Yantai Foods Other 81 Total book value of 7,218,882.48 -134,855.22 7,084,027.26 intangible assets Land use right of Yantai 7,187,092.60 -118,208.52 7,068,884.08 Foods Other 31,789.88 -16,646.70 15,143.18 RMB 134,855.22 amortized in Period 12. Long-term deferred expenditure In RMB Amortized in Reasons of other Item Opening amount Increase in Period Other decreased Closing amount Period decreased Improvement expenditure of 81,778.00 81,778.00 rent-in fixed assets Total 81,778.00 81,778.00 -- Explanation on long-term deferred expenditure The Improvement expenditure (decoration costs) of rent-in fixed assets from Shandong Zhonglu Fishery Shipping Co., Ltd., amortized in 3 years after construction completed. 13. Deferred income tax asset and deferred income tax liability (1) Amount of deferred income tax asset and deferred income tax liability before trade-off Deferred income tax asset and deferred income tax liability ascertained In RMB Item Closing amount Opening amount Deferred income tax asset: Start-up costs 205,685.00 205,685.00 Subtotal 205,685.00 205,685.00 Deferred income tax liability: Deferred income tax asset without confirmed In RMB Closing amount Opening amount Deductible losses of deferred income tax asset without confirmed will expired in later year In RMB Year Closing amount Opening amount Note Taxable difference and deductible difference 82 In RMB Amount of temporary differences Item Period-end Period-begin Taxable difference Deductible difference (2) Amount of deferred income tax asset and deferred income tax liability after trade-off Composition of deferred income tax asset and liabilities after trade-off In RMB Deductible or taxable Deductible or taxable Deferred income tax Deferred income tax temporary temporary asset or liability after asset or liability after Item differences after differences after trade-off at trade-off at trade-off at trade-off at period- period-end period-begin period-end begin Deferred income tax asset 205,685.00 205,685.00 Trade-off between the deferred income tax asset and deferred income tax liability In RMB Item Amount trade-off in Period Explanation on deferred income tax asset and deferred income tax liability 14. Impairment of assets In RMB Opening book Decrease in Period Closing book Item Increase in Period balance Switch-back Written-off balance I. Bad debt provision 15,467,173.00 4,266,486.00 11,200,687.00 II. Provision for price 51,082.91 32,367,450.35 32,418,533.26 fall-down of inventory V. Provision for depreciation of long term equity 33,000,000.00 33,000,000.00 investment VI. Provision for depreciation 886,512.06 886,512.06 of investment real estate VII. Provision for 7,571,580.00 7,571,580.00 0.00 depreciation of fixed assets Total 56,976,347.97 32,367,450.35 4,266,486.00 7,571,580.00 77,505,732.32 Explanation on provision for depreciation of assets 83 15. Short-term borrowing (1) Short-term borrowing In RMB Item Closing amount Opening amount Mortgage loan 13,216,727.52 12,676,887.96 Credit loan 20,885,235.02 20,000,000.00 Total 34,101,962.54 32,676,887.96 Explanation on category of short-term borrowing In order to obtained the comprehensive credit line of RMB 27 million, the production-used house with original value of RMB 22,651,704.00, and land use right of 33,333.30 M2 were pledge by subsidiary Zhonglu Oceanic (Yantai) Foods Co., Ltd. RMB 13,216,727.52 short-term borrowing has received. 16. Account payable (1) Account payable In RMB Item Closing amount Opening amount Within one year 61,815,498.63 39,830,312.81 1-2 years 0.00 2-3 years 0.00 Over three years 4,258,033.37 4,258,033.37 Total 66,073,532.00 44,088,346.18 (2) Explanation on major account payable over one year There are no major acount payables with over one year 17. Account received in advance (1) Account received in advance In RMB Item Closing amount Opening amount Within 1 year 4,251,206.73 2,074,042.23 1-2 years 0.00 2-3 years 0.00 84 Over three years 349,863.72 349,863.72 Total 4,601,070.45 2,423,905.95 18. Salary payable In RMB Item Opening book balance Increase in Period Decrease in Period Closing book balance I. Salary, bonus, allowance and 10,349,436.93 23,273,648.81 23,220,115.87 10,402,969.87 subsidy II. Employee 1,506,186.06 1,506,186.06 Welfare expenses III. Social insurance 4,300,613.07 4,300,613.07 Including: 1. 1,214,455.52 1,214,455.52 Medical insurance 2. Basic pension 2,577,383.09 2,577,383.09 insurance 3. Unemployment 231,544.18 231,544.18 insurance 4. Injury insurance 140,992.81 140,992.81 5. Maternity 136,237.47 136,237.47 insurance IV. Housing 873,183.00 873,183.00 accumulation fund V. Dismissal welfare 197,360.00 163,680.00 33,680.00 VI. Other 893,484.79 515,360.11 371,062.82 1,037,782.08 Fund of labor union 893,484.79 515,360.11 371,062.82 1,037,782.08 and education Total 11,440,281.72 30,468,991.05 30,434,840.82 11,474,431.95 RMB ** was defaulted in salary payable Fund of labor union and education was RMB 371,062.82, non-monetary welfare was RMB **, and compensation due to labor relationship terminated was RMB 163,680.00. Note: Closing balance of salary payable mainly was the bonus for year of 2012 and salary of June 2013 for employees which was accrual but not give out. 19. Tax payable In RMB 85 Item Closing amount Opening amount VAT -10,047,436.29 -9,986,506.96 Business tax 36,548.11 79,158.55 Corporate income tax -70,736.34 299,260.41 Individual income tax 34,249.09 42,904.53 Urban maintenance and construction tax 2,706.68 5,890.75 House property tax 210,470.33 201,470.33 Land use tax 82,750.00 82,750.00 Educational surtax 1,933.35 4,162.68 Other 19,062.31 22,949.86 Total -9,730,452.76 -9,247,959.85 Taxes payable, that the tax authorities agreed to the branch companies, subsidiaries of taxable income between mutual dispensing, and shall explain tax calculation process: 20. Interest payable In RMB Item Closing amount Opening amount Installment and interest due repayment of principal 68,053.16 long-term loan interest Short-term borrowing interest payable 33,333.34 Total 101,386.50 Explanation on interest payable 21. Dividends payable In RMB Name Closing amount Opening amount Reasons for unpaid over one year Luyin Investment Group Co., Ltd. 45,109.80 45,109.80 Shandong Airlines Co., Ltd. 32,110.00 32,110.00 CNHTC Jinan Truck Co., Ltd. 350,000.00 350,000.00 Shandong Detai Decorating Co., Ltd. 32,110.00 32,110.00 Total 459,329.80 459,329.80 -- Explanation on dividends payable 86 22. Other account payable (1) Other account payable In RMB Item Closing amount Opening amount Within one year 5,474,400.04 18,616,754.54 1-2 years 973,352.19 3,676,262.14 2-3 years 294,609.98 869,961.68 Over three years 4,582,310.90 1,375,973.43 Total 11,324,673.11 24,538,951.79 23. Non-current liabilities due within one year (1) Non-current liabilities due within one year In RMB Item Closing amount Opening amount Long-term loans due within one year 7,697,777.78 7,697,777.78 Total 7,697,777.78 7,697,777.78 (2) Long-term loans due within one year Long-term loans due within one year In RMB Item Closing amount Opening amount Credit loan 7,697,777.78 7,697,777.78 Total 7,697,777.78 7,697,777.78 Amount of RMB ** was extended due to overdue in long-term loans due within one year Top five long-term loans due within one year In RMB Closing amount Opening amount Loans dated Company Loans ended Currency Rate (%) In foreign In foreign from In RMB In RMB currency currency Jinan Lixia Branch of 2012-10-31 2015-10-30 RMB 7.07% 7,697,777.78 7,697,777.78 ICBC Total -- -- -- -- -- 7,697,777.78 -- 7,697,777.78 Overdue loans in long-term loans due within one year 87 In RMB Reasons for Expected Company Amount loans Overdue time Annual rate (%) Purpose of loans overdue payment date Amount RMB ** was paid after balance sheet date Explanation on long-term loans due within one year: Note: On 11 June 2012, the Company entered into a loan agreement with Jinan Lixia Branch of ICBC for loan of RMB 58,000,000.00. The loan terms from 31 October 2012 to 30 October 2015, RMB 34,640,000.00 was drawing in the Period actually. The principal RMB 7,697,777.78 paid in 2013 was listed under the item of “Non-current liabilities due within one year” 24. Long-term loans (1) Long-term loans In RMB Item Closing amount Opening amount Credit loan 34,542,222.22 26,942,222.22 Total 34,542,222.22 26,942,222.22 Explanation on long-term loans 1. On 11 June 2012, the Company entered into a loans agreement with Jinan Lixia Branch of ICBC for borrowing RMB 58,000,000.00 dated from 31 October 2012 to 30 October 2015. Actually RMB 34,640,000.00 loans were withdrawal in the Period. The principal of loans RMB 7,697,777.78 payable was listed under the “Non-current liabilities due within one year” 2. On 3 April 2013, the Company entered into a loans agreement with Jinan Lixia Branch of ICBC for borrowing RMB 10,000,000.00 dated from 8 April 2013 to 1 April 2016. And actually RMB 7,600,000.00 loans were withdrawal in the Period. (2) Top five long-term loans In RMB Closing amount Opening amount Loans dated Company Loans ended Currency Rate (%) In foreign In foreign from In RMB In RMB currency currency Jinan Lixia 26,942,222.2 26,942,222.2 Branch of 2012-10-31 2015-10-30 RMB 7.07% 2 2 ICBC Jinan Lixia Branch of 2013-04-08 2016-04-01 RMB 6.77% 7,600,000.00 ICBC 34,542,222.2 26,942,222.2 Total -- -- -- -- -- -- 2 2 Explanation on long-term loans: explain the condition of extension, principal, interest and arrangement for payment for those long-term loans merge from overdue loans which were extended. 88 25. Other non-current liability In RMB Item Closing book balance Opening book balance Fuel subsidies 21,771,200.00 Construction special funds 13,600,000.00 6,800,000.00 Total 13,600,000.00 28,571,200.00 Explanation on other non-current liability, including vary government subsidies with assets and income concerned obtained in reporting period as well as the amount at period-end In accordance with the notice of construction special funds plans as 2nd RMB 800 million “Two districts” of 2011 and 2nd of 2011 Shandong peninsula blue economic development districts and Yellow River Delta Efficient Ecological Economic Districts, that is Yan Fa Gai Tou Zi [2011] No. 464 issued from Yantai Development and Reform Commission and Yantai Municipal Finance Bureau, the Company obtained construction special funds with assets concerned RMB 6,800,000.00 in reporting period. 26. Share capital In RMB Changes in the Period (+,-) Opening Shares transfer Closing Issuing new amount Bonus shares from public Other Subtotal amount shares reserves Total shares 266,071,320.00 266,071,320.00 Explanation on changes of share capital: Name of CPA, who has verified the capital, and verification report serial shall be disclosed while the capital was increased or decreased in the reporting period; as for the incorporated company operated within three years, net assets of the year before establishment should be explained; if the limited liability company change to incorporated company totally, the verification while establishment shall be explained 27. Capital surplus In RMB Item Opening amount Increase in Period Decrease in Period Closing amount Capital premium (equity 186,283,711.00 186,283,711.00 premium) Other Capital surplus 94,961,504.96 94,961,504.96 Total 281,245,215.96 281,245,215.96 Explanation on capital surplus 89 28. Surplus reserve In RMB Item Opening amount Increase in Period Decrease in Period Closing amount Statutory Surplus reserve 21,908,064.19 21,908,064.19 Total 21,908,064.19 21,908,064.19 Explanation on surplus reserve: explain relevant reference while there have equity increased from surplus reserves, make-up losses and dividend distribution 29. Retained profit In RMB Proportion of withdrawal or Item Amount distribution Retained profit of end of last year before -93,413,762.00 -- adjustment Retained profit of year-begin after adjustment -93,413,762.00 -- Add: Net profit attribute to owners of parent 23,102,972.94 -- company Retained profit at period-end -70,310,789.06 -- Adjustment of retained profit at year-begin: 1) Retained profit RMB ** at beginning of the year was affected by the retroactive adjustment regulated in rules and Accounting Standards for Business Enterprise; 2) Retained profit RMB ** at beginning of the year was affected by the changes of accounting policy; 3) Retained profit RMB ** at beginning of the year was affected by the major correction on accounting errors; 4) Retained profit RMB ** at beginning of the year was affected by the consolidation scope changed under the same control; 5) Retained profit RMB ** at beginning of the year was affected by the total other adjustment Explanation on retained profit: As for the enterprises initial public offering the securities, if the accumulated profits before offering are been approved to be share by new and old shareholders in the shareholders’ general meeting, the explanation shall be state; if the accumulated profit before offering are been approved to be share by old shareholders only before offering in the shareholders’ general meting, the audit profit in dividend payables that should be share by the old shareholders shall be disclosed. 30. Operating revenue, operating cost (1) Operating revenue, operating cost In RMB Item Current amount Amount of the period before Main operating revenue 260,988,876.37 247,589,887.87 90 Other revenue 3,739,483.85 3,310,206.16 Operating cost Operating cost 219,741,407.16 218,874,259.05 (2) Main business (by industries) In RMB Current amount Amount of the period before Industries Operating revenue Operating cost Operating revenue Operating cost Oceanic fishing and re-processing 74,020,865.36 51,153,852.24 79,469,478.83 67,000,613.37 Management and rental of 39,743,558.52 30,632,659.79 33,889,343.62 25,813,516.53 refrigerated transport vessels Seafood processing, cold storage 147,224,452.49 137,175,578.42 134,231,065.42 125,119,665.33 and other Total 260,988,876.37 218,962,090.45 247,589,887.87 217,933,795.23 (3) Main business (by products) In RMB Current amount Amount of the period before Products Operating revenue Operating cost Operating revenue Operating cost Tuna 74,020,865.36 51,153,852.24 79,469,478.83 67,000,613.37 Vessels rental 39,743,558.52 30,632,659.79 33,889,343.62 25,813,516.53 Seafood processing, cold storage 147,224,452.49 137,175,578.42 134,231,065.42 125,119,665.33 charge Total 260,988,876.37 218,962,090.45 247,589,887.87 217,933,795.23 (4) Main business (regions) In RMB Current amount Amount of the period before Regions Operating revenue Operating cost Operating revenue Operating cost Mainland China 70,125,569.27 61,224,936.88 45,560,040.48 33,518,936.51 Taiwan China 73,341,550.52 48,151,686.19 49,389,849.01 38,073,465.57 Hong Kong China 11,581,030.32 10,801,572.70 Japan 75,549,131.86 70,464,321.21 102,292,151.80 98,401,777.04 Singapore 7,679,886.56 7,162,994.20 17,454,830.61 16,744,419.00 Ghana 5,922,454.23 5,497,321.11 6,537,224.74 5,922,602.54 91 South Korea 16,789,253.61 15,659,258.16 26,355,791.23 25,272,594.57 Total 260,988,876.37 218,962,090.45 247,589,887.87 217,933,795.23 (5) Top five clients in operating revenue In RMB Proportion in total operating revenue of the Company Clients Revenue from main business (%) No.1 Fengqun Fishery Co., Ltd. 73,341,550.52 27.7% No.2 Ningbo Fengsheng Seafood 30,508,182.67 11.53% Co., Ltd. No.3 Japan San Narita 26,855,322.20 10.15% No.4 WEC FOODS 18,986,547.53 7.17% CORPORATION No.5 BFC JAPAN CO.LTD 18,135,993.55 6.85% Total 167,827,596.47 63.4% Explanation on operating revenue 31. Business tax and surcharge In RMB Amount of the period Item Current amount Taxation basis before Business tax 360,209.02 125,064.20 3% or 5% of the rental income Urban maintenance and construction 24,918.01 68,137.15 7% of amount of turnover tax paid tax Educational surtax 17,798.59 48,669.39 5% of amount of turnover tax paid House property tax 132,465.47 135,960.00 House area Other 17,798.21 24,001.48 Total 553,189.30 401,832.22 -- Explanation on business tax and surcharge 32. Sales expenses In RMB Item Current amount Amount of the period before Payroll payable 430,724.97 255,821.99 Depreciation cost 16,777.50 18,892.69 92 Travelling charge 140,057.56 59,023.77 Entertainment expenses 81,280.50 Freight and miscellaneous charges 456,934.13 384,439.67 Port surcharge 915,375.64 882,728.45 Communication expenses 12,447.43 17,664.98 Agency fee 55,585.71 25,514.19 Business publicity expenses 18,800.00 57,700.00 Customs censoring charges 104,201.39 105,417.00 Other 11,400.00 24,976.47 Total 2,162,304.33 1,913,459.71 33. Administrative expenses In RMB Item Current amount Amount of the period before Payroll payable 8,108,131.68 11,710,177.15 Travelling charge 402,232.49 282,834.32 Entertainment expenses 787,815.99 698,307.07 Office allowance 215,231.09 152,914.45 Depreciation cost 762,431.65 705,229.86 Repair charge 86,168.10 72,826.18 Conference expenses 39,284.50 90,456.00 Amortization of low-value consumption 12,638.00 6,300.50 Personnel education fund 127,930.88 145,890.56 Expenses-type taxes 420,288.64 379,707.70 Agency fee 625,473.70 517,246.40 Vehicles charge (operating expenses) 286,423.18 238,046.59 Disclosure expenses 190,000.00 194,883.40 Utilities 94,442.82 74,662.61 Amortization of intangible assets 134,855.22 135,595.22 Post and communication charge 177,610.57 193,130.91 Expenses of labor protection appliance 151,758.30 9,500.00 Abroad charges 138,547.40 80,433.50 Leasing expenses 485,387.17 356,873.42 Premium 119,286.95 99,447.25 93 Publicity expenses 99,900.00 134,340.00 Other 255,852.92 251,616.94 Total 13,721,691.25 16,530,420.03 34. Financial expenses In RMB Item Current amount Amount of the period before Interest costs 2,122,987.11 591,719.89 Interest income -3,503,459.03 -130,445.04 Exchange loss 1,856,838.69 202,707.51 Exchange gains -567,204.26 -203,149.91 Service fee expense 335,232.11 151,488.05 Total 244,394.62 612,320.50 35. Asset impairment losses In RMB Item Current amount Amount of the period before I. Bad debt losses -4,266,486.00 -332,079.07 II. Inventory falling price loss 32,367,450.35 Total 28,100,964.35 -332,079.07 36. Non-operating revenue (1) Non-operating revenue In RMB Amount reckoned in current Item Current amount Amount of the period before non-recurring gains/losses Total income from disposal of non-current 1,474,592.70 1,474,592.70 assets Including: income from disposal of fixed 1,474,592.70 1,474,592.70 assets Government subsidies 21,771,200.00 22,401,200.00 Other 46,408.22 1,039,813.97 46,408.22 Total 23,292,200.92 23,441,013.97 1,521,000.92 94 (2) Government subsidy In RMB Amount of the period Item Current amount Note before Fuel subsidies 21,771,200.00 21,771,200.00 Note: 1 Finance discount 600,000.00 30,000.00 Total 21,771,200.00 22,401,200.00 -- Explanation on non-operating revenue Note: 1. In accordance with the document from Shandong Finance Department Lu Cai Jian Zhi [2012] No.: 54 (issued on 11 May 2012): “Notice of Badget Index of Fiscal Subsidies Allocated in Advance for Year of 12012 for Reform of Refined Oil Price” and attached “Allocation Table of Badget Index of Fiscal Subsidies for Reform of Refined Oil Price for year of 2012”, the fuel subsidies RMB 21,771,200.00 for year of 2012 allocated in advance was received by the Company on 13 June 2012. In line with the “Notice of Liquidation Fund of Fiscal Subsidies for Refine Oil Price of 2012” carried out from Ministry of Finance, the fule subsidiay which was received actually was reckoned into the income for first half year of 2013. 37. Non-operating expenditure In RMB Amount reckoned in Amount of the period Item Current amount current non-recurring before gains/losses Total income from disposal of non-current assets 383,366.53 4,779,798.56 Including: losses from disposal of fixed assets 383,366.53 4,779,798.56 383,366.53 Other 4,491,750.18 Total 383,366.53 9,271,548.74 383,366.53 Explanation on non-operating expenditure Losses from disposal of fixed assets mainly due to the expenditure RMB 344,533.53 used facilities sort out 38. Income tax expenses In RMB Item Current amount Amount of the period before Current income taxes that calculated based on taxation laws 28,100.00 660,166.07 and relevant regulations Total 28,100.00 660,166.07 95 39. Calculation of basic Earnings per share (EPS) and diluted Earnings per share (EPS) Item Code Current amount Amount of the period before Net profit attributable to common shareholders of the Company (Ⅰ) P0 23,102,972.94 26,409,180.75 Net profit attributable to common shareholders of the Company P0 21,965,338.55 34,610,915.52 after deducting non-recurring gains and losses (Ⅱ) Total shares at period-begin S0 266,071,320.00 266,071,320.00 Amount of shares increase from public reserve capitalizing or share S1 dividend distribution Amount of shares increase from newly issuing shares or shares Si transfer from debt Amount of shares decrease from repurchased in report period Sj Reducing shares in report period Sk Amount of months in report period M0 6 6 Accumulated months from next month of share increased to Mi period-end Accumulated months from next month of share decreased to Mj period-end Weighted average of common shares issuing outside S 266,071,320.00 266,071,320.00 Basic earnings per share(EPS) (Ⅰ) 0.10 0.09 Basic earnings per share(EPS) (Ⅱ) 0.13 0.08 Current net profit attributable to common shareholders after P1 23,102,972.94 24,609,180.75 adjustment (Ⅰ) Current net profit attributable to common shareholders after P1 21,965,338.55 34,610,915.52 adjustment without non-recurring gains and losses (Ⅱ) Weighted average of common shares increased by warrants, stock option and convertible bonds etc. Diluted weighted average of common shares issuing outside 266,071,320.00 266,071,320.00 Diluted earnings per share(EPS) (Ⅰ) 0.09 0.10 Diluted earnings per share (EPS) (Ⅱ) 0.08 0.13 40. Other consolidated income In RMB 96 Item Current amount Amount of the period before 1. Amount of gains (loss) arising from financial assets available 33,737.59 for sale Subtotal 33,737.59 4. Translation differences of foreign financial sheet 624,046.25 462,193.65 Subtotal 624,046.25 462,193.65 Total 624,046.25 495,931.24 Explanation on other consolidated income 41. Notes of cash flow statement (1) Other cash received related to operating activities In RMB Item Amount Interest income 3,503,459.03 Government subsidies Current account 22,933,544.23 Other 1,548,520.66 Total 27,985,523.92 Explanation on other cash received related to operating activities (2) Other cash paid related to operating activities In RMB Item Amount Current account paid 34,348,814.83 Sales expenses paid in cash 2,145,476.70 Administrative expenses paid in cash 5,928,461.89 Total 42,422,753.42 Explanation on other cash paid related to operating activities (3) Other cash received related to investment activities In RMB Item Amount Insurance indemnity received 33,974,356.00 97 Total 33,974,356.00 Explanation on other cash received related to investment activities (4) Other cash paid related to investment activities In RMB Item Amount Explanation on other cash paid related to investment activities (5) Other cash received related to financing activities In RMB Item Amount Explanation on other cash received related to financing activities (6) Other cash paid related to financing activities In RMB Item Amount Explanation on other cash paid related to financing activities 42. Supplementary information of cash flow statement (1) Supplementary information of cash flow statement In RMB Supplementary information Current Amount Amount of the Previous Period 1. Reconciliation of net profit to cash flows from operating -- -- activities: Net profit 23,085,143.00 26,409,180.75 Add: Provision for impairment of assets 28,100,964.35 -332,079.07 Depreciation of fixed assets, oil assets and productive 11,686,603.28 11,365,741.09 biological assets Amortization of intangible assets 134,855.22 134,855.22 Losses on disposal of fixed assets, intangible assets and 383,366.53 other long-term assets (income is listed with “- ”) Losses on scrapping of fixed assets(income is listed with -1,474,592.70 4,779,798.56 “- ”) 98 Financial expenses(income is listed with “- ”) 2,122,987.11 603,922.77 Decrease in inventories(increase is listed with “-”) -76,106,350.93 30,209,176.48 Decrease in operating receivables(increase is listed with -15,494,978.46 -22,700,176.51 “-”) Increase in operating payables(decrease is listed with “- ”) 6,646,905.40 -8,309,100.48 Net cash flows arising from operating activities -20,915,097.21 42,161,318.81 2. Significant investing and financing activities that do not -- -- involve cash receipts and payments 3. Net changes in cash and cash equivalents -- -- Cash at the end of the year 49,253,990.22 93,146,168.46 Less: Cash at the beginning of the period 28,287,601.46 65,716,267.14 Net increase in cash and cash equivalents 20,966,388.76 27,429,901.32 (2) Composition of cash and cash equivalents In RMB Item Closing amount Opening amount I. Cash 49,253,990.22 28,287,601.46 Including: Cash on hand 409,245.00 562,927.25 Bank deposit paid at any time 47,978,104.97 26,831,911.66 Other monetary funds paid at any time 866,640.25 892,762.55 III. Cash and cash equivalents a period-end 49,253,990.22 28,287,601.46 Explanation on supplementary information of cash flow statement VIII. Related parties and related transaction 1. Parent company of the enterprise Shareholdi Voting ng right proportion proportion Ultimate Code of Related Legal Parent Type of Register Business Registered of parent of parent controller organizati relationshi representat company enterprise place nature capital company company of the on p ive in the in the Company institution Company Company (%) (%) Shandong Controllin State-owne Investment Shandong Jinan Li 1,600,000, 16307316- State-owne g d and 33.07% 33.07% State-owne Shandong Guangqing 000.00 7 d Assets shareholde enterprise manageme d Assets 99 Investment r nt, Investment Holdings manageme Holdings Co., Ltd. nt and Co., Ltd. operation of assets, managed operations, investment advisory Explanation on parent company of the enterprise 2. Subsidiary of the enterprise Full name Legal Shareholdin Voting Code of Type of Type of Register Business Registered of representati g proportion proportion organization subsidiary enterprise place nature capital subsidiary ve (%) (%) institution Shandong Zhonglu Controlling Limited Qingdao Refrigerated 22,5056,00. Fishery Wang Huan 100% 100% 163071233 subsidiary company Shandong transport 00 Shipping Co., Ltd. Habitat Internationa Controlling Limited Refrigerated 12,476,146. Panama Li Wenyi 100% 100% l subsidiary company transport 00 Corporation Shandong Zhonglu Oceanic Controlling Limited Yantai Food 75,593,300. Li Ming 100% 100% 729277389 (Yantai) subsidiary company Shandong processing 00 Foods Co., Ltd. Shandong Zhonglu Controlling Limited Qingdao Chi Ocean 54,000,000. Haiyan 51.85% 51.85% 05341864-6 subsidiary company Shandong Weizhen fishery 00 Oceanic Co., Ltd. 3. Other related party of the Company Other related party Relations with Company Organization code Luxin Investment Holding Company Shareholders with over 5% shares held 73577367-X Limited 100 Explanation on other related party of the Company 4. Account receivable/payable of related parties Account receivable from related party In RMB Period-end Period-begin Item Related party Book balance Bad debt provision Book balance Bad debt provision Shandong Zhonglu Account receivable Oceanic (Yantai) 12,358,600.06 18,849,330.00 Foods Co., Ltd. YAW ADDO FISHERIES Other account receivable 6,122,866.55 6,228,701.46 COMPANY LIMITED Shandong Zhonglu Other account receivable Fishery Shipping Co., 24,714,718.67 24,714,718.67 Ltd. YAW ADDO FISHERIES Long-term receivables 7,051,496.61 5,800,810.98 COMPANY LIMITED Account payable to related party In RMB Item Related party Closing amount Opening amount Shandong Zhonglu Haiyan Other payables 26,799,669.84 1,454,000.00 Oceanic Co., Ltd. Habitat International Other payables 9,685,952.82 7,081,380.40 Corporation IX. Notes to main items in financial statement of parent company 1. Account receivable (1) Account receivable In RMB Closing amount Opening amount Category Book balance Bad debt provision Book balance Bad debt provision Amount Propo Amount Proporti Amount Proporti Amount Proporti 101 rtion on (%) on (%) on (%) (%) Account receivable with bad debt provision accrual by portfolio Portfolio 1:Accounts with major single amount 98.33 17,746,938.87 5,388,338.81 30.36% 22,450,292.12 91.49% 3,600,962.12 16.04% without withdrawal bad % debt provision singly Portfolio 2:Accounts without major single 302,154.28 300,826.71 99.56% 2,089,530.97 8.51% 2,088,203.40 99.94% amount and major risks Subtotal 18,049,093.15 1.67% 5,689,165.52 31.52% 24,539,823.09 100% 5,689,165.52 23.18% Total 18,049,093.15 -- 5,689,165.52 -- 24,539,823.09 -- 5,689,165.52 -- Explanation on category of account receivable Account receivable with major single amount refers to the accounts receivable from clients with over RMB one million (RMB one million included), the Company will withdrawal the bad debt provision by account age while no impairment been found in testing. Account receivable of bad debt provision withdrawal by portfolio refers to the account receivable with major single amount without withdrawal bad debt provision singly and the accounts without major single amount and major risks, the Company will withdrawal bad debt provision by account age while no impairment been found in testing. Account receivable with major single amount and withdrawal bad debt provision single at period-end □Applicable √Not applicable Account receivable with bad debt provision withdrawal by method of account age in portfolio √ Applicable □Not applicable In RMB Closing amount Opening amount Book balance Book balance Account age Proporti Bad debt provision Proporti Bad debt provision Amount Amount on (%) on (%) Within one year Including: -- -- -- -- -- -- Within six 12,358,600.06 68.47% 18,849,330.00 76.81% months 6 months to 1 1,475.08 0.01% 147.51 1,475.08 0.01% 147.51 year Subtotal within one 12,360,075.14 68.48% 147.51 18,850,805.08 76.82% 147.51 year Over three 5,689,018.01 31.52% 5,689,018.01 5,689,018.01 23.18% 5,689,018.01 102 years Over five 5,689,018.01 5,689,018.01 5,689,018.01 23.18% 5,689,018.01 years Total 18,049,093.15 -- 5,689,165.52 24,539,823.09 -- 5,689,165.52 Account receivable with bad debt provision withdrawal by method of percentage of balance in portfolio □Applicable √Not applicable Account receivable withdrawing bad bed provision by other methods in portfolio □Applicable √Not applicable Account receivable with minor single amount but has individual bad debt provision accrual at period-end □Applicable √Not applicable (2) Top five clients in account receivable In RMB Proportion in total Name Relations with Company Amount Aging account receivable (%) Shandong Zhonglu Oceanic (Yantai) Foods Subsidiary 12,358,600.06 Within six months 68.47% Co., Ltd. PANDA Non-related party 3,600,962.12 Over three years 19.95% Haifeng Company Non-related party 430,625.10 Over three years 2.39% Han Xue Non-related party 293,209.20 Over three years 1.62% Wholesale dept. Non-related party 158,154.98 Over three years 0.88% Total -- 16,841,551.46 -- 93.31% 2. Other account receivable (1) Other account receivable In RMB Closing amount Opening amount Book balance Bad debt provision Book balance Bad debt provision Category Propo Propo Propo Propo Amount rtion Amount rtion Amount rtion Amount rtion (%) (%) (%) (%) Other account receivable with bad debt provision accrual by portfolio Portfolio 1:Accounts with 11.34 major single amount without 37,107,173.02 1,819,492.98 39,425,040.13 88.9% 4,472,162.00 % withdrawal bad debt 103 provision singly Portfolio 2:Accounts without 72.75 major single amount and 2,561,937.62 1,966,824.09 4,922,109.97 11.1% 3,580,641.07 % major risks 18.16 Subtotal 39,669,110.64 3,786,317.07 44,347,150.10 100% 8,052,803.07 % Total 39,669,110.64 -- 3,786,317.07 -- 44,347,150.10 -- 8,052,803.07 -- Explanation on category of other account receivable Other account receivable with major single amount refers to the other accounts receivable with over RMB one million (RMB one million included), the Company will withdrawal the bad debt provision by account age while no impairment been found in testing. Other account receivable of bad debt provision withdrawal by portfolio refers to the other account receivable with major single amount without withdrawal bad debt provision singly and the accounts without major single amount and major risks, the Company will withdrawal bad debt provision by account age while no impairment been found in testing Other account receivable with major single amount and withdrawal bad debt provision single at period-end □Applicable √Not applicable Other account receivable with bad debt provision withdrawal by method of account age in portfolio √ Applicable □Not applicable In RMB Closing amount Opening amount Book balance Book balance Account age Proporti Bad debt provision Proporti Bad debt provision Amount Amount on(%) on(%) Within one year Including: -- -- -- -- -- -- Within six 10,733,377.86 27.06% 16,866.00 35,945,539.33 81.05% 250,105.96 months 6 months to 1 25,528,010.29 64.35% 361,728.58 425,084.30 0.96% 42,508.43 year Within one year 36,261,388.15 91.41% 378,594.58 36,370,623.23 82.01% 292,614.39 1-2years 309,053.98 0.7% 92,716.19 Over three years 3,407,722.49 8.59% 3,407,722.49 7,667,472.49 17.29% 7,667,472.49 3-4years 3,050.00 0.01% 3,050.00 Over five years 7,664,672.49 17.28% 7,664,672.49 Total 39,669,110.64 -- 3,786,317.07 44,347,150.10 -- 8,052,803.07 Other account receivable with bad debt provision withdrawal by method of percentage of balance in portfolio □Applicable √Not applicable Withdrawing bad bed provision by other methods in portfolio 104 □Applicable √Not applicable Other account receivable with minor single amount but has individual bad debt provision accrual at period-end □Applicable √Not applicable (2) Other account receivable switch-back or taken back in reporting period In RMB Amount of bad bed Determination basis for provision accrual Reason of switch back Amount switch back or Other account receivable original bad debt accumulatively before or take back taken back reserves switch-back or taken back Followed the Taken back Payment Accounting Standard for 4,266,486.00 4,281,620.00 Business Enterprise Total -- -- 4,266,486.00 -- Accrual of bad debt provision for other account receivable with major single amount or with minor amount but have impairment test independently at period In RMB Account receivable Book balance Bad debt Accrual proportion (%) Reasons Explanation on other account receivable with minor single amount but have major risks after combined with risk characteristic of the credit (3) Top five clients in other account receivable In RMB Proportion in total other Name Relations with Company Amount Aging account receivable (%) Shandong Zhonglu Fishery Shipping Co., Subsidiary 24,714,718.67 Within 1 year 62.3% Ltd. YAW ADDO Subsidiary 6,243,096.46 2-3 years 15.74% Zhoushan Customs Non-related party 4,200,000.00 6 months to 1 year 10.59% Japan Daihatsu Non-related party 288,896.39 Over three years 0.73% Wang Yanle from Staff of the Company 200,865.64 Over three years 0.51% business dept. Total -- 35,647,577.16 -- 89.87% 105 3. Long term equity investment In RMB Explanati on on Sharehold Accrual Voting inconsiste ing of proportio ncy in Provision Increase/ proportio provision Cash Invested Calculatio Investme Opening Closing n in proportio for decrease n in for dividend company n method nt cost balance balance invested n between depreciati change invested impairme in Period company the on company nt in (%) sharehold (%) Period ing and voting South Cost 33,000,00 33,000,00 33,000,00 33,000,00 Securities 0.87% 0.87% method 0.00 0.00 0.00 0.00 Co., Ltd. HABITA T Cost 12,476,14 12,476,14 12,476,14 INTERN 100% 100% method 5.60 5.60 5.60 ATIONA L CORP. Shandong Zhonglu Cost 21,380,32 22,869,51 22,869,51 Fishery 100% 100% method 0.00 3.38 3.38 Shipping Co., Ltd. Shandong Zhonglu Oceanic Cost 32,280,00 55,448,18 55,448,18 74.23% 74.23% (Yantai) method 0.00 5.24 5.24 Foods Co., Ltd. Shandong Zhonglu Cost 28,000,00 1,311,900 26,688,10 28,000,00 Haiyan 51.85% 51.85% method 0.00 .00 0.00 0.00 Oceanic Co., Ltd. 127,136,4 125,105,7 26,688,10 151,793,8 33,000,00 Total -- -- -- -- 65.60 44.22 0.00 44.22 0.00 Explanation on long term equity investment 106 4. Operating revenue and Operating cost (1) Operating revenue In RMB Item Current amount Amount of the period before Main operating revenue 72,545,924.45 74,128,085.09 Other revenue 4,756,262.02 2,841,489.83 Total 77,302,186.47 76,969,574.92 Operating cost 52,558,645.91 63,054,354.15 (2) Main business (by industries) In RMB Current amount Amount of the period before Industries Operating revenue Operating cost Operating revenue Operating cost Oceanic fishing 72,545,924.45 49,783,238.95 73,530,169.59 61,595,950.58 Other 597,915.50 517,939.75 Total 72,545,924.45 49,783,238.95 74,128,085.09 62,113,890.33 (3) Main business (by products) In RMB Current amount Amount of the period before Products Operating revenue Operating cost Operating revenue Operating cost Tuna 72,545,924.45 49,783,238.95 73,530,169.59 61,595,950.58 Other 597,915.50 517,939.75 Total 72,545,924.45 49,783,238.95 74,128,085.09 62,113,890.33 (4) Main business (regions) In RMB Current amount Amount of the period before Regions Operating revenue Operating cost Operating revenue Operating cost Mainland China 38,947,932.45 32,264,212.55 58,557,877.52 49,843,091.61 Taiwan China 33,597,992.00 17,519,026.40 14,972,292.07 11,752,858.97 Ghana 597,915.50 517,939.75 Total 72,545,924.45 49,783,238.95 74,128,085.09 62,113,890.33 107 (5) Top five clients in operating revenue In RMB Proportion in total Clients Total operating revenue operating revenue of the Company (%) No.1 Fengqun Fishery Co., Ltd. 33,597,992.00 43.46% No.2 Ningbo Fengsheng Seafood Co., Ltd. 30,508,182.67 39.47% No.3 Shandong Zhonglu Haiyan Oceanic Co., Ltd. 6,306,644.26 8.16% No.4 Tropical Food Manufacturing (Ningbo) Co., Ltd. 1,221,668.02 1.58% No.5 Fuzhou Jindingwei Food Co., Ltd. 240,314.00 0.31% Total 71,874,800.95 92.98% Explanation on operating revenue 5. Supplementary information of cash flow statement In RMB Amount of the Previous Item Current Amount Period 1. Reconciliation of net profit to cash flows from operating activities: -- -- Net profit 17,122,542.88 15,592,503.23 Add: Provision for impairment of assets 28,100,964.35 6,940.30 Depreciation of fixed assets, oil assets and productive biological 6,705,488.08 5,517,259.93 assets Amortization of intangible assets 16,646.70 16,646.70 Losses on disposal of fixed assets, intangible assets and other -1,470,292.70 4,779,798.56 long-term assets (income is listed with “- ”) Financial expenses(income is listed with “- ”) 1,730,237.32 16,051.20 Decrease in inventories(increase is listed with “-”) -64,412,798.17 961,402.57 Decrease in operating receivables(increase is listed with “-”) -5,290,079.93 -8,170,470.75 Increase in operating payables(decrease is listed with “- ”) 13,655,850.20 55,444,506.44 Net cash flows arising from operating activities -3,841,441.27 74,164,638.18 2. Significant investing and financing activities that do not involve -- -- cash receipts and payments 3. Net changes in cash and cash equivalents -- -- Cash at the end of the year 26,592,324.84 65,297,639.51 Less: Cash at the beginning of the period 16,467,806.39 24,327,292.06 108 Net increase in cash and cash equivalents 10,124,518.45 40,970,347.45 X. Supplementary Information 1. Current non-recurring gains/losses In RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the 1,091,226.17 write-off that accrued for impairment of assets) Other non-operating income and expenditure except for the 46,408.22 aforementioned items Total 1,137,634.39 -- Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, explain reasons □Applicable √Not applicable 2. ROE and Earnings per share (EPS) In RMB Earnings per share(EPS) Weighted average rate of Net profit in Period Basic earnings per Diluted earnings per ROE (%) share(EPS) share(EPS) Net profit attributable to common shareholders 4.73% 0.09 0.09 of Company Net profit attributable to common shareholders of Company after deducting non-recurring 4.5% 0.08 0.08 gains/losses 109 Section IX. Documents available for reference I. Text of semi-annual report with signature of the legal representative; II. Financial statement of the Company with signature and seal from the person in charge of the Company, person in charge of the accounting works and person in charge of accounting; III. Original text of all documents of the Company as well as manuscript of the announcement that disclosed on website appointed by CSRC. Shandong Zhonglu Oceanic Fisheries Co., Ltd August 8, 2013 110