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Shandong Zhonglu Oceanic Fisheries Co., Ltd.

Annual Report for Year of 2015

March 2016

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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.

Li Wenyi, Principal of the Company, Zhang Weiping, person in charge of

accounting works and Lei Lixin, person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of 2015 Annual

Report is authentic, accurate and complete.

All directors are attended the Board Meeting for report deliberation.

China Securities Journal, Hong Kong Commercial Daily and Juchao Website

(www.cninfo.com.cn) are the media for information disclosure appointed by the

Company, all information under the name of the Company disclosed on the

above said media shall prevail, and Investors are advised to exercise caution of

investment risks.

The Company has no plans of cash dividend distributed, no bonus shares and

has no share converted from capital reserve either.

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Contents

\l - _Toc300000084Section I Important Notice, Contents and Paraphrase ......................................... 2

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

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

Section IV Discussion and Analysis by the Management Team ................................................. 12

Section V Important Events .......................................................................................................... 26

Section VI Changes in shares and particular about shareholders............................................... 35

Section VII Preferred Stock¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­¡­.42

Section VIII Particulars about Directors, Supervisors,Senior Executives and Employees ...... 43

Section IX Corporate Governance ................................................................................................. 50

Section X Financial Report ............................................................................................................. 56

Section XI Documents available for reference ............................................................................ 123

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Paraphrase

Items Refers to Contents

¡°The Company¡± or ¡°Company¡± Refers to Shandong Zhonglu Oceanic Fisheries Co., Ltd.

¡°Shandong State-owned Assets Investment¡± Refers to Shandong State-owned Assets Investment Holding Company Limited

¡±Luxin Group¡± Refers to Shandong Luxin Investment Holding Company Limited

State-owned Assets Supervision and Administration Commission of

¡°SASACP¡± Refers to

Shandong Provincial Government

¡°CSRC¡± Refers to China Securities Regulatory Commission

¡°Shandong SRB¡± Refers to CSRC, Shandong Securities Regulatory Bureau

¡°The report¡± Refers to Annual Report for 2015 compiled by the Company

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Section II Company Profile and Main Finnaical Indexes

I. Company information

Short form of the stock Zhonglu-B Stock code 200992

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾

Chinese)

Short form of the Company

ÖгԶÑó

(in Chinese)

Foreign name of the

Shandong Zhonglu Oceanic Fisheries Company Limited

Company(if applicable)

Short form of foreign name of

ZLYY

the Company(if applicable)

Legal representative Li Wenyi

Registrations add. No. 43 Heping Rd. Jinan City, Shandong Province

Code for registrations add 250014

Offices add. No. 43 Heping Rd. Jinan City, Shandong Province

Codes for office add. 250014

Company website http://www.zofco.cn/

Email zlzqb@163.com

II. Person/Way to contact

Secretary of the Board Rep. of security affairs

Name Li Ming Li Ying

No. 43 Heping Rd. Jinan City, Shandong No. 43 Heping Rd. Jinan City, Shandong

Contacts add.

Province Province

Tel. 0531-86553278 0531-86553276

Fax. 0531-86552906 0531-86552906

Email zlzqb@163.com zlzqb@163.com

III. Information disclosure and preparation place

In China: China Securities Journal; overseas: Hong Kong Commercial

Newspaper appointed for information disclosure

Daily

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Website for annual report publish appointed by CSRC http//www.cninfo.com.cn

Preparation place for annual report Office of the Board

IV. Registration changes of the Company

Organization code 863043102

Changes of main business since listing (if

No change.

applicable)

Previous changes for controlling

No change.

shareholders (if applicable)

V. Other relevant information

CPA engaged by the Company

Name of CPA PKF Daxin Certified Public Accountants LLP

Offices add. for CPA 15/F College International Building, No.1 Zhichun Rd., Haidian District, Beijing

Signing Accountants He Zheng; Wu Zhixing

Sponsor engaged by the Company for performing continuous supervision duties in reporting period

¡õ Applicable ¡Ì Not applicable

Financial consultant engaged by the Company for performing continuous supervision duties in reporting period

¡õ Applicable ¡Ì Not applicable

VI. 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

¡Ì Yes ¡õNo

Changes over

2014 2013

last year

2015

Before the After the After the Before the After the

adjustment adjustment adjustment adjustment adjustment

Operating income (RMB) 723,723,003.05 598,380,696.83 598,380,696.83 20.95% 554,246,686.92 554,246,686.92

Net profit attributable to

shareholders of the listed 12,141,360.21 15,367,992.51 15,367,992.51 -21.00% 43,224,675.00 43,239,025.11

company(RMB)

Net profit attributable to

shareholders of the listed

company after deducting 14,060,740.19 10,460,455.75 10,460,455.75 34.42% 39,458,643.30 39,472,993.41

non-recurring gains and

losses(RMB)

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Net cash flow arising from

55,443,390.22 65,320,481.37 65,320,481.37 -15.12% 20,591,144.79 20,591,144.79

operating activities(RMB)

Basic earnings per share

0.05 0.06 0.06 -16.67% 0.16 0.16

(RMB/Share)

Diluted earnings per share

0.05 0.06 0.06 -16.67% 0.16 0.16

(RMB/Share)

Weighted average ROE 2.16% 2.81% 2.81% -0.65% 7.91% 8.33%

Changes over

End of 2014 End of 2013

end of last year

End of 2015

Before the After the After the Before the After the

adjustment adjustment adjustment adjustment adjustment

Total assets (RMB) 798,232,793.11 797,490,171.48 797,490,171.48 0.09% 737,318,072.70 737,318,072.70

Net assets attributable to

shareholder of listed company 565,708,222.79 554,900,782.17 554,900,782.17 1.95% 540,850,737.98 539,538,122.29

(RMB)

Cause for changes in accounting policies and conditions of accounting error correction

VII. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

¡õ Applicable ¡Ì Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International

Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.

2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

¡õ Applicable ¡Ì Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or

Chinese GAAP (Generally Accepted Accounting Principles) in the period.

VIII. Quarterly main financial index

In RMB

First quarter Second quarter Third quarter Fourth quarter

Operating income 162,535,738.67 192,151,980.47 190,417,369.75 178,617,914.16

Net profit attributable to

-4,419,867.02 -6,504,040.97 29,265,431.17 -6,200,162.97

shareholders of the listed company

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Net profit attributable to

shareholders of the listed company

-4,629,419.39 -4,825,473.56 28,918,186.37 -5,402,553.23

after deducting non-recurring gains

and losses

Net cash flow arising from

-19,489,172.23 22,745,912.53 38,624,826.58 13,561,823.34

operating activities

Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial

index disclosed in the company¡¯s quarterly report and semi-annual report

¡õYes ¡Ì No

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

¡ÌApplicable ¡õNot applicable

In RMB

Item Amount in 2015 Amount in 2014 Amount in 2013 Note

Gains/losses from the disposal of

non-current asset (including the write-off -4,260,148.37 -303,324.40 1,085,253.47

that accrued for impairment of assets)

Governmental subsidy reckoned into current

gains/losses (not including the subsidy

enjoyed in quota or ration according to 2,021,471.48 2,566,585.48 2,818,603.46

national standards, which are closely

relevant to enterprise¡¯s business)

Other non-operating income and expenditure

82,182.68 2,787,770.58 -136,634.36

except for the aforementioned items

Less: impact on income tax 130,889.73 1,190.87

Impact on minority¡¯s equity (after-tax) -237,114.23 12,605.17

Total -1,919,379.98 4,907,536.76 3,766,031.70 --

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

¡ÌApplicable ¡õNot applicable

Item Amount (RMB) Reason

Fuel subsidies reckoned into

The subsidy enjoyed in quota or ration according to national standards,

current gains/losses listed in 40,856,800.00

which are closely relevant to enterprise¡¯s business

recurrent gains/losses

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Section III Summary of Company Business

I. Main businesses of the company in the reporting period

Shandong Zhonglu Oceanic Fisheries Co., Ltd. is a comprehensive fishery enterprise integrated with ocean-going

fishing, ocean refrigerated transport, and refrigeration, processing and trading of aquatic products, its main

businesses involve all major aspects of the industry chain.

(I) Business introduction

1. Ocean-going fishing

During the reporting period, the company has owned a total of 18 vessels for ocean-going fishing, including 2

large-scale tuna seiners, 14 large ultra-low temperature tuna long liners, and 2 medium-sized trawlers, which have

been respectively working in the western-central Pacific Ocean, Indian Ocean, and Ghana sea area in the Atlantic

Ocean. During the reporting period, the pattern of world's tuna resources have been changing, some fishery

resources decline sharply, the company has adhered to the principle of combining deploying and retracting,

operated scientifically, deployed reasonably, and positively implemented offshore production based on the fishing

characteristics and the actual situation of offshore production. As for the long-line fishing, the company became

more familiar with the distribution of the fishing waters along with the continuous exploration and in-depth

development to the Indian Ocean, the company also broken the routine, innovated boldly, and endeavored to

enhance the catch yield, therefore the ultralow temperature catch yield in the Indian Ocean has significantly

increased compared with the same period last year, which turned losses into gains. As for the purse seine fishing,

the company decisively took some measures such as temporary closed fishing and stopping to timely arrange the

remaining days of operation according to the industry environment and development situation. Ghana trawl fishing

production project is better than last year.

2. Refrigerated transport

During the reporting period, the company has 8 ocean cold-storage boats for operation service and has taken

various measures to complete the annual economic indicators. Firstly, stand on the special cold storage freight

markets, expand the navigating area, enhance the transport capacity, and strive to improve the market share. At

present, the company¡¯s large-scale refrigerated transport fleet has a total displacement of over 60,000 tons, the

navigating area has expanded to dozens of countries and regions around the Pacific, Indian Ocean, and Atlantic, the

company has made some achievements in the optimization and upgrade of ocean transportation in recent years, the

core competitiveness of its ocean refrigerated transport fleet has been significantly improved in the international

cold transport market. Secondly, strictly control the cost accounting, and ensure all expenses, especially the

overwhelming expenses are under surveillance all the time. Thirdly, take account of the non-operating income,

especially focus on the exchange rate trend of US dollar against RMB, so as to make foreign exchange settlement

at the appropriate time and greatly increase financial exchange gains. Fourthly, strengthen the risk management and

control, and minimize the risk factor of uncertainty. Fifthly, increase the ship self-repair efforts to achieve the

double harvests of benefits of technology.

3. Refrigeration processing trade

During the reporting period, the company refrigeration processing trade has been developed in two markets and

has made great breakthrough especially in the foreign market. The development has focused on three aspects: the

first is to insist on internal absorption and external introduction, give full play to advantages of industrial clusters,

resist the risks and face the market development together with fishing industry, strengthen efforts to the return

shipping and deep processing of tuna, form a processing industry chain by centering on Zhonglu food, and give a

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real play to the distributing centre as the deep-processing of deep-sea fishing products and cold-chain logistics

base in Shandong Province and the tuna trading center of China, and have far-reaching significance to refine and

strengthen the tuna industry chain. The second is to focus on improving the automation and mechanization of

processing, especially the automation and mechanization of important and key processes so as to increase

productivity, reduce raw material consumption, stabilize product quality, and decrease operating costs. The third is

to expand the processing business, and strengthen the market exploitation.

(II) Industry development

Overall, in 2015, international and domestic economic situation was severe and macroeconomic indicator went

down, and the real economy especially had difficulties in management, and the global offshore fishing continued

downturn. Under the adverse economic and industry environment at home and abroad, the company has made

steady growth and healthy development in other businesses except in purse seine business which encumbered the

entire management efficiency. The company¡¯s relatively complete industrial chain and the reciprocity and

complementation among each sector have played a good role in resisting risks when the development of current

offshore fishing industry is in a downturn.

II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets No major changes in equity assets.

RMB 53,869,400 of fixed assets increased newly in Period, RMB 42,523,100 of which

Fixed assets

transferred from construction in progress.

Intangible assets No major change.

In Period the construction in process (cold storage and refrigeration equipment etc.)

Construction in progress

transferred into fixed assets of RMB 42,523,100.

2. Main overseas assets

¡õ Applicable ¡Ì Not applicable

III. Core competitive-ness analysis

Shandong Zhonglu Oceanic Fisheries Co., Ltd. is the outgoing comprehensive deep-sea fishing enterprise with a

complete industry chain, and also it¡¯s the provincial hydrants, backbone enterprises of deep-sea fishing in

Shandong.

As a comprehensive fishery enterprise, core competitive-ness of the Company mainly shows in follow aspects:

firstly, ocean-going fishing, refrigeration transport, aquatic products frozen processing and trading combined into

the enterprise, main business involved in vary main link of the industry chain, business between vary business

entities are highly associated, owns overall synergy conditions that supply guarantees of operation mode

innovation and for the strategy of reinforce and extend industry chain; Secondly, as one of the first enterprises

engaged in pelagic fishing business, business of the Company begins quite early with high starting point, and

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talents and assets quality quite well. After professional operation for over decades, the Company absorb many

specialized talents with vary field of deep-sea fishery involved. No matter in aspect of ships numbers, gross

tonnage or profitability, current refrigerated transport fleet always leading the way in the country. The Company

owns the biggest ultra-low temperature cold storage and raw food processing factory in China. The tuna trading

center in China and new-established tuna electronic trading platform system strengthen the advantages of fresh

tuna processing and trading ability of the Company. The 1st phase construction of tide refrigerated logistic center,

30,000 tons ultra-low temperature and variable temperature cold storage as well as the supporting facility have

completed and bring into production. The construction only took 4 months from beginning to production; it

pioneered much new technology and creating a domestic cold storage construction pioneer. The construction will

become major rich seam of profit for the on-land business of the Company in future; thirdly, the oceanic fishery

industry of the Company, which is one of the components of country¡¯s maritime strategy and Shandong Blue

Economic Zone Planning, the country has long practiced many preferential policies in aspect of ocean fisheries

development. As the leading enterprise of ocean fishery in Shandong Province, under great supporting policies

from the country and Shandong Province, the Company will faces new development opportunities.

The above mentioned factors were provided a powerful strategic support for the development of the Company; the

Company will make good use of these strategic resources, creating innovative to accelerate the strategic

transformation, and vigorously implement the industrial chain extension projects to upgrade the influence and

completive in deep-sea fishing market in and out of China.

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Section IV Discussion and Analysis by the Management Team

1. Introduction

In 2015, except doing a good job of existing assets, production and management, the company has adhered to the

improvement of quality and benefit, and positively promoted the industrial restructuring and the optimization and

upgrading of assets, but the company¡¯s tuna seine project has encountered many difficulties because of the

economic downturn at home and abroad. Affected by the oversupply of stock in raw materials market, the price of

seine tuna has greatly declined which resulted in the sharp decrease of income and profits, and the increasing

fishing fees also caused the profit decline. The company paid high attention to the above disadvantages, timely

established practical and effective response measures according to the actual situation of each unit so as to ensure

the production and operation activities can be normally and orderly carried out by the annual plan. The Company

realized operation income of RMB 723,723,000, which increased 20.95% over that of last year. Operation cost

amounting as RMB 685,083,500, increased 22.34% over that of last year. Net profit attributable to parent

company amounting as RMB 12, 141, 400, decreased 21% down over that of last year.

II. Main business analysis

1. Introduction

See ¡°I. Introduction¡± in ¡°Discussion and Analysis by the Management Team¡±.

2. Revenue and cost

(1) Constitute of operation revenue

In RMB

2015 2014

Increase/decrease

Ratio in operation Ratio in operation

Amount Amount y-o-y

revenue revenue

Total of operation

723,723,003.05 100% 598,380,696.83 100% 20.95%

revenue

According to industries

Seine tuna fishing 16,648,918.64 2.30% 65,639,553.55 10.97% -74.64%

Longlines tuna

34,820,140.60 4.81% 10,582,561.22 1.77% 229.03%

fishing

Boat rental 92,625,139.80 12.80% 79,278,010.43 13.25% 16.84%

Other deep-sea

15,188,831.26 2.10% 12,155,710.73 2.03% 24.95%

fishing

Aquatic product

546,887,905.48 75.57% 417,460,400.97 69.77% 31.00%

processing

Refrigerator 6,799,773.81 0.94% 2,993,595.14 0.50% 127.14%

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OEM 1,622,094.99 0.22% 2,823,794.98 0.47% -42.56%

House rental 5,070,648.88 0.70% 4,457,963.59 0.75% 13.74%

Waste income and

4,059,549.59 0.56% 2,989,106.22 0.49% 35.81%

others

According to products

Seine tuna fishing 16,648,918.64 2.30% 65,639,553.55 10.97% -74.64%

Longlines tuna

34,820,140.60 4.81% 10,582,561.22 1.77% 229.03%

fishing

Boat rental 92,625,139.80 12.80% 79,278,010.43 13.25% 16.84%

Other deep-sea

15,188,831.26 2.10% 12,155,710.73 2.03% 24.95%

fishing

Aquatic product

546,887,905.48 75.57% 417,460,400.97 69.77% 31.00%

processing

Refrigerator 6,799,773.81 0.94% 2,993,595.14 0.50% 127.14%

OEM 1,622,094.99 0.22% 2,823,794.98 0.47% -42.56%

House rental 5,070,648.88 0.70% 4,457,963.59 0.75% 13.74%

Waste income and

4,059,549.59 0.56% 2,989,106.22 0.49% 35.81%

others

According to region

Japan 247,103,891.96 34.14% 215,165,512.90 35.96% 14.84%

China 145,850,932.92 20.15% 132,596,458.29 22.16% 10.00%

South Korea 48,493,068.93 6.70% 47,082,679.34 7.87% 3.00%

Singapore 13,451,408.35 1.86% 22,011,674.13 3.68% -38.89%

Taiwan 198,229,835.18 27.39% 152,931,390.20 25.56% 29.62%

Ghana 15,188,831.26 2.10% 12,155,710.73 2.03% 24.95%

Other 55,405,034.45 7.66% 16,437,271.24 2.74% 237.07%

(2) About the industries, products, or regions accounting for over 10% of the company¡¯s operating income

or operating profit

¡ÌApplicable ¡õNot applicable

In RMB

Increase/decrease Increase/decrease Increase/decrease

Operating

Operating cost Gross profit ratio of operating of operating cost of gross profit

revenue

revenue y-o-y y-o-y ratio y-o-y

According to industries

Boat rental 92,625,139.80 65,460,761.63 29.33% 16.84% 8.09% 5.72%

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Aquatic product

546,887,905.48 522,103,529.77 4.53% 31.00% 31.67% -0.48%

processing

According to products

Boat rental 92,625,139.80 65,460,761.63 29.33% 16.84% 8.09% 5.72%

Aquatic product

546,887,905.48 522,103,529.77 4.53% 31.00% 31.67% -0.48%

processing

According to region

Japan 247,103,891.96 237,110,214.57 4.04% 14.84% 14.96% -0.10%

China 201,716,992.40 187,336,535.79 7.13% 52.13% 41.52% 6.96%

Taiwan 142,363,775.73 141,229,554.88 0.80% -6.91% 7.03% -12.92%

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on

latest one year¡¯s scope of period-end

¡õ Applicable ¡Ì Not applicable

(3) Whether income from physical sales larger than income from labors or not

¡Ì Yes ¡õ No

Increase/decrease

Industries Item Unit 2015 2014

y-o-y

Sales volume Ton 10,739 14,779 -27.34%

Deep-sea fishing and

Production Ton 10,066 13,382 -24.78%

re-processing

Inventory Ton 2,157 2,830 -23.78%

Aquatic products Sales volume Ton 19,069 12,975 46.97%

processing, Production Ton 22,589 15,450 46.21%

refrigerator and

others Inventory Ton 5,638 1,196 362.88%

Reasons for y-o-y relevant data with over 30% changes

¡ÌApplicable ¡õNot applicable

During this reporting period, the company's subsidiary - Zhonglu Yantai (Food) Co., Ltd. has increased the purchase amount, which

thereby increased the sales volume and stock, the operating income of this subsidiary has increased by 31.19% compared with the

same period last year.

(4) Fulfillment of the company¡¯s signed significant sales contracts up to this reporting period

¡õ Applicable ¡Ì Not applicable

(5) Constitute of operation cost

Industry classification

Industry classification

In RMB

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2015 2014

Industry

Item Ratio in operation Ratio in operation Y-o-y changes

classification Amount Amount

cost cost

Access fishing

Seine tuna fishing 20,856,578.32 0.42% 20,589,446.20 0.33% 1.30%

fee

Seine tuna fishing Raw material 4,855,099.85 0.10% 6,830,606.21 0.11% -28.92%

Seine tuna fishing Fuel power 10,470,056.65 0.21% 20,239,778.62 0.32% -48.27%

Employee

Seine tuna fishing 6,033,513.68 0.12% 7,041,343.63 0.11% -14.31%

compensation

Depreciation

Seine tuna fishing 5,224,397.12 0.11% 4,692,729.67 0.08% 11.33%

charge

Seine tuna fishing Other 1,705,716.68 0.03% 3,001,066.42 0.05% -43.16%

Seine tuna fishing Total 49,145,362.30 1.00% 62,394,970.75 1.00% -21.24%

Longlines tuna Access fishing

726,897.47 2.65% 480,154.62 2.25% 51.39%

fishing fee

Longlines tuna

Raw material 6,918,634.71 25.20% 3,721,200.51 17.41% 85.92%

fishing

Longlines tuna

Fuel power 9,670,281.46 35.23% 9,638,498.28 45.10% 0.33%

fishing

Longlines tuna Employee

5,425,074.90 19.76% 3,598,489.22 16.84% 50.76%

fishing compensation

Longlines tuna Depreciation

2,143,601.95 7.81% 1,463,460.79 6.85% 46.47%

fishing charge

Longlines tuna

Other 2,568,286.75 9.36% 4,000,733.00 18.72% -35.80%

fishing

Longlines tuna

Total 27,452,777.24 100.00% 21,372,225.89 100.00% 28.45%

fishing

Employee

Boat rental 26,416,951.95 40.36% 21,159,116.51 34.94% 24.85%

compensation

Depreciation

Boat rental 11,282,316.84 17.24% 9,297,203.37 15.35% 21.35%

charge

Boat rental Material 9,579,036.06 14.63% 10,864,828.28 17.94% -11.83%

Boat rental Other 5,698,212.12 8.70% 5,665,634.61 9.36% 0.58%

Insurance

Boat rental 3,973,497.81 6.07% 3,445,860.60 5.69% 15.31%

premium

Boat rental Fuel 3,816,461.99 5.83% 4,654,350.62 7.69% -18.00%

Boat rental Repairs fee 3,332,575.32 5.09% 4,689,282.66 7.74% -28.93%

15

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Boat rental Inspection fee 1,361,709.54 2.08% 783,262.60 1.29% 73.85%

Boat rental Total 65,460,761.63 100.00% 60,559,539.26 100.00% 8.09%

Other deep-sea

Fuel power 6,343,893.43 45.94% 7,654,770.42 61.50% -17.12%

fishing

Other deep-sea

Raw material 1,527,842.47 11.06% 927,025.42 7.40% 64.81%

fishing

Other deep-sea

Labor charges 2,490,827.59 18.04% 759,493.38 6.10% 227.96%

fishing

Other deep-sea Depreciation

663,819.70 4.81% 573,632.16 4.60% 15.72%

fishing charge

Other deep-sea

Other 2,781,875.08 20.15% 2,528,961.21 20.30% 10.00%

fishing

Other deep-sea

Total 13,808,258.27 100.00% 12,443,882.59 100.00% 10.96%

fishing

Aquatic product

Direct materials 463,471,303.38 88.77% 350,526,073.58 88.40% 32.22%

processing

Aquatic product

Packaging 10,598,701.65 2.03% 9,199,326.82 2.32% 15.21%

processing

Aquatic product

Labor wage 22,032,768.96 4.22% 16,653,953.72 4.20% 32.30%

processing

Aquatic product

Depreciation 3,393,672.94 0.65% 3,211,833.93 0.81% 5.66%

processing

Aquatic product

Other 22,607,082.84 4.33% 16,931,519.62 4.27% 33.52%

processing

Aquatic product

Total 522,103,529.77 100.00% 396,522,707.67 100.00% 31.67%

processing

Refrigerator Labor wage 668,335.13 15.41% 954,350.98 31.24% -29.97%

Refrigerator Depreciation 1,068,642.28 24.64% 680,937.37 22.29% 56.94%

Refrigerator Fuel power 1,500,175.99 34.59% 709,806.18 23.24% 111.35%

Refrigerator Other 1,099,868.84 25.36% 709,806.18 23.24% 54.95%

Refrigerator Total 4,337,022.24 100.00% 3,054,900.71 100.00% 41.97%

OEM Labor wage 405,587.98 45.87% 738,539.05 47.98% -45.08%

OEM Depreciation 62,513.78 7.07% 105,747.46 6.87% -40.88%

OEM Other 416,110.11 47.06% 694,977.87 45.15% -40.13%

OEM Total 884,211.87 100.00% 1,539,264.38 100.00% -42.56%

House rental Labor charges 64,800.00 3.43% 65,184.85 3.10% -0.59%

House rental Out-of ¨Cpocket 26,743.40 1.41% 29,654.50 1.41% -9.82%

16

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

expenses

Depreciation

House rental 1,218,665.52 64.42% 1,218,665.52 58.00%

charge

House rental Electric charge 269,248.31 14.23% 225,265.47 10.72% 19.52%

House rental Repairs fee etc. 132,332.71 7.00% 396,725.77 18.88% -66.64%

House rental Heating fee 179,814.10 9.51% 165,579.04 7.88% 8.60%

House rental Total 1,891,604.04 100.00% 2,101,075.15 100.00% -9.97%

Note

(6) Whether the changes in the scope of consolidation in Reporting Period

¡õYes ¡Ì No

(7)Major changes or adjustment in business, product or service of the Company in Reporting Period

¡õ Applicable ¡Ì Not applicable

(8) Major sales and main suppliers

Major sales of the Company

Total top five clients in sales (RMB) 404,611,297.04

Proportion in total annual sales volume for top five clients 55.91%

Information of top five clients of the Company

Serial Name Sales (RMB) Proportion in total annual sales

1 F.C.F Fishery Co., Ltd. 122,026,001.51 0.17%

ITOCHU CORPORATION TOKFJ

2 116,873,017.85 0.16%

SECTION

3 WEC FOODS.CO.,LTD 59,318,735.34 0.08%

4 DOHSUI CO.,LTD 56,187,258.68 0.08%

5 Liantai Seafood International Co., LTD 50,206,283.66 0.07%

Total -- 404,611,297.04 0.56%

Other situation of main clients

¡õ Applicable ¡Ì Not applicable

Main suppliers of the Company

Total purchase amount from top five suppliers (RMB) 227,876,551.93

Proportion in total annual purchase amount for top five

36.25%

suppliers

Information of top five suppliers of the Company

Serial Name Purchases (RMB) Proportion in total annual purchase

17

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

1 Yantai Beijing Ocean Fishery Co., ltd. 63,301,245.79 10.07%

2 CNFC Overseas Fishery Co., Ltd. 51,740,393.32 8.23%

3 Shenzhen South Fishery Co., Ltd. 48,201,900.12 7.67%

4 Rongcheng Ocean Fishery Co., ltd. 36,197,071.46 5.76%

5 Haishun International Trade Pte Co., Ltd. 28,435,941.24 4.52%

Total -- 227,876,551.93 36.25%

Other notes of main suppliers of the Company

¡õ Applicable ¡Ì Not applicable

3. Expense

In RMB

2015 2014 Y-o-y changes Note

Sales expense 6,056,111.86 5,421,903.79 11.70%

Mainly because the two seiner of the

Company took the temporary

moratorium measure for part of month,

the related expense during the

moratorium included in administrative

expense. The expense in moratorium

Management expense 51,671,846.22 34,130,669.66 51.39%

period including: RMB 9,458,202.45

of access fishing fee, RMB

3,536,411.36 of amortization of spare

parts, RMB 1,467,230.19 of employee

compensation, and RMB 1,363,619.35

of depreciation charge.

Exchange gains in this reporting period

were 6,930,500 Yuan, a substantial

Financial expense 433,236.30 4,488,063.94 -90.35%

increase compared with 405,600 Yuan

in the previous period.

4. R&D investment

¡õ Applicable ¡Ì Not applicable

5. Cash flow

In RMB

Item 2015 2014 Y-o-y changes

Subtotal of cash in-flow from 856,059,135.23 862,090,672.85 -0.70%

18

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

operation activity

Subtotal of cash out-flow from

800,615,745.01 796,770,191.48 0.48%

operation activity

Net cash flow from operation

55,443,390.22 65,320,481.37 -15.12%

activity

Subtotal of cash in-flow from

444,766.87 767,430.00 -42.04%

investment activity

Subtotal of cash out-flow from

18,051,688.49 85,285,611.79 -78.83%

investment activity

Net cash flow from investment

-17,606,921.62 -84,518,181.79 80.08%

activity

Subtotal of cash in-flow from

101,754,637.69 78,585,422.69 29.48%

financing activity

Subtotal of cash out-flow from

118,798,599.90 63,761,734.62 86.32%

financing activity

Net cash flow from financing

-17,043,962.21 14,823,688.07 -214.98%

activity

Net increased amount of cash

27,272,912.98 -8,208,126.09 -432.27%

and cash equivalent

Main factors of related data¡¯s significant changes on a year-on-year basis

¡ÌApplicable ¡õNot applicable

The reason why the net cash flow from investing activities is greater than the period last year was mainly because

the cash paid for purchasing and establishing fixed assets in current period was less than last year. Net cash flow

from financial activities has decreased by 214.98% compared with the last year, mainly because the cash paid for

repayments of debts in current period was more than last year.

Causes for significant differences between net cash flow from the company¡¯s operating activities and net profit of this year during the

reporting period

¡ÌApplicable ¡õNot applicable

Net cash flow from operating activities is more than net profit, which is main because the accumulated

depreciation and amortization of 35,970,265.23 Yuan in the costs and expenses is non-pocket costs, and interest

expenses of 4,559,606.82 Yuan are cash paid for distribution of dividends, profits or interest payments which are

not cash payment for operating activities.

III. Analysis of the non-main business

¡ÌApplicable ¡õNot applicable

In RMB

Amount Ratio in total profit Note Whether be sustainable

Asset impairment 2,428,525.98 15.65% The inventory decline was No sustainable.

19

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

RMB 1,964,700, bad debt

loss was RMB 306,200, and

fixed assets impairment was

RMB 157,600.

If the fishing vessels can have

normal marine operation and

the national oil subsidy policy

The fuel subsidies was RMB

doesn¡¯t change, the fuel

40,856,800, special funds for

subsidies are sustainable,

Non-operating foreign trade was RMB

43,531,014.39 280.51% special funds for foreign trade

income 1,100,000, and the other was

and economies depend on the

government grand for

project¡¯s age limit of interest

deferred income etc.

subsidy, and deferred income

remains unchanged in within

the age limit of amortization.

RMB 4,170,000 of

non-operating expense was

Non-operating loss on disposal of fixed

4,830,708.60 31.13% No sustainable.

expense assets; and others were

mainly for employee

accident compensation.

IV. Assets and liability

1. Major changes of assets composition

In RMB

End of 2015 End of 2014

Ratio

Ratio in total Ratio in total Notes of major changes

Amount Amount changes

assets assets

Monetary fund 72,428,421.94 9.07% 44,980,211.04 5.64% 3.43%

Account

26,746,955.58 3.35% 25,395,972.27 3.18% 0.17%

receivable

189,084,316.9

Inventory 23.69% 189,737,455.53 23.79% -0.10%

1

Investment real

33,557,057.70 4.20% 34,775,723.22 4.36% -0.16%

estate

429,846,758.4

Fix assets 53.85% 411,596,231.93 51.61% 2.24%

1

Construction in 5,901,575.16 0.74% 22,485,504.14 2.82% -2.08%

20

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

progress

Short-term

46,321,773.62 5.80% 42,316,324.69 5.31% 0.49%

borrowing

Long-term

1,900,000.00 0.24% -0.24%

borrowing

2. Assets and liability measure by fair value

¡õ Applicable ¡Ì Not applicable

V. Investment

1.Overall situation

¡õ Applicable ¡Ì Not applicable

2.The major equity investment obtained in Reporting Period

¡õ Applicable ¡Ì Not applicable

3.The major non-equity investment doing in Reporting Period

¡õ Applicable ¡Ì Not applicable

4. Financial assets investment

(1) Securities investment

¡õ Applicable ¡Ì Not applicable

The company had no securities investment in the reporting period.

(2) Derivative investment

¡õ Applicable ¡Ì Not applicable

The company had no derivative investment in the reporting period.

5. Application of raised proceeds

¡õ Applicable ¡Ì Not applicable

The company had no application of raised proceeds in the reporting period.

21

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

VI. Sales of major assets and equity

1. Sales of major assets

¡õ Applicable ¡Ì Not applicable

The Company had no sales of major assets in the reporting period.

2. Sales of major equity

¡õ Applicable ¡Ì Not applicable

VII. Analysis of main holding company and stock-jointly companies

¡ÌApplicable ¡õNot applicable

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

In RMB

Company Main Register Operating Operating

Type Total assets Net Assets Net profit

name business capital revenue profit

Shandong

Zhonglu

Food 300,254,376. 141,030,977. 559,369,323. 17,465,146.6 17,169,012.7

Oceanic Subsidiary 75,593,300

processing 74 03 87 5 4

(Yantai) Food

Co., Ltd.

Shandong

Zhonglu

Haiyan Marine 157,067,309. 149,636,002. 49,745,349.1 13,202,476.9

Subsidiary 138,731,900 8,993,461.07

Oceanic fishing 08 04 7 7

Fishery Co.,

Ltd.

HABITAT

INTERNATI

Refrigerated 170,998,563. 168,138,067. 64,108,261.7 22,163,545.2 22,163,545.2

ONAL Subsidiary 12,476,146

shipment 25 51 6 5 5

CORPORAT

ION

Shandong

Zhonglu

Refrigerated 33,254,112.1 28,516,878.0

Fishery Subsidiary 22,505,600 843,806.40 -362,383.99 -357,873.99

shipment 7 4

Shipping Co.,

Ltd.

Particular about subsidiaries obtained or disposed in report period

¡õ Applicable ¡Ì Not applicable

Notes of main holding company and stock-jointly companies

22

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

VIII. Structured vehicle controlled by the Company

¡õ Applicable ¡Ì Not applicable

IX. Prospect for future development of the Company

2016 is the first year of "13th Five Year Plan", the company will have more arduous tasks. Under the new situation,

the company will focus on "stability", keep the existing scale, maintain the company¡¯s normal and stable

development, steadily expand the business, complete the annual budget target, hold the short-term and long-term

tasks for the enterprise¡¯s steady and healthy development, continue to deepen the reform and development,

highlight the central task of grasping production, strengthening management, and striving for benefits¡±, strengthen

the production and management, comprehensively expand domestic and foreign markets, pay close attention to

safety management, optimize the hardware and software structure of assets and management, gradually enhance the

core competitiveness, and promote the enterprise¡¯s comprehensive, orderly, coordinated and sustainable

development. Mainly complete the following aspects:

Firstly, take production and management as supports and market development as point of strength, and focus on

offshore fishing. Refrigerated transport needs continue to keep stable development, strive to maintain customer

resources, and ensure the operation quality of fleet; Yantai aquatic product processing cold storage trade have to not

only maintain the present operating conditions, but also optimize and strengthen, develop simultaneously inside

and outside , innovate and make breakthrough, dig the potential overseas markets, expand overseas markets,

strongly expand sales network in mainland market, and achieve new breakthroughs in management efficiency;

offshore fishing production should pay attention to optimal configuration and harmonious development of various

fishing operations, strive to make up its own disadvantages, scientifically distribute, make overall arrangements,

and continuously raise production.

Secondly, focus on optimizing ¡°two¡± structures of hardware and software, and gradually improve the core

competitiveness.

Optimize the management structure, adjust and optimize the functional departments, staff and job responsibilities,

and further improve the management relations; continue to promote the internal control system and management

improvement activities, and strictly implement the management system; adopt the information reporting and

evaluation system, timely grasp the comprehensive operating and management dynamic, and provide effective

basis for enterprise¡¯s development decision; deepen budget management, and strengthen cost management;

practically grasp work style construction, strongly push forward the fine management; further strengthen the talent

team construction, highlight the five links of grasping talent attraction, training, selection, employment and

remuneration, and improve employee probation, appraisal, dismissal management mechanisms; treat the enterprise

cultural construction as an important part of management, and expand the channel, depth and breadth of enterprise

culture propaganda with the help of the company's website and other carriers.

Keep a foothold on optimizing the asset structure, steadily increase investments in vessel replacement,

construction upgrade of processing base and trading center, and development of overseas projects according to the

own features and development requirements of various businesses, optimize and integrate resources, give full play

to the industrial centralized advantages and overall advantages, and enhance the company's market

competitiveness.

Thirdly, take safe production as a guarantee, attach great importance to safety production, always intensify the

"bottom line" consciousness of zero accidents, strengthen the safety education and training, ensure the pertinence

and operability of training contents, and make sure that the personnel in key position can work after training; fully

23

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

implement the responsibility system for production safety, carry out safety and quality inspection activities,

strengthen the hidden danger investigation and management of key places like vessels and workshops, and ensure

there is no dead space; strictly implement the emergency plan for safety and quality accidents and the security

management accountability mechanisms, strengthen the inspection and supervision to safety production, and

increase efforts to safety production responsibility investigation and the income-related assessment to staff.

X. Reception of research, communication and interview

1. In the report period, reception of research, communication and interview

¡ÌApplicable ¡õNot applicable

Time Way Type Basic situation index of investigation

Operation of the Company and no

2015-01-27 Telephone communication Individual

material required

Operation of the Company and no

2015-04-20 Telephone communication Individual

material required

Operation of the Company and no

2015-04-21 Telephone communication Individual

material required

Operation of the Company and no

2015-04-27 Telephone communication Individual

material required

Operation of the Company and no

2015-04-28 Telephone communication Individual

material required

Operation of the Company and no

2015-04-29 Telephone communication Individual

material required

Operation of the Company and no

2015-05-04 Telephone communication Individual

material required

Operation of the Company and no

2015-05-12 Telephone communication Individual

material required

Operation of the Company and no

2015-05-13 Telephone communication Individual

material required

Operation of the Company and no

2015-06-02 Telephone communication Individual

material required

Operation of the Company and no

2015-06-05 Telephone communication Individual

material required

http://www.cninfo.com.cn ¡°records of

2015-06-09 Field research Individual investor relations activities on June 9

2015¡±

Operation of the Company and no

2015-07-24 Telephone communication Individual

material required

Operation of the Company and no

2015-08-11 Telephone communication Individual

material required

2015-08-24 Telephone communication Individual Operation of the Company and no

24

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

material required

Operation of the Company and no

2015-09-10 Telephone communication Individual

material required

Operation of the Company and no

2015-10-29 Telephone communication Individual

material required

Operation of the Company and no

2015-12-16 Telephone communication Individual

material required

Operation of the Company and no

2015-12-27 Telephone communication Individual

material required

Reception (times) 19

Number of hospitality 0

Number of individual reception 19

Number of other reception 0

Disclosed, released or let out major undisclosed

No

information

2. From the end of reporting period to the disclosure date , reception of research, communication and

interview

¡ÌApplicable ¡õNot applicable

Time Way Type Basic situation index of investigation

Operation of the Company and no

2016-01-08 Telephone communication Individual

material required

Reception (times) 1

Number of hospitality 0

Number of individual reception 1

Number of other reception 0

Disclosed, released or let out major undisclosed

No

information

25

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section V. Iimportant Events

I. Profit distribution plan of common stock and capitalizing of common reserves plan

Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during

the Reporting Period

¡õ Applicable ¡Ì Not applicable

Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years

(including the reporting period)

In latest three years, after cover the deficit of previous years, the retained profit at period-end still negative; being deliberated and

approved by the Board and Shareholders¡¯ General Meeting, no profit distributed either. The Company has no plan of cash dividend

distribution, no bonus distributed and capitalizing of common reserves either for year of 2015.

Cash dividend of common stock in latest three years (including the reporting period)

In RMB

Net profit Ratio in net profit

attributable to attributable to

common stock common stock

Year for bonus Amount for cash shareholders of shareholders of Amount for cash Proportion for cash

shares bonus (tax included) listed company in listed company bonus by other ways bonus by other ways

consolidation contained in

statement for bonus consolidation

year statement

2015 0.00 12,141,360.21 0.00% 0.00 0.00%

2014 0.00 15,367,992.51 0.00% 0.00 0.00%

2013 0.00 43,239,025.11 0.00% 0.00 0.00%

The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is

positive but no plan of cash dividend proposed of common stock

¡õ Applicable ¡Ì Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

¡õ Applicable ¡Ì Not applicable

The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for

the year

III. Implementation of commitment

1. Commitments that the company, shareholders, actual controller, offeror, directors, supervisors, senior

management or other related parties have fulfilled during the reporting period and have not yet fulfilled by

the end of reporting period

¡õ Applicable ¡Ì Not applicable

26

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

During the reporting period, there is no commitment that the company, shareholders, actual controller, offeror, directors, supervisors,

senior management or other related parties have fulfilled during the reporting period and have not yet fulfilled by the end of reporting

period.

2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in

forecasting period, explain reasons of reaching the original profit forecast

¡õ Applicable ¡Ì Not applicable

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

¡õ Applicable ¡Ì Not applicable

No non-operational fund occupation from controlling shareholders and its related party in period.

V. Explanation from Board of Directors, Supervisory Committee and Independent Directors

(if applicable) for ¡°Qualified Opinion¡± that issued by CPA

¡õ Applicable ¡Ì Not applicable

VI. Particulars about the changes in aspect of accounting policy, estimates and calculation

method compared with the financial report of last year

¡õ Applicable ¡Ì Not applicable

No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.

VII. Major accounting errors within reporting period that needs retrospective restatement

¡õ Applicable ¡Ì Not applicable

No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.

VIII. Compare with last year¡¯s financial report; explain changes in consolidation statement¡¯s

scope

¡õ Applicable ¡Ì Not applicable

No changes in consolidation statement¡¯s scope for the Company in the period.

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

Accounting firm appointed

Name of domestic accounting firm PKF Daxin Certified Public Accountants LLP

Remuneration for domestic accounting firm (in 10

40

thousand Yuan)

Continuous life of auditing service for domestic

13

accounting firm

Name of domestic CPA He Zheng; Wu Zhixing

Whether re-appointed accounting firms in this period or not

¡õ Yes ¡Ì No

27

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Appointment of internal control auditing accounting firm, financial consultant or sponsor

¡ÌApplicable ¡õNot applicable

Being approved by the Annual Shareholders¡¯ Meeting of 2014, PKF Daxin Certified Public Accountants LLP was engaged by the

Company for auditing CPA of internal control for 2015, RMB 100,000 of remuneration being paid in the period.

X. Particular about suspended and delisting after annual report disclosed

¡õ Applicable ¡Ì Not applicable

XI. Bankruptcy reorganization

¡õ Applicable ¡Ì Not applicable

No bankruptcy reorganization for the Company in reporting period

XII. Significant lawsuits and arbitrations of the Company

¡õApplicable ¡ÌNot applicable

No significant lawsuits and arbitrations occurred in the reporting period

XIII. Penalty and rectification

¡õ Applicable ¡Ì Not applicable

No penalty and rectification for the Company in reporting period.

XIV Integrity of the company and its controlling shareholders and actual controllers

¡ÌApplicable ¡õNot applicable

The company and its controlling shareholders and actual controllers do not have a relatively large amount of due existing debt with

court's effective judgments.

XV Implementation of the company¡¯s stock incentive plan, employee stock ownership plan or

other employee incentives

¡õ Applicable ¡Ì Not applicable

During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives

that have not been implemented.

XVI. Material related transactions

1. Related transaction with daily operation concerned

¡õ Applicable ¡Ì Not applicable

No related transaction with daily operation concerned for the Company in reporting period

2. Related transactions by assets acquisition and sold

28

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

¡õ Applicable ¡Ì Not applicable

No related transactions by assets acquisition and sold for the Company in reporting period

3. Main related transactions of mutual investment outside

¡õ Applicable ¡Ì Not applicable

No main related transactions of mutual investment outside for the Company in reporting period

4. Contact of related credit and debt

¡õ Applicable ¡Ì Not applicable

No contact of related credit and debt for the Company in reporting period

5. Other related transactions

¡ÌApplicable ¡õNot applicable

On May 20, 2015, the company¡¯s 2014 Annual General Meeting has deliberated that the company would invest 8

ships in Shandong Zhonglu Oceanic Fisheries Co., Ltd. to increase capital and enlarge shares, the assessed value

of the invested ships was 85,409,800 Yuan. Refer to the assessed value of the company shareholders¡¯ total equity

value, this in kind capital increase should be calculated by registered capital of 1.008 Yuan per Yuan, 84,731,900

Yuan would be included in the paid-up capital, 677,900 Yuan would be included in the capital reserve. After the

capital increase, the registered capital of Shandong Zhonglu Oceanic Fisheries Co., Ltd. would account for

81.26%, and the registered capital of Shandong State-owned Assets Investment Holdings Co., Ltd. would account

for18.74%.

Website for temporary disclosure of the major connected transaction

Announcement Date of disclosure Website for disclosure

Capital increase for subsidiaries and Related

2015-04-29 http//www.cninfo.com.cn

Transactions

Supplement announcement on connected

2015-05-04 http//www.cninfo.com.cn

transactions

XVII. Major contract and implantation

1. Trusteeship, contract and leasing

(1) Trusteeship

¡õ Applicable ¡Ì Not applicable

No trusteeship for the Company in reporting period

(2) Contract

¡õ Applicable ¡Ì Not applicable

No contract for the Company in reporting period

(3) Leasing

¡õ Applicable ¡Ì Not applicable

No leasing for the Company in reporting period

29

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

2. Major guarantee

¡õ Applicable ¡Ì Not applicable

No guarantee for the Company in reporting period

3. Entrust others to cash asset management

(1) Trust financing

¡ÌApplicable ¡õNot applicable

In ten thousand Yuan

Impairme Gains/l

nt osses

Is a Amount Determin Principal Actual

actuall

related for trust e way for actually provision Anticipat gains/loss

Trustee Kinds Start Date Expiry (if y

transactio financing remunerat recover in ed income es in

recover

n or not ion the period applicable Period

) in

Period

Preservati Accordin

on 2015-01- 2015-03- g to the

CMB No 200 200 1.24 1.24 1.24

financial 20 18 agreemen

products t

Preservati Accordin

on 2015-01- 2015-03- g to the

CMB No 200 200 1.42 1.42 1.42

financial 20 27 agreemen

products t

Preservati Accordin

on 2015-01- 2015-03- g to the

CMB No 200 200 1.42 1.42 1.42

financial 20 27 agreemen

products t

Preservati Accordin

on 2015-01- 2015-05- g to the

CMB No 200 200 2.67 2.67 2.67

financial 20 25 agreemen

products t

Preservati Accordin

on 2015-01- 2015-05- g to the

CMB No 200 200 2.67 2.67 2.67

financial 20 25 agreemen

products t

Preservati Accordin

2015-01- 2015-12-

CMB No on 200 g to the 200 6.47 6.47 6.47

20 28

financial agreemen

30

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

products t

Preservati Accordin

on 2015-07- 2015-11-1 g to the

CMB No 500 500 7.52 7.52 7.52

financial 10 6 agreemen

products t

Preservati Accordin

on 2015-07- 2015-11-1 g to the

CMB No 500 500 7.52 7.52 7.52

financial 10 6 agreemen

products t

Preservati Accordin

on 2015-07- 2015-07- g to the

CMB No 500 500 0.45 0.45 0.45

financial 10 17 agreemen

products t

Preservati Accordin

on 2015-07- 2015-07- g to the

CMB No 500 500 0.45 0.45 0.45

financial 10 17 agreemen

products t

Preservati Accordin

on 2015-08- 2015-12- g to the

CMB No 500 500 5.94 5.94 5.94

financial 03 08 agreemen

products t

Preservati Accordin

on 2015-08- 2015-12- g to the

CMB No 500 500 5.94 5.94 5.94

financial 03 08 agreemen

products t

Total 4,200 -- -- -- 4,200 43.71 43.71 --

Capital resources Owned fund of the Company

Accumulated overdue

0

uncollected principal and interest

Lawsuit involved (if applicable) Not applicable

Disclosure date for the notice of

approval by the Board (if

applicable)

Disclosure date for the notice of

approval by Shareholders¡¯

General Meeting (if applicable)

Whether there is the trust On the condition of ensuring the company's working capital and money used for projects, the

financing in the future company shall continue to entrust the banks for breakeven financial services.

(2) Entrusted loans

¡õ Applicable ¡Ì Not applicable

31

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

The company had no entrusted loans in the reporting period.

4. Other material contracts

¡õ Applicable ¡Ì Not applicable

No other material contracts for the Company in reporting period

XVIII. Explanation on other significant events

¡ÌApplicable ¡õNot applicable

Name The Press for disclosure Date of disclosed Internet website and retrieval path for

disclosed information

Performance pre-notice for year of Hong Kong Commercial Daily 2015-1-30 http//www.cninfo.com.cn

2014 China Securities Journal

Resolution Notice of 10th Meeting of Hong Kong Commercial Daily 2015-3-6 http//www.cninfo.com.cn

th

5 Session of the Board China Securities Journal

Resolution Notice of 8th Meeting of 5th Hong Kong Commercial Daily 2015-3-6 http//www.cninfo.com.cn

Session of the Board China Securities Journal

Summary of Annual Report for year of Hong Kong Commercial Daily 2015-3-6 http//www.cninfo.com.cn

2014 China Securities Journal

Resignation of the Secretary of the Hong Kong Commercial Daily 2015-3-17 http//www.cninfo.com.cn

Board China Securities Journal

Performance pre-notice of Third Hong Kong Commercial Daily 2015-4-14 http//www.cninfo.com.cn

Quarterly for year of 2015 China Securities Journal

Resolution Notice of 11st Meeting of 5th Hong Kong Commercial Daily 2015-4-29 http//www.cninfo.com.cn

Session of the Board China Securities Journal

Notice of Related Transaction Hong Kong Commercial Daily 2015-4-29 http//www.cninfo.com.cn

China Securities Journal

Summary of First Quarterly Report for Hong Kong Commercial Daily 2015-4-29 http//www.cninfo.com.cn

year of 2015 China Securities Journal

Declaration of the Independent Director Hong Kong Commercial Daily 2015-4-29 http//www.cninfo.com.cn

Nominator China Securities Journal

Declaration of the Independent Director Hong Kong Commercial Daily 2015-4-29 http//www.cninfo.com.cn

Candidate China Securities Journal

Announcement of Holding the AGM of Hong Kong Commercial Daily 2015-4-29 http//www.cninfo.com.cn

2014 China Securities Journal

Supplement Announcement of Related Hong Kong Commercial Daily 2015-5-4 http//www.cninfo.com.cn

Transactions China Securities Journal

Prompted Notice of AGM Hong Kong Commercial Daily 2015-5-16 http//www.cninfo.com.cn

China Securities Journal

Announcement of Abnormal Price Hong Kong Commercial Daily 2015-5-19 http//www.cninfo.com.cn

Movement China Securities Journal

32

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Resolution of the AGM of 2014 Hong Kong Commercial Daily 2015-5-21 http//www.cninfo.com.cn

China Securities Journal

Capital Increased Completion for Hong Kong Commercial Daily 2015-6-2 http//www.cninfo.com.cn

Subsidiary China Securities Journal

Announcement of Abnormal Price Hong Kong Commercial Daily 2015-6-3 http//www.cninfo.com.cn

Movement China Securities Journal

Performance pre-notice of half of 2015 Hong Kong Commercial Daily 2015-7-11 http//www.cninfo.com.cn

China Securities Journal

Announcement of Price stability Hong Kong Commercial Daily 2015-7-11 http//www.cninfo.com.cn

China Securities Journal

Resolution Notice of 12nd Meeting of Hong Kong Commercial Daily 2015-8-22 http//www.cninfo.com.cn

th

5 Session of the Board China Securities Journal

Performance pre-notice of Third Hong Kong Commercial Daily 2015-10-14 http//www.cninfo.com.cn

Quarterly for year of 2015 China Securities Journal

Summary of Third Quarterly Report for Hong Kong Commercial Daily 2015-10-30 http//www.cninfo.com.cn

year of 2015 China Securities Journal

XIX. Significant event of subsidiary of the Company

¡ÌApplicable ¡õNot applicable

On May 20, 2015, the company¡¯s 2014 Annual General Meeting has deliberated that the company would invest 8

ships in Shandong Zhonglu Oceanic Fisheries Co., Ltd. to increase capital and enlarge shares, on May 28, 2015,

Zhonglu Haiyan Company has completed the changes of industrial and commercial registration, and obtained the

business license issued by Administration for Industry & Commerce of Qingdao, and the registered capital has

increased from 54 million Yuan to 138,731,980 Yuan. The relevant announcement was published on "China

Securities Journal", "Hong Kong Commercial Daily" and http // www.cninfo.com.cn on June 2, 2015.

XX. Social responsibility

¡ÌApplicable ¡õNot applicable

The Company always puts socially responsible and public welfare undertakings as one of the core value for the enterprise, and

exercise corporate social responsibility through respecting employees¡¯ rights, prevent and control pollution, promoting sustainable

use of resources, focusing and participating public welfare.

The listed company and subsidiaries is in the range of heavy pollution industry that regulated by State environment protection

departments

¡õYes ¡Ì No ¡õNot applicable

Whether the social responsibility report released

¡õYes ¡Ì No

XXI. Issuance of corporate bonds

Whether the company has corporate bonds that have been publicly issued and listed on the stock exchange, and

33

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

not yet due or due but not fully cashed on the approval date of annual report

No

34

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in shares

1. Changes in shares

In Share

Before changes (+,-) After changes

Capitaliza

tion of

Amount Ratio New issue Bonus Other Subtotal Amount Ratio

public

reserve

128,071,3 128,071,3

I. Unlisted shares 48.13% 48.13%

20 20

128,071,3 128,071,3

1. Sponsor shares 48.13% 48.13%

20 20

Including: State-owned 127,811,3

48.04% 48.04%

shares 20

Domestic corporate

260,000 0.10% 260,000 0.10%

shares

138,000,0 138,000,0

II. Listed shares

00 00

2. Domestically listed 138,000,0 138,000,0

51.87% 51.87%

foreign shares 00 00

266,071,3 266,071,3

III. Total shares 100.00% 100.00%

20 20

Reasons for share changed

¡õ Applicable ¡Ì Not applicable

Approval of share changed

¡õ Applicable ¡Ì Not applicable

Ownership transfer of share changed

¡õ Applicable ¡Ì Not applicable

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common

shareholders of Company in latest year and period

¡õ Applicable ¡Ì Not applicable

Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators

¡õ Applicable ¡Ì Not applicable

35

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

2. Changes of restricted shares

¡õ Applicable ¡Ì Not applicable

II. Securities issue and listing

1. Security offering (without preferred stock) in Reporting Period

¡õ Applicable ¡Ì Not applicable

2. Changes of total shares and shareholders structure as well as explanation on changes of assets and

liability structure

¡õ Applicable ¡Ì Not applicable

3. Existing internal staff shares

¡õ Applicable ¡Ì Not applicable

III. Shareholders and actual controller

1. Number of shareholders of the Company and share-holding

In Share

Total preference

Total preference shareholders

Total common shareholders with voting

Total common

stock with voting rights recovered

stock

shareholders at rights recovered at end of last

shareholders in 11,586 11,763 0 0

end of last month at end of month before

reporting

before annual reporting period annual report

period-end

report disclosed (if applicable) disclosed (if

(found in note8) applicable)

(found in note8)

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

Total Amount Number of shares pledged/frozen

Amount

sharehol of

Proportio Changes of listed

Full name of Nature of n of ders at unlisted

in report outstandi

Shareholders shareholder shares the end outstandi State of share Amount

held period ng shares

of report ng shares

held

period held

Shandong State-owned 88,000,0 88,000,0

33.07%

State-owned legal person 00 00

36

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Assets Investment

Holding Co., Ltd

Shandong Luxin

Investment State-owned 37,731,3 37,731,3

14.18%

Holding Group legal person 20 20

Co., Ltd

Shenwan

Foreign legal 9,346,18

Hongyuan (H.K.) 3.51% 9,346,186

person 6

Limited

GUOTAI JUNAN

SECURITIES(H Foreign legal 7,092,03

2.67% 7,092,032

ONGKONG) person 2

LIMITED

CHINA INT'L

CAPITAL CORP

Foreign legal 5,939,68

HONG KONG 2.23% 5,939,682

person 2

SECURITIES

LTD

Foreign nature 5,760,42

Chen Tianming 2.16% 5,760,427

person 7

Haitong

International

Securities Foreign legal 2,197,90

0.83% 2,197,900

Company person 0

Limited-Account

Client

China Everbright

Foreign legal 2,142,56

Securities (H.K.) 0.81% 2,142,561

person 1

Co., Ltd.

China National

Heavy Duty State-owned 1,950,00 1,950,00

0.73%

Truck Group legal person 0 0

Jinan Truck LLC

Foreign nature 1,209,50

Wang Dongsheng 0.46% 1,209,502

person 2

Strategy investors or general legal

person becomes top 10 shareholders

Not applicable

due to rights issued (if applicable)

(see note3)

Explanation on associated Shandong State-owned Assets Investment Holding Co., Ltd and Shandong Luxin Investment

relationship among the aforesaid Holding Group Co., Ltd are provincial state-owned enterprises under the same stock controlling of

37

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

shareholders Shandong Provincial Commission; China National Heavy Duty Truck Group Jinan Truck LLC

is the sponsor shareholder of the Company and the above mentioned shareholders have no

associated relationships or not belong to consistent actors regulated by Management

Regulation of Information Disclosure on Change of Shareholding for Listed Companies.

Rests of the shareholders are the domestically listed foreign shareholders, and t he Company

is unknown whether there exists associated relationship or belongs to consistent actor

regulated by ¡°management method for acquisition of listed company¡± among the above said

shareholders.

Shareholding of top 10 circulated shareholders

Type of shares

Shareholders Amount of listed shares held at end of the Period

Type Amount

Domestically

Shenwan Hongyuan (H.K.) Limited 9,346,186 listed foreign 9,346,186

shares

GUOTAI JUNAN Domestically

SECURITIES(HONGKONG) 7,092,032 listed foreign 7,092,032

LIMITED shares

Domestically

CHINA INT'L CAPITAL CORP

5,939,682 listed foreign 5,939,682

HONG KONG SECURITIES LTD

shares

Domestically

Chen Tianming 5,760,427 listed foreign 5,760,427

shares

Domestically

Haitong International Securities

2,197,900 listed foreign 2,197,900

Company Limited-Account Client

shares

Domestically

China Everbright Securities (H.K.)

2,142,561 listed foreign 2,142,561

Co., Ltd.

shares

Domestically

Wang Dongsheng 1,209,502 listed foreign 1,209,502

shares

Domestically

Zhang Xiufang 1,108,554 listed foreign 1,108,554

shares

Domestically

Qin Jun 1,083,220 listed foreign 1,083,220

shares

Domestically

Yi Ying 1,078,200 1,078,200

listed foreign

38

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

shares

Expiation on associated relationship

or consistent actors within the top 10 The Company is unknown whether there exists associated relationship or belongs to

un-restrict shareholders and between consistent actor regulated by ¡°management method for acquisition of listed company¡± among

top 10 un-restrict shareholders and the above said shareholders.

top 10 shareholders

Explanation on shareholders

involving margin business about top

ten common stock shareholders with Not applicable

un-restrict shares held(if applicable)

(see note4)

Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back

agreement dealing in reporting period

¡õ Yes ¡Ì No

The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no

buy-back agreement dealing in reporting period.

2. Controlling shareholders

Nature of controlling shareholders: local state-owned holding

Type of controlling shareholders: legal person

Legal person/person

Controlling shareholders Date of foundation Organization code Main operation business

in charge of the unit

Management of

state-owned property right

and disposal of

non-performing assets that

authorized by SDGZK;

Shandong State-owned Assets

Li Guangqing 1994-03-25 16307316-7 investment and

Investment Holding Co., Ltd

management of industry

projects; assets

management and assets

operation; entrust operation

and investment consultant

Equity of other

foreign/domestic listed

0.92% of China Merchants Bank; 0.98% of China United Network Communication Limited; 1.49%

company that controlled by

of Guangzhou Pubang Landscape Architecture Co., LTD; 0.69% of By-health Co., LTD; 13.96% of

and have joint-stock from

Zhongtong Bus Co., LTD; 2.25% of Luzheng Futures Co., LTD.

controlling shareholder in

reporting period

Changes of controlling shareholder in reporting period

¡õ Applicable ¡Ì Not applicable

39

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

No changes of controlling shareholder for the Company in reporting period.

3. Actual controller

Nature of actual controller: local state-owned assets management

Type of actual controller:legal person

Legal

Actual controller person/person in Date of foundation Organization code Main operation business

charge of the unit

State-owned Assets Supervision Performing responsibilities of

and Administration Commission investors, monitoring the

of Shandong Provincial Zhang Xinwen 2004-06-18 N/A preserve and increase value for

Government state-owned assets that

supervised etc.

Equity of other

foreign/domestic listed

company that controlled by Not applicable

actual controller in reporting

period

Changes of actual controllers reporting period

¡õ Applicable ¡Ì Not applicable

No changes of actual controllers for the Company in reporting period

Property right and controlling relationship between the actual controller and the Company is as follow:

State-owned Assets Supervision and

Administration Commission of Shandong

70%

Shandong State-owned Assets Investment

Holding Co., Ltd

33.07%

Shandong Zhonglu Oceanic Fisheries Co., Ltd

Actual controller controlling the Company by entrust or other assets management

¡õ Applicable ¡Ì Not applicable

4. Particulars about other legal person shareholders with over 10% shares held

¡ÌApplicable ¡õNot applicable

Legal person shareholder Legal person/person in Date of Register capital Main operation business or

40

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

charge of the unit foundation management activities

Foreign investment

(restricted industries by

laws and regulations

excluding) and

management, investment

consultant (securities and

Shandong Luxin Investment

Ji Binchang 2002-01-31 3,000 million Yuan futures consultant

Holding Group Co., Ltd

excluding), assets

management, trust

operation, capital operation;

guarantee; hotel

management; leasing house

and property management

5. Limitation and reducing the holdings of shares of controlling shareholders, actual

controllers, restructuring side and other commitment subjects

¡õ Applicable ¡Ì Not applicable

41

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section VII. Preferred Stock

¡õ Applicable ¡Ì Not applicable

The Company had no preferred stock in the reporting.

42

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section VIII. Particulars about Directors, Supervisors and Senior

Executives and Employees

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

Increasin Decreasin

Shares

g shares g shares Shares

Start held at Other

Working End date held in held in held at

dated of

Title Sex Age of office period-be changes

Name status office this this period-en

term

term gin (Share)

period period d(Share)

(Share)

(Share) (Share)

Currently 2012-09- 2016-06-

Li Wenyi Chairman M 59 0 0 0 0

in office 18 27

Director,

Song Currently 2007-04- 2016-06-

Deputy M 59 0 0 0 0

Wenjian in office 26 27

GM

Zhang Currently 2011-08- 2016-06-

Director M 48 0 0 0 0

Chunxing in office 26 27

Independ

Hu Leave the 2009-03- 2015-05-

ent M 61 0 0 0 0

Yuanmu office 31 20

director

Independ

Wang Currently 2015-05- 2016-06-

ent M 55 0 0 0 0

Hanmin in office 20 27

director

Independ

Zhong Currently 2010-06- 2016-06-

ent M 48 0 0 0 0

Zhigang in office 10 27

director

Chi Currently 2014-08- 2016-06-

GM M 49 0 0 0 0

Weizhen in office 19 27

Deputy

GM;

Zhou Leave the 2002-09- 2015-03-

Secretary M 60 0 0 0 0

Feng office 16 16

of the

Board

Deputy Currently 2015-04- 2016-06-

Li Ming M 50 0 0 0 0

GM in office 28 27

Zhang Currently 2011-08- 2016-06-

CFO M 60 0 0 0 0

Weiping in office 26 27

Liu Chairman Currently M 50 2013-06- 2016-06- 0 0 0 0

43

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Zhihui of in office 28 27

Superviso

ry

Committe

e

Yang Superviso Currently 2010-06- 2016-06-

M 57 0 0 0 0

Gongmin r in office 10 27

Shang Superviso Currently 2003-10- 2016-06-

F 45 0 0 0 0

Qinghua r in office 23 27

Total -- -- -- -- -- -- 0 0 0 0

II. Changes of directors, supervisors and senior executives

Name Title Type Date Reasons

Independent

Hu Yuanmu Leave the office 2015-05-20 Served for six years and no longer re-election.

director

Deputy GM;

Zhou Feng Secretary of the Dismissal 2015-03-16 Retired.

Board

Independent Appointment and

Wang Hanmin 2015-05-20 General election.

director dismissal

III. Post-holding

Professional background, major working experience and present main responsibilities in Company of directors, supervisors and

senior executive at the present in latest five years

1. Directors

Li Wenyi, member of the CPC with junior college degree. Once served as member of CPC Committee in

Shandong Fishery Group; served as deputy secretary of CPC Committee and GM of the Company; serve as

Director of the Company since July of 1999; he serves as chairman of the Company and secretary of CPC

Committee since September 2012.

Song Wenjian, senior economist with MBA as well as the member of Communist Party and member of CPC

Committee of the Company, he once took the senior business manager of Shandong International Entrustment &

Investment Co., Ltd. Since April 2007, he has been taking the posts of director and deputy general manager of the

Company.

Zhang Chunxing, an accountant with a university degree, member of CPC. He once took the assistant consultant,

deputy researcher and deputy consultant of enterprise reform and restructuring office of State-owned Assets

Supervision and Administration Commission of Shandong Provincial Government; and served as director of

capital operation department of Shandong State-owned Assets Investment Holding Co., Ltd; currently he serves as

director of capital management department of Shandong State-owned Assets Investment Holding Co., Ltd; and he

44

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

serves as director of the Company since August 2011.

Zhong Zhigang, Master of Law, II Lawyer, and he use to being the partner of Grandall (Jinan) Law Firm and the

professional lawyer over the latest five years. He took the position of independent director of the Company since

June 2010.

Wang Hanmin, professor of accounting and accounting (audit) postgraduate tutor in Shandong University of

Finance and Economics, member of Communist Party of China, current vice-president of School of Continuing

Education and director of self-study examination and social examination center of Shandong University of

Finance and Economics,, has served as an independent director of the Company since May 2015.

2. Supervisor

Liu Zhihui, member of the CPC with university degree. He once served as business manager of the capital

operation department of Shandong State-owned Assets Investment Holding Co., Ltd, deputy director of auditing

(disciplinary inspection) department and senior business manager; now he currently serves as the director of

Auditing department (disciplinary inspection dept.) of Shandong State-owned Assets Investment Holding Co., Ltd.

And he serves as chairman of Board of Supervisors of the Company since June 2013.

Yang Gongmin, senior MBA, once took the position of GM of Investment Management Department in Shandong

Luxin Investment Holding Co., Ltd.; He took the position of supervisor of the Company since June 2010.

Shang Qinghua, member of the CPC with university degree, She once took the posts of deputy director of

financial dept. of the Company; now she serves as director of finance dept. of the Company. She serves as

employee supervisor of the Company since October 2003.

3. Senior executives

Chi Weizhen, Master¡¯s degree, an engineer, was member of the CPC and member of the party committee of the

Company. He once served as GM of Haiyan Branch; currently he serves as Director of Shandong Zhonglu Haiyan

Oceanic Co., Ltd. and serves as GM of the Company since August 2014.

Li Ming, an economist, member of the CPC with university degree and member of the party committee of the

Company. He serves as deputy general manager of the Company since April 2007. And he served as deputy

general manager and secretary of the board of director of the Company since April 2015.

Zhang Weiping, an accountant with 3-year college degree. He once served as manager of laws & auditing dept.,

senior business manager and senior business manager of risk management dept. in Luxin Investment Holding

Company Limited. He served as CFO of the Company since August 2011.

Post-holding in shareholder¡¯s unit

¡ÌApplicable ¡õNot applicable

Whether receiving

Start dated of End date of remuneration from

Name Name of shareholder¡¯s units Position

office term office term shareholder¡¯s units

or not

Director of

Zhang

Shandong State-owned Assets Investment assets 2012-02-01 Y

Chunxing

management

45

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

dept.

Director of

Auditing

department

Liu Zhihui Shandong State-owned Assets Investment 2012-11-01 Y

(disciplinary

inspection

dept.)

GM of

investment

Yang Gongmin Luxin Group 2010-02-01 Y

management

dept.

Post-holding in other unit

¡ÌApplicable ¡õNot applicable

Whether

receiving

Start dated of End date of office

Name Name of other units Position remuneration

office term term

from other units

or not

Professor of

Wang Hanmin Shandong University of Finance Y

Accounting

Zhong Zhigang Grandall (Jinan) Law Firm Partner Y

Punishment of securities regulatory authority in recent three years to the company¡¯s current and outgoing directors,

supervisors and senior management during the reporting period

¡õ Applicable ¡Ì Not applicable

IV. Remuneration for directors, supervisors and senior executives

Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives

In accordance with relevant requirement and regulation of ¡°Code of Corporate Governance for Listed Companies¡± from CSRC, the

remuneration plan for directors, supervisors and senior executives of the Company was proposed by remuneration and appraisal

committee of the Board, and being deliberated by 7th meeting of 3rd session of the Board held on 14 February 2008 and approved in

Annual Shareholders¡¯ General Meeting of 2007 held on 18 March 2008.

Remuneration for directors, supervisors and senior executives in reporting period

In 10 thousand Yuan

Whether

Total

remuneration

Post-holding remuneration

Name Title Sex Age obtained from

status obtained from the

related party of

Company

the Company

Li Wenyi Chairman M 59 Currently in 47.7 No

46

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

office

Currently in

Song Wenjian Director, GM M 59 38.5 No

office

Currently in

Zhang Chunxing Director M 49 0 Yes

office

Independent

Hu Yuanmu M 61 Leave the office 4 No

director

Independent Currently in

Wang Hanmin M 55 0 No

director office

Independent Currently in

Zhong Zhigang M 48 4 No

director office

Currently in

Chi Weizhen GM M 49 40.1 No

office

Zhou Feng Deputy GM M 60 Leave the office 24.6 No

Deputy GM;

Currently in

Li Ming secretary of the M 50 38.5 No

office

Board

Currently in

Zhang Weiping CFO M 60 38.5 No

office

Chairman of

Currently in

Liu Zhihui Supervisory M 51 0 Yes

office

Committee

Currently in

Yang Gongmin Supervisor M 58 0 Yes

office

Employee Currently in

Shang Qinghua F 45 18.5 No

supervisor office

Total -- -- -- -- 254.4 --

Delegated equity incentive for directors, supervisors and senior executives in reporting period

¡õ Applicable ¡Ì Not applicable

V. Employees of the Company

(I) Ended as reporting period, totally on-job employees of the Company amounting as 1129 people, expenses that

bear by the Company for post-waiting and early retirement employees amounting to 49 people and 270 people

retired.

(II) Professional constitution

Classification of profession Number

Production personnel 950

Sales man 12

47

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Technicians 16

Fianncial personnel 21

Administrative personnel 126

(III) Education background

Classification of education background Number

Bachelor degree or above 62

Junior college 151

Higher school, technical secondary school and 212

middle technical school

Middle school or below 704

(IV) Statistical graph for professional composition and education background:

48

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

(V) Policy of remuneration for employees: the Company formulated a management mechanism of remunerations,

and paying salaries to employees on time.

(VI) Training plan: Exercising multi-style training for senior executives, financial staff and technicians according

to their own situation and working demands

Cost of enterprise salary

The Period

The total number of current employees to receive

1,201

pay (people)

The current total remuneration amount (Yuan) 10,379

The proportion of total remuneration accounting

14.34%

for current operating income

The per capita remuneration amount of senior

35.19

management (Yuan / person)

The per capita remuneration amount of all

8.64

employees (Yuan / person)

49

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section IX. Corporate Governance

I. Basic state of corporate governance

In reporting period, by strictly followed requirement of relevant laws and regulations of ¡°Company Law¡±, ¡°Securities Laws¡±, ¡°Rules

of Corporate Governance for Listed Company¡±, ¡°Standard Operation Guide of Stock Listing in Main Board of Shenzhen Stock

Exchange¡± and related normative documents, the Company constantly improve structure of the corporate governance, and further to

regulated company operation as well as enhancing corporate governance. General Meeting, the Board Meeting and Supervisory

Meeting are convening under the regulations, directors and supervisors are earnestly perform their duties and carry out due diligence.

The Company believes that in the reporting period, there are no difference between actual condition of corporate governance and

relevant requirements of CSRC and ¡°Company Law¡±.

Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for

listed company from CSRC?

¡õYes ¡Ì No

There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance

for listed company from CSRC.

II. Independency of the Company relative to controlling shareholders¡¯ in aspect of businesses,

personnel, assets, institution and finance

The Company¡¯s business, personnel, assets, institution and finance are separated with its shareholders¡¯ and owe independent

self-operation ability.

1. Business independence: production and administrative management are totally separated with controlling shareholders, and no

horizontal competition being found with controlling shareholders;

2. Personnel independence: the Company has an independent HR system and completed system of salary management, and has a

self-governed staff team. Senior executives of GM, deputy GM, financial principal and secretary of the Board are not serves in

controlling shareholders¡¯ unit and other enterprise controlled by shareholders¡¯ unit except for office-holding as director, supervisor,

and all of them are receiving remuneration from the Company. Financial staffs are not taking a part-time in controlling shareholders¡¯

unit and other enterprise controlled by shareholders¡¯ unit.

3. Assets integrity: the Company has completed and separated assets with clear-defined property relations. There are no capital

occupations by controlling shareholders being found and assts of the Company are totally independent of its controlling shareholders.

4. Institutional independence: the Company owes a completed organization structure and separated totally with controlling

shareholders in institution; shareholders¡¯ general meeting, the Board and supervisory committee running independently and has an

independent decision-making ability.

5. Financial independent: the Company owes independent financial department and personnel, has completed and independent

financial calculation system, qualified standardized financial accounting mechanism and has ability to making decisions in aspect of

finance. Open a bank account and levy a tax independently.

III. Horizontal Competition

¡õ Applicable ¡Ì Not applicable

IV. In the report period, the Company held annual shareholders¡¯ general meeting and

extraordinary shareholders¡¯ general meeting

1. Annual Shareholders¡¯ General Meeting in the report period

50

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Ratio of investor

Session of meeting Type Date Date of disclosure Index of disclosure

participation

¡°Annual General

Meeting of 2014¡±

(No.: 2015-016)

Annual General Annual General published on China

48.13% 2015-05-20 2015-05-21

Meeting of 2014 Meeting Securities Journal,

Hong Kong

Commercial Daily

and Juchao Website

Institutional investors

Times presented in shareholders¡¯ general

Name Number of directors

meeting

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

¡õ Applicable ¡Ì Not applicable

V. Responsibility performance of independent directors in report period

1. The attending of independent directors to Board meetings and shareholders¡¯ general meeting

The attending of independent directors

Times of Board

Whether absent

meeting Times of Times of

Name of independent Times of present Times of the Meeting for

supposed to attending by entrusted

director in person Absence the second time

attend in the communication presence

in a row or not

report period

Hu Yuanmu 2 1 1 0 0 No

Zhong Zhigang 4 1 3 0 0 No

Wang Hanmin 2 0 2 0 0 No

Times presented in shareholders¡¯

general meeting by independent 1

directors

Explanation of absent the Board Meeting for the second time in a row

2. Objection for relevant events from independent directors

Whether independent directors come up with objection about company¡¯s relevant matters or not

¡õ Yes ¡Ì No

Independent directors has no objections for relevant events in reporting period

3. Other explanation about responsibility performance of independent directors

Whether the opinions from independent directors have been adopted or not

51

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

¡Ì Yes ¡õ No

Explanation on advice that accepted/not accepted from independent directors

In accordance with relevant rules and requirements from ¡°Company Law¡±, ¡°Guiding Opinions for Establishment

of Independent Director Mechanism for Listed Company¡± and ¡°Article of Association¡±, independent directors of

the Company is serious to performing the duties given by laws, regulations, article of associations and mechanism

of independent directors; they proactively present the Board Meeting and shareholders¡¯ general meeting, examine

and guild the operation of the Company, kept eyes on normalization of the operation, independently performed

duties with all efforts, propose several professional advice in aspect of the mechanism perfection and routine

operation decisions, furthermore, carried out independent opinions for significant events which plays a necessary

role in perfecting supervisory system and protecting legal interest of the Company and whole shareholders.

VI. Responsibility performance of subordinate special committee of the Board in report

period

(I) Auditing Committee:

1. Conduct a regular meeting

In reporting period, totally four meetings are held by audit committee of the Board, and discuss ¡°Annual Report

2014¡±, ¡°1Q Report of 2015¡±, ¡°Semi-Annual Report of 2015¡±, ¡°3Q Report of 2015¡±and relevant events

respectively.

2. Final report of the auditing works for year of 2015 from PKF Daxin Certified Public Accountants

Auditing committee took an all-around review on auditing works for year of 2015 and after standard unqualified

auditors report and relevant documents issued by Daxin CPA while all auditing procedures completed, auditing

committee held the first meeting of 2016 and they believes that the Daxin is able to exercise relevant auditing

procedures and quality controlling system of the CPA in line with new auditing rules, the CPA owns good

business qualities and fulfill their duties to complete vary auditing works. Therefore, auditing committee submit to

the Board for Daxin CPA re-engagement as the auditing body for year of 2016 and auditing organization for

internal control as well.

(II) Nomination Committee

During the reporting period, the nominations committee of the board of directors has convened a meeting which

seriously reviewed the aspiring candidates of the independent directors in accordance with the requirements of

"Nomination Committee Implementing Rules"

VII. Works from Supervisory Committee

Whether the Company has risks or not in reporting period that found in supervisory activity from supervisory committee

¡õ Yes ¡Ì No

Supervisory committee has no objection about supervision events in reporting period

VIII. Appraisal and incentive mechanism for senior executives

Check on senior employees by the Board based on the Measure of Operation Evaluation that approved in

Shareholders¡¯ General Meeting.

52

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

IX. Internal Control

1. Details of major defects in IC appraisal report that found in reporting period

¡õYes ¡Ì No

2. Appraisal Report of Internal Control

Disclosure date of full internal control

2016-03-05

evaluation report

Disclosure index of full internal control

www.cninfo.com.cn

evaluation report

The ratio of the total assets of units

included in the scope of evaluation

accounting for the total assets on the 98.29%

company's consolidated financial

statements

The ratio of the operating income of units

included in the scope of evaluation

accounting for the operating income on the 97.86%

company's consolidated financial

statements

Defects Evaluation Standards

Category Financial Reports Non-financial Reports

Major deficiencies: a. fraud of directors, Major deficiencies: a) violation of state

supervisors and senior management; b. laws and regulations, such as

Material misstatements found in current environmental pollution; b) project

financial statements by the external audit decision-making process is not scientific,

which are not found in the process of wrong decision-making caused by lack

internal control; c. the supervision of audit of democratic decision-making process;

committee and internal audit service to c) brain drain of managers or

internal control is invalid. Significant technicians; d) frequent negative news on

deficiencies: The misstatements caused by media; e ) the results of internal control

Qualitative criteria

single deficiency or together with other evaluation especially major deficiencies

deficiencies that cannot be timely prevented and significant deficiencies have not

or found and corrected in the financial report been rectified and reformed; f)

and has not reached or has exceed the major significant business is lack of system

deficiencies but still should be taken into control or systematicness is invalid.

account by the management; other Significant deficiencies: The deficiencies

circumstances determined by the degree of caused by single deficiency or together

influence. Common deficiencies: other with other deficiencies of which the

internal control deficiencies do not constitute severity, direct or potential negative

53

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

major or significant deficiencies. impact have not reached or has exceed

the major deficiencies but still should be

taken into account by the management;

other circumstances determined by the

degree of influence. Common

deficiencies: other internal control

deficiencies do not constitute major or

significant deficiencies.

Compare the misstatements and missing

reports (i.e. amount affected by internal

control deficiencies) of some subjects in the Compare the amount of direct property

financial reports that may cause or have loss with certain ratio of total profits in

caused by internal control deficiencies with the company¡¯s current consolidated

certain ratio of total profits in the company¡¯s financial statements, and determine the

current consolidated financial statements, type of deficiencies in internal control as

and determine the type of deficiencies in follows: it should be judged to be major

internal control as follows: it should be deficiency if the amount of direct

judged to be major deficiency if the amount property loss is more than 5% of total

Quantitative criteria affected by internal control deficiencies is profits; it should be judged to be

more than 5% of total profits; it should be significant deficiency if the amount of

judged to be significant deficiency if the direct property loss is more than 3% but

amount affected by internal control less than 5% (including 5%) of total

deficiencies is more than 3% but less than profits; it should be judged to be

5% (including 5%) of total profits; it should common deficiency if the amount of

be judged to be common deficiency if the direct property loss is less than 3%

amount affected by internal control (including 3%) of total profits;

deficiencies is less than 3% (including 3%)

of total profits;

Amount of significant defects in financial

0

reports

Amount of significant defects in

0

non-financial reports

Amount of important defects in financial

0

reports

Amount of important defects in

0

non-financial reports

X. Auditing report of internal control

¡ÌApplicable ¡õNot applicable

Deliberation section of auditing report of IC

54

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Auditing opinion from DAXIN CPA: in our opinion, the Company, in line with Basic Norms of Enterprises Internal Control and

relevant regulations, shows an effectiveness internal control of financial report in all major aspects.

Disclosure details of audit report of

Disclosed

internal control

Disclosure date of audit report of

2016-03-05

internal control (full-text)

Index of audit report of internal

www.cninfo.com.cn

control (full-text)

Opinion type of auditing report of

Standard unqualified

IC

whether the non-financial report

No

had major defects

Issued a modified audit opinions for internal control

¡õYes ¡Ì No

Auditing report of internal control issued by CPA shows the same opinion as self-evaluation report issued by the Board

¡Ì Yes ¡õ No

55

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Section X. Financial Report

Da Xin Shen Zi£Û2016£ÝNo.3-00040

To all the shareholders of Shandong Zhonglu Oceanic Fisheries Co., Ltd.:

We have audited the attached financial statements of Shandong Zhonglu Oceanic Fisheries

Co., Ltd. (¡°the Company¡±), including balance sheet and consolidated balance sheet of 31st

December, 2015, income statement and consolidated income statement, statement of

changes in equity and consolidated statements of changes in equity, cash flow statement and

consolidated cash flow statement, and notes to the financial statements for the year 2015.

I. Management¡¯s responsibility for the financial statements

The Company¡¯s management is responsible for the preparation and fair presentation of

financial statement. The responsibility includes: (1) preparing and fairly presenting financial

statements in accordance with Accounting Standards for Business Enterprises; (2) designing,

implementing and maintaining necessary internal control in order to avoid material

misstatement of fraud or error.

II. Auditor¡¯s responsibility

Our responsibility is to express audit opinion on these financial statements based on our audit

result. We conducted our audit work in accordance with the Chinese Auditing Standards.

Those standards require that we comply with professional ethics, plan and perform the audit to

obtain reasonable assurance of whether the financial statements are free of material

misstatement or not.

Audit work includes examining, on test basis, evidence supporting the amounts and

56

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

disclosures in the financial statements. The testing methods and procedures are based on

auditor's judgment, including evaluation of the risk of material misstatement due to frauds or

errors. When evaluating risk, we examine the internal control system related to financial

statements in order to design auditing procedures, but not for the purpose of expressing an

opinion on the system¡¯s effectiveness. Audit work also includes assessing the applied

accounting principles and the significant estimates made by management, as well as

evaluating the overall financial statement presentation.

We believe that we have obtained sufficient and appropriate evidence to present our audit

opinion on a reasonable basis.

III. Auditing opinion

In our opinion, the Company¡¯s financial statements have been prepared in accordance with the

Chinese Accounting Standards (CASs), and fairly present, in all material respects, the financial

position of the Company on 31st December, 2015, operation results and cash flows.

WUYIGECERTIFIEDPUBLICACCOUNTANTSLLP. Chinese Certified Public Accountant: He Zheng

Beijing China Chinese Certified Public Accountant: Wu Zhixing

March 3, 2016

57

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

58

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Consolidated Banlance Sheet

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

Current asset:

Monetary fund V.1 72,428,421.94 44,980,211.04

Financial asset under fair value method

Derivative financial asset

Notes receivable

Accounts receivable V.2 26,746,955.58 25,395,972.27

Payment in advance V.3 6,195,816.18 29,278,905.45

Interest receivble

Dividend receivble

Other receivble V.4 4,567,617.49 7,613,670.62

Inventory V.5 189,084,316.91 189,737,455.53

Available-for-sale asset

Non-current asset due within one year

Other current asset V.6 14,405,410.05 8,588,771.55

Total current asset 313,428,538.15 305,594,986.46

Non-current asset:

Available-for-sale financial asset V.7

Held-to-maturity investment

Long-term receivable

Long-term equity investment

Investemnt property V.8 33,557,057.70 34,775,723.22

Fixed asset V.9 429,846,758.41 411,596,231.93

Construction in progress V.10 5,901,575.16 22,485,504.14

Project goods and material

Disposal of fixed asset

Productive biological asset

Oil and gas asset

Intangible asset V.11 13,498,863.69 13,862,710.39

Development expenditure

Goodwill

Long-term deferred expense

Deferred tax asset V.12 306,828.34

Other non-current asset V.13 2,000,000.00 8,868,187.00

Total non-current asset 484,804,254.96 491,895,185.02

Total asset 798,232,793.11 797,490,171.48

Legal representative£º Chief accountant: Person in charge of accountingagency:

- 59 -

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Consolidated Banlance Sheet(Continue)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

Current liability:

Short-time borrowing V.14 46,321,773.62 42,316,324.69

Financial liability under fair value method

Derivative financial liability

Note payable

Account payable V.15 81,770,298.61 81,409,933.67

Advance from customer V.16 18,691,305.28 21,249,662.15

Accured employee compensation V.17 17,624,638.23 16,946,769.05

Tax payable V.18 3,044,646.00 1,415,685.45

Interest payable V.19 655,581.11 741,295.43

Dividend payable

Other payable V.20 5,630,290.48 7,124,660.88

Held-for sale liability

Non-current liability due within one year V.21 17,396,585.48 16,213,252.14

Other current liability

Total liability 191,135,118.81 187,417,583.46

Non-current liability

Long-term borrowing V.22 1,900,000.00

Note payable

Including: preferred stock

Perpetual bond

Long-term payable V.23 14,630,000.00

Long-term employee compensation V.24 1,908,126.22 1,780,982.41

Special fund payable

Accured liability

Deferred income V.25 11,439,040.10 12,305,625.58

Deferred tax liability

Other non-current liability

Total non-current liability 13,347,166.32 30,616,607.99

Total liability 204,482,285.13 218,034,191.45

Shareholder equity:

Share capital V.26 266,071,320.00 266,071,320.00

Other equity instrument

Including: preferred stock

Perpetual bond

Capital reserve V.27 279,998,206.82 281,245,215.96

Less: treasury stock

Other comprehensive income V.38 -34,029.26 52,881.19

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Special reserve

Surplus reserve V.29 21,908,064.19 21,908,064.19

Undistributed profit V.30 -2,235,338.96 -14,376,699.17

Shareholder equity to parent 565,708,222.79 554,900,782.17

Minority shareholding 28,042,285.19 24,555,197.86

Total shareholder equity 593,750,507.98 579,455,980.03

Total liability and shareholder equity 798,232,793.11 797,490,171.48

Legal representative£º Chief accountant: Person in charge of accounting agency:

Balance Sheet(Parent)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

Current asset:

Monetary fund 40,612,855.17 30,215,484.63

Financial asset under fair value method

Derivative financial asset

Notes receivable

Accounts receivable XIII.1 748,287.00 9,375,347.44

Payment in advance 2,205,564.37 17,971,428.11

Interest receivble

Dividend receivble

Other receivble XIII.2 36,250,522.61 34,069,621.90

Inventory 34,878,804.73 90,759,254.92

Available-for-sale asset

Non-current asset due within one year

Other current asset 128,193.05 267,436.41

Total current asset 114,824,226.93 182,658,573.41

Non-current asset:

Available-for-sale financial asset

Held-to-maturity investment

Long-term receivable 5,831,546.05 6,231,614.21

Long-term equity investment XIII.3 204,189,455.23 118,779,655.23

Investemnt property 33,557,057.70 34,775,723.22

Fixed asset 87,079,353.98 187,370,467.76

Construction in progress 1,452,019.07

Project goods and material

Disposal of fixed asset

Productive biological asset

Oil and gas asset

- 61 -

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Intangible asset 30,166.70 10,143.24

Development expenditure

Goodwill

Long-term deferred expense

Deferred tax asset

Other non-current asset

Total non-current asset 332,139,598.73 347,167,603.66

Total asset 446,963,825.66 529,826,177.07

Legal representative£º Chief accountant: Person in charge of accounting agency:

Balance Sheet(Parent)(Continue)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co.,

Dec 31,2015 Currency: RMB

Ltd

Beginning

Item Notes Ending balance

balance

Current liability:

Short-time borrowing 10,000,000.00

Financial liability under fair value method

Derivative financial liability

Note payable

Account payable 15,700,096.10 35,571,681.51

Advance from customer 5,858,514.14 2,579,030.39

Accured employee compensation 7,031,556.30 8,509,363.43

Tax payable 2,131,532.55 749,581.59

Interest payable 2,757.64 50,506.75

Dividend payable

Other payable 48,122,404.66 44,438,966.80

Held-for sale liability

Non-current liability due within one year 1,900,000.00 15,375,042.66

Other current liability

Total liability 80,746,861.39 117,274,173.13

Non-current liability

Long-term borrowing 1,900,000.00

Note payable

Including: preferred stock

- 62 -

ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Perpetual bond

Long-term payable

Long-term employee compensation 1,333,709.44 1,458,495.50

Special fund payable

Accured liability

Deferred income 761,424.64

Deferred tax liability

Other non-current liability

Total non-current liability 1,333,709.44 4,119,920.14

Total liability 82,080,570.83 121,394,093.27

Shareholder equity:

Share capital 266,071,320.00 266,071,320.00

Other equity instrument

Including: preferred stock

Perpetual bond

Capital reserve 279,115,900.17 279,115,900.17

Less: treasury stock

Other comprehensive income

Special reserve

Surplus reserve 19,184,672.34 19,184,672.34

Undistributed profit -199,488,637.68 -155,939,808.71

Total shareholder equity 364,883,254.83 408,432,083.80

Total liability and shareholder equity 446,963,825.66 529,826,177.07

Legal representative£º Chief accountant: Person in charge of accounting agency:

Consoidated Income Statement

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

I.Operating income V.31 723,723,003.05 598,380,696.83

Less: Operating cost V.31 685,083,527.36 559,988,566.40

Business tariff and annex V.32 1,231,694.81 1,125,698.01

Sales expenditure V.33 6,056,111.86 5,421,903.79

Administrative expenditure V.34 51,671,846.22 34,130,669.66

Financial expenditure V.35 433,236.30 4,488,063.94

Impairment loss of asset V.36 2,428,525.98 17,315,628.51

Plus: Changes in value under fair value method

Investment profit

Including: investment profit from joint-venture enterprises

II.Operating profit -23,181,939.48 -24,089,833.48

Plus: non-operating profit V.37 43,531,014.39 38,689,440.66

Including: profit of disposal of fixed asset 12,530.62 46,363.18

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Less: non-operating expense V.38 4,830,708.60 355,109.00

Including: loss of disposal of fixed asset 4,170,048.32 349,687.58

III.Total profit 15,518,366.31 14,244,498.18

Less: income tax V.39 1,136,927.91 126,242.31

IV.Net profit 14,381,438.40 14,118,255.87

Including: net profit to parent company 12,141,360.21 15,367,992.51

Loss of minority shareholding 2,240,078.19 -1,249,736.64

V.After-tax other comprehensive income -86,910.45 -5,332.63

After-tax other comprehensive income to parent company -86,910.45 -5,332.63

i.Other comprehensive income that cannot be reclassified into profit and loss

1.Changes in net liability and net asset in defined benefit plan

2.Shares of other comprehensive income that cannot be reclassified into profit

and loss under equity method

ii.Other comprehensive income to be reclassified into profit and loss -86,910.45 -5,332.63

1.Shares of other comprehensive income to be reclassified into profit and loss

under equity method

2.Change in fair value of available-for-sale financial asset

3. Change of held-to-maturity financial asset that reclassified into

available-for-sale

4.Effective amount of loss of cash-flow hedging

5.Foreign currency translation reserve -86,910.45 -5,332.63

6.Other

After-tax net other comprehensive profit to minority shareholders

VI.Total comprehensive profit 14,294,527.95 14,112,923.24

Amount to the parent company 12,054,449.76 15,362,659.88

Amount to minority shareholders 2,240,078.19 -1,249,736.64

VII.Earnings per share

i.Basic earnings per share 0.05 0.06

ii.Diluted earnings per share 0.05 0.06

Net profit before consolidation:

Legal representative£º Chief accountant: Person in charge of accounting agency:

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Income Statement(Parent)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

I.Operating income XIII.4 125,758,001.95 224,923,900.11

Less: Operating cost XIII.4 162,311,720.67 229,001,886.49

Business tariff and annex 894,410.32 743,009.20

Sales expenditure 434,522.60 612,584.72

Administrative expenditure 35,318,160.44 21,054,729.96

Financial expenditure 213,736.41 2,476,584.07

Impairment loss of asset 1,066,571.17 15,520,211.63

Plus: Changes in value under fair value method

Investment profit

Including: investment profit from joint-venture enterprises

II.Operating profit -74,481,119.66 -44,485,105.96

Plus: non-operating profit 37,123,646.29 35,808,268.85

Including: profit of disposal of fixed asset 1,548.60

Less: non-operating expense 6,191,355.60 1,000.00

Including: loss of disposal of fixed asset 5,876,267.32

III.Total profit -43,548,828.97 -8,677,837.11

Less: income tax

IV.Net profit -43,548,828.97 -8,677,837.11

V.After-tax other comprehensive income

i.Other comprehensive income that cannot be reclassified into profit and loss

1.Changes in net liability and net asset in defined benefit plan

2.Shares of other comprehensive income that cannot be reclassified into

profit and loss under equity method

ii.Other comprehensive income to be reclassified into profit and loss

1.Shares of other comprehensive income to be reclassified into profit and

loss under equity method

2.Change in fair value of available-for-sale financial asset

3. Change of held-to-maturity financial asset that reclassified into

available-for-sale

4.Effective amount of loss of cash-flow hedging

5.Foreign currency translation reserve

6.Other

VI.Total comprehensive profit -43,548,828.97 -8,677,837.11

VII.Earnings per share

i.Basic earnings per share

ii.Diluted earnings per share

Legal representative£º Chief accountant: Person in charge of accounting agency:

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Consolidated Cash Flow Statement

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

I.Cash flow from operating activities:

Sales of goods and rendering servie 737,100,850.94 761,436,757.08

Tax refund 52,461,561.62 43,741,745.27

Cash from other operating activities V.40 66,496,722.67 56,912,170.50

Total cash inflow from operating activities 856,059,135.23 862,090,672.85

Payment of sales of goods and accepting servie 632,345,401.27 670,174,471.42

Payment for employees 111,285,426.90 95,383,161.06

Payment of tax 5,229,994.94 4,331,123.52

Payment for other operating activities V.40 51,754,921.90 26,881,435.48

Total cash outflow from operating activities 800,615,745.01 796,770,191.48

Net cash flow from operating activites 55,443,390.22 65,320,481.37

II.Cash inflow from investment activitis

From disinvestment

From investment profit

Net cash flow from disposal of fixed assets,intangible assets and other long-term

58,431.91 767,430.00

assets

Net cash flow from disposal of subsidiary and other operating entity

From other investing activites V.40 386,334.96

Total cash inflow from investing activities 444,766.87 767,430.00

Payment of fixed assets,intangible assets and other long-term assets 18,051,688.49 85,285,611.79

Payment of investment

Payment for acquisition of subsidiary and other operating entity

Payment for other investing activities

Total cash outlow from investing activities 18,051,688.49 85,285,611.79

Total net cash flow from investing activities -17,606,921.62 -84,518,181.79

III.Cash flow form financing activities

Cash inflow from financing activities

Including: cash inflow from minority shareholder investments to subsidiaries

From borrowing 101,754,637.69 63,955,422.69

From other financing activites V.40 14,630,000.00

Cash inflow form financing activities 101,754,637.69 78,585,422.69

Debt payment 113,933,828.76 60,542,615.07

Payment of dividend, interest 4,864,771.14 3,219,119.55

Including: cash dividend paid to minority shareholders by subsidiaries

Payment for other financing activities

Total cash outflow of financing activities 118,798,599.90 63,761,734.62

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Total net cash flow from financing activities -17,043,962.21 14,823,688.07

IV.Changes in cash and cash equivalent by change in exchange rate 6,480,406.59 -3,834,113.74

V.Increase in cash and cash equivalent 27,272,912.98 -8,208,126.09

Plus: beginning balance of cash and cash equivalent 44,191,457.02 52,399,583.11

VI.Ending balance of cash and cash equivalent 71,464,370.00 44,191,457.02

Legal representative£º Chief accountant: Person in charge of accounting agency:

Cash Flow Statement (Parent)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

Beginning

Item Notes Ending balance

balance

I.Cash flow from operating activities:

Sales of goods and rendering servie 138,448,990.90 210,683,689.82

Tax refund

Cash from other operating activities 56,459,132.46 48,224,461.07

Total cash inflow from operating activities 194,908,123.36 258,908,150.89

Payment of sales of goods and accepting servie 101,067,184.59 168,032,389.29

Payment for employees 35,697,054.84 41,807,253.62

Payment of tax 1,464,312.30 933,037.70

Payment for other operating activities 17,618,547.86 12,852,146.39

Total cash outflow from operating activities 155,847,099.59 223,624,827.00

Net cash flow from operating activites 39,061,023.77 35,283,323.89

II.Cash inflow from investment activitis

From disinvestment

From investment profit

Net cash flow from disposal of fixed assets,intangible assets and other long-term

1,548.60

assets

Net cash flow from disposal of subsidiary and other operating entity

From other investing activites 386,334.96

Total cash inflow from investing activities 386,334.96 1,548.60

Payment of fixed assets,intangible assets and other long-term assets 1,829,544.07 5,096,428.75

Payment of investment

Payment for acquisition of subsidiary and other operating entity

Payment for other investing activities

Total cash outlow from investing activities 1,829,544.07 5,096,428.75

Total net cash flow from investing activities -1,443,209.11 -5,094,880.15

III.Cash flow form financing activities

Cash inflow from financing activities

From borrowing 20,400,000.00

From other financing activites 12,336,789.14

Cash inflow form financing activities 32,736,789.14

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Debt payment 25,346,666.66 27,695,555.56

Payment of dividend, interest 932,894.07 2,101,239.25

Payment for other financing activities 1,028,388.09 16,346,794.83

Total cash outflow of financing activities 27,307,948.82 46,143,589.64

Total net cash flow from financing activities -27,307,948.82 -13,406,800.50

IV.Changes in cash and cash equivalent by change in exchange rate 87,504.70 32,707.65

V.Increase in cash and cash equivalent 10,397,370.54 16,814,350.89

Plus: beginning balance of cash and cash equivalent 30,215,484.63 13,401,133.74

VI.Ending balance of cash and cash equivalent 40,612,855.17 30,215,484.63

Legal representative£º Chief accountant: Person in charge of accounting agency:

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Consolidated Statement of Changes in Equity

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

2015

Shareholder euiqty to parent company

Total

Item Other equity instrument Other Minority

Less:treasury Special Surplus Undistributed shareholder

Share capital Preferred Perpetual Capital reserve comprehensive Other Total shareholding

Other stock reserve reserve profit equity

shares bond income

I.Ending balance of last year 266,071,320.00 281,245,215.96 52,881.19 21,908,064.19 -14,376,699.17 554,900,782.17 24,555,197.86 579,455,980.03

Plus: change in accouting policy

Former adjustment

Other

II.Beginning balance 266,071,320.00 281,245,215.96 52,881.19 21,908,064.19 -14,376,699.17 554,900,782.17 24,555,197.86 579,455,980.03

III.Change in current period (-) -1,247,009.14 -86,910.45 12,141,360.21 10,807,440.62 3,487,087.33 14,294,527.95

i.Total comprehensive income -86,910.45 12,141,360.21 12,054,449.76 2,240,078.19 14,294,527.95

ii.Capital invested by shareholders and capital reduction

1. Common stocks

2.Other equity instrument

3.Amount counted into shareholder equity paid by stocks

4.Other

iii.Profit distribution

1.Capital reserve

2.Distibution to shareholders

3.Other

iv.Internal shareholder equity reversal -1,247,009.14 -1,247,009.14 1,247,009.14

1.From capital reserve to share capital

2.From surplus reserve to share capital

3.Surplus reserve of loss reversal

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

4.Other -1,247,009.14 -1,247,009.14 1,247,009.14

v.special reserve

1.Amount withdrawn

2. Amount used

vi.Other

IV.Ending balance 266,071,320.00 279,998,206.82 -34,029.26 21,908,064.19 -2,235,338.96 565,708,222.79 28,042,285.19 593,750,507.98

Legal representative£º Chief accountant: Person in charge of accounting agency:

Consolidated Statement of Changes in Equity 2014

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

2014

Shareholder euiqty to parent company

Total

Item Other equity instrument Other Minority

Capital Less:treasury Special Surplus Undistributed shareholder

Share capital Preferred Perpetual comprehensive Other Total shareholding

Other reserve stock reserve reserve profit equity

shares bond income

I.Ending balance of last year 266,071,320.00 281,245,215.96 58,213.82 21,908,064.19 -29,744,691.68 539,538,122.29 25,804,934.50 565,343,056.79

Plus: change in accouting policy

Former adjustment

Other

II.Beginning balance 266,071,320.00 281,245,215.96 58,213.82 21,908,064.19 -29,744,691.68 539,538,122.29 25,804,934.50 565,343,056.79

III.Change in current period (-) -5,332.63 15,367,992.51 15,362,659.88 -1,249,736.64 14,112,923.24

i.Total comprehensive income -5,332.63 15,367,992.51 15,362,659.88 -1,249,736.64 14,112,923.24

ii.Capital invested by shareholders and capital reduction

1. Common stocks

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

2.Other equity instrument

3.Amount counted into shareholder equity paid by stocks

4.Other

iii.Profit distribution

1.Capital reserve

2.Distibution to shareholders

3.Other

iv.Internal shareholder equity reversal

1.From capital reserve to share capital

2.From surplus reserve to share capital

3.Surplus reserve of loss reversal

4.Other

v.special reserve

1.Amount withdrawn

2. Amount used

vi.Other

IV.Ending balance 266,071,320.00 281,245,215.96 52,881.19 21,908,064.19 -14,376,699.17 554,900,782.17 24,555,197.86 579,455,980.03

Legal representative£º Chief accountant: Person in charge of accounting ag

Statement of Changes in Equity (Parent)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

2015

Other equity instrument Less: Other

Item Special Total shareholder

Share capital Preferred Perpetual Capital reserve treasury comprehensive Surplus reserve Undistributed profit

Other reserve equity

shares bond stock income

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

I.Ending balance of last year 266,071,320.00 279,115,900.17 19,184,672.34 -155,939,808.71 408,432,083.80

Plus: change in accouting policy

Former adjustment

Other

II.Beginning balance 266,071,320.00 279,115,900.17 19,184,672.34 -155,939,808.71 408,432,083.80

III.Change in current period (-) -43,548,828.97 -43,548,828.97

i.Total comprehensive income -43,548,828.97 -43,548,828.97

ii.Capital invested by shareholders and capital reduction

1. Common stocks

2.Other equity instrument

3.Amount counted into shareholder equity paid by stocks

4.Other

iii.Profit distribution

1.Capital reserve

2.Distibution to shareholders

3.Other

iv.Internal shareholder equity reversal

1.From capital reserve to share capital

2.From surplus reserve to share capital

3.Surplus reserve of loss reversal

4.Other

v.special reserve

1.Amount withdrawn

2. Amount used

vi.Other

IV.Ending balance 266,071,320.00 279,115,900.17 19,184,672.34 -199,488,637.68 364,883,254.83

Legal representative£º Chief accountant: Person in charge of accounting agency:

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

Statement of Changes in Equity 2014 (Parent)

The auditee's name£ºShandong Zhonglu Oceanic Fisheries Co., Ltd Dec 31,2015 Currency: RMB

2014

Other equity instrument Other Total

Item Less: treasury Special Surplus Undistributed

Share capital Preferred Capital reserve comprehensive shareholder

Perpetual bond Other stock reserve reserve profit

shares income equity

I.Ending balance of last year 266,071,320.00 279,115,900.17 19,184,672.34 -147,261,971.60 417,109,920.91

Plus: change in accouting policy

Former adjustment

Other

II.Beginning balance 266,071,320.00 279,115,900.17 19,184,672.34 -147,261,971.60 417,109,920.91

III.Change in current period (-) -8,677,837.11 -8,677,837.11

i.Total comprehensive income -8,677,837.11 -8,677,837.11

ii.Capital invested by shareholders and capital reduction

1. Common stocks

2.Other equity instrument

3.Amount counted into shareholder equity paid by stocks

4.Other

iii.Profit distribution

1.Capital reserve

2.Distibution to shareholders

3.Other

iv.Internal shareholder equity reversal

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

1.From capital reserve to share capital

2.From surplus reserve to share capital

3.Surplus reserve of loss reversal

4.Other

v.special reserve

1.Amount withdrawn

2. Amount used

vi.Other

IV.Ending balance 266,071,320.00 279,115,900.17 19,184,672.34 -155,939,808.71 408,432,083.80

Legal representative£º Chief accountant: Person in charge of accounting agency:

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

SHANDONG ZHONGLU OCEANIC FISHERIES CO., LTD.

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2015

(All amounts are stated in RMB Yuan unless otherwise stated)

I. Company profile

Shandong Zhonglu Oceanic Fisheries Co., Ltd. (the ¡°Company¡±), whose registered address is No.43, Heping

Road, Jinan, Shandong, was incorporated as a liability limited company in the People¡¯s Republic of China on

July 30, 1999 according to the document 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.

On June 26, 2000, the Company issued 120 million domestic listed foreign shares (B shares) to foreign

investors with face value of 1 Yuan per share according to the document of Zheng Jian Fa Xing Zi [2000]

No.82 issued by the China Securities Regulatory Commission. The B shares, Zhonglu B with stock code of

200992, have been listed on the Shenzhen Stock Exchange since July 24, 2000. On August 22, 2000.

Operating activity: ocean fisheries

Main product: tuna and its products.

Operating scope: aquatic products breeding, processing and sale; goods import and export business within

approved scope; ice machine manufacture and sale; refrigeration equipment manufacture, installation,

maintenance; refrigeration; load and unload services; housing lease.

Advance licensed operating scope: marine and oceanic fishing;

The basic structure of the company: shareholders committee, board of directors, board of supervisors, the

board of directors office, human resources, finance department, administration department, audit department,

general department.

Consolidation scope of financial statement includes: 4 wholly-owned subsidiaries : Shandong Zhonglu

Oceanic Fisheries Transportation Co., Ltd.; Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd.; HABITAT

INTERNATIONAL CORP; Shandong zhonglu Haiyan Oceanic Fisheries Co., Ltd. . ; 2 sub-subsidiaries: LAIF

FISHERIES COMPANY LIMITED, Shandong Zhonglu Oceanic Fisheries Refrigeraton Co., Ltd; 1 operational

entity through control over operating leases: YAW ADDO FISHERIES COMPANY LIMITED. More information

is disclosed in Note.6 ¡° Equity disclosure in other entities¡±.

The financial statement is predetermined and authorized by the board of company on 3th March, 2016.

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

II. Compilation basis of financial statement

1£®Preparation basis

On the basis of going-concern and factual transactions, the financial statements of the company are prepared

in accordance with the Chinese Accounting Standards (CASs), specific accounting standards(accounting

standard for business enterprises in general), and the main accounting policies and accounting estimation are

described below .

2£®Going-concern basis

Within at least 12 months of this report, the company should maintain its operational capacity without matters

that have potential impact on ability of the continuing operations.

III. Main accounting policies and accounting estimation

The Company has made specific accounting policies of recognition of income and other items based on its

own operating characteristic under relevant regulations in Accounting Standard for Business Enterprise:

1. Compliance of CASs

The financial statements of the Company have been prepared in accordance with CASs, and present truly

and completely the Company¡¯s financial position on 31ST December 2014, and information about operation

and cash flows.

2 Accounting year

The Company has adopted the calendar year as its accounting year, i.e. from 1st January to 31st December.

3. Operating cycle

The operating cycle of the Company is determined as 12 months. The determining criterion of asset-liability

liquidity is based upon this operating cycle.

4 Functional currency

The functional currency of the Company is RMB.

5 Business Combinations

5.1 Business combinations of enterprises under common control

For long-term equity investment merger and acquisition under common control through methods of cash

payment, non-cash assets transfer and debt assuming, the Company applies the net asset in final

consolidated financial statement on acquisition date as initial capital of long-term equity investment. For

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

acquisition through issuance of equity instrument, the Company applies the fair value of shares issued as

initial capital. The difference of initial investment capital and its book value should be adjusted to capital

reserve. If capital reserve is insufficient, retained earnings should be adjusted.

5.2 Business combinations not under common control

For business merger and acquisition not under common control, consolidation cost should be determined by

the fair value of asset payments, debt assuming amount and issuance of other equity instruments on

acquisition date. For qualified identifiable assets, liabilities and contingent liabilities acquired through

corporation consolidation, their value should be determined by fair value amount on acquisition date. The

excess of consolidation cost to fair value of net identifiable assets is counted into goodwill, the shortage is

counted into non-operating income.

6. Preparation of consolidated financial statements

6.1 The scope of consolidation

All subsidiaries and special purpose entities are included within the scope of consolidation.

6.2 The standardized accounting policies, balance sheet date and accounting period within parent and

sub companies of consolidation scope

When preparing consolidation, necessary changes are made according to the Company¡¯s accounting policy

or accounting period if the subsidiaries and the company use different accounting policies or accounting

period.

6.3 The offset of consolidated financial statements

All subsidiaries and special purpose entities are included within the scope of consolidation.

The Company consolidated financial statements in accordance with "CAS 33£¬Consolidated Financial

Statements" and the relevant provisions of the requirements, and offset all important insider trading and

correspondence within consolidation scope. The subsidiary shareholders' equity that are not belonged to the

parent company's share will be listed as ¡°Minority shareholding¡± in the consolidated financial statements. The

long-term equity investment of parent company held by the subsidiary is regarded as corporation treasury

stock, and is reported as ¡°Less: treasury stock¡± in consolidated financial statement.

6.4 Accounting treatment of merger-acquired subsidiaries

For the subsidiary obtained from merger of enterprises under common control, from the beginning of the

current period, the assets, liabilities, operating results and cash flows are included into the consolidated

financial statements. For the subsidiary company obtained from the merger of enterprises under different

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ɽ¶«Ê¡ÖгԶÑóÓæÒµ¹É·ÝÓÐÏÞ¹«Ë¾ 2015 ÄêÄê¶È±¨¸æÈ«ÎÄ

control, it is based on the fair value of the identifiable net assets on the purchase day when preparing

consolidated financial statements.

7 The classification of joint-venture and its accounting policies treatment

7.1 The classification of joint-venture

The joint-venture is classified as joint operation and joint enterprise. The joint-venture arrangement without a

separate entity is classified as joint operation. Separate entity is the entity entitled with independent

identifiable financial structure, including the independent legal representative or legitimate recognition of legal

representative. The joint-venture arrangement with a separate entity is classified as joint enterprise. The

correspondent changes in rights owned and obligations undertaken by changes in relevant matters and

situations can result in revaluations in joint-venture arrangement.

7.2 Accounting policies treatment of joint operation

Participants in joint operation should confirm its benefit share and prepare the financial statement in

accordance with relevant enterprise accounting standards within the following items: separately-owned assets

and liabilities, share-related assets and liabilities in commonly owned assets and liabilities, the revenue from

sale of joint-operation production, the revenue from share-related sale of joint-operation production, expense

from separated activities and expenses from share-related joint operation.

To participants without common control over joint operation: treated by accounting policies of participant in

joint operation if the participants own related assets and undertake related liabilities in joint operation;

Otherwise treated by correspondent policies in Accounting Standards for Business Enterprises

7.3 Accounting policies treatment of joint enterprise

The participants in joint enterprise should follow the accounting policies in

Business Enterprises ¨C Long-term Equity Investment>. Participants without common control should arrange

the accounting treatment according to its impact upon the joint enterprise.

8 Confirmation criteria of cash and cash equivalent

Cash that the Company applied in the preparation of cash flow statement is cash on hand and bank deposit

that is available for payment. Cash equivalent that the Company applied in the preparation of cash flow

statement is short-term, highly liquid investments that are readily convertible to known amount of cash and

without significant risk of change in value.

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9 Translation of transactions denominated in foreign currencies and the foreign currency financial

statements

9.1 Translation of transactions denominated in foreign currencies

The transaction of the Company for foreign currencies adopts the spot exchange rate of the transaction date.

At the balance sheet date, foreign currency monetary items are translated to RMB using the spot exchange

rate at that date, the exchange rate difference from the time of initial recognition and previous balance sheet

date will generate balance exchange, except for the qualified foreign currency exchange specifically borrowed

in the capitalization period which shall be included in the relevant capitalization cost of the asset, all should be

included in the current profits and losses.

Foreign currency non-monetary items measured with the historical cost still adopt the spot exchange rate at

the transaction day; do not change the recording currency. Foreign currency non-monetary items measured

with fair value adopts the spot exchange rate determined at fair value date, the balance between the

after-conversion amount of functional currency and the original standard money of charge, is counted as the

changes in the fair value (including the exchange rate) processing, should be included in the current profits

and losses or confirmed as other comprehensive income and included in the capital reserve.

9.2 Translation of the foreign currency financial statements

If the subsidiary company, cooperative enterprise, joint enterprise and so on, use different standard currency,

they need to convert foreign currency conversion financial statements into RMB, and then carry on accounting

and preparing the consolidated financial statements.

Asset and liability items of the balance sheet adopt the spot exchange rate on the balance sheet to convert,

except for "undistributed profit¡±, other items of Owner¡¯s Equity sheet convert at the spot exchange rate.

The income and expense items of the income statement adopt the spot rate of the transaction date to convert.

The exchange balance of foreign currency financial statements should be listed in the owner's equity item of

the balance sheet separately.

Foreign currency cash flow according to the system reasonable method to determine, adopt the spot rate of

the transaction date to convert .Exchange rate on the influence of the cash amount should be listed in the

cash flow statement separately.

On the disposal of a foreign operation, according to the proportion of the disposal, the balance of foreign

currency statement relating to overseas business should be converted into the current period of the profits

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and losses.

10£®Financial instruments

10.1 Recognition criteria and classification of financial instruments

Financial instruments are classified into financial asset and financial liability.

On initial recognition, financial assets shall be classified into the following four categories: (1) Financial assets

at fair value through profit and loss, including financial assets held for trading and those designated as at fair

value through profit and loss; (2) Held-to-maturity investments; (3) loans and receivables; and (4)

available-for-sale financial assets. Except for accounts receivable , financial assets are classified depending

on the intentions and capacity of the company and its subsidiaries of financial assets.

On initial recognition, financial liabilities shall be classified into the following categories: (1) financial liabilities

at fair value through profit or loss, including financial liabilities held for trading and those designated as at fair

value through profit or loss; and (2) other financial liabilities.

Financial assets at fair value through profit and loss, include financial assets held-for-; sale receivables are

non-derivative financial assets for which there is no quoted price in the active market and of which the repo

amount is fixed or determinable; Available-for-sale financial assets

include non-derivative financial assets initially recognized as available-for-sale and financial assets that are

not divided into other classes; Held-to-maturity investment refers to non-derivative financial assets with fixed

maturity and repo amount, and the board of management have clear intention and ability to hold to maturity.

10.2 The measurement of financial instrument

The company's financial assets or financial liabilities are initially recognized at fair value measurement. For

subsequent measurement categories: current financial assets are reported at fair value and whose

fluctuations are recorded into the profits and losses, available-for-sale financial assets and current financial

liabilities are measured at fair value and the changes are recorded into the profits and losses. Held-to-maturity

investments, loans and receivables, as well as other financial liabilities are measured at amortized cost. Cost

method should be used when the equity instrument investments has no offer in the active market whose fair

value cannot be reliably measured, and when the related equity instrument must be settled by delivering the

equity instruments of the derivative financial assets or derivative financial liabilities. The changes in the fair

value of the profit and loss, except for related hedging process that are generated from follow-up

measurement of financial assets and financial liabilities, are treated as following method: the profits and

losses of the financial asset or financial liability that form on the changes in the fair value are measured at fair

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value and reflected in P&L. Changes in the fair value of available for sale financial assets are included in other

comprehensive income.

10.3 The confirmation method of the financial assets and financial liabilities the Company adopted

If there exists an active market of financial instruments, the active market quotation determines its fair value; if

there is no active market of financial instruments, valuation techniques are used to determine the fair value.

Valuation techniques mainly include market method, income method and cost method

10.4 The recognition criteria and measurement method of transfer of financial asset and liability

When transferring financial asset ownership on almost all of the risks and rewards, or to which neither move

nor keep financial asset ownership on almost all of the risks and rewards but give up the control over the

financial asset, the recognition the financial of the asset shall be terminated. To those financial assets that

meet the recognition criteria of termination: the sum of the accumulative amount of changes of the book value

of the transferred financial asset that are received by transfer of value and the fair value originally recorded in

other comprehensive income balance are included in the current profits and losses. To those whose part of

the transfer that meet the recognition criteria of termination, the entire book value of the transferred financial

asset, between the terminated parts and non-terminated parts, are amortized according to their relative fair

value.

For the present obligations that are in whole or in part lifted, the confirmation of the financial liability or part of

it should be terminated.

10.5 The impairment of the financial asset

When financial assets at the amortized cost measurement impairment occurs, according to the expected

future cash flow (not including the future credit losses) present value less than the difference between the

book value, the provision for impairment loss occurs. If there is objective evidence that the financial asset

value has been restored, and is objectively related to the loss occurred afterwards, impairment loss should be

turned back, and included in the current profits and losses.

When financial assets valued under cost measurement are impaired, the difference between the equity

instrument investments and the present value of book value of similar derivative financial assets that are

determined by market discount rate, is recognized as the impairment loss and prepared for provision for

impairment loss. The impairment loss, once confirmed, could no longer be restored.

When there is objective evidence that available-for-sale financial assets impairment has occurred, the

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cumulative loss of fair value in the shareholder's rights should be transferred out and counted into impairment

loss. To impairment loss of available-for-sale debt instrument investment, the fair value of which in the

after-period that are increased, the impairment loss should be turned back and recorded into the profits and

losses. To sale of equity-instrument investment that impairment loss has previously occurred, fair value

increased after the period is included directly in the Stockholders' equity.

For equity-instrument investment, the basis that the Company uses to determine the fair value of "serious" or

"other-than-temporary" specific quantitative standards, cost calculation method, the final determination of the

fair value method and the period of continuously falling is as the following:

The specific quantification standard of fair value of "severe" The fall of the final fair value relative to the cost has reached or exceeded

declines 50%

The specific quantification standard of fair value of

The fall in the 12 consecutive months

¡°other-than-temporary¡± declines

The sum of the payment (excluding cash dividend that has been declared

The calculation method of cost but not yet paid or bond interest that has matured but not yet withdrawn )

and related transaction costs as the cost of investment.

For financial instruments within existing active market, the Company uses

active market quotation to determine its fair value; For financial instruments

The final determination of the fair value method

without existing active market , it uses valuation techniques to determine its

fair value

Continuous decline or rose less than 20% during the downward trend, or the

The basis to determine the period of continuously falling rebound lasts no more than 6 months are determined as period of

continuously falling

11 Receivables

Receivables include accounts receivable, long-term accounts receivable and other receivables. Receivables

provision for bad debt provision method is as follows:

11.1 Receivables with single major amount and provision for bad debts

The recognition standard of the single major amount of accounts Amount above 1 million Yuan (including 1 million) of the accounts

receivable for bad loans receivable

The carrying method of the single amount major of account receivable Recognized according to the difference of book value and present value

for bad loans of estimated future cash flows

11.2 Receivables with combination to draw the bad debts provision

Combination determination criteria Payment properties and risk characteristics

Aging combination Single significant amount without provision for bad debt, single less-significant ,less-risky amount

Riskless combination Accounts receivable within consolidation scope and amounts without default risk within the next 12

months

Bad debt provision method by

combination

Aging combination Aging accounting method

Riskless combination No provision for bad debts

In the combination, the aging analysis method of drawing bad debts provision is as follows:

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aging Accounts receivable£¨%£© Other receivables£¨%£©

Within 6 months 5 5

6 months to 1 year 10 10

1 year to 2 years 30 30

2 years to 3 years 50 50

Above 3 years 100 100

To those account receivables without default risk within the next 12 months, it is treated as riskless

combination and no provision for bad debt is necessary.

11.3 Individual amount not significant but in need of bad debt provision

The reason to draw bad debts provision Accounts receivable with Aging more than 3 years of and objective evidence that the impairment

separately has occurred

According to the difference of book value and present value of estimated future cash flows to

The method to draw bad debts provision

recognize

12. Inventories

12.1 Classification of inventories

Inventories are assets: (a) held for sale in the ordinary course of business; (b) in the process of production for

such sale; or (c) in the form of materials or supplies to be consumed in the production process or in the

rendering of services. Inventories of the company includes: raw materials, turnover materials, low value and

easily used up materials, work in progress, semi-finished goods, finished goods and so on.

12.2 Measurement of sending out inventory

Upon delivery of inventory, the weighted average method is used to assign the actual cost.

12.3 Inventory write-down provision method

At the balance sheet date, inventories shall be measured at the lower of cost and net realizable value, and

according to a single inventory project to draw Inventory falling in price reserves, but for numerous, lower unit

price inventories, drawing Inventory falling in price reserves is based on the inventory category.

The basis of determining inventory net realizable value: (1) Finished goods¡¯ net realizable value is the amount

of an estimated price minus the estimated cost of sales and relevant taxes, company¡¯s finished goods is

mainly long-line tuna which price is determined by the price Japan Qingshui fishery market that is most close

to the balance sheet date less related expense.

; (2) Materials held for production are based on cost measurement when the finished products¡¯ net realizable

value is higher than cost; the material price decline shows that the finished products¡¯ net realizable value is

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lower than cost, net realizable value is calculated as an estimated sales price minus the estimated cost, the

cost of sales and the relevant taxes amount.(3) the materials held for sale may use the market price as net

realizable value.

12.4 Inventory system

The company adopts perpetual inventory system

12.5 The amortization method of low-value-and-easily-used-up materials and packages

Low-value-and-easily-used-up materials and packages amortize twice of 50% each time.

13. Long-term Equity Investments

13.1 Determination of initial cost of a long-term equity investment

For the enterprise merger & acquisition under the common control, the share of the book value of the merged

owner's equity should be recognized as the initial investment cost. For the enterprise merger & acquisition

without common control, the initial investment cost shall be the cost decided at the purchase date. For a

long-term equity investment acquired by cash, the initial investment cost shall be the purchasing price. For a

long-term equity investment acquired by the issue of equity securities, the initial investment cost shall be the

fair value of the securities issued; For a long-term equity investment acquired through a debt restructuring

transaction, the initial investment cost shall be determined in accordance with

for Business Enterprises-debt restructuring >.For a long-term equity investment acquired through an

exchange of non-monetary assets, the initial investment cost shall be determined in accordance with relevant

CASs.

13.2 Subsequent measurement and determination of profit and loss

If Investors can implement control for the invested entity of a long-term equity investment, the cost method

should be employed; to long-term equity investment of affiliated enterprises and joint ventures, equity method

should be employed. For equity investment in affiliated enterprises by means of venture capital institution,

mutual fund, trust company and fund of fund, investors should follow related regulations in

Standards for Business Enterprises-The confirmation and measurement of financial tools> whether the

above-stated subjects has a significant influence on this part of the investment or not. To the part of

investment acquired in an

indirect way, fair value method should be employed to reflect profit and loss. To the rest part of investment,

equity method should be employed.

13.3 The basis to determine the common control and significant influence on invested entity

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The common control on invested entity refers to that decisions must be made upon agreements of parties with

common control on an activity arrangement that has a significant impact on return, such as activities that

include: sale and purchase of goods and services, management of financial assets, purchase and disposal of

assets, research and development and financing activities.

The significant influence on invested entity refers to that it will have significant influence over the investee

when holding more than 20% and up to 50% of the voting rights of the invested entity.. Or although less than

20%, it will also has significant influence over the investee when meet one of the following conditions,:

¢ÙThe investors send a representative to the board of directors or similar authority in the invested entity£»

¢ÚThe investors participate in policy-making process of invested entity;

¢ÛThe investors send management personnel to the invested entity;

¢ÜThe investees rely on the technology or technical information of the investors;

¢ÝImportant transactions conducted between the investees and the investors.

14£®Investment property

The type of an investment property of the company includes: Lease of the land use rights, rental buildings,

hold and prepare the transfer of the land use rights after value added. An investment property is initially

measured at cost. The Company uses the cost model or fair value for subsequent measurement of an

investment property.

Straight-line method is used to carry depreciation towards the rental buildings of real estate investment of the

Company. Specific accounting policy is the same to fixed assets. Land use right for lease in the investment

real estate and hold-and-prepare to transfer of the land use right after value-added adopt the straight-line

amortization method. Specific accounting policy is the same to intangible assets.

15. Fixed assets

15.1 Fixed assets recognition criteria

Fixed assets are tangible assets that are held for use in the production or supply of goods and services, for

rental to others, or for administrative purposes. And they have more than one accounting year useful lives. A

fixed asset shall be recognized only when both of the following conditions are satisfied: a. it is probable that

economic benefits associated with the asset will flow to the enterprise; b. the cost of the asset can be

measured reliably.

15.2 Classification of fixed assets and depreciation method

The company¡¯s fixed assets include houses and buildings, machinery and equipment, electronic equipment,

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transportation equipments, etc; Depreciation is provided to write off the cost of each category of fixed assets

using the straight-line method. The Company estimates fixed assets¡¯ useful lives and estimated residual value

according to their nature and usage condition. The Company reviews the useful life and estimated net

residual value of a fixed asset and the depreciation method applied at least each financial year-end if there is

any difference from the original estimate, then adjustment shall be made. Except for

fully-depreciated-but-still-in-usage fixed assets and separately recorded land, depreciation is provided to write

off the cost of each category of fixed assets over their estimated useful lives.

Estimated net residual values

Classes Useful life (years) Annual depreciation rates£¨%£©

rates£¨%£©

Buildings 20¡ª40 3¡ª5 2.00-5.00

Boats and nets 5¡ª30 3¡ª5 3.17-19.40

Machinery and equipment 8¡ª20 3¡ª5 5.00-12.00

Transportation equipment 5 3¡ª5 19.00-19.40

Furniture and office equipment 5 3¡ª5 19.00-19.40

15.3 The recognition criteria and measurement method for financial lease fixed assets

Financial lease fixed asset is a kind of lease that in actual transfers the overall ownership and risk of the asset.

The initial cost of financial lease fixed asset is the lower of the fair value and the present value of expected

lease payment on lease inception day. The measurement of financial lease adopts the same depreciation and

impairment provision policy as self-owned fixed assets.

16£®Construction in progress

Construction in progress of the company includes self construction and outsourced construction project.

When conformed to the expected conditions for use, the construction in progress will be transferred to fixed

assets. The recognition standard of expected conditions for use should meet one of the following

circumstances:

(1) The fixed assets of the entity build (including installation) work have been finished completely or

substantially

(2) After trial production or trial operation, the asset is able to operate steadily or produce standard and

qualified products, or the results of trial operation indicates that the asset is able to normally work or operate ;

(3) The expenditures of the construction of fixed assets are little or almost no longer occur;

(4) The assets under acquisition and construction have reached the design or the contract requirements, or

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are fundamentally in accordance with design or contract requirements.

The majority of the projects of construction in progress of the Company are ships. When the ships are tested

qualified and accepted and meet the criteria of sea sailing, the company determines that project of

construction in progress has reached the expectations for use.

17£®Borrowing Costs

17.1 Principle of capitalization of borrowing cost

The borrowing costs that are directly attributable to the acquisition or production of a qualifying asset are

eligible for capitalization. Other borrowing cost should be recognized as expenses and attributed to profit and

loss account when incurred. Qualifying assets are assets (fixed assets, investment property, inventories, etc.)

that necessarily take a substantial period of time for acquisition, construction or production to get ready for

their intended use or sale.

17.2 Measurement of capitalization of borrowing cost

The capitalization period refers to the period from the beginning to the end of capitalization of borrowing costs.

The suspended period of the capitalization of borrowing costs is not included.

During the capitalization period: if the acquisition and construction or production of a qualified asset is

interrupted abnormally and the interruption period lasts for more than 3 months, the capitalization of the

borrowing costs shall be suspended.

Confirmation of the amount which has been capitalized: During the capitalization period, the amount of

interest to be capitalized for each accounting period shall be determined as follows:

(a) For a specific-purpose borrowing, the amount of interest to be capitalized shall be the actual interest

expense incurred for the period less temporary deposit¡¯s interest or investment income;

(b) For funds are borrowed under general-purpose borrowings, the Company shall determine the amount of

interest to be capitalized by applying a capitalization rate to the weighted average of the excess amounts of

cumulative expenditures on the asset over and above the amounts of specific-purpose borrowings. The

capitalization rate shall be the weighted average of the interest rates applicable to the general-purpose

borrowings.

(c) When loan discount or premium exists, the company should determine those discount and premium

amortization amount with the actual interest rate method, and adjust the amount of interests for each period.

The effective interest rate method is based on borrowing real interest rates to calculate both discount or

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premium or more interest expense. Real interest rate is the interest used to calculate future cash flow for the

expected duration.

18£®Intangible Assets

18.1 Measurement of intangible assets

The initial measurement of intangible assets is based on cost. For the intangible assets purchased, the price

paid and relevant cost related to the purchase will be recognized as cost of the intangible assets. For the

intangible assets invested by investors, the cost of the assets will be recognized as contract agreement

amount, and it shall be recognized at fair value once the contract agreement amount is unfair. For self

developed intangible assets, all cost occurred before it reached the condition for use will be recognized as

cost of intangible asset.

Subsequent measurement that the Company adopts: (1) the amortization amount of intangible assets with

finite useful lives shall use straight-line amortization method over its useful life The company shall, at least at

the end of each year, review the amortization period and the amortization method of the intangible assets with

finite useful lives and adjust them when necessary; (2) Intangible assets with indefinite useful lives shall not

be amortized, but they required an annual impairment review of useful lives. For any evidence of finite

economic useful life, the company will reassess its useful life adopt straight-line amortization method.

18.2 Recognition criteria of intangible assets with indefinite useful lives

The future economic benefit flowing from intangible asset unforeseeable or its economic use life that cannot

be estimated will be recognized as intangible assets with indefinite useful lives.

Recognition criteria of intangible assets with indefinite useful lives can be determined:

(1) From contraction right or other legal rights, and the contract or law specifies no fixed number of year of

use;

(2) Summarized industry situation or related experts arguments, and still can't conclude the useful life during

which intangible assets could make economic benefits for the company

The bottom-up Impairment review of useful life of intangible assets is at least at the end of each year, and

reassessed for any change in estimated useful life by related departments

19. Impairment of asset

Impairment loss test is applied to items such as: long-term equity investment, investment properties under

cost method, fixed assets, construction in progress, productive biological asset under cost method,

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oil-and-gas asset, intangible asset, goodwill and other long-term assets that indicates impairment loss on

balance-sheet date. After impairment loss test, if the recoverable amount is below its book value, the

difference is prepared for impairment loss and deducted from profit and loss.

Recoverable amount is the higher of fair value minus disposal expenses and expected future cash flow.

Impairment loss is calculated and confirmed by individual asset. For individual asset difficult to valuate its

recovery amount, it is determined by its asset group. An asset group is the minimum asset portfolio which

could generate cash inflows.

Impairment test should be applied to goodwill at least annually whether it indicates signs of impairment loss or

not. When goodwill is tested for impairment, its book value is impaired to asset group or asset portfolio that

benefit from synergistic effects of enterprise merger and acquisition. It is tested to be impairment loss if the

recovery amount of goodwill from asset group or asset portfolio is below from its book value. Impairment loss

amount is first deducted from the book value of goodwill from asset group or asset portfolio, and then

deducted proportionally to the book value of other assets according to the portion of the rest asset group and

asset portfolio apart from goodwill.

Once confirmed, the above-stated impairment loss is nonreversible.

20. Long-term deferred expenses

Long-term deferred expenses refers to expenses that have been paid out, but with more than 1 beneficial

accounting years. Long-term deferred expenses should be amortized base on the straight-line method during

the beneficial period. If there is any evidence implying that the long-term deferred expenses cannot bring

economic benefit any more, the company shall write-down all the balance of long-term deferred expenses into

current profit and loss.

21.Employee compensation

Employee compensation refers to all forms of payment or compensation that the enterprise grants to obtain

service or terminate the labor relationship. Employee compensation is mainly composed of short-term

employee compensation, welfare of departure and other long-term employee welfare.

21.1 Short-term employee compensation

During the accounting period when an employee provides service to the Company, the actual short-term

employee compensation is determined as liability and deducted from current profit and loss, except for those

counted in asset cost according to other accounting principle requirements. The employee welfare is

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deducted from profit and loss or related asset cost according to its actual amount. Non-monetary employee

welfare is counted as its fair value. The payment of medical assurance premium, industrial injury insurance

premium, birth insurance premium with other social insurance premium, housing fund, labor-union

expenditure and personnel-training expenditure withdrawn as required that the Company undertakes for

employees in the service-providing accounting period, is calculated proportionally to determine the employee

compensation amount and accordingly amount of liability, which is then deducted in current profit and loss

and related asset cost.

21.2 Welfare of departure

The Company determines the amount calculated according to predetermined contribution plan in the

accounting period that employee provides service as liabilities and subtracts it in current profit and loss and

related asset cost. The welfare obligation of benefit plan that generated from estimated accumulated welfare

in the accounting period that employee provides services is deducted from current profit and loss and related

asset cost.

21.3 The determination of welfare of departure

The determination date of welfare of departure is the earlier of : (1). The date that the Company cannot

unilaterally terminate the labor relationship or provide layoff proposal; (2). The date that the Company

confirms reconstruction of welfare of departure or relevant costs.

21.4 Other long-term employee welfare

For other long-term employee welfare that in accordance with defined contribution plan requirements, it is

treated on the basis of related contribution plan requirements. Other than that, it is determined as net liability

or net asset of other long-term employee welfare.

22. Revenue

22.1 Revenue arising from the sale of goods

Revenue from the sale of goods is recognized according to the price stipulated in the contract or agreement,

only when all of the following conditions are satisfied:(1) The group has transferred to the buyer the significant

risks and rewards of ownership of the goods; (2) The group retains neither continuing managerial involvement

to the degree usually associated with ownership nor effective control over the goods sold; (3) The amount of

revenue can be measured reliably; (4) It is probable that the associated economic benefits will flow in the

group; (5) The associated costs incurred or to be incurred can be measured reliably.

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The Company¡¯s seine fishery sales occurs mainly at sea. When the ship is fully loaded, the captain will

contact with our sales department, sales department contacting transporting ship, cargo transferred to

transporting ship (mate receipt signed by both parties). Then sales department will sign sales agreement

according to the tonnage showed on the mate receipt. Finally, financial department confirm the revenue on

the basis of mate receipt, sales agreement, and sales invoice.

The Company long-line fishery is transported back and sold domestically. Sales department make sales price

referring to Japan's Shimizu transaction prices, and both sides confirm the change of the freight¡¯s ownership

according to sales contract and decision tables based on values. Financial department confirm the revenue

on the basis of sales contract, decision tables, and sales invoices .

The process of the company¡¯s aquatic products domestic sales: Domestic Sales Department (tuna sales

center) ,according to domestic customers¡¯ fax or mail orders, issue delivery confirmation and sales

department staff will arrange warehouse to stock and to ship by air, bus transportation, etc. According to the

dispatch list, with warehouse department signature and issued by sales department, the finance department

will issue sales invoice and confirm revenue.

The oversea sales of the Company¡¯s aquatic products processing: After obtaining purchase orders from

foreign customers, the International Trade Sector will issue export shipment orders and arrange

Transportation Department to prepare stocking. After the export goods be packed and transported out,

Warehousing Sector will sign on the dispatch list issued by International Trade Department. After the cargo

exported, export documents issued by transport department will be delivered, such as packing lists, bills of

lading, etc. and Warehousing Sector will get the export declaration issued by Customs Department. Finance

Department issue sales invoice and confirm sales revenue under the dispatch list, packing slips documents,

declarations, etc.

Deferred method should be employed in the charge of the price of contract or agreement. The sales of

goods should be determined according to fair value in receivable contract or agreement that in financing

nature.

21.2 Revenue generated from the rendering services

If the outcome of a transaction involving the rendering of services can be estimated reliably, at the balance

sheet date, revenue associated with the transaction is recognized using the percentage of completion method.

When the outcome of a transaction involving the rendering of services cannot be estimated reliably on

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balance sheet date, different accounting treatments shall be adopted depending on the circumstances:

a. when the costs incurred are expected to be recoverable, revenue shall be recognized to the extent of costs

incurred that are expected to be recoverable and an equivalent amount shall be charged to profit or loss as

service costs.

b. when the costs incurred are not expected to be recoverable, the costs incurred shall be recognized in profit

or loss for the current period and no service revenue shall be recognized.

21.3 Revenue arising from the use by others of enterprise assets

Revenue arising from the use by others of enterprise assets shall be recognized only when both of the

following conditions are satisfied:

(1) It is probable that the associated economic benefits will flow to the enterprise; and

(2) The amount of the revenue can be measured reliably.

23.Governmentgrants

23.1 Accounting treatment of asset-related government grants

Government grants that acquired by the company for construction or other forms to establish long-term assets

and related to an asset shall be recognized as deferred income, and evenly amortized to profit or loss over the

useful life of the related asset

23.2 Accounting treatment of asset-related government grants

Government grants related to an asset shall be recognized as deferred income,. For the government grants to

income, the following circumstance is processed respectively:

(1) If the grant is a compensation for related expenses or losses to be incurred by the enterprise in

subsequent periods, the grant shall be recognized as deferred income, and recognized in profit or loss

over the periods in which the related costs are recognized.

(2) If the grant is used to compensate for the enterprise actual related expenses or losses, it is directly

included in the current profits and losses.

23.3 Specific recognition criteria of asset-related and income-related government grants

The criteria to determine asset-related and income-related government grants when there is no clear-stated

subsidy object in government document is listed as follows:

(1) It is recognized as asset-related government grants if the government document has indicated the specific

project in subsidy object. The amount that formed from the budget of this specific project and the amount that

counted into expenses shall be divided proportionally. The division proportion is to be revised at each

balance-sheet date and corrected when necessary.

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(2). It is recognized as income-related government grants if there is only generally described function and no

indication of specific project in subsidy object in the government document.

24.Deferredtaxassetsanddeferredtaxliabilities

Recognition criteria of deferred tax liabilities and deferred tax assets£º

£¨1£©According to the balance between assets and liabilities¡¯ book value and tax base(items that are not

recognized as an asset or liability, which is in accordance with the provisions of the tax law, determine the tax

base as the balance), Recognition of deferred tax assets and deferred tax liabilities are calculated according

to the applicable rate of the period of expecting to recover the asset or liability.

£¨2£© A deferred tax asset shall be recognized for deductible temporary differences to the extent that it is

probable that taxable profits will be available against which the deductible temporary differences can be

utilized. On balance sheet date, If it is likely to obtain sufficient amount of taxable income tax in future to

reverse partial or all deferred tax assets, it is determined as deferred income tax assets that are not confirmed

by former accounting periods. If it is unlikely to obtain sufficient amount of taxable income tax in future to

reverse partial or all deferred tax assets, the carrying amount of the deferred tax assets shall be reduced for

those unable to reverse.

(3)Taxable temporary differences arising from investment in subsidiaries and joint ventures, the company

shall recognize deferred tax liabilities, unless the company can control the timing of reversal of this temporary

differences and the return of temporary differences in the foreseeable future is improbably to occur.

Deductable temporary differences arising from investment in subsidiaries and joint ventures, when the return

of temporary differences in the foreseeable future is probably to occur and it is likely to be used to deduct the

income tax, the company shall recognize deferred tax assets.

25.Leases

25.1 Accounting treatment of operational lease

The rental expense within lease duration is counted in relevant asset costs using straight line method in

current profit and loss.

25.2 Accounting treatment of financial lease

The book value of financial lease is determined as the lower of its fair value and the present value of future

lease payments. The difference between the book value and its minimum lease payment is determined as

unconfirmed financing expense and amortized according to effective rate method within lease duration. The

residual value of the minimum lease payment less unconfirmed financing expense is listed as long-term

payable.

26.Changesinaccountingpoliciesandaccountingestimate

26.1 Changes in main accounting policies

None

26.2 Changes in accounting estimates

None

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IV. The main tax items

1. Main tax categories and tax rates

Tax categories Tax base Tax rate

output tax deducted input tax that can be

Value-added tax£¨VAT£© 17%,13%,6%

credited against the output tax

Business tax Rent revenue 5%

Urban maintenance and construction tax Turnover taxes already paid 7%

Educational surcharge Turnover taxes already paid 3%,

Local educational surcharge Turnover taxes already paid 2%

Income tax Taxable income 25%

Note: Shandong zhonglu Haiyan Oceanic Fisheries Co., Ltd. was exemption from enterprise income tax. Part

of the fishery product processing of Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd. was exemption from

enterprise income tax.

2. Tax preferences and approval documents

2.1 VAT Tax preferences

On the basis of relevant policies in the following documents: Cai Shui Zi (1994) No. 001 < Notice of income

tax preferential policies of the Company>, Cai Shui Zi (1997) No.114 < Notice of income tax of

domestic-funded fishery companies engaged in fishing business>, finance and agriculture document of

Ministry of Finance (2000) No.104 < Document of suggestions on development acceleration of pelagic fishery

industry in our country>, Order of the Chairman of the People¡¯s Republic of China (2007) No.63

Republic of China Enterprise Income Tax Law>, Decree of the State Council of the People¡¯s Republic of China

No.512 < Enforcement regulations of People¡¯s Republic of China Enterprise Income Tax Law>,

Income from activities of pelagic fishery and preliminary production of agricultural products in which the

Company is engaged is exempt from income tax. Income from activities other than pelagic fishery and

preliminary production of agriculture products that the Company is engaged in is taxed 25%.

V. Notes to the consolidated financial statement

1£®Monetary funds

Account Ending balance Beginning balance

Cash 893,253.29 817,698.32

Bank deposit 70,570,487.71 43,373,129.70

Other cash and cash equivalent 964,680.94 789,383.02

Total 72,428,421.94 44,980,211.04

Note: Among other cash and cash equivalent, 964,051.94 yaun is marginal deposit.

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2£®Accounts receivable

2.1 Disclosure according to category

Ending Balance

Category Book balance Bad debts provision

proportion proportion

amount amount

(%) (%)

Significant individual amount accounts

receivable in need of bad debts provision

Accounts receivable in need of bad debts

33,905,178.71 100.00 7,158,223.13 21.11

provision according to combination

Aging combination 33,905,178.71 100.00 7,158,223.13 21.11

Riskless combination

Accounts receivable without significant

single amount in need of separate bad debts

provision

Total 33,905,178.71 100.00 7,158,223.13 21.11

Beginning Balance

Category Book balance Bad debts provision

proportion proportion

amount amount

(%) (%)

Significant individual amount accounts

receivable in need of bad debts provision

Accounts receivable in need of bad debts

32,444,198.22 100.00 7,048,225.95 21.72

provision according to combination

Age combination 32,444,198.22 100.00 7,048,225.95 21.72

Riskless combination

Accounts receivable without significant

single amount in need of separate bad

debts provision

Total 32,444,198.22 100.00 7,048,225.95 21.72

2.1.1 Bad debt provision of account receivable based on aging analysis:

Ending balance Beginning balance

Aging schedule Proportion Proportion Bad debt

Book value balance Bad debt provision Book value balance

(%) (%) provision

Within 6 months 27,686,028.99 5.00 1,384,301.47 26,651,849.08 5.00 1,332,592.43

6 months to 1

370,679.31 10.00 37,067.93 22,956.50 10.00 2,295.65

year

1 year to 2 years 159,452.40 30.00 47,835.72 79,337.30 30.00 23,801.19

2 years to 3

1,037.33 50.00 518.67

years

Above 3 years 5,689,018.01 100.00 5,689,018.01 5,689,018.01 100.00 5,689,018.01

total 33,905,178.71 7,158,223.13 32,444,198.22 7,048,225.95

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2.2 Provision, payback or return for the bad debts in this period

In this period, the amount of provision for bad debts is 109,997.18yuan, no withdraw or return for bad debts.

2.3 According to information of the top five debtors:

Proportion to overall receivable

Company name Ending balance Bad debt provision balance

ending balance

LUEN THAI SEAFOODS INTERNATIONAL

8,589,862.39 25.33 429,493.12

LTD

CORAL TRIANGLE PROCESSOR 4,600,355.85 13.57 230,017.79

PACIFIC PANDA,INC 3,600,962.12 10.62 3,600,962.12

Shanghai baifeng food co., LTD 1,616,234.73 4.77 80,811.74

Dalian Chen Yang science and Technology

1,107,750.00 3.27 55,387.50

Development Co., Ltd

Total 19,515,165.09 57.56 4,396,672.27

3£®Payment in advance

3.1 Analysis according to aging schedule

Ending balance Beginning balance

Aging schedule

Amount Proportion (%) Amount Proportion (%)

Within 1 year 6,195,816.18 100.00 29,278,905.45 100.00

Total 6,195,816.18 100.00 29,278,905.45 100.00

3.2 Information of the first five companies of payment in advance

Business name Ending balance Proportion (%)

Government of KIRIBATI 1,260,148.02 20.34

Zhejiang Sea Shipyard Co. Ltd 1,000,000.00 16.14

Nantong glacier refrigeration equipment Co., Ltd. 600,000.00 9.68

TONG AIK MARINE ENTERPRISE PTE LTD 257,879.75 4.16

Dalian ocean Ocean Fisheries Co., Ltd. 300,000.00 4.84

Total 3,418,027.77 55.16

4£®Other receivables

4.1 Disclosure according to category

Ending balance

Book balance Bad debts provision

Category

proportion proportion

amount amount

(%) (%)

Individual significant amount of other receivables in need of

bad debt provision

Other receivables in need of bad debts according to 9,297,125.77 100.00 4,729,508.28 50.87

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Ending balance

Book balance Bad debts provision

Category

proportion proportion

amount amount

(%) (%)

combination

Aging combination 8,297,125.77 89.24 4,729,508.28 57.00

Riskless combination 1,000,000.00 10.76

Individual insignificant amount of other receivables in need

of separate bad debt

Total 9,297,125.77 100.00 4,729,508.28 50.87

Beginning balance

Book balance Bad debts provision

Category

proportion proportion

amount amount

(%) (%)

Individual significant amount of other

receivables in need of bad debt provision

Other receivables in need of bad debts

12,146,008.44 100.00 4,532,337.82 37.32

according to combination

Aging combination 7,359,030.55 60.59 4,532,337.82 37.32

Riskless combination 4,786,977.89 39.41

Individual insignificant amount of other

receivables in need of separate bad debt

Total 12,146,008.44 100.00 4,532,337.82 37.32

4.1.1 Provision for bad debts based on aging schedule analysis

Ending balance Beginning balance

Aging

Book value Proportion Bad debt Book value Proportion( Bad debt

schedule

balance (%) provision balance %) provision

Within 6

2,511,310.09 5.00 125,565.51 2,689,959.10 5.00 134,497.98

months

6 months to

794,951.66 10.00 79,495.17 152,090.47 10.00 15,209.05

1 year

1 year to 2

651,340.48 30.00 195,402.15 164,513.76 30.00 49,354.13

years

2 years to 3

20,956.19 50.00 10,478.10 38,381.13 50.00 19,190.57

years

Above 3

4,318,567.35 100.00 4,318,567.35 4,314,086.09 100.00 4,314,086.09

years

total 8,297,125.77 4,729,508.28 7,359,030.55 4,532,337.82

4.1.2 Provision for bad debts based on other combination analysis

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Ending balance Beginning balance

Combination

Book value Bad debt Book value Bad debt

category Proportion% Proportion%

balance provision balance provision

Riskless

1,000,000.00 4,786,977.89

combination

Total 1,000,000.00 4,786,977.89

4.2 Provision, payback or return for the bad debts in this period

In this period, the amount of provision for bad debts is 197,170.46yuan, no withdraw or return for bad debts.

4.3 Division of other receivable by nature

nature Ending balance Beginning balance

Income tax refund receivable 2,516,977.89

Guarantee deposit 1,165,901.84 2,270,000.00

Insurance claim 808,986.14 351,655.81

Current account and others 7,322,237.79 7,007,374.74

Total 9,297,125.77 12,146,008.44

4.4 Information of the first five debtors

Bad debt

Business name Nature Ending balance Aging Proportion (%)

provision balance

Shandong Maritime Safety Guarantee Above 3

1,000,000.00 10.76

Administration deposit years

Within 6

PICC Property and Casualty Company months, 1

Insurance claim 808,986.14 8.70 128,363.26

Limited year to 2

years

Above 3

Dafa, Japan Current account 288,896.39 3.11 288,896.39

years

Above 3

DIVING-SEAGULL Current account 207,072.50 2.23 207,072.50

years

Above 3

Tingle Wang Staff borrowings 200,865.64 2.16 200,865.64

years

Total 2,505,820.67 26.96 825,197.79

5. Inventory

5.1 Classification of inventories

Ending balance Beginning balance

Inventory

category Falling price Falling price

Book balance Book value Book balance Book value

reserve reserve

Raw material 105,508,981.73 51,082.91 105,457,898.82 97,293,304.24 146,312.87 97,146,991.37

Low value and

consumption 154,798.51 - 154,798.51 645,557.76 645,557.76

goods

Finished goods 84,281,728.09 2,059,961.21 82,221,766.88 108,084,914.82 16,849,588.00 91,235,326.82

Turnover material

1,382,851.00 132,998.30 1,249,852.70 842,577.88 132,998.30 709,579.58

and package

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Ending balance Beginning balance

Inventory

category Falling price Falling price

Book balance Book value Book balance Book value

reserve reserve

Total 191,328,359.33 2,244,042.42 189,084,316.91 206,866,354.70 17,128,899.17 189,737,455.53

5.2 Changes in inventory falling price reserves

Reduction

Category Beginning balance Increase Ending balance

Reversal Written off

Raw material 51,082.91 51,082.91

Low value and

16,944,817.96 1,964,731.25 16,849,588.00 2,059,961.21

consumption goods

Turnover material and

132,998.30 132,998.30

package

Total 17,128,899.17 1,964,731.25 16,849,588.00 2,244,042.42

Note: The reason of written off inventory impairment is inventory sales.

6. Other current assets

Item Ending balance Beginning balance

VAT 14,277,217.00 8,365,709.75

Prepaid income tax 88,480.55 88,480.55

Prepaid other tax 39,712.50 134,581.25

Total 14,405,410.05 8,588,771.55

Available-for-sale financial asset

7.1 Presentation of available-for-sale financial asset

Ending balance Beginning balance

Item Impairment Book Impairment Book

Book balance Book balance

provision value provision value

Available-for-sale

33,000,000.00 33,000,000.00 33,000,000.00 33,000,000.00

equity instrument

Among

above-stated, cost

33,000,000.00 33,000,000.00 33,000,000.00 33,000,000.00

method is

employed

Total 33,000,000.00 33,000,000.00 33,000,000.00 33,000,000.00

7.2 Detail of equity instrument under cost method

Ending balance Beginning blance Proportion

Cash

Item Impairment Book Impairment Book of share

Book balance Book balance

provision value provision value holding (%) dividend

Equity

investment-

33,000,000.00 33,000,000.00 33,000,000.00 33,000,000.00 0.87

China

Southern

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Ending balance Beginning blance Proportion

Cash

Item Impairment Book Impairment Book of share

Book balance Book balance

provision value provision value holding (%) dividend

Securities

Total 33,000,000.00 33,000,000.00 33,000,000.00 33,000,000.00 0.87

Note: On 29th April, 2005, China Southern Securities received its administrative penalty, and its security

business license was cancelled by China Securities Regulatory Commission. On 16th August, 2006, Shenzhen

Intermediate People¡¯s court announced its bankruptcy. The Company has full provision of overall holding

shares of China Southern Securities.

8.Investment property

Investment property under cost method

Item Houses and buildings Total

Initial book value

Beginning book balance 47,120,794.80 47,120,794.80

Ending book balance 47,120,794.80 47,120,794.80

Accumulated depreciation and amortization

Beginning book balance 11,458,559.52 11,458,559.52

Increase 1,218,665.52 1,218,665.52

Depreciation and amortization 1,218,665.52 1,218,665.52

Ending book balance 12,677,225.04 12,677,225.04

Falling price reserve

Beginning book balance 886,512.06 886,512.06

Ending book balance 886,512.06 886,512.06

Book value

Ending book value 33,557,057.70 33,557,057.70

Beginning book value 34,775,723.22 34,775,723.22

9. Fixed assets

Presentation of fixed asset

Transportat Furniture

House and Boats and Machinery

ITem ion and office Total

building nets equipment

equipment equipment

Initial book value

Beginning book

74,047,364.66 469,007,734.69 32,328,693.35 6,423,090.55 9,659,001.07 591,465,884.32

balance

Increase 43,923,944.02 3,010,312.62 5,862,148.68 282,730.47 790,226.21 53,869,362.00

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Transportat Furniture

House and Boats and Machinery

ITem ion and office Total

building nets equipment

equipment equipment

Purchase 1,581,512.83 2,829,665.14 5,862,148.68 282,730.47 790,226.21 11,346,283.33

Converted from

construction-in-prog 42,342,431.19 180,647.48 - - - 42,523,078.67

ress

Deduction - 16,563,834.93 89,743.59 340,945.40 296,844.50 17,291,368.42

Disposal - 16,563,834.93 89,743.59 340,945.40 296,844.50 17,291,368.42

Ending book

117,971,308.68 455,454,212.38 38,101,098.44 6,364,875.62 10,152,382.78 628,043,877.90

balance

Accumulated

depreciation

Beginning balance 16,238,002.60 133,577,120.45 11,415,218.43 3,713,481.17 7,354,258.14 172,298,080.79

Increase 3,302,705.34 26,053,062.60 1,975,245.58 863,242.03 427,834.49 32,622,090.04

Amount withdrawn 3,302,705.34 26,053,062.60 1,975,245.58 863,242.03 427,834.49 32,622,090.04

Deduction - 6,251,285.72 21,089.84 311,396.38 296,844.50 6,880,616.44

Disposal - 6,251,285.72 21,089.84 311,396.38 296,844.50 6,880,616.44

Ending book

19,540,707.94 153,378,897.33 13,369,374.17 4,265,318.42 7,485,248.13 198,039,545.99

balance

Falling price reserve

Beginning book

7,571,580.00 7,571,580.00

balance

Increase 157,573.50 157,573.50

Deduction 7,571,580.00 7,571,580.00

Ending book

157,573.50 157,573.50

balance

Book value

Ending book value 98,430,600.74 301,917,741.55 24,731,724.27 2,099,557.20 2,667,134.65 429,846,758.41

Beginning book

57,809,362.06 327,859,034.24 20,913,474.92 2,709,617.78 2,304,742.93 411,596,231.93

value

Note1: The initial value of fixed asset in continuity of usage that has withdrawn depreciation is 8,611,422.12

Yuan.

Note2: According to the Debt Repayment Advice signed between the Company and Shandong Fishery Group

Corporation in April 2006, and Civil Ruling Li Zhi Zi No.1299 published by Lixia District People's Court of Jinan

in 2005, the building of Shandong Fishery Group Corporation located at Heping road No.43 Lixia District of

Jinan with the value of 54,221,197.05 Yuan was used to repay debt. The transfer procedure of the property

right certificate is not yet accomplished; The board of management coordinates actively relevant parties and

the property right certificate is still in process.

10. Construction in progress

10.1 Presentation of construction in progress

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Ending balance Beginning balance

item Falling Falling

book balance price book value book balance price book value

reserve reserve

Low-temperature

18,511,970.07 18,511,970.07

store

Atlantic seine

4,449,556.09 4,449,556.09 3,973,534.07 3,973,534.07

project

No.1 TaiLong 1,452,019.07 1,452,019.07

Total 5,901,575.16 - 5,901,575.16 22,485,504.14 22,485,504.14

10.2 Major changes in construction-in-progress

Beginning Transferred to fixed Other

Project Budget number Increase Ending balance

balance asset reduction

Low-temperature

39,000,000.00 18,511,970.07 23,830,461.12 42,342,431.19

store

Atlantic seine

43,840,000.00 3,973,534.07 476,022.02 4,449,556.09

project

Total 82,840,000.00 22,485,504.14 24,306,483.14 42,342,431.19 4,449,556.09

(Continue)

Proportion of Accumulated

Accumulated Rate of

project Rate of amount of

Project name amount of capitalized Source of fund

investment to progress(%) capitalized interest

capitalized interest interest

budget(%) of this year

Low-temperature store 100.00 100.00 793,677.50 219,450.00 9.00 Staff borrowing

Atlantic seine project 10.15 10.15 Self-owned

Toal 793,677.50 219,450.00

11. Intangible assets

Item Land use right Computer software Total

Initial book value

Beginning book balance 17,154,729.00 165,000.00 17,319,729.00

Increment 32,000.00 32,000.00

Purchase 32,000.00 32,000.00

Decrement

Ending book balance 17,154,729.00 197,000.00 17,351,729.00

Accumulated amortization

Beginning book balance 3,302,161.85 154,856.76 3,457,018.61

Increment 383,870.16 11,976.54 395,846.70

Amount withdrawn 383,870.16 11,976.54 395,846.70

Decrement

Ending book balance 3,686,032.01 166,833.30 3,852,865.31

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Item Land use right Computer software Total

Falling price reserve

Book value

Ending book value 13,468,696.99 30,166.70 13,498,863.69

Beginning book value 13,852,567.15 10,143.24 13,862,710.39

12. Deferred tax asset

12.1 deferred tax asset

Ending balance Beginning balance

Item Taxable temporary Taxable temporary

DTA DTA

difference difference

Asset depreciation reserve 306,828.34 1,227,313.36

Total 306,828.34 1,227,313.36

12.2 Unconfirmed details of DTA

Item Ending balance Beginning balance

Taxable temporary difference ¨CBad debt provision 11,887,731.41 7,613,023.05

Taxable temporary difference ¨CInventory falling price reserve 2,244,042.42 20,437,575.82

Deductable loss 76,122,159.09 44,075,376.44

Total 90,253,932.92 72,125,975.31

12.3 Presentation of deductable loss of unconfirmed DTA

Year Ending balance Beginning balance Remark

2015 10,496,726.06

2016 16,843,152.08 16,843,152.08

2017 11,888,745.27 11,888,745.27

2018 4,490,106.62 4,490,106.62

2019 356,646.41 356,646.41

2020 42,543,508.71

Total 76,122,159.09 44,075,376.44

13. Other non-current asset

Item Ending balance Beginning balance

Prepaid amount of land 2,000,000.00 2,000,000.00

Prepaid amount of construction-in-progress 6,868,187.00

Total 2,000,000.00 8,868,187.00

14. Short-term loans

Categories of short-term loans:

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Condition Ending balance Beginning balance

Collateral loan 15,000,000.00 11,054,697.70

Credit loan 31,321,773.62 31,261,626.99

Total 46,321,773.62 42,316,324.69

Note: Till 31st December, 2015, Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd. applies its land use right(Yan Guo Yong (2002)

No.1047) and Real estate right(Yan Fang Quan Zheng Kai No.102954, Yan Fang Quan Zheng Kai No.102985, Yan Fang Quan Zheng Kai

No.102986, Yan Fang Quan Zheng Kai No.102984, Yan Fang Quan Zheng Kai No.106566,) as collateral of 15,000,000 Yuan loan in

Yantai Kaifa District branch of Bank of China.

15. Accounts payable

Item Ending balance Beginning balance

Within 1 year (1 year included) 75,578,357.72 77,136,413.14

Beyond 1 year 6,191,940.89 4,273,520.53

Total 81,770,298.61 81,409,933.67

16. Advance deposit received

Item Ending balance Beginning balance

Within 1 year (1 year included) 18,341,441.56 20,787,298.43

Beyond 1 year 349,863.72 462,363.72

Total 18,691,305.28 21,249,662.15

17. Accrued employee compensation

17.1 Presentation of categories of accrued employee compensation

Items Beginning balance Accruals Payments Ending balance

Short-term compensation 16,752,686.83 104,558,705.40 103,866,207.93 17,445,184.30

Departure welfare-defined

- 7,231,981.15 7,231,981.15

contribution plan

Dismission welfare 140,933.82 211,526.17 212,378.37 140,081.62

Other welfare due within one

56,337.84 53,205.63 70,171.16 39,372.31

year

Total 16,949,958.49 112,055,418.35 111,380,738.61 17,624,638.23

17.2 Presentation of short-term employee compensation

Item Beginning Accrual Payment Ending

balance balance

Salary, bonus, allowance and

15,542,180.51 93,038,812.78 92,724,905.17 15,856,088.12

subsidy

Employee welfare 4,255,227.89 4,255,227.89

Social security 3,775,166.87 3,775,166.87

Medical insurance premium 3,051,497.83 3,051,497.83

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Injury insurance premium 377,577.36 377,577.36

Birth insurance premium 346,091.68 346,091.68

Housing fund 134,340.00 2,644,072.61 2,559,160.61 219,252.00

Labor union and employee training

1,076,166.32 625,199.25 331,521.39 1,369,844.18

expenditure

Others 220,226.00 220,226.00

Total 16,752,686.83 104,558,705.40 103,866,207.93 17,445,184.30

17.3 Presentation of defined contribution plan

Item Beginning balance Increment Decrement Ending balance

Basic endowment insurance 6,534,435.33 6,534,435.33

Unemployment insurance 354,842.16 354,842.16

Others 342,703.66 342,703.66

Total 7,231,981.15 7,231,981.15

18. Tax payable

Items Ending balance Beginning balance

Value-added tax 1,780,431.41 551,786.52

Income tax 43,807.86 112,078.67

Business income tax 497,594.64 117,104.60

Building taxes 252,935.96 228,809.68

Land use tax 166,227.25 166,192.45

Individual income tax 53,017.02 133,937.83

Stamp tax 18,070.36 88,016.04

Other tax 232,561.50 14,570.22

Total 3,044,646.00 1,412,496.01

19. Interest payable

Item Ending balance Beginning balance

Long-term debt interest with installment payment structure and

33,395.64

principle due at maturity

Long-term payable interest with installment payment structure

574,227.50 574,227.50

and principle due at maturity

Short-term debt interest 81,353.61 133,672.29

Total 655,581.11 741,295.43

20. Other account payable

Item Ending balance Beginning balance

Within one year 1,635,887.13 3,759,597.34

Beyond one year 3,994,403.35 3,365,063.54

Total 5,630,290.48 7,124,660.88

21. Non-current liabilities due within one year

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Item Ending balance Beginning balance

Long-term debt due within one year 1,900,000.00 15,346,666.66

Long-term payable due within one year 14,630,000.00

Deferred income due within one year 866,585.48 866,585.48

Total 17,396,585.48 16,213,252.14

22. Long-term debt

Condition Ending balance Beginning balance Interest rate range

Credit loan 1,900,000.00 6.7650-7.0725

Total 1,900,000.00

23. Long-term payable

Item Ending balance Beginning balance

Staff borrowing 14,630,000.00

Total 14,630,000.00

Note: In 2014, company¡¯s wholly-owned subsidiary Shandong Zhonglu Oceanic (Yantai) Food Co., Ltd.

Established wholly-owned subsidiary of Shandong Zhonglu Oceanic Fisheries Refrigeration Co., Ltd., for the

fund demands of low-temperature store project , Shandong Zhonglu Oceanic Fisheries Refrigeration Co., Ltd.

borrowed the two-year fund 14,630,000.00 Yuan from its personnel at 9% annual rate, interest validation date

starting from 28th July, 2014.

24. Long-term accrued employee compensation

Item Beginning balance Ending balance

Departure welfare-Net liability of defined

509,128.39 712,004.80

contribution plan

Other long-term accrued employee

1,271,854.02 1,196,121.42

compensation

Total 1,780,982.41 1,908,126.22

25. Deferred income

25.1 Categories of deferred income

Project Beginning balance Increment Decrement Ending balance Formation reason

Construction special Asset-related government

11,544,200.94 838,209.48 10,705,991.46

fund grants

Subsidy of boat Asset-related government

761,424.64 28,376.00 733,048.64

manufacture grants

Total 12,305,625.58 866,585.48 11,439,040.10

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25.2 Presentation of government grants

Amount that

reported under Asset-related or

Item Beginning balance Increment Other changes Ending balance

non-operating income-related

income

Construction special fund 11,544,200.94 838,209.48 10,705,991.46 Asset-related

Subsidy of boat

761,424.64 28,376.00 733,048.64 Asset-related

manufacture

Total 12,305,625.58 866,585.48 11,439,040.10

26. Share capital

Change£¨+¡¢-£©

Item Beginning balance Converted from Ending balance

Newly-issued Stock dividend company Other Total

reserve

Overall

266,071,320.00 266,071,320.00

shares

27. Capital reserves

Item Beginning balance Increment Decrement Ending balance

Capital premium 186,283,711.00 1,247,009.14 185,036,701.86

Other capital premium 94,961,504.96 94,961,504.96

Total 281,245,215.96 1,247,009.14 279,998,206.82

28. Other comprehensive income

Amount incurred in current period

Less:theamountreported Amount to A mount to

Beginning Ending

Item Before underothercomprehensive Less: income the minority

balance balance

income itax i comei formerperiodand tax Company shareholders

thatcountedi profitandl ss after tax after tax

Amount that cannot be

reclassified to profit

and loss

Amount that can be

reclassified to profit 52,881.19 -86,910.45 -86,910.45 -34,029.26

and loss

Difference in foreign

currency financial 52,881.19 -86,910.45 -86,910.45 -34,029.26

statement

Total 52,881.19 -86,910.45 -86,910.45 -34,029.26

29. Surplus reserve

Item Beginning balance Increment Decrement Ending balance

Statutory surplus reserve 21,908,064.19 21,908,064.19

Total 21,908,064.19 21,908,064.19

30. Undistributed profits

Ending balance

Items Extraction or

Amount

distribution£¨%£©

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Ending balance

Items Extraction or

Amount

distribution£¨%£©

Undistributed profit at ending of last year before adjustment -14,376,699.17

Total undistributed profit at beginning of year after adjustment(+,-)

undistributed profit at beginning of year after adjustment -14,376,699.17

Add: net profit attribute to parent company this year 12,141,360.21

Minus£ºAppropriation to statutory surplus reserve

Undistributed profit at end of year -2,235,338.96

31. Operating income and cost

Amount incurred this year Amount incurred last year

Item

Income Cost Income Cost

Total Operating activities 714,592,804.58 683,191,923.32 590,933,627.02 557,887,491.25

Seine tuna fishing 16,648,918.64 49,145,362.30 65,639,553.55 62,394,970.75

Long-line tuna fishing 34,820,140.60 27,452,777.24 10,582,561.22 21,372,225.89

Boat lease 92,625,139.80 65,460,761.63 79,278,010.43 60,559,539.26

Other pelagic fishing 15,188,831.26 13,808,258.27 12,155,710.73 12,443,882.59

Aquatic products manufacture 546,887,905.48 522,103,529.77 417,460,400.97 396,522,707.67

Refrigeration 6,799,773.81 4,337,022.24 2,993,595.14 3,054,900.71

Subcontract production 1,622,094.99 884,211.87 2,823,794.98 1,539,264.38

Total other operating income 9,130,198.47 1,891,604.04 7,447,069.81 2,101,075.15

House lease 5,070,648.88 1,891,604.04 4,457,963.59 2,101,075.15

Sales of waste material and others 4,059,549.59 - 2,989,106.22

Total 723,723,003.05 685,083,527.36 598,380,696.83 559,988,566.40

32. Operating taxes and extras

Items 2015 2014

Business tax 302,776.98 284,109.92

Urban maintenance and construction tax 184,958.68 176,598.65

Educational surtax 79,267.99 75,685.13

Local educational surtax 52,845.34 50,456.74

Local water conservancy construction fund 26,422.66 25,228.37

Housing property tax 553,500.00 487,200.00

Land use tax 31,923.16 26,419.20

Total 1,231,694.81 1,125,698.01

33. Sales expense

Items 2015 2014

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Items 2015 2014

Employee compensation expenditure 1,084,593.76 1,027,457.72

Port charge expenditure 3,517,558.10 2,543,471.12

Transportation expense 909,175.36 760,180.49

Customs clearance charge 25,298.00 389,916.18

Travelling expense 241,966.08 308,286.06

Advertisement expense 78,397.00 181,025.00

Others 199,123.56 211,567.22

Total 6,056,111.86 5,421,903.79

34. General and administrative expenses

Items 2015 2014

Employee compensation expenditure 23,835,073.70 23,162,855.89

Depreciation expenditure 1,858,919.05 1,720,674.85

Travelling expense 935,256.07 1,461,141.52

Business entertainment expense 1,422,079.71 1,281,985.01

Tax expense 1,755,406.73 1,169,700.89

Vehicle expenses 707,389.26 893,632.96

Attorney expense 871,508.60 970,970.80

Administrative expense 700,442.63 523,181.90

Water and electricity expense 307,874.05 412,930.77

The cost of fishing moratorium 16,473,989.38

Other s 2,803,907.04 2,533,595.07

Total 51,671,846.22 34,130,669.66

Note£ºFor two fishing vessel of the company take a temporary fishing moratorium for several months in this

year, the relating costs during the outrage was listed in the administrative expenses. The cost of fishing

moratorium is mainly include£ºaccess fishing fees 9,458,202.45yuan, material amortization 3,536,411.36yuan,

employee compensation 1,467,230.19yuan, depreciation cost1,363,619.35yuan.

35. Financial expense

Items 2015 2014

Interest expenses 4,559,606.82 3,225,968.26

Less: Interest income 661,916.64 348,194.70

Exchange losses 2,988,181.57 1,639,044.88

Less: exchange gains 6,930,498.86 405,593.37

Service fee 356,909.86 376,838.87

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Items 2015 2014

Other expenses 120,953.55 -

Total 433,236.30 4,488,063.94

36. Assets impairment loss

Items 2015 2014

Bad debt losses 306,221.23 871,552.70

Inventory loss 1,964,731.25 16,444,075.81

Fixed assets loss 157,573.50

Total 2,428,525.98 17,315,628.51

37. Non-operating income

37.1 Presentation of Non-operating income

Amount Accounted into current

Item 2015 2014

Non-recurring profit and loss

Gains on disposal of non-current assets 12,530.62 46,363.18 12,530.62

Including: Gains on disposal of fixed assets 12,530.62 46,363.18 12,530.62

Gain on exchange of non-monetary asset 503,102.72

Government grants 42,878,271.48 35,849,885.48 2,021,471.48

Others 640,212.29 2,290,089.28 640,212.29

Total 43,531,014.39 38,689,440.66 2,674,214.39

37.2 Presentation of government grants that are counted in profit and loss

Asset-related

Item 2015 2014

/income-related

Fuel subsidies (Note1) 40,856,800.00 33,283,300.00 Income-related

Special fund of foreign trade and economic

1,100,000.00 1,700,000.00 Income-related

cooperation(Note2)

Fund for construction of Blue Economy

838,209.48 838,209.48 Asset-related

Zone(Note3)

Financial subsidy(Note4) 28,376.00 28,376.00 Asset-related

Others 54,886.00 Income-related

Total 42,878,271.48 35,849,885.48

Note1: According to < Notice of distribution of fuel subsidy of pelagic enterprises in 2014> (Nong Ban Yu

(2015) No.57), the Company has received fuel subsidy of 40,856,800.00 Yuan.

Note2: According to < Notice of budget of special fund of foreign trade and economic cooperation (foreign

investment cooperation project) >, the Company has received special fund of 1,700,000.00 Yuan; and the

Company has received 1,100,000.00 Yuan of this special fund from Shandong Province, Lixia District of

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Ji'nan City Finance Bureau in this year.

Note3: According to No.464(2011) document of

fund of 8,000 million Yuan of construction of Shandong peninsula Blue Economy Zone and Yellow River Delta

efficient ecological zone> issued by Yantai development and reform committee and Yantai Bureau of Finance,

and the notice of 2011 unit budget index(Yan Kai Cai Yu[2011] NO.514), issued by YanTai Economic and

Technological Development of Finance Bureau, specific indicators of blue economic zone construction

13,600,000.00 Yuan was allocated. The company received 6,800,000.00 Yuan in 2012, and 6,800,000.00

Yuan in 2013. Related fund had be recognized as deferred income when received, and amortized equally

over the expected average underlying assets¡¯ remaining useful life, the amount included in operating income

in 2015 is 838,209.48 Yuan.

Note4: According to (Lu Cai Zhi (2013)

No.32) issued by Shandong Bureau of Finance on 25th June, 2013, the Company has received ship

construction subsidy of 830,000.00 Yuan and counted under deferred income in current period and amortized

equally over the expected average underlying assets¡¯ remaining useful life. The amount counted under

non-operating income in 2015 is 28,376.00 Yuan.

38. Non-operating expenses

Item 2015 2014

Total loss on disposal of non-current assets 4,170,048.32 349,687.58

Including: loss on disposal of fixed assets 4,170,048.32 349,687.58

Donation 1,000.00 3,000.00

Others 659,660.28 2,421.42

Total 4,830,708.60 355,109.00

39. Income tax expenses

39.1 Presentation of income tax

Item 2015 2014

Current income tax calculated according to tax law and relevant

830,099.57 261,363.14

regulations

Deferred income tax adjustment 306,828.34 -135,120.83

Total 1,136,927.91 126,242.31

39.2 Adjustment of accounting profit and income tax expense

Serial

Item Amount

number

Overall profit 1 15,518,366.31

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Serial

Item Amount

number

Income tax expense based on statutory applied tax rate 2 3,879,591.58

The impact of different tax rates applicable 3 -8,498,687.92

Adjustment of former income tax 4 -3,746,385.59

Loss and non-recoverable cost and expenditure 5 68,411.09

The impact of DTA recognized in the current period 6 9,433,998.75

Income tax expense 7 1,136,927.91

40. Cash flow statement

40.1 Cash received and paid related to other operating activities

Item 2015 2014

Cash received from other operating activity 66,496,722.67 56,912,170.50

Including: financial expense-interest received 661,916.64 348,194.70

Government grants 42,017,846.00 34,983,300.00

Financial product due 7,000,000.00

Security deposit due 23,816,960.03 2,353,874.70

Current account and other 12,226,801.10

Cash paid to other operating activity 51,754,921.90 26,881,435.48

Including: cash payment to sales expense 4,926,815.66 4,394,446.07

Cash payment to administrative expense 21,390,270.01 8,104,357.39

Security deposit 23,992,257.95 1,606,486.17

Current account and other 1,445,578.28 12,776,145.85

40.2 Cash received and paid related to other investment activities

Item 2015 2014

Cash received from other investment-related activity 386,334.96

Including: No.102 Taifu insurance indemnity 386,334.96

40.3 Cash received and paid related to other financing activities

Item 2015 2014

Cash received from other financing-related activity 14,630,000.00

Including: Staff borrowing 14,630,000.00

Total 14,630,000.00

41.Supplementary information of cash flow statement

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41.1. Supplementary information of cash flow statement

Items 2015 2014

1£®Reconciliation of net profit to cash flows from operating activities:

Net profit 14,381,438.40 14,118,255.87

Add: Provision for impairment of assets 2,428,525.98 17,315,628.51

Depreciation of( fixed assets, fuel, productive biological assets) 33,840,755.56 26,713,768.91

Amortization of intangible assets 395,846.70 330,908.37

Amortization of long-term prepayments - 40,889.00

Losses on disposal of fixed assets, intangible assets and other long-term assets(income "-") 4,157,517.70 -199,778.32

Financial expenses(income "-") 4,559,606.82 -608,145.48

Decrease in deferred tax assets (increase "-") 306,828.34 -135,120.83

Decrease in inventories (increase "-") 15,537,995.37 44,624,087.61

Decrease in operating receivables (increase "-") 18,617,735.03 48,931,039.69

Increase in operating payables (less "-") -38,782,859.68 -85,811,051.96

Others -

Net cash flows from operating activities 55,443,390.22 65,320,481.37

2£®Significant investing and financing activities that do not involve cash receipts and

payments

3£®Net increase in cash and cash equivalents

Cash at the end of the period 71,464,370.00 44,191,457.02

Less: Cash at the beginning of the period 44,191,457.02 52,399,583.11

Add: Cash equivalents at the end of the period

Less: Cash equivalents at the beginning of the period

Net increase in cash and cash equivalents 27,272,912.98 -8,208,126.09

41.2 Cash and cash equivalents

Items Ending balance Beginning balance

1. Cash 71,464,370.00 44,191,457.02

Including: Cash on hand 893,253.29 817,698.32

Bank deposit to be withdrawn at any time 70,570,487.71 43,373,129.70

Other monetary funds to be withdrawn at any time 629.00 629.00

2. cash equivalents

3. Cash and cash equivalents at the end of year 71,464,370.00 44,191,457.02

42. Foreign currency monetary items

42.1 Presentation of foreign currency monetary items

Ending balance in foreign Ending balance in RMB

Item Exchange rate

currency amount amount

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Ending balance in foreign Ending balance in RMB

Item Exchange rate

currency amount amount

Cash

Including: USD 70,499.23 6.4936 457,793.79

EUR 1,205.00 7.0952 8,549.72

ZAR

XOF 185,000.00 0.01 2,252.44

GHC 91,789.23 1.71 157,084.79

Bank deposit

Including: USD 3,171,851.72 6.4936 20,596,736.33

JPY 5,563,226.00 0.0539 299,718.80

EUR 7,342.49 7.0952 52,096.49

SGD 462.09 4.5875 2,119.84

GHC 152,592.64 1.7114 261,141.55

Account receivable 2,153,882.17 6.4936 13,986,449.26

Including: USD 2,153,882.17 6.4936 13,986,449.26

JPY 25,444,391.91 0.0539 1,370,816.61

Other account receivable

Including: USD 59,950.69 6.4936 389,295.82

42.2 Base currency in significant oversea operating entity

Operating entity Location Base currency Selection criteria

HABITAT INTERNATIONAL

Panama RMB Business environment need

CORPORATION

LAIF FISHERIES COMPANY

Ghana USD Business environment need

LIMITED

YAW ADDO FISHERIES

Ghana USD Business environment need

COMPANY LIMITED

VI. Change in consolidation scope

There was no change from the previous period.

VII. Equity in other entities

1. Enterprise formation

Registered Main business Proportion of

Subsidiary Operation content Acquisition method

location location shareholding(%)

Shandong Zhonglu Oceanic

Shandong Shandong Refrigeration

Fisheries Transportation 100.00 Through investment

Qingdao Qingdao transportation

Co., Ltd.

Shandong Zhonglu Oceanic Shandong

Shandong Yantai Food processing 100.00 Through investment

(Yantai) Food Co., Ltd. Yantai

Shandong zhonglu Haiyan Shandong Shandong

Oceanic fishing 81.26 Through investment

Oceanic Fisheries Co., Ltd. Qingdao Qingdao

HABITAT

Refrigeration

INTERNATIONAL Panama Panama 100.00 Through investment

transportation

CORPORATION

YAW ADDO FISHERIES Through operational

Ghana Ghana Oceanic fishing

COMPANY LIMITED lease

2. Presentation of not-wholly-owned subsidiary

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Ending balance of

Proportion of minority Current loss to minority Current dividend to

No. Corporation Name accumulated minority

holdings shareholders minority shareholders

holdings

Shandong zhonglu

Haiyan Oceanic 18.74% 2,240,078.19 28,042,285.19

Fisheries Co., Ltd.

3. Financial information of not-wholly-owned subsidiary

Ending balance

Corporation name Non-current

Current asset Non-current asset Total asset Current liability Total liability

liability

Shandong zhonglu

Haiyan Oceanic 61,746,373.60 95,320,935.48 157,067,309.08 6,698,258.40 733,048.64 7,431,307.04

Fisheries Co., Ltd.

Beginning balance

Corporation name Non-current

Current asset Non-current asset Total asset Current liability Total liability

liability

Shandong zhonglu

Haiyan Oceanic 44,302,018.84 13,930,784.60 58,232,803.44 7,251,421.94 - 7,251,421.94

Fisheries Co., Ltd.

2015 2014

Corporation Total Total

Operating Operating Operating Operating

name Net income comprehensive Net income comprehensive

income cash flow income cash flow

income income

Shandong

zhonglu

Haiyan

49,745,349.17 13,202,476.97 13,244,820.54 --4,262,398.67 12,985,795.41 -2,603,617.99 -2,604,370.81 4,121,172.71

Oceanic

Fisheries

Co., Ltd.

VIII. Risk related to financial instrument

The financial assets of the Company include notes receivable, account receivable and other receivables,

the financial liabilities include notes payable, account payable, other payables and long-term loan, for details

see Notes V. Company is faced with Various risks in operating activities, including credit risk, liquidity risk and

market risk, board of directors establish and supervise company¡¯s ERM architecture, establish and supervise

company¡¯s risk management policy with full authority.

The goals of Company engaged in the risk management is to achieve the proper balance between the

risks and benefits, reduced the negative impact to the Company operating performance risk to a minimum,

maximized the profits of shareholders and other equity investors.

1. Credit risk

Credit risk what may lead to the financial losses was the other party of the contract failed to fulfill the

obligations and causes loss of the Company¡®s financial assets. Credit risk is mainly from the customers¡¯

receivables. The book value of account receivable, note receivable and other account receivable are the

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biggest credit risk of the company¡¯s financial assets.

2. Liquidity Risk

Liquidity risk is the risk that the company is in short of capital when fulfilling its obligations related to

financial liabilities. In the capital normal and stressful situation, the company ensures that there is sufficient

liquidity to fulfill the due debt, and consult with the financial institutions to maintain a certain level of reserve

credit line to reduce liquidity risk.

3. Market risk

(1) Foreign exchange risk

Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate. The

company's foreign exchange risk is mainly derived from the dollar denominated financial assets. The amount

of foreign currency denominated financial assets to be converted into RMB is as V.42 the foreign currency

monetary items stated.

(2) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flow of the financial instruments fluctuate due

to the fluctuation of market interest rate. The company's interest rate risk is mainly derived from long-term

bank borrowings, the company's borrowing are floating interest rates, there is a risk of RMB benchmark

interest rate changes.

IX. Related party relationship and transactions

1. Parent company and ultimate controller

Registered Holding the

Registered Proportion of the

Name Activity content capital Company¡¯s

location right to vote(%)

(RMB0¡¯000) shares (%)

Investment and

management,

asset

Shandong

management

State-owned

Shandong and capital

assets 450,000 33.07 33.07

Jinan operation,

investment Co.

entrustment

Ltd

management,

investment

consulting

Note: Shandong State-owned assets investment Co. Ltd is the ultimate controller of the Company.

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2. Information about subsidiaries

Detailed information refers to VII Equity in other entities.

3. Information of other related parties

Name Relationship with the Company

Shandong Luxin Investment Holdings Ltd. Shareholder(¡Ý5%)

4. Compensation of key management personnel

Name 2015 2014

Compensation of key management personnel 2,031,803.00 1,457,400.00

X. Commitment issues and Contingencies

1. Commitment issues

None

2.Contingencies

None

XI. Events after the balance sheet date

None

XII. Other significant matter

1.Branches report:

1.1 The company¡¯s mainly business are oceanic fishing, aquatic products processing, vessels leasing and

others. The company disclosure the branches reports by the character and plate of its mainly bussiness.

1.2 The financial information of branches report

Aquatic products Elimination between

Item Oceanic fishing Vessels leasing Others

processing branches

¢ñ. Sales revenue 185,621,533.50 92,625,139.80 548,602,960.51 24,133,829.32 136,390,658.55

¢ò. Cost of sales 213,326,719.69 65,460,761.63 526,423,451.54 18,328,327.89 140,347,337.43

¢ó. Assets Devaluation 559,165.51 8,748.71 1,666,899.96 659,895.30 466,183.50

¢ô.Fees of depreciation and

16,071,510.44 11,608,177.55 4,092,509.24 3,556,300.41 1,091,895.38

amortization

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Aquatic products Elimination between

Item Oceanic fishing Vessels leasing Others

processing branches

¢õ. Overall profit -22,321,550.27 20,365,671.26 15,057,590.65 -4,707,722.29 -7,124,376.96

¢ö. Income tax expenses 1,136,927.91 -

¢÷. Net profit -22,321,550.27 20,365,671.26 14,596,562.31 -5,383,621.86 -7,124,376.96

¢ø. Total assets 376,233,577.34 204,252,675.42 270,276,603.99 473,212,936.15 525,742,999.79

IX. Total liability 117,369,132.97 36,710,801.51 131,547,189.69 210,439,051.86 291,583,890.90

2. In addition to the above matters, the company doesn¡¯t have other important matters to

disclosure.

XIII. Notes of main accounts of parent company¡¯s financial statements

1£®Accounts receivable

Accounts receivable classification

Ending balance

Category Book balance Bad debts provision

proportion proportion

amount amount

(%) (%)

Significant single amount accounts receivable in

need of separate bad debts provision

Accounts receivable in need of bad debts provision

6,437,305.01 100.00 5,689,018.01 88.38

according to combination

Aging combination 5,689,018.01 88.38 5,689,018.01 100.00

Riskless combination 748,287.00 11.62

Accounts receivable of insignificant single amount in

need of separate bad debts provision

Total 6,437,305.01 100.00 5,689,018.01 88.38

Beginning balance

Category Book balance Bad debts provision

proportion proportion

amount amount

(%) (%)

Significant single amount accounts receivable in

need of separate bad debts provision

Accounts receivable in need of bad debts provision

15,455,725.90 100.00 6,080,378.46 39.34

according to combination

Aging combination 13,506,890.90 87.39 6,080,378.46 45.02

Riskless combination 1,948,835.00 12.61 -

Accounts receivable of insignificant single amount in

need of separate bad debts provision

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Beginning balance

Category Book balance Bad debts provision

proportion proportion

amount amount

(%) (%)

Total 15,455,725.90 100.00% 6,080,378.46 39.34

1.1 Bad debts provision of accounts receivable in combination

1.1.1 Bad debts provision of accounts receivable in aging analysis:

Ending balance Beginning balance

Aging

schedule Proportion Proportion

Book value balance Bad debt provision Book value balance Bad debt provision

(%) (%)

Within 6

7,816,835.56 5.00 390,841.78

months

6 months to

10.00

1 year

1 year to 2

30.00

years

2 years to 3

1,037.33 50.00 518.67

years

Above 3

5,689,018.01 100.00 5,689,018.01 5,689,018.01 100.00 5,689,018.01

years

total 5,689,018.01 5,689,018.01 13,506,890.90 6,080,378.46

1.1.2 Bad debts provision of accounts receivable in other combination analysis:

Ending balance Beginning balance

Combination category Bad debt Bad debt

Book balance Proportion Book balance Proportion

provision provision

Riskless combination 748,287.00 - 1,948,835.00

Total 748,287.00 1,948,835.00

1.2 Information of the first five debtors

Proportion to overall receivable

Company name Ending balance Bad debt provision balance

ending balance%

PACIFIC PANDA,INC 3,600,962.12 63.30 3,600,962.12

Shandong Zhonglu Oceanic (Yantai) Food

748,287.00 13.15

Co., Ltd.

Qingdao Haifeng limited liability company 430,625.10 7.57 430,625.10

Han Xue 293,209.20 5.15 293,209.20

Lv Ming 158,154.98 2.78 158,154.98

Total 5,231,238.40 91.95 4,482,951.40

2£®Other receivables

2.1 Disclosure according to category

Ending balance

Category

Book balance Bad debts provision

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proportion proportion

amount amount

(%) (%)

Individual significant amount of other receivables in need of bad

debt provision

Other receivables in need of bad debts according to

39,960,282.54 100.00 3,709,759.93 9.28

combination

Aging combination 5,596,767.41 14.01 3,709,759.93 66.28

Riskless combination 34,363,515.13 85.99

Individual insignificant amount of other receivables in need of

separate bad debt

Total 39,960,282.54 100.00 3,709,759.93 9.28

Beginning balance

Category Book balance Bad debts provision

proportion proportion

amount amount

(%) (%)

Individual significant amount of other receivables in need

of bad debt provision

Other receivables in need of bad debts according to

37,625,953.95 100.00 3,556,332.05 9.45

combination

Aging combination 5,069,982.85 13.47 3,556,332.05 70.14

Riskless combination 32,555,971.10 86.53

Individual insignificant amount of other receivables in

need of separate bad debt

Total 37,625,953.95 100.00 3,556,332.05 9.45

2.2 Provision for bad debts based on combination analysis

2.2.1 Provision for bad debts based on aging schedule analysis

Ending balance Beginning balance

Aging

schedule Book value Book value

Proportion% Bad debt provision Proportion% Bad debt provision

balance balance

Within 6

1,135,287.32 5.00 56,764.37 1,385,887.10 5.00 69,294.35

months

6 months to 1

436,775.86 10.00 43,677.59 112,776.04 10.00 11,277.61

year

1 year to 2

585,285.82 30.00 175,585.75 133,246.49 30.00 39,973.95

years

2 years to 3

11,372.39 50.00 5,686.20 4,574.16 50.00 2,287.08

years

Above 3

3,428,046.02 100.00 3,428,046.02 3,433,499.06 100.00 3,433,499.06

years

Total 5,596,767.41 3,709,759.93 5,069,982.85 3,556,332.05

2.2.2 Provision for bad debts based on other combination analysis

Ending balance Beginning balance

Combination

category Book value Bad debt Bad debt

Proportion% Book value balance Proportion%

balance provision provision

Riskless

34,363,515.13 32,555,971.10

combination

Total 34,363,515.13 32,555,971.10

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2.3 Division of other receivable by nature

nature Ending balance Beginning balance

Internal current account 34,363,515.13 32,555,971.10

Insurance indemnity from the Chinese people's

808,986.14 351,655.81

property insurance co., LTD

Revolving fund and other 4,787,781.27 4,718,327.04

Total 39,960,282.54 37,625,953.95

2.4. Information of the first five debtors

Bad debt

Proportion

Business name Nature Ending balance Aging provision

(%)

balance

Shandong Zhonglu Oceanic

2 years to 3 years,

Fisheries Transportation Co., Internal current account 24,714,718.67 61.85

Above 3 years

Ltd.

YAW ADDO FISHERIES

Internal current account 9,156,014.44 2 years to 3 years 22.91

COMPANY LIMITED

PICC Property and Casualty 1-6months,1 years to

Insurance claim 808,986.14 2.02 128,363.26

Company Limited 2 years

Japan, Daihatsu Internal current account 288,896.39 Above 3 years 0.72 288,896.39

DIVING-SEAGULL Internal current account 207,072.50 Above 3 years 0.52 207,072.50

Total 35,175,688.14 88.02 624,332.15

3£®Long-term equity investments

Ending balance Beginning balance

Impairme

Item Impairment

Book balance Book valaue Book balance nt Book valaue

provision

provision

Investment to

204,189,455.23 204,189,455.23 118,779,655.23 118,779,655.23

subsidiaries

Total 204,189,455.23 204,189,455.23 118,779,655.23 118,779,655.23

Investment to subsidiaries:

Impairment

Beginning Impairment provision

Invested companies Increment Decrement Ending balance

balance provision ending

balance

HABITAT INTERNATIONAL CORP. 12,476,145.60 12,476,145.60

Shandong Zhonglu Oceanic Fisheries

22,869,513.38 22,869,513.38

Transportation Co., Ltd.

Shandong Zhonglu Oceanic (Yantai)

55,448,185.24 55,448,185.24

Food Co., Ltd.

Shandong zhonglu Haiyan Oceanic

27,985,811.01 85,409,800.00 113,395,611.01

Fisheries Co., Ltd.

Total 118,779,655.23 85,409,800.00 204,189,455.23

4£®Operating income and cost

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2015 2014

Item

Income Cost Income Cost

Total operating activities 120,687,353.07 160,420,116.63 220,465,936.52 226,900,811.34

Seine tuna fishing 21,726,959.64 54,223,403.30 66,221,750.71 62,977,167.91

Long-line tuna fishing 98,960,393.43 106,196,713.33 154,244,185.81 163,923,643.43

Total other operating activities 5,070,648.88 1,891,604.04 4,457,963.59 2,101,075.15

House lease 5,070,648.88 1,891,604.04 4,457,963.59 2,101,075.15

Total 125,758,001.95 162,311,720.67 224,923,900.11 229,001,886.49

XIV. Supplementary information

1. Non-recurring profit and loss

Item Amount Remark

1£®Profit and loss from disposal of non-current assets, including the part written-off in impairment

-4,260,148.37

provision

2£®Government grants included in current profit and loss( must be enterprises activities related, except

2,021,471.48

for government grants of national standard quota)

3£®Non-operating revenue and expense other from the above- stated items 82,182.68

4£®Impact on income tax

5£®Impact on minority shareholding 237,114.23

Total -1,919,379.98

Non-recurring items of profit and loss redefined as regular item of profit and loss according to

characteristics and properties of its own operating activities:

Item Amount Remark

Government grants of national standard quota and related to

Regular profit and loss from fuel subsidies 40,856,800.00

operating activities of the Company

2£®Return on equity and earnings per share

Return on equity£¨%£© Basic EPS

Profit

2015 2014 2015 2014

Net profit to common shareholders of the Company 2.16 2.81 0.0456 0.0578

Net profit to common shareholders of the Company after

2.51 1.91 0.0528 0.0393

non-recurring profit and loss

Shandong Zhonglu Oceanic Fisheries Co., Ltd

3th March, 2016

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Section XI. Documents available for reference

I. Accounting 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;

II. Original auditing report carrying the seal of CPA and autography and seal of the accountants;

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.

Chairman: Li Wenyi

5 March 2016

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