东沣B:2017年半年度报告(英文版)

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东沣科技集团股份有限公司 2017 年半年度报告全文

Dongfeng Sci-Tech Group CO., LTD

SEMI-ANNUAL REPORT 2017

August 2017

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东沣科技集团股份有限公司 2017 年半年度报告全文

Section I Important Notice, Contents and Paraphrase

Board of Directors, Supervisory Committee, all directors, supervisors and senior

executives of Dongfeng Sci-Tech Group CO., LTD. (hereinafter referred to as the

Company) hereby confirm that there are no any fictitious statements, misleading

statements, or important omissions carried in this report, and shall take all

responsibilities, individual and/or joint, for the reality, accuracy and completion

of the whole contents.

Zhao Yongsheng, Principal of the Company, Zhao Yongsheng, person in charger

of accounting works and Liu Fengguo, person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of 2017

Semi-annual Report is authentic, accurate and complete.

All directors are attended the Board Meeting for report deliberation.

The Company has no plan of cash dividends carried out, bonus issued and

capitalizing of common reserves either.

If the Report related to the forward-looking statements about future business

environment and business planning, and benefit forecasting of investment

projects, it does not constitute a substantive commitment to investors of the

Company, investors pay attention to investment risks.

Note: The Report is prepared in bilingual versions of Chinese and English

respectively, in the event of any discrepancy in understanding the two

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东沣科技集团股份有限公司 2017 年半年度报告全文

aforementioned versions, the Chinese version shall prevail.

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东沣科技集团股份有限公司 2017 年半年度报告全文

Content

Section I Important Notice, Contents and Paraphrase .................................................................. 2

Section II Company Profile and Main Finnaical Indexes .............................................................. 6

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

Section IV Discussion and Analysis of the Operation ................................................................... 11

Section V Important Events ............................................................................................................ 20

Section VI. Changes in Shares and Particulars about Shareholders .......................................... 25

Section VII. Preferred Stock ........................................................................................................... 29

Section VIII. Directors, Supervisors and Senior Executives ........................................................ 30

Section IX Corporate Bonds ........................................................................................................... 31

Section X. Financial Report ............................................................................................................ 32

Section XI. Documents available for reference ........................................................................... 144

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东沣科技集团股份有限公司 2017 年半年度报告全文

Paraphrase

Items Refers to Contents

CSRC, SRC Refers to China Securities Regulatory Commission

SZ Stock Exchange, Exchange Refers to Shenzhen Stock Exchange

Company, The Company Refers to Dongfeng Sci-Tech Group CO., LTD

Dongfeng Investment Refers to Chengde Dongfeng Investment Co., Ltd.

Nanjiang Trading Refers to Chengde Nanjiang Trading Co., Ltd.

Nanjiag Technology Refers to Chengde Nanjiag Technology Co. Ltd.

Kefeng Trading Refers to Chengde Kefeng Trading Co., Ltd.

Chengde Kefeng Refers to Chengde Kefeng Aerospace Technology Development Co. Ltd.

Kefeng Engineering Refers to Chengde Kefeng Engineering Project Management Co. Ltd.

Ecological Agriculture, Refers to Chengde Dongfeng Ecological Agriculture Co., Ltd.

Asia Investment, Nanjiang Asia Refers to Nanjiang Asia Investment Co., Ltd.

Runhua RW Refers to Runhua Rural Water (Tianjin) International Trade Co., Ltd.

Hangzhou Dongfeng Refers to Hangzhou Dongfeng Technology Co. Ltd.

Huijing Property Refers to Chengde Huijing Property Services Co., Ltd.

Dongfeng New Energy Refers to Dongguan Dongfeng New Energy Technology Co. Ltd.

Company Law Refers to Company Law of the People’s Republic of China

Securities Law Refers to Securities Law of the People’s Republic of China

Listing Rules Refers to Rules Governing the Listing of Securities on Shenzhen Stock Exchange

Yuan, 10 thousand Yuan Refers to RMB, RMB 10 thousand

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东沣科技集团股份有限公司 2017 年半年度报告全文

Section II Company Profile and Main Finnaical Indexes

I. Company Profile

Short form of the stock Dongfeng-B Stock code 200160

Short form of the Stock after

Dongfeng-B

changed (if applicable)

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

东沣科技集团股份有限公司

Chinese)

Short form of the Company

东沣 B

(in Chinese) (if applicable)

Foreign name of the Company

DongfengSci-Tech Group CO.,LTD

(if applicable)

Short form of foreign name of

DONGFENG-B

the Company (if applicable)

Legal representative Zhao Yongsheng

II. Contact person and ways

Secretary of the Board Rep. of security affairs

Name Li Wenying Wang Haijian

XiaBanCheng Town, Chengde County, XiaBanCheng Town, Chengde County,

Contact add.

Hebei Province Hebei Province

Tel. 0314-3115048 0314-3115048

Fax. 0314-3111475 0314-3111475

E-mail liwy@dftechgroup.com wanghj@dftechgroup.com

III. Others

1. Way of contact

Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or

not

□ Applicable √ Not applicable

Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,

found more details in Annual Report 2016.

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东沣科技集团股份有限公司 2017 年半年度报告全文

2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not

□ Applicable √ Not applicable

The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation

place for semi-annual report have no change in reporting period, found more details in Annual Report 2016.

3. Other relevant information

Whether the other relevant information changed during the reporting period

√Applicable □ Not applicable

On May 16, 2017, the company changed its name from “Chengde Nanjiang Co., Ltd.” to “Dongfeng Sci-Tech Group Co., Ltd.”, the

shortened form of the company securities changed from “Nanjiang B” to “Dongfeng B”. See details on the relevant announcements

the company disclosed on Securities Times, Hong Kong Commercial Daily and http://www.cninfo.com.cn on May 16, 2017.

On July 3, 2017, the company received the approval of Chengde Market Supervision Authority, the company's business scope

changed to the research and development, sales, technology promotion and technical services of new energies and new materials

products; the research and development, technology promotion and technical services of modern ecological agriculture, the

wholesale of eco-agricultural products; import and export trading of goods and technology; real estate development and management

approved by the qualification certificates; property management. (Projects need to be approved according to law can only carry out

the operating activities after being approved by relevant departments).

IV. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data or not

□ Yes √ No

Increase/decrease in this

Current period Same period of last year

report y-o-y

Operating revenue (RMB) 101,563,994.47 191,414,481.74 -46.94%

Net profit attributable to shareholders of

-3,145,668.96 1,801,869.94 -274.58%

the listed company (RMB)

Net profit attributable to shareholders of

the listed company after deducting -3,168,677.19 2,072,748.29 -252.87%

non-recurring gains and losses (RMB)

Net cash flow arising from operating

28,687,301.69 76,854,983.97 -62.67%

activities (RMB)

Basic earnings per share (RMB/Share) -0.004 0.003 -233.33%

Diluted earnings per share (RMB/Share) -0.004 0.003 -233.33%

Weighted average ROE -0.88% 0.51% -1.39%

End of current period End of last period Increase/decrease in this

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东沣科技集团股份有限公司 2017 年半年度报告全文

report-end over that of last

period-end

Total assets (RMB) 571,444,743.94 626,756,827.34 -8.83%

Net assets attributable to shareholder of

355,700,272.96 359,826,450.98 -1.15%

listed company (RMB)

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

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

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

□ Applicable √ Not applicable

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

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

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

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

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

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

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

√Applicable □ Not applicable

In RMB

Item Amount Note

Other non-operating income and expenditure except for the

23,008.23

aforementioned items

Total 23,008.23 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss, explain reasons

□ Applicable √ Not applicable

In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to

the Public --- Extraordinary Profit/loss

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东沣科技集团股份有限公司 2017 年半年度报告全文

Section III Summary of Company Business

I. Main businesses of the Company in the reporting period

Does the Company need to comply with the disclosure requirement of the special industry

Yes

Real estate industry

During the reporting period, the company's main business was the real estate, business model was the development and sale of

commercial housing, and the business scope was mainly in Chengde. The products of the company's real estate business were mainly

the commercial residential building, focused on high-rise, supplemented by small high-rise, duplex and garden house and other forms.

The residence community currently for sale is Nanjiang Huijing Tiandi project.

Key performance driving factors:

Influenced by the national strategy of Beijing-Tianjin-Hebei integration, and required by the evacuation and industrial transfer of the

capital to peripheral areas, the value of real estate in the cities around Beijing is highlighted; the real estate shows good market

prospects. Chengde is close to Beijing and Tianjin in the south and next to Liaoning and Neimenggu in the back, and has peculiar

regional advantages, the construction of Beijing-Shenyang high-speed rail makes Chengde enter into the “capital one hour economic

circle” and brings major opportunities to the local economic development. In the future, the company will take this development

opportunity to actively expand business areas, continuously promote service quality, build high-end boutique residence, and improve

market competitiveness.

II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets N/A

Fixed assets No major change

Intangible assets No major change

Construction in process N/A

2. Main overseas assets

□ Applicable √ Not applicable

III. Core Competitiveness Analysis

Does the Company need to comply with the disclosure requirements of the special industry

Yes

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东沣科技集团股份有限公司 2017 年半年度报告全文

Real estate industry

During the reporting period, the core competitiveness of the Company has not changed significantly. See 2016 Annual Report.

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东沣科技集团股份有限公司 2017 年半年度报告全文

Section IV Discussion and Analysis of the Operation

I. Introduction

(I) Situation analysis of the real estate industry during the reporting period

In the first half of 2017, the national real estate macro-control continued to strengthen, different cities implemented corresponding

policies to actively deepen the real estate policy control and carry out the housing price controlling and destocking at the same time.

On the one hand, the hot cities continued the strong regulation pattern, the third and fourth-tier cities around also regulated and

controlled synchronously, the traditional restrictions on purchase and loans continued to upgrade, the credit funds for both supply and

demand ends of real estate gradually tightened, and the effects of policy since the beginning of the year gradually appeared; on the

other hand, most of the third and fourth-tier cities continued the destocking, some cities with significant decrease in stock pressure

also timely introduced the market stabilizing measures. During the reporting period, Hebei Province implemented the real estate

control from the provincial level, successively introduced a series of regulatory policies such as the purchase restriction, loan

restriction, and price restriction, the real estate market gradually returned to be rational. In the long run, with the continuous promotion

of Beijing-Tianjin-Hebei integration and the requirements of the capital to the evacuation and industrial transfer in peripheral areas,

the market prospects of the cities around Beijing are still good.

(II) The operation of the company during the reporting period

During the reporting period, in the face of severe policy and market situation of real estate, the company complied with the changes in

the market and accelerated the sale of existing inventories, and planned to promote the construction of new projects according to the

market situation at the same time; on the other hand, on the basis of ensuring the steady development of existing businesses, actively

promoted the company's business transformation, expanded and cultivated the new business growth point.

During the reporting period, the company achieved main business income of RMB 101,564,000, net profits attributable to the parent

company of RMB -3,145,700. Up to the end of the reporting period, the total assets of the company were RMB 571,444,700 and the net

assets were RMB 355,700,300.

Sales of the property (Nanjiang Huijing Tiandi) for Jan.-June 2017 are as:

Operation Operation cost Gross

Clearing the

Type of Ratio Area presale in income (in 10 (in 10 profit

Item area in the

operation (%) the period (㎡) thousand thousand margin

period (㎡)

Yuan) Yuan) (%)

Nanjiang Residence 9408.24 22989.40 9946.52 8384.18 15.71

100

Huijing 2263.01 - - - -

Commerce

Tiandi

Total 11671.25 22989.40 9946.52 8384.18 15.71

The Company has no new land reserves and new constructed property in the Period

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东沣科技集团股份有限公司 2017 年半年度报告全文

II. Main business analysis

Found more in “I. Introduction” in “Discussion and Analysis of the Operation”.

Y-o-y changes of main financial data

In RMB

Current period Same period of last year Y-o-y increase/decrease Reasons for changes

The real estate revenue

carry-over in the period

Operating revenue 101,563,994.47 191,414,481.74 -46.94%

decreased on a y-o-y

basis

Costs of real estate

Operating costs 86,769,226.19 163,182,686.63 -46.83% carry-over decreased on a

y-o-y basis

Sales expenses 315,835.82 314,718.06 0.36%

Labor charges in the

Administration expenses 10,548,195.52 13,829,541.30 -23.73% period declined from a

year earlier

Interest income increased

Finance expenses -691,269.95 -101,786.84 -579.13%

from a year earlier

Income tax expenses 8,991.27 -100.00%

Payment collection from

Net cash flow arising real estate business

28,687,301.69 76,854,983.97 -62.67%

from operating activities decreased from a year

earlier

Net cash flow arising Account paid for

from investment -1,391,915.91 -26,994,960.98 94.84% investment decreased

activities from a year earlier

The margin paid for

Net cash flow arising mortgage loans

-663,800.00 -873,435.54 24.00%

from financing activities decreased from a year

earlier

Payment collection from

Net increase of cash and real estate business

26,631,585.78 48,986,587.45 -45.63%

cash equivalent decreased from a year

earlier

Major changes on profit composition or profit resources in reporting period

□ Applicable √ Not applicable

No major changes on profit composition or profit resources occurred in reporting period.

Constitution of main business

In RMB

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东沣科技集团股份有限公司 2017 年半年度报告全文

Increase or Increase or Increase or

decrease of decrease of decrease of gross

Operating

Operating cost Gross profit ratio operating revenue operating cost profit ratio over

revenue

over same period over same period same period of

of last year of last year last year

According to industries

Real estate

99,465,192.85 83,841,835.73 15.71% -44.62% -44.32% -0.46%

industry

Other industry 2,098,801.62 2,927,390.46 -39.48% 20.21% -8.20% 43.17%

According to products

Real estate sales 99,465,192.85 83,841,835.73 15.71% -44.62% -44.32% -0.46%

Property

management and 2,098,801.62 2,927,390.46 -39.48% 20.21% -8.20% 43.17%

other

According to region

Chengde region 101,563,994.47 86,769,226.19 14.57% -44.17% -43.78% -0.58%

III. Analysis of the non-main business

□ Applicable √ Not applicable

IV. Assets and liability

1. Major changes of assets composition

In RMB

End of same period of last

End of the Period

year Ratio

Notes of major changes

Ratio in total Ratio in total changes

Amount Amount

assets assets

160,265,548.0 Fund invested in real estate business

Monetary fund 28.05% 138,135,232.83 17.57% 10.48%

1 decreased from a year earlier

Account

80,084.75 0.01% 173,815.53 0.02% -0.01%

receivable

The development products are carry

287,218,307.9

Inventory 50.26% 478,454,283.19 60.86% -10.60% over to revenue, than the inventory

2

declined

Investment

4,774,873.63 0.84% 0.84%

property

Long-term equity 2,331,040.66 0.30% -0.30%

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东沣科技集团股份有限公司 2017 年半年度报告全文

investment

Fix assets 14,634,378.09 2.56% 9,385,790.29 1.19% 1.37%

2. Assets and liability measured by fair value

□ Applicable √ Not applicable

3. Assets rights restricted till end of the period

Limited assets rights:

Item Closing balance Opening balance

Margin of the housing mortgage 6,663,127.40 5,999,327.40

Total 6,663,127.40 5,999,327.40

V. Investment

1. Overall situation

√Applicable □ Not applicable

Investment in the same period of last year

Investment in the reporting (RMB) Changes

( RMB)

0.00 25,000,000.00 -100.00%

2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable

3. The major non-equity investment doing in the reporting period

□ Applicable √ Not applicable

4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

The Company had no securities investment in Period.

(2) Derivative investment

□ Applicable √ Not applicable

The Company has no derivatives investment in Period.

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东沣科技集团股份有限公司 2017 年半年度报告全文

VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable

The Company has no sales of major assets in Period.

2. Sales of major equity

□ Applicable √ Not applicable

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

√Applicable □ Not applicable

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

In RMB

Company Main Register Operating Operating

Type Industry Total assets Net Assets Net profit

name business capital revenue profit

Hardware

mechanical

and

electrical,

building

Chengde

materials,

Nanjiang Commercia 12,473,771. -1,429,08

Subsidiary machinery 1,000,000.0 128,898.51 0.00 -1,408,883.60

Trading l trade 99 9.39

and 0

Co., Ltd.

equipment

sales;

housing

rental

services

Industrial

investment,

investment

Chengde managemen

Dongfeng t, Industrial 90,000,000. 79,042,074. 79,042,074. -108,011.

Subsidiary 0.00 -108,011.81

Investment investment investment 00 10 10 81

Co., Ltd. consulting

and import

& export

trading

Chengde Cultivation 10,890,569. -13,564,790 -544,173.

Subsidiary Agriculture 61,073.78 -520,617.62

Dongfeng and sales of 10,000,000. 25 .81 41

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东沣科技集团股份有限公司 2017 年半年度报告全文

Ecological field crop, 00

Agriculture edible

Co., Ltd. mushrooms,

fruit and

vegetables

as well as

Chinese

Herbs;

breeding

and sales of

livestock

Internationa

l investment

Nanjiang

and trading,

Asia Internationa US$ 20 5,687,480.8 5,682,509.6

Subsidiary ship sales 0.00 -306.00 -306.00

Investment l investment million 6 4

and

Co., Ltd.

purchase

and lease

R&D,

manufactur

e and sales

of inflatable

capsule,

grapheme,

grapheme

application

materials,

power cell

& battery

Chengde materials,

Nanjiang high-perfor New energy 50,000,000. 48,856,394. 48,072,166.

Subsidiary 0.00 -999.57 -999.57

Technology mance materials 00 85 85

Co., Ltd. membrane

material

and nano

materials as

well as the

technology

promotion

and

technical

service for

the above

said

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东沣科技集团股份有限公司 2017 年半年度报告全文

products.

Chengde

Huijing Property Property

1,550,639.0 -5,294,173. 2,001,623.8 -1,299,36

Property Subsidiary managemen managemen 500,000.00 -1,299,367.80

3 14 7 7.80

Services t service t

Co., Ltd.

New

energy, new

materials

and applied

products

Hangzhou

research High-tech

Dongfeng 50,000,000. 29,137,621. 28,901,831. -661,342.

Subsidiary and developmen 0.00 -660,499.64

Technology 00 06 96 88

developmen t

Co., Ltd.

t, sales and

technical

promotion,

technical

services

Technology

R&D,

technology

Chengde

consulting

Kefeng

and High-tech

Aerospace 30,000,000. 0.00

Subsidiary promotion developmen 59,710.39 -289.61 -289.61 -289.61

Technology 00

and transfer t

Developme

service of

nt Co. Ltd.

the

aerospace

products

Sales of

machinery

and

machine

Chengde

parts and

Kefeng Commercia 8,500,000.0 322,505,44 260,185,64 0.00 -945,880.

Subsidiary mechanical -945,880.08

Trading l trade 0 2.62 7.62 08

& electrical

Co., Ltd.

products;

real estate

leasing

service

Chengde Engineering Engineering -180,380.

Subsidiary 500,000.00 475,174.19 319,619.43 -180,380.57

Kefeng managemen Project 57

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东沣科技集团股份有限公司 2017 年半年度报告全文

Engineering t and Manageme 0.00

Project consulting nt

Managemen service;

t Co. Ltd. infrastructu

re

constructio

n and house

leasing

service

Import

trade,

domestic

Runhua agents and

Rural Water distribution

(Tianjin) of the Internationa 30,000,000. 3,271,855.2 3,268,363.5 -88,149.2

Subsidiary 0.00 -88,149.25

Internationa plastic raw l Trade 00 3 3 5

l Trade Co., materials of

Ltd. polyethylen

e (PE) and

polypropyle

ne (PP)

Particular about subsidiaries obtained or disposed in report period

√Applicable □ Not applicable

The method of obtaining and handling The influence to the whole production and

Company Name

subsidiaries during the report period performance

Chengde Kefeng Trading Co., Ltd. Derivate by subsidy Nanjiang Trading No influence

Chengde Kefeng Engineering Project

Derivate by subsidy Nanjiang Trading No influence

Management Co. Ltd.

Runhua Rural Water (Tianjin) International Without controls after release the

No influence

Trade Co., Ltd. consistent action

Notes of holding and shareholding companies

On March 6, 2017, approved by Chengde Administration for Industry and Commerce, Chengde Nanjiang Trading Co., Ltd. was

divided into Chengde Kefeng Trading Co., Ltd., Chengde Kefeng Project Management Co., Ltd. and Chengde Nanjiang Trading Co.,

Ltd. Among them, the registered capital of Chengde Kefeng Trading Co., Ltd. is RMB 8.5 million,Dongfeng Sci-Tech Group CO.,

LTD. has a wholly-owned holding in the company, its business scope includes the sale of mechanical equipment, machine parts, and

mechanical and electrical products, and the housing leasing services; the registered capital of Chengde Kefeng Project Management

Co., Ltd. is RMB 500,000.00,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope

includes the project management and consulting services, the infrastructure construction, and the housing leasing services; the

registered capital of Chengde Nanjiang Trading Co., Ltd. is changed to RMB one million,Dongfeng Sci-Tech Group CO., LTD. has a

wholly-owned holding in the company, its business scope includes the sale of hardware and mechanical products, building materials,

and mechanical equipment, and the housing rental services.

On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan

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东沣科技集团股份有限公司 2017 年半年度报告全文

Chunhong of Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person

Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the

decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance

with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both

parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for

Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person

relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to

Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of

losing the control power to it, and check and calculate by equity method.

VIII. Structured vehicle controlled by the Company

□ Applicable √ Not applicable

IX. Prediction of business performance from January – September 2017

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the

warning of its material change compared with the corresponding period of the last year and explanation on reason

□ Applicable √ Not applicable

X. Risks and countermeasures

1. Policy risk.

The real estate industry is affected by the macro policy, land policy, real estate tax policy, financial policy for the real estate industry

will have a direct impact on the real estate business. The company will pay close attention to the macro situation, strengthen the

research and tracking policy, rational analysis of the market, to adapt to changes in market adjustment, and to improve the company's

ability to resist risks.

2. Market risk.

In the background of economic slowdown, real estate market turns to have obvious differentiation. Under the increasingly fierce in

competition, the Company will continue to improve the self-owned construction, strength management ability, and continuously

enhance the competitiveness of the Company. Meanwhile, accelerate the strategic transformation of the Company and exploiting new

growth of profit.

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东沣科技集团股份有限公司 2017 年半年度报告全文

Section V Important Events

I. In the report period, the Company held annual shareholders’ general meeting and

extraordinary shareholders’ general meeting

1. Shareholders’ General Meeting in the report period

Ratio of investor

Session of meeting Type Date Date of disclosure Index of disclosure

participation

Securities Times,

Hong Kong

Annual General Commercial Daily

AGM 11.11% 2017-06-15 2017-06-16

Meeting of 2016 and Juchao Website

http://www.cninfo.co

m.cn

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

□ Applicable √ Not applicable

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

□ Applicable √ Not applicable

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

the semi-annual year.

III. Commitments that the actual controller, shareholders, related party, buyer and relevant

committed party as the Company have fulfilled during the reporting period and have not yet

fulfilled by the end of reporting period

√Applicable □ Not applicable

Type of

Commitm Commitm Implementa

Commitments Promise commitment Content of commitments

ent date ent term tion

s

Commitments for

share merger reform

Commitments in Controlli Commitmen 1. Commitments in aspect of independency of

Duration

report of ng ts in listed company: 2012-04-2 Implementi

of the

acquisition or equity sharehol horizontal For the equity changes, that is 208,324,800 4 ng

Company

change der competition, shares of Chengde Dalu Co., Ltd held by Chen

20

东沣科技集团股份有限公司 2017 年半年度报告全文

related Rong was transfer, Wang Dong guarantee there

transactions, are no influence on the independent of

and capital employee, financial, institution, business and

occupying integrity of assets of Chengde Dalu Co., Ltd.

After transaction, Chengde Dalu Co., Ltd still

has the ability of independent operation and

owes independent legal person, and continues to

owes the independency of institution, assts,

employees, production and financial. 2.

Commitments for horizontal competition: after

208,324,800 shares of Chengde Dalu Co., Ltd

held by Chen Rong was transfer, Wang Dong

guarantee there are no or potential horizontal

competition between the Chengde Dalu Co.,

Ltd and Wang Dong and related parties of Wang

Dong

Commitments in

assets reorganization

Commitments in

initial public offering

or re-financing

Commitments in stock

option incentive plan

Other commitments

for medium and small

shareholders

Completed on time Yes

If the commitments is

not fulfilled on time,

shall explain the N/A

specify reason and the

next work plan

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

Financial report has been audit or not

□ Yes √ No

Not been audited.

21

东沣科技集团股份有限公司 2017 年半年度报告全文

V. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion”

that issued by CPA

□ Applicable √ Not applicable

VI. Explanation from the Board for “Qualified Opinion” of last year’s

□ Applicable √ Not applicable

VII. Bankruptcy reorganization

□ Applicable √ Not applicable

No bankruptcy reorganization for the Company in Period.

VIII. Lawsuits

Material lawsuits and arbitration

□ Applicable √ Not applicable

No significant lawsuits and arbitrations occurred in the reporting period.

Other lawsuits

□ Applicable √ Not applicable

IX. Penalty and rectification

□ Applicable √ Not applicable

No penalty and rectification for the Company in Period.

X. Integrity of the Company and its controlling shareholders and actual controllers

□ Applicable √ Not applicable

XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or

other employee incentives

□ Applicable √ Not applicable

The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period.

XII. Major related transaction

1. Related transaction with routine operation concerned

□ Applicable √ Not applicable

The Company had no related transaction with routine operation concerned in Period.

22

东沣科技集团股份有限公司 2017 年半年度报告全文

2. Related transactions by assets acquisition and sold

□ Applicable √ Not applicable

No related transactions by assets acquisition and sold for the Company in Period.

3. Main related transactions of mutual investment outside

□ Applicable √ Not applicable

No main related transactions of mutual investment outside for the Company in Period.

4. Contact of related credit and debt

□ Applicable √ Not applicable

The Company had no contact of related credit and debt in the reporting period.

5. Other related transactions

□ Applicable √ Not applicable

The Company had no other related transaction in the reporting period.

XIII. Non-business capital occupying by controlling shareholders and its related parties

□ Applicable √ Not applicable

No non-business capital occupied by controlling shareholders and its related parties in Period.

XIV. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

□ Applicable √ Not applicable

No trusteeship for the Company in reporting period.

(2) Contract

□ Applicable √ Not applicable

No contract for the Company in Period.

(3) Leasing

□ Applicable √ Not applicable

No leasing for the Company in Period.

23

东沣科技集团股份有限公司 2017 年半年度报告全文

2. Major guarantees

□ Applicable √ Not applicable

No guarantee for the Company in reporting period

3. Other material contracts

□ Applicable √ Not applicable

No other material contracts for the Company in reporting period.

XV. Social responsibility

1. Fulfill the social responsibility for targeted poverty alleviation

The Company has no targeted poverty alleviation temporary in the year, and no subsequent program either

2. Major environmental protection

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department

No

XVI. Other major events

□ Applicable √ Not applicable

XVII. Major event of the subsidiaries

□ Applicable √ Not applicable

24

东沣科技集团股份有限公司 2017 年半年度报告全文

Section VI. Changes in Shares and Particulars about Shareholders

I. Changes in Share Capital

1. Changes in Share Capital

In Share

Before the Change Increase/Decrease in the Change (+, -) After the Change

Capitalizat

New

Bonus ion of

Amount Proportion shares Others Subtotal Amount Proportion

shares public

issued

reserve

244,800,0 244,800,0

I. Unlisted shares 34.66% 34.66%

00 00

244,800,0 244,800,0

1. Sponsor’s shares 34.66% 34.66%

00 00

Domestic legal 23,147,30 23,147,30

3.28% 3.28%

person’s shares 9 9

221,652,6 221,652,6

Other 31.38% 31.38%

91 91

461,520,0 461,520,0

II. Listed shares 65.34% 65.34%

00 00

2. Domestically listed 461,520,0 461,520,0

65.34% 65.34%

foreign shares 00 00

706,320,0 706,320,0

III. Total shares 100.00% 100.00%

00 00

Reasons for share changed

□ Applicable √ Not applicable

Approval of share changed

□ Applicable √ Not applicable

Ownership transfer of share changes

□ Applicable √ Not applicable

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

shareholders of Company in latest year and period

□ Applicable √ Not applicable

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

25

东沣科技集团股份有限公司 2017 年半年度报告全文

□ Applicable √ Not applicable

2. Changes of restricted shares

□ Applicable √ Not applicable

II. Securities issuance and listing

□ Applicable √ Not applicable

III. Number of shares and shares held

In Share

Total preference shareholders

Total common shareholders at with voting rights recovered at

19,555 0

period-end end of reporting period (if

applicable) (note8)

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

Total Number of share pledged/frozen

Amount

sharehol Amount

Changes of

Full name of Nature of Proportion of ders at of listed

in report un-listed

Shareholders shareholder shares held the end shares State of share Amount

period shares

of report held

held

period

Domestic nature 208,324, 208,324,

Wang Dong 29.49% 0 0

person 800 800

Everbright

Overseas legal 93,833,0 93,833,0

Securities 13.28% 0 0

person 93 93

(H.K.) Co., Ltd.

GUOTAI

JUNAN

Overseas legal 48,524,0 48,524,0

SECURITIES( 6.87% 0 0

person 62 62

HONGKONG)

LIMITED

Chengde North Domestic

18,517,6 18,517,6

Industrial non-state owned 2.62% 0 0

51 51

Corporation legal person

Wang Domestic nature 13,327,8 13,327,8

1.89% 0 0

Zhengsong person 91 91

Wang Domestic nature 1.03% 7,258,00 0 0 7,258,00

26

东沣科技集团股份有限公司 2017 年半年度报告全文

Wensheng person 7 7

Domestic nature 6,708,49 6,708,49

Zhou Haihong 0.95% 0 0

person 5 5

Domestic nature 5,158,00 5,158,00

Li Tianyun 0.73% 0 0

person 0 0

Shanghai

Overseas legal 4,995,92 4,995,92

Wanguo (H.K) 0.71% 0 0

person 0 0

Securities

Domestic nature 4,023,25 4,023,25

Chen Yan 0.57% 0 0

person 6 6

Strategy investors or general legal

person becomes top 10 shareholders

N/A

due to rights issued (if applicable)

(see note 3)

Explanation on associated The Company is unknown whether there exists associated relationship or belongs to consistent

relationship among the aforesaid actor regulated by “management method for acquisition of listed company” among the above

shareholders said shareholders.

Particular about top ten circulated shareholders

Type of shares

Shareholders’ name Amount of listed shares held at period-end

Type Amount

Domestically

Everbright Securities (H.K.) Co.,

93,833,093 listed foreign 93,833,093

Ltd.

shares

GUOTAI JUNAN Domestically

SECURITIES(HONGKONG) 48,524,062 listed foreign 48,524,062

LIMITED shares

Domestically

Wang Wensheng 7,258,007 listed foreign 7,258,007

shares

Domestically

Zhou Haihong 6,708,495 listed foreign 6,708,495

shares

Domestically

Li Tianyun 5,158,000 listed foreign 5,158,000

shares

Domestically

Shanghai Wanguo (H.K) Securities 4,995,920 listed foreign 4,995,920

shares

Domestically

Chen Yan 4,023,256 4,023,256

listed foreign

27

东沣科技集团股份有限公司 2017 年半年度报告全文

shares

Domestically

Zhao Ziying 3,286,616 listed foreign 3,286,616

shares

VANGUARD TOTAL Domestically

INTERNATIONAL STOCK 3,182,875 listed foreign 3,182,875

INDEX FUND shares

Domestically

Peng Wei 2,978,525 listed foreign 2,978,525

shares

Expiation on associated relationship

or consistent actors within the top

The Company is unknown whether there exists associated relationship or belongs to consistent

10 un-restrict common shareholders

actor regulated by “management method for acquisition of listed company” among the above

and between top 10 un-restrict

said shareholders.

common shareholders and top 10

common shareholders

Explanation on shareholders

involving margin business about top

ten common shareholders with N/A

un-restrict shares held (if

applicable) (see Note 4)

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

dealing in reporting period

□Yes √No

Top ten common shareholders or top ten common shareholders with un-restrict shares not held have a buy-back agreement dealing in

reporting period.

IV. Changes of controlling shareholders or actual controller

Changes of controlling shareholders in reporting period

□ Applicable √ Not applicable

The Company had no changes of controlling shareholders in reporting period.

Changes of actual controller in reporting period

□ Applicable √ Not applicable

No changes of actual controllers for the Company in reporting period.

28

东沣科技集团股份有限公司 2017 年半年度报告全文

Section VII. Preferred Stock

□ Applicable √ Not applicable

The Company had no preferred stock in the reporting.

29

东沣科技集团股份有限公司 2017 年半年度报告全文

Section VIII. Directors, Supervisors and Senior Executives

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

□ Applicable √ Not applicable

Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report

2016.

II. Resignation and dismissal of directors, supervisors and senior executives

√Applicable □ Not applicable

Name Title Type Date Reasons

Chen Gang Director Leave office 2017-03-13 Voluntary turnover

Chen Gang Vice GM Dismissal 2017-03-13 Resign voluntarily

30

东沣科技集团股份有限公司 2017 年半年度报告全文

Section IX Corporate Bonds

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when

semi-annual report approved for released or fail to cash in full on due

No

31

东沣科技集团股份有限公司 2017 年半年度报告全文

Section X. Financial Report

I. Audit reports

Whether the semi-annual report was audited or not

□ Yes √ No

The financial report of this semi-annual report was unaudited

II. Financial statements

Units in Notes of Financial Statements is RMB

1. Consolidated balance sheet

Prepared by Dongfeng Sci-Tech Group CO., LTD

2017-06-30

In RMB

Item Closing balance Opening balance

Current assets:

Monetary funds 160,265,548.01 132,970,162.23

Settlement provisions

Capital lent

Financial assets measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes receivable

Accounts receivable 80,084.75 77,884.75

Accounts paid in advance 107,838.08 18,250,328.13

Insurance receivable

Reinsurance receivables

Contract reserve of reinsurance

receivable

Interest receivable

Dividend receivable

Other receivables 68,070,707.68 67,805,513.40

Purchase restituted finance asset

32

东沣科技集团股份有限公司 2017 年半年度报告全文

Inventories 287,218,307.92 341,740,059.14

Divided into assets held for sale

Non-current asset due within one

333,716.08 333,716.08

year

Other current assets 9,368,662.98 19,177,045.07

Total current assets 525,444,865.50 580,354,708.80

Non-current assets:

Loans and payments on behalf

Finance asset available for sales 22,784,131.93 22,784,131.93

Held-to-maturity investment

Long-term account receivable

Long-term equity investment 1,022,730.46

Investment property 4,774,873.63 4,831,153.75

Fixed assets 14,634,378.09 14,980,260.33

Construction in progress

Engineering material

Disposal of fixed asset

Productive biological asset 16,229.01 42,133.76

Oil and gas asset

Intangible assets 1,052,848.17 1,073,407.21

Expense on Research and

1,831,791.81 641,604.82

Development

Goodwill

Long-term expenses to be

129,980.39 160,010.87

apportioned

Deferred income tax asset 775,645.41 775,645.41

Other non-current asset 91,040.00

Total non-current asset 45,999,878.44 46,402,118.54

Total assets 571,444,743.94 626,756,827.34

Current liabilities:

Short-term loans

Loan from central bank

Absorbing deposit and interbank

deposit

Capital borrowed

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

33

东沣科技集团股份有限公司 2017 年半年度报告全文

Derivative financial liability

Notes payable

Accounts payable 20,774,299.85 12,889,329.86

Accounts received in advance 188,143,498.26 243,917,918.70

Selling financial asset of

repurchase

Commission charge and

commission payable

Wage payable 221,277.50 1,937,682.44

Taxes payable 403,722.99 1,359,022.01

Interest payable

Dividend payable

Other accounts payable 6,201,672.38 4,476,864.40

Reinsurance payables

Insurance contract reserve

Security trading of agency

Security sales of agency

Divided into liability held for sale

Non-current liabilities due within 1

year

Other current liabilities

Total current liabilities 215,744,470.98 264,580,817.41

Non-current liabilities:

Long-term loans

Bonds payable

Including: preferred stock

Perpetual capital securities

Long-term account payable

Long-term wages payable

Special accounts payable

Projected liabilities

Deferred income

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities

Total liabilities 215,744,470.98 264,580,817.41

34

东沣科技集团股份有限公司 2017 年半年度报告全文

Owner’s equity:

Share capital 706,320,000.00 706,320,000.00

Other equity instrument

Including: preferred stock

Perpetual capital securities

Capital public reserve 463,681,309.55 463,681,309.55

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus public reserve 76,791,550.17 76,791,550.17

Provision of general risk

Retained profit -891,092,586.76 -886,966,408.74

Total owner’s equity attributable to

355,700,272.96 359,826,450.98

parent company

Minority interests 2,349,558.95

Total owner’s equity 355,700,272.96 362,176,009.93

Total liabilities and owner’s equity 571,444,743.94 626,756,827.34

Legal Representative: Zhao Yongsheng Person in charge of Accounting Works: Zhao Yongsheng

Person in charge of Accounting Institution: Liu Fengguo

2. Balance Sheet of Parent Company

In RMB

Item Closing balance Opening balance

Current assets:

Monetary funds 10,172,167.50 69,381,131.38

Financial assets measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes receivable

Accounts receivable

Account paid in advance 5,000.33 18,240,099.06

Interest receivable

Dividends receivable

Other receivables 29,724,078.94 23,582,767.33

35

东沣科技集团股份有限公司 2017 年半年度报告全文

Inventories 287,081,113.95 341,419,337.97

Divided into assets held for sale

Non-current assets maturing within

one year

Other current assets 8,746,046.75 18,152,929.82

Total current assets 335,728,407.47 470,776,265.56

Non-current assets:

Available-for-sale financial assets 22,784,131.93 22,784,131.93

Held-to-maturity investments

Long-term receivables

Long-term equity investments 178,114,466.37 178,114,466.37

Investment property

Fixed assets 1,962,245.05 2,100,122.12

Construction in progress

Project materials

Disposal of fixed assets

Productive biological assets

Oil and natural gas assets

Intangible assets

Research and development costs

Goodwill

Long-term deferred expenses 117,830.39 142,798.37

Deferred income tax assets 750.00 750.00

Other non-current assets

Total non-current assets 202,979,423.74 203,142,268.79

Total assets 538,707,831.21 673,918,534.35

Current liabilities:

Short-term borrowings

Financial liability measured by fair

value and with variation reckoned into

current gains/losses

Derivative financial liability

Notes payable

Accounts payable 20,506,024.52 12,777,756.02

Accounts received in advance 187,840,560.64 242,747,445.35

36

东沣科技集团股份有限公司 2017 年半年度报告全文

Wage payable 398.22 576,458.22

Taxes payable 393,513.74 1,340,388.72

Interest payable

Dividend payable

Other accounts payable 149,326,089.31 237,841,253.38

Divided into liability held for sale

Non-current liabilities due within 1

year

Other current liabilities

Total current liabilities 358,066,586.43 495,283,301.69

Non-current liabilities:

Long-term loans

Bonds payable

Including: preferred stock

Perpetual capital securities

Long-term account payable

Long-term wages payable

Special accounts payable

Projected liabilities

Deferred income

Deferred income tax liabilities

Other non-current liabilities

Total non-current liabilities

Total liabilities 358,066,586.43 495,283,301.69

Owners’ equity:

Share capita 706,320,000.00 706,320,000.00

Other equity instrument

Including: preferred stock

Perpetual capital securities

Capital public reserve 456,569,124.55 456,569,124.55

Less: Inventory shares

Other comprehensive income

Reasonable reserve

Surplus reserve 76,791,550.17 76,791,550.17

Retained profit -1,059,039,429.94 -1,061,045,442.06

37

东沣科技集团股份有限公司 2017 年半年度报告全文

Total owner’s equity 180,641,244.78 178,635,232.66

Total liabilities and owner’s equity 538,707,831.21 673,918,534.35

3. Consolidated Profit Statement

In RMB

Item Current Period Last Period

I. Total operating income 101,563,994.47 191,414,481.74

Including: Operating income 101,563,994.47 191,414,481.74

Interest income

Insurance gained

Commission charge and commission

income

II. Total operating cost 104,794,376.13 190,180,369.70

Including: Operating cost 86,769,226.19 163,182,686.63

Interest expense

Commission charge and commission

expense

Cash surrender value

Net amount of expense of

compensation

Net amount of withdrawal of

insurance contract reserve

Bonus expense of guarantee slip

Reinsurance expense

Operating tax and extras 7,852,986.54 12,955,210.55

Sales expenses 315,835.82 314,718.06

Administration expenses 10,548,195.52 13,829,541.30

Financial expenses -691,269.95 -101,786.84

Losses of devaluation of asset -597.99

Add: Changing income of fair

value(Loss is listed with “-”)

Investment income (Loss is listed

-12,933.77

with “-”)

Including: Investment income on

affiliated company and joint venture

Exchange income (Loss is listed

38

东沣科技集团股份有限公司 2017 年半年度报告全文

with “-”)

Other income

III. Operating profit (Loss is listed with

-3,230,381.66 1,221,178.27

“-”)

Add: Non-operating income 30,121.27 69,070.59

Including: Disposal gains of

non-current asset

Less: Non-operating expense 7,113.04 339,948.94

Including: Disposal loss of

non-current asset

IV. Total Profit (Loss is listed with “-”) -3,207,373.43 950,299.92

Less: Income tax expense 8,991.27

V. Net profit (Net loss is listed with “-”) -3,207,373.43 941,308.65

Net profit attributable to owner’s of

-3,145,668.96 1,801,869.94

parent company

Minority shareholders’ gains and

-61,704.47 -860,561.29

losses

VI. Net after-tax of other comprehensive

income

Net after-tax of other comprehensive

income attributable to owners of parent

company

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1. Changes as a result of

re-measurement of net defined benefit

plan liability or asset

2. Share of the other

comprehensive income of the investee

accounted for using equity method which

will not be reclassified subsequently to

profit and loss

(II) Other comprehensive income items

which will be reclassified subsequently to

profit or loss

1. Share of the other

comprehensive income of the investee

accounted for using equity method which

39

东沣科技集团股份有限公司 2017 年半年度报告全文

will be reclassified subsequently to profit

or loss

2. Gains or losses arising from

changes in fair value of available-for-sale

financial assets

3. Gains or losses arising from

reclassification of held-to-maturity

investment as available-for-sale financial

assets

4. The effect hedging portion of

gains or losses arising from cash flow

hedging instruments

5. Translation differences arising

on translation of foreign currency

financial statements

6. Other

Net after-tax of other comprehensive

income attributable to minority

shareholders

VII. Total comprehensive income -3,207,373.43 941,308.65

Total comprehensive income

-3,145,668.96 1,801,869.94

attributable to owners of parent Company

Total comprehensive income

-61,704.47 -860,561.29

attributable to minority shareholders

VIII. Earnings per share:

(i) Basic earnings per share -0.004 0.003

(ii) Diluted earnings per share -0.004 0.003

Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and

realized 0 Yuan at last period for combined party.

Legal Representative: Zhao Yongsheng Person in charge of Accounting Works: Zhao Yongsheng

Person in charge of Accounting Institution: Liu Fengguo

4. Profit Statement of Parent Company

In RMB

Item Current Period Last Period

I. Operating income 99,528,159.94 180,141,392.89

Less: Operating cost 83,879,550.47 151,288,325.84

Operating tax and extras 7,838,404.44 12,822,979.94

Sales expenses 201,716.00 114,165.00

40

东沣科技集团股份有限公司 2017 年半年度报告全文

Administration expenses 5,588,635.68 8,380,621.85

Financial expenses -7,755.36 -67,570.12

Losses of devaluation of asset 4,585,185.00

Add: Changing income of fair

value(Loss is listed with “-”)

Investment income (Loss is

listed with “-”)

Including: Investment income

on affiliated company and joint venture

Other income

II. Operating profit (Loss is listed

2,027,608.71 3,017,685.38

with “-”)

Add: Non-operating income 0.02

Including: Disposal gains of

non-current asset

Less: Non-operating expense 21,596.61 178,654.01

Including: Disposal loss of

non-current asset

III. Total Profit (Loss is listed with

2,006,012.12 2,839,031.37

“-”)

Less: Income tax expense

IV. Net profit (Net loss is listed with

2,006,012.12 2,839,031.37

“-”)

V. Net after-tax of other comprehensive

income

(I) Other comprehensive income

items which will not be reclassified

subsequently to profit of loss

1. Changes as a result of

re-measurement of net defined benefit

plan liability or asset

2. Share of the other

comprehensive income of the investee

accounted for using equity method

which will not be reclassified

subsequently to profit and loss

(II) Other comprehensive income

items which will be reclassified

subsequently to profit or loss

41

东沣科技集团股份有限公司 2017 年半年度报告全文

1. Share of the other

comprehensive income of the investee

accounted for using equity method

which will be reclassified subsequently

to profit or loss

2. Gains or losses arising from

changes in fair value of

available-for-sale financial assets

3. Gains or losses arising from

reclassification of held-to-maturity

investment as available-for-sale

financial assets

4. The effect hedging portion of

gains or losses arising from cash flow

hedging instruments

5. Translation differences arising

on translation of foreign currency

financial statements

6. Other

VI. Total comprehensive income 2,006,012.12 2,839,031.37

VII. Earnings per share:

(i) Basic earnings per share

(ii) Diluted earnings per share

5. Consolidated Cash Flow Statement

In RMB

Item Current Period Last Period

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor 49,648,921.18 137,650,745.69

services

Net increase of customer deposit

and interbank deposit

Net increase of loan from central

bank

Net increase of capital borrowed

from other financial institution

Cash received from original

42

东沣科技集团股份有限公司 2017 年半年度报告全文

insurance contract fee

Net cash received from reinsurance

business

Net increase of insured savings and

investment

Net increase of amount from disposal

financial assets that measured by fair

value and with variation reckoned into

current gains/losses

Cash received from interest,

commission charge and commission

Net increase of capital borrowed

Net increase of returned business

capital

Write-back of tax received 36.00

Other cash received concerning

9,487,446.88 8,055,810.61

operating activities

Subtotal of cash inflow arising from

59,136,368.06 145,706,592.30

operating activities

Cash paid for purchasing

commodities and receiving labor 2,657,862.72 30,339,142.70

service

Net increase of customer loans and

advances

Net increase of deposits in central

bank and interbank

Cash paid for original insurance

contract compensation

Cash paid for interest, commission

charge and commission

Cash paid for bonus of guarantee

slip

Cash paid to/for staff and workers 8,045,025.91 10,973,577.47

Taxes paid 5,542,118.14 10,536,340.72

Other cash paid concerning

14,204,059.60 17,002,547.44

operating activities

Subtotal of cash outflow arising from

30,449,066.37 68,851,608.33

operating activities

Net cash flows arising from operating 28,687,301.69 76,854,983.97

43

东沣科技集团股份有限公司 2017 年半年度报告全文

activities

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

Cash received from investment

income

Net cash received from disposal of

fixed, intangible and other long-term

assets

Net cash received from disposal of

subsidiaries and other units

Other cash received concerning

investing activities

Subtotal of cash inflow from investing

activities

Cash paid for purchasing fixed,

1,391,915.91 1,994,960.98

intangible and other long-term assets

Cash paid for investment 25,000,000.00

Net increase of mortgaged loans

Net cash received from subsidiaries

and other units obtained

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

1,391,915.91 26,994,960.98

activities

Net cash flows arising from investing

-1,391,915.91 -26,994,960.98

activities

III. Cash flows arising from financing

activities

Cash received from absorbing

investment

Including: Cash received from

absorbing minority shareholders’

investment by subsidiaries

Cash received from loans

Cash received from issuing bonds

Other cash received concerning 753,264.46

44

东沣科技集团股份有限公司 2017 年半年度报告全文

financing activities

Subtotal of cash inflow from financing

753,264.46

activities

Cash paid for settling debts

Cash paid for dividend and profit

distributing or interest paying

Including: Dividend and profit of

minority shareholder paid by

subsidiaries

Other cash paid concerning

663,800.00 1,626,700.00

financing activities

Subtotal of cash outflow from financing

663,800.00 1,626,700.00

activities

Net cash flows arising from financing

-663,800.00 -873,435.54

activities

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

V. Net increase of cash and cash

26,631,585.78 48,986,587.45

equivalents

Add: Balance of cash and cash

126,970,834.83 84,543,677.45

equivalents at the period-begin

VI. Balance of cash and cash

153,602,420.61 133,530,264.90

equivalents at the period-end

6. Cash Flow Statement of Parent Company

In RMB

Item Current Period Last Period

I. Cash flows arising from operating

activities:

Cash received from selling

commodities and providing labor 48,417,004.47 125,007,492.84

services

Write-back of tax received 36.00

Other cash received concerning

16,464,467.95 17,073,078.15

operating activities

Subtotal of cash inflow arising from

64,881,472.42 142,080,606.99

operating activities

45

东沣科技集团股份有限公司 2017 年半年度报告全文

Cash paid for purchasing

commodities and receiving labor 158,077.41 20,218,504.45

service

Cash paid to/for staff and workers 2,981,492.09 6,323,092.84

Taxes paid 5,123,209.48 9,928,150.19

Other cash paid concerning

115,820,458.32 31,528,674.54

operating activities

Subtotal of cash outflow arising from

124,083,237.30 67,998,422.02

operating activities

Net cash flows arising from operating

-59,201,764.88 74,082,184.97

activities

II. Cash flows arising from investing

activities:

Cash received from recovering

investment

Cash received from investment

income

Net cash received from disposal of

fixed, intangible and other long-term

assets

Net cash received from disposal of

subsidiaries and other units

Other cash received concerning

investing activities

Subtotal of cash inflow from investing

activities

Cash paid for purchasing fixed,

7,199.00 10,788.00

intangible and other long-term assets

Cash paid for investment 25,000,000.00

Net cash received from

subsidiaries and other units

Other cash paid concerning

investing activities

Subtotal of cash outflow from investing

7,199.00 25,010,788.00

activities

Net cash flows arising from investing

-7,199.00 -25,010,788.00

activities

III. Cash flows arising from financing

46

东沣科技集团股份有限公司 2017 年半年度报告全文

activities

Cash received from absorbing

investment

Cash received from loans

Cash received from issuing bonds

Other cash received concerning

financing activities

Subtotal of cash inflow from financing

activities

Cash paid for settling debts

Cash paid for dividend and profit

distributing or interest paying

Other cash paid concerning

663,800.00 1,626,700.00

financing activities

Subtotal of cash outflow from financing

663,800.00 1,626,700.00

activities

Net cash flows arising from financing

-663,800.00 -1,626,700.00

activities

IV. Influence on cash and cash

equivalents due to fluctuation in

exchange rate

V. Net increase of cash and cash

-59,872,763.88 47,444,696.97

equivalents

Add: Balance of cash and cash

63,381,803.98 22,671,791.13

equivalents at the period-begin

VI. Balance of cash and cash

3,509,040.10 70,116,488.10

equivalents at the period-end

7. Statement of Changes in Owners’ Equity (Consolidated)

This Period

In RMB

This Period

Owners’ equity attributable to parent company

Other

Item Less: Other Provisio Minorit Total

equity instrument Reason

Share Capital Invento compre Surplus n of Retaine y owners’

able interests equity

capital Prefer Perpet reserve ry hensive reserve general d profit

reserve

red ual Other shares income risk

stock capita

47

东沣科技集团股份有限公司 2017 年半年度报告全文

l

securi

ties

706,32 -886,96

I. Balance at the 463,681 76,791, 2,349,5 362,176

0,000. 6,408.7

end of the last year ,309.55 550.17 58.95 ,009.93

00 4

Add: Changes

of accounting

policy

Error

correction of the

last period

Enterprise

combine under

the same control

Other

II. Balance at the 706,32 463,681 76,791,

-886,96

2,349,5 362,176

beginning of this 0,000. 6,408.7

,309.55 550.17 58.95 ,009.93

year 00 4

III. Increase/

Decrease in this -4,126,1 -2,349,5 -6,475,7

year (Decrease is 78.02 58.95 36.97

listed with “-”)

(i) Total -3,145,6 -3,145,6

comprehensive

68.96 68.96

income

(ii) Owners’

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Withdrawal of

48

东沣科技集团股份有限公司 2017 年半年度报告全文

general risk

provisions

3. Distribution for

owners (or

shareholders)

4. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

-980,50 -2,349,5 -3,330,0

(VI) Others

9.06 58.95 68.01

IV. Balance at the 706,32 463,681 76,791,

-891,09

355,700

end of the report 0,000. 2,586.7

,309.55 550.17 ,272.96

period 00 6

Last Period

In RMB

Last Period

Owners’ equity attributable to the parent Company

Other

equity instrument

Minorit

Item Less: Other Provisio Total

Perpet Reason y

Share Capital Invento compre Surplus n of Retaine interest owners’

ual able

capital Prefer reserve ry hensive reserve general d profit equity

capita reserve s

red Other shares income risk

l

stock

securi

ties

49

东沣科技集团股份有限公司 2017 年半年度报告全文

706,32 -890,72

I. Balance at the 459,871 76,791, 18,754, 371,010

0,000. 7,215.2

end of the last year ,788.64 550.17 592.06 ,715.62

00 5

Add: Changes

of accounting

policy

Error

correction of the

last period

Enterprise

combine under the

same control

Other

II. Balance at the 706,32 459,871 76,791,

-890,72

18,754, 371,010

beginning of this 0,000. 7,215.2

,788.64 550.17 592.06 ,715.62

year 00 5

III. Increase/

Decrease in this 3,801,7 1,801,8 -860,56 4,743,0

year (Decrease is 00.00 69.94 1.29 08.65

listed with “-”)

(i) Total 1,801,8 -860,56 941,308

comprehensive

69.94 1.29 .65

income

(ii) Owners’ 3,801,7 3,801,7

devoted and

00.00 00.00

decreased capital

1.Common shares 3,801,7 3,801,7

invested by

00.00 00.00

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4 Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Withdrawal of

general risk

provisions

50

东沣科技集团股份有限公司 2017 年半年度报告全文

3. Distribution for

owners (or

shareholders)

4. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI) Others

IV. Balance at the 706,32 463,673 76,791,

-888,92

17,894, 375,753

end of the report 0,000. 5,345.3

,488.64 550.17 030.77 ,724.27

period 00 1

8. Statement of Changes in Owners’ Equity (Parent Company)

This Period

In RMB

This Period

Other

equity instrument

Other Total

Item Share Less: Retaine

Perpetu Capital comprehe Reasonab Surplus

Inventory owners’

capital Preferre al reserve nsive le reserve reserve d profit

shares equity

capital Other income

d stock

securiti

es

I. Balance at the 706,320, 456,569,1 76,791,55 -1,061,0 178,635,2

51

东沣科技集团股份有限公司 2017 年半年度报告全文

end of the last year 000.00 24.55 0.17 45,442. 32.66

06

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

II. Balance at the 706,320, -1,061,0

456,569,1 76,791,55 178,635,2

beginning of this 45,442.

000.00 24.55 0.17 32.66

year 06

III. Increase/

Decrease in this 2,006,0 2,006,012

year (Decrease is 12.12 .12

listed with “-”)

(i) Total 2,006,0 2,006,012

comprehensive

12.12 .12

income

(ii) Owners’

devoted and

decreased capital

1.Common shares

invested by

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

shareholders)

3. Other

(IV) Carrying

forward internal

owners’ equity

52

东沣科技集团股份有限公司 2017 年半年度报告全文

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI) Others

IV. Balance at the 706,320, -1,059,0

456,569,1 76,791,55 180,641,2

end of the report 39,429.

000.00 24.55 0.17 44.78

period 94

Last period

In RMB

Last period

Other

equity instrument

Other Total

Item Share Less: Retaine

Perpetu Capital comprehe Reasonab Surplus

Inventory owners’

capital Preferre al reserve nsive le reserve reserve d profit

capital Other shares equity

income

d stock

securiti

es

-1,063,1

I. Balance at the 706,320, 452,767,4 76,791,55 172,685,4

93,524.

end of the last year 000.00 24.55 0.17 49.84

88

Add: Changes

of accounting

policy

Error

correction of the

last period

Other

53

东沣科技集团股份有限公司 2017 年半年度报告全文

II. Balance at the 706,320, -1,063,1

452,767,4 76,791,55 172,685,4

beginning of this 93,524.

000.00 24.55 0.17 49.84

year 88

III. Increase/

Decrease in this 3,801,700 2,839,0 6,640,731

year (Decrease is .00 31.37 .37

listed with “-”)

(i) Total 2,839,0 2,839,031

comprehensive

31.37 .37

income

(ii) Owners’ 3,801,700 3,801,700

devoted and

.00 .00

decreased capital

1.Common shares 3,801,700 3,801,700

invested by

.00 .00

shareholders

2. Capital invested

by holders of other

equity instruments

3. Amount

reckoned into

owners equity with

share-based

payment

4. Other

(III) Profit

distribution

1. Withdrawal of

surplus reserves

2. Distribution for

owners (or

shareholders)

3. Other

(IV) Carrying

forward internal

owners’ equity

1. Capital reserves

conversed to

capital (share

capital)

2. Surplus reserves

conversed to

capital (share

capital)

3. Remedying loss

with surplus

54

东沣科技集团股份有限公司 2017 年半年度报告全文

reserve

4. Other

(V) Reasonable

reserve

1. Withdrawal in

the report period

2. Usage in the

report period

(VI) Others

IV. Balance at the 706,320, -1,060,3

456,569,1 76,791,55 179,326,1

end of the report 54,493.

000.00 24.55 0.17 81.21

period 51

III. Company profile

1. Registered place, organization structure and head office of the Company

Dongfeng Sci-Tech Group CO., LTD (Hereinafter referred to as " Dongfeng Group " or the "the Company") was formerly known as

Chengde Dixian Knitting Co., Ltd., and was reorganized on 3 November 1999 by sponsorship, approved by the People's Government

of Hebei Province with the issue of Ji Gu Ban [1999] No.: 36 with license of the business corporation obtained from Hebei

Administration for Industry & Commerce; registered capital while established amounting as RMB 100,000,000, and RMB 1.00 per

share. Among the abovementioned, RMB 85.10 million contributed by Wang Shuxian, representing 7.56 percent of the registered

capital; Wang Zhengsong invested RMB 5.4444 million with 5.44 percent in total registered capital presented; Chengde Longfeng

Cosmetics Co., Ltd. contributed RMB 0.9456 million, a 0.95 percent in registered capital and RMB 0.9456 million contributed by

Chengde Xiabancheng Hongxing Plastics Products Plant with 0.95 percent in registered capital presented.

On 29 August 2000, according to the Zheng Jian Fa Xing Zi [2000] No.: 121 issued by the China Securities Regulatory Commission,

the Company issued 100,000,000 domestically listed foreign shares in Shenzhen Stock Exchange dated 19 September 2000; and

excised the over-allotment option to increase issuing 15,000,000 B shares from September 29, 2000 to October 29, 2000. The

registered capital of the Company after the issuance of B shares was RMB 215,000,000 with one Yuan of face value per share.

According to the resolution of the shareholder’s general meeting on March 12, 2002, the Company allotted 43,000,000 bonus shares

to all of the shareholders according to the proportion of 2 free shares for every 10 shares, and meanwhile increased 107,500,000

shares to all of the shareholding by transferring from capital reserve according to 5 shares free for every 10 shares. The registered

capital of the company was changed to RMB 365,500,000 after it allotted bonus shares and increased by transferring.

According to the resolution of the shareholder’s general meeting on July 22, 2003, the Company allotted 73,100,000 bonus shares to

all of the shareholders according to the proportion of 2 free shares for every 10 shares, and the registered capital of the company was

changed to RMB 438,600,000 after such bonus shares were allotted.

On March 11, 2004, approved by the Ministry of Commerce of the People's Republic of China, the Company was allowed to be

changed as a foreign investment limited liability company.

In July 2004, the Company increased 150,000,000 B shares directionally, during which 91,300,000 shares were subscribed in HK$,

55

东沣科技集团股份有限公司 2017 年半年度报告全文

and another 58,700,000 shares were subscribed in RMB, upon check by China Securities Regulatory Commission with the issue

[2004] No.101.

According to the resolution of the shareholder’s general meeting on June 8, 2006, the Company allotted 117,720,000 bonus shares to

all of the shareholders according to the proportion of 2 free shares for every 10 shares,

On August 4, 2008, according to the judgment ruled by Shenzhen Intermediate People's Court, 112,324,800 sponsor shares held by

Wang Shuxian was compensated to Chen Rong for 45,491,544 Yuan, and on August 15, 2008, 96,000,000 sponsor shares held by

Wang Shuxian was compensated to Chen Rong for 38,880,000 Yuan according to the judgment ruled by Dalian Intermediate

People's Court.

On November 11, 2009, according to “reply to the approval of capital increase, and change of share as well as name of Chengde

Dixian Knitting Co., Ltd” with No.143 [2009] by Bureau of Commerce of Hebei Province, it agreed that the Company increased

150,000,000 domestically listed foreign shares in 2004 and allotted 2 bonus shares free for every 10 shares in 2006; and it agreed that

208,324,800 shares of Dixian stock held by Wang Shuxian was changed to Chen Rong ; as well as the name of the Company changed

to Chengde Dalu Co., Ltd. Total share capital of the Company was 706,320,000 shares and the registered capital of the Company was

706,320,000 Yuan after the Company’s share increased and allotted,

On 23 August 2011, the Company received the enterprise corporate business license issued from Chengde Administration for

Industry and Commerce, register serial was No.: 130000400001225; registered capital and paid-up capital was 706.32 million Yuan

with corporate type of limited liability company (Sino-foreign joint venture, listed)

On April 6, 2012, Chen Rong, shareholder of Company, signed a share transfer agreement with Mr. Wang Dong for transferred all of

the 208,324,800 shares held by himself (accounting for 29.49% of total capital of the Company) to Mr. Wang Dong; After equity

transfer the above mentioned, capital contribution proportion of the shareholders of the Company were: 208.3248 million Yuan

invested by Wang Dong, representing 29.49 percent of the register capital; 18517651 Yuan contributed by Hebei Chengde Northern

Industrial Corporation, representing 2.62 percent of the register capital; 13327891 Yuan invested by Wang Zhengsong, a 0.33 percent

in register capital; 2314829 Yuan invested by Chengde Xiabancheng Hongxing Plastics Products Plant, a 0.33 percent in register

capital and 461.52 million Yuan contributed by shareholders of domestically listed foreign shares, representing 65.34 percent of the

register capital.

On 19 September 2012, being verified and approved by Chengde Administration for Industry and Commerce, the Company’s name

changed asDongfeng Sci-Tech Group CO., LTD.

Over the years of bonus issue, rights issue and capitalization, up to 31st December 2014, the issued shares totally amounting to

706.32 million shares, registered capital of the Company was 706.32 million Yuan; registered address: Xiabancheng Town, Chengde

County, Hebei Province; HQ: Xiabancheng Town, Chengde County, Hebei Province. The Company has no parent company and Mr.

Wang Dong is the first largest shareholder of the Company and also is the controller of the Company.

On 15 May 2017, approved by Administration Bureau for Industry and Commerce of Chengde City, name of the Company agreed to

changed as Dongfeng Sci-Tech Group CO., LTD

(II) Business scope

R&D and sales of new energy, and new material products as well as technology promotion and technical service; scientific research

of modern eco-agriculture and technology promotion service, wholesales of eco-agriculture products; import and export trade of

56

东沣科技集团股份有限公司 2017 年半年度报告全文

goods and technology; Engage in the real estate development and management in the scope approved by the qualification certificates;

property management. (Projects need to be approved according to law can only carry out the operating activities after being approved

by relevant departments).

(III) Business nature and main operating activities of the Company

Dongfeng Group belongs to the development operation of real estate business, subsidy engaged in commerce trading, property

management and agricultural fariming and breeding etc.

(IV) Report approval for the financial statement

The statement has been approved by all Directors of the Company dated 28 August 2017 for reporting.

Totally 10 subjects are included in consolidate financial statement, mainly including:

Shareholding Voting rights ratio

Subsidiaries Type Level

ratio (%) (%)

Chengde Nanjiang Trading Co. Ltd. (Nanjiang Wholly-owned 2 100.00 100.00

Trading for short) subsidiary

Chengde Dongfeng Investment Co., Ltd. (Dongfeng Wholly-owned 2 100.00 100.00

Investment for short) subsidiary

Chengde Dongfeng Ecological Agriculture Co., Ltd. Wholly-owned 3 100.00 100.00

(Ecological Agriculture for short) sub-subsidiary

Nanjiang Asia Investment Co., Ltd. (Nanjiang Asia Wholly-owned 2 100.00 100.00

for short) subsidiary

Chengde Nanjiang Technology Co. Ltd. (Nanjiang Wholly-owned 3 100.00 100.00

Technology for short) subsidiary

Chengde Huijing Property Service Co., Ltd. Wholly-owned 3 100.00 100.00

(Huijing Property for short) sub-subsidiary

Hangzhou Dongfeng Technology Co., Ltd. Wholly-owned 2 100.00 100.00

(Hangzhou Dongfeng for short) subsidiary

Chengde Kefeng Aerospace Technology Wholly-owned 2 100.00 100.00

Development Co. Ltd. (Chengde Kefeng for short) subsidiary

Chengde Kefeng Trading Co., Ltd. (Kefeng Trading Wholly-owned 2 100.00 100.00

for short) subsidiary

Chengde Kefeng Engineering Project Management Wholly-owned 2 100.00 100.00

Co. Ltd. (Kefeng Engineering for short) subsidiary

Note:

1. Former Hangzhou Hangfeng Technology Co., Ltd. renamed as Hangzhou Dongfeng Technology Co., Ltd. in June 2017;

2. Former Chengde Nanjiang Investment Co., Ltd. renamed as Chengde Dongfeng Investment Co., Ltd. in June 2017;

3. Former Chengde Nanjiang Ecological Agriculture Co., Ltd. renamed as Chengde Dongfeng Ecological Agriculture Co., Ltd. in

June 2017;

4. In March 2017, the company separated the wholly owned subsidiary Chengde Nanjiang Trading Co., Ltd. (hereinafter referred to

as “Nanjiang Trading”), Nanjiang Trading continued to exist, with the registered capital of RMB 1 million, and derived to establish

Chengde Kefeng Project Management Co., Ltd., with the registered capital of RMB 500,000, and Chengde Kefeng Trading Co. Ltd.,

with the registered capital of RMB 8.5 million. Approved by Chengde Market Supervision Authority, Nanjiang Trading has

completed the relevant industrial and commercial registration for separation. Chengde Kefeng Project Management Co., Ltd. and

Chengde Kefeng Trading Co. Ltd. established by derivation are the company’s wholly-owned subsidiaries and are included in the

57

东沣科技集团股份有限公司 2017 年半年度报告全文

consolidated financial statements.

Subsidiary, special purpose vehicle and operational entity with control over by means of entrusted management or lessee newly

included in the consolidate scope in the Period:

Name Reason for changes

Kefeng Trading Enterprise derivated

Kefeng Engineering Enterprise derivated

Subsidiary, special purpose vehicle and operational entity with control lost by means of entrusted management or rent-out, which no

longer include in consolidate scope in the Period:

Name Reason for changes

Runhua RW The Company release the consistent action with shareholder Lan

Chunhong

Note: On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the

shareholder Lan Chunhong of Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original

Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and

operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to

vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their

own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting

Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action

person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control

power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the

date of losing the control power to it, and check and calculate by equity method.

IV. Basis of preparation of financial statements

1. Preparation basis

The Company conducts recognition and measurement according to actual occurrence of transactions and issues, pursuant to the

accounting principles for enterprise-basic rules and specific accounting principle as well as the application guidance for the

accounting principles for enterprise, interpretation to the accounting principles for enterprise and other related requirements

(hereinafter referred to as Enterprise Accounting Principles) issued by the ministry of finance, on that basis, combining the

Information Disclosure Preparation Rules for Company Public Issuing Securities No.15-General Rules for Financial Report

(amended in 2014) of the CSRC for statement preparation.

2. Going concern

We evaluated the sustainable management ability for 12 months since end of the period, and found out that there was not a

significant doubt on sustainable management ability of the entity in consolidate statement range. Therefore, the financial statement is

prepared based on the continuing operation assumption.

V. Major accounting policy and accounting estimation

Notice of specific accounting policy and estimation:

Nil

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1. Statement of Compliance with the Accounting Standards for Business Enterprises

The financial statements prepared by the Company meet the requirements of the Accounting Standards for Business Enterprises;

truthfully and completely reflect the financial status, operation results and cash flow etc. of the Company.

2. Fiscal period

The fiscal year of the Company is from 1 January to 31 December on basis of Gregorian calendar.

3. Operating cycle

One operating cycle for the Company is 12 months

4. Standard currency

The Company and its subsidiaries take RMB as the standard currency for bookkeeping.

5. Accounting treatment for business combinations under the same control and those not under the same

control

1. If the terms, conditions, and economic impact of each transaction involved in business combination achieved in stages fall

within one or more of the following situations, such transactions will be accounted for as a package deal:

(1) Such transactions are entered into simultaneously or in the case of considering the impact of each other;

(2) Such transactions as a whole in order to reach a complete business results;

(3) The occurrence of a transaction subject to that of at least one other transaction;

(4) One transaction alone is not economic, but otherwise when considered with other transactions.

2. Business combination under the same control

The Company’s assets and liabilities acquired in a business combination are measured by the book value in the consolidated financial

statements of ultimate controlling party in accordance with the assets and liabilities (including the goodwill formed by the ultimate

controlling party’s acquisition to the combined party) of combined party on combining date. If there is balance between the book

value of net assets obtained in merger and the book value of paid merger consideration (or total face value of issued shares), adjust

the stock premium in capital reserve, and adjust the retained earnings if the stock premium in capital reserve is not enough for writing

down.

If there is a contingent consideration needs to confirm the expected liabilities or assets, and there is balance between the expected

liabilities or assets amount and the settlement amount of follow-up contingent consideration, adjust the capital reserve (capital

premium or stock premium), and adjust the retained earnings if the capital reserve is not enough.

As for business combination realized through numbers of transactions, and if these transactions belong to a bundle of transactions,

then each of them shall be accounted as a transaction to acquire controlling right; and if not belong to a bundle of transactions, then

the difference between the initial investment cost of the long term equity investment as of the date on which the Company obtains

controlling right and the carrying value of the long term equity investment prior to combination plus the carrying value of the new

consideration paid for further acquisition of shares as of the combination date shall be used to adjust capital reserve; in case of

insufficient capital reserve, adjust retained earnings. For equity investment held prior to the combination date, the other

comprehensive income recognized due to calculation by equity method or based on recognition and measurement principles for

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financial instruments would not be accounted for temporarily until the Company disposes of this investment on the same basis as the

investee directly disposes of relevant assets or liabilities; other changes of owners’ equity in the net assets of investee as recognized

under equity method, except for net profit or loss, other comprehensive income and profit distribution, shall not be accounted for

until being transferred to current profit or loss when this investment is disposed of.

3. Business combination not under the same control

The Company's assets paid as the consideration of business merger or liabilities occurred or assumed on the acquisition date are

measured by the fair value, and the balance between fair value and its book value is included in the current profit and loss.

The Company confirms the balance that the combined cost is greater than the fair value shares of acquiree’s recognizable net assets

obtained in the combination as the goodwill; the balance that the combined cost is less than the fair value shares of acquiree’s net

identifiable assets obtained in the combination is included in the current profit and loss after re-checking.

As for the business combination not under the same control realized through several exchange transactions step by step, part of the

package deal, than carrying accounting treatment on transactions with controlling rights obtained through vary transactions; for

equity investment held prior to combination date which is calculated under equity method, the sum between carrying value of the

equity investment prior to acquisition date and cost of additional investment made on the acquisition date is deemed to be the initial

investment cost of this investment. Other comprehensive income recognized for equity investment held prior to combination date

under equity method shall be accounted for when the Company disposes of this investment on the same basis as the investee directly

disposes of relevant assets or liabilities. In case that equity investment held prior to combination date is calculated based on

recognition and measurement principles for financial instruments, then the fair value of this equity investment as of combination date

plus new investment cost shall be deemed as initial investment cost. The difference between fair value and carrying value of the

originally held equity interests and the accumulated fair value movements as originally recorded in other comprehensive income shall

be all transferred to investment income of the period in which the combination date falls.

4. Relevant expenses from combination

The intermediate expenses occurred for business combination such as audit, legal service and appraisal consultation expenses and

other related expenses shall be recorded in current gains and losses when occurred; the trading expenses for equity securities offering

shall be excluded while reckoned into equity transaction directly.

6. Methods for preparation of consolidated financial statements

1. Consolidated scope

The consolidation scope of the consolidated financial statements of the Company is fixed on the basis of control, and all subsidiaries

(including the independent subject control by the Company) have been consolidated.

2. Consolidated procedure

Based on financial statements of its own and the subsidiaries, the Company establishes the consolidated financial statements

according to other relevant data. The consolidated financial statements established by the Company regard the whole enterprise group

as an accounting subject, and reflect the overall financial situation, operating results and cash flow of the enterprise group by the

uniform accounting policies in accordance with the relevant confirmation, measurement and presentation requirements of accounting

standards.

The accounting policies and accounting period adopted by the subsidiaries taken into account of the consolidation scope are in line

with the Company. If it is not the same as the Company, necessary adjustments will be made when preparing consolidated financial

statements according to the accounting policy and accounting period of the Company.

When consolidating financial statements, the Company shall offset all effects upon consolidated balance sheet, consolidated profit

statement, consolidated cash flow statement and consolidated statement of changes in equity arising from the internal transactions

between the Company and each subsidiary and between various subsidiaries. If there is difference between the point of view of

consolidated financial statements of enterprise group and the affirmation to the same transaction by taking the Company or its

subsidiaries as the accounting subject, adjust the transaction from the enterprise group’s point of view.

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The ownership interests of subsidiaries, current net profits or losses and shares of current comprehensive income belonging to

minority shareholders are respectively and separately listed under the ownership interest item of consolidated balance sheet, the net

profit item of consolidated profit statement and the total comprehensive income item. The balance that the current losses shared by

the subsidiary's minority shareholders is greater than the shares in the ownership interests held by the minority shareholders in the

beginning period of this subsidiary offsets against the minority stockholders' interests.

For the subsidiaries acquired through business combination under the same control, take the fair value of its assets and liabilities

(including the goodwill formed by the ultimate controlling party’s acquisition to the combined party) in the financial statements of

ultimate controlling party as a basis to adjust its financial statements.

For the subsidiaries acquired through business combination not under the same control, take the fair value of net identifiable assets

on acquisition date to adjust its financial statements.

(1) Increase subsidiaries or businesses

During the reporting period, if there are subsidiaries or businesses increased by the business combination under the same control,

adjust the opening balance of consolidated balance sheet; include the income, expenses and profits of the subsidiaries or business

combination from the beginning of the period to the end of the reporting period into the consolidated profit statement; include the

cash flow of the subsidiaries or business combination from the beginning of the period to the end of the reporting period into the

consolidated statement of cash flows, adjust the relevant items of comparative statements at the same time, and regard that the

reporting entity after combination has been exiting since the ultimate controller starts controlling.

If the control can be implemented to the investees under the same control due to the additional investment, it can be regarded that all

partied in the combination can be adjusted when the ultimate controller starts controlling, i.e. by the current status and existence. For

the equity investment held before obtaining the control power of combined party, the relevant profit and loss, other comprehensive

income and other changes in net assets from the later date between the acquisition date of original stock right and the date when the

combining party and combined party are under the same control to the combination date respectively offset against the retained

earnings at the beginning of the period or the current profit and loss in the comparative statement period.

During the reporting period, if there are subsidiaries or businesses increased by the business combination not under the same control,

don’t adjust the opening balance of consolidated balance sheet; include the income, expenses and profits of the subsidiaries or

business combination from the purchase date to the end of the reporting period into the consolidated profit statement; include the

cash flow of the subsidiaries or business combination from the purchase date to the end of the reporting period into the consolidated

statement of cash flows.

If the control can be implemented to the investees not under the same control due to the additional investment, the Company

re-measures the stock right of acquiree held before the purchase date according to the fair value of this stock right on the purchase

date, the balance between fair value and its book value is included in the current investment income. Other comprehensive income

that the stock right of acquiree held before the purchase date involving in equity method business accounting and other changes in

ownership interest except for net profit or loss, other comprehensive income and profits distribution, together with its relevant other

comprehensive income and other changes in ownership interest are transferred into the current investment income attributable to the

purchase date, besides the other comprehensive income generated by the changes in the net indebtedness and net assets re-measured

and defined benefit plans by investees.

(2) Disposal of subsidiaries or businesses

1) General approaches

During the reporting period, if the Company disposes a subsidiary or business, the income, expense and profit of this subsidiary or

business from the beginning of the period to the disposal date are included in the consolidated income statement; the cash flow of this

subsidiary or business from the beginning of the period to the disposal date are included in the consolidated statement of cash flows.

When control power over investees are lost due to disposal of some equity investment or other reasons, the Company re-measure the

remaining equity investment after disposal in accordance with its fair value on the date to lose the control power. The balance by

subtracting the sum of consideration obtained by disposing stock right and fair value of residual equity from the sum of the shares of

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net assets continuously calculated according to the original shareholding ratio since the purchase date or combination date of the

original subsidiary and the goodwill are included in the investment income of the current period of losing control power. Other

comprehensive income related to the equity investment of original subsidiary and other changes in ownership interest except for

other net profit and loss, other comprehensive income and profits distribution are transferred into current investment income when

losing the control power, besides the other comprehensive income generated by the changes in the net indebtedness and net assets

re-measured and defined benefit plans by investees.

2) Dispose subsidiaries step by step

Dispose a subsidiary's equity investment until losing the control power step by step through multiple transactions, if the terms,

conditions and economic impact of the disposal to various transactions of the subsidiary's equity investment conform to following

one or various conditions, it means that the multiple transactions should have accounting treatment as a package deal:

A. These transactions are made by considering each other’s impacts;

B. These transactions can only reach a complete business result as a whole;

C. The occurrence of one transaction depends on the occurrence of at least one other transaction;

D. One transaction alone is not economical, but it is economical when it is considered together with other transactions.

The various transactions that dispose a subsidiary's equity investment until losing the control power belong to a package deal, the

Company handles accounting treatment to various transactions by taking them as a transaction disposing a subsidiary's equity

investment and losing the control power; however, the balance between every disposal price before losing control power and net

asset shares of the subsidiary corresponding to disposal of investment should be confirmed as other comprehensive income in the

consolidated financial statements and transferred into the profit and loss of the current period of losing control power when losing the

control power.

The various transactions that dispose a subsidiary's equity investment until losing the control power and don’t belong to a package

deal, before losing control power, are handled with accounting treatment according to relevant policies which used to partly dispose

the subsidiary's equity investment on the condition of not losing the control power; when losing the control power, they are handled

with accounting treatment according to the general handling methods used to dispose the subsidiary.

(3) Purchase the minority shareholding of a subsidiary

If there is balance between the Company’s long-term equity investment newly obtained by purchasing the minority shareholding and

the net asset shares of the subsidiary continuously calculated from the acquisition date (or combination date) according to the newly

increased shareholding ratio, adjust the capital stock premium in capital reserve on consolidated balance sheet, if the capital stock

premium in capital reserve is not enough for offset, adjust the retained earnings.

(4) The partial disposal of equity investments in subsidiaries without losing the control power

If there is balance between the disposal price obtained by the partial disposal of long-term equity investments in subsidiaries without

losing the control power and the net asset shares of the subsidiary continuously calculated from the acquisition date or combination

date corresponding to the disposal of long-term equity investments, adjust the capital stock premium in capital reserve on

consolidated balance sheet, if the capital stock premium in capital reserve is not enough for offset, adjust the retained earnings.

7. Classification of joint arrangement and accounting for joint operations

1. Classification of joint arrangement

The Company classifies joint venture arrangement into joint operations and joint ventures based on the structure, legal form, agreed

terms of the arrangement and other related facts and conditions.

Joint venture arrangement not concluded through separate entity is classified as joint operation; and those concluded through separate

entity are generally classified as joint ventures. However, joint venture arrangement which meets any of the following conditions as

proven by obvious evidence and satisfies relevant laws and rules is grouped as joint operation:

1. The legal form of the arrangement shows that parties to the arrangement are entitled to and assume rights and obligations in

respect of the relevant assets and liabilities.

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2. It is agreed by the terms of the arrangement that parties to the arrangement are entitled to and assume rights and obligations in

respect of the relevant assets and liabilities.

3. Other related facts and conditions show that parties to the arrangement are entitled to and assume rights and obligations in respect

of the relevant assets and liabilities. For instance, joint parties are entitled to almost all the output related to joint venture

arrangement and settlement of the liabilities under the arrangement continues to rely on supports from the joint parties.

2. Accounting for joint operations

The Company recognizes its proportion of interests in joint operation as related to the Company, and accounts for under relevant

business accounting principles:

1. To recognize separately-held assets and jointly-held assets under its proportion;

2. To recognize separately-assumed liabilities and jointly-assumed liabilities under its proportion;

3. To recognize revenue from disposal of the output which the Company is entitled to under the proportion;

4. To recognize revenue from disposal of the output under the proportion;

5. To recognize separately occurred expenses, and to recognize expenses occurred for joint operations under its proportion.

For injection to or disposal of assets of joint operations (other than those assets constituting business operation), gain or loss arising

from the transaction is only recognized to the extent it is attributable to other parties to the joint operation before the joint operation is

sold to any third party. In case those assets injected or disposed satisfy the condition for asset impairment loss under Business

Accounting Principle No.8-Assets Impairment, the Company recognizes this loss in full.

For acquisition of assets from joint operations (other than those assets constituting business operation), gain or loss arising from the

transaction is only recognized to the extent it is attributable to other parties to the joint operation before the relevant assets are sold to

any third party. In case that the acquired assets satisfy the condition for asset impairment loss under Business Accounting Principle

No.8-Assets Impairment, the Company recognizes relevant loss according to the proportion it assumes.

The Company exercises no common control over joint operations. If the Company is entitled to relevant assets of the joint operation

and assure relevant liabilities, it shall be accounted for under the above principle, otherwise it would be accounted for under the

relevant business accounting principles.

8. Recognition standards for cash and cash equivalents

When preparing cash flow statement, the Company recognized the stock cash and deposits available for payment at any time as cash,

and investments featuring with the following four characters at the same time as cash equivalents: short term (expire within 3 months

commencing from purchase day), active liquidity, easy to convert to already-known cash, and small value change risks.

9. Foreign currency business and conversion of foreign currency statement

1. Foreign currency business

For the foreign currency business, the Company converts the foreign currency into RMB for book-keeping based on spot exchange

rate at date of trading occurred while initially recognized.

On balance sheet date, balance of foreign currency monetary items shall be converted based on the spot rate as at the balance sheet

date, and the arising exchange difference shall be recorded in current gains and losses other than those arising from the special

foreign currency borrowings related to purchasing assets qualifying for capitalization which is treated under the principle of

borrowing expense capitalization. As for the foreign currency non-monetary items measured in historical cost, conversion is still

conducted with the spot rate as at the transaction date, without any change to its functional currency.

As for the foreign currency non-monetary items measured in fair value, conversion is conducted with the spot rate as at the date for

determination of fair value, and the arising exchange difference shall be recorded in current gains and losses as the changes of fair

value. if the foreign currency non-monetary items belong to foreign currency available for sale, the arising exchange difference shall

be recorded in other comprehensive income.

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2. Translation of foreign currency financial statement

Assets and liabilities in balance sheet are translated at the spot exchange rate at the balance sheet date. Equity items, excluding

“undistributed profit”, are translated at the spot exchange rates at the transaction dates. As for those translated at the spot exchange

rates at the transaction dates or those recognized in line with the reasonable method in system, translated at the similar exchange rate

as at the transaction date. The resulting translation differences are recognized in other comprehensive income.

When disposing overseas operations, the foreign currency financial statement translation differences listed under items of other

comprehensive income in balance sheet and which are directly related to the overseas operations are transferred to profit or loss in

the period when the overseas operation is disposed; In case of partial disposal or the overseas business, which has lower operation

ratio overseas without operation controlling loss due to other reason, the translation differences related to disposal part shall

including in equity of minority shareholders, no need to transfer into current gains/losses. In case of partial disposal of associated or

joint venture, foreign currency translation differences shall be calculated in respect of the disposed part under disposal proportion and

transferred to profit or loss in the period when the overseas operation is disposed.

10. Financial instruments

Financial instruments include financial assets, financial liabilities and equities instruments.

1. Categories of financial instruments

According to the contract terms of the financial instrument issued and economic substance reflects by such instrument, not only in

form of law, combine with purposes held for financial assets and liabilities, the management categorizes financial assets and liability

into different types at the time of initial confirmation: financial assets (or financial liabilities) at fair value through current gains and

losses; accounts receivable; financial assets available for sale; other financial liabilities, etc.

2. Recognition and measurement for financial instrument

(1) Financial assets or liabilities at fair value through profit or loss

Financial assets or liabilities at fair value through profit or loss include transactional financial assets or financial liabilities and

financial assets or liabilities directly designated at fair value through profit or loss.

Transactional financial assets or financial liabilities refer to those meeting any of the following conditions:

1) Purpose for holding the assets or liabilities are to disposal, repurchase or redemption in a short time;

2) Constitute part of the identifiable financial instrument group for central management, and there is objective evidence proving that

the Company manages this group in a short-time-return way recently;

3) Belong to derivative financial instrument, other than those derivatives designated as effective hedge instruments, belonging to

financial guarantee contracts and those linked to equity instrument investment which is not quoted in an active market and whose

fair cannot be measured reliably and the settlement of which is conditional upon delivery of the equity instrument.

Subject to satisfaction of any of the following conditions, financial assets or liabilities can be designated as financial assets or

liabilities at fair value through profit or loss upon initial measurement:

1) The designation can eliminate or substantially eliminate the inconsistencies between profit or loss from the financial assets arising

from different measurement basis;

2) The portfolio of financial assets and liabilities in which the financial asset belongs to are designated as measured at fair value in

the risk management report or investment strategic report handed in to key management personnel;

3) Hybrid instruments which contains one or more embedded derivatives, unless the containing of embedded derivatives does not

have substantial effect on the cash flows of the hybrid instruments, or the embedded derivatives obviously should not be separated

from relevant hybrid instruments;

4) Hybrid instruments which contains embedded derivatives that should split, but cannot be measured separately when acquired or on

the subsequent balance sheet date.

Amount is initially measured by the sum of fair value (deducted bond interest expired without received) while obtained and relevant

transaction expenses.

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Interest or cash dividend in period of holding shall be recognized as investment income, and reckoned into current gains/losses with

the variation of fair value at period-end.

In case of disposal, the difference between the amount while obtained and book value of the investment shall reckon into investment

income, and gains/loses of variation of the fair value shall be adjusted correspondingly.

(2) Account receivables

Account receivables refer to the non-derivative financial assets in active market, which has no quoted but has fixed amount or

amount can be determined in collection.

The contract price charged to the buyers shall be recognized as initial value for those account receivables which mainly comprise the

receivable creditor’s right caused by the sale of goods and providing of labor service to external customers by the Company, and

receivables in other companies excluding debt instruments priced in active markets, includes but not limited to trade receivables,

notes receivables, account paid in advance and other receivables. If characterized as of financing nature, the initial recognition shall

be priced at the present value.

Upon disposal, the difference between the sale value and the book value of the receivables shall be accounted into current profit or

loss on its recovery or disposal.

(3) Held-to-maturity investment

The non-derivative financial assets with maturity date, fix return amount or amount able to determined, and the Company held with

specific intention and ability.

The Company takes the sum of fair value (after deducting bond interests which is due for interest payment but not received) and

related transaction fee as initial recognition amount in respect of held-to-maturity investment upon acquisition of the investment.

During the holding period, the Company recognizes interest income at amortized cost and effective interest rate which is included in

investment income. The effective interest rate is determined upon acquisition of the investment and remains unchanged for the

expected continuous period or appropriate shorter period. Difference between sale price and carrying value of the investment is

included in investment income.

If held-to-maturity investment is disposed or reclassified as other types of financial asset, and the relevant amount is relatively bigger

than the total amount of our all held-to-maturity investments prior to disposal or reclassification, the remaining held-to-maturity

investments shall be reclassified as available-for-sale financial assets immediately following such disposal or reclassification. On the

reclassification date, difference between the carrying value and fair value of the investment is included in other comprehensive

income and is transferred out into current profit or loss when the available-for-sale financial assets experience impairment or

derecognition. However, the followings are exceptions:

1) The date of disposal or reclassification is approaching to the date of expiration or redemption of the investment (such as three

months prior to expiration), and change of market rate has no material influences over the fair value of the investment.

2) Company has already recovered nearly all initial principal under the repayment means as agreed in contract.

3) Disposal or reclassification is arising from separate matters which are out of our control, which are expected not to occur

repeatedly and which are difficult to predict reasonably.

(4) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale upon initial recognition

and financial assets other than other categories of financial assets.

The Company initially measures available-for-sale financial assets at the sum between their fair values when acquiring the assets or

liabilities (after deducting cash dividend already declared but not paid or bond interests which is due for interest payment but not

received) and the relevant transaction fee.

Interest or cash dividend acquired during the holding period shall be recognized as investment income. Gains or losses arising from

movement of fair value is directly included in other comprehensive income except for impairment loss and exchange difference

arising from foreign currency monetary financial assets.

When disposing available-for-sale financial assets, the Company includes the difference between the acquired price and carrying

value of the financial assets into investment profit or loss. Meanwhile, accumulated fair value movement attributable to the disposed

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part which is originally directly included in other comprehensive income is transferred out and included investment profit or loss.

For equity instrument investment which is not quoted in an active market and whose fair value cannot be reliably measured, and

derivative financial assets which are linked to the equity instrument and whose settlement is conditional upon delivery of the equity

instrument, they are stated at cost by the Company.

(5) Other financial liabilities

Initial recognition amount is determined at the sum of fair value and relevant transaction fee. Subsequent measurement is conducted

at amortized cost.

(6) Held-to-maturity investment for sales or reclassify as financial assets available for sale:

In case that the amount of held-to-maturity investments disposed or reclassified into other categories of financial assets is greater

than the total amount of all the held-to-maturity investment of the Company before the disposal or reclassification, the remaining

held-to-maturity investment shall be recorded as financial assets available for sale immediately after such disposal or reclassification,

unless:

1) The date of disposal or reclassification is relatively close to the maturity date or redemption date of the investment (such as three

months before expiration), and change of market rate has no material affects on the fair value of the investment.

2) The enterprise has nearly recovers the entire initial principal under the payment method as agreed by contract.

3) The disposal or reclassification is due to such independent matter that the enterprise is not able to control, will not happen again as

expected and can not predicted reasonably.

3. Confirmation evidence and measurement methods for transfer of financial assets

When transfer of financial assets occurs, the Company shall stop recognition of such financial assets if all risks and remunerations

related to ownership of such financial assets have almost been transferred to the receiver; while shall continue to recognize such

financial assets if all risks and remunerations related to ownership of such financial assets have almost been retained.

When judging whether or not the aforesaid terminal recognition condition for financial assets is arrived at for transfer of financial

assets, the Company generally adopts the principle that substance overweighs format. The Company divides such transfer into entire

transfer and part transfer. As for the entire transfer meeting condition for discontinued recognition, balance between the following

two items is recorded in current gains and losses:

(1) Carrying value of financial assets in transfer;

(2) Aggregate of the consideration received from transfer and accumulative movements of fair value originally recorded in owners’

equity directly (applicable when financial assets involved in transfer belong to financial assets available for sale).

As for the part transfer meeting condition for discontinued recognition, entire carrying value of financial assets in transfer is shared

by discontinued recognition part and continued recognition part, in light of their respective fair value. Balance between the following

two items is recorded in current gains and losses:

(1) Carrying value of discontinued recognition part;

(2) Aggregate of the consideration of discontinued recognition part and amount of such part attributable to accumulative movements

of fair value originally recorded in owners’ equity directly (applicable when financial assets involved in transfer belong to financial

assets available for sale).

Financial assets are still subject to recognition if transfer of such assets doesn’t satisfy the condition for discontinued recognition.

And consideration received is recognized as financial liability.

4. De-recognition condition for financial liability

As for the financial liabilities with its whole or part present obligations released, the company shall de-realize such financial

liabilities or part of it. if the company enters into agreement with its creditor to substitute for the existing financial liabilities by

means of assuming new financial liabilities, then the company shall de-realize the existing financial liabilities and realize the new

financial liabilities provided that the contract clauses of the new and the existing financial liabilities are different in substance.

If the company makes substantial amendment to the whole or part contract clauses of the existing financial liabilities, it shall

de-realize the existing financial liabilities or part of it. Meanwhile, the financial liabilities with amendment to its clauses shall be

realized as new financial liabilities.

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In case of derecognizing of financial liabilities in whole or part, the difference between the carrying value of such de-realized

financial liabilities and consideration paid (including the non-cash assets exchanged or new financial liabilities assumed) shall be

recorded in current gains and losses.

In case that the company repurchases part of financial liabilities, based on the comparative fair value of the continuing recognition

part and the derecognizing part, the company shall allocate the carrying value of the financial liabilities in whole on the repurchase

date. Difference between the carrying value allocated to the derecognizing part and the consideration paid (including the non-cash

assets exchanged or new financial liabilities assumed) shall be recorded in current gains and losses.

5. Determination method for fair value of financial assets and financial liabilities

As for the financial assets or financial liability for which there is an active market, the quoted prices in the active market shall be

used to determine the fair value thereof; the quoted prices in the active market refers to the prices, which are easily available from the

stock exchanges, brokers, industry associations, pricing service institutions and etc. at a fixed term, and which represent the prices at

which actually occurred market transactions are made under fair conditions.

As for the financial assets and financial liabilities measured by fair value and in case that there are active market for those assets and

liabilities, then the fair value shall be determined based on the quotation on active market; as for the financial assets initially acquired

or financial liabilities assumed, their fair value are determined based on the market transaction prices; in case that there are no such

active market for financial assets and financial liabilities, the fair value shall be determined by evaluation technology. At time of

evaluation, the applicable evaluation technology, in the prevailing circumstance, and those have available date and other information

supporting shall be adopted, choose the input value, same with the assets or liability features that consider in transaction by market

participants, and use the relevant observable input values as far as possible. Use the un-observable input values when relevant

observable input values unable to obtained or obtained without feasible.

6. Provision of impairment reserve for impairment of financial assets (excluding account receivables)

The company reviews the carrying value of the financial assets (excluding those measured by fair value and the change thereof is

recorded in current gains and losses) on the balance sheet date, if there is objective evidence showing impairment of the financial

assets, it shall provide impairment reserve.

Objective evidence that a financial asset is impaired includes the following observable events:

Significant financial difficulty of the issuer or obligor;

A breach of contract by the borrower, such as a default or delinquency in interest or principal payments;

The creditor, for economic or legal reasons relating to the borrower’s financial difficulty, granting a concession to the borrower;

It becoming probable that the borrower will enter bankruptcy or other financial reorganizations;

The disappearance of an active market for that financial asset because of financial difficulties of the issuer;

Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets

since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the

group, including: adverse changes in the payment status of borrowers in the group, an increase in the unemployment rate in the

country or geographical area of the borrowers, a decrease in property prices for mortgages in the relevant area, or adverse changes in

industry conditions that affect the borrowers in the group;

Significant adverse changes in the technological, market, economic or legal environment in which the issuer operates, indicating that

the cost of the investment in the equity instrument may not be recovered by the investor;

A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost;

Details for impairment of financial assets are set out below:

(1) Impairment provision for available-for-sale financial assets

The Group has separately tested various available-for-sale equity instruments at the balance sheet date. It will be defined as

impairment if the fair value is lower than the initial investment cost by more than 50% (including 50%) or the low state has lasted for

no less than 1 year. While the lower proportion is between 20% and 50%, the Group will take other factors such as price fluctuation

into consideration to estimate whether the equity instrument has impaired or not.

Cost stated in the above paragraph is determined based on the initial acquisition cost of available for sale equity instrument

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investment less recovered principal and amortized amount as well as impairment loss originally included in profit or loss; fair value

is determined at the closing price quoted on stock exchange at period end, unless the available for sale equity instrument investment

is limited for sale for certain periods. For available for sale equity instrument investment which is limited for sale for certain periods,

fair value is determined at the closing price quoted on stock exchange at period end less the compensation required by market

participator who would otherwise assume risks due to impossibility of selling the equity instrument on open market in designated

period.

When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value that had been recognized

in other comprehensive income is reclassified to the profit or loss even though the financial asset has not been derecognized. The

amount of the cumulative loss that is removed from equity is the difference between the acquisition cost (net of any principal

repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or

loss.

If there are objective evidences showing that the value of available-for-sale debt instrument is recovered and it relates to the matters

happened after the impairment loss recognition, the impairment loss recognized shall be reversed and accounted in current profit or

loss. Impairment losses recognized for equity instrument investments classified as available-for-sale are reversed through equity.

However, impairment loss occurred by equity instrument investment which is not quoted in an active market and whose fair value

cannot be measured reliably and derivative financial assets which are linked to the equity instrument and whose settlement is

conditional upon delivery of the equity instrument, shall not be reversed.

(2) Impairment provision for held-to-maturity investment

For held-to-maturity investment, if there is object evidence showing the investment is impaired, then impairment loss is determined

based on the difference between its fair value and present value of predicted future cash flow. After provision, if there is evidence

showing its value has been restored, the originally recognized impairment loss can be reversed and included in current profit or loss,

provided that the reversed carrying value shall not exceed the amortized cost of the financial asset as at reversal date assuming no

impairment provision had been made.

7. Offset of financial assets and financial liabilities

Financial assets and financial liabilities are stated in balance sheet separately without inner-offset. However, the net amount after

inner offset is stated in balance sheet date when the following conditions are all met:

(1) The Company has legal right to offset recognized amount and the right is enforceable;

(2) The Company plans to settle on a net basis, or simultaneously realize the financial assets and settle the financial liabilities.

11. Account receivable

(1) Account receivable with single significant amount and withdrawal single item bad debt provision

Determine basis or amount standards for single significant

Account with single significant amount not less than RMB 1 million

amount

Conducted impairment testing separately, balance between the

present value of future cash flow and its carrying value, bad debt

Withdrawal method for bad debt provision of account receivable

provision withdrawal and reckoned into current gains/losses. As

with single significant amount:

for the receivable without impairment being out in test, accrual

bad debt provision in corresponding group

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(2) Accounts receivable whose bad debts provision was accrued by combination of credit risk

characteristics portfolio

Combination Methods on withdrawal of bad debt provision

Age combination Age analysis method

No risk portfolio Other method

Related party combination in combined range Other method

Accrued for provision of bad debt by aging analysis method in portfolio:

√ Applicable □Not-applicable

Account age Rate for receivables Rate for other receivables

Within one year (one year included) 5.00% 5.00%

1-2 years 20.00% 20.00%

2-3 years 50.00% 50.00%

Over 3 years 100.00% 100.00%

In combination, withdrawal proportion of bad debt provision based on balance proportion:

□ Applicable √ Not-applicable

In combination, withdrawal proportion of bad debt provision based on other methods

√Applicable □ Not applicable

Name

Rate for receivables Rate for other receivables

No risk portfolio 0.00% 0.00%

Related party combination in combined

0.00% 0.00%

range

(3) Accounts receivable with single significant amount and bad debts provision accrued individually

There is an objective evidence of impairment which is probably

about to occurred, such as revocation from the debtor,

Reasons for withdrawal single item bad debt provision bankruptcy or dead, and still able to recover after liquidated by

the bankruptcy property or heritage as well as serious insufficient

cash flow etc.

For those account receivable with objective evidence of

impairment been found, separated them from the relevant groups

for impairment testing independently, and impairment losses

Withdrawal method for bad debt provision

shall recognized and withdrawal bad debt reserves on the

difference between the present values of estimated future cash

flow which is lower than its carrying value,

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12. Inventories

Whether the company needs to comply with the disclosure requirements of the particular industry

Yes

Real estate industry

1. Classification of inventories

Inventories are categorized into development cost, development products, relocation housing animals & plants aquaculture plant

products and low value consumables etc.

2. Valuing of inventory

The Company adopts the historical cost for obtaining or the planned cost to value the inventory according to its actual situation, and

specific identification method for the development projects.

3. Confirmation of net realizable value for the inventory and provision for inventory impairment

Making an overall check of the inventory at end of the year, withdrawal the lower one according to the cost or the net realizable

value, or adjusted the provision for inventory impairment. Withdrawal the impairment provisions for the single inventory at end of

the year.

In case the influencing factor for write-down of the inventory values has disappeared, the amount which has been written down can

be recover, and shall switch back within the inventory falling price reserves which has been accrual originally, the amount switch

back shall reckoned into current gains/losses.

4. Inventory System

Perpetual inventory system

5. Low-value consumables are amortized on one-off amortization method

6. Relocation housing refers to the house for turnover purpose to arrange for relocation of residents, and amortized evenly in

50 years.

7. Calculation method of the lands for development purpose

As for the pure land development project, the costs constitute costs of the land development; the project develops along with the real

estate, costs with clear burden of objects shall split into commercial house costs with actual area.

8. Calculation method of the expenses of public supporting facilities

Public supporting facilities cannot be transfer with compensation: reckoned into commercial house costs by the benefit ratio;

Public supporting facilities can transfer with compensation: take all supporting facilities as the cost calculation subject, summarize

the costs occurred.

13. Classified as assets held for sale

1. Recognition criteria of assets held for sale

The Company’s component (or non-current asset) will recognize as held-for-sale while satisfied the followed conditions

simultaneously:

(1) The component can be promptly sold at its existing status only according to the practice terms in connection with disposal of this

kind of assets;

(2) The Company has already made resolution on disposal of such component, such as approved by shareholders in line with

regulations, have already approved by general meeting or relevant authority;

(3) The Company entered into irrevocable transfer agreement with the transferee;

(4) And this transfer will be completed within one year.

2. Accounting for assets held for sale

The company will adjust the predicted net residual value of the held for sale fixed assets so that the predicted net residual value can

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reflect its fair value minus the costs of disposal, but the predicted net residual value should not exceed the book value of the fixed

asset when it was recognized as held for sale. If the book value is higher, the difference between them should be charged into profit

or loss for the current period as asset impairment loss. Fixed assets held for sale shall not be depreciated or amortized, and is

measured at carrying value and fair value less costs of disposal (whichever is lower).

Other non-current assets like equity investments and intangible assets satisfying condition for held for sale should be accounted for as

shown above, other than deferred income tax assets, financial assets under Business Accounting Standard No. 22-Measurement and

Recognition of Financial Instruments, investment property measured at fair value, biological assets, and rights from insurance

contract.

14. Long-term equity investment

1. Recognition of investment cost

(1) As for the long-term equity investment formed from business combination under the same control, accounting policy found in

Note I - Accounting method for business combination (not) under the same control.

(2) Long-term equity investment obtained by other means

For long-term equity investments obtained through payment with cash, then the actual payment shall be viewed as initial investment

cost. Initial investment cost including the expenses, taxes and other necessary costs that directly concerned with the long-term equity

investment that acquired.

For long-term equity investments obtained through issuance of equity securities, then the fair value of such securities shall be viewed

as initial investment cost; for transaction expenses from issuing or own equity instrument acquired, it can be deducted from the

equity when such expenses attributable directly to equity transaction.

Under the precedent condition that non-monetary assets exchanges are featured with commercial nature and fair values of

exchange-in or exchange-out assets can be reliably measured, long-term equity investment exchange-in through non-monetary assets

exchange shall be recognized with initial investment cost on the basis of the fair value of the assets exchange-out, unless there is

obvious evidence showing that fair value of exchange-in assets is more reliable; as for non-monetary assets exchanges not satisfying

such precedent condition, initial investment cost of exchange-in long-term equity investment falls to the carrying value of

exchange-out assets and relevant taxes payable.

For long-term equity investments obtained through debt reorganization, its initial investment cost is recognized based on fair value.

2. Subsequent measurement and recognition of gains and losses

(1) Subsequent measurement

(1) Cost method

The long-term equity investment control by invested entity shall counted by cost method, and pricing on initial investment cost, cost

of the long-term equity investment shall be adjusted while additional investment or dis-investment.

Other than payment actually paid for obtaining investment or cash dividend or profit included in consideration which has been

declared while not granted yet, the Company recognizes investment income according to its share in the cash dividend or profit

declared for grant by the invested unit.

(2) Equity method

The Company calculates long term equity investment in associates and joint ventures under equity method. For certain equity

investments in associates indirectly held through risk investment institutions, joint funds, trust companies or similar entities including

investment linked insurance fund, the Company measures the investment at fair value through profit or loss.

Where the initial investment cost of a long-term equity investment exceeds the Group’s share of the fair value of the investee’s

identifiable net assets at the time of acquisition, no adjustment is made to the initial investment cost. Where the initial investment

cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the difference is

recognized in profit or loss for the period.

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Return on investments and other comprehensive income is recognized respectively by shares of net gains and losses realized by the

invested company and other comprehensive income after acquisition of long-term equity, and book value of such investment is

adjusted accordingly. Profit or cash dividends pro rata distributed by the invested company are to minus book value of the relative

long-term investment. Book value of long-term investment is adjusted when changes occur other than net gains and losses, other

comprehensive income and profit distribution of the invested company, and is to reported in owners’ equity accordingly

The Company should recognized net profit of invested unit after adjustment, based on fair value of vary identifiable assets of

invested unit while obtained investment, while recognized net profit or net losses of invested units that should be enjoy by investment

enterprise. the un-realized transaction gains/losses attributable to investment enterprise, internally occurred between the Company,

affiliated units and joint-ventures should calculated by proportion of shares-holding which should be offset, than recognized

investment gains/losses.

When the Company is confirmed to share losses of the invested units, the following order shall prevail for disposal: first of all, offset

carrying value of long-term equity investment. Second, for long-term equity investment whose carrying value is not enough for offset,

investment loss should be continued to recognize within the limit of carrying value of other long-term equity which substantially

forms net investment to invested units, to offset carrying value of long-term items receivable. At last, after the aforesaid treatment, if

enterprise still bears additional duties according to investment contract or agreement, projected liabilities are recognized in

accordance to the obligations which are expected to undertake, and then recorded in current gains and losses.

In the event that the invested unit realizes profit in later periods, the Company will adopt disposal adverse to the above order after

deduction the unrecognized share of loss, i.e. write off the carrying value of the recognized projected liabilities, recover carrying

value of long-term equity which substantially forms net investment to invested unit and long-term equity investment, and recognize

investment income at the same time.

3. Transfer of calculation for long term equity investment

(1) Measure at fair value transfer to equity method

For the equity investment originally held by the Company in which it has no control, common control or significant influence over

the investee and which is accounted for under recognition and measurement principle as financial assets, in case that the Company

becomes able to exercise significant influence or common control upon the investee due to additional investment while no control is

reached, the sum of fair value of the originally held equity investment as determined under Business Accounting Principles No.22-

Recognition and Measurement Principle as Financial Assets plus cost of the new investment shall be deemed as the initial investment

cost upon calculation under equity method.

If the originally held equity investment is classified as available for sale financial assets, the difference between its fair value and

carrying value and the accumulated fair value movement which is originally included in other comprehensive income shall be

transferred to current period gains and losses under equity method.

In case that the initial investment cost under equity method is lesser than share of fair value of the investee’s net identifiable assets as

of the date when additional investment is made as calculated based on the latest shareholding proportion upon additional investment,

carrying value of the long term equity investment shall be adjusted against such difference which is included in current period

non-operating income.

(2) Measure at fair value or calculation under equity method transfer to calculation under cost method

For the equity investment originally held by the Company in which it has no control, common control or significant influence over

the investee and which is accounted for under recognition and measurement principle as financial instrument, or for long term equity

investment originally held in associates or joint ventures, in case that the Company becomes able to exercise control over investee

not under common control due to additional investment, the sum of fair value of the originally held equity investment plus cost of the

new investment shall be deemed as the initial investment cost upon calculation under cost method when preparing separate financial

statement.

For other comprehensive income as recognized under equity method in respect of equity investment held prior to acquisition date,

when the Company disposes this investment, the aforesaid income shall be accounted for on the same basis as the investee would

otherwise adopt when it directly disposes relevant assets or liabilities.

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For equity investment held prior to acquisition date which is accounted for under Business Accounting Principles No.22- Recognition

and Measurement of Financial Assets, the accumulated fair value movement which originally included in other comprehensive

income shall be transferred to current period gains and losses upon calculation under cost method.

(3) Calculation under equity method transfer to fair value measurement

In case that the Company lost common control or significant influence upon investee due to disposal of part equity investment, the

remaining equity investment shall be calculated under Business Accounting Principles No.22- Recognition and Measurement of

Financial Assets, and the difference between its fair value and carrying value as of the date when the Company lost common control

or significant influence shall be included in current period gains and losses.

For other comprehensive income as recognized under equity method in respect of the original equity investment, when the Company

ceases calculation under equity method, the aforesaid income shall be accounted for on the same basis as the investee would

otherwise adopt when it directly disposes relevant assets or liabilities.

(4) Cost method transfer to equity method

In case that the Company lost control upon investee due to disposal of part equity investment, and if the remaining equity investment

can exercise common control or significant influence over the investee, equity method shall be adopted when preparing separate

financial statement, and the remaining equity investment shall be adjusted as if it had been stated under equity method since the

acquisition.

(5) Cost method transfer to fair value measure

In case that the Company lost control upon investee due to disposal of part equity investment, and if the remaining equity investment

cannot exercise common control or significant influence over the investee, Business Accounting Principles No.22- Recognition and

Measurement of Financial Assets shall be adopted for accounting treatment when preparing separate financial statement, and the fair

value and carrying value as of the date when control is lost shall be included in current period gains and losses.

4. Disposal of long term equity investment

Difference between carrying value and actual acquisition price in respect of disposal of long term equity investment shall be included

in current period gains and losses. For long term equity investment under equity method, the Company shall adopt the same basis as

the investee directly disposes relevant assets or liabilities when disposing this investment, and account for the part originally included

in other comprehensive income under appropriate proportion.

If the terms, conditions and economic impact of each transaction involved in the disposal by steps of investment in subsidiaries fall

into one or more of the following situations, such transactions will be accounted for as a package deal:

1. Such transactions are entered into simultaneously or in the case of considering the impact of each other;

2. Such transactions as a whole in order to reach complete commercial results;

3. The occurrence of one transaction is subject to that of at least one other transaction;

4. A transaction alone is not economic, but otherwise when considered with other transactions.

Enterprises that lose control of their original subsidiaries due to the disposal of partial equity investment or otherwise, and therefore

disqualify a package deal, should prepare the relevant accounting treatment in differentiation with individual financial statements and

consolidated financial statement:

(1) In separate financial statement, as for disposal of equity interest, difference between carrying value and actual acquisition price

shall be included in current period gains and losses. In case that the remaining equity interests can exercise common control or

significant influence over investee, it shall be stated under equity method in stead, and shall be adjusted as if the remaining equity

interests had been stated under equity method since the acquisition. In case that the remaining equity interests cannot exercise

common control or significant influence over investee, it shall be accounted for under Business Accounting Principles No.22-

Recognition and Measurement Principle of Financial Instruments, and the difference between its fair value and carrying value as of

the date then the Company lost control shall be included in current period gains and losses.

(2) In consolidated financial statement, for those transactions occurred before lost of control in subsidiaries, the difference between

disposal price and share of net assets of subsidiaries since purchase date or combination date shall be used to adjust capital reserve

(equity premium), and if capital reserve is insufficient to offset, then it shall adjust retained earnings; when the Company lost control

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in a subsidiary, the remaining equity interests would be re-measured at the fair value as of the control-lost date. The sum of

consideration gained from the disposal of equity and the fair value of remaining equity minus the share of net assets of original

subsidiaries since the day of purchase and based on its original shareholding ratio is credited into investment gain for the current

period, and off-set the goodwill at the same time. Other comprehensive income in relation to equity investments of original

subsidiaries should be transferred to investment gain for the period at the time of loss of control.

Each transaction involved in the disposal of equity investments of subsidiaries until loss of control falls into a package deal, carrying

accounting treatment on transaction of losing control rights and disposing the company, and should be accounted for accordingly in

differentiation with individual financial statements and consolidated financial statements:

(1) In consolidated financial statements, difference between each payment from disposal of an equity and the book value of such

long-term equity investment before the loss of control should be recognized as other comprehensive income and at the time of loss of

control, transferred to profit or loss for the current period.

(2) In consolidated financial statements, difference between each payment from disposal of a subsidiary and the share of its net assets

through investment before the loss of control should be recognized as other comprehensive income and at the time of loss of control,

transferred to profit or loss for the current period.

5. Criteria for common control and significant influence

Where the Company jointly controls an arrangement with other participators under agreed terms, and decisions which materially

affect return of such arrangement can only exist when other participators unanimously agree on the decisions, the Company is

deemed to jointly control this arrangement with other participators, and the arrangement belongs to joint venture arrangement.

In case of a joint venture arrangement concluded through separate entity, when the Company is judged to be entitled to the net assets

of the separate entity under relevant agreements, the entity shall be viewed as a joint venture under equity method. However, when

the Company is judged to be not entitled to the net assets of the separate entity under relevant agreements, the entity shall be viewed

as a joint operation, in which case, the Company recognizes items relating to its share of interests from the joint operation and

accounts for according to relevant business accounting rules.

Significant influence refers to that investor has right to participate in making decisions relating to the financial and operational

policies of the investee, while not able to control or jointly control (with others) establishment of these policies. The following one or

more conditions are based to judge whether the Company has significant influence over investee with consideration of all facts and

situations: (1) Has delegate in the board of directors or similar authority organs of investee; (2) Participate in establishing financial

and operational policies of the investee; (3) Occur material transactions with the investee; (4) Delegate management to the investee;

(5) Provide key technical data to the investee.

15. Investment real estate

Measurement model of investment real estate

Measure by cost

Depreciation or amortization method

Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including the rented

land use rights and the land use rights which are held and prepared for transfer after appreciation, the rented buildings.

The investment property of the Company is accounted at its cost. Cost of investment property purchased from the external sources

includes purchase payment, related taxes and other expenditures which can be directly attributable to such assets; Cost of investment

property constructed by the Company comprise of the necessary expenditure occurred during the construction for reaching the

condition of planned use.

Consequent measurement of investment estate shall be measured by cost method. Depreciation and amortization are provided to the

buildings and land use right pursuant to the predicted service life and net rate of salvage value. The predicted service life and net rate

of salvage value and annual depreciation (amortization) are listed as follows:

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Type Expected operating life Predicted rate of net salvage Depreciation(amortization) rate per

(year) value annum

Land Use Right 50 0%-10% 1.80%-2.00%

House and buildings 20-28 0%-10% 3.56%-4.50%

When investment real estate turns to be used by holders, it shall switch to fixed assets or intangible assets commencing from the date

of such turning. And when self-used real estate turns to be leased out for rental or additional capital, the fixed assets or intangible

assets shall switch to investment real estate commencing from the date of such turning. In situation of switch, the carrying value

before the switch shall be deemed as the credit value after the switch.

Indication of impairment is assessed, the recoverable amount shall be estimated and the impairment shall be recognizing while the

recoverable amount lower than its book value.

Impairment loss once recognized shall not be reversed.

When investment is disposed, or out of utilization forever and no economic benefit would be predicted to obtain through the disposal,

the Company shall terminate recognition of such investment real estate. The amount of income from disposal, transfer, discarding as

scrap or damage of investment real estate after deducting the asset’ s carrying value and relevant taxation shall be written into current

gains and losses.

16. Fixed asset

(1) Recognition

Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for

operation & management, and have more than one year of service life. Fixed assets should be recognized for qualified the followed

conditions at the same time: (1) It is probable that the economic benefits associated with the assets will flow into the Company; and

(2) The cost of the assts can be measured reliably.

(2) Depreciation method

Category Depreciation method Estimated useful life Estimated residual rate Annual depreciation rate

Houses and buildings Straight-line depreciation 20.00-28.00 5.00 3.39%-4.75%

Machinery equipment Straight-line depreciation 4.00-5.00 5.00 19.00%-23.75%

Transportation

Straight-line depreciation 5.00-20.00 5.00 4.75%-19.00%

equipment

Other equipment Straight-line depreciation 3.00-5.00 5.00 19.00-31.67%

Straight-line depreciation

(3) Basis of asserting, pricing and depreciation method on fixed assets under financing lease

A fixed asset leased by the Company is recognized as the fixed asset held under finance lease if one or more of the following criteria

are met: (1) Upon the expiry of the lease term, the ownership is transferred to the Company. (2) The Company has the option to

purchase the asset at a predetermined price that is expected to be sufficiently lower than the fair value at the date the option becomes

exercisable and it is reasonably ascertained at the inception of lease that the option will be exercised. (3) The lease term approximates

the useful life of the relevant asset even if the ownership is not transferred. (4) At the inception of the lease, the present value of the

minimum lease payments is substantially equivalent to the fair value of the leased asset. (5) The leased assets are of such a

specialized nature that only the Company can use them without major modification. A fixed asset held under finance lease is initially

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recognized at the lower of fair value of the leased asset and the present value of the minimum lease payments, while the amount of

the minimum lease payments will be recognized as the entry value of long-term account payable, the difference between them will be

recognized as unrecognized financing costs. The initial direct costs such as commissions, attorney’s fees, and travelling expenses,

stamp duties attributable to the leased item incurred during the process of lease negotiating and signing the leasing agreement shall be

recorded in the asset value. Unrealized finance costs will be amortized using actual interest rate method over each period during the

lease terms. The Company adopts depreciation policies for leased assets consistent with those of self-owned fixed assets for the

purpose of calculating the depreciation of a leased asset. If it is reasonable to be certain that the lessee will obtain the ownership of

the leased asset when the lease term expires, the leased asset shall be fully depreciated over its useful life. If it is not reasonable to be

certain that the lessee will obtain the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully

depreciated over the shorter one of the lease term or its useful life.

17. Construction in process

1. Classification of constructions under progress

The constructions under progress of the Company are accounted for by fund project.

2. Standard and point of time for construction in process carrying forward to fixed assets

Fixed asset is booked with the entire expenditures occurred in the construction in process till it arrives at predicted state for use. For

those constructions in process of fixed assets which have already arrived at the predicted state for use, while still with absence of

completion settlement, they shall be carried forward to fixed assets at the estimated value based on engineering budget, construction

cost or actual cost commencing from the date of arrival of the predicted state for use. Meanwhile, they shall be also subject to the

depreciation policies applicable to fixed assets of the Company for provision of depreciation. Once completion settlement is made,

the original temporary estimated value shall be adjusted at the effective cost. However, the original provision of depreciation remains

unchanged.

3. Impairment test and impairment provision for construction in process

The Company determines whether there is evidence of impairment that may occur upon construction in progress at end of each

period.

If there is indication of impairment of construction in progress, the Company shall estimate its recoverable amount. The recoverable

amount is to be determined by the higher between the net price of the fair value of construction in progress after subtracting costs of

disposal and the present value of expected future cash flow from construction in progress.

When the recoverable amount of construction in progress is below their book value, the book value of construction in progress shall

be written down to its recoverable amount, and the amount of write-down shall recognized as impairment loss of construction in

progress, and included into current profits and losses. At the same time, the provision for depreciation of construction in progress

shall be accrued.

After the recognition, the impairment loss of construction in progress shall not be reversed in subsequent accounting period.

If there are indications showing that impairment of certain construction in progress is possible, the Company shall estimate its

recoverable amount based on individual construction. If difficult to do so, the Company shall determine the recoverable amount of

the assets group on basis of the asset groups to which the construction in progress belongs.

18. Borrowing expenses

1. Recognition of the borrowing expenses capitalization

Borrowing expenses that attributed for purchasing or construction of assets that are complying with capitalizing conditions start to be

capitalized and counted as relevant assts cost; other borrowing expenses, reckoned into current gains and losses after expenses

recognized while occurred.

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Assets satisfying the conditions of capitalization are those assets of fixed, investment real estate etc. which need a long period of time

to purchase, construct, or manufacturing before becoming usable.

Capitalizing for borrowing expenses by satisfying the followed at same time:

(1) Assets expense occurred, and paid as expenses in way of cash, non-cash assets transfer or debt with interest taken for purchasing,

constructing or manufacturing assets that complying with capitalizing condition;

(2) Borrowing expenses have occurred;

(3) Necessary activities occurred for reaching predicted usable statues or sale-able status for assets purchased, constructed or

manufactured.

2. Period of capitalization

Capitalizing period was from the time star capitalizing until the time of suspended capitalization. The period for borrowing expensed

suspended excluded in the period.

If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization reached its predicted

usable status or sale-able status, capitalization suspended for borrowing expenses.

If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization completed projects and

usable independently for part of the projects, borrowing expenses for this kind of assts shall suspended capitalization.

If the assets have been completed in every part, but can be reached the useful status or sale-able status while completed entirely, the

borrowing expense shall be suspended for capitalization while the assets completely finished in whole.

3. Period of suspended

If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization is suspended abnormally

for over 3 months, capitalizing of borrowing expenses shall be suspended; the suspended assets that satisfying the conditions of

capitalization meets the necessary procedure of reaching predicted usable status or sellable status, capitalizing of borrowing expenses

shall be resumed. The borrowing expenses occurred during the period of suspended shall reckon into current gains and losses until

the purchasing, construction, or manufacturing process is resumed for capitalizing.

4. Calculation for capitalization amount

Interest expenses practically occurred at the current term of a special borrowing are capitalized after deducting of the bank saving

interest of unused borrowed fund or provisional investment gains

Capitalization amounts of common borrowings are decided by the weighted average of exceeding part of accumulated asset expenses

over the special borrowing assets multiply the capitalizing rate of common borrowings adopted. Capitalization rates are decided by

the weighted average of common borrowings.

For those expenses with discount or premium, determined the amortizable discount or premium in every fiscal year by effective

interest method, than adjusted interest amount in every period.

19. Biological assets

The biological assets of the Company refer to consumptive biological assets and productive biological assets. The consumptive

biological assets including young and livestock etc., productive biological assets including eggs etc.

Biological assets are recognized upon satisfaction of the following conditions:

(1) The company owns or controls the biological asset due to the past transaction or proceeding;

(2) The economic benefits or service potential related to the biological assets are likely to flow into the company;

(3) Cost of the biological assets can be measured reliably.

Acquisition and disposal of biological assets: cost of biological assets upon change of use is determined based on the carrying value

when use changes; the disposal income arising from disposal, damage or inventory losses of biological assets less the carrying value

and related taxes shall be recorded in current profit and loss.

The productive biological assets are initially measured according to the cost. The cost of the outsourcing productive biological assets

includes purchase cost, related taxes and dues, transportation charge, insurance expenses and other expenses directly belonging to the

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purchase of this asset. The book value of the productive biological assets of the investors is measured by adding the value on the

investment contract or the value stipulated by agreement to the payable taxes and dues, but if the contract or agreement appoints the

value as unfair, the actual cost is determined by the fair value. The cost of the progenitive productive biological assets is determined

according to the necessary expenses occurred before achieving the anticipated production and management purposes, including the

feed cost, labor cost and indirect expenses to be shared, etc.

The closing or the management and feeding costs occurred after achieving the predetermined production and management purposes

of the productive biological assets of the Company are reckoned in the current profit and loss.

The Company withdraws and depreciates the productive biological assets, and the depreciation adopts the straight-line depreciation

method. The Company determines its service life and anticipated net residual value according to the nature and service condition of

the productive biological assets and the anticipated implementation way of the related economic interests. At the end of the year, the

Company re-checks the service life, anticipated net residual value and depreciation method of the productive biological assets, and

adjusts correspondingly if it differs from the original assessment.

The expected service life, anticipated net residual value and yearly depreciation of the productive biological assets of the Company

are as follows:

Category Estimated useful life (Year) Estimated residual rate Annual depreciation rate

Eggs 1 5% 95%

Sheep and pigs 3 5% 31.67%

On balance sheet date, the Company measures the productive biological assets in accordance with the lower one of its book value and

the recoverable amount, withdraws the provision for impairment of productive biological assets according to the balance between the

book value and the recoverable amount of the single assets. The impairment loss of the productive biological assets cannot be

reversed in the subsequent accounting periods once recognized.

Gain and disposal of the biological assets: The cost of the biological assets after changing the purposes are recognized according to

the book value at the time when changing the purposes; when the biological assets being sold, damaged or having inventory losses,

reckon the balance after deducting the book value and related taxes and dues from the disposal consideration in the current profit and

loss.

20. Oil and gas assets

Nil

21. Intangible assets

(1) Pricing method, service life and impairment test

An intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by the Company, including

land use right and non-patented technology etc.

1. Initial measurement of intangible assets

For those intangible assets purchased from outside, the purchase value, relevant taxes and other payments attributable to predicted

purpose obtained should recognized as cost for this assts. For those purchased amount that paid overdue exceeded the normal credit

condition, owns financing natures actually, the cost should be recognized based on the current value while purchased

As for the intangible assets acquired from the debtor in debt restructuring for the purpose of settlement of debt, the fair value of the

intangible assets shall be based to determine the accounting value. The difference between the carrying value of restructured debt and

the fair value of the intangible assets use for settlement of debt shall be recorded in current gains and losses.

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With the preceding conditions that non-monetary assets exchange has commerce nature and the fair value of the assets exchanged in

or out can be measured reliably, the intangible assets exchanged in through non-monetary assets exchange are accounted at the value

based on the fair value of assets exchanged out, unless there is obvious evidence showing the fair value of assets exchanged in is

more reliable; for non-monetary assets exchange not qualifying for the preceding conditions, the carrying value of assets exchanged

out and related taxes payable shall be viewed as the cost of intangible assets exchanged in, without recognition of gains and losses.

Intangible assets obtained by means of enterprise mergered under common control, recognized book-keeping value by the book value

of mergered party; Intangible assets obtained by means of enterprise mergered under different control, recognized book-keeping

value by the its fair value.

For those cost of intangible assets development internally including: the used materials, labor cost and register charge for

development; amortization for other patent and concession used and interest expense satisfying the capitalization condition during

process of development; other directly expense before reached its predated useful purpose.

2. Subsequent measurement

Analysis and determined the service life for intangible assts while obtained. And classified into intangible assets with limited useful

life and assets without certain service life

(1) Intangible assets with limited useful life

Those intangible assets with limited useful life are evenly amortized on straight basis from the date when they become useable to the

end of expected useful life. Particular about the estimation on intangible assets with limited service life:

Item Predicted useful life Basis

Patent right, trademark right, non-patents 5-year

Within the terms of contractual rights or other statutory rights

and outsourcing software

Land use right 50-year Within the terms of contractual rights or other statutory rights

At end of year, revising will be performed on the useful life of intangible assets with limited useful life and the methods of

amortizing.

Being revised, the useful life of intangible assets and amortization method at period-end shows the same as previous.

(2) Judgment basis of criterion for intangible assets without certain service life

Intangible assets for which it is impossible to predict the term during which the assets can bring in economic benefits are viewed as

intangible assets with indefinite life.

Intangible assets with indefinite life are not amortized during the holding period, and useful life is re-reviewed at the end of each

accounting period. In case that it is still determined as indefinite after such re-review, then impairment test will be conducted

continuously in every accounting period.

At end of year, revising will be performed on the useful life of intangible assets with uncertain life.

The Company has no such intangible assets without certain service life after review.

(2) Accounting policy for expenditure of internal R&D

1. Detail standard for classification on research stage and exploitation stage

Research stage: stage of the investigation and research activities exercising innovative-ness for new science or technology knowledge

obtained and understanding.

Exploitation stage: stage of the activities that produced new or material advance materials, devices and products that by research

results or other knowledge adoption in certain plan or design before the commercial production or usage.

The expenditure of the research stage in R&D project internally shall reckon into current gains and losses while occurred.

2. Standards for capitalization satisfaction of expenditure in exploitation state

Intangible assets recognized for expenditure in exploitation stage by satisfying the followed at same time:

(1) Owes feasibility in technology and completed the intangible assets for useful or for sale;

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东沣科技集团股份有限公司 2017 年半年度报告全文

(2) Owes the intention for completed the intangible assets and for sale purpose;

(3) Way of profit generated including: show evidence that the products generated from the intangible assets owes a market or owes a

market for itself; if the intangible assets will use internally, than show evidence of useful-ness;

(4) Possess sufficient technique, financial resources and other resources for the development of kind of intangible assets and has the

ability for used or for sale;

(5) The expenditure attributable to the exploitation stage for intangible assets could be measured reliably.

22. Impairment of long term assets

Long term asset is judged whether for which there is indication of impairment on balance sheet date. If there is indication of

impairment, the Company would estimate its recoverable amount based on single asset; if it is difficult to estimate the recoverable

amount of single asset, then the assets group which the single asset belongs to is based to determine the recoverable amount of the

assets group.

Recoverable amount of an asset is determined at the higher of its fair value less disposal fee and present value of its predicted future

cash flow.

If measurement of recoverable amount shows that the recoverable amount of long term asset is lower than carrying value, and then

the carrying value shall be deducted to recoverable amount, with the deducted amount recognized as impairment loss which is

included in current period gains and losses, meanwhile, asset impairment provision shall be made accordingly. Once recognized,

asset impairment loss would not be reversed in future accounting period.

Once an asset is recognized for impairment loss, its depreciation or amortization expense would be adjusted in future periods, so as to

systematically allocate the adjusted asset carrying value (after deduction of predicted net residual value) during the remaining useful

life.

Goodwill arising from business combination and intangible assets with indefinite useful life shall be tested annually for impairment

whether or not there is indication of impairment.

Goodwill is tested for impairment with the related assets group. When conducting impairment test for relevant asset group with

inclusion of goodwill, in case that there is indication of impairment for such asset group, impairment test would be firstly conducted

in respect of the asset groups without inclusion of goodwill. Then, it shall calculate the recoverable amount and determine the

corresponding impairment loss as compared to its carrying value. Second, asset group with inclusion of goodwill would be tested for

impairment. If it is found after comparison between the carrying value and recoverable amount of the asset group that the recoverable

amount is less than carrying value, the Company would recognize impairment loss for goodwill.

23. Long term prepaid expense

1. Amortization method

Long term prepaid expense represents the expense which the Company has occurred and shall be amortized in the current and later

periods with amortization period exceeding one year. Long term prepaid expense amortized on straight-line method by stages in

benefit period.

2. Amortization term

Amortized equally during the benefit period for those long-term expenses whose has a defined benefit period, for those without a

defined benefit period, amortized equally within 5 years.

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24. Staff remuneration

(1) Accounting treatment of short-term remuneration

Short term remuneration refers to all the staff remuneration payable by the Company to its staff within 12 months after the end of

annual reporting period in which staff provides relevant services, other than post office benefit and dismissal benefits. The Company

recognizes short term remuneration payables as liabilities during the accounting period during which staff provides services, and

includes in cost and expense of relevant asset according to the beneficial parties of such services.

(2) Accounting treatment of post office benefits

Post office benefits refer to kinds of remuneration or benefits granted by the Company to staff for their provision of service upon

retirement or release of employment, other than short term remuneration and dismissal benefits. Post benefit plan is categorized as

defined withdraw plan and defined benefit plan.

Defined withdraw plan under post office benefit mainly represents participation into social basic pension insurance and

unemployment insurance operated by labor and social security authorities. During the accounting period when employee provides

services for the Company, the contribution calculated under defined withdraw plan would be recognized as liabilities and included in

current gains and losses or relevant asset cost.

Defined benefit plans for post-employment benefits are primarily clear and standard outside-plan welfare to pay the retirees and pay

the living expenses for the deceased employees’ family members. For the obligation assumed in the defined benefit plans, the

independent actuaries will accurately calculate by using the expected cumulative actuarial unit credit method on the balance sheet

date, attribute the benefit obligations arising from defined benefit plan to the period of employee providing services, and include in

the current profit or loss or associated asset cost, thereinto, unless other accounting standards require or allow the employee benefits

costs to be included in the asset cost, the service costs of defined benefit plans and the net interest of net indebtedness and net assets

of defined benefit plans should be included in the current profit and loss in the current occurrence period; changes in the net

indebtedness and net assets of re-measured defined benefit plans should be included in the other comprehensive income in the current

occurrence period, and are not allowed to switch back to profit and loss in the follow-up accounting period.

(3) Accounting treatment of dismissal benefit

Dismissal benefit represents compensation paid to employees for release of employment before expiration or as compensation for

their willing of cut, if the Company cannot recall the dismissal unilaterally or re-organization-related costs with dismissal benefit

involved in cutting down, the liability arising from compensation for recognition of labor relationship released, reckoned into current

gains/losses at the same time.

(4) Accounting treatment of other long term staff benefits

The Company has no other long term staff benefits.

25. Accrual liability

When the Company is involved in proceedings, debt guarantees, onerous contracts and reorganization events, if such events may

require delivery of assets or rendering of services in the future and the amounts of such events can be reliably measured, accrued

liabilities are recognized.

1. Recognition criteria of accrued liability

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The Company recognizes the accrued liabilities when obligations related to contingencies satisfy all the following conditions:

This obligation is a present obligation of the Company;

The performance of such obligation is likely to result in outflow of economic benefits from the Company; and

The amount of the obligation can be measured reliably.

2. Method of measuring of accrued liabilities

Accrued liabilities shall be initially measured at the best estimate of the expenditure required to settle the related present obligation.

The Company, when determining the best estimate, has had a comprehensive consideration of risks with respect to contingencies,

uncertainties and the time value of money. If the time value of money is significant, the best estimate shall be determined after

discounting the relevant future outflow of cash.

The best estimate will be dealt with separately in the following circumstances:

The expenses required have a successive range (or band), in which the possibilities of occurrence of each result are the same, and the

best estimate should be determined as the middle value for the range, i.e. the average of the upper and lower limit.

The expenses required does not have a successive range (or band), or although there is a successive range (or band), the possibilities

of occurrence of each result are not the same, if the contingency is related to individual item, the best estimate should be determined

as the most likely amount; where the contingency is related to a number of items, the best estimate should be calculated and

determined according to the possible results and the relevant possibilities.

When all or part of the expenses necessary for the settlement of an estimated liability of the Company is expected to be compensated

by a third party, the compensation should be separately recognized as an asset only when it is virtually certain that the compensation

will be received. The amount recognized for the compensation should not exceed the book value of the estimated liability.

26. Share-based payment

1. Category of share-based payment

Share-based payment of the Company divided into share-based payment settled by equity and by cash

2. Determination of fair value of equity instruments

If there is an active market for an equity instrument granted such as share option, the quoted price in the active market is used to

establish the fair value of the equity instrument. If there is no active market for the equity instrument granted such as share option,

the option pricing model is used to determine the fair value. Option pricing model is elected after taking into account the following

factors: (1) Exercise price of the option; (2) Effective period of the option; (3) Prevailing price of the subject shares; (4) Predicted

fluctuation rate of share prices; (5) Predicted dividend of shares; (6) Risk-free interest rate of the option in effective period.

When determining fair value of equity instruments on the date of grant, influences from market conditions among conditions

available for exercising rights and those not available for exercising rights as provided in share-based payment agreement should be

considered. If there is condition not available for exercising rights in respect of share-based payment, cost expenses attributable to

services received can be recognized provided that employees or other parties satisfy all the non-market conditions among conditions

available for exercising rights (such as service term).

3. Bases for determining the best estimate for exercisable equity instruments

On each balance sheet date during the vesting period, best estimate shall be made based on the latest available information on change

of employees who are entitled to exercise right, and number of exercisable equity instruments shall be amended accordingly. On

exercise date, number of the final predicted exercisable equity instruments shall accord to the actual number of exercisable

instruments.

4. Accounting treatment method

Equity-settled share-based payment is measured at fair value of equity instruments granted to staff. For equity instruments which are

exercisable immediately upon grant, they are included in relevant costs or expenses at fair value of the instruments as of the date of

grant, with increase of capital reserve accordingly. For instruments for which exercise is conditional upon completion of service in

vesting period or satisfaction of required results, services received in current period are included in relevant costs or expenses and

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capital reserve at the fair value of the equity instrument as of the date of grant based on the best estimate of the numbers of

exercisable equity instruments on each balance sheet date during the vesting period. Recognized relevant costs or expense and total

owners’ equity will not be adjusted after the exercise date.

The cash-settled share-based payment shall be measured at the fair value of liabilities identified on the basis of shares or other equity

instruments undertaken by the Group. For the instruments that may be exercised immediately after the grant, the fair value shall, on

the date of the grant, be recognized in relevant costs or expenses and the liabilities shall be increased accordingly. For instruments

that cannot be exercised until the services are fully provided during vesting period or specified performance targets are met, on each

balance sheet date within the vesting period, the services acquired in the current period shall, based on the best estimate of the

number of exercisable instruments, be recognized in relevant costs or expenses and the corresponding liabilities at the fair value of

the liability incurred by the Group. The Group shall, on each balance sheet date and on each account date prior to the settlement of

the relevant liabilities, re-measure the fair values of the liabilities and include the changes in the profit or loss for the period.

5. Amendment and relevant accounting treatment for those with amendment clauses and condition concerned

During the vesting period, where an equity instrument award is cancelled, it is treated as if it had vested on the date of cancellation,

and any expense not yet recognized for the award is included immediately into the profit or loss for the period and capital reserve is

recognized. Where employees or other parties are permitted to choose to fulfill non-vesting conditions but have not fulfilled during

the vesting period, equity instrument award are deemed cancelled.

27. Other financial instruments, such as preferred stock, perpetual debt, etc.

Nil

28. Revenue

Whether the company needs to comply with the disclosure requirements of the particular industry

Yes

Real estate industry

Revenue of the Company mainly including revenue from goods selling, sale of real estate, and revenue from property rent-out and

labor service revenue etc.

1. Recognition standards of income from commodity sales:

When main risks and rewards attached to the ownership of goods have been transferred to the buyer, reserved neither continuous

management power nor effective control over the goods, incoming payment can be measured reliably, relative financial benefit

possibly inflow to the company, cost occurred or will occur can be reliably measured, sales income of goods is recognized.

2. Sales revenue recognition for property industry:

(1) Construction completion and qualified acceptance of properties;

(2) Commercial property pre-sale license granted by relevant state resources and housing bureau;

(3) Enter into sales contract;

(4) Sales contract has been certified and confirmed by property exchange center;

(5) Receive property price or obtain payment certificate from buyers;

(6) Complete deliver procedure for commercial properties.

Upon satisfaction of all the above conditions, the Company recognizes sales revenue

3. Recognition of property leasing revenue:

Property leasing revenue is recognized when the Company receives rental or obtain payment certificate from buyers based on the

payment date and rental amount to be paid by lessee as provided in the contract or agreement entered into between the Company and

the lessee.

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4. Labor service revenue

(1) Income of the contract can be measured reliably

(2) Financial benefit attached to the contract is possibly inflow to the company

(3) Schedule of the contracted project can be determined reliably;

(4) And the relevant amount of cost incurred or to be incurred can be measured reliably

5. Recognition basis of revenue from transferring the use right of assets

The economic benefits related to transactions are probable to flow into the Company; and amount of revenue can be measured

reliably.

29. Government grants

(1) Criterion and accounting treatment on government grants with assets concerned

Government grants means the monetary or non-monetary assets obtained free by an enterprise from the government, but excluding

the capital invested by the government as the owner of the enterprise. According to the subsidy object from relevant government

documents, the government grants consist of the government grants pertinent to assets and government grants pertinent to income.

The government grants with assets concerned, will recognized as deferred income, and reckoned into non-operation revenue by the

use of terms for those assets constructed or purchased

(2) Criterion and accounting treatment on government grants with revenue concerned

As for the government grants with income concerned, the relevant expenses or losses compensate in follow period, shall be

recognized as deferred income while required, and reckoned into non-operation revenue in period when relevant expenses recognized;

the relevant expenses or losses compensate, reckoned into current non-operation revenue while acquired.

30. Deferred income tax assets / Deferred income tax liabilities

Deferred tax assets and deferred tax liabilities are calculated and recognized according to the balance between the tax base and the

book value of assets and liabilities (temporary differences). At the balance sheet date, the deferred tax assets and deferred tax

liabilities are measured by the applicable tax rate during the period of expected recovery of assets or clearing off the liability.

(1) The basis for confirming deferred tax assets

The Company takes the taxable income which is likely to be obtained for deducting the deductable temporary differences and can

carry over the deductable loss and tax credits as the limit to confirm the deferred income tax assets generated by deductable

temporary differences. However, the deferred income tax assets generated by the initial recognition of assets or liabilities in the

transactions with following characteristics shall not be recognized: (1) The transaction is not a business combination; (2) The

occurrence of transaction affects neither the accounting profit nor the taxable income or deductible loss.

For the deductible temporary differences associated with investments in associated enterprises and satisfying the following

conditions, confirm the corresponding deferred income tax assets: temporary difference is likely to be reversed back in the

foreseeable future, and it is likely to obtain the taxable income used for deducting the deductable temporary differences in the future.

(2) The basis for confirming deferred tax liabilities

The company recognizes the currently and previously payable but not paid taxable temporary differences as the deferred income tax

liabilities. But not including:

(1) The temporary differences formed in the initial recognition of goodwill;

(2) Transactions or events formed by non-business combination, and it affects neither the accounting profit nor the temporary

differences formed by taxable income (or deductible loss) when the transactions or events occur;

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(3) For the taxable temporary differences related to the subsidiary companies and investments in associated enterprises, the reversal

time of this temporary difference can be controlled and this temporary difference is unlikely to be reversed back in the foreseeable

future.

(3) Deferred tax assets and liabilities are offset if all the following conditions are met

(1) An enterprise has the legal rights to settle the income tax assets and income tax liabilities for the current period by net amount;

(2) They relate to income taxes levied by the same tax authority on either the taxable entity has a legally enforceable right or set off

current income tax assets against current income tax liabilities, and different taxable entities which either intend to settle the current

income tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future period in

which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

31. Lease

(1) Accounting treatment of operation lease

In terms of tenancy, if all risks and remuneration with ownership of the leasing assets concerned are transfer to the lessee

substantially, the leasing will consider as finance lease, otherwise consider as operation lease.

(1) The lease payment paid for leasing assets is amortized under straight line method in the entire lease period without deduction of

lease-for-free period, and is recorded in current expenses. The initial direct expenses paid by the Company related to lease

transactions shall be recorded in current expenses.

If asset leaser assumes the lease related expenses which shall be assumed by the Company, the Company shall deduct such expenses

from the total rental and amortize based on the deducted rental expenses during the lease period and record in current expenses.

(2) The lease fee collected by the Company for assets lease is amortized under straight line method in the entire lease period without

deduction of lease-for-free period, and is realize as lease income. The initial direct expenses paid by the Company related to lease

transactions shall be recorded in current expenses; for significant amount, it shall be capitalized and recorded in current income in

phases under the same basis as realization of lease income in the entire lease period.

If the Company assumes the lease related expenses which shall be assumed by the lessee, the Company shall deduct such expenses

from the total rental income and allocate based on the deducted rental expenses during the lease period.

(2) Accounting treatment of financing lease

(1) Assets leased by financing lease: the Company accounts the leased assets at the lower of the fair value of leased assets and

present value of the minimum lease payment on the inception date of the lease, and the minimum lease payment is deemed as the

accounting value of long term account payables, and the difference is taken as unrealized financing expenses.

The Company amortizes the unrealized financing expenses at effective interest rate method in the asset lease period and records in

finance expenses.

(2) Assets leased out by financing lease: on the inception date of the lease, the Company realizes the difference between the sum of

financing lease account receivables and unguaranteed remaining value and its present value as unrealized financing income which is

conformed as lease income in future periods involving lease. The initial direct expenses occurred by the Company related to lease

transaction shall be recorded in the initial measurement of financing lease account receivables. And income realized in lease period

shall be reduced accordingly.

32. Other important accounting policies and accounting estimates

Nil

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33. Changes of main accounting policy and estimate

(1) Changes of accounting policies

□ Applicable √ Not-applicable

(2) Changes in accounting estimates

□ Applicable √ Not-applicable

34. Other

Nil

VI. Taxes

1. Main tax category and tax rate

Taxes Basis Rate

Sales of goods, taxable sales service

VAT income, intangible assets or immovable 3%-17%

property

Urban maintenance and construction tax Turnover tax payable 5%

Enterprise income tax Taxable income 16.5%, 25%

Educational surtax Turnover tax payable 3%

Local educational surtax Turnover tax payable 2%

Rental income or original value of the

Property tax 12% or 1.2%

property

Land appreciation tax Appreciation value or pre-requisitioned Progressive rates

As for the taxpaying body with different tax rate for enterprise income tax, disclosed explanations:

Taxpaying body Rate for income tax

The Company 25%

Nanjing Trade 25%

Dongfeng Investment 25%

Ecological Agriculture 25%

Hangzhou Dongfeng 25%

Nanjiang Asia 16.5%

Nanjiang Technology 25%

Huijing Property 25%

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Kefeng Engineering 25%

Kefeng Trade 25%

Chengde Kefeng 25%

2. Tax preference

3. Other

Nanjiang Asia tax in Hong Kong Special Administrative Region with rate of 16.5% for income tax.

VII. Notes to the main items of consolidate financial statements

1. Monetary funds

In RMB

Item Ending balance Opening balance

Cash 39,802.86 33,804.54

Bank deposit 153,562,617.75 126,937,030.29

Other monetary funds 6,663,127.40 5,999,327.40

Total 160,265,548.01 132,970,162.23

Other explanation

Monetary fund with restrictions:

Item Ending balance Opening balance

Margin of housing mortgage 6,663,127.40 5,999,327.40

Total 6,663,127.40 5,999,327.40

Closing balance of monetary fund increased 27,295,385.78 Yuan over that of period-begin with 520.53% up, mainly because revenue

from real estate in the period increased than the input declined.

2. Accounts receivable

(1) Accounts receivable by type

In RMB

Ending balance Opening balance

Provision for bad

Book balance Book balance Provision for bad debts

Type debts

Book

Book value

Proportio Provision value Proportio Provision

Amount Amount Amount Amount

ratio ratio

n n

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东沣科技集团股份有限公司 2017 年半年度报告全文

Accounts receivable

with large single

2,320,04 2,320,04 2,320,0 2,320,047

amount and accrued 94.66% 100.00% 94.74% 100.00%

7.40 7.40 47.40 .40

for provision of bad

debt on a single basis

Accounts receivable

accrued for provision 130,971. 50,887.1 128,771

5.34% 38.85% 80,084.75 5.26% 50,887.10 39.52% 77,884.75

of bad debt by 85 0 .85

portfolio

2,451,01 2,370,93 2,448,8 2,370,934

Total 100.00% 96.73% 80,084.75 100.00% 96.82% 77,884.75

9.25 4.50 19.25 .50

Accounts receivable with large single amount and accrued for provision of bad debt on a single basis at period-end:

√ Applicable □ Not-applicable

In RMB

Accounts receivable Ending balance

(unit) Accounts receivable Provision for bad debts Provision ratio Reasons

Beijing Xiangeqing

Industrial & Trade Co., 2,320,047.40 2,320,047.40 100.00% Estimated uncollectible

Ltd.

Total 2,320,047.40 2,320,047.40 -- --

Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio:

√ Applicable □ Not-applicable

In RMB

Ending balance

Aging

Accounts receivable Provision for bad debts Provision ratio

Within 1 year

Subtotal within one year 8,302.51 305.13 3.68%

1-2 years 50,339.00 10,067.80 20.00%

2-3 years 63,632.35 31,816.18 50.00%

Over 3 years 8,697.99 8,697.99 100.00%

Total 130,971.85 50,887.10 38.85%

Portfolio recognized:

Accounts receivable accrued for provision of bad debt by percentage of balance in portfolio:

□ Applicable √ Not-applicable

Accounts receivable accrued for provision of bad debt by other methods in portfolio:

(2) Provision for bad debts accrued, regain or switch back in the Period

In the Period, 0 Yuan accrued for provision of bad debts; 0 Yuan provision for bad debts regains or switch back in the Period.

88

东沣科技集团股份有限公司 2017 年半年度报告全文

Including major amount of bad debt provision regain or switch back in the Period:

In RMB

Unit Amount regain or switch back Way of regain

(3) Account receivable actual charge off in the Period

In RMB

Item Amount written off

Written-off for the major receivable:

In RMB

Arising from related

Unit Nature Amount written off Reasons Procedures

transaction (Y/N)

Explanation on written off:

(4) Top five account receivables collected by arrears party at ending balance

Unit Ending balance Ratio in account receivable Bad debt provision

at period-end (%) accrued

Customer I 2,320,047.40 94.66% 2,320,047.40

Customer II 74,188.85 3.03% 34,488.70

Customer III 44,172.00 1.80% 8,834.40

Customer IV 12,611.00 0.51% 7,564.00

Total 2,451,019.25 100.00% 2,370,934.50

(5) Account receivable de-recognition due to financial assets transfer

(6) Assets and liabilities resulted by account receivable transfer and continues involvement

Other explanation:

3. Prepayments

(1) Aging analysis of repayment

In RMB

Ending balance Opening balance

Aging

Amount Proportion Amount Proportion

Within 1 year 97,609.01 90.51% 18,243,428.68 99.96%

2-3 years 10,229.07 9.49% 6,899.45 0.04%

Total 107,838.08 -- 18,250,328.13 --

89

东沣科技集团股份有限公司 2017 年半年度报告全文

Reasons for significant repayment with over one year age without settle:

(2) Top five prepayment collected by objects at ending balance

Unit Ending amount Ratio in prepayment Time of repayment Un-settle

(%) reasons

Unit I 48,510.00 44.98% Within 1 year Un-settled

Unit II 37,795.80 35.05% Within 1 year Un-settled

Unit III 6,537.13 6.06% 1-2 years Un-settled

Unit IV 5,000.00 4.64% Within 1 year Un-settled

Unit V 3,370.00 3.13% Within 1 year Un-settled

Total 101,212.93 93.86% --- ---

Other explanation:

Prepayment decreased 18,142,490.05 Yuan over that of period-begin with 99.41% down, mainly because the account paid to Emast

and Shan’xi Emast for the airship last period are refund in the period

4. Other account receivables

(1) Other account receivables by type

In RMB

Ending balance Opening balance

Provision for bad

Book balance Book balance Provision for bad debts

Type debts

Book

Book value

Proportio Provision value Proportio Provision

Amount Amount Amount Amount

ratio ratio

n n

Other receivables

with large single

2,709,27 2,709,27 2,709,2 2,709,273

amount and accrued 3.71% 100.00% 3.72% 100.00%

3.00 3.00 73.00 .00

for provision of bad

debt on a single basis

Other receivables

accrued for provision 68,241,0 170,334. 68,070,70 67,638, 170,334.5 67,467,772.

93.48% 0.25% 93.00% 0.25%

of bad debt by 42.23 55 7.68 107.30 5 75

portfolio

Other receivables

with minor single

2,046,95 2,046,95 2,384,6 2,046,957

amount but accrued 2.81% 100.00% 3.28% 85.84% 337,740.65

7.70 7.70 98.35 .70

for provision of bad

debt on a single basis

Total 72,997,2 100.00% 4,926,56 6.84% 68,070,70 72,732, 100.00% 4,926,565 6.77% 67,805,513.

90

东沣科技集团股份有限公司 2017 年半年度报告全文

72.93 5.25 7.68 078.65 .25 40

Other receivables with large single amount and accrued for provision of bad debt on a single basis at period-end:

√ Applicable □ Not-applicable

In RMB

Other account Ending balance

receivables (by unit) Other account receivable Provision for bad debts Provision ratio Reason for provision

Non-Taxable Revenue

Authority of Chengde 1,500,000.00 1,500,000.00 100.00% Estimated uncollectible

County

Claims obtained from

1,209,273.00 1,209,273.00 100.00% Estimated uncollectible

auction

Total 2,709,273.00 2,709,273.00 -- --

Other receivables accrued for provision of bad debt by aging analysis method in portfolio:

√ Applicable □ Not-applicable

In RMB

Ending balance

Aging

Other account receivable Provision for bad debts Provision ratio

Within 1 year

Subtotal within one year 1,725,202.66 40,891.12 2.37%

1-2 years 146,639.04 29,421.80 20.06%

2-3 years 85,043.25 42,521.63 50.00%

Over 3 years 57,500.00 57,500.00 100.00%

Total 2,014,384.95 170,334.55 8.46%

Portfolio recognized:

Other accounts receivable accrued for provision of bad debt by percentage of balance in portfolio:

□ Applicable √ Not-applicable

Other accounts receivable accrued for provision of bad debt by other methods in portfolio:

√Applicable □ Not applicable

Portfolio Ending balance

Other accounts receivable Provision for bad debts Provision ratio (%)

Land reserve center of Chengde County 66,025,400.00 --- ---

Chengde Petroleum Branch 110,836.28 --- ---

Office of material reformation for wall 90,421.00 --- ---

in the County

Total 66,226,657.28 --- ---

91

东沣科技集团股份有限公司 2017 年半年度报告全文

(2) Bad debt provision accrual collected or switch back

There is 0 Yuan provision for bad debts accrued in the Period; and 0 Yuan regains or switch back in the Period.

Including the followed significant amount:

In RMB

Unit Regains or switch back Way of regain

(3) Other receivables actually written-off during the reporting period

In RMB

Item Amount written-off

Major other account receivables written-off:

In RMB

Arising from related

Name Nature Amount written-off Reasons Procedures

transaction (Y/N)

Explanation on other account receivable:

(4) Other account receivables category by nature of money

In RMB

Nature of money Ending book balance Beginning book balance

Land acquisition account 66,025,400.00 66,025,400.00

Margin 1,550,000.00 1,570,000.00

Debt auction 1,209,273.00 1,209,273.00

Other 4,212,599.93 3,927,405.65

Total 72,997,272.93 72,732,078.65

(5) Top five other account receivables collected by arrears party at ending balance

In RMB

Proportion in total Ending balance of

Unit Nature Ending balance Aging

other receivables bad debt provision

Payment for land

Unit I 66,025,400.00 2-3 years 90.45%

acquisition

Margin for land

Unit II 1,500,000.00 2-3 years 2.05% 1,500,000.00

bidding

Unit III Other 642,689.25 3-4 years 0.88% 642,689.25

92

东沣科技集团股份有限公司 2017 年半年度报告全文

Unit IV Other 356,838.00 4-5 years 0.49% 356,838.00

Unit V Other 300,000.00 4-5 years 0.41% 300,000.00

Total -- 68,824,927.25 -- 94.29% 2,799,527.25

(6) Account receivables related to government subsidies

In RMB

Time and amount

Unit Item Ending balance Ending age

collected and basis

(7) Other receivable for termination of confirmation due to the transfer of financial assets

(8) The amount of assets and liabilities that are transferred other receivable and continued to be involved

Other explanation:

5. Inventories

Whether the company needs to comply with the disclosure requirements of the particular industry

Yes

(1) Classification of inventories

The Company is comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange

No.3-engaged in real estate business for the listed companies”

By nature:

In RMB

Ending balance Opening balance

Item Depreciation Depreciation

Book balance Book value Book balance Book value

reserve reserve

Development cost 279,423,016.25 279,423,016.25

Development

285,724,897.50 285,724,897.50 61,074,784.71 61,074,784.71

products

Raw materials 85,993.85 85,993.85 205,531.64 205,531.64

Production costs 1,392,589.77 1,392,589.77 83,168.30 83,168.30

Stock products 18,786.95 3,960.15 14,826.80 1,158,462.11 229,002.27 929,459.84

Revolving

18,498.40 18,498.40

materials

Consumptive

5,600.00 5,600.00

biological assets

93

东沣科技集团股份有限公司 2017 年半年度报告全文

Total 287,222,268.07 3,960.15 287,218,307.92 341,969,061.41 229,002.27 341,740,059.14

Disclose of “development cost” and interest capitalization rate:

In RMB

Cumulati Including:

Increase

Estimated Switch to ve amount of

Estimated Other in Period

Name of Time to total Opening developm Ending amount of interest Source of

completio decrease (develop

project start investmen balance ent balance interest capitalizat funds

n time in Period ment

t products capitalize ion in

costs)

d Period

Disclose of “Development products”:

In RMB

Time of

Name of project Opening balance Increased in Period Decreased in Period Ending balance

completion

Huijing Tiandi 2016-12-31 61,074,784.71 308,491,948.52 83,841,835.73 285,724,897.50

Total -- 61,074,784.71 308,491,948.52 83,841,835.73 285,724,897.50

Disclosed the “installment development products”, “rental development products” and “relocation housing”:

In RMB

Item Opening balance Increased in Period Decreased in Period Ending balance

(2) Inventory depreciation reserve

Accrual of the inventory depreciation reserve:

By nature:

In RMB

Increased in Period Decreased in Period

Opening

Item Reversing or Ending balance Note

balance Accrual Other Other

write-off

Stock products 229,002.27 225,042.12 3,960.15

Total 229,002.27 225,042.12 3,960.15 --

By project:

In RMB

Increased in Period Decreased in Period

Opening

Item Reversing or Ending balance Note

balance Accrual Other Other

write-off

94

东沣科技集团股份有限公司 2017 年半年度报告全文

(3) Explanation on capitalization of borrowing costs at ending balance of inventory

(4) Inventory constrained

Disclosure by items:

In RMB

Item Opening balance Ending balance Reasons of restricted

(5) Assets completed without settlement from construction contract at period-end

In RMB

Item Amount

Other explanation:

Does the Company comply with the disclosure requirement of “Information Disclosure Guidelines of Shenzhen Stock Exchange

No.4 – Listed Companies Engaged in Seed Industry and Planting Business” or not

No

6. Non current assets due within one year

In RMB

Item Ending balance Opening balance

Gains/losses of assets ready for disposal 333,716.08 333,716.08

Total 333,716.08 333,716.08

Other explanation:

Refers to the gains/losses of assets ready for disposal from third –grade subsidiary Chengde Dongfeng Ecological Agriculture Co.,

Ltd. in the period

7. Other current assets

In RMB

Item Ending balance Opening balance

Taxes paid in advance 9,368,662.98 19,177,045.07

Total 9,368,662.98 19,177,045.07

Other explanation:

Decreased 9,808,382.09 Yuan over that of period-begin with 51.15% down, mainly because amount paid in advance from Huijing

Tiandi are transfer to income, the taxes declined as a result.

95

东沣科技集团股份有限公司 2017 年半年度报告全文

8. Financial assets available for sale

(1) Financial assets available for sale

In RMB

Closing balance Opening balance

Item Depreciation Depreciation Depreciation

Book balance Book balance Book balance

reserves reserves reserves

Instrument equity

25,000,000.00 2,215,868.07 22,784,131.93 25,000,000.00 2,215,868.07 22,784,131.93

available for sale:

Measured by cost 25,000,000.00 2,215,868.07 22,784,131.93 25,000,000.00 2,215,868.07 22,784,131.93

Total 25,000,000.00 2,215,868.07 22,784,131.93 25,000,000.00 2,215,868.07 22,784,131.93

(2) Financial assets available for sale measured by fair value at period-end

In RMB

Instrument equity Instrument debt available

Type Total

available for sale for sale

(3) Financial assets available for sale measured by cost at period-end

In RMB

Book balance Depreciation reserves Ratio of

share-holdi Current

Investee

Current Current Current Current ng in cash

unit Opening Closing Opening Closing

increased decreased increased decreased invested dividend

entity

Dongguan

Dongfeng

New 25,000,000 25,000,000 2,215,868. 2,215,868.

2.44%

Energy .00 .00 07 07

Technolog

y Co. Ltd.

25,000,000 25,000,000 2,215,868. 2,215,868.

Total --

.00 .00 07 07

(4) Change of financial assets depreciation for sale during reporting period

In RMB

Instrument equity Instrument debt available

Type Total

available for sale for sale

96

东沣科技集团股份有限公司 2017 年半年度报告全文

(5) Fair value of the available-for-sale equity instrument drops significantly or not contemporarily without

depreciation reserves accrued

In RMB

Decline range of

Equity instrume Times continued

fair value Amount accrual Reasons for

nts project Investment cost Ending fair value to declined

compare with the for impairment un-accrual l

available for sale (Month)

cost

Other explanation

9. Long-term equity investment

In RMB

Changes in Period

Investme

nt Adjustme Impairme

Cash

Additiona gains/loss nt of Provision nt

Invested Opening Other dividend Ending

l Capital es other for provision

company balance equity or profit Other balance

investmen reduction recognize comprehe impairme at ending

changes declare to

t d by nsive nt losses balance

issue

equity income

method

I. Joint venture

II. Associated enterprise

Runhua

RW

(Tianjin)

Water-sav 1,022,730 -1,022,73

0.00 0.00

ing .46 0.46

Technolo

gy Co.,

Ltd.

Wuchan

Minfeng

4,455,549

(Tianjin) -4,455,54

.93 0.00 0.00

Chemical 9.93

Trade

Co., Ltd.

Runhua 2,790,271 2,790,271 2,790,271

RW .96 .96 .96

(Tianjin)

Internatio

97

东沣科技集团股份有限公司 2017 年半年度报告全文

nal Trade

Co., Ltd.

5,478,280 -2,688,00 2,790,271 2,790,271

Subtotal

.39 8.43 .96 .96

5,478,280 -2,688,00 2,790,271 2,790,271

Total

.39 8.43 .96 .96

Other explanation

(1) Runhua RW (Tianjin) Water-Saving Technology Co., Ltd obtained the corporation certificate on 14th Oct. 2011 with register

capital of RMB 6.3 million included, Runhua RW Industrial Development invested RMB 3 million with ratio of 47.62%. The

original company Runhua RW (Tianjin) International Trade Co., Ltd. invested RMB 2 million with ratio of 31.75% in registered

capital; Langfang ChunYuan Minor Watering Engineer Co., Ltd invested RMB one million with ratio of 15.87% and Zhang Heping

invested RMB 300,000 with ratio of 4.76% in registered capital.

(2) Wuchan Minfeng (Tianjin) Chemical Trade Co., Ltd had risen up the register capital of shareholders on 21 st Dec. 2012, totaling

RMB 9 million included, Shanxi Wuchan Minfeng Chemistry Co., Ltd invested RMB 4.59 million with ratio of 51%. The original

company Runhua RW (Tianjin) International Trade Co., Ltd. invested RMB 4.41 million with ratio of 49% in registered capital.

(3) On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder

Lan Chunhong of original subsidiary Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original

Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and

operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to

vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their

own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting

Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action

person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control

power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the

date of losing the control power to it, and check and calculate by equity method.

10. Investment real estate

(1) Investment real estate measured at cost

√ Applicable □ Not-applicable

In RMB

Item Houses, buildings Land use right Construction in process Total

I. Original book value:

1.Opening balance 5,475,870.75 5,475,870.75

2. Increased in Period

(1) Outsourcing

(2) Inventory \

Fixed assets \ Transferred

from construction in

process

98

东沣科技集团股份有限公司 2017 年半年度报告全文

(3) Increased by

enterprise combination

3. Decreased in

Period

(1) Disposal

(2) Other

transfer-out

4. Ending balance 5,475,870.75 5,475,870.75

II. Accumulated

depreciation and

accumulated

amortization

1. Opening balance 644,717.00 644,717.00

2. Increased in Period 56,280.12 56,280.12

(1) Provision or

56,280.12 56,280.12

amortization

3. Decreased in

Period

(1) Disposal

(2) Other

transfer-out

4. Ending balance 700,997.12 700,997.12

III. Depreciation reserves

1. Opening balance

2. Increased in

Period

(1) Accrual

3. Decreased in

Period

(1) Disposal

(2) Other

transfer-out

99

东沣科技集团股份有限公司 2017 年半年度报告全文

4. Ending balance

IV. Book value

1. Ending book value 4,774,873.63 4,774,873.63

2. Opening book value 4,831,153.75 4,831,153.75

(2) Investment real estate measured by fair value

□ Applicable √ Not applicable

The Company needs to comply with the disclosure requirement of “Guidelines for the Information Disclosure of the Shenzhen Stock

Exchange No.3 – Listed Company Engaged in Real Estate Business”

Investment real estate measured by fair value released by items as:

In RMB

Fair value

Geographi Rental

Covered at Fair value at Change of fair Reasons of changes

Item cal income in

area period-begi period-end value and report index

position the period

n

Whether the Company has new real estate measured by fair value in the period or not

□ Yes √ No

(3) Investment real estate without ownership certification completed yet

In RMB

Item Book value Reasons

Other note

11. Fixed assets

(1) Fixed assets

In RMB

Houses and Machinery Transportation

Item Other Total

buildings equipment equipment

I. Original book

value:

1.Opening balance 13,678,422.66 2,032,443.28 4,288,676.71 801,523.65 20,801,066.30

2. Increased in

194,529.92 12,296.58 206,826.50

Period

(1) Purchase 194,529.92 12,296.58 206,826.50

100

东沣科技集团股份有限公司 2017 年半年度报告全文

(2) Transferred

from construction in

process

(3) Increased by

enterprise

combination

3. Decreased in

673,859.00 178,432.47 852,291.47

Period

(1) Disposal or

scrap

(2) Other

673,859.00 178,432.47 852,291.47

transfer-out

4. Ending balance 13,678,422.66 2,226,973.20 3,614,817.71 635,387.76 20,155,601.33

II. Accumulated

depreciation

1. Opening

2,157,487.89 1,195,831.33 1,918,422.13 549,064.62 5,820,805.97

balance

2. Increased in

264,051.79 43,718.58 160,589.10 34,660.25 503,019.72

Period

(1) Accrual 264,051.79 43,718.58 160,589.10 34,660.25 503,019.72

3. Decreased in

640,236.58 162,365.87 802,602.45

Period

(1) Disposal or

scrap

(2) Other

640,236.58 162,365.87 802,602.45

transfer-out

4. Ending balance 2,421,539.68 1,239,549.91 1,438,774.65 421,359.00 5,521,223.24

III. Depreciation

reserves

1. Opening

balance

2. Increased in

Period

(1) Accrual

3. Decreased in

101

东沣科技集团股份有限公司 2017 年半年度报告全文

Period

(1) Disposal or

scrap

4. Ending balance

IV. Book value

1. Ending book

11,256,882.98 987,423.29 2,176,043.06 214,028.76 14,634,378.09

value

2. Opening book

11,520,934.77 836,611.95 2,370,254.58 252,459.03 14,980,260.33

value

(2) Temporarily idle fixed assets

In RMB

Cumulative Depreciation

Item Original book value Book value Note

depreciation reserves

(3) Fixed assets acquired by financing lease

In RMB

Item Original book value Cumulative depreciation Depreciation reserves Book value

(4) Fixed assets acquired by operating lease

In RMB

Item Ending book value

(5) Fixed assets without property certificates

In RMB

Item Book value Reasons

Other explanation

12. Productive biological assets

(1) Measured by cost

√ Applicable □ Not-applicable

In RMB

Item Plantation Livestock Forestry Aquaculture Total

102

东沣科技集团股份有限公司 2017 年半年度报告全文

I. Original book

214,802.68 214,802.68

value

1. Opening

balance

2. Increased in

28,563.30 28,563.30

Period

(1) Outsourcing 28,563.30 28,563.30

(2)

Self-cultivation

3. Decreased in

197,843.42 197,843.42

Period

(1) Disposal 197,843.42 197,843.42

(2) Other

4. Ending balance 45,522.56 45,522.56

II. Accumulated

depreciation

1. Opening

172,668.92 172,668.92

balance

2. Increased in

18,019.35 18,019.35

Period

(1) Accrual 18,019.35 18,019.35

3. Decreased in

161,394.72 161,394.72

Period

(1) Disposal 161,394.72 161,394.72

(2) Other

4. Ending balance 29,293.55 29,293.55

III. Depreciation

reserves

1. Opening

balance

2. Increased in

Period

103

东沣科技集团股份有限公司 2017 年半年度报告全文

(1) Accrual

3. Decreased in

Period

(1) Disposal

(2) Other

4. Ending balance

IV. Book value

1. Ending book

16,229.01 16,229.01

value

2. Opening book

42,133.76 42,133.76

value

(2) Measured by fair value

□ Applicable √ Not-applicable

13. Intangible assets

(1) Intangible assets

In RMB

Non-patent

Item Land use right Patent right Software Total

technology

I. Original book

value

1. Opening

1,197,567.36 228,000.00 1,425,567.36

balance

2. Increased in

Period

(1) Purchase

(2) Internal

R&D

(3) Increased

by enterprise

combination

3. Decreased in 228,000.00 228,000.00

104

东沣科技集团股份有限公司 2017 年半年度报告全文

Period

(1) Disposal

(2) Other

228,000.00 228,000.00

transfer-out

4. Ending

1,197,567.36 1,197,567.36

balance

II. Accumulated

amortization

1.Opening

124,160.15 228,000.00 352,160.15

balance

2. Increased in

20,559.04 20,559.04

Period

(1) Accrual 20,559.04 20,559.04

3. Decreased in

228,000.00 228,000.00

Period

(1) Disposal

(2) Other

228,000.00 228,000.00

transfer-out

4. Ending

144,719.19 144,719.19

balance

III. Depreciation

reserve

1. Opening

balance

2. Increased in

Period

(1) Accrual

3. Decreased in

Period

(1) Disposal

4. Ending

balance

IV. Booking value

1. Ending book 1,052,848.17 1,052,848.17

105

东沣科技集团股份有限公司 2017 年半年度报告全文

value

2. Beginning

1,073,407.21 1,073,407.21

book value

Intangible assets formulated no by means of internal R&D in balance of total intangible assets at period-end

(2) Land use right without property certificate

In RMB

Item Book value Reasons

Other explanation:

14. Development expenditure

In RMB

Opening Ending

Item Increased in Period Decreased in Period

balance balance

Airship 641,604.82 1,190,186.99 1,831,791.81

Other explanation

15. Goodwill

(1) Original book value of goodwill

In RMB

Name of invested

company or items Opening balance Increased in Period Decreased in Period Ending balance

formed goodwill

Runhua RW 1,809,762.89 1,809,762.89

Total 1,809,762.89 1,809,762.89

(2) Impairment loss of goodwill

In RMB

Name of invested

company or items Opening balance Increased in Period Decreased in Period Ending balance

formed goodwill

Runhua RW 1,809,762.89 1,809,762.89

Total 1,809,762.89 1,809,762.89

Process of impairment testing, parameter and recognization method for impairment losses:

Other explanation

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东沣科技集团股份有限公司 2017 年半年度报告全文

Runhua RW has deficit in 2014 and 2015 continuously, and did not complete the performance commitment; goodwill has

impairment.

16. Long-term unamortized expenses

In RMB

Item Opening balance Increased in Period Amortized in 2015 Other decrease Ending balance

Office remodeling

105,268.54 26,654.27 78,614.27

costs

Outdoor project cost

49,500.04 2,472.41 47,027.63

for boiler room

Color steel room 5,242.29 903.80 4,338.49

Total 160,010.87 30,030.48 129,980.39

Other explanation

17. Deferred income tax assets and deferred income tax liabilities

(1) Deferred income tax assets un-offset

In RMB

Ending balance Opening balance

Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax

difference assets difference assets

Preparations of assets

3,102,581.64 775,645.41 3,102,581.64 775,645.41

depreciation

Total 3,102,581.64 775,645.41 3,102,581.64 775,645.41

(2) Deferred income tax liabilities un-offset

In RMB

Ending balance Opening balance

Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax

differences liabilities differences liabilities

(3) Deferred income tax assets and deferred income tax liabilities listed after off-set

In RMB

Ending balance of Trade-off between the Opening balance of

Trade-off between the

deferred income tax deferred income tax deferred income tax

Item deferred income tax

assets or liabilities after assets and liabilities at assets or liabilities after

assets and liabilities

off-set period-begin off-set

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Deferred income tax

775,645.41 775,645.41

assets

(4) Details of unrecognized deferred income tax assets

In RMB

Item Ending balance Opening balance

Deductible temporary differences -75,878.20 -75,878.20

Deductible losses 88,611,454.74 96,377,902.07

Total 88,535,576.54 96,302,023.87

(5) Deductible losses of un-recognized deferred income tax assets expired on the followed year

In RMB

Year Ending amount Opening amount Note

2017 12,891,377.63

2018

2019 30,576,125.82 30,576,125.82

2020 33,429,382.84 33,429,382.84

2021 19,481,015.78 19,481,015.78

2022 5,124,930.30

Total 88,611,454.74 96,377,902.07 --

Other explanation:

18. Other non-current assets

In RMB

Item Ending balance Opening balance

Account paid in advance for equipment 91,040.00

Total 91,040.00

Other explanation:

19. Account payable

(1) Account payable

In RMB

Item Ending balance Opening balance

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Account payable for engineering 20,029,823.67 12,446,199.86

Account payable for equipment 364,700.00 8,700.00

Account payable for materials 11,781.49 5,080.00

Other 367,994.69 429,350.00

Total 20,774,299.85 12,889,329.86

(2) Accounts payable with major amount and aging of over one year

In RMB

Item Ending balance Reasons of un-paid or carry-over

Handan Hanyi Construction Engineering

400,000.00 Settlement un-completed

Co., Ltd.

Total 400,000.00 --

Other explanation:

Account payable increased 7,884,969.99 Yuan over that of period-begin with 61.17% up, mainly because real estate was basically

completed, the payable enginneering account in settlement increased

20. Account received in advance

(1) Account received in advance

In RMB

Item Ending balance Opening balance

Deposit received for house-Huijing Tiandi 187,840,560.64 242,747,445.35

Resident heating fees received in advance 98,363.28 962,488.89

Other 204,574.34 207,984.46

Total 188,143,498.26 243,917,918.70

(2) Major account received in advance for over one year age

In RMB

Item Ending balance Reasons

(3) Project closed for account without complete in construction from construction contract at period-end

In RMB

Item Amount

Other explanation:

Account received in advance decreased 55,774,420.44 Yuan over that of period-begin with 22.87% down, mainly because the

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东沣科技集团股份有限公司 2017 年半年度报告全文

prepayment account from Huijing Tiandi project are carry forward to revenue in the period

21. Wages payable

(1) Wages payable

In RMB

Item Opening balance Increased in Period Decreased in Period Ending balance

I. Short-term employee

1,915,411.19 5,476,441.95 7,216,453.26 175,399.88

benefits

II. Post-employment

benefits - defined 22,271.25 750,534.96 726,928.59 45,877.62

contribution plans

Total 1,937,682.44 6,226,976.91 7,943,381.85 221,277.50

(2) Short-term employee benefits

In RMB

Item Opening balance Increased in Period Decreased in Period Ending balance

1. Salary, bonus,

1,897,065.74 5,009,546.39 6,731,610.47 175,001.66

allowance and subsidy

3. Social insurance

17,419.23 181,931.04 199,350.27

premium

Of which: including:

medical insurance 15,226.28 156,291.18 171,517.46

expenses

Work

injury insurance 742.83 14,384.10 15,126.93

expenses

Maternity

1,450.12 11,255.76 12,705.88

insurance

4. Housing provident

528.00 282,575.20 283,103.20

funds

5. Labor union

expenditures and

398.22 2,389.32 2,389.32 398.22

employee education

expenses

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Total 1,915,411.19 5,476,441.95 7,216,453.26 175,399.88

(3) Details of defined contribution plans

In RMB

Item Opening balance Increased in Period Decreased in Period Ending balance

1.Basic endowment

20,791.36 736,218.86 711,477.07 45,533.15

insurance expenses

2.Unemployment

1,479.89 14,316.10 15,451.52 344.47

insurance expenses

Total 22,271.25 750,534.96 726,928.59 45,877.62

Other explanation:

22. Tax payable

In RMB

Item Ending balance Opening balance

VAT 389,575.42 565,795.13

Individual income tax 10,199.23 1,417.40

Urban maintenance and construction tax 684.49

Educational surtax 410.70

Local educational surtax 273.80

Stamp tax 3,853.10 9,123.40

Deed tax 781,317.09

Property tax 95.24

Total 403,722.99 1,359,022.01

Other explanation:

23 .Other account payables

(1) Other account payables by nature

In RMB

Item Ending balance Opening balance

Intercourse funds 4,716,778.66 2,710,112.00

Deposit and margin 456,000.00 587,221.20

Agency fee 130,000.00 400,000.00

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Withhold and remit tax 20,477.03 28,669.69

Other 878,416.69 750,861.51

Total 6,201,672.38 4,476,864.40

(2) Other payables with large amount and aging of over one year

In RMB

Item Ending balance Reason for non-repayment or carryover

Other explanation

24. Share capital

In RMB

Increased (decreased) in Period

Opening Shares

New shares Ending balance

balance Bonus shares converted from Other Sub-total

issued

public reserve

Total shares 706,320,000.00 706,320,000.00

Other explanation:

25. Capital reserves

In RMB

Item Opening balance Increased in Period Decreased in Period Ending balance

Capital premium (share

397,808,090.32 397,808,090.32

premium)

Other capital reserves 65,873,219.23 65,873,219.23

Total 463,681,309.55 463,681,309.55

Other explanation, including changed in Period as well as reasons for changes:

26. Surplus reserves

In RMB

Item Opening balance Increased in Period Decreased in Period Ending balance

Statutory surplus

76,791,550.17 76,791,550.17

reserves

Total 76,791,550.17 76,791,550.17

Explanation on surplus reserve, including changed in Period as well as reasons for changes:

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25. Retained profits

In RMB

Item The Period Last Period

Retained profits at the end of last period before

-886,966,408.74 -890,727,215.25

adjustment

Retained profits at the beginning of the period

-886,966,408.74 -890,727,215.25

after adjustment

Add: The net profits belong to owners of patent

-3,145,668.96 3,760,806.51

company of this period

Retained profits at the end of the period -891,092,586.76 -886,966,408.74

Details about adjusting the retained profits at the beginning of the period:

1) The retroactive adjustments to Accounting Standards for Business Enterprises and its relevant new regulations affect the

undistributed profits at the beginning of the year amounting to 0 Yuan.

2) The changes in accounting policies affect the undistributed profits at the beginning of the year amounting to 0 Yuan.

3) The major accounting error correction affects the undistributed profits at the beginning of the year amounting to 0 Yuan.

4) Merge scope changes caused by the same control affect the undistributed profits at the beginning of the year amounting to 0 Yuan.

5) Other adjustments affect the undistributed profits at the beginning of the year amounting to 0 Yuan.

28. Operating income and operating cost

In RMB

The Period Last Period

Item

Income Cost Income Cost

Main business 101,493,229.09 86,731,511.45 191,078,889.32 163,101,369.56

Other business 70,765.38 37,714.74 335,592.42 81,317.07

Total 101,563,994.47 86,769,226.19 191,414,481.74 163,182,686.63

29 .Business tax and surcharges

In RMB

Item The Period Last Period

Urban maintenance and construction tax 360,349.17 497,164.44

Educational surtax 360,349.18 497,014.47

Property tax 838.10

Land use tax 127,235.53

Vehicle and vessel tax 9,880.00

Stamp duty 67,598.20

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Business tax 4,938,432.50 8,296,366.53

Land VAT 1,988,303.86 3,664,665.11

Total 7,852,986.54 12,955,210.55

Other explanation:

30. Sales expense

In RMB

Item The Period Last Period

Advertising fees 88,066.00 71,975.00

Business promotion fee 113,450.00

Product packing fee 114,119.82

Transport charge 176,729.02

Lump sum 4,483.49

Salary 60,190.00

Storage fee 1,140.47

Other 200.00 200.08

Total 315,835.82 314,718.06

Other explanation:

31. Administration expenses

In RMB

Item The Period Last Period

Employee wages 3,921,799.98 6,748,266.03

Intermediary organs fee 927,762.26 1,085,483.77

Business entertainment 1,220,199.01 818,553.45

Business-travel expense 551,869.73 812,495.35

Welfare expenses 372,685.72 661,214.54

Social insurance fee 784,247.48 526,608.65

Depreciation and amortization 540,961.54 421,693.46

Office allowance 228,411.68 429,394.93

Housing fund 235,434.20 168,697.60

Low value consumables 280,130.27 219,071.44

Material consumption 339,236.49 98,279.84

Repair charge 117,778.09 98,964.60

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Long-term deferred expenses 46,203.48 78,609.04

Water and electricity 38,644.36 19,077.73

Union dues 4,009.32 3,971.32

Land use tax 590,196.79

Property tax 20,558.29

Stamp tax 126,417.27

Other expense 938,821.91 901,987.20

Total 10,548,195.52 13,829,541.30

Other explanation:

32. Financial expenses

In RMB

Item The Period Last Period

Interest expenses

Less: Interest income 709,763.28 121,643.23

Profit/loss on exchange

Bank handling charges 18,493.33 19,856.39

Total -691,269.95 -101,786.84

Other explanation:

33. Asset impairment loss

In RMB

Item The Period Last Period

I. Bad debt loss -597.99

Total -597.99

Other explanation:

34. Investment income

In RMB

Item The Period Last Period

Long-term equity investment income

-12,933.77

calculated on equity method

Total -12,933.77

Other explanation:

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35. Non-operating income

In RMB

Amount reckoned into current

Item The Period Last Period

non-recurring gains/losses

Other 30,121.27 69,070.59

Total 30,121.27 69,070.59

Government grants reckoned into current gains/losses:

In RMB

Impact on Assets-relate

Distributed current Special d

Item Reasons Nature The Period Last Period

by gains/losses grants (Y/N) /income-relat

(Y/N) ed

Other explanation:

36. Non-operating expenditure

In RMB

Amount reckoned into current

Item The Period Last Period

non-recurring gains/losses

Other 7,113.04 339,948.94

Total 7,113.04 339,948.94

Other explanation:

37. Income tax expense

(1) Statement of income tax expenses

In RMB

Item The Period Last Period

Current income tax 8,991.27

Total 8,991.27

(2) Adjustment on accounting profit and income tax expenses

In RMB

Item The Period

Total profit -3,207,373.43

Income tax based on statutory/applicable tax rate -801,843.36

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The impact of deductible losses of deferred income tax assets is

801,843.36

not confirmed in the previous period

Other explanation

38. Other comprehensive income

Found in Note

39. Notes to statement of cash flow

(1) Other cash received in relation to operation activities

In RMB

Item The Period Last Period

Intercourse funds 2,737,235.86 6,619,861.33

Interest income 709,446.69 122,433.28

Other 6,040,764.33 1,313,516.00

Total 9,487,446.88 8,055,810.61

Explanation on other cash received in relation to operation activities:

(2) Other cash paid in relation to operation activities

In RMB

Item The Period Last Period

Disbursement costs 4,634,876.43 10,713,299.72

Intercourse funds 832,000.00 3,632,456.94

Other 8,737,183.17 2,656,790.78

Total 14,204,059.60 17,002,547.44

Explanation on other cash paid in relation to operation activities:

(3) Cash received from other investment activities

In RMB

Item The Period Last Period

Explanation on cash received from other investment activities:

(4) Cash paid related with other investment activities

In RMB

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Item The Period Last Period

Explanation on cash paid related with other investment activities:

(5) Cash received from other financing activities

In RMB

Item The Period Last Period

Collected the margin of housing mortgage 753,264.46

Total 753,264.46

Explanation on cash received from financing activities:

(6) Cash paid related with other financing activities

In RMB

Item The Period Last Period

Paid the margin of housing mortgage 663,800.00 1,626,700.00

Total 663,800.00 1,626,700.00

Note of cash paid related with other financing activities:

40. Supplementary information to statement of cash flow

(1) Supplementary information to statement of cash flow

In RMB

Supplementary information The Period Last Period

1. Net profit adjusted to cash flow of

-- --

operation activities:

Net profit -3,207,373.43 941,308.65

Depreciation of fixed assets, consumption of

oil assets and depreciation of productive 521,039.05 464,795.45

biology assets

Amortization of intangible assets 30,461.06 65,377.98

Amortization of long-term deferred expenses 86,310.60 94,093.00

Loss from disposal of fixed assets, intangible

assets and other long-term assets(gain is -21,731.42 74,717.58

listed with “-”)

Investment losses(gain is listed with “-”) 12,933.77

Decrease of inventory (increase is listed with

54,521,751.22 140,787,091.53

“-”)

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Decrease of operating receivable accounts

17,625,680.12 -1,126,508.10

(increase is listed with “-”)

Increase of operating payable accounts

-40,868,835.51 -64,458,825.89

(decrease is listed with “-”)

Net cash flow arising from operating

28,687,301.69 76,854,983.97

activities

2. Material investment and financing not

-- --

involved in cash flow

3. Net change of cash and cash equivalents: -- --

Balance of cash at period end 153,602,420.61 133,530,264.90

Less: Balance of cash equivalent at

126,970,834.83 84,543,677.45

year-begin

Net increase of cash and cash equivalents 26,631,585.78 48,986,587.45

(2) Net cash payment for the acquisition of a subsidiary of the current period

In RMB

Amount

Including: --

Including: --

Including: --

Other explanation:

(3) Net cash received from the disposal of subsidiaries

In RMB

Amount

Including: --

Including: --

Including: --

Other explanation:

(4) Constitution of cash and cash equivalent

In RMB

Item Ending balance Opening balance

Ⅰ. Cash 153,602,420.61 126,970,834.83

Ⅲ. Balance of cash and cash equivalent at 153,602,420.61 126,970,834.83

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period-end

Other explanation:

41. Notes on items of changes of owner’s equity

Name and adjusted amount on “Other” at balance of year-end of last year:

42. Assets with ownership or right-to-use restricted

In RMB

Item Ending book value Restriction reasons

Monetary fund 6,663,127.40 Margin for housing mortgage

Total 6,663,127.40 --

Other explanation:

43. Foreign currency monetary items

(1) Foreign currency monetary items

In RMB

Balance of foreign currency at

Item Exchange rate convert RMB concert at Period-end

period-end

Including: USD 819,785.69 6.7744 5,553,556.18

Other explanation:

(2) Explanation on foreign operational entity, as for major foreign operational entity, disclosed foreign

main operation land, book-keeping currency and basis; and disclosed reasons if the book-keeping currency

changed

□ Applicable √ Not-applicable

44. Other

VIII. Changes of consolidation range

1. Enterprise merger not under the same control

(1) Enterprise merger not under the same control in the period

In RMB

Time for Cost for Ratio of Way to Purchasing Basis of the Revenue of Net profit of

Acquiree

equity equity equity obtained date purchasing the acquiree the acquiree

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obtained obtained obtained date from from

purchasing purchasing

date to date to

period-end period-end

Other explanation:

(2) Combined cost and goodwill

In RMB

Combine cost

Explanation on determination method for fair value of combine cost, contingent consideration and its changes:

Reason of major goodwill resulted:

Other explanation:

(3) Acquiree's identifiable assets and liabilities on purchasing date

In RMB

Fair value on purchasing date Book value on purchasing date

Determination method for fair value of the identifiable assets and liabilities:

Contingent liability of the acquiree taken during enterprise merger:

Other explanation:

(4) Gains/losses arising from re-calculation on fair value for the equity held before purchasing date

Whether the enterprise combine through multiple transaction by steps or not and obtained controlling rights during the reporting

period

□Yes √No

(5) Explanation on the combination consideration, which is unable to confirm rationally on purchasing date

or combination date or on the fair value of identifiable assets and liabilities for the acquiree

(6) Other explanation

2. Enterprise merger under the same control

(1) Enterprise merger under the same control in the period

In RMB

Equity ratio Basis for Basis of Revenue of Net profit of Revenue of Net profit of

Combined Combination

in merger under combination the combined the combined the combined the combined

party date

combination the same date party from party from party during party during

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control period of period of comparative comparative

combined to combined to period period

combination combination

date date

Other explanation:

(2) Combine cost

In RMB

Combine cost

Explanation on contingent consideration and its changes:

Other explanation:

(3) Book value of the combined party's assets and liabilities on combine date

In RMB

Combination date End of last period

Contingent liability of the combined party taken in combination:

Other explanation:

3. Counter purchase

The basic information of transactions, the basis of transactions constituting counter purchase, whether the assets and liabilities

reserved by listed company constitute business and the basis, the confirmation of combined costs, the amount and its calculation of

adjusted equity when handling according to the equity transaction.

4. Subsidiary disposal

Whether there is a single disposal of the investment in subsidiaries that is the loss of control

□ Yes √ No

Whether there is disposal of the investment in subsidiaries through multiple transactions step by step and loss of control in the current

period

□ Yes √ No

5. Other reasons for consolidation range changed

Reasons for changed on consolidation range (such as new subsidiary established, subsidiary liquidated etc.)And relevant information:

(1) Subsidiary, special purpose vehicle and operational entity with control over by means of entrusted management or lessee newly

included in the consolidate scope in the Period:

Name Change reason

Kefeng Trade Enterprise derivated

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Kefeng Engineering Enterprise derivated

On March 6, 2017, approved by Chengde Administration for Industry and Commerce, Chengde Nanjiang Trading Co., Ltd. was

divided into Chengde Kefeng Trading Co., Ltd., Chengde Kefeng Project Management Co., Ltd. and Chengde Nanjiang Trading Co.,

Ltd. Among them, the registered capital of Chengde Kefeng Trading Co., Ltd. is RMB 8.5 million,Dongfeng Sci-Tech Group CO.,

LTD. has a wholly-owned holding in the company, its business scope includes the sale of mechanical equipment, machine parts, and

mechanical and electrical products, and the housing leasing services; the registered capital of Chengde Kefeng Project Management

Co., Ltd. is RMB 500,000.00,Dongfeng Sci-Tech Group CO., LTD. has a wholly-owned holding in the company, its business scope

includes the project management and consulting services, the infrastructure construction, and the housing leasing services; the

registered capital of Chengde Nanjiang Trading Co., Ltd. is changed to RMB 1 million,Dongfeng Sci-Tech Group CO., LTD. has a

wholly-owned holding in the company, its business scope includes the sale of hardware and mechanical products, building materials,

and mechanical equipment, and the housing rental services.

(2) Subsidiary, special purpose vehicle and operational entity with control lost by means of entrusted management or rent-out, which

no longer include in consolidate scope in the Period:

Name Change reason

Runhua RW The Company release the consistent action with shareholder Lan

Chunhong

On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan

Chunhong of Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original Concerted Action Person

Agreement, both parties no longer maintain the concerted actions to the company’s daily production and operation and the

decision-making of other major matters, and each party makes opinions independently and exercises the right to vote in accordance

with the laws and regulations and normative documents and the provisions of the articles of association and their own wishes, both

parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting Standards for

Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action person

relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control power to

Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the date of

losing the control power to it, and check and calculate by equity method.

6. Other

IX. Equity in other entity

1. Equity in subsidiary

(1) Constitute of enterprise group

Main operation Share-holding ratio

Subsidiary Registered place Business nature Acquired way

place Directly Indirectly

Enterprise merger

Nanjing

Chengde City Chengde City Commercial trade 100.00% under the same

Trading*1

control

Dongfeng Industrial

Chengde City Chengde City 100.00% Establishment

Investment*2 investment

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Ecological Animal

Chengde City Chengde City 100.00% Establishment

Agriculture*3 husbandry

International

Nanjiang Asia*4 Hong Kong Hong Kong 100.00% Establishment

investment

Inflatable

Morsh capsule,

Chengde City Chengde City 100.00% Establishment

Technology *5 production and

sale of Grapheme

Huijing Property Property

Chengde City Chengde City 100.00% Establishment

*6 management

Hangzhou High-tech

Hangzhou Hangzhou 100.00% Establishment

Dongfeng*7 development

Aerospace

Chengde product

Chengde City Chengde City 100.00% Establishment

Kefeng*8 technology

development

The derived

Kefeng Trade*9 Chengde City Chengde City Commercial trade 100.00%

discrete

Engineering

Kefeng The derived

Chengde City Chengde City project 100.00%

Engineering*10 discrete

management

Explanation on share-holding ratio in subsidiary different from ratio of voting right:

Basis for controlling the invested entity with half or below voting rights held and without controlling invested entity but with over

half and over voting rights:

Controlling basis for the structuring entity included in consolidated range:

Basis on determining to be an agent or consignor:

Other explanation:

*1 Nanjiang Trade (“Chengde Rongyida Real Estate Development Co., Ltd.” for original name) was established on 20 February 2009

with registered capital of 10 million Yuan, of which, Wang Fei invested 9 million Yuan, representing 90 percent of the registered

capital while one million Yuan contributed by Chen Liping, presenting 10 percent of the registered capital; On 27 th July 2009, Wang

Fei and Chen Liping transferred all their shares to the controlling shareholder Chen Rong. At the same time, Chen Rong transferred

100% shares to Nanjiang Company with RMB1.00. After the transfer, Nanjiang Company wholly owned the Rongyida. On 3 April

2014, as approved by Industry & Commercial Bureau of Chengde County, Rongyida changed its name to Chengde Nanjiang Real

Estate Development Co., Ltd. (“Nanjiang Real Estate” for short). On 12 December 2016, being approved from Chengde

Administration for Industry and Commerce, the name of the enterprise are re-named as Chengde Nanjiang Trade and Business Co.,

Ltd (hereinafter referred to as Nanjiang Trade and Business), business cope: sales of hardware electrical, construction material and

mechanical equipment; house leasing services. In March 2017, the company separated Nanjiang Trading, Nanjiang Trading

continued to exist, with the registered capital of RMB 1 million, and derived to establish Chengde Kefeng Project Management Co.,

Ltd., with the registered capital of RMB 500,000, and Chengde Kefeng Trading Co. Ltd., with the registered capital of RMB 8.5

million. Approved by Chengde Market Supervision Authority, Nanjiang Trading has completed the relevant industrial and

commercial registration for separation.

124

东沣科技集团股份有限公司 2017 年半年度报告全文

*2 Dongfeng Investment was funded and established by Nanjiang Real Estate on October 9, 2012, its original registered capital was

RMB 50 million, and the shareholder Nanjiang Real Estate invested RMB 50 million, accounting for 100% of the registered capital;

on December 21, 2012, Nanjiang Real Estate transferred 100% equity stake to Chengde Nanjiang at the cost of RMB 50 million, after

the equity transfer, Chengde Nanjiang held 100% equity stake of Nanjiang Investment, on January 6, 2013, Chengde Nanjiang

increased capital of RMB 40 million to Nanjiang Investment, and the registered capital was RMB 90 million after the capital increase.

In June 20117, approved by Chengde Administration for Industry and Commerce, the company’s name was changed to Chengde

Dongfeng Investment Co., Ltd.

*3 Ecological Agriculture was established by Nanjiang Investment on 24 October 2012, original registered capital was 5 million

Yuan, shareholder Nanjiang Investment contributes 5 million Yuan with 100 percent held in total registered capital. On 18 April

2013, Nanjiang Investment increase 5 million Yuan to Ecological Agriculture and the registered capital turns to 10 million Yuan after

increased. In June 21017, the Company changed it’s name to Chengde Dongfeng Ecological Agriculture Co., Ltd after approved by

Administrative Bureau of Industry and Commerce of Chengde County

*4 Nanjiang Asia was founded by Nanjiang Company on 14th Nov. 2013, located in Hong Kong, with register capital of US$ 20

million, the paid-up was US$ 797, 583.34.

*5 Nanjiang Technology was jointly funded the established by Nanjiang Investment and Ningbo Morsh Tech Co., Ltd. on January 24,

2013 with registered capital of RMB 50 million, of which Nanjiang Investment invested RMB 45 million in cash, accounting for 90%

of the total amount of investment, Ningbo Morsh Tech Co., Ltd. invested RMB 5 million in cash, accounting for 10% of the total

amount of investment. On September 26, 2016, approved by Chengde Administration for Industry and Commerce, agreed to change the

name of the company to Chengde Nanjiang Technology Co., Ltd. (“Nanjiang Technology” for short), the business scope changed to

the research and development, production, and sales of inflatable capsule, grapheme, grapheme application materials, power battery

and battery materials, high-performance membrane materials, and nano-materials and the technology promotion and technical services

of above-mentioned products. On July 4, 2016, Chengde Nanjiang Investment and Ningbo Morsh Tech signed an equity transfer

agreement, the agreement appointed to transfer 10% equity stake held by Ningbo Morsh Tech to Chengde Nanjiang Investment Co.,

Ltd., and Chengde Nanjiang Investment would hold 100% equity stake of Nanjiang Technology after the transfer.

*6 Huijing Property was founded by Nanjiang Investment on 18th Nov. 2013 with register capital of RMB500,000. Shareholder

Nanjiang Investment invested RMB500, 000 wholly owning it.

*7 Hangzhou Dongfeng established on 21 September 2016 by Nanjiang Co., Ltd., registered capital was 50 million Yuan; actually

paid-in capital was 30 million Yuan. Former Hangzhou Hangfeng Technology Co., Ltd. Re-named as Hangzhou Dongfeng

Technology Co., Ltd.

*8Chengde Kefeng estalibished by contribution from Nanjiang Co., Ltd. on 12 Dec. 2016. Registered captial amounted to 30

millionYuan, there are actually no fund ivnested ended as 31 Dec. 2016.

*9Kefeng Trade derivated from Nanjiang Trading on 6 March 2017, registered captial amounted as 8.5 million Yuan.

*10Kefeng Engineering derivated from Nanjiang Trading on 6 March 2017, registered captial amounted as 0.5 million Yuan.

125

东沣科技集团股份有限公司 2017 年半年度报告全文

(2) Important non-wholly-owned subsidiary

In RMB

Dividend announced to

Share-holding ratio of Gains/losses attributable Ending equity of

Subsidiary distribute for minority in

minority to minority in the Period minority

the Period

Explanation on share-holding ratio of minority different from ratio of voting right:

Other explanation:

(3) Main finance of the important non-wholly-owned subsidiary

In RMB

Ending balance Opening balance

Subsidia Non-curr Non-curr Non-curr Non-curr

Current Total Current Total Current Total Current Total

ry ent ent ent ent

assets assets liability liability assets assets liability liability

assets liability assets liability

In RMB

The Period Last Period

Cash flow Cash flow

Total Total

Subsidiary Operation from Operation from

Net profit comprehensi Net profit comprehensi

Income operation Income operation

ve income ve income

activity activity

Other explanation:

(4) Significant restrictions on the use of enterprise group assets and pay off debts of the enterprise group

(5)Financial or other supporting offer to structuring body included in consolidate statement scope

Other explanation:

2. Transaction that has owners equity shares changed in subsidiary but still with controlling rights

(1) Explanation on changes in owner's equity in subsidiaries

(2) Impact on minority interest and owner's equity attributable to parent company from transaction

In RMB

Other explanation

126

东沣科技集团股份有限公司 2017 年半年度报告全文

3. Equity in joint venture and cooperative enterprise

(1) Important joint venture and cooperative enterprise

Share-holding ratio Accounting

treatment on

Main operation investment for

Name Registered place Business nature

place Directly Indirectly joint venture and

cooperative

enterprise

Runhua RW

(Tianjin) International

Tianjin City Tianjin City 30.00% Equity method

International trading

trading Co., Ltd.

Share-holding ratio or shares enjoyed different from voting right ratio:

Basis of the voting rights with 20% below but with major influence, or without major influence but with over 20% (20% included)

voting rights hold:

(2) Main financial information of the important joint venture

In RMB

Ending balance/The Period Opening balance/Last Period

Other explanation

(3) Main financial information of the important affiliated business

In RMB

Ending balance/ The Period Opening balance/ Last Period

Other explanation

(4) Financial summary for non-important Joint venture and affiliate enterprise

In RMB

Ending balance/ The Period Opening balance/ Last Period

Joint venture: -- --

Total on below item by shareholding ratio -- --

Affiliated enterprise: -- --

Total on below item by shareholding ratio -- --

127

东沣科技集团股份有限公司 2017 年半年度报告全文

Other explanation

(5) Major limitation on capital transfer ability to the Company from joint venture or affiliates

(6) Excess loss occurred in joint venture or affiliates

In RMB

Losses un-determined in the

Cumulated previous losses Cumulated losses

Name Period(net profit share in the

determined un-determined at period-end

Period)

Other explanation

(7) Unconfirmed commitment with joint venture investment concerned

(8) Intangible liability with joint venture or affiliates investment concerned

4. Major conduct joint operation

Shareholding ratio/quota enjoy

Joint operation Main operation site Register place Business

Directly Indirectly

Explanation on shareholding ratio or quota enjoy in joint operation different from voting rights:

If the joint operation was the independent body, basis of classification of joint operation:

Other explanation

5. Structured body excluding in consolidate financial statement

Relevant explanation:

6. Other

X. Risk related with financial instrument

XI. Disclosure of fair value

1. Ending fair value of the assets and liabilities measured by fair value

In RMB

Ending fair value

Item

First-order Second-order Third-order Total

I. Sustaining measured by

-- -- -- --

fair value

II.Non-sustaining -- -- -- --

128

东沣科技集团股份有限公司 2017 年半年度报告全文

measured by fair value

2. Basis for determining the market price of the sustained and non-sustained first-level fair value

measurement projects

3. The qualitative and quantitative information of the valuation techniques and important parameters

adopted for the sustained and non-sustained second-level fair value measurement projects

4. The qualitative and quantitative information of the valuation techniques and important parameters

adopted for the sustained and non-sustained third-level fair value measurement projects

5. The adjustment information about book value between the beginning and the end of the period and the

unobservable parameter sensitivity analysis of the sustained third-level fair value measurement projects

6. The sustained third-level fair value measurement projects that conversion has occurred among various

levels in the current period, the reasons for change and the policy determining the conversion point

7. Valuation techniques change occurred during the current period and the reasons for change

8. The fair value situations of the financial assets and financial liabilities not measured by the fair value

9. Other

XII. Related party and related transactions

1. Parent company of the enterprise

Share-holding ratio

Voting right ratio on

Parent company Registration place Business nature Registered capital on the enterprise for

the enterprise

parent company

Explanation on parent company of the enterprise

The Company has no parent company; controller refers to the first largest shareholder Mr. Wang Dong, who holds 29.49% equity of

the Company.

Ultimate controller of the Company: Mr. Wang Dong

Other explanation:

2. Subsidiary of the Enterprise

Found more in Note IX.

3. Cooperative enterprise and joint venture

Found more in Note IX.

Other cooperative enterprise and joint venture that have related transaction with the Company in the Period or occurred in pervious

129

东沣科技集团股份有限公司 2017 年半年度报告全文

period:

Name Relationship

Runhua RW (Tianjin) International Trade Co., Ltd. Joint venture

Other explanation

On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan

Chunhong of original subsidiary Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original

Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and

operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to

vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their

own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting

Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action

person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control

power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the

date of losing the control power to it, and check and calculate by equity method.

4. Other related party

Other related party Relationship with the Enterprise

Eagles Men Aeronautic Science and Technology Group Co., Ltd. Related legal person of the Company

Shanxi Eagles Men Aeronautic Science and Technology Co., Ltd. Related legal person of the Company

Other explanation

5. Related transaction

(1) Goods purchasing, labor service providing and receiving

Goods purchasing/labor service receiving

In RMB

Whether over the

Related party Content The Period Amount approved Last Period

transaction limit

Eagles Men

Aeronautic Science Merchandise

-2,970,000.00 No

and Technology returns

Group Co., Ltd.

Shanxi Eagles Men

Aeronautic Science Merchandise

-21,159,500.00 No

and Technology returns

Co., Ltd.

Goods sold/labor service providing

In RMB

Related party Content The Period Last Period

130

东沣科技集团股份有限公司 2017 年半年度报告全文

Explanation on goods purchasing, labor service providing and receiving

On 15 November 2016,Dongfeng Sci-Tech Group CO., LTD. (hereinafter referred to as “the Company”) holding a 14th session of 6th

BOD, for deliberated and approved the Proposals of Routine Related Transactions. The Company entered into a Sales Contract for

Ground Protection System and Sales Contract for Stratospheric Satellite Ground Protection System with EMAST Group (hereinafter

referred to as “EMAST”) and its wholly-owned subsidiary - Shanxi Eagles Men Aeronautic Science and Technology Co., Ltd.

(hereinafter referred to as Shanxi Eagles) respectively. Purchasing equipment as airship ground protection produced by EMAST and

Shanxi Eagles, total contract amounting as 24.1295 million Yuan. Till end of 31 December 2016, actually money paid for products

are 21.7166 million Yuan.

On 3 December 2016, according to the Escrow Letter agreed for payment and delivery on time in the contract, the equipments

purchased are full custody by Shanxi Eagles on behalf of the Company.

After investigation from the technician of the Company, we found that the technical proposal and drawings, attaché with original

contract, has an unforeseeable difference with the critical success factors that in original plans, the purpose of contract has not been

realized. The three parties terminate the original sales contract by negotiation, after technology validation by EMAST and Shanxi

Eagles, for purpose of avoiding potential risks and the losses to both parties. Returns processing of goods and money are temporary

implemented.

On 15 March 2017, the Company entered into a Release Agreement on Sales Contract for Ground Protection System and Release

Agreement on Sales Contract for Stratospheric Satellite Ground Protection System with EMAST Group and Shanxi Eagles

respectively. The former contract will release while the agreement take into effect. And the two parties are implemented returns

processing of goods and money in duty.

On 16 March 2017, 17 March and 20 March, the Company received the payment for goods as 3.5 million Yuan, 15.5436 million

Yuan and 2.673 million Yuan in three times, 21.7166 million Yuan in total.

(2) Related trusteeship management/contract & entrust management/ outsourcing

Trusteeship management/contract:

In RMB

Income

Client/contract-ou Commissioned

Assets type Start date Expire date Pricing basis recognized in the

t party party/contractor

period

Explanation

Entrust management/ outsourcing:

In RMB

Expenses

Client/contract-ou Commissioned

Assets type Start date Expire date Pricing basis recognized in the

t party party/contractor

period

Explanation

(3) Related leasing

As a lessor for the Company:

In RMB

Lessee Assets type Lease income recognized in the Lease income recognized in last

131

东沣科技集团股份有限公司 2017 年半年度报告全文

Period Period

As a lessee for the Company:

In RMB

Rental fee recognized in the Rental fee recognized in last

Lessor Assets type

Period Period

Explanation on related lease

(4) Related guarantee

The Company acts as a secured party

In RMB

Whether the guarantee

Secured party Guarantee amount Start date Expiry date

implemented or not

As a secured party by the Company

In RMB

Whether the guarantee

Guarantor Guarantee amount Start date Expiry date

implemented or not

Explanation on related guarantee

(5) Borrowed funds from related party

In RMB

Related party Borrowing amount Start date Expiry date Note

Inter-bank borrowing

Lending transaction

(6) Related party’s assets transfer and debt reorganization

In RMB

Related party Content The Period Last Period

(7) Remuneration of key management personnel

In RMB

Item The Period Last Period

Remuneration of key management

783,050.00 898,000.00

personnel

132

东沣科技集团股份有限公司 2017 年半年度报告全文

(8) Other related transaction

6. Account receivable/payable from/to related party

(1) Account receivables

In RMB

Ending balance Opening balance

Item Related party

Book balance Bad debt provision Book balance Bad debt provision

Advance payment

Eagles Men

Aeronautic Science

2,241,461.40

and Technology

Group Co., Ltd.

Shanxi Eagles Men

Aeronautic Science

15,969,092.73

and Technology Co.,

Ltd.

(2) Account payable

In RMB

Item Related party Ending book balance Opening book balance

7. Commitment of related party

8. Other

XIII. Share-based payment

1. Share-based payment

□ Applicable √ Not applicable

2. Share-based payment settled by equity

□ Applicable √ Not applicable

3. Share-based payment settled by cash

□ Applicable √ Not applicable

133

东沣科技集团股份有限公司 2017 年半年度报告全文

4. Modification and termination of the share-based payment

5. Other

XIV. Commitment and contingency

1. Important commitment

Important commitment on balance sheet date

2. Contingency

(1) Important contingency on balance sheet date

As of 30 June 2017, the balance of guarantee of the mortgage for commercial housing owner amounted as 166,451,200 Yuan

(2) If the Company has no important contingency need to disclosed, explain reasons

The Company has no important contingency that need to disclose.

3. Other

XV. Events after balance sheet date

1. Important non adjustment matters

In RMB

Impact on financial status and Reasons of fails to estimate the

Item Content

operation results impact

2. Profit distribution

In RMB

3. Sales return

4. Other events after balance sheet date

XVI. Other important events

1. Previous accounting errors collection

(1) Retrospective restatement

In RMB

134

东沣科技集团股份有限公司 2017 年半年度报告全文

Items impact during vary

Content Treatment procedure Accumulated impact

comparative period

(2) Prospective application

Content Approval procedure Reasons

2. Debt restructuring

3. Assets replacement

(1) Non-monetary assets

(2) Other assets

4. Pension plan

5. Discontinuing operation

In RMB

Profit of

discontinuing

operation

Item Revenue Expenses Total profit Income tax Net profit

attributable to

owners of parent

company

Other explanation

6. Segment

(1) Recognition basis and accounting policy for reportable segment

(2) Financial information for reportable segment

In RMB

Item Offset of segment Total

135

东沣科技集团股份有限公司 2017 年半年度报告全文

(3) The Company has no segment, or unable to disclose total assets and liability of the segment, explain

reasons

(4) Other explanation

7. Major transaction and events makes influence on investor’s decision

8. Other

XVII. Principle notes of financial statements of parent company

1. Accounts receivable

(1) Accounts receivable by type

In RMB

Ending balance Opening balance

Provision for bad

Book balance Book balance Provision for bad debts

Type debts

Book

Book value

Proportio Provision value Proportio Provision

Amount Amount Amount Amount

ratio ratio

n n

Accounts receivable with large single amount and accrued for provision of bad debt on a single basis at period-end:

□ Applicable √ Not-applicable

Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio:

□ Applicable √ Not-applicable

Accounts receivable accrued for provision of bad debt by percentage of balance in portfolio:

□ Applicable √ Not-applicable

Accounts receivable accrued for provision of bad debt by other methods in portfolio:

(2) Provision for bad debts accrued, regain or switch back in the Period

In the Period, 0 Yuan accrued for provision of bad debts; 0 Yuan provision for bad debts regains or switch back in the Period.

Including major amount of bad debt provision regain or switch back in the Period:

In RMB

Unit Amount regain or switch back Way of regain

(3) Account receivable actual charge off in the Period

In RMB

Item Amount written off

Written-off for the major receivable:

136

东沣科技集团股份有限公司 2017 年半年度报告全文

In RMB

Arising from related

Unit Nature Amount written off Reasons Procedures

transaction (Y/N)

Explanation on written off:

(4) Top five account receivables collected by arrears party at ending balance

(5) Account receivable de-recognition due to financial assets transfer

(6) Assets and liabilities resulted by account receivable transfer and continues involvement

Other explanation:

2. Other account receivables

(1) Other account receivables by type

In RMB

Ending balance Opening balance

Provision for bad

Book balance Book balance Provision for bad debts

Type debts

Book

Book value

Proportio Provision value Proportio Provision

Amount Amount Amount Amount

ratio ratio

n n

Other receivables

accrued for provision 29,791,9 67,905.7 29,724,07 23,650, 23,582,767.

99.77% 0.23% 99.51% 67,905.78 0.56%

of bad debt by 84.72 8 8.94 673.11 33

portfolio

Other receivables

with minor single

70,000.0 70,000.0 70,000.

amount but accrued 0.23% 100.00% 0.49% 70,000.00 100.00%

0 0 00

for provision of bad

debt on a single basis

29,861,9 137,905. 29,724,07 23,720, 137,905.7 23,582,767.

Total 100.00% 0.46% 100.00% 1.05%

84.72 78 8.94 673.11 8 33

Other receivables with large single amount and accrued for provision of bad debt on a single basis at period-end:

□ Applicable √ Not-applicable

Other receivables accrued for provision of bad debt by aging analysis method in portfolio:

√ Applicable □ Not-applicable

In RMB

Aging Ending balance

137

东沣科技集团股份有限公司 2017 年半年度报告全文

Other account receivable Provision for bad debts Provision ratio

Within 1 year

Subtotal within one year 1,574,385.00 32,046.24 2.04%

1-2 years 130,597.72 26,119.54 20.00%

2-3 years 19,480.00 9,740.00 50.00%

Total 1,724,462.72 67,905.78 3.94%

Portfolio recognized:

Other accounts receivable accrued for provision of bad debt by percentage of balance in portfolio:

□ Applicable √ Not-applicable

Other accounts receivable accrued for provision of bad debt by other methods in portfolio:

√ Applicable □ Not-applicable

Portfolio Ending balance

Other accounts receivable Provision for bad debts Provision ratio (%)

Ecological agriculture 16,467,846.58 --- ---

Huijing Property 6,091,523.19 --- ---

Tail payment of the land reserves from 3,678,200.00 --- ---

Land Reserve Center of Chengde

County

Nanjiang Trade 1,129,495.73 --- ---

Nanjiang Technology 284,228.00 --- ---

Kefeng Engineering 150,000.00 --- ---

Kefeng Aerospace 60,000.00 --- ---

Nanjiang Asia 4,971.22 --- ---

Oil prepaid to Petroleum Company 110,836.28 --- ---

Cement special fund 90,421.00 --- ---

Total 28,067,522.00 --- ---

(2) Bad debt provision accrual collected or switch back

There is 0 Yuan provision for bad debts accrued in the Period; and 0 Yuan regains or switch back in the Period.

Including the followed significant amount:

In RMB

Unit Regains or switch back Way of regain

(3) Other receivables actually written-off during the reporting period

In RMB

Item Amount written-off

Major other account receivables written-off:

138

东沣科技集团股份有限公司 2017 年半年度报告全文

In RMB

Arising from related

Name Nature Amount written-off Reasons Procedures

transaction (Y/N)

Explanation on other account receivable:

(4) Other account receivables category by nature of money

In RMB

Nature of money Ending book balance Beginning book balance

Intercourse current 24,188,064.72 18,676,237.99

Land acquisition account 3,678,200.00 3,678,200.00

Other 1,995,720.00 1,366,235.12

Total 29,861,984.72 23,720,673.11

(5) Top five other account receivables collected by arrears party at ending balance

In RMB

Proportion in total Ending balance of

Unit Nature Ending balance Aging

other receivables bad debt provision

Nanjiang Ecological Within one year; 1-2

Intercourse current 16,467,846.58 55.15%

Agriculture years

Land Reserve Center Final payment for

3,678,200.00 2-3 years 12.32%

of Chengde County land acquisition

Huijing Property

Intercourse current 6,091,523.19 Within one year 20.40%

Company

Nanjiang Technology Within one year; 2-3

Intercourse current 284,228.00 0.95%

Company years

Kefeng Engineering Intercourse current 150,000.00 Within one year 0.50%

Total -- 26,671,797.77 -- 89.32%

(6) Account receivables related to government subsidies

In RMB

Time and amount

Unit Item Ending balance Ending age

collected and basis

139

东沣科技集团股份有限公司 2017 年半年度报告全文

(7) Other receivable for termination of confirmation due to the transfer of financial assets

(8)The amount of assets and liabilities that are transferred other receivable and continued to be involved

Other explanation:

3. Long-term equity investment

In RMB

Ending balance Opening balance

Item Depreciation Depreciation

Book balance Book value Book balance Book value

reserves reserves

Investment for

178,114,466.37 178,114,466.37 187,284,836.37 9,170,370.00 178,114,466.37

subsidiary

Investment in

joint ventures and

2,790,271.96 2,790,271.96 0.00

associated

enterprise

Total 180,904,738.33 2,790,271.96 178,114,466.37 187,284,836.37 9,170,370.00 178,114,466.37

(1) Investment for subsidiary

In RMB

Depreciation Ending balance of

Increased in Decreased in

Invested company Opening balance Ending balance reserves accrual depreciation

Period Period

in the Period reserves

Nanjiang Trading 53,114,299.73 47,802,869.76 5,311,429.97

Dongfeng

90,000,000.00 90,000,000.00

Investment

Nanjiang Asia 5,000,166.64 5,000,166.64

Hangzhou

30,000,000.00 30,000,000.00

Dongfeng

Kefeng Trade 45,147,154.77 45,147,154.77

Kefeng

2,655,714.99 2,655,714.99

Engineering

Ruihua RW 9,170,370.00 9,170,370.00 0.00

Total 187,284,836.37 47,802,869.76 56,973,239.76 178,114,466.37

140

东沣科技集团股份有限公司 2017 年半年度报告全文

(2) Investment for joint venture and associated enterprise

In RMB

Changes in Period

Investme Cash Ending

Other

nt dividend balance

Unit of Additiona comprehe Depreciat

Opening Negative gains/loss Other or profit Ending of

investmen l nsive ion

balance investmen es equity announce Other balance depreciati

t investmen income reserves

t recognize changes d to on

t adjustmen accrual

d by distribute reserves

t

equity d

I. Joint venture

II. Associated enterprise

Ruihua 2,790,271 2,790,271 2,790,271

RW .96 .96 .96

2,790,271 2,790,271 2,790,271

Subtotal

.96 .96 .96

2,790,271 2,790,271 2,790,271

Total

.96 .96 .96

(3) Other explanation

In March 2017, the company separated the wholly owned subsidiary Chengde Nanjiang Trading Co., Ltd. (hereinafter referred to as

“Nanjiang Trading”), Nanjiang Trading continued to exist, with the registered capital of RMB 1 million, and derived to establish

Chengde Kefeng Project Management Co., Ltd., with the registered capital of RMB 500,000, and Chengde Kefeng Trading Co. Ltd.,

with the registered capital of RMB 8.5 million. Approved by Chengde Market Supervision Authority, Nanjiang Trading has

completed the relevant industrial and commercial registration for separation.

On April 26, 2017, the company signed the Termination Agreement of Concerted Action Person Agreement with the shareholder Lan

Chunhong of original subsidiary Runhua Nongshui (Tianjin) International Trade Co., Ltd., after the termination of the original

Concerted Action Person Agreement, both parties no longer maintain the concerted actions to the company’s daily production and

operation and the decision-making of other major matters, and each party makes opinions independently and exercises the right to

vote in accordance with the laws and regulations and normative documents and the provisions of the articles of association and their

own wishes, both parties are no longer subject to the original agreement. In accordance with the relevant provisions of the Accounting

Standards for Business Enterprises No. 33 - Consolidated Financial Statements, after Mr. Lan Chunhong relieved the concerted action

person relations with our company, our company would hold 30% equity stake of Runhua Nongshui but no longer have the control

power to Runhua Nongshui, the company would no longer include Runhua Nongshui in the consolidated financial statement from the

date of losing the control power to it, and check and calculate by equity method.

4. Operation income and operation cost

In RMB

Item The Period Last Period

141

东沣科技集团股份有限公司 2017 年半年度报告全文

Income Cost Income Cost

Main business 99,465,192.85 83,841,835.73 179,229,459.06 150,397,967.36

Other business 62,967.09 37,714.74 911,933.83 890,358.48

Total 99,528,159.94 83,879,550.47 180,141,392.89 151,288,325.84

Other explanation:

5. Investment gains

In RMB

Item The Period Last Period

6. Other

XVIII. Supplementary information

1. Details of current non-recurring profits and losses

√ Applicable □ Not-applicable

In RMB

Item Amount Remark

Other non-operating income and expense

23,008.23

other than the abovementioned ones

Total 23,008.23 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss, explain reasons

□ Applicable √ Not-applicable

2. REO and earnings per share

Earnings per share

Profits during report period Weighted average ROE Diluted EPS

Basic EPS (Yuan/share)

(Yuan/share)

Net profits belong to common stock

-0.88% -0.004 -0.004

stockholders of the Company

Net profits belong to common stock

-0.88% -0.004 -0.004

stockholders of the Company after

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东沣科技集团股份有限公司 2017 年半年度报告全文

deducting nonrecurring gains and

losses

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

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

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

□ Applicable √ Not-applicable

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

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not-applicable

(3) Explanation on data differences under the accounting standards in and out of China; as for the

differences adjustment audited by foreign auditing institute, listed name of the institute

4. Other

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东沣科技集团股份有限公司 2017 年半年度报告全文

Section XI. Documents available for reference

1. Financial statement carried with the signature and seal of the Person in charge of the Company, person in charge of the accounting

works and accountant in charge.

2. Text and original draft of the notice that disclosed in reporting period on newspapers appointed by CSRC.

144

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