深圳市深粮控股股份有限公司SHENZHEN CEREALS HOLDINGS CO.,LTD.
ANNUAL REPORT 2018
April 2019
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and seniorexecutives of SHENZHEN CEREALS HOLDINGS CO.,LTD. (hereinafterreferred to as the Company) hereby confirm that there are no any fictitiousstatements, misleading statements, or important omissions carried in this report,and shall take all responsibilities, individual and/or joint, for the reality, accuracyand completion of the whole contents.Chairman of the Company Zhu Junming, General Manager Hu Xianghai, Headof Accounting Ye Qingyun and Head of Accounting Institution (AccountingSupervisors) Wen Jieyu hereby confirm that the Financial Report of AnnualReport 2018 is authentic, accurate and complete.Except for followed director, other directors are attending the Board Meeting forAnnual Report deliberation in person
| Director not attending in person | Position of the director not attending in person | Reasons on absent | Trustee |
| Zhu Junming | Chairman | On business trip | Hu Haixiang |
Discussion and Analysis of the Operation.This report has been prepared in Chinese and English version respectively. In theevent of difference in interpretation between the two versions, Chinese reportshall prevail.The profit distribution plan deliberated and approved by the Board Meeting was:
distributed cash bonus of 1 yuan (tax included) for every 10 shares held by wholeshareholders based on the 1,152,535,254, zero share(tax included) for bonus andzero share additional for every 10 shares held by whole shareholders with thecapital public reserves.
Contents
Section I Important Notice, Contents and Paraphrase . ....................................................... 2
Section II Company Profile and Main Finnaical Indexes ...... 6
Section III Summary of Company Business ...... 12Section IV Discussion and Analysis of Operation………………………………………………17Section V Important Events ...... 38
Section VI Changes in shares and particular about shareholders ...... 105
Section VII Preferred Stock ...... 115
Section VIII Directors, Supervisors, Senior Executives and Staff of the Company ...... 116
Section IX Corporate Governance ...... 125
Section X Corporate Bond ...... 134
Section XI Financial Reprot ...... 135
Section XII Documents Available for Reference ...... 328
Paraphrase
| Items | Refers to | Contents |
| SZCH/Listed Company /the Company/ | Refers to | Shenzhen Cereals Holdings Co., Ltd. |
| Shenshenbao/Shenbao Company | Refers to | Shenzhen Shenbao Industrial Co., Ltd. |
| SZCG | Refers to | Shenzhen Cereals Group Co., Ltd |
| Doximi | Refers to | SZCG Doximi Business Co., Ltd. |
| Flour Company, Flour Factory | Refers to | Shenzhen Flour Co., Ltd |
| SZCG Quality Inspection | Refers to | SZCG Quality Inspection Co., Ltd. |
| Dongguan Food Industrial Park | Refers to | Dongguan International Food Industrial Park Development Co., Ltd. |
| Wuyuan Ju Fang Yong | Refers to | Ju Fang Yong Tea Industry Co., Ltd. in Wuyuan County |
| Shenbao Technology Center | Refers to | Shenzhen Shenbao Technology Center Co., Ltd. |
| Fude Capital | Refers to | Shenzhen Fude State-owned Capital Operation Co., Ltd. |
| Agricultural Products | Refers to | Shenzhen Agricultural Products Co., Ltd |
| Shenzhen Investment Holding | Refers to | Shenzhen Investment Holding Co., Ltd |
| Shenzhen SASAC | Refers to | Shenzhen Municipal People’s Government State-owned Assets Supervision & Administration Commission |
| CSRC | Refers to | China Securities Regulation Commission |
| SSE | Refers to | Shenzhen Stock Exchange |
| Dahua CPA | Refers to | Dahua Certified Public Accountants (Special General Partnership) |
| Article of Association | Refers to | Article of Association of Shenzhen Cereals Holdings Co., Ltd. |
| RMB/10 thousand Yuan | Refers to | CNY/ten thousand Yuan |
Section II Company Profile and Main Financial Indexes
I. Company information
| Short form for share | SZCH, Shenliang B | Stock code | 000019, 200019 |
| Listing stock exchange | Shenzhen Stock Exchange | ||
| Chinese name of the Company | 深圳市深粮控股股份有限公司 | ||
| Abbr. of Chinese name of the Company | 深粮控股 | ||
| English name of the Company(if applicable) | SHENZHEN CEREALS HOLDINGS CO.,LTD | ||
| Legal Representative | Zhu Junming | ||
| Registrations add. | 8/F, Tower B, No.4 Building, Software Industry Base, South District, Science & Technology Park, Xuefu Rd., Yuehai Street, Nanshan District, Shenzhen | ||
| Code for registrations add | 518057 | ||
| Offices add. | 13/F, Tower A, World Trade Plaza, No.9 Fuhong Rd., Futian District, Shenzhen | ||
| Codes for office add. | 518033 | ||
| Company’s Internet Web Site | www.slkg1949.com | ||
| szch@slkg1949.com | |||
| Secretary of the Board | Rep. of security affairs | |
| Name | Wang Fangcheng | Huang Bingxia |
| Contact add. | 13/F, Tower A, World Trade Plaza, No.9 Fuhong Rd., Futian District, Shenzhen | 13/F, Tower A, World Trade Plaza, No.9 Fuhong Rd., Futian District, Shenzhen |
| Tel. | 0755-82027522 | 0755-82027522 |
| Fax. | 0755-82027522 | 0755-82027522 |
| wangfc@slkg1949.com | huangbx@slkg1949.com |
| Newspaper appointed for information disclosure | Securities Times; China Securities Journal and Hong Kong Commercial Daily |
| Website for annual report publish appointed by CSRC | Juchao Website: www.cninfo.com.cn |
| Preparation place for annual report | Office of the Board of Directors |
IV. Registration changes of the Company
| Organization code | 91440300192180754J |
| Changes of main business since listing (if applicable) | On February 18, 2019, the company completed the registration procedures of changes in industry and commerce for business scope and other matters. The main business has newly increased grain and oil reserves, grain and oil trade, grain and oil processing, and service business for grain and oil circulation and grain and oil reserves based on the production, research and development and sales of food raw materials (ingredients) mainly based on tea and natural plant deep processing. |
| Previous changes for controlling shareholders (if applicable) | On 10 September 1999, Shenzhen Investment Management Co., Ltd. entered into the “Equity Transfer Agreement of Shenzhen Shenbao Industrial Co., Ltd.” with Agricultural Products for 58,347,695 shares of the Company (35% in total shares of the Company) transfer to Agricultural Products with price of RMB 1.95 per share. Agricultural Products comes to the first majority shareholder of the Company after transfer and procedures for the above equity transfer has completed in June of 2003. On April 3, 2018, Shenzhen Investment Holdings completed the transfer of all of its 79,484,302 shares of A shares in the company to Fude Capital. After the completion of the equity transfer, Shenzhen Investment Holdings no longer holds shares in the company, while Fude Capital directly holds 79,484,302 shares of A shares in the company (accounting for 16% of the company’s original total share capital) and controls 19.09% shares of the company through Agricultural Products Control Company, becoming the controlling shareholder of the company. |
| Name of CPA | Dahua Certified Public Accountants (Special General Partnership) |
| Offices add. for CPA | 11/F, Block B, Union Square, No. 5022, Binhe Blv, Futian District, Shenzhen |
| Signing Accountants | Chen Baohua, Zhou Lingzhi |
| Financial consultant | Office address | Financial consultant sponsor | Continuous supervision period |
| Wanho Securities Co., Ltd. | Times Technology Building No.7028, Shennan Avenue, Futian District, Shenzhen | Guo Yong, Yu Hai | 12 November 2018 to 31 December 2019 |
Enterprise combined under the same control
| 2018 | 2017 | Changes over last year | 2016 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Operating revenue (RMB) | 10,758,782,838.14 | 315,762,708.35 | 10,793,693,156.79 | -0.32% | 273,383,642.99 | 7,493,028,165.21 |
| Net profit attributable to shareholders of the listed Company(RMB) | 308,331,032 .44 | -54,094,136.23 | 359,174,263.44 | -14.16% | 96,620,658.92 | 364,384,734.36 |
| Net profit attributable to shareholders of the listed Company after deducting non-recurring gains and losses(RMB) | -70,825,168.94 | -56,114,386.31 | -56,114,386.31 | -26.22% | -64,394,848.68 | -64,394,848.68 |
| Net cash flow arising from operating activities(RMB) | 299,103,635.58 | -94,914,594.15 | 17,058,691.88 | 1,653.38% | 61,740,568.12 | 99,307,564.51 |
| Basic earnings per share (RMB/Share) | 0.2675 | -0.1089 | 0.3116 | -14.15% | 0.1945 | 0.3162 |
| Diluted earnings per share (RMB/Share) | 0.2675 | -0.1089 | 0.3116 | -14.15% | 0.1945 | 0.3162 |
| Weighted average ROE | 7.70% | -5.46% | 9.55% | -1.85% | 9.82% | 10.77% |
| End of 2018 | End of 2017 | Changes over end of last year | End of 2016 | |||
| Before adjustment | After adjustment | After adjustment | Before adjustment | After adjustment | ||
| Total assets (RMB) | 6,468,951 ,793.87 | 1,070,386,220.55 | 5,911,027,724.31 | 9.44% | 1,178,543,725.30 | 5,487,316,562.13 |
| Net assets attributable to shareholder of listed Company(RMB) | 4,172,502,535.11 | 946,920,577.33 | 3,848,760,765.85 | 8.41% | 1,031,768,388.87 | 3,582,365,242.67 |
| Total share capital of the Company on the trading day prior to disclosure (Share) | 1,152,535,254 |
| Total diluted EPS calculated with the latest share capital (RMB/Share) | 0. 2675 |
VII. Difference of the accounting data under accounting rules in and out of China1. Difference of the net profit and net assets disclosed in financial report, under both IAS(International Accounting Standards) and Chinese GAAP (Generally Accepted AccountingPrinciples)
√ Applicable □ Not applicable
In RMB
| Net profit attributable to shareholders of listed Company | Net assets attributable to shareholders of listed Company | |||
| Current period | Last period | Ending amount | Opening amount | |
| Chinese GAAP | 308,331,032 .44 | 359,174,263.44 | 4,172,502,535.11 | 3,848,760,765.85 |
| Items and amount adjusted by IAS | ||||
| Adjustment for other payable fund of stock market regulation | 1,067,000.00 | 1,067,000.00 | ||
| IAS | 308,331,032 .44 | 359,174,263.44 | 4,173,569,535.11 | 3,849,827,765.85 |
| 1st Q | 2nd Q | 3rd Q | 4th Q | |
| Operating income | 2,427,761,440.54 | 2,006,927,206.28 | 2,834,555,228.13 | 3,489,538,963.19 |
| Net profit attributable to shareholders of listed Company | 125,145,974.07 | 77,633,369.27 | 87,708,504.25 | 17,843,184.85 |
| Net profit attributable to shareholders of listed Company after deducted non-recurring gain/loss | -10,953,014.99 | -7,931,905.70 | -12,241,225.60 | -39,699,022.65 |
| Net cash flow arising from | 99,267,533.46 | -46,406,288.16 | 64,495,978.61 | 181,746,411.67 |
| operating activities |
| Item | 2018 | 2017 | 2016 | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | 1,207,842.88 | -50,200.13 | 171,607,536.76 | |
| Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business) | 8,311,158.51 | 2,990,059.15 | 4,000,648.87 | |
| Fund possession cost reckoned in current gain/loss charged from non-financial enterprise | 490,289.86 | 488,839.56 | ||
| Profit and loss of assets delegation on others’ investment or management | 1,984,446.92 | 2,706,034.95 | 821,891.58 | |
| Net gains/losses of the current period from beginning of the period to date of consolidation for those subsidiary arising from enterprise combined under the same control | 374,880,023.05 | 413,268,399.67 | 267,764,075.44 | |
| Gains and losses from change of fair values of held-for-transaction financial assets and financial liabilities except for the effective hedge business related to normal business of the Company, and investment income from disposal of tradable financial assets and liabilities and financial assets available for sale | -474,740.24 | -1,651,270.40 | -335,414.30 | |
| Other non-operating income and expenditure except for the aforementioned items | -4,434,126.83 | -4,097,739.37 | 8,557,332.04 | |
| Other gains/losses items that conform to the definition of non-recurring gains/losses | 450,000.00 | |||
| Less: impact on income tax | 3,210,576.33 | 51,797.61 | 23,961,893.28 | |
| Impact on minority shareholders’ equity (post-tax) | 48,116 .44 | -1,686,323.93 | -325,405.93 |
In RMBConcerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons□ Applicable √ Not applicableIn reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists ofextraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to thePublic --- Extraordinary Profit/loss
| Total | 379,156,201.38 | 415,288,649.75 | 428,779,583.04 | -- |
Section III Summary of Company Business
I. Main businesses of the Company in the reporting period
Does the Company need to comply with disclosure requirements of the special industry?No
During the reporting period, the company completed major asset restructuring. The main business newly increasedgrain and oil reserves, grain and oil trade, grain and oil processing, and service business for grain and oil circulationand grain and oil reserves based on the production, research and development and sales of food raw materials(ingredients) mainly based on tea and natural plant deep processing.The tea business mainly covers intensive processing, premium tea sales, tea life experience, tea electronic trading,food and beverage, technology research and development, and so on. The main products include “Golden Eagle”instant tea powder, tea concentrate and other series of tea products; “Jufangyong”, “Gutan”, “Fuhaitang” series oftea products; “Tri-Well” oyster sauce, chicken essence, seafood sauce and other series of condiments; “Shenbao”chrysanthemum tea, lemon tea, herbal tea and other series of drinks.The grain and oil trade business is mainly rice, wheat, rice in the husk, corn, sorghum, cooking oil and other varietiesof grain and oil. According to the market conditions and the needs of upstream and downstream enterprises, theabove-mentioned grain and oil products purchased are independently traded. The wheat, rice in the husk, corn,barley and sorghum in the trade products are the unprocessed grain, which are mainly used for the further processingof food and feed for customers such as large traders, feed and flour processing enterprises in the industry; rice, flourand vegetable oil are the finished grain and oil, of which the main consumer groups are institutions, organizations,enterprises and public institutions, food deep processing enterprises and community residents.The grain and oil processing business is mainly the processing and sale of flour, rice, cooking oil and other products.The main products of the company’s flour processing include “Jinchangman”, “Yingshanhong” and “Hongli” seriesbread flour; “Clivia” and “Canna” series tailored flour for cakes and steamed bun; “Sunflower” high-gluten tailoredflour and biscuit tailored flour; “Feiyu” caramel treats tailored flour; “Yuejixiang” moon cake tailored flour andother various small packages of flour. Rice products include “SZCG Duoxi”, “Guzhixiang”, “Jinjiaxi”,“Runxiangliangpin”, “Hexiang”, etc. Among them, SZCG Duoxi Changxiangdao Daohuaxiang Rice was selectedas the first batch of “China Good Grains and Oils” products by the State Administration of Grain as the only selectedproduct in Guangdong Province. Cooking oil products include brands such as “SZCG Duoxi”, “SZCG Fuxi” and“Hongli”. The company has also established a grain and oil food delivery service system, actively promoted e-commerce marketing, had a B2C grain and oil network direct sales platform “duoximi.com”, and has openedchannels in e-commerce platforms such as Tmall and Jingdong Mall, and has set up branches in Guangzhou topromote grain and oil terminal vending machines to enter the community and provide consumers with green andreliable grain and oil products.The grain and oil reserve service business mainly provides dynamic grain and oil reserve services to local
governments in Shenzhen, and provides local governments with market-oriented services such as grain and oilreserves, testing, and rotation in the form of business holdings. With the advantages of brand, reputation, experience,management, service, facilities and information system accumulated in the grain and oil market, we independentlyorganize and implement the procurement, storage, rotation, sales and other activities of the local governmentreserves of grain and oil, and ensure the quality, quantity and safety and other aspects of grain and oil reserves arein line with the requirements of the reserve grain and oil administrative authorities of local governments, providinglocal governments with high-quality dynamic grain and oil reserve services to ensure local food security.The company also provides grain and oil circulation services such as warehousing and logistics, terminal loadingand unloading, and quality inspection for upstream and downstream enterprises in the industrial chain. The SZCGDongguan Grain Logistics Nodes Project has been steadily advanced, completed storehouse capacity of 320,000tons (including temporary gas film silo) and a 5,000-ton grain-specific terminal which achieved an upgrade of15,000 tons of berthing capacity during the reporting period, the storage transfer volume reached 1.2 million tons,and the terminal transfer volume was more than 400,000 tons; at the same time, the CDE silos with 510,000 tons ofwarehouse capacity under construction, food deep processing projects, the terminal phase I and other projects areprogressing smoothly. After the project is completed, it will become a comprehensive grain circulation serviceprovider integrating five functions including grain and oil terminal, transfer reserve, inspection and processing,delivery and bonded tax, and market transaction. The company’s subordinate enterprise SZCG Quality Test hasmore than 100 professional equipment, and has obtained the qualification certificates authorized by quality testingorganizations and was awarded the “Guangdong Shenzhen National Grain Quality Monitoring Station”, and morethan 6,000 samples were tested in 2018. The company’s subsidiaries also provide logistics services and cold chaindistribution services to customers, the above-mentioned grain and oil industry chain circulation services aregradually becoming an important business segment of the company.
II. Major changes in main assets
1. Major changes in main assets
| Major assets | Note of major changes |
| Equity assets | Adding new investment outside in the period |
| Fixed assets | No major Change |
| Intangible assets | Parts of the property has surcharge for land price |
| Construction in progress | Investment for joint project engineering from SZCG Dongguan Logistic increased |
| Inventory | Reducing grain inventory according to the market quotations |
No
During the reporting period, the company completed major asset restructuring, and increased high-quality grain andoil reserves, grain and oil trade, grain and oil processing and grain and oil circulation and grain and oil reserveservice industries on the basis of the established and complete tea industry chain system such as tea planting, teaprimary processing /elaborate processing, tea deep processing, premium tea sales, tea life experience, tea electronictrading/finance, food and beverage, etc., through resource integration, the “double main business” developed inparallel, which extended the development of the grain and tea industry chain, deepened the enterprise reform, andrejuvenated the traditional industry. The company stimulated the viability of enterprises through innovativeimplementation of EVA performance appraisal mechanism, promoted the sustainable development of enterprisesthrough the guidance of grain logistics nodes projects, built unique competitiveness by adhering to the organiccombination of “dynamic reserves” and market-oriented operation, improved management efficiency bycontinuously leading the information construction of domestic grain industry, prevented business risks by buildinga new “four-in-one” management and control model, and built a leap-forward development foundation bystrengthening the corporate culture and talent management so as to embark on a development path with “SZCGcharacteristics” to form the company’s unique competitiveness.1. Management advantagesThe core management team of the company has rich experience and stable structure, and has a strong strategicvision and pragmatic spirit. It has formed a set of effective system and mechanism to promote the high-qualitydevelopment of the company by combining with the company’s actual development. The company vigorouslypromotes the innovation and transformation of business models, and actively promotes the transition from “trade-oriented enterprises” to “service-oriented enterprises”, and from “operational management and control” to “strategicmanagement and control”. In the business management and control, the company builds a “four-in-one”management and control model that the business operations and fund management, inventory management, andquality management relatively separate and check and balance each other, at the same time, it strengthens riskmanagement, budget management, plan management, contract management, customer management and brandmanagement and other measures to effectively prevent operational risks. Through innovative talent management,the company has established an open talent team to meet the long-term development of enterprises. The companyhas innovated and implemented the EVA performance appraisal mechanism and established a result-orientedincentive and restraint assessment mechanism which effectively built the performance culture and stimulated theviability within the enterprise. The company insists on cultivating and advocating the corporate culture with“people-oriented, performance first, excellent quality, and harmony” as the core values, combines the personaldevelopment goals of employees with the corporate vision, and enhances the cohesiveness and centripetal force ofthe enterprise.2. Business model advantagesIn terms of business layout and management, the company has further cultivated the market segment, and graduallybuilt and formed a “three-in-one” multi-level grain and oil supply network of catering and distribution services,terminal grain and oil e-commerce, and service-oriented grain and oil docking trade. The company vigorouslydevelops new commercial activities of grain, actively promotes the development of new grain retail formats such
as “internet + grain”, grain e-commerce, and “community vending grain supply centers”, and promotes the deepintegration of online and offline e-commerce platforms. The company builds a grain bulk commodity tradingplatform, efficiently integrates business flow, logistics and information flow, improves circulation efficiency, andprovides spot trading, financing, logistics, quality inspection, transaction information and other services for internalbusiness units, suppliers and customers. The company gives full play to the traction role of major projects such asgrain logistics nodes, continuously improves the construction of the grain supply chain system, and promotes thesustainable development of enterprises.3. Research and development technology advantagesThe company attaches great importance to transforming and upgrading the traditional industries by moderntechnologies, and actively introduces a new generation of information technologies such as internet of things, cloudcomputing, big data and mobile internet into grain management. It takes the lead in promoting the construction of“standardization, mechanization, informationization and harmlessness” of warehouse management in the industry,independently develops “grain logistics information system” (SZCG GLS), applies RFID technology and slip sheetequipment, introduces intelligent robots, and upgrades the grain depot operation efficiency and managementefficiency. The company has undertaken a number of national-level research projects, and multiple IT project resultshave won national, provincial and municipal awards. The company has completed the development and applicationof 30 new technologies and participated in several national-level scientific research projects. As of now, thecompany has 62 patents and 20 copyrights.4. Quality advantagesThe company gives full play to the advantages of products, channels, brands, warehousing, quality inspection, etc.,and truly provides good quality and safety products for the society. The company has established a quality controlsystem that is recognized by international large food and beverage enterprises. In the grain and oil business, thecompany’s subordinate enterprise, SZCG Quality Test, has the leading grain quality testing technology andequipment in the domestic grain industry, and has been officially incorporated into the national grain qualitysupervision and testing system, and has been awarded the “Guangdong Shenzhen National Grain QualityMonitoring Station” by the State Administration of Grain. The advanced testing technology selects and checks thegrain from the source, and timely and accurately checks the quality status of grain and oil in all aspects ofwarehousing, storage and delivery. SZCG Quality Test has obtained the qualification certificate (CMA) for testingand inspection institutions, and it is the first among domestic peers to include pesticide residues, heavy metalpollutants, mycotoxins and other hygienic indicators and taste value indicators in daily testing indicators, and hasthe detection ability of four types of indicators such as grain regular quality, storage quality, hygiene and eatingquality, which can meet the relevant quality inspection requirements of grain and oil products, and can accuratelyanalyze the nutritional ingredients and hygienic index of grain and determine its storage quality and eating quality.5. Brand advantageThe company regards “quality” as the cornerstone of establishing the enterprise brand, and takes “good service”and “livelihood guarantee” as the brand’s core value, and has created a batch of “reliable grain”, “reliable flour”and “reliable oil” brand systems, and has formed good brand effects. The company has been selected as one of the“Top 500 Chinese Service Enterprises” for five times, and has won the “China Top Ten Grain and Oil Group”,
“China Top 100 Grain and Oil Enterprise”, “China’s Most Respected Grain and Oil Enterprise”, “National Top 100Military Supply Stations” and “Key Agricultural Leading Enterprises in Guangdong Province”, etc., and wasawarded “Shenzhen Credit Enterprise”, “Shenzhen Old Brand”, “Leading Enterprises Strongly Support Grain andOil Industrialization”, etc., the market influence of “SZCG Duoxi”, “Guzhixiang”, “Clivia”, “SZCG Fuxi” and otherbrands has gradually expanded, and the subordinate flour company has won the title of “Shenzhen Old Brand”, andSZCG Duoxi Changxiangdao Daohuaxiang rice has been selected as the first batch of “China Good Grain and Oil”products of the State Administration of Grain which is the only selected product in Guangdong Province.6. Market advantageThe company has a large-scale storehouse capacity in Shenzhen, and is the leading enterprise in Shenzhen’smunicipal grain reserves. At present, the company has a self-owned grain storehouse capacity of about 400,000 tons,and has established long-term and extensive and diversified cooperative relationship with grain and oil traders,processors and end customers over the years and built wide business networks and stable business channels, andhas a high market share in the regional market and was rated as “Key Agricultural Leading Enterprises in GuangdongProvince” by the Department of Agriculture and Rural Affairs of Guangdong Province. On the basis of givingpriority to ensuring the government’s macro-control to grain and ensuring grain security, the company gives fullplay to the operating characteristics and advantages of “dynamic rotation” and “constant storage and constantreplacement” and fully participates in market competition. In the process of market-oriented self-management, thecompany continues to optimize and innovate the grain storage logistics mode and the grain and oil distributiondocking mode, so that the market competitiveness and regulation power have significantly enhanced, the mainchannel advantages of grain and oil supply have been further stabilized, and the main position of grain and oilindustry has further highlighted.
Section IV Discussion and Analysis of the Operation
I. Introduction
During the reporting period, Shenzhen Cereals Holdings earnestly implemented the annual key work and strategicplanning objectives, implemented major asset restructuring, acquired 100% equity of Shenzhen Cereals Group, andachieved the overall listing of local state-owned grain enterprises. The company’s main business newly increasedgrain and oil reserves, grain and oil trade, grain and oil processing, and service business for grain and oil circulationand grain and oil reserves based on the production, research and development and sales of food raw materials(ingredients) mainly based on tea and natural plant deep processing, and the company transformed into the track of“double main business” developing shoulder to shoulder.During the reporting period, Shenzhen Cereals Holdings focused on creating “a quality service provider for grainsupply chain and a safe and quality food supplier”, took continuous innovation and development as the principleline, and insisted on quality leading and innovation driving. The operating efficiency of the whole year continuedto improve, the company was awarded the “Top 500 Chinese Service Enterprises” and the subordinate ShenzhenCereals Group was successfully selected into the list of “Double Hundred Actions” enterprises under the StateCouncil’s state-owned enterprise reform, and its subsidiary, Wuyuan Jufangyong, was recognized as a national high-tech enterprise.1. Main business developmentAs the “grain security” project and “rice bag” of Shenzhen, Shenzhen Cereals Holdings guaranteed both quality andquantity and completed the government reserve services during the reporting period, with monthly average grainreserves reaching 1,014,200 tons and oil reserves reaching 12,100 tons, and guaranteed that Shenzhen’s grain andoil were in liberal supply and the prices were stable through balance rotation of grain and oil.During the reporting period, based on its own advantages and industrial development, the company usedinformationization technology, innovated and opened up supply channels and trading methods for grain and oilproducts, built the “three-in-one” food service networks for family-oriented customers, schools, office buildings,large enterprises and institutions, as well as feed mills and factories, expanded the effective and medium-to-high-end supply of grain and oil to meet the needs of “quality, diversity, nutrition, health, greenness and convenience”,and realized the transformation of grain supply from “eat enough” to “eat well”. First, the members of its“duoximi.com” online member + offline unmanned retail model have reached more than 350,000 families, annualincome exceeded 100 million yuan. Second, its subsidiary SZCG Big Kitchen Food Supply Chain Co., Ltd providedone-stop kitchen distribution services for high-end office buildings, schools, hospitals, enterprises and institutions,catering and other units, serving more than 400,000 people per year. Third, its “online bulk grain and oil tradingplatform” expanded the processing of raw materials and brought together the service business, with an annualturnover exceeding 5 million tons, and the turnover reached 11 billion yuan.During the reporting period, the subordinate SZCG Quality Test passed the CATL qualification certification ofagricultural products and obtained the CMA certificate, 6,223 samples were tested throughout the year, an increase
of 24% on a year-on-year basis, including 1217 samples tested for external customers. Checked the inventory ofprovincial-level grain and oil, the quality compliance rate of grain storage in the northeast region was 100%, andthe quality compliance rate of municipal grain and oil inventory was 98%. In addition, the satisfactory results of themilitary grain service satisfaction assessment were 100%, and got “0” complaints throughout the year.2. Key projectsDuring the reporting period, the company’s Dongguan grain logistics nodes project simultaneously carried out theconstruction of 510,000 tons of CDE silos, food deep processing projects, and terminal phase I and other projects.The progress of the pile foundation project of the CDE silos project reached 90%, and the main construction of thefood deep processing project was basically completed. The international food terminal achieved an upgrade of15,000 tons of berthing capacity, and 406 vessels were loaded and unloaded throughout the year, and the transfervolume exceeded 400,000 tons. The company has won many honors such as “Key Agricultural Leading Enterprisesof Guangdong Province” and “National Reassuring Grain and Oil Demonstration and Storage Enterprise”.During the reporting period, www.zglsjy.com.cn was fully launched on the platform, and held the first bran biddingfair in February 2018, and a total of 133 bidding fairs were held throughout the year. In addition, www.zglsjy.com.cnand Ping An Bank jointly launched the “Spot Trading Link” three-party depository, realizing all transactions throughmargin trading online.3. Continue to innovate and developDuring the reporting period, Shenzhen Cereals Holdings established the SZCG Research Institute to ensure thesustainable and healthy development of innovation. At present, the innovative R&D system with SZCG ResearchInstitute as the core and with Shenyuan Data and Product Research and Development Center of Flour Company,duoximi Quality Test R&D Department and SZCG Storage Branch Technology Center as the key supports has beenformed, and the traction business continued to develop. Continued to promote informatization construction,accelerated the construction and improvement of decision support systems, and upgraded the core business systemof the constituent companies, including: the completion of Dongguan Intelligent Logistics Park InformationizationPhase I, Flour Storage Informationization Phase II, and SZCG Digitalization Lab Phase I; the Grain Supply ChainManagement Information System (referred to as “Grain SCM System”) was applied in 6 units as planned; undertookthe “Grain Safety Project” of the Grain Depot directly under Dongguan Development and Reform Bureau, andexpanded the external informationization projects such as Guangdong Guanxiang, Tailiang Rice and Huizhoumilitary supply “grain safety project”; the Shenyuan Data Company undertook projects worth more than 10 millionyuan in 2018.In addition, the company continued to master key intellectual property rights in the core areas of industryinformation construction. During the report period, it obtained 1 new computer software copyright, and 5 otherapplications are in the process. Up to now, the company has 62 patents and 20 copyrights.4. Safe productionDuring the reporting period, Shenzhen Cereals Holdings adhered to the concept of “management-oriented, safety-oriented” safety development, and implemented the responsibility system for production safety to ensure zeroaccidents in safety production throughout the year. Including: the company completed various safety production
control indicators; took the lead in comprehensively carrying out the construction of safety standardization systemand the establishment of dual prevention mechanisms among the municipal state-owned enterprises in the wholecity in the company’s overall form; fully completed the safety education and training for all types of personnelrequired by the “Responsibility Regulations on Safe Production Entities of Production and Operation Units inShenzhen.
In 2018, the Company achieved total operating income of 10,758,780,000 Yuan, an increase of 3,307.27% over thesame period of last year(before reorganization); operating profit of 341,230,000 Yuan, an increase of 696.76% overthe same period of last year(before reorganization); net profit attributable to shareholders of the listed Company of308340000 Yuan, an increase of 670% over the same period of last year(before reorganization). The changes in netprofit attributable to shareholders of the listed Company mainly because the Company completed material assetsreorganization in the period, the performance of SZCG are including in the Company for in the consolidate statementscope as a wholly-owned subsidiary.
II. Main business analysis
1. IntroductionSee the “I-Introduction” in “Discussion and Analysis of the Operation”2. Income and cost(1) Constitute of operating income
In RMB
| 2018 | 2017 | Increase/decrease y-o-y (+,-) | |||
| Amount | Ratio in operation income | Amount | Ratio in operation income | ||
| Total operating income | 10,758,782,838.14 | 100% | 10,793,693,156.79 | 100% | -0.32% |
| According to industries | |||||
| Industry | 695,553,870.44 | 6.46% | 725,888,522.28 | 6.73% | -4.18% |
| Trading | 9,195,475,394.07 | 85.47% | 9,251,910,218.70 | 85.72% | -0.61% |
| Reserve and warehousing logistic service | 750,725,543.50 | 6.98% | 689,991,273.21 | 6.39% | 8.80% |
| Leasing business and other | 117,028,030.13 | 1.09% | 125,903,142.60 | 1.17% | -7.05% |
| According to products | |||||
| Tea and seasoning | 279,394,901.18 | 2.60% | 307,578,675.27 | 2.85% | -9.16% |
| Grain and oil reserve | 691,544,621.62 | 6.43% | 639,830,385.04 | 5.93% | 8.08% |
| service | |||||
| Grain and oil trading and processing | 9,611,634,363.33 | 89.34% | 9,670,220,065.71 | 89.59% | -0.61% |
| Warehousing logistics service | 59,180,921.88 | 0.55% | 50,160,888.17 | 0.46% | 17.98% |
| Other | 117,028,030.13 | 1.09% | 125,903,142.60 | 1.17% | -7.05% |
| According to region | |||||
| Domestic market | 10,717,552,556.45 | 99.62% | 10,756,701,331.93 | 99.66% | -0.36% |
| Exportation | 41,230,281.69 | 0.38% | 36,991,824.86 | 0.34% | 11.46% |
| Operating income | Operating cost | Gross profit ratio | Increase/decrease of operating income y-o-y | Increase/decrease of operating cost y-o-y | Increase/decrease of gross profit ratio y-o-y | |
| According to industries | ||||||
| Trading | 9,195,475,394.07 | 8,827,089,691.12 | 4.01% | -0.61% | -1.45% | 0.82% |
| According to products | ||||||
| Grain and oil trading and processing | 9,611,634,363.33 | 9,210,878,430.16 | 4.17% | -0.61% | -1.48% | 0.85% |
| According to region | ||||||
| Domestic market | 10,717,552,556.45 | 9,661,039,061.95 | 9.86% | -0.36% | -1.61% | 1.15% |
| Industries | Item | Unit | 2018 | 2017 | Increase/decrease y-o-y (+,-) |
| Trading | Sales volume | Ton | 4,100,188.31 | 4,361,341.54 | -5.99% |
| Output | Ton | 0 | 0 | 0 | |
| Storage | Ton | 1,004,124.93 | 1,104,062.8 | -9.05% |
□ Applicable√Not applicable
(4) Fulfillment of the Company’s signed significant sales contracts up to this reporting period
□ Applicable √Not applicable
(5) Constitute of operation costClassification of industries and products
In RMB
| Industries | Item | 2018 | 2017 | Increase/decrease y-o-y (+,-) | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Trading | Raw materials | 8,827,089,691.12 | 91.06% | 8,957,020,243.19 | 90.96% | -1.45% |
| Products | Item | 2018 | 2017 | Increase/decrease y-o-y (+,-) | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Grain and oil trading and processing | Raw materials | 9,185,461,514.60 | 94.76% | 9,326,537,456.25 | 94.71% | -1.51% |
| Grain and oil trading and processing | Labor wage | 2,659,530.58 | 0.03% | 1,709,723.80 | 0.02% | 55.55% |
| Grain and oil trading and processing | Cost of production | 22,757,384.98 | 0.23% | 21,037,961.83 | 0.21% | 8.17% |
| Enterprise | Reasons for changes |
| Shenzhen Cereals Group Co., Ltd | Enterprise combined under the same control |
| Shenzhen Flour Co., Ltd | Enterprise combined under the same control |
| Shenzhen Hualian Grain & Oil Trade Co., ltd. | Enterprise combined under the same control |
| Hainan Haitian Aquatic Feed Co., Ltd | Enterprise combined under the same control |
| SZCG Quality Inspection Co., Ltd. | Enterprise combined under the same control |
| SZCG Doximi Business Co., Ltd. | Enterprise combined under the same control |
| SZCG Cold-Chain Logistic Co., Ltd. | Enterprise combined under the same control |
| SZCG Big Kitchen Food Supply Chain Co., Ltd. | Enterprise combined under the same control |
| SZCG Real Estate Development Co., Ltd. | Enterprise combined under the same control |
| SZCG Property Management Co., Ltd. | Enterprise combined under the same control |
| SZCG Storage (Yingkou) Co., Ltd. | Enterprise combined under the same control |
| Dongguan SZCG Logistics Co., Ltd. | Enterprise combined under the same control |
| Dongguan International Food Industrial Park Development Co., Ltd. | Enterprise combined under the same control |
| Dongguan SZCG Oil & Food Trade Co., Ltd. | Enterprise combined under the same control |
| Dongguan Golden Biology Tech. Co., Ltd. | Enterprise combined under the same control |
| Shuangyashan SZCG Zhongxin Cereals Base Co., Ltd. | Enterprise combined under the same control |
| Heilongjiang Hongxinglong Nongken Shenxin Cereals Industrial Park Co., ltd. | Enterprise combined under the same control |
| Zhanjiang Haitian Aquatic Feed Co., Ltd | Stripped without compensation from state-owned shares |
| Total top five clients in sales (RMB) | 3,959,163,581.30 |
| Proportion in total annual sales volume for top five clients | 36.79% |
| Proportion in total annual sales volume for related sales among top five clients | 0.00% |
| Serial | Name | Sales (RMB) | Proportion in total annual sales |
| 1 | Client I | 1,484,981,070.58 | 13.80% |
| 2 | Client II | 1,135,231,059.13 | 10.55% |
| 3 | Client III | 675,421,881.58 | 6.28% |
| 4 | Client IV | 337,224,099.51 | 3.13% |
| 5 | Client V | 326,305,470.50 | 3.03% |
| Total | -- | 3,959,163,581.30 | 36.79% |
□ Applicable√Not applicable
Main suppliers of the Company
| Total purchase amount from top five suppliers (RMB) | 3,910,469,944.38 |
| Proportion in total annual purchase amount for top five suppliers | 40.53% |
| Proportion in total annual purchase amount from related purchase among top five suppliers | 0.00% |
| Serial | Name | Sum of purchase (RMB) | Proportion in total annual sum of purchase |
| 1 | Supplier I | 936,211,349.86 | 9.70% |
| 2 | Supplier II | 911,945,686.63 | 9.45% |
| 3 | Supplier III | 898,884,092.95 | 9.32% |
| 4 | Supplier IV | 621,211,483.87 | 6.44% |
| 5 | Supplier V | 542,217,331.07 | 5.62% |
| Total | -- | 3,910,469,944.38 | 40.53% |
| 2018 | 2017 | Increase/decrease y-o-y (+,-) | Note of major changes | |
| Sales expenses | 255,021,072.54 | 275,025,028.88 | -7.27% | Warehouse rental fee, port terminal fee and logistic transportation fee declined |
| Administration expenses | 246,543,836.47 | 193,136,022.27 | 27.65% | Long-term assets depreciation & amortization fee, intermediary fees and office expenses & salary increased |
| Financial expenses | 10,131,313.25 | -3,335,527.31 | 403.74% | More loans for engineering needs from subsidiary Dongguan Logistic |
| R&D expenses | 10,979,464.64 | 9,827,707.76 | 11.72% |
developed more than 60 new products and for sales, including tea raw materials, tea powder, tea concentrated juice,plant extracts, and food and beverage products. In reporting period, three national invention patents were appliedfor, two papers were published, one patent certificate was obtained and two authorized patents were in the processof certification.During the reporting period, Shenzhen Flour adhered to the philosophy of “Quality First, Customer First”, andprovided comprehensive technical services for more than 60 customers in 2018 to help customers solve problemsin the process of using powder; united customers to hold exhibitions and promotion conference to improve theinformation coverage of enterprise and brand and word-of-mouth, successfully helped develop 13 new customers,increased sales of products; carried out a series of monitoring from raw grain to finished products (baking test,quality analysis, fine-tuning of recipe, etc.), stabilized the company’s product quality, guaranteed the balance of thecompany’s products, and continuously improved and upgraded the products according to market feedback andquality analysis of similar products. Actively developed new products to meet the needs of customers, broadenedthe company’s product line, and successfully developed 3 new products in 2018, including top low-gluten flour,burger flour, and pressed bread flour.During the reporting period, the company developed and implemented a total of 9 information system projects,including: grain SCM system; internal control of the group; Dongguan Intelligent Grain Logistics Park Phase I;SZCG Storage Branch digital quality inspection system; flour informationization phase II; duoximi ERP and GroupEAS docking; military mobile phone intelligent sales system; cold chain mobile phone reservation system; BigKitchen network was developed and upgraded. Among them, the grain SCM system is a supply chain managementsystem tailored by SZCG for the grain industry. In 2018, the grain SCM system was fully launched and applied inthe subordinate Purchase and Sales Branch, Storage Branch and Big Kitchen Company, and realized the grain sourcebase selection, procurement planning, contract approval, logistics arrangement, grading management, storagelocation management, sales and distribution, and other aspects of the entire process control, so that information flowbecame more intelligent, process became clearer, and authority management became more detailed.
R&D investment of the Company
| 2018 | 2017 | Change ratio | |
| Number of R&D (people) | 67 | 47 | 42.55% |
| Ratio of number of R&D | 6.11% | 3.47% | 2.64% |
| R&D investment (Yuan) | 10,979,464.64 | 9,827,707.76 | 11.72% |
| investment accounted for operation income | 0.10% | 0.09% | 0.01% |
| R&D investment capitalization (Yuan) | 0.00 | 0.00 | 0.00 |
| Capitalization R&D investment accounted for R&D investment | 0.00% | 0.00% | 0.00% |
□ Applicable √Not applicable
Reason for the great change in R&D investment capitalization rate and rational description
□ Applicable √Not applicable
5. Cash flow
In RMB
| Item | 2018 | 2017 | Increase/decrease y-o-y (+,-) |
| Subtotal of cash in-flow from operation activity | 11,015,888,418.12 | 11,471,067,597.46 | -3.97% |
| Subtotal of cash out-flow from operation activity | 10,716,784,782.54 | 11,454,008,905.58 | -6.44% |
| Net cash flow arising from operating activities | 299,103,635.58 | 17,058,691.88 | 1,653.38% |
| Subtotal of cash in-flow from investment activity | 195,610,693.45 | 346,202,583.23 | -43.50% |
| Subtotal of cash out-flow from investment activity | 669,839,107.07 | 639,452,266.94 | 4.75% |
| Net cash flow from investment activity | -474,228,413.62 | -293,249,683.71 | -61.71% |
| Subtotal of cash in-flow from financing activity | 562,240,181.56 | 339,096,993.25 | 65.81% |
| Subtotal of cash out-flow from financing activity | 302,433,961.14 | 282,762,015.63 | 6.96% |
| Net cash flow from financing activity | 259,806,220.42 | 56,334,977.62 | 361.18% |
| Net increased amount of cash and cash equivalent | 87,197,600.23 | -215,136,841.07 | 140.53% |
| Amount | Ratio in total profit | Note | Whether be sustainable |
| Investment income | 1,724,353.15 | 0.51% | Unsustainable | |
| Gains/losses of fair value variation | -474,740.24 | -0.14% | Unsustainable | |
| Asset impairment | 199,636,023.51 | 58.83% | Reasons including: inventory falling price reserves increased; If the reserve for depreciation of inventory has been calculated for the sold inventory, the reserve for depreciation of inventory has been carried forward to reduce the current main business cost. | Unsustainable |
| Non-operating income | 1,390,434.84 | 0.41% | Unsustainable | |
| Non-operating expense | 3,266,448.43 | 0.96% | Unsustainable |
| End of 2018 | End of 2017 | Ratio changes | Notes of major changes | |||
| Amount | Ratio in total assets | Amount | Ratio in total assets | |||
| Monetary fund | 631,638,339.68 | 9.76% | 544,440,739.45 | 9.21% | 0.55% | |
| Account receivable | 473,646,886.64 | 7.32% | 193,727,800.13 | 3.28% | 4.04% | |
| Inventory | 2,811,802,600.19 | 43.47% | 2,938,467,812.31 | 49.71% | -6.24% | The Company reduce grain stocks according to the market conditions |
| Investment real estate | 282,622,184.92 | 4.37% | 319,023,095.62 | 5.40% | -1.03% | |
| Long-term equity investment | 70,999,666.81 | 1.10% | 35,755,171.55 | 0.60% | 0.50% | |
| Fix assets | 993,136,743.51 | 15.35% | 1,052,866,458.21 | 17.81% | -2.46% | |
| Construction in progress | 186,586,135.06 | 2.88% | 70,735,978.49 | 1.20% | 1.68% | |
| Short-term loans | 91,600,000.00 | 1.42% | 169,800,000.00 | 2.87% | -1.45% | |
| Long-term loans | 516,687,791.66 | 7.99% | 195,647,403.88 | 3.31% | 4.68% |
| Item | Amount at the beginning period | Changes of fair value gains/losses in this period | Accumulative changes of fair value reckoned into equity | Devaluation of withdrawing in the period | Amount of purchase in the period | Amount of sale in the period | Amount in the end of period |
| Financial assets | |||||||
| 1. Financial assets measured by fair value and whose change is recorded in current gains and losses (excluding derivative financial assets) | 1,599,668.20 | -474,740.24 | 43,861.87 | 1,124,927.96 | |||
| Aforementioned total | 1,599,668.20 | -474,740.24 | 43,861.87 | 1,124,927.96 | |||
| Financial liabilities | 0.00 | 0.00 | 0.00 | 0.00 | |||
| Item | Original book value | Book value | Reasons for restriction |
| Intangible assets | 52,777,696.83 | 47,406,749.48 | According to the long-term loan mortgage contract signed by Dongguan Logistics, a subsidiary of the Company, and Agricultural Development Bank, Dongguan Logistics mortgaged the land (DFGY (2014) DT No. 6) of No. 32, Jianshe Road, Masan Village, Machong Town, Dongguan City and the grain storage and terminal facilities to be built and other buildings and structures on the ground to Agricultural Development Bank as collateral for the loan. |
| Fixed assets | 400,834,811.27 | 377,777,105.09 | |
| Construction in progress | 39,276,418.03 | 39,276,418.03 | |
| Intangible assets | 45,580,368.97 | 36,339,192.71 | According to the loan contract of “Guangdong DG 2017 NGDZ No. 006” signed by Dongguan Food Industry Park, a subsidiary of the Company, and Bank of Communications Guangdong Branch, Dongguan Food Industry Park mortgaged its two pieces of lands (DFGY (2009) DT No. 190) and (DFGY (2012) DT No. 152) to Bank of Communications Guangdong Branch as collateral for the borrowing. |
| Total | 538,469,295.10 | 500,799,465.31 |
| Item | Original book value | Book value | Reasons for restriction | |||
| Item | Original book value | Reasons for restriction | ||||
| Intangible assets | 52,777,696.83 | According to the long-term loan mortgage contract signed by Dongguan Logistics, a subsidiary of the Company, and Agricultural Development Bank, Dongguan Logistics mortgaged the land (DFGY (2014) DT No. 6) of No. 32, Jianshe Road, Masan Village, Machong Town, Dongguan City and the grain storage and terminal facilities to be built and other buildings and structures on the ground to Agricultural Development Bank as collateral for the loan. | ||||
| Fixed assets | 400,834,811.27 | |||||
| Construction in progress | 39,276,418.03 | |||||
| Intangible assets | 45,580,368.97 | According to the loan contract of “Guangdong DG 2017 NGDZ No. 006” signed by Dongguan Food Industry Park, a subsidiary of the Company, and Bank of Communications Guangdong Branch, Dongguan Food Industry Park mortgaged its two pieces of lands (DFGY (2009) DT No. 190) and (DFGY (2012) DT No. 152) to Bank of Communications Guangdong Branch as collateral for the borrowing. | ||||
| Total | 538,469,295.10 | |||||
| Investment in reporting period (Yuan) | Investment in the same period of last year (Yuan) | Range |
| 294,171,532.43 | 6,400,000 | 4,496% |
| Invested enterprise | Main business | Investment ways | Investment amount | Shareholding ratio | Capital resources | Partners | Term of investment | Product type | Progress as at balance sheet date | Estimated revenue | Investment loss in the period | Whether has litigation involved (Y/N) | Disclosure date (if applicable) | Disclosure index (if applicable) |
| Shenzhen Cereals Grou | Grain and oil trading | Acquisition | -- | 100% | Issued shares | Fude Capital | Not applica | Not applica | Completed | 390,000,000.00 | 401,987,820.86 | N | 2018-6-11 | Found more in Notice of the Company released on Juchao |
| p Co., Ltd | processing, Warehousing logistics service | ble | ble | website (www.cninfo.com.cn) | ||||||||||
| Total | -- | -- | -- | -- | -- | -- | -- | -- | -- | 390,000,000.00 | 401,987,820.86 | -- | -- | -- |
| Item | Investment ways | Whether it is the investment for fixed assets (Y/N) | Industry with the investment involved | Amount input in the period | Accumulated actual input as of the end of reporting period | Capital resources | Progress | Estimated revenue | Income accumulated at end of the reporting period | Reasons for failure to achieve planned progress and expected benefits | Disclosure date (if applicable) | Disclosure index (if applicable) |
| Grain storage and wharf complementary engineering of Dongguan SZCG Logistics Co., Ltd. | Self-build | Y | Storage and wharf | 55,159,418.07 | 301,605,773.69 | Owned funds and bank loans | 75.40% | 38,483,400.00 | 41,199,404.09 | Start-up of the wharf project later than expected | ||
| Grain storage and wharf complementary engineering | Self-build | Y | Storage and wharf | 55,738,511.77 | 179,679,302.57 | Owned funds and bank loans | 100.00% | 17,068,400.00 | - |
| (Phase II) of Dongguan SZCG Logistics Co., Ltd. | ||||||||||||
| Food logistics and wharf matching project of Dongguan SZCG Logistics Co., Ltd. | Self-build | Y | Warehouse logistic | 5,938,738.07 | 11,071,222.92 | Owned funds | 2.25% | - | ||||
| Warehouse logistic distribution center of Dongguan International Food Industrial Park Development Co., Ltd. | Self-build | Y | Warehouse logistic | 41,834,440.79 | 271,437,590.22 | Owned funds and bank loans | 30.55% | 37,108,900.00 | Adjustment of construction scheme | |||
| Food processing project of Dongguan SZCG Oil & Food Trade Co., Ltd. | Self-build | Y | Flour processing | 33,109,558.34 | 39,276,418.03 | Owned funds | 13.45% | - | ||||
| Land use right | Self-build | N | Construction | 39,890,865.39 | 203,743,457.22 | Owned funds | - | |||||
| Total | -- | -- | -- | 231,671,532.43 | 1,006,813,764.65 | -- | -- | 92,660,700.00 | 41,199,404.09 | -- | -- | -- |
| Variety of securities | Code of securities | Short form of securities | Initial investment cost | Accounting measurement model | Book value at the beginning of the period | Changes in fair value of the current | Cumulative fair value changes in | Current purchase amount | Current sales amount | Profit and loss in the Reporting | Book value at the end of the period | Accounting subject | Capital Source |
| profit and loss | equity | Period | |||||||||||
| Domestic and overseas stock | 000017 | CBC-A | -- | Fair value measurements | 1,599,668.20 | -474,740.24 | 43,861.87 | 0.00 | 0.00 | -474,740.24 | 1,124,927.96 | Financial assets available for sale | Paid shares from debt reorganization |
| Total | -- | -- | 1,599,668.20 | -474,740.24 | 43,861.87 | 0.00 | 0.00 | -474,740.24 | 1,124,927.96 | -- | -- | ||
| Disclosure date of securities investment approval of the Board | Not applicable | ||||||||||||
| Disclosure date of securities investment approval of the Shareholder Meeting (if applicable) | Not applicable | ||||||||||||
In RMB
| Company name | Type | Main business | Register capital | Total assets | Net Assets | Operating income | Operating profit | Net profit |
| Shenzhen Cereals Group Co., Ltd | Subsidiary | Grain & oil trading processing、Grain and oil reserve service | 1,530,000,000.00 | 5,530,296,554.50 | 3,481,379,571.43 | 10,468,857,056.92 | 449,696,262.10 | 427,835,409.08 |
| Shenzhen Hualian Grain & Oil Trade Co., ltd. | Subsidiary | Grain & oil trading | 31,180,000.00 | 1,076,989,175.15 | 194,154,007.83 | 4,153,366,944.73 | 75,706,224.41 | 73,910,678.33 |
| Shenzhen Flour Co., Ltd | Subsidiary | Grain & oil trading processing | 30,000,000.00 | 945,013,952.04 | 236,010,016.38 | 2,847,662,565.99 | 67,899,300.91 | 68,055,926.98 |
| Hangzhou Ju Fang Yong Holding Co., Ltd. | Subsidiary | Production & sales of tea product | 175,000,000.00 | 182,616,725.75 | 123,286,165.59 | 27,181,171.90 | -39,757,437.82 | -38,641,080.66 |
| Company name | The way of getting and treating subsidiary in the reporting | Influence on overall product and performance |
| Shenzhen Cereals Group Co., Ltd | Acquisition of assets reorganization | Impact on net profit of the Company: 427.84 million yuan |
| Shenzhen Flour Co., Ltd | Acquisition of assets reorganization | Impact on net profit of the Company: 68.06 million yuan |
| Shenzhen Hualian Grain & Oil Trade Co., ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 73.91 million yuan |
| Hainan Haitian Aquatic Feed Co., Ltd | Acquisition of assets reorganization | Impact on net profit of the Company: 1.21 million yuan |
| SZCG Quality Inspection Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 480000 yuan |
| SZCG Doximi Business Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 2.31 million yuan |
| SZCG Cold-Chain Logistic Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 6.11 million yuan |
| SZCG Big Kitchen Food Supply Chain Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 1.87 million yuan |
| SZCG Real Estate Development Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 8.58 million yuan |
| SZCG Property Management Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 780000 yuan |
| SZCG Storage (Yingkou) Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 5.63 million yuan |
| Dongguan SZCG Logistics Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 29.97 million yuan |
| Dongguan International Food Industrial Park Development Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: 330000 yuan |
| Dongguan SZCG Oil & Food Trade Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: -940000 yuan |
| Dongguan Golden Biology Tech. Co., Ltd. | Acquisition of assets reorganization | Not yet open, and has no impact on the Company’s production and operation |
| Shuangyashan SZCG Zhongxin Cereals Base Co., Ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: -800000 yuan |
| Heilongjiang Hongxinglong Nongken Shenxin Cereals Industrial Park Co., ltd. | Acquisition of assets reorganization | Impact on net profit of the Company: -640000 yuan |
| Zhanjiang Haitian Feed Industrial Co., Ltd. | Peeling from assets reorganization | Impact on net profit of the Company: 350000 yuan |
obtaining permission). Register capital was 1,530,000,000 Yuan. Ended as this period, total assets amounted as5.530.296.554.50Yuan, and net assets amounting to 3,481,379,571.43Yuan, shareholders’ equity attributable toparent Company is 3,330,154,413.59 Yuan; in the reporting period, achieved operation income, net profit and netprofit attributable to shareholder of parent Company as 10,468,857,056.92 Yuan, 427,835,409.08Yuanand412,949,102.83Yuan respectively.
Shenzhen Hualian Grain and Oil Trade Co., Ltd., business scope: general operational projects include domestictrade (except for projects that laws, administrative regulations, and decisions of the State Council require approvalbefore registration); engaging in import and export business (except for projects prohibited by laws, administrativeregulations, and decision of the State Council, restricted projects can be operated only after obtaining permission);online feed sales; information consultation, self-owned housing leasing (excluding talent agency services and otherrestricted items); international freight forwarding, domestic freight forwarding (can only be operated after beingapproved by the transport department if laws, administrative regulations, State Council decision require the approvalof transport department); license business projects include purchase and sale of grain and oil, online sales of grainand oil; information service business (internet information service business only). Register capital was 31,180,000Yuan. Ended as this period, total assets amounted as 1,076,989,175.15 Yuan, and net assets amounting to194,154,007.83 Yuan, shareholders’ equity attributable to parent Company is 194,154,007.83 Yuan;in the reportingperiod, achieved operation income, net profit and net profit attributable to parent Company as 4,153,366,944.73Yuan, 73,910,678.33 Yuan and 73,910,678.33 Yuan respectively.
Shenzhen Flour Co., Ltd., business scope: hardware and electrical equipment, chemical products (excludinghazardous chemicals and restricted items), auto parts, purchase and sales of construction materials; self-operatedimport and export business (carry out according to the provisions of the registration certificate SMGDZZ No. 76);domestic trade (excluding franchise, exclusive control, monopoly commodities); wheat wholesale and retail; flourprocessing and production. Register capital was 30,000,000 Yuan. Ended as this period, total assets amounted as945,013,952.04 Yuan, and net assets amounting to 236,010,016.38 Yuan, shareholders’ equity attributable to parentCompany is 236,010,016.38 Yuan;in the reporting period, achieved operation income, net profit and net profitattributable to parent Company as 2,847,662,565.99 Yuan, 68,055,926.98 Yuan and 68,055,926.98 Yuan respectively.
Hangzhou Ju Fang Yong Holding Co., Ltd., a wholly owned subsidiary. Business scope: sell both retail andwholesale: wholesale, retail of the prepackaged food and bulk food (pre-approval items should be operated withinvalidity period ): tea set; acquisitions: tea business sales required (limited to the acquisition of the original producerof primary industry directly); Services: Tea business investment and asset management, technology development,cultivation, breeding, technical consulting, technical services, transfer of results, the other all legitimate projectswithout approval, subsidiaries’ business scope included. Register capital was 175,000,000 Yuan. Ended as thisperiod, total assets amounted as 182,616,725.75 Yuan, and net assets amounting to 123,286,165.59 Yuan,shareholders’ equity attributable to parent Company is 124,023,180.99 Yuan;in the reporting period, achievedoperation income, net profit and net profit attributable to parent Company as 27,181,171.90 Yuan, -38,641,080.66
Yuan and -38,210,926.83 Yuan respectively.
VIII. Structured vehicle controlled by the Company
□ Applicable√Not applicable
IX. Prospects on future development
(I) Development trend and competition layout of the industry1. The development trend of industryIn 2018, the overall trend of the grain and oil market was weak, and the market prices of specific varieties werequite different. Wheat and rice in the husk were strongly influenced by policy orientation, and prices went downthroughout the year with the lowering of minimum purchase price; the marketization of corn was high, and theoverall price throughout the year was fluctuating increasingly due to the imbalance of supply and demand; thesoybean market was affected by the Sino-US trade war, and the annual price trend was in a downturn; the cookingoil market was affected by the excess supply and high inventory, and the overall price declined sharply.At present, China has 22,000 enterprises included in the economic statistics of the grain industry, with an annualsales income of 2.9 trillion yuan, which has formed a certain scale. However, due to the lack of innovation capability,the problems of unreasonable industrial structure, short chain, and low-end overcapacity are still outstanding, whichis difficult to adapt to the needs of upgrading consumer demand. With the continuous development of the grainindustry economy, the grain industry now has strong demand for engineering personnel in grain storage, processing,logistics, etc., while there is a great shortage of high-grade talents in technology, warehousing, logistics,management, international trade, and futures, etc., which cannot meet the needs of high quality development in thegrain industry. The grain industry is in a critical period of deepening reform, transformation and development, andis more eager for high-quality and professional talents than ever before. It is necessary to vigorously create a groupof management talents, science and technology innovation talents, high-skilled talents and storage talents for grainindustry so as to provide talent supports for the development of grain industry economy and the protection ofnational food security.According to the statistic data released by China Tea Marketing Association and other institutions, the productionand consumption of the tea industry in the country continued to maintain an overall growth trend. In 2018, the areaof tea gardens in 18 major tea-producing provinces (autonomous regions and municipalities) throughout the countrywas 43,956,000 mu, with a year-on-year increase of 1.23 million mu, the growth rate was 2.9%. The national dryraw tea output was 2.616 million tons, an increase of 120,000 tons over the previous year, the growth rate was 4.8%.The total output value of dry raw tea in China exceeded 200 billion yuan for the first time, reaching 215.73 billionyuan, with a year-on-year increase of 20.77 billion yuan, the growth rate was 10.65%. In 2018, the domestic salesvolume of Chinese tea was 1.91 million tons, an increase of 93,000 tons compared with the previous year, thegrowth rate was 5.1%; domestic sales reached 266.1 billion yuan; the average selling price was 139.3 yuan / kg, anincrease of 5.2% on a year-on-year basis. However, due to the impact of the macroeconomic environment and weakconsumption, the problem of overproduction of tea in the country has become increasingly prominent. Safe,reasonably priced, diversified, younger products and diversified marketing are still the development trend of the tea
industry.The rapid development of the new tea industry promotes the transformation of the food and beverage consumermarket and accelerates the transformation and upgrading of beverage products. Social media has changed the dietarymode in society, consumers expect every dish or drink to be shared, and social sharing becomes one of the coreinnovations in food, beverage and catering service. While the new tea industry maintains rapid development, thetraditional beverage industry is also constantly innovating business models and expanding sales channels; productcategory structure will be further optimized, and water drinks, tea drinks, and plant-based milk drinks have gooddevelopment prospects, the functional beverages, low-calorie beverages and healthy nutritious beverages willdevelop rapidly. As a food and beverage ingredient, tea and natural plant deep processing products have natural andhealthy essential characteristics, of which the application in the food and beverage field continues to innovate anddevelop, and the huge development space of tea drinks and plant beverages lays a good foundation for thedevelopment of tea and natural plant deep processing products.2. The competitive landscape of the industryChina is not only a big agricultural producer but also a major grain consumer. China’s grain output has achievedbumper harvests in successive years, but it also faces many challenges. Problems such as the transformation of grainproduction methods, the adjustment of crop planting structure, the import volume of grain remaining high, theincrease in marginal cost of production, the intensification of environmental factors, and the contradiction betweensupply and demand have become increasingly prominent. At the same time, China’s grain storage still hasweaknesses such as large stocks of grain, low level of inventory facilities, and incomplete storage methods.The company’s tea and natural plant deep processing products are a segment of the tea industry, and have evolvedinto a market with a relatively concentrated market share. The company’s main competitors are the certifiedsuppliers for large-scale food and beverage customers at home and abroad, the price competition in the industry isfierce. At the same time, the increase in raw material prices and labor costs has also led to a significant increase inthe production cost of tea deep processing. However, the company has comparative advantages in technologicalinnovation and product innovation, as well as many patented technologies with independent research anddevelopment. Moreover, the company is one of the few tea industry chain conglomerates in the industry that haveobtained the qualifications of global suppliers.The competition in various brands and categories of the domestic tea consumption market is becoming increasinglyfierce, the marketing promotion methods are constantly innovating, and cross-border cooperation is deepening. Withthe upgrade of consumption, consumers pay more attention to quality and brand in addition to price issues. Somewell-known and brand-name tea companies have gradually expanded their market share and achieved greaterdevelopment. The safety of tea products still challenges the healthy development of tea industry.China’s economic development has been generally stable with good momentum, the structural reforms of supplyside have been continuously deepened, a series of policies and measures to stabilize consumption and adjuststructure have continued to play a role, and people’s living standards have continued to improve. The expansion ofconsumer demand and the upgrading of level of the whole society have created a good external environment for thesustainable and healthy development of the tea industry.(II) The company’s development strategy
Shenzhen Cereals Holdings will focus on the grain and tea business, keep a foothold in Guangdong-Hong Kong-Macao Greater Bay Area, face domestic and international important supply and marketing channels, drive bytechnology innovation and model innovation, make full use of the capital market, and utilize market-based meansto strengthen external mergers and acquisitions and internal reorganization and integration, accelerate the replicationand expansion of “SZCG model” such as intelligent grain logistics park and grain informationization, continuouslyexpand the development strength and scale of enterprises, further enhance the market’s comprehensivecompetitiveness, sustained profitability and anti-risk ability, assume the social responsibility of state-ownedenterprises, and commit to building a first-class “grain supply chain high quality service provider” and “safe andhigh quality food supplier”.(III) The company’s 2019 business planIn 2019, the company will further leverage the capital and brand advantages of listed companies to complete theannual business management objectives. The main work plans are as follows:
First, steadily take the first step after the reorganization, accelerate the reorganization integration work, strengthenthe development of the grain and oil industry on the basis of the tea industry, two main businesses develop in parallel,and strengthen the core competitiveness of the enterprise;Second, accomplish the people’s livelihood security services, ensure to complete the municipal government’sstorage tasks, truly achieve “sufficient quantity and good quality”, and play an emergency role when needed;Third, according to the company’s “13th Five-Year Strategic Planning Objectives”, focus on promoting theconstruction of Dongguan logistics nodes project, strive for the completion of the foundation project of the 510,000tons silo project and the completion of the construction of two 10,000-ton berths in the terminal phase I, and putthem into trial operation, and the flour processing plant project goes into operation;Fourth, adhere to the two-wheel drive of technological innovation and model innovation, strengthen the combinationof grain and oil business and informationization, and accelerate the pace of the company’s external exporttechnology and services;Fifth, improve the assessment and incentive mechanism, establish and improve the total compensation and flexibleadjustment mechanism of the economic benefits and labor productivity of connected enterprises, and strengthen theendogenous development momentum of enterprises;Sixth, improve internal management, improve work efficiency, prevent internal risks, and ensure safety productionand no liability accidents.
X. Research reception, communication and interview activities
1. Registration form of research reception, communication and interview in the Period
□ Applicable √Not applicable
There were no research reception, communication and interview activities occurred in the period
Section V. Important Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividendpolicy during the Reporting Period
√ Applicable □Not applicable
In reporting period, no adjustment and change happened to profit distribution rule.
| Special explanation on cash dividend policy | |
| Satisfy regulations of General Meeting or requirement of Article of Association (Y/N): | Y |
| Well-defined and clearly dividend standards and proportion (Y/N): | Y |
| Completed relevant decision-making process and mechanism (Y/N): | Y |
| Independent directors perform duties completely and play a proper role (Y/N): | Y |
| Minority shareholders have opportunity to express opinions and demands totally and their legal rights are fully protected (Y/N): | Y |
| Condition and procedures are compliance and transparent while the cash bonus policy adjusted or changed (Y/N): | Y |
| Year for bonus shares | Amount for cash bonus (tax included) | Net profit attributable to common stock shareholders of listed company | Ratio of the cash bonus in net profit attributable to common stock | Proportion for cash bonus by other ways(i.e. share buy-backs) | Ratio of the cash bonus by other ways in net profit attributable to | Total cash bonus (including other ways) | Ratio of the total cash bonus (other ways included) in net profit |
| in consolidation statement for bonus year | shareholders of listed company contained in consolidation statement | common stock shareholders of listed company contained in consolidation statement | attributable to common stock shareholders of listed company contained in consolidation statement | ||||
| 2018 | 115,253,525.40 | 308,331 ,032.44 | 37.38% | 0.00 | 0.00% | 115,253,525.40 | 37.38% |
| 2017 | 0.00 | 359,174,263.44 | 0.00% | 0.00 | 0.00% | 0.00 | 0.00% |
| 2016 | 22,581,013.80 | 364,384,734.36 | 6.20% | 0.00 | 0.00% | 22,581,013.80 | 6.20% |
| Bonus shares for every 10-share (Share) | 0 |
| Dividends for every 10-share (RMB) (Tax included) | 1.00 |
| Shares transferred from every 10 shares (Share) | 0 |
| Equity base of distribution plan (Share) | 1,152,535,254 |
| Cash bonus distribution (RMB) (Tax included) | 115,253,525.40 |
| Cash bonus distribution in other ways (i.e. share buy-backs) (RMB) | 0.00 |
| Total cash bonus (including other ways) (RMB) | 115,253,525.40 |
| Distributable profits (RMB) | 165,505,986.31 |
| Ratio of total cash dividend (other ways included) in total profit distribution | 100% |
| Cash dividend | |
| The Company is in a development stage and has the arrangement of major capital expenses, ratio of cash dividend in profit distribution should reach a minimum of 20% while the profit distributed. | |
| Detailed explanation on profit distribution or capital accumulation fund conversion plan | |
| After audited by Dahua CPA, in consolidate statement, the net profit attributable to shareholders of parent company amounted as 308,331,032.44 yuan in 2018, net profit of parent company was -34,283,664.43 yuan; ended as 31st December 2018, the profit of parent company that can be distributed for shareholders was 165,505,986.31 yuan, balance of consolidate capital public reserves was 1,422,892,729.36 yuan. In line with relevant regulations and Article of Association, and consider the interest of shareholders, BOD plans to submit the equity distribution plan for year of 2018 to shareholders general meeting: based on total share capital 1,152,535,254 shares of the Company on 31st December 2018, distributed 1 Yuan (tax included) for every 10-share to all shareholders with zero share bonus (tax included), and no share converted from capital reserve | |
III. Implementation of commitment
1. Commitments that the actual controller, shareholders, related party, buyer and the Company have fulfilled during the reporting period and have not yetfulfilled by the end of reporting period
√ Applicable□Not applicable
| Commitments | Commitment party | Type of commitments | Content of commitments | Commitment date | Commitment term | Implementation |
| Commitments for share merger reform | ||||||
| Commitments in report of acquisition or equity change | ||||||
| Commitments in assets reorganization | Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment to non-normal business enterprises: For non-normal business enterprises under Shenzhen Cereals Group (including but not limited to enterprises that have been revoked business licenses, discontinued operation, etc.), the committed person will fully assist, urge and promote Shenzhen Cereals Group to implement the corresponding write-off procedures. After the completion of this reorganization, if Shenzhen Cereals Group or the listed company is called to account, receives administrative punishment or suffers any losses due to the abnormal operation of the non-normal business enterprises or the failure to handle write-off procedures in time, the committed person will bear the relevant legal liability, and fully compensate the listed company and the target company within 30 working days after the actual loss occurs. | 2018-03-23 | Implement as promised | Normal performance |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Relevant Commitments Regarding the Existence of Flaws in Leased Property: The leased house property of Shenzhen Cereals Group and its holding subsidiaries has the following conditions: (1) The lessor has not provided the ownership documentary evidence of the property and/or the documentary evidence proving the lessor has the right to rent out the house property. (2) The lease term of part of the leased house | 2018-03-23 | Implement as promised | Normal performance |
| property is more than 20 years; (3) Shenzhen Cereals Group and its subsidiaries sublet part of the leased house property to a third party without the consent of the lessor; (4) The leased house property of Shenzhen Cereals Group and its holding subsidiary has not been registered for the housing lease. If Shenzhen Cereals Group and its holding subsidiaries are imposed any form of punishment by the relevant government departments or assume any form of legal responsibility, or occur any losses or expenses because their leased place and / or house property do not comply with relevant laws and regulations, the committed person will be willing to bear any losses, damages, claims, costs and expenses incurred, suffered and assumed by Shenzhen Cereals Group and its holding subsidiaries, and protect Shenzhen Cereals Group and its holding subsidiaries from damages. In addition, the committed person will support Shenzhen Cereals Group and its holding subsidiaries to actively advocate their rights to the corresponding parties to maximumly maintain and guarantee the interests of Shenzhen Cereals Group and the listed companies. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment Letter on Flaws in House Property and Land: In the case that some of the house properties held by Shenzhen Cereals Group fail to rename the obligee of the property ownership certificate, the committed person will fully assist, urge and promote Shenzhen Cereals Group or its subsidiaries to go through the formalities. After the completion of this reorganization, if Shenzhen Cereals Group or the listed company is called to account, receives administrative punishment or suffers any losses due to the failure to rename the obligee of the property ownership certificate, the committed person will bear the relevant legal liability, and fully compensate the listed company and Shenzhen Cereals Group within 30 working days after the actual loss occurs. In view of the fact that some house properties held by Shenzhen Cereals Group fail to complete the registration procedures for ownership transfer, the committed person will fully assist, urge and promote Shenzhen Cereals Group to complete the relevant transfer procedures. After the completion of this reorganization, if Shenzhen Cereals Group or the listed company is called to account, receives administrative punishment or suffers any losses due to the failure to rename the obligee of above-mentioned property, the committed person will bear the | 2018-03-23 | Implement as promised | Normal performance |
| any ownership disputes in the above-mentioned land use right, the committed person will bear the relevant legal liability, and fully compensate the listed company and Shenzhen Cereals Group within 30 working days after the actual loss occurs. If Shenzhen Cereals Group and its holding subsidiaries are required to take back the sites and/or properties or imposed any form of punishment by the relevant government departments or assume any legal liability, or suffer any losses or expenses arising from the modification for flaws in sites and/or properties as the above-mentioned and other self-owned or leased sites and/or properties fail to comply with the relevant laws and regulations, the committed person will assume any losses, damages, claims, costs and expenses incurred, suffered and assumed by Shenzhen Cereals Group and its holding subsidiaries, and protect the list companies and Shenzhen Cereals Group from damages. In addition, the committed person will support the company and its holding subsidiaries to actively advocate rights to the corresponding parties to maximumly maintain and guarantee the interests of the company and its holding subsidiaries. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment Letter on the Company’s System Reform and System Evaluation of Shenzhen Cereals Group in 1998: After the completion of this restructuring, if Shenzhen Cereals Group or the listed company is called to account, receives administrative punishment or suffers any losses as the system reform is not evaluated or other reasons related to this reform, the committed person will bear the relevant legal liability, and fully compensate the listed company and Shenzhen Cereals Group within 30 working days after the actual loss occurs. | 2018-03-23 | Implement as promised | Normal performance |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment on the Adjustment of the Main Business: Within 24 months after the completion of the transaction, the Company has no plan, intention or arrangement to divest the main assets related to the existing business of the listed company through the shareholders’ meeting and the board of directors of the listed company. The listed company will strive to improve the management level based on the asset structure and business development after the completion of the transaction, and do its best to complete the business integration and coordination after the completion | 2018-03-23 | Implement as promised | Normal performance |
| of the reorganization, and create greater value for shareholders. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment to Maintain the Position of Controlling Shareholders of Listed Companies: Within 60 months from the date of completion of this transaction, the Company promises not to voluntarily give up the controlling shareholder status in the listed company, and guarantees that the controlling shareholder status of the listed company will not be changed due to reasons of the Company during this period, nor assists any other party to seek the controlling shareholder status of the listed company. Within 60 months from the date of completion of this transaction, the Company will not take the initiative to change the status of the controlling shareholder of the listed company through any actions including reducing the share holding in the listed company. | 2018-03-23 | Implement as promised | Normal performance |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment on the public shares: After the completion of the transaction, the committed person will cautiously nominate directors and supervisors, and will not nominate candidates for directors, supervisors and senior management to the listed company that will cause the proportion of public shares of the listed company not meet the requirements of the Listing Rules of Shenzhen Stock Exchange.; nor will vote for the relevant shareholders’ meeting and/or board resolutions for selecting directors, supervisors and senior executives of listed companies that will make the proportion of public shares of listed companies not meet the requirements of the Listing Rules of Shenzhen Stock Exchange . | 2018-03-23 | Implement as promised | Normal performance |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Performance commitments and compensation arrangements | Commitment on performance compensation: Fude Capital promises that after the completion of the audit and evaluation of Shenzhen Cereals Group, the Company will make a commitment to the performance of Shenzhen Cereals Group within three years after the completion of the restructuring, and sign a clear and feasible compensation agreement on the achievement of performance promised by the target company with the listed company so as to protect the interests of small and medium investors. On June 8, 2018, Fude Capital and Shenshenbao signed the “Performance Compensation Agreement” and agreed to make a commitment to the net profit of | 2018-03-23 | Implement as promised | Normal performance |
| Shenzhen Cereals Group from 2018 to 2020 (hereinafter referred to as the “commitment period”, if it is not completed before December 31, 2018, the commitment period will correspondingly postpone), and after the completion of the acquisition, compensate Shenshenbao in accordance with the provisions of this agreement as the actual net profit of the object company is less than the promised net profit. The performance compensation period of this transaction is 2018, 2019 and 2020, if the transaction is not completed in 2018, the first year of the performance commitment period of this transaction is the year when the target company of the transaction is delivered. Fude Capital promises Shenzhen Cereals Group to achieve net profit (net profit is subject to the net profit attributable to shareholders of the parent company after deducting non-recurring gains and losses in the audited consolidated statement, the same below) of not less than 390 million yuan in 2018, and net profit of not less than 400 million yuan in 2019, and net profit of not less than 420 million yuan in 2020. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Share reduction commitment | Principled Opinions on this Restructuring and Commitment on No Plan for Reducing Shareholding: The Company believes that this restructuring is conducive to enhancing Shenshenbao’s sustainable operation ability and enhancing Shenshenbao’s profitability, and is beneficial to protect the interests of Shenshenbao’s shareholders, especially the interests of small and medium shareholders. The Company has no objection to this restructuring. The Company promises that from the signing date of the commitment letter to the completion of the restructuring, the Company and the Company’s concerted action person will not reduce the shareholdings of Shenshenbao, nor will reduce the shareholding of the listed company. | 2018-03-23 | 2018-11-12 | Completed |
| Shenzhen Agricultural Products Co., Ltd. | Share reduction commitment | Principal Opinions and Commitments and Statements on No Plan for Reducing Shareholding: The Company believes that this restructuring is conducive to enhancing Shenshenbao’s sustainable operation ability and enhancing Shenshenbao’s profitability. The Company agrees in principle on this restructuring. The Company promises that the Company will not reduce its shareholdings of | 2018-03-23 | 2018-11-12 | Completed |
| Shenshenbao from the date of restructuring and resumption of trading to the completion of the restructuring, nor will plan to reduce the shareholding of Shenshenbao. | |||||
| Shenzhen Agricultural Products Co., Ltd. | Shares limited for sale commitment | Commitment on the Lock-up Period of the Shares: 1. The shares of the listed company obtained by the committed person before the transaction shall not be transferred within 12 months from the date of completion of the transaction. 2. During the lock-up period of shares, the part that the committed person has increased due to the bonus issue of dividends, transfer of share capital or share allotment of the listed company and other ex dividend and ex right matters should also abide by the above-mentioned share lock-up arrangement. 3. If the above lock-up period does not comply with the latest regulatory requirements of the securities regulatory authority, the committed person will agree to make corresponding adjustments according to the latest regulatory opinions of the regulatory authorities, and implement in accordance with the relevant provisions of the China Securities Regulatory Commission and the Shenzhen Stock Exchange after the lock-up period expires. | 2018-03-23 | 2019-11-12 | Normal performance |
| Wanho Securities Co., Ltd. | Other commitments | Commitment Letter of Independent Financial Adviser About Shenzhen Shenbao Industrial Co., Ltd. Issuing Shares for Asset Purchase: Wanho Securities Co., Ltd. (hereinafter referred to as “Wanho Securities” or “this independent financial adviser”), as an independent financial adviser for the issuance of shares for asset purchase and the related transactions (hereinafter referred to as “this transaction”) of Shenzhen Shenbao Industrial Co., Ltd. Co., Ltd. (hereinafter referred to as “Shenshenbao” or “Listed Company”), makes the following statements and commitments based on full due diligence and internal verification. 1. This independent financial adviser has no other interest relationship with the parties involved in this transaction, and the relevant opinions expressed in this transaction plan are completely independent. 2. The documents and materials on which this independent financial adviser’s verification opinions are based are provided by the parties to this transaction, and the parties to the transaction have promised that the information provided is true, accurate and complete, and there are no false records, | 2018-03-23 | 2018-11-12 | Completed |
| from the investment decisions made by investors according to the relevant verification opinions. | |||||
| Chen Chansong; Fan Zhiqing; Huang Yu; Li Fang; Li Xinjian; Li Yiyan; Lin Hong; Liu Zhengyu; Luo Longxin; Qian Xiaojun; Wang Zhiping; Wu Shuping; Yan Zesong; yao Xiaopeng; Zhang Guodong; Zheng Yuxi | Other commitments | Commitment on No Plan for Reducing Shareholding: The Company promises that from the signing date of the commitment letter to the completion of the restructuring, the Company and the Company’s concerted action person will not reduce the shareholding of Shenshenbao, nor has the plan to reduce the shareholding of the listed company. | 2018-03-23 | 2018-11-12 | Completed |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Shares limited for sale commitment | Commitment on the Lock-up Period of the Shares: Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao” and “Listed Company”) intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”, “target company”) held by the shareholders of SZCG through issuance of shares. Shenzhen Fude State-owned Capital Operation Co., Ltd. (hereinafter referred to as “the committed person”), the controlling shareholder of SZCG, has made the following commitments: 1. The committed person should not transfer the shares of the listed company obtained from this transaction within 36 months from the date of listing of the shares. If the closing price of the listed company’s stock is lower than the issue price for 20 consecutive trading days within 6 months after the completion of this transaction, or the closing price is lower than the issue price at the term end of 6 months after the completion of the transaction, the lock-up period for the committed person to hold the company’s stock | 2018-04-02 | Implement as promised | Normal performance |
| automatically prolongs for at least 6 months. 2. At the expiration of the above-mentioned lock-up period, if the committed person doesn’t fully fulfill the performance compensation obligation stipulated in the Performance Compensation Agreement, the lock-up period of the shares issued to the committed person will be prolonged to the date when the performance compensation obligation is fulfilled. 3. Before this transaction, the shares of the Listed Company held by the committed person and the companies controlled by the promise shall not be transferred within 12 months after the completion of this transaction. 4. During the lock-up period of shares, the part that the committed person has increased due to the bonus issue of dividends, transfer of share capital or share allotment of the Listed Company and other ex dividend and ex right matters should also abide by the above-mentioned share lock-up arrangement. 3. If the above lock-up period does not comply with the latest regulatory requirements of the securities regulatory authority, the committed person will agree to make corresponding adjustments according to the latest regulatory opinions of the regulatory authorities, and implement in accordance with the relevant provisions of the China Securities Regulatory Commission and the Shenzhen Stock Exchange after the lock-up period expires. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment letter of Shenzhen Fude State-owned Capital Operation Co., Ltd. on pending litigation of Shenzhen Cereals Group Co., Ltd.: Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao”, “Listed Company”) intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”, “target company”) held by the shareholders of SZCG through issuance of shares. In view of the two unfinished major lawsuits/arbitration of SZCG, Shenzhen Fude State-owned Capital Operation Co., Ltd. (hereinafter referred to as “the committed person”), the controlling shareholder of SZCG, has made the following commitments: If SZCG and its controlling subsidiaries suffer any claims, compensation, losses or expenses due to the unsettled major lawsuits/arbitration about the contract dispute of international sale of soybean with Noble Resources Co., Ltd. and the contract dispute with Guangzhou Jinhe Feed | 2018-04-02 | Implement as promised | Normal performance |
| Co., Ltd. and Huangxianning Import Agent, the committed person will assume the compensation or loss caused by the above two outstanding major lawsuits/arbitration. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment letter of Shenzhen Fude State-owned Capital Operation Co., Ltd. on risks of making a supplementary payment for the rent at earlier stage of Pinghu Grain Depot: Shenzhen Shenbao Industrial Co., Ltd. intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”) held by the shareholders of SZCG through issuance of shares. Shenzhen Fude State-owned Capital Operation Co., Ltd. (hereinafter referred to as “the committed person”), the controlling shareholder of SZCG, has made the following commitments: If SZCG needs to make a supplementary payment for the rent before assessment basis date to the property right unit of Pinghu Grain Depot (or its authorized unit), the total amount of the rent and other related charges and expenses shall be borne by the committed person. | 2018-04-02 | Implement as promised | Normal performance |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment letter on the house properties of Shenzhen Cereals Group and its subsidiaries that have not obtained the housing ownership certificate: Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao” and “listed company”) intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”, “target company”) held by the shareholders of SZCG through issuance of shares. Shenzhen Fude State-owned Capital Operation Co., Ltd. (hereinafter referred to as “the committed person”), the controlling shareholder of SZCG, has made the following commitments: If SZCG and its subsidiaries suffer any administrative punishment or losses due to their house properties without the housing ownership certificate, the committed person will bear the relevant legal responsibilities and fully compensate the listed company and SZCG within 30 working days after the actual loss occurs. | 2018-04-02 | Implement as promised | Normal performance |
| Shenzhen Fude State- | Shares | Commitment on Shenzhen Fude State-owned Capital Operation Co. Ltd. to accept | 2018-04-04 | Impleme | Normal |
| owned Capital Operation Co., Ltd. | limited for sale commitment | the restricted shares of non-tradable shares reform of Shenzhen Shenbao Industrial Co., Ltd. held by Shenzhen Investment Holdings Co., Ltd.: Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “Fude Capital”) accepts 79,484,302 shares of A shares of Shenshenbao A (000019) (including 66,052,518 shares of unrestricted A shares and 13,431,784 shares of restricted A shares ) held by Shenzhen Investment Holdings Co., Ltd. (hereinafter referred to as “Shenzhen Investment Holdings”) by the free transfer, totally accounting for 16% of the total share capital of Shenshenbao. Shenzhen Investment Holdings made the following commitments in the reform of non-tradable shares of Shenshenbao in 2006: “To make effective and long-term incentives for the management, after the completion of the share reform, Shenzhen Agricultural Products Co., Ltd. (hereinafter referred to as “Agricultural Products”) and Shenzhen Investment Holdings, the company’s non-tradable shareholders, will sell their shareholdings after consideration which account for 6%-8% of the company’s total share capital to the management of the company in three years based on the shareholding ratio of Agricultural Products and Shenzhen Investment Holdings after the share reform (i.e. accounting for 6%-8% of the company’s total share capital of 181,923,088 shares after the share reform).” Fude Capital made a commitment that after the completion of the free transfer of the state-owned shares, Fude Capital would continue to perform the above commitments it made when Shenzhen Investment Holdings makes the non-tradable shares reform to Shenshenbao, which is effective in the long run. | nt as promised | performance | |
| Cao Xuelin; Dai Bin;Du Jianguo; Hu Xianghai; Huang Ming; Jin Zhenyuan; Liu Ji; Lu Qiguang; Ni Yue; Qian Wenying; Wang Fangcheng; Wang Huimin; Wang Li; Ye | Other commitments | Commitment and Statement on No Major Violations and Integrity: Shenzhen Shenbao Industrial Co., Ltd. intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. through issuance of shares. In response to the above transactions, as the Director/Supervisor/Senior Management of SZCG(hereinafter referred to as the “Declarant”), I have made the following commitments: 1. The Declarant has not been subject to administrative penalties and criminal penalties from the securities market or involved in major civil litigation or arbitration related to economic disputes in the past 5 years, and there are currently | 2018-06-08 | 2018-11-12 | Completed |
| Qingyun; Yin Yong; Zhang Yong; Zhao Rubing; Zheng Shengqiao; Zhu Junming; Zhu Junming | no outstanding or foreseeable major litigation, arbitration and administrative punishment cases, nor suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission; there is no failure to repay large debts on time, no failure to fulfill commitments, nor administrative supervision measures taken by the China Securities Regulatory Commission, nor disciplinary action made by the stock exchange. 2. The Declarant does not have suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission, nor behavior of suspected crime or violation of the laws and rules has been terminated for 36 months. 3. The Declarant has not been publicly condemned by the stock exchange in the last 36 months, and there are no other major dishonest acts. 4. There is no such case that the Declarant is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. | ||||
| Cao Xuelin; Dai Bin;Du Jianguo; Hu Xianghai; Huang Ming; Jin Zhenyuan; Liu Ji; Lu Qiguang; Ni Yue; Qian Wenying; Wang Fangcheng; Wang Huimin; Wang Li; Ye Qingyun; Yin Yong; | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Provided Information: 1. The information and materials provided by the committed person for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 2. The information provided by the committed person to the intermediaries participating in this major asset reorganization is the true, accurate and complete source written materials or copy materials, the copy or copies of the materials are consistent with their source materials or original copies; the signatures and the seals of all documents are true and there are no false records, misleading statements or major omissions. 3. The explanations and confirmations issued by the committed person for this major asset | 2018-06-08 | 2018-11-12 | Completed |
| Zhang Yong; Zhao Rubing; Zheng Shengqiao; Zhu Junming | restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. | ||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd.;Cao Yu; Ni Yue; Zhu Junming | Other commitments | Commitment and Statement on No Major Violations and Integrity: Shenzhen Shenbao Industrial Co., Ltd. intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “Fude Capital”) through issuance of shares. In response to the above transactions, Fude Capital and its directors, supervisors, and senior management (hereinafter referred to as the “Declarant”) have made the following commitments: 1. The Declarant has not been subject to administrative penalties and criminal penalties from the securities market or involved in major civil litigation or arbitration related to economic disputes in the past 5 years, and there are currently no outstanding or foreseeable major litigation, arbitration and administrative punishment cases, nor suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission; there is no failure to repay large debts on time, no failure to fulfill commitments, nor administrative supervision measures taken by the China Securities Regulatory Commission in the past 5 years; 2. The Declarant has not received administrative penalties unrelated to the securities market in the past 5 years; 3. The Declarant does not have suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission, nor behavior of suspected crime or violation of the laws and rules has been terminated for 36 months. 4. There is no such case that the Declarant is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or | 2018-06-08 | 2018-11-12 | Completed |
| suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. | |||||
| Cao Yu; Ni Yue; Zhu Junming | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Information Provided: Shenzhen Shenbao Industrial Co., Ltd. intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “Fude Capital”) through issuance of shares. In response to the above transactions, as the Director/Supervisor/Senior Management of Fude Capital (hereinafter referred to as the “committed person”), I have made the following commitments: 1. The information and materials provided by the committed person for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 2. The information provided by the committed person to the intermediaries participating in this major asset reorganization is the true, accurate and complete source written materials or copy materials, the copy or copies of the materials are consistent with their source materials or original copies; the signatures and the seals of all documents are true and there are no false records, misleading statements or major omissions. 3. The explanations and confirmations issued by the committed person for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 4. If the information provided or disclosed by the committed person for this transaction is suspected of false records, misleading statements or major omissions or is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission, before the conclusion of the investigation, the shares that own rights and interests in the listed company will not be transferred, and the written application for suspicion of transfer and the stock account should be submitted to the board of directors of listed company within two trading days of receipt of the notice of filing the investigation, and the board of directors shall apply for lock-up to the stock exchange and the registration and settlement company on its behalf; If the application for lock-up is | 2018-06-08 | 2018-11-12 | Completed |
| not submitted within two trading days, the board of directors is authorized to verify and directly submit the identity information and account information of the committed person directly to the stock exchange and the registration and settlement company and apply for lock-up; if the board of directors fails to submit the identity information of the committed person to the stock exchange and the registration and settlement company, authorize the stock exchange and the registration and settlement company directly lock the relevant shares. If the investigation concludes that there is a violation of the laws and rules, the committed person will promise to lock up the shares and voluntarily use for the compensation arrangements for relevant investors. | |||||
| Chen Chansong; Fan Zhiqing; Huang Yu; Li Fang; Li Xinjian; Li Yiyan; Lin Hong; Liu Zhengyu; Luo Longxin; Ni Yue; Qian Xiaojun; Wang Huimin; Wang Li; Wang Zhiping; Wu Shuping; Yan Zesong; Yao Xiaopeng; Zhang Guodong and Zheng Yuxi | Other commitments | Commitment and Statement on No Major Violations and Integrity: Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Listed Company”) intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. held by the shareholders of Shenzhen Cereals Group Co., Ltd. through issuance of shares. In response to the above transactions, I have made the following commitments as director/supervisor/senior management of Listed Company (hereinafter referred to as the “Declarant”): 1. The Declarant has not received administrative penalties from the China Securities Regulatory Commission in the last 36 months, or has been publicly condemned by the stock exchange in the past 12 months. 2. The Declarant does not have suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission; 3. There is no such case that the Declarant is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. 4. The Declarant does not use insider information to buy or sell related securities before the transaction information is | 2018-06-08 | 2018-11-12 | Completed |
| disclosed, nor disclose inside information or use inside information to advise others to buy and sell related securities and other insider transaction behavior. If I violate the above commitments, I will bear all the losses caused to Shenshenbao. | |||||
| Chen Chansong; Fan Zhiqing; Huang Yu; Li Fang; Li Xinjian; Li Yiyan; Lin Hong; Liu Zhengyu; Luo Longxin; Ni Yue; Qian Xiaojun; Wang Huimin; Wang Li; Wang Zhiping; Wu Shuping; Yan Zesong; Yao Xiaopeng; Zhang Guodong and Zheng Yuxi | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Information Provided: Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Listed Company”) intends to purchase the 100% equity of Shenzhen Cereals Group Co., Ltd. held by the shareholders of Shenzhen Cereals Group Co., Ltd. through issuance of shares. In response to the above transactions, as the Director/Supervisor/Senior Management of the Listed Company (hereinafter referred to as the “committed person”), I have made the following commitments: 1. The Declarant has not received administrative penalties from the China Securities Regulatory Commission in the last 36 months, or has been publicly condemned by the stock exchange in the past 12 months. 2. The Declarant does not have suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission. 3. There is no such case that the Declarant is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. 4. The Declarant does not use insider information to buy or sell related securities before the transaction information is disclosed, nor disclose inside information or use inside information to advise others to buy and sell related securities and other insider transaction behavior. If I violate the above commitments, I will bear all the losses caused to Shenshenbao. | 2018-06-08 | 2018-11-12 | Completed |
| Ni Yue; Wang | Other | Commitment on No Reducing Shareholding and plan of share reduction: I hereby | 2018-06-08 | 2018-11- | Complete |
| Huimin; Wang Li | commitments | promises that from the signing date of the commitment letter to the completion of the restructuring, I will not reduce the shareholding of Shenshenbao, nor has the plan to reduce the shareholding of the listed company. Hereby notify | 12 | d | |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Share increase commitment | Commitment Letter on the Subscription of Non-Public Issuance of Shares of Shenzhen Shenbao Industrial Co., Ltd.: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as the “target company”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) by issuing shares to purchase assets, the Company has made the following commitments: 1. The Company does not have the following situations stipulated in Article 6 of Administrative Measures On Acquisition Of Listed Companies: (1) using the acquisition of the listed company to damage the legitimate rights and interests of the acquired company and its shareholders; (2) having a relatively large amount of debts, failing to pay due, and being in a continuous state; (3) having major illegal acts or suspected of being involved in major illegal acts in the past three years; (4) having serious dishonest behavior at securities market in the past three years; (5) other situations that are not allowed to acquire the listed company by the laws, administrative laws and regulations, and the China Securities Regulatory Commission. 2. The Company and its key management personnel have not received administrative penalties (except for those clearly irrelevant to the securities market) or criminal penalties, nor involved in major civil litigation or arbitration related to economic disputes in the past five years. | 2018-06-08 | 2018-11-12 | Completed |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment Letter on Inside Information: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) by issuing shares to purchase assets, the Company has made the following commitments: The company does not disclose relevant inside information of the | 2018-06-08 | 2018-11-12 | Completed |
| restructuring nor use the inside information for insider trading. If the Company violates the above commitments, it will bear all the losses caused to Shenshenbao. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Confirmation Letter on the Ownership of Underlying Assets of the Restructuring Transaction: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as the “target company”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) by issuing shares to purchase assets, the Company has made the following commitments: 1. The Company is an enterprise registered in the People’s Republic of China and has full capacity for civil conduct, and it has the legal subject qualification to participate in this restructuring and sign an agreement with Shenshenbao, and fulfill its rights and obligations under the agreement. 2. The Company has fulfilled its capital contribution obligations to the target company in accordance with the law, and there is no feigned capital contribution, deferred capital contribution, withdrawal of capital contribution, or other behavior which violates its obligations and responsibilities as a shareholder, nor any situation that may affect the legal existence of the target company. 3. There is no ownership dispute or potential ownership disputes in the equity of the target company, nor any situation that may affect the legal existence of the target company. 4. The equity of the target company held by the Company is actually legally owned, there is no dispute over ownership or potential ownership disputes, there is no trust, entrusted shareholding or similar arrangement, and there is no promise or arrangement prohibiting the transfer or restricting the transfer. There is also no pledge, blocking, seizure, property preservation or other rights restrictions, nor litigation, arbitration or other forms of disputes that affect the restructuring. At the same time, the Company guarantees that the equity of the target company will remain in the states until it is registered to Shenshenbao. 5. The equity of the target company held by the Company is the asset with clear ownership, and it is promised that there will be no legal obstacles to the stock transfer after the approval of the China Securities Regulatory Commission, | 2018-06-08 | 2018-11-12 | Completed |
| and there is no dispute over rights and obligations, it is also promised that the transfer of ownership of the shares will be completed within the agreed time limit. 6. Before registering the change of the shareholding of the target company to be under the name of Shenshenbao, the Company will guarantee the normal, orderly and legal operation of the target company, and ensure that the target company does not carry out asset disposal and external guarantees unrelated to normal production and operation, nor increase the behavior of major debts, and ensure that the target company does not illegally transfer, hide assets and business. If there is a need to conduct actions related to the foregoing matters, it must be implemented with the written consent of Shenshenbao under the premise of not violating national laws, regulations and regulatory documents. 7. The Company guarantees that there is no litigation, arbitration or dispute that affects or potentially affects the Company’s transfer of the target company’s equity held by the Company, and guarantees that there are no restrictions in all agreements or contracts signed by the Company which hinder the Company from transferring the equity of the target company it holds. There are no restrictive clauses in the articles of association, internal control system documents and the signed contracts or agreements of the target company that prevent the Company from transferring the equity of the target company it holds. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Provided Information: in viewing of Shenzhen Shenbao Industrial Co., Ltd purchase 100 percent equity of Shenzhen Cereals Group Co., Ltd held by Shenzhen Fude State-owned Capital Operation Co., Ltd. (hereinafter referred to as the company) in way of share issuing, the company made commitments as: 1. The information and materials provided by the committed person for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 2. The information provided by the committed person to the intermediaries participating in this major asset reorganization is the true, accurate and complete source written materials or copy materials, the copy or copies of the materials are consistent with their source materials or original copies; the signatures | 2018-06-08 | 2018-11-12 | Completed |
| and the seals of all documents are true and there are no false records, misleading statements or major omissions. 3. The explanations and confirmations issued by the committed person for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 4. The promisor will provide information about the reorganization to listed company timely, if the listed company or an investor suffers losses due to the existence of false records, misleading statements or major omissions in the information provided, the promisor shall be liable for compensation according to law. 5. If the information provided or disclosed by the committed person for this transaction is suspected of false records, misleading statements or major omissions or is investigated by the judicial authorities or investigated by the China Securities Regulatory Commission, before the conclusion of the investigation, the shares that own rights and interests in the listed company will not be transferred, and the written application for suspicion of transfer and the stock account should be submitted to the board of directors of listed company within two trading days of receipt of the notice of filing the investigation, and the board of directors shall apply for lock-up to the stock exchange and the registration and settlement company on its behalf; If the application for lock-up is not submitted within two trading days, the board of directors is authorized to verify and directly submit the identity information and account information of the committed person directly to the stock exchange and the registration and settlement company and apply for lock-up; if the board of directors fails to submit the identity information of the committed person to the stock exchange and the registration and settlement company, authorize the stock exchange and the registration and settlement company directly lock the relevant shares. If the investigation concludes that there is a violation of the laws and rules, the committed person will promise to lock up the shares and voluntarily use for the compensation arrangements for relevant investors. 6. The committed person agrees to bear individual and joint legal liability for the authenticity, accuracy and completeness of the information provided | |||||
| Shenzhen Cereals Group Co., Ltd | Other commitme | Commitment and Statement on No Major Violations and Integrity: Shenzhen Shenbao Industrial Co., Ltd. intends to purchase the 100% equity of Shenzhen | 2018-06-08 | 2018-11-12 | Completed |
| nts | Cereals Group Co., Ltd (hereinafter referred to as the company) held by Shenzhen Fude State-owned Capital Operation Co. Ltd.through issuance of shares. In response to the above transactions, the company made the following commitments: 1. The company has not been subject to administrative penalties and criminal penalties from the securities market or involved in major civil litigation or arbitration related to economic disputes in the past 5 years, and there are currently no outstanding or foreseeable major litigation, arbitration and administrative punishment cases, nor suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission; there are no cases of failure to repay large debts on time or failure to fulfill commitments, nor administrative supervision taken by the China Securities Regulatory Commission, or disciplinary action taken by the stock exchange. 2. The Company does not have the case that the suspected crime is being investigated by the judicial authorities or suspected of violating the law and being investigated by the China Securities Regulatory Commission, or the alleged crime or illegality has been terminated for 36 months. 3. The Company has not been publicly condemned by the stock exchange in the last 36 months, and there are no other major dishonest acts. 4. There is no such case that the Company is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. 5. Except for major lawsuits and arbitration disclosed in the Restructuring Report, the Company and its branches, wholly-owned and holding subsidiaries do not currently have other outstanding or foreseeable major lawsuits and arbitration cases involving more than 10 million yuan. 6. Except for the administrative penalties disclosed in the Restructuring Report, the Company and its branches, wholly-owned and holding subsidiaries have no act which violates the |
| industrial and commercial, taxation, land, food safety, construction, planning, environmental protection, fire protection, quality supervision or other laws and administrative regulations, received administrative punishment, and have serious circumstances since January 1, 2015. 7. The Company and its branches, wholly-owned and holding subsidiaries have no food safety incidents since January 1, 2015. 8. The Company does not have any illegal guarantee for the controlling shareholder, the actual controller and other enterprises controlled by it. | |||||
| Shenzhen Cereals Group Co., Ltd | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Provided Information: in viewing of Shenzhen Shenbao Industrial Co., Ltd purchase 100 percent equity of Shenzhen Cereals Group Co., Ltd (hereinafter referred to as the company) in way of share issuing, the company made commitments as: 1. The information and materials provided by the company for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 2. The information provided by the company to the intermediaries participating in this major asset reorganization is the true, accurate and complete source written materials or copy materials, the copy or copies of the materials are consistent with their source materials or original copies; the signatures and the seals of all documents are true and there are no false records, misleading statements or major omissions. 3. The explanations and confirmations issued by the company for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. | 2018-06-08 | 2018-11-12 | Completed |
| Shenzhen Agricultural Products Co., Ltd. | Other commitments | Commitment and Statement on No Major Violations and Integrity: in viewing of Shenzhen Shenbao Industrial Co., Ltd purchase 100 percent equity of Shenzhen Cereals Group Co., Ltd in way of share issuing, as the person acing in concert withe the acquirer, Shenzhen Agricultural Products Co., Ltd. (hereinafter referred to as the company) made commitments as: 1. The company has not been subject to administrative penalties and criminal penalties from the securities market or involved in major civil litigation or arbitration related to economic disputes in the past 5 years, and there are currently no outstanding or foreseeable major litigation, | 2018-06-08 | 2018-11-12 | Completed |
| arbitration and administrative punishment cases, nor suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission; there are no cases of failure to repay large debts on time or failure to fulfill commitments, nor administrative supervision taken by the China Securities Regulatory Commission, or disciplinary action taken by the stock exchange. 2. The company does not have the case that the suspected crime is being investigated by the judicial authorities or suspected of violating the law and being investigated by the China Securities Regulatory Commission, or the alleged crime or illegality has been terminated for 36 months. 3. The company has not been publicly condemned by the stock exchange in the last 36 months, and there are no other major dishonest acts. 4. There is no such case that the Company is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. 5. Before the disclosure of this transaction information, the Company does not use insider information to buy or sell related securities or to disclose inside information, or use inside information to advise others to buy and sell related securities and other insider transaction behavior. 6. There is no such case that the Company is not allowed to have non-public offering of shares due to the violation of the provisions of Article 39 of the Administration Measures for the Securities Issuance of Listed Companies. | |||||
| Shenzhen Agricultural Products Co., Ltd. | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Provided Information: Shenzhen Shenbao Industrial Co., Ltd (hereinafter referred to as Shenshenbao or the listed company) purchase 100 percent equity of SZCG form shareholder of Shenzhen Cereals Group Co., Ltd (hereinafter referred to as SZCG or the target company) in way of share issuing. As the person acting in concert with the acquirer, Shenzhen Agricultural Products Co., Ltd. (hereinafter referred to as | 2018-06-08 | 2018-11-12 | Completed |
| individual and joint legal liability for the authenticity, accuracy and completeness of the information provided | |||||
| Shenzhen Shenbao Industrial Co., Ltd. | Other commitments | Commitment and Statement on No Major Violations and Integrity: in viewing of Shenzhen Shenbao Industrial Co., Ltd (hereinafter referred to as the company) purchase 100 percent equity of Shenzhen Cereals Group Co., Ltd in way of share issuing, the company made commitments as: 1. The company has not been subject to administrative penalties and criminal penalties from the securities market or involved in major civil litigation or arbitration related to economic disputes in the past 5 years, and there are currently no outstanding or foreseeable major litigation, arbitration and administrative punishment cases, nor suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission; there is no failure to repay large debts on time, no failure to fulfill commitments, nor administrative supervision measures taken by the China Securities Regulatory Commission, nor disciplinary action made by the stock exchange. 2. The company does not have suspected crime being investigated by the judicial authorities or suspected of violating laws and regulations and being investigated by the China Securities Regulatory Commission, nor behavior of suspected crime or violation of the laws and rules has been terminated for 36 months. 3. The company has not been publicly condemned by the stock exchange in the last 36 months, and there are no other major dishonest acts. 4. There is no such case that the company is not allowed to participate in any major assets restructuring of listed companies in accordance with Article 13 of the Interim Provisions on Strengthening the Supervision of Abnormal Transaction of Stocks Related to Major Assets Restructuring of Listed Companies, that is, “being investigated on suspicion of insider trading related to the major assets restructuring of listed companies or suffering administrative penalties by CSRC or being investigated for criminal responsibility by judicial authorities”. 5. The company does not use insider information to buy or sell related securities before the transaction information is disclosed, nor disclose inside information or use inside information to advise others to buy and sell related securities and other insider | 2018-06-08 | 2018-11-12 | Completed |
| transaction behavior.6. There is no such case that the Company is not allowed to have non-public offering of shares due to the violation of the provisions of Article 39 of the Administration Measures for the Securities Issuance of Listed Companies. | |||||
| Shenzhen Shenbao Industrial Co., Ltd. | Other commitments | Commitment Letter on the Authenticity, Accuracy and Integrity of the Provided Information: in viewing of Shenzhen Shenbao Industrial Co., Ltd (hereinafter referred to as the company) purchase 100 percent equity of Shenzhen Cereals Group Co., Ltd in way of share issuing, the company made commitments as: 1. The information and materials provided by the company for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions. 2. The information provided by the company to the intermediaries participating in this major asset reorganization is the true, accurate and complete source written materials or copy materials, the copy or copies of the materials are consistent with their source materials or original copies; the signatures and the seals of all documents are true and there are no false records, misleading statements or major omissions.3. The explanations and confirmations issued by the company for this major asset restructuring are true, accurate and complete, and there are no false records, misleading statements or major omissions.4. The company agrees to bear individual and joint legal liability for the authenticity, accuracy and completeness of the information provided | 2018-06-08 | 2018-11-12 | Completed |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Commitments on inter-industry competition, related transactions and capital occupancy | Commitment Letter on Avoiding Horizontal Competition: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Listed Company”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) by issuing shares to purchase assets, the Company has made the following commitments: 1. As of the issue date of this Commitment Letter, the Company and other enterprises controlled by the Company have not engaged in any business or activity that directly or indirectly constitute horizontal competition to the Listed Company and its subsidiaries in the business, and guarantees that it will not engage or induce any enterprise controlled by the Company to engage in any business or activity that directly or indirectly constitute horizontal competition to the | 2018-06-08 | Implement as promised | Normal performance |
| Listed Company and its subsidiaries in the future. 2. If the business opportunity obtained by the Company and other enterprises controlled by the Company constitutes horizontal competition or may constitute horizontal competition to the main business of the Listed Company and its subsidiaries, the Company will immediately notify the Listed Company and try its best to give the business opportunity to the Listed Company to avoid horizontal competition or potential horizontal competition with the Listed Company and its subsidiaries and ensure the interests of Listed Company and other shareholders of Listed Company are not impaired. 3. If the main business of the Listed Company and its subsidiaries constitutes horizontal competition or may constitute horizontal competition to the Company and other enterprises controlled by the Company due to business development or extension, the Company and other enterprises controlled by the Company shall take the following feasible measures based on specific circumstance to avoid competition with the Listed Company: (1) Stop business that constitutes competition or may constitute competition to the Listed Company; (2)Transfer the competitive businesses and assets to the Listed Company at fair prices; (3) Transfer the competitive business to an unrelated third party; (4) Other ways to protect the interests of the Listed Company; 4. If the Company violates the above commitments and causes losses to the Listed Company, the Company will compensate the Listed Company for the incurred losses after the losses are determined. 5. The above commitments continue to be valid during the period when the Company is the controlling shareholder of the Listed Company. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Commitments on inter-industry competition, related transactions and | Commitment Letter on Reducing and Regulating Related Transactions: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Listed Company”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) by issuing shares to purchase assets, the Company has made the following commitments: 1. The enterprises directly or indirectly controlled or affected by the Company and the restructured company and its holding companies will regulate and minimize the related transactions. For related transactions that | 2018-06-08 | Implement as promised | Normal performance |
| capital occupancy | cannot be avoided or have reasonable reasons to occur, the Company promises to follow the market-oriented principle of justice, fairness and openness, and sign agreements in accordance with relevant laws and regulations, regulatory documents and articles of association, perform legal procedures, fulfill information disclosure obligations and handle relevant approval procedures in accordance with the law, and ensure not to damage the legitimate rights and interests of the company and other shareholders through related transactions. 2. The enterprises directly or indirectly controlled or affected by the Company will strictly avoid borrowing from the company and its holding and shareholding companies, occupying the funds of the company and its holding and shareholding companies, or embezzling the company’s funds by taking advance payments and compensatory debts from the company and its holding and shareholding companies. 3. After the completion of this transaction, the Company will continue to exercise its shareholder rights in strict accordance with the relevant laws and regulations, regulatory documents and the relevant provisions of the Articles of Association; and fulfill its obligation of avoiding voting when the company’s general meeting of shareholders is voting on related transactions involving the Company. 4. The Company guarantees not to obtain any improper interests through the related transactions or cause the company and its holding and shareholding companies to bear any wrongful obligations. If the company or its holding and shareholding companies suffer loses or the interests of the company or its holding and shareholding companies are embezzled by related transactions, the Company will the losses of the company and its holding and shareholding companies. | ||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment on the Standardized Operation of Listed Company: Shenzhen Shenbao Industrial Co., Ltd. intends to purchase 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) through issuance of shares. In response to the above transactions, the Company has made the following commitments: After the completion of this transaction, the committed | 2018-06-08 | Implement as promised | Normal performance |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment Letter on the Legal Compliance of the Underlying Asset Operation: Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao”, “Listed Company”) intends to purchase 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”, “Target Company”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) through issuance of shares. The Company has made the following commitments: 1. The Target Company is a limited liability company established according to law and is validly existing, possesses statutory business qualifications, and the Target Company has obtained all the approvals, consents, authorizations and licenses required for its establishment and operation, and all approvals, consents and authorizations and licenses are valid and there is no reason or case that may result in the invalidation of the above approvals, consents, authorizations and licenses. 2. The Target Company has no major violations of laws and regulations in the production and operation in the last three years, there is no case that the Target Company should be terminated according to relevant laws, regulations, normative documents and the company’s articles of association. Except for litigations, arbitrations and administrative penalties disclosed in the Restructuring Report, the Target Company does not have any unsettled or foreseeable major litigation, arbitration and administrative penalty that adversely affect its operations or the amount is more than 10 million yuan. 3. The Target Company will perform the labor contracts with its employees independently and completely. 4. If the Target Company is subject to the fees or penalties of the relevant competent authorities in terms of industry and commerce, taxation, employee salaries, social security, housing provident fund, business qualifications or industry supervisors due to the facts already existing before the reorganization, the Company will fully compensates all the outstanding fees of the Target Company and bear all the losses suffered by Shenshenbao and the Target Company. 5. The Target Company legally owns the ownership and/or use rights of the offices, office equipment, trademarks and other assets required for normal production and operation, has independent and complete assets and business | 2018-06-08 | Implement as promised | Normal performance |
| structure, and has legal ownership of its main assets, and the ownership of assets is clear. 6. There is no case that the Target Company impedes the transfer of ownership of the company, such as litigation, arbitration, judicial enforcement, etc., and there is no external guarantee that violates the law or the articles of association. After this reorganization, if the Company violates the above commitments and causes losses to Shenshenbao and the Target Company, the Company agrees to bear the aforementioned compensation/ liability for damage to Shenshenbao/ Target Company. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment on the Independence of Listed Company: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “Shenshenbao”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “Target Company”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) by issuing shares to purchase assets, the Company has made the following commitments: 1. Guarantee the independence of the personnel of Shenshenbao and the Target Company (1) Guarantee that the labor, personnel and compensation management of Shenshenbao and Target Company are completely independent of the Company and other companies and enterprises controlled by the Company or other economic organizations and related parties after the completion of this restructuring. (2) Guarantee that the senior management personnel of Shenshenbao and Target Company are fully employed in Shenshenbao and Target Company and receive remuneration after the completion of this restructuring, and do not hold any post except for directors and supervisors in the Company and other companies, enterprises controlled by the Company or other economic organizations and related parties. (3) Ensure not to intervene into the shareholders’ meeting and the board of directors of Shenshenbao and Target Company to exercise their powers to determine the appointment and dismissal of personnel after the completion of this restructuring. 2. Guarantee the institutional independence of Shenshenbao and Target Company (1) After the completion of this restructuring, Shenshenbao and Target Company will | 2018-06-08 | Implement as promised | Normal performance |
| independent financial accounting system, and a standardized and independent financial accounting system after the completion of this restructuring. (2) Ensure that Shenshenbao and Target Company will open an independent bank account after the completion of this restructuring, and will not share bank accounts with the Company and other companies and enterprises controlled by the Company or other economic organizations and other related parties. (3) After the completion of this restructuring, the financial personnel of Shenshenbao and Target Company shall not take part-time jobs in the Company and other companies and enterprises controlled by the Company or other economic organizations and related parties. (4) After the completion of this restructuring, Shenshenbao and Target Company shall be able to make financial decisions independently, the Company shall not interfere with the use of funds of Shenshenbao and Target Company. (5) After the completion of this restructuring, Shenshenbao and Target Company shall pay taxes independently according to law. If the Company violates the above commitments, it will bear all the losses caused to Shenshenbao and Target Company. | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd., Shenzhen Agricultural Products Co., Ltd. | Commitments on inter-industry competition, related transactions and capital occupancy | Commitment to Avoid Occupation of Non-operating Capital: Shenzhen Shenbao Industrial Co., Ltd. intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. (hereinafter referred to as “SZCG”) held by Shenzhen Fude State-owned Capital Operation Co. Ltd. (hereinafter referred to as “the Company”) through issuance of shares. In response to the above transactions, the Company has made the following commitments: 1. As of the issue date of this commitment letter, the committed person and its related person do not have any illegal use of funds and assets of the listed company and SZCG, and there is no case that the listed company and SZCG provide illegal guarantee for the committed person and its related person. 2. After the completion of the transaction, the committed person guarantees that the committed person and its related person shall not illegally occupy the funds and assets of the listed company in any way, nor require the listed company to provide illegal guarantee for the committed person and its related person under any circumstances, nor engage in any act to damage the legitimate rights and interests of | 2018-06-08 | Implement as promised | Normal performance |
| the listed company and other shareholders. If the committed person violates the above commitments, it will bear all losses caused to the listed company and the target company and other companies and enterprises controlled by them or other economic organizations. | |||||
| Shenzhen Shenbao Industrial Co., Ltd. | Other commitments | Commitment related to the transactions: In view of the fact that Shenzhen Shenbao Industrial Co., Ltd. (hereinafter referred to as “the Company”) intends to acquire 100% equity of Shenzhen Cereals Group Co., Ltd. held by Shenzhen Fude State-owned Capital Operation Co. Ltd. by issuing shares to purchase assets, the Company has made the following commitments: 1. The Company is a limited liability company legally established and is validly existing, there is no bankruptcy, dissolution, liquidation and other cases that it needs to be terminated in accordance with the current effective laws, regulations, normative documents and articles of association, the Company has publicly issued shares and listed in accordance with the law. As a listed company, the Company has the subject qualifications of the issuer of non-public issuance of shares and the purchaser of assets as stipulated in Chinese laws, regulations and normative documents. 2. The Company has complied with the laws and regulations concerning industrial and commercial administration in the past three years. There are no records of suffering administrative penalties with a gross violation for violating relevant industrial and commercial administrative laws and regulations. There is no case that the Company needs to be terminated in accordance with the current effective laws, regulations, normative documents and articles of association. The Company does not have legal impediments to continuous operation. 3. The convening of the shareholders’ meeting, the board meeting, and the board of supervisors meeting of the Company, the contents of the resolution and their signings in the past three years are in compliance with the relevant laws, regulations, normative documents and the articles of association, the convening of the shareholders’ meeting, the board meeting, and the board of supervisors meeting of the Company, the contents of the resolution and their signings for the last three years are legal and valid; the authorization of the stockholders’ meeting of the Company | 2018-06-08 | Implement as promised | Normal performance |
| in the past 36 months, or have been publicly condemned by the stock exchange in the last 12 months. 22. There is no case that the Company and its current directors and senior management personnel are suspected of committing a crime and being investigated by the judicial authorities or suspected of violating the regulations and being investigated by the China Securities Regulatory Commission. | ||||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Other commitments | Commitment to return the arrears to SZCG for Zhanjiang Haitian and Taizhong Agriculture: As of March 31, 2018, the current balance of other receivables of related party of SZCG was 44,605,900 yuan, of which the receivables of related party of Zhanjiang Haitian Aquatic Feed Co., Ltd. (hereinafter referred to as Zhanjiang Haitian) was 40,898,011.31 yuan, and Taizhong Agriculture Co., Ltd. (hereinafter referred to as Taizhong Agriculture) was 3,707,930.42 yuan. The above-mentioned related parties were originally subsidiaries of SZCG. Due to this restructuring, the subsidiary companies whose main businesses discontinued operation were divested to Fude Capital, resulting in the formation of a related relationship between Zhanjiang Haitian and Taizhong Agriculture and the passive formation of accounts receivable from related parties, which didn’t have the subjective intention that the related parties initiatively occupied the funds of SZCG. As a controlling shareholder of SZCG, Zhanjiang Haitian and Taizhong Agriculture, Fude Capital has supervised and urged Zhanjiang Haitian and Taizhong Agriculture to return the above arrears to SZCG as soon as possible, and promised that if Zhanjiang Haitian and Taizhong Agriculture still didn’t return the above all or part of arrears before the equity of SZCG was transferred to Shenshenbao in this restructuring, Fude Capital would assume the obligations for Zhanjiang Haitian and Taizhong Agriculture, and return the arrears to SZCG for Zhanjiang Haitian and Taizhong Agriculture. | 2018-06-19 | 2018-9-6 | Completed | |
| Commitments make in initial public offering or re-financing | ||||||
| Equity incentive commitment |
| Other commitments for medium and small shareholders | ||||||
| Completed on time(Y/N) | Y | |||||
2. Concerning assets or project of the Company, which has profit forecast, and reporting period still inforecasting period, explain reasons of reaching the original profit forecast
√ Applicable□Not applicable
| Assets with earnings forecast or items | Predict start time | Predict termination time | Current forecast performance (10 thousand yuan) | Current actual performance (10 thousand yuan) | Reasons for not reaching predictions (if applicable) | Predicted disclosure date | Predictive disclosure index |
| Shenzhen Cereals Group Co., Ltd | 2018-01-01 | 2020-12-31 | 39,000 | 40,199 | Not applicable | 2018-03-24 | Found more in the Notice of the Company released on Juchao Website (www.cninfo.com.cn) |
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors(if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable√Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculationmethod compared with the financial report of last year
√ Applicable□Not applicable
| Content & reasons | Approval procedure | Note |
| The “Notice on Revising and issuing the Format of General Enterprise Financial Statement for 2018” (CK[2018] No.15) issued by Ministry of Finance on 15 June 2018, the format of financial statement for general enterprise are being revised, and the Company adjusted item presentation of the financial statement and comparative data of comparable accounting period should be adjusted accordingly. | The policy change has deliberated on 23rd session of 9th BOD and no need to deliberated in shareholder general meeting |
| The " Accounting Standards for Business Enterprise No. 42 - Non-current Assets Held for Sale, Disposal Group and Discontinuing Operation” issued by Ministry of Finance on 28 April 2017, relevant accounting treatment for non-current assets held for Sale, disposal group and discontinuing operation are changed correspondingly according to the accounting policy changes. | The policy change has deliberated on 16th session of 9th BOD and no need to deliberated in shareholder general meeting |
| Content & reasons | Approval procedure | The time when changes in accounting estimate begin to apply | Note |
| Identification standards for account receivable with significant single amount, classification of credit risk portfolio and change of percentage of provision for bad debts in age portfolio | The change has deliberated on 24th session of 9th BOD and no need to deliberated in shareholder general meeting | 2018-12-28 | |
| Depreciable life of investment real estate and unification of residual value rate | |||
| Depreciable life of fixed assets and unification of residual value rate | |||
| Unification of amortization period for intangible assets |
| According to the relevant agreement of transfer of stripped assets for free from material assets reorganization signed between the SZCG and Fude Capital, Zhanjiang Haitian Aquatic Feed Co., Ltd does not belong to the scope of material assets reorganization, thus, the equity of Zhanjiang Haitian Aquatic Feed held by SZCG are transfer to Fude Capital for free, which is out of the consolidate scope of the Company. | Reasons for changes |
| Shenzhen Cereals Group Co., Ltd | Enterprise combined under the same control |
| Shenzhen Flour Co., Ltd | Enterprise combined under the same control |
| Shenzhen Hualian Grain & Oil Trade Co., ltd. | Enterprise combined under the same control |
| Hainan Haitian Aquatic Feed Co., Ltd | Enterprise combined under the same control |
| SZCG Quality Inspection Co., Ltd. | Enterprise combined under the same control |
| SZCG Doximi Business Co., Ltd. | Enterprise combined under the same control |
| SZCG Cold-Chain Logistic Co., Ltd. | Enterprise combined under the same control |
| SZCG Big Kitchen Food Supply Chain Co., Ltd. | Enterprise combined under the same control |
| SZCG Real Estate Development Co., Ltd. | Enterprise combined under the same control |
| SZCG Property Management Co., Ltd. | Enterprise combined under the same control |
| SZCG Storage (Yingkou) Co., Ltd. | Enterprise combined under the same control |
| Dongguan SZCG Logistics Co., Ltd. | Enterprise combined under the same control |
| Dongguan International Food Industrial Park Development Co., Ltd. | Enterprise combined under the same control |
| Dongguan SZCG Oil & Food Trade Co., Ltd. | Enterprise combined under the same control |
| Dongguan Golden Biology Tech. Co., Ltd. | Enterprise combined under the same control |
| Shuangyashan SZCG Zhongxin Cereals Base Co., Ltd. | Enterprise combined under the same control |
| Heilongjiang Hongxinglong Nongken Shenxin Cereals Industrial Park Co., ltd. | Enterprise combined under the same control |
| Zhanjiang Haitian Aquatic Feed Co., Ltd | Stripped without compensation from state-owned shares |
| Name of domestic accounting firm | Dahua Certified Public Accountants (Special General Partnership) |
| Remuneration for domestic accounting firm (in 10 thousand Yuan) | 90 |
| Continuous life of auditing service for domestic accounting firm | 11- year |
| Name of domestic CPA | Chen Baohua, Zhou Lingzhi |
| Continuous life of auditing service for domestic CPA | 3- year |
XI. Bankruptcy reorganization
□ Applicable√Not applicable
XII. Significant lawsuits and arbitration of the Company
√ Applicable□Not applicable
XIII. Penalty and rectification
□ Applicable√Not applicable
XIV. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable√Not applicable
XV. Implementation of the Company’s stock incentive plan, employee stock ownership plan orother employee incentives
□ Applicable√Not applicableDuring the reporting period, the Company has no stock incentive plan, employee stock ownership plan or other employee incentivesthat have not been implemented.
XVI. Major related transaction
1. Related transaction with routine operation concerned
√ Applicable □Not applicable
| Related transaction parties | Related relationship | Related transaction type | Related transaction content | Pricing principle | Dealing price | Trading amount (in 10 thousand Yuan) | Proportion in the amount of the same transaction | Approved transaction amount (in 10 thousand Yuan) | Whether to exceed the approved amount | Means of payments | Market price of similar transaction available | Date of disclosure | Index of disclosure |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Controlling shareholder | Related leasing | Related leasing | Fair value in market | 2,843.42 | 2,843.42 | 2,843.42 | N | Cash | Not applicable | Not applicable | Not applicable |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Controlling shareholder | Related leasing | Related leasing | Fair value in market | 34.52 | 34.52 | - | - | Cash | Not applicable | Not applicable | Not applicable | |
| Total | -- | -- | 2877.94 | -- | 2,843.42 | -- | -- | -- | -- | -- | |||
| Details of major sold-out order sent back | Not applicable | ||||||||||||
| The actual implementation of routine related transactions that is about to occurred in the Period with total amount estimated by category (if applicable) | Not applicable | ||||||||||||
| Reason for the great difference between trade price and market reference price (if any) | Not applicable | ||||||||||||
| Related transaction parties | Related relationship | Related transaction type | Related transaction content | Pricing principle | Book value of the assets transferred (in 10 thousand Yuan) | Valuation value of the assets transferred (in 10 thousand Yuan) | Transfer price(in 10 thousand Yuan) | Means of payments | Transaction gain/loss(in 10 thousand Yuan) | Date of disclosure | Index of disclosure |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Controlling shareholder | Material assets reorganization | Purchased100 percent equity of SZCG by issuing shares | Valuation value | 287,960.44 | 587,554.64 | 587,554.64 | Purchased100 percent equity of SZCG by issuing shares | 0 | 22018-10-15 | Found more in the Notice of the Company released on Juchao Website (www.cninfo.com.c |
| n) | ||
| Reasons for the great difference between transfer price and book value or valuation value (if applicable) | N/A | |
| Impact on operation results and financial status of the Company | Affected the current consolidated net profit of parent company 412.95million yuan | |
| For those related transaction with performance commitment involved, the achievement of performance during the period | In reporting period, SZCG has a net profit attributable to parent company after deducting non-recurring gains/losses of 401.99 million yuan, which achieved the performance commitment | |
| Related party | Relationship | Causes | Whether has a non-operational fund occupancy (Y/N) | Opening balance (in 10 thousand Yuan) | Amount increased in the period (in 10 thousand Yuan) | Amount collected in the period (in 10 thousand Yuan) | Interest rate | Current interest (in 10 thousand Yuan) | Ending balance (in 10 thousand Yuan) |
| Zhanjiang Haitian Aquatic Feed Co., Ltd | Affiliated enterprise of controlling shareholder | Divestiture profits | N | 4,058.92 | 179.93 | 4,238.85 | 0.00% | 0 | 0 |
| Impact on operation result and financial status of the Company from related claims | N/A | ||||||||
| Related party | Relationship | Causes | Opening balance (in | Amount increased in | Amount paid in the period | Interest rate | Current interest (in | Ending balance (in |
| 10 thousand Yuan) | the period (in 10 thousand Yuan) | (in 10 thousand Yuan) | 10 thousand Yuan) | 10 thousand Yuan) | ||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Controlling shareholder | Divestiture profits | 601.49 | 1,191.30 | 0 | 0.00% | 0 | 1792.79 |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Controlling shareholder | Related leasing | 710.86 | 2,843.42 | 0 | 0.00% | 0 | 3,554.28 |
| Impact on operation result and financial status of the Company from related debts | N/A | |||||||
XVII. 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 reporting period
(3) Leasing
□ Applicable√Not applicable
No leasing in the Period2. Major Guarantee
√ Applicable□Not applicable
(1) Guarantee
In 10 thousand Yuan
| External Guarantee (not including guarantees to subsidiaries) | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party |
| Guarantee for the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party |
| Dongguan SZCG Logistics Co., Ltd. | 27,300 | 2015-07-13 | 17,887 | Joint liability guarant | 8 years | N | N | |
| y | ||||||||
| Dongguan SZCG Logistics Co., Ltd. | 10,200 | 2016-12-21 | 5,576 | Joint liability guaranty | 5 years | N | N | |
| Dongguan SZCG Logistics Co., Ltd. | 1,530 | 2017-05-19 | 1,530 | Joint liability guaranty | 2 years | N | N | |
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd | 3,000 | 2018-07-26 | 3,000 | Joint liability guaranty | 1 year | N | N | |
| Dongguan International Food Industrial Park Development Co., Ltd. | 39,168 | 2018-07-27 | 14,463 | Joint liability guaranty | 14 years | N | N | |
| Dongguan SZCG Logistics Co., Ltd. | 15,000 | 2018-10-17 | 3,000 | Joint liability guaranty | 1 year | N | N | |
| Total amount of approving guarantee for subsidiaries in report period (B1) | 57,168 | Total amount of actual occurred guarantee for subsidiaries in report period (B2) | 20,463 | |||||
| Total amount of approved guarantee for subsidiaries at the end of reporting period (B3) | 96,198 | Total balance of actual guarantee for subsidiaries at the end of reporting period (B4) | 45,456 | |||||
| Guarantee of the subsidiaries for the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party |
| Total amount of guarantee of the Company( total of three above mentioned guarantee) | ||||||||
| Total amount of approving guarantee in report period (A1+B1+C1) | 57,168 | Total amount of actual occurred guarantee in report period (A2+B2+C3) | 20,463 | |||||
| Total amount of approved guarantee at the end of report period (A3+B3+C2) | 96,198 | Total balance of actual guarantee at the end of report period (A4+B4+C4) | 45,456 | |||||
| The proportion of the total amount of actually guarantee in the net assets of | 10.89% | |||||||
| the Company(that is A4+ B4+C4) | |
| Including: | |
| Balance of the guarantee provided for shareholder, actual controller and their related parties (D) | 0 |
| The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or indirectly(E) | 42,456 |
| Proportion of total amount of guarantee in net assets of the Company exceed 50%(F) | 0 |
| Total amount of the aforesaid three guarantees(D+E+F) | 42,456 |
| Type | Fund sources | Amount occurred | Undue balance | Overdue amount |
| Bank financial products | Owned fund | 5,000 | 0 | 0 |
| Bank financial products | Owned fund | 4,000 | 0 | 0 |
| Bank financial products | Owned fund | 2,000 | 0 | 0 |
| Bank financial products | Owned fund | 2,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 2,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 5,000 | 0 | 0 |
| Bank financial products | Owned fund | 5,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 100 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 7,900 | 0 | 0 |
| Bank financial products | Owned fund | 2,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 0 | 0 |
| Bank financial products | Owned fund | 3,000 | 3,000 | 0 |
| Bank financial products | Owned fund | 3,000 | 3,000 | 0 |
| Bank financial products | Owned fund | 5,000 | 5,000 | 0 |
| Bank financial products | Owned fund | 2,000 | 2,000 | 0 |
| Bank financial products | Owned fund | 3,000 | 3,000 | 0 |
| Total | 78,000 | 16,000 | 0 | |
4. Other material contracts
√ Applicable □Not applicable
| Contracting enterprise | Contracting counter party | Contract object | Date of contract | Book value of the assets involved in contract (in 10 thousand Yuan)(if applicable) | Evaluation value of the assets involved in contract (in 10 thousand Yuan)(if applicable) | Evaluation institution (if applicable) | Base date of evaluation (if applicable) | Pricing principle | Trading price (in 10 thousand Yuan) | Whether it is a related transaction (Y/N) | Relationship | Implementation as at end of the period | Date of disclosure | Index of disclosure |
| Shenzhen Shenbao Industrial Co., Ltd. | Shenzhen Fude State-owned Capital Operation Co., Ltd. | 100 percent equity of Shenzhen Cereals Group Co., Ltd | 2018-06-08 | 287,960.44 | 587,554.64 | Beijing China CEA | 2017-09-30 | Found more in Report on Purchase of Assets by Issuing Shares and Related Transaction (Draft) (Revised) released on Juchao Website dated 23 June 2018 | 587,554.64 | Y | The counter party is the controlling shareholder of the Company- Fude Capital, thus, the transaction consist of a related transaction | Ended as the reporting period, the transaction has approved by the CSRC, and the underlying assets of 100 percent equity of SZCG have completed the ownership transfer procedures and relevant industrial & commercial | 2018-06-11 | Agreement of the Assets Acquisition by Issuing Shares between Shenzhen Shenbao Industrial Co., Ltd. And Shenzhen Fude State-owned Capital Operation Co., Ltd and supplementary agreement released on |
| changes | Juchao website dated 24 March 2018, 4 April, 11 June and 8 Sept. |
XVIII. Social responsibility1. Performance of social responsibility
During the reporting period, the Company has been strictly in accordance with "Company Law", "Securities Law","Articles of Association" and other relevant laws and regulations, continues to improve governance structure andregulized operation. the Company attaches importance to social responsibility, sustains attention to social createvalue, integrity management according to law, to provide consumers with safe and secure products, high-quality,green and healthy products to enhance the capacity for sustainable development and overall competitiveness;making efforts to improve management, enhance innovation capability and core competencies; the Company upholda fair, just and open principles of treatment for all investors, with particular emphasis on safeguarding the interestsof minority shareholders; the Company strictly comply with national environmental laws and regulations,thoroughly implement green philosophy, strengthen ecological protection, comply with the overall development ofthe country and society, and strive to achieve economic and social benefits, short-term interests and long-terminterests of their own development and social development, coordination, thus achieve healthy and harmoniousdevelopment between the Company and the community, the Company and the environment.
2. Execution of social responsibility of targeted poverty alleviation
(1) Plan of targeted poverty alleviationIn 2018, the company continued to carry out the targeted poverty alleviation work at Guilin Village, Yidu Town,Longchuan County, Heyuan City through SZCG, its wholly-owned subsidiary. According to the documents of theGuangdong Provincial Party Committee and the Provincial Government “Opinions on Implementation of the Three-year Tack on Targeted Poverty Alleviation in the New Era” (YF [2016] No. 13), the task of Guilin Village’s povertyalleviation was to achieve the goals of “Two No-worries Three-Guarantees One-Equal” in 2018, realizing no worriesfor food and clothing for impoverished people, guarantees for compulsory education, basic medical care and housingsecurity, and index of main fields of basic public services equal to the provincial average, and strive to bring 10 lowincome families with 44 persons get ready for getting out of poverty in 2018 (totally bring 52 families with 145persons out of poverty in three year ). In order to ensure that the poverty alleviation work achieve substantive resultsand implement the various objectives and tasks of targeted poverty alleviation, the work team adopted the followingeffective assistance measures: help poor households increase their income by organizing training courses, helpingsell tea, providing public welfare positions, assisting in handling small loans, encouraging to work outside, leadingto increase tea planting, increasing the planting area, and using the investment dividends of “substituting andcomplementing the financial funds with rewards”, and other means.(2) Summary of annual targeted poverty alleviationIn 2018, the Company has input 1684500 yuan in total for poverty alleviation (consolation money and materialallowance excluded), and used to improve the infrastructure construction, implement industrial assistance plan with
tea as the main component, and provided medical insurance for poor households.Performance and effectFirst, in the aspect of industrial assistance, carried out poverty alleviation work in the mode of “company +cooperative + farmer + base”, guided the large tea farmers to actively help more than 20 tea farmers to purchase tea,which solved the marketing problem of villagers’ tea to a certain extent; utilized the “substituting andcomplementing the financial funds with rewards” to guide the 20 poor households with labor capacity to invest inthe Nanyuewang Company and the Aodingfeng Tea Cooperative, at the end of 2018, the two investment dividendsamounted to 64,300 yuan, with an average income of 3,215 yuan per household. After three years, the principal of10,000 yuan/person will be returned, which will provide financial guarantees for the poor households to developtheir industries in the future. Organized the tea training courses for four times and 200 person-time of poorhouseholds participated in the training, which enhanced the production skills of poor households. Organized largetea farmers to participate in the first tea garden trade fair of poverty alleviation town village of Heyuan City,achievement exhibition of Shenzhen - Heyuan City targeted poverty alleviation, and Shenzhen Tea Fair, whichgreatly enhanced the popularity of “Guilin Tea”.Second, in the improvement of village infrastructure and public services, invested 625,000 yuan to build theChashan Road of more than 30 kilometers, which has effectively improved the tea picking efficiency of the villagers,and invested 570,000 yuan to complete the hardening project for 2.1 km village road to ensure the safe travel of thevillagers. Started the construction of a new village service center to improve the environment of the villagers’ arena,invested 200,000 yuan to install solar street lamps, make hygiene billboard, buy electric cleaning vehicles andgarbage cans, hire poor households as cleaners, beautify the village appearance, and change the backward situationof “dirty, chaotic and poor”. By the end of 2018, 14 dangerous houses had been reconstructed, and 52 poverty-stricken households in the village had achieved safe housing and reached the “eight-have” requirement.Third, in the medical education assistance, invested 77,600 yuan to help the villagers in Guilin Village to handle thenew rural cooperative medical insurance so as to reduce the burden of disease prevention and treatment of thevillagers; applied for the allowance of 33,000 yuan to Shenzhen Charity Federation for the children from 5 poorhouseholds, which effectively reduced the economic burden of schooling for the children of poor households. In2018, 8 households with 37 persons were released from poverty.
(3) Performance of targeted poverty alleviation
| Target | Measurement unit | Numbers/ implementation |
| i. Overall | —— | —— |
| Including:1. fund | 10 thousand yuan | 173.27 |
| 2. Material discount | 10 thousand yuan | 2.08 |
| 3.number of poverty-stricken population eliminating poverty with card for archives established | Person | 145 |
| ii. Invested by specific project | —— | —— |
| 1.Industrial development poverty | —— | —— |
| Including: 1.1Type | —— | Poverty alleviation in agriculture and forestry industry |
| 1.2 numbers of industrial development poverty | Number | 1 |
| 1.3Amount input | 10 thousand yuan | 62.5 |
| 1.4number of poverty-stricken population eliminating poverty with card for archives established | Person | 37 |
| 2.Transfer employment | —— | —— |
| Including: 2.1 Amount input for vocation skills training | 10 thousand yuan | 0.8 |
| 2.2 Number of vocation skills training | Person-time | 200 |
| 2.3 Number of poverty-stricken population achieving employment with card for archives established | Person | 15 |
| 3.Relocation the poor | —— | —— |
| Including: 3.1 Number of employed persons from relocated households | Person | 0 |
| 4.Education poverty | —— | —— |
| Including: 4.1 Amount input for subsidizing the impoverished students | 10 thousand yuan | 3.75 |
| 4.2Number of subsidized poor student s | Person | 6 |
| 4.3Amount input for improving the education resources in poverty-stricken areas | 10 thousand yuan | 0.4 |
| 5.Health poverty alleviation | —— | —— |
| Including: 5.1 Amount input for medical and health resources in poverty-stricken areas | 10 thousand yuan | 7.76 |
| 6.Ecological protection and poverty alleviation | —— | —— |
| Including: 6.1 Type | —— | Carry out ecological protection and construction |
| 6.2Amount input | 10 thousand yuan | 8.8 |
| 7.Fallback protection | —— | —— |
| Including: 7.1 Amount input for Three Stay Behind persons | 10 thousand yuan | 5.12 |
| 7.2Number of Three Stay Behind persons help | Person | 47 |
| 7.3Amount input for poor disabled persons | 10 thousand yuan | 0.96 |
| 7.4Number of poor disabled persons help | Person | 6 |
| 8.Social poverty alleviation | —— | —— |
| 9.Other | —— | —— |
| Including: 9.1. number of items | Number | 7 |
| 9.2.Amount input | 10 thousand yuan | 81.1 |
| 9.3.number of poverty-stricken population eliminating poverty with card for archives established | Person | 138 |
| iii. Awards (content and grade) | —— | —— |
3. Environmental protectionThe listed Company and subsidiaries is in the range of heavy pollution industry that regulated by State environmentprotection departments
Yes
| Name | Name of Major Pollutants and Particular Pollutants | Emission Method | Quantity of Discharge Outlet | Distribution of Discharge Outlet | Emission Concentration | Executed Pollutant Discharge Standards | Total Emissions | Approved Total Emissions | Excessive Discharge |
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd | Chemical oxygen demand | Emission after the qualified biochemical treatment | 1 | Concentrated emission | 10 | 90 | 0.22 tons | 15.44 tons /Year | N/A |
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd | Suspended matter | Emission after the qualified biochemical treatment | 1 | Concentrated emission | 5 | 60 | 0.11 tons | 10.293 tons /Year | N/A |
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd | Five-day biochemical oxygen demand | Emission after the qualified biochemical treatment | 1 | Concentrated emission | 1.8 | 20 | 0.04 tons | 3.431 tons /Year | N/A |
| Shenzhen Shenbao Huacheng Science and | Ammonia nitrogen | Emission after the qualifie | 1 | Concentrated emissi | 0.146 | 10 | 0.003 tons | 1.716 tons /Year | N/A |
| Technology Co.,Ltd | d biochemical treatment | on | |||||||
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd | Chroma | Emission after the qualified biochemical treatment | 1 | Concentrated emission | 2 | 40 | 0.044 tons | 6.862 tons /Year | N/A |
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd | PH value | Emission after the qualified biochemical treatment | 1 | Concentrated emission | 7.43 | 6~9 | —— | —— | N/A |
Environmental self-monitoring scheme1. The Company installed COD, PH value, and flowmeter pollution source online monitor for all-weather on-line monitoring in 2010.2. Engage a third-party professional organization to test the industrial discharge of waste water for every half year.
Other environmental information that should be disclosed1. Oil-to-gas project: In 2011, the Company transformed its two boilers from diesel boilers into natural gas boilers that burn cleanenergy, which greatly reduced the greenhouse gas emissions.2. Clean production audit: The Company passed the voluntary clean production audit of Shenzhen in 2016.
Note: If the company discloses environmental information content in the form of an interim report during the reporting period, it oughtto explain the follow-up progress or changes. If the relevant matters have been disclosed in the interim report and there is no progressor change in subsequent implementation, only the summary of the matter should be disclosed and the relevant query index of theinterim report disclosure website should be provided.Other environment protectionNil
XIX. Explanation on other significant events
√ Applicable□Not applicableShenzhen Shenbao Industrial has applied for a suspension of the Company’s stock (referred to as: Shenshenbao A, Shenshenbao B,stock code: 000019, 200019) from the opening of the market on August 22, 2017 to the Shenzhen Stock Exchange due to the planningand preparation of major events. On September 5, 2017, the Company disclosed the “Announcement on the Suspension for the MajorAsset Restructuring of the Company”, the Company’s stock has been transferred to major asset restructuring and continued to besuspended since the opening of the market on September 5, 2017. During the suspension of the Company’s stock, the Company hasdisclosed the “Announcement on Suspension Progress of Major Asset Restructuring” at least every five trading days in accordancewith relevant regulations.
On March 23, 2018, the Company convened the 15
th
session of the 9
th
Board of Directors which discussed and approved the“Proposal on Preplanning of Shenzhen Shenbao Industrial Co., Ltd. Issuing Shares to Purchase Assets and Related Transactions”, andthe proposals related to this major asset restructuring.
On 27 March 2018, the Company received the “Inquiry Letter on the Restructuring of Shenzhen Shenbao Industrial Co., Ltd.” [LicenseRestructuring Inquiry Letter [2018] No. 6] issued by the Shenzhen Stock Exchange. According to the requirements of the inquiry letter,the Company promptly organized various intermediaries to carry out careful research, implemented and replied the relevant issues termby term, and supplemented and revised the original planning, and compiled the “Preplanning of Shenzhen Shenbao Industrial Co., Ltd.Issuing Shares to Purchase Assets and Related Transactions (revised version)”
By application, the Company’s stock resumed the trading on the opening of the market on the morning of April 4, 2018 (Wednesday).
On June 8, 2018, the Company held the 17
th
session of the 9
th
board of directors which deliberated and approved the “Proposal on ‘theCompany’s Share Issuance for Purchasing Assets and Related Transactions Report (Draft)’ and its Summary” and other proposals
related to major asset restructuring.
On June 15, 2018, the Company received the “Approval of Shenzhen State-owned Assets Supervision and Administration Commissionon the Company’s Share Issuance for the Acquisition of 100% Equity of Shenzhen Cereals Group and Relevant Issues of Major AssetsRestructuring” (SGZWH [2018] No. 499) issued by Shenzhen SASAC from Fude Capital, agreed the restructuring plan reported byFude Capital.
On June 19, 2018, the Company received the “Inquiry Letter on the Company’s Restructuring” [XKLCZWXH[2018] No. 18] issuedby the Shenzhen Stock Exchange. According to the requirements of the inquiry letter, the Company supplemented and improved thedocuments related to this major asset restructuring, and established the Report on Share Issuance of Shenzhen Shenbao Industrial Co.,Ltd. for Purchasing Assets and Related Transactions (Revised Version).
On June 27, 2018, the Company held the first extraordinary meeting in 2018 which reviewed and approved the “Proposal on ‘theCompany’s Share Issuance for Purchasing Assets and Related Transactions Report (Draft)’ and its Summary” and other proposalsrelated to this major asset restructuring.
On July 5, 2018, the Company received the “Notice of Correction on Application for Administrative License of China SecuritiesRegulatory Commission” (No. 181013) (hereinafter referred to as the “Notice of Correction”) issued by the China Securities RegulatoryCommission. The CSRC reviewed the application materials for the administrative license of the “Approval of the Company’s ListedCompanies to Issue Shares to Purchase Assets” submitted by the Company, and requested the Company to submit the relevantcorrection materials to the acceptance department of CSRC for administrative license application within 30 working days from the dateof issuance of the Notice of Correction. The Company strictly followed the requirements of the Notice of Correction, and activelyprepared the correction materials and submitted them in time.
On July 27, 2018, the Company received the “Administrative License Application Acceptance Form of CSRC” issued by the ChinaSecurities Regulatory Commission (acceptance number is 181013). The China Securities Regulatory Commission examined theapplication materials for the administrative license of the “Approval of the Issuance of Shares by Listed Companies to Purchase Assets”submitted by the Company in accordance with the law, considering that all materials were complete, decided to accept the applicationfor the administrative license.
On August 9, 2018, the Company obtained the “Notice of Investigation of China Securities Regulatory Commission” (YZDCTZ No.180133) from Jonten, the audit institution responsible for this major asset restructuring, because it was suspected of violating securitieslaws and regulations in the audit process of other enterprises, CSRC decided to file a case and investigate it. In accordance with therelevant regulations of the CSRC Decree No. 138, the Company convened the board meeting on August 13, 2018, and decided to applyto the CSRC for the suspension of the “Approval of the Issuance of Shares by Listed Companies to Purchase Assets” and submittedthe application to the CSRC on the same day. On August 15th, the Company received the “Notice of the Suspension of the Reviewabout Administrative License Application from China Securities Regulatory Commission (No. 181013), and CSRC decided to agreeto the Company’s suspension of the review.
In view of the fact that Jonten had fulfilled the corresponding review procedures and issued the review report in accordance with theregulations, on August 19, 2018, the Company convened the board meeting to deliberate and approve the “Proposal on Resuming theReview about the Application for ‘the Approval of Issuance of Assets by Listed Companies to Purchase Assets’ to the China SecuritiesRegulatory Commission”, and agreed the Company to apply to the China Securities Regulatory Commission for resumption of review.
On August 23, 2018, the company received the “Written Decision on Not Implementing Further Review to the Anti-monopolyInvestigation of Operators” issued by the Anti-Monopoly Bureau of the State Administration of Market Regulation (FLDCSH [2018]No. 153), which agreed not to implement further review to the equity case about the company’s acquisition of Shenzhen Cereals Group,and the company can implement concentration from now on.On August 24, 2018, the company received the “Notice of Resuming the Review to Administrative Licensing Application of ChinaSecurities Regulatory Commission” (No. 181013), and the China Securities Regulatory Commission reviewed the “Approval ofResuming the Review to the Issuance of Shares for Asset Purchase by Listed Companies” submitted by the company according to law,and considered that the application was in compliance with the conditions for resuming review. According to the relevant provisionsof Article 23 of the Regulations on the Implementation Procedures of Administrative Licensing of the China Securities RegulatoryCommission, the CSRC decided to resume the review of the application for the administrative licensing.On August 31, 2018, the company received the “Notice of Feedback on Administrative Licensing Project Review from the ChinaSecurities Regulatory Commission” issued by the China Securities Regulatory Commission (No. 181013). The China SecuritiesRegulatory Commission investigated the application materials for administrative licensing of “Approval of Issuance of Shares for AssetPurchase by Listed Companies” submitted by the company in accordance with the law, requiring the company to provide writtenexplanations on relevant issues and submit a written response to the administrative licensing acceptance department of China SecuritiesRegulatory Commission within 30 working days..On September 6, 2018, the company held the 22
nd
meeting of the Ninth Board of Directors which reviewed and approved the Proposalon Amending the Issue Price Adjustment Plan, the Proposal on Adjusting the Issue Price of Issuance of Shares for Asset Purchase bythe Company, and other proposals related to the major asset restructuring.On September 10, 2018, the company replied to a feedback from the China Securities Regulatory Commission and revised therestructuring report according to the feedback.On September 12, 2018, the company received a notice from the China Securities Regulatory Commission, the Listed Company Mergerand Acquisition and Reorganization Audit Committee of China Securities Regulatory Commission (hereinafter referred to as the “M&Aand Reorganization Committee”) will hold a working meeting in the near future to review the company’s issuance of shares for assetpurchase and related transactions. After applying to the Shenzhen Stock Exchange, the company’s stocks (stock abbreviation:
Shenshenbao A, Shenshenbao B, stock codes: 000019, 200019) have been suspended since the opening on September 13, 2018(Thursday).On September 21, 2018, the company received a notice from the China Securities Regulatory Commission, after reviewed by the 44
th
working conference of the M&A and Reorganization Committee in 2018 held by the Listed Company Merger and Acquisition andReorganization Audit Committee of China Securities Regulatory Commission, the company’s issuance of shares for asset purchaseand related transactions obtained a pass unconditionally. After applying to the Shenzhen Stock Exchange, the company’s stocks (stockshort name: Shenshenbao A, Shenshenbao B, stock codes: 000019, 200019) resumed trading on September 25, 2018 (Tuesday).On October 13, 2018, the company disclosed the reorganization assessment report additional announcement, and revised therestructuring report according to the additional situation.On October 15, 2018, the company received the Reply on the Approval of the Company to Issue Shares to Fude Capital to PurchaseAssets (ZJXK [2018] No. 1610) approved and issued by the China Securities Regulatory Commission, according to which the companyrevised the restructuring report.On October 18, 2018, the company obtained the “Change (Record) Notice” (21802220859) issued by the Shenzhen Market SupervisionAdministration, and the transfer of the underlying assets of the company regarding the issuance of shares to purchase assets and therelated transactions was completed. After the completion of this change, the company holds 100% equity of Shenzhen Cereals Group.
On November 12, 2018, the issuance of shares for this major asset restructuring was listed on the Shenzhen Stock Exchange.
XX. Significant event of subsidiary of the Company
√ Applicable□Not applicable
1. On July 24, 2018, the company held the 18
th
meeting of the Ninth Session of Board of Directors and the 10
th
meeting of the Ninth Session of Board of Supervisors, and reviewed and approved the Proposal on the Relocationof the Shenzhen Factory of the Company’s Subsidiary - Shenzhen Shenbao Huacheng Tech Co., Ltd.”, and agreedto relocate the Shenzhen Factory of Shenzhen Shenbao Huacheng Tech Co., Ltd., its wholly-owned subsidiary, toits wholly-owned subsidiary, Wuyuan County Jufangyong Tea Industry Limited Company. Found more in the Noticeof the Company released on Juchao website (www.cninfo.com.cn) dated 26 July 20182. On December 28, 2018, the company held the 24
th
meeting of the Ninth Session of Board of Directors and the
th
meeting of the Ninth Session of Board of Supervisors, and reviewed and approved the “Proposal on theRevocation of the Company’s Subsidiary - Shenzhen Shenbao Huacheng Tech Co., Ltd. Shantou Branch”, agreedto revoke the company’s wholly-owned subsidiary Shenzhen Shenbao Huacheng Tech Co., Ltd. Shantou Branch.Found more in the Notice of the Company released on Juchao website (www.cninfo.com.cn) dated 29 Dec. 2018
Section VI. Changes in Shares and Particulars about
Shareholders
I. Changes in Shares
1. Changes in shares
In Share
| Before the Change | Increase/Decrease in the Change (+, -) | After the Change | |||||||
| A mount | Proportion | New shares issued | Bonus shares | Capitalization of public reserve | Others | Subtotal | A mount | Proportion | |
| I. Restricted shares | 29,068,445 | 5.85% | 655,752,951 | 0 | 0 | 0 | 655,752,951 | 684,821,396 | 59.42% |
| 1. State-owned shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 2. State-owned corporate shares | 13,431,784 | 2.70% | 655,752,951 | 0 | 0 | 0 | 655,752,951 | 669,184,735 | 58.06% |
| 3. Other domestic shares | 15,583,325 | 3.14% | 0 | 0 | 0 | 1 | 1 | 15,583,326 | 1.35% |
| Including: Domestic legal person’s shares | 15,384,832 | 3.10% | 0 | 0 | 0 | 0 | 0 | 15,384,832 | 1.33% |
| Domestic nature person’s shares | 198,493 | 0.04% | 0 | 0 | 0 | 1 | 1 | 198,494 | 0.02% |
| 4. Foreign shares | 53,336 | 0.01% | 0 | 0 | 0 | -1 | -1 | 53,335 | 0.01% |
| Including: Foreign corporate shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| overseas nature person’s share | 53,336 | 0.01% | 0 | 0 | 0 | -1 | -1 | 53,335 | 0.01% |
| II. Un-restricted shares | 467,713,858 | 94.15% | 0 | 0 | 0 | 0 | 0 | 467,713,858 | 40.58% |
| 1. RMB common shares | 415,964,578 | 83.73% | 0 | 0 | 0 | 0 | 0 | 415,964,578 | 36.09% |
| 2. Domestically listed foreign shares | 51,749,280 | 10.42% | 0 | 0 | 0 | 0 | 0 | 51,749,280 | 4.49% |
| 3. Foreign listed foreign shares | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| 4. Other | 0 | 0.00% | 0 | 0 | 0 | 0 | 0 | 0 | 0.00% |
| III. Total shares | 496,782,303 | 100.00% | 655,752,951 | 0 | 0 | 0 | 655,752,951 | 1,152,535,254 | 100.00% |
respectively.
Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable√Not applicable
2. Changes of restricted shares
√ Applicable□Not applicable
In Share
| Shareholders’ name | Number of shares restricted at Period-begin | Number of shares released in the Year | Number of new shares restricted in the Year | Number of shares restricted at Period-end | Restriction reasons | Released date |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | 0 | 0 | 655,752,951 | 655,752,951 | Additional limited shares for material assets reorganization | 2022-5-12 |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | 0 | 0 | 13,431,784 | 13,431,784 | Restricted shares before IPO | Restrict shares of Shenzhen Investment Holding transfer for free |
| Shenzhen Investment Holding Co., Ltd | 13,431,784 | 13,431,784 | 0 | 0 | Restricted shares before IPO | 2018-4-3 |
| Yan Zesong | 53,336 | 1 | 0 | 53,335 | Senior executives locked-up shares | Shares unlock every year takes 25% of the total shares holding |
| Yao Xiaopeng | 33,288 | 0 | 1 | 33,289 | Senior executives locked-up shares | Shares unlock every year takes 25% of the total shares holding |
| Total | 13,518,408 | 13,431,785 | 669,184,736 | 669,271,359 | -- | -- |
| Stock and its | Issuing date | Issuing price (or | Issuing amount | Listing date | Numbers | Date for deal closure |
| derivative securities | interest rate) | approved for listing | ||||
| Stock | ||||||
| SZCH | 2018-11-12 | 8.96 yuan/share | 655,752,951 | 2018-11-12 | 655,752,951 | |
| Convertible corporate bond, Convertible corporate bonds traded separately and corporate bond | ||||||
| Other derivative securities | ||||||
| Shareholder | Before transaction | After transaction | ||
| Number of shares holding (Share) | Proportion of shares holding | Number of shares holding (Share) | Proportion of shares holding | |
| Shenzhen Agricultural Products Co., Ltd. | 94,832,294 | 19.09% | 94,832,294 | 8.23% |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | 79,484,302 | 16.00% | 735,237,253 | 63.79% |
| Other circulating shareholders | 322,465,707 | 64.91% | 322,465,707 | 27.98% |
| Total | 496,782,303 | 100.00% | 1,152,535,254 | 100.00% |
III. Particulars about shareholder and actual controller of the Company
1. Number of shareholders and particulars about shares holding
In Share
| Total common stock shareholders in reporting period-end | 63,160 | Total common stock shareholders at end of last month before annual report disclosed | 57,385 | Total preference shareholders with voting rights recovered at end of reporting period (if applicable) (found in note 8) | 0 | Total preference shareholders with voting rights recovered at end of last month before annual report disclosed (if applicable) (found in note 8) | 0 | ||||||
| Particulars about shares held above 5% by shareholders or top ten shareholders | |||||||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held | Total shares hold at the end of report period | Changes in report period | Amount of restricted shares held | Amount of un-restricted shares held | Number of share pledged/frozen | ||||||
| State of share | Amount | ||||||||||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | State-owned legal person | 63.79% | 735,237,253 | 735,237,253 | 669,184,735 | 66,052,518 | |||||||
| Shenzhen Agricultural Products Co., Ltd. | Other | 8.23% | 94,832,294 | 0 | 15,384,832 | 79,447,462 | |||||||
| Sun Huiming | Domestic nature person | 0.30% | 3,403,262 | 0 | 0 | 3,403,262 | |||||||
| Hu Xiangzhu | Domestic nature person | 0.23% | 2,630,000 | 720000 | 0 | 2,630,000 | |||||||
| Zhonghai Trust Co., Ltd. - Zhonghai - Pujiang Star 353 Collective Fund Trust | Other | 0.18% | 2,108,025 | 2,108,025 | 0 | 2,108,025 | |||||||
| China resources Trust - CR Trust - Yun sheng 9 Collective Fund Trust Plan | Other | 0.18% | 2,091,200 | 2,091,200 | 0 | 2,091,200 | |||||||
| Cai Yunsheng | Domestic nature person | 0.14% | 1,611,590 | 1,611,590 | 0 | 1,611,590 | |||||||
| Central Huijin Asset | State-owned | 0.13% | 1,472,625 | 0 | 0 | 1,472,625 | |||||||
| Management Co., Ltd. | legal person | |||||||
| Lin Junbo | Domestic nature person | 0.13% | 1,457,900 | 1,457,900 | 0 | 1,457,900 | ||
| Li Qian | Domestic nature person | 0.11% | 1,279,191 | -3487 | 0 | 1,279,191 | ||
| Strategy investors or general corporation comes top 10 common shareholders due to rights issue (if applicable) (see note 3) | N/A | |||||||
| Explanation on associated relationship among the aforesaid shareholders | Shenzhen SASAC directly holds 100% equity of Fude Capital, and holds 34% of Agricultural Products indirectly through Fude Capital; the Company was not aware of any related relationship between other shareholders above, and whether they belonged to parties acting in concert as defined by the Acquisition Management Method of Listed Company. | |||||||
| Particular about top ten shareholders with un-restrict shares held | ||||||||
| Shareholders’ name | Amount of un-restrict shares held at Period-end | Type of shares | ||||||
| Type | Amount | |||||||
| Shenzhen Agricultural Products Co., Ltd. | 79,447,462 | RMB common shares | 79,447,462 | |||||
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | 66,052,518 | RMB common shares | 66,052,518 | |||||
| Sun Huiming | 3,403,262 | Domestically listed foreign shares | 3,403,262 | |||||
| Hu Xiangzhu | 2,630,000 | RMB common shares | 2,630,000 | |||||
| Zhonghai Trust Co., Ltd. - Zhonghai - Pujiang Star 353 Collective Fund Trust | 2,108,025 | RMB common shares | 2,108,025 | |||||
| China resources Trust - CR Trust - Yun sheng 9 Collective Fund Trust Plan | 2,091,200 | RMB common shares | 2,091,200 | |||||
| Cai Yunsheng | 1,611,590 | RMB | 1,611,590 | |||||
| common shares | |||
| Central Huijin Asset Management Co., Ltd. | 1,472,625 | RMB common shares | 1,472,625 |
| Lin Junbo | 1,457,900 | RMB common shares | 1,457,900 |
| Li Qian | 1,279,191 | RMB common shares | 1,279,191 |
| Expiation on associated relationship or consistent actors within the top 10 un-restrict shareholders and between top 10 un-restrict shareholders and top 10 shareholders | Shenzhen SASAC directly holds 100% equity of Fude Capital, and holds 34% of Agricultural Products indirectly through Fude Capital; the Company was not aware of any related relationship between other shareholders above, and whether they belonged to parties acting in concert as defined by the Acquisition Management Method of Listed Company. | ||
| Controlling shareholders | Legal person/person in charge of the unit | Date of foundation | Organization code | Main operation business |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Zhu Junming | 2017-12-14 | 91440300MA5EWWPXX2 | Investing in the establishment of industries (Specific projects are declared separately); development, operation and management of self-owned properties. (Projects subject to approval according to law should be approved by relevant departments before carrying out business activities) (Except for projects prohibited by laws, administrative regulations and the decisions of the State Council, and the restricted projects must be licensed before operating) |
| Equity of other domestic/oversea listed Company control by controlling shareholder as well as stock-joint in report period | Except for holding 63.79 percent equity of the Company, 34.04 percent equity of Shenzhen Agricultural Products Co., Ltd was held by Shenzhen Fude State-owned Capital Operation Co., Ltd. |
| New controlling shareholder | Shenzhen Fude State-owned Capital Operation Co., Ltd. |
| Date for change | 2018-4-3 |
| Query index on specify web site | Juchao website（www.cninfo.com.cn） |
| Disclosure date on specify web site | 2018-4-4 |
| Actual controller | Legal person/person in charge of the unit | Date of foundation | Organization code | Main operation business |
| Shenzhen Municipal People’s Government State-owned Assets Supervision & Administration Commission | Yu Gang | 2004-04-02 | 11440300K317280672 | According to the authorization of the Shenzhen Municipal Government, perform the investor’s duties in accordance with laws and regulations, safeguard the rights and interests of the investor of state-owned assets in accordance with the law; assume the responsibility of supervising the state-owned assets of municipal enterprises; assume the responsibility of supervising the hedging and investor of state-owned assets of the supervised enterprises; guide and advance the supervised enterprises to improve the corporate governance structure, strengthen the construction of the board of directors and the board of supervisors of the supervised enterprises; take responsible for appointing or recommending directors, supervisors and financial controllers to the supervised enterprises, take responsible for the audit of the economic responsibility of the responsible |
| persons of the supervised enterprises in accordance with the provisions on the administration authority of the persons in charge of the enterprise; take responsible for preparing the budget and final account draft of the annual state-owned capital operation of the supervised enterprises, including the government budget system, etc. | ||
| Equity of other domestic/foreign listed Company controlled by actual controller in reporting period | - | |
□ Applicable√Not applicable
5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,restructuring side and other commitment subjects
□ Applicable√Not applicable
Section VII. Preferred Stock
□ Applicable √Not applicable
Section VIII. Particulars about Directors, Supervisors, Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
| Name | Title | Post-holding status | Sex (F/M) | Age | Start dated of office term | End date of office term | Shares held at period-begin (Share) | Increasing shares held in this period (Share) | Decreasing shares held in this period (Share) | Other changes (share) | Shares held at period-end(Share) |
| Zheng Yuxi | Party Secretary, Chairman | Currently in office | M | 57 | 2015-09-10 | 2018-09-10 | 66,000 | 0 | 0 | 0 | 66,000 |
| Zhang Guodong | Director | Currently in office | M | 57 | 2017-09-13 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| Wang Li | Director | Currently in office | M | 58 | 2018-05-15 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| Ni Yue | Director | Currently in office | F | 45 | 2018-05-15 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| Fan Zhiqing | Independent director | Currently in office | M | 70 | 2015-09-10 | 2018-09-10 | 3,960 | 0 | 0 | 0 | 3,960 |
| Wu Shuping | Independent director | Currently in office | M | 66 | 2015-09-10 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| Chen Cansong | Independent director | Currently in office | M | 47 | 2015-09-10 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| Yan Zesong | Director, GM | Currently in office | M | 49 | 2015-09-10 | 2018-09-10 | 71,114 | 0 | 0 | 0 | 71,114 |
| Li Yiyan | Director, Deputy GM, Secretary of the Board | Currently in office | F | 53 | 2015-09-10 | 2018-09-10 | 41,250 | 0 | 0 | 0 | 41,250 |
| Lin Hong | Chairman of supervisory committee | Currently in office | F | 54 | 2015-09-10 | 2018-09-10 | 41,250 | 0 | 0 | 0 | 41,250 |
| Wang | Supervisor | Currently | F | 52 | 2018-05- | 2018-09- | 0 | 0 | 0 | 0 | 0 |
| Huimin | in office | 15 | 10 | ||||||||
| Luo Longxin | Staff supervisor | Currently in office | M | 58 | 2015-09-10 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| 钱晓军 | Deputy GM | Currently in office | M | 47 | 2015-09-10 | 2018-09-10 | 0 | 0 | 0 | 0 | 0 |
| Yao Xiaopeng | Deputy GM | Currently in office | M | 51 | 2015-09-10 | 2018-09-10 | 44,385 | 0 | 0 | 0 | 44,385 |
| Wang Zhiping | CFO | Currently in office | F | 48 | 2015-09-10 | 2018-09-10 | 28,050 | 0 | 0 | 0 | 28,050 |
| Liu Zhengyu | Director | Office-leaving | M | 49 | 2015-09-10 | 2018-04-13 | 0 | 0 | 0 | 0 | 0 |
| Huang Yu | Director | Office-leaving | M | 45 | 2015-09-10 | 2018-04-13 | 0 | 0 | 0 | 0 | 0 |
| Li Xinjian | Supervisor | Office-leaving | M | 47 | 2015-09-10 | 2018-05-15 | 0 | 0 | 0 | 0 | 0 |
| Li Fang | Deputy party secretary, SCID, Deputy GM | Office-leaving | F | 45 | 2015-09-10 | 2018-05-31 | 39,766 | 0 | 0 | 0 | 39,766 |
| Total | -- | -- | -- | -- | -- | -- | 335,775 | 0 | 0 | 0 | 335,775 |
| Name | Title | Type | Date | Reasons |
| Liu Zhengyu | Director | Office-leaving | 2018-04-13 | Reasons for job transfer |
| Huang Yu | Director | Office-leaving | 2018-04-13 | Reasons for job transfer |
| Li Xinjian | Supervisor | Office-leaving | 2018-05-15 | Reasons for job transfer |
| Li Fang | Deputy party secretary, SCID, Deputy GM | Non-reappointment | 2018-05-31 | Reasons for job transfer |
Mr. Zheng Yuxi: bachelor degree of economics, was born in 1962. He has served successively as director andDeputy GM of underling enterprise of Shenzhen Special Economic Region Free Commodities Enterprises,Chairman of Shenzhen Agri-Pastoral Enterprises Co., Ltd., assistant GM and Deputy GM and GM of the Company,Chairman of 7
th
and 8
th
BOD; and now serves as Party Secretary of the Company and chairman of the 9
th
BOD
Mr. Zhang Guodong: master’s degree, and engineer, was born in 1962. He successively served as director of theassets management dept. in Shenzhen Agricultural Products Co., Ltd, the director of international dept. and directorof the GM Office; the GM and chairman of Shanghai Hanjisi Market Management Co., Ltd. Now he serves as GMof the HQ of supplying chain management in Shenzhen Agricultural Products Co., Ltd; also the director of 9
th
BODof the Company
Mr. Wang Li: master’s degree and an accountant, was born in 1961. He successively served as assistant workers inChengdu Locomotive Factory; assistant workers in Xi’an Railway Branch; business manager, vice director of thefinancial department, director of capital division, deputy chief accountant, deputy GM, Director, deputy partysecretary and GM of Shenzhen SEG Group Co., Ltd.; now he serves as full-time external director of ShenzhenSASAC, Director of Shenzhen Cereals Group Co., Ltd and Shenzhen Agricultural Products Co., Ltd, the Directorof 9
th
BOD of the Company.
Ms. Ni Yue: a master’s degree and a senior accountant, was born in 1974. She successively served as general ledgeraccountant in Shanghai Jingan Commercial & Trade Corporation; chief accounting in Shanghai Tailong Real EstateCo., Ltd.; finance officer in Shanghai Baodi Property Co., Ltd; chief accountant in Shanghai Ruian Real Estate Co.,Ltd and full-time supervisor in the enterprise directly under SASAC of Shanghai Pudong New District. Now sheserves as full-time external director of Shenzhen SASAC, Director of Shenzhen Bus Group and Shenzhen CerealsGroup Co., Ltd; chief financial officer of Shenzhen Fude State-owned Capital Operation Co., Ltd.and Director of
th
BOD of the Company.
Mr. Fan Zhiqing, was born in 1949, a master’s degree, a senior accountant and senior economist. He has servedsuccessively as judge of title of a senior professional post in Guangdong Province and panelists, financial managerand CFO of large state-run or joint venture in Shenzhen, guest professor of Shenzhen University and ShenzhenManagers College, independent Director of Ocean’s King Lighting Science & Technology Co., Ltd.;independent Director of Shenzhen Kingsignal Technology Co., Ltd.; Independent director of Shenzhen UniverseGroup; he also served as independent director of 5
th
, 6
th
and 8
th
BOD of the Company; independent director ofShenzhen Shahe Industrial Co., Ltd; now he serves as independent director of Shenzhen SEG Co., Ltd. andindependent director of 9
th
BOD of the Company.
Mr. Wu Shuping, was born in 1953, a Master degree and senior economist. He has served successively as deputyfactory director of Shanghai Starter Motor Factory; deputy director of comprehensive division of General Office of
Shanghai Municipal People’s Government; Director and Deputy President of Asia Commerce EnterprisesConsultant Co., Ltd.and Independent Director of Shenzhen Agricultural Products Co., Ltd and Chengdu Hi-TechInvestment Group. Now he serves as GM of Shanghai Baiyan Enterprise Management Consultant Co., Ltd, andIndependent Director of 9
th
BOD of the Company.
Mr. Chen Cansong: born in 1972, bachelor degree. Successive director, politics and law committee of the districtparty committee, Shantou; assistant lawyer of Guangdong Xincheng Law firm; lawyer of Guangdong Ruite Lawfirm; now he is a lawyer and partner of Guangdong Dena Law Firm; outside director of Shenzhen State-owned DutyFree Commodities (Group) Co.,Ltd. and independent director of 9
th
BOD of the Company.
Mr. Yan Zesong, was born in 1970, a university background. He served as Director and GM of Shenzhen ShenbaoHuacheng Food Co., ltd., President and chairman of Shenbao Huacheng Science and Technology Co.,Ltd,supervisor of 6
th
Supervisory Committee of the Company and Director of 7
th
and 8
th
BOD of the Company. He nowserves as Director and GM of 9
th
BOD of the Company
Ms. Li Yiyan, was born in 1966, a master’s degree, a senior human resources manager. She has served successivelyas deputy director and director of the HR department of the Company, supervisor of 5
th
and 6
th
supervisorycommittee of the Company, the Director and Secretary of 7
th
BOD and Secretary of the 8
th
BOD. Now she servesas Director of 9
th
BOD, Secretary of the Board and Deputy GM of the Company.(ii) SupervisorMs. Lin Hong, was born in 1965, senior accountant with master degree. She once was the accountant charger ofShenzhen Native Product & Animal By-Products & Tea I/E Co., accountant charge of Planning and FinancialDepartment of Hesheng FUR& LEATHER CO., Ltd., deputy minister of Planning and Financial Department ofShenzhen Foreign Trade Xinhua Enterprise Co., accountant and deputy minister and minister of Planning andFinancial Department of Agricultural Products and chairman of 7
th
and 8
th
supervisory committee of the Company.Now she serves as chairman of 9
th
supervisory committee of the Company.
Ms. Wang Huimin: master’s degree and a intermediate economist, senior HR manager and has a lawyer’squalification, was born in 1967. She successively served as a legal adviser for Shenzhen Construction Group Co.,Ltd, an economist, chairman of the committee of female employees, manager of HR department in ShenzhenConstruction Investment Holding Co., Ltd; director of HR department of Shenzhen Investment Holding Co., Ltd;Deputy GM of SZPRD; Director, Deputy party secretary and SCID of Shenzhen Cereals Group Co., Ltd. Now sheserves as SCID and Chairman of supervisory committee of Shenzhen Cereals Group Co., Ltd, the supervisor of 9
th
supervisory committee of the Company.
Mr. Luo Longxin, was born in 1970, a university background and a tea researcher, was born in 1961. He successivelyworked in Tea Research Institute, Chinese Academy of Agricultural Sciences, mainly engaged in research and
technology development in tea making, tea bevarage, concentrated tea juice and other tea deep processing, servedas deputy director of the tea making office, member of the academic committee, and in 2018, he was hired byNational Science & Technology Award Office as an expert in evaluation of the National Science & TechnologyAward. Worked as the director of production and quality department in Shenzhen Shenbao Huacheng Food Co.,Ltd., the supervisor of 8
th
supervisory committee of the Company. Now he serves as the chief technical office andhead of R&D center of the Company, supervisor of 9
th
supervisory committee of the Company and Chairman ofthe Shenzhen Shenbao Technology Center Co., Ltd., subordinate enterprise of the Company.(iii) Senior executiveMr. Qian Xiaojun, was born in 1972, a university background, a food engineer. He served in tea research instituteof Chinese Academy of Agricultural Sciences, mainly engaged in research of further processing of tea as well astea-making, tea beverage and concentrated tea; He successively served as technical chief and GM of ShenzhenShenbao Huacheng Science and Technology Co., Ltd. Now he serves as Deputy GM of the Company and chairmanof Hangzhou Ju Fang Yong Holding Co., Ltd and Shenzhen Shenshenbao Investment Co., Ltd.
Mr. Yao Xiaopeng, was born in 1968, a university background, a food safety division. He has successively servedas deputy GM and GM of Guangdong Shenbao Food Co., Ltd., Chairman of Shenbao Sanjing Food & BeverageDevelopment Co., Ltd and GM assistant of the Company. Now he serves as deputy GM of the Company andchairman of Huizhou Shenbao Science & Technology Co., Ltd.
Ms. Wang Zhiping, was born in 1971, a university background, an accountant and non-practicing CPA. She hassuccessively served as auditor, senior auditor and department manager of Shenzhen Dahua CPA; director assistantand director of accounting and financial department of the Company. Now she serves as CFO of the Company.
Post-holding in shareholder’s unit
√ Applicable□Not applicable
| Name | Name of shareholder’s units | Position | Start dated of office term | End date of office term | Weather receiving remuneration from shareholder’s units |
| Zhang Guodong | Shenzhen Agricultural Products Co., Ltd | GM of the HQ of supplying chain management | Y | ||
| Explanation on post-holding in shareholder’s unit | N/A | ||||
√ Applicable□Not applicable
| Name | Name of other units | Position | Start dated of office term | End date of office term | Weather receiving remuneration from other units |
| Fan Zhiqing | Shenzhen SEG Co., Ltd. | Independent director | Y | ||
| Wu Shuping | Shanghai Baiyan Enterprise Management Consultant Co., Ltd | GM | Y | ||
| Chen Cansong | Guangdong Dena Law Firm | Lawyer, partner | Y | ||
| Chen Cansong | Shenzhen State-owned Duty Free Commodities (Group) Co.,Ltd | Outside Director | N | ||
| Explanation on post-holding in other unit | N/A | ||||
In 10 thousand Yuan
| Name | Title | Sex | Age | Post-holding status | Total remuneration obtained from the Company | Whether remuneration obtained from related party of the Company |
| Zheng Yuxi | Party Secretary, Chairman | M | 57 | Currently in office | 96.20 | N |
| Zhang Guodong | Director | M | 57 | Currently in office | 0 | Y |
| Wang Li | Director | M | 58 | Currently in office | 0 | Y |
| Ni Yue | Director | F | 45 | Currently in office | 0 | Y |
| Fan Zhiqing | Independent director | M | 70 | Currently in office | 10 | N |
| Wu Shuping | Independent director | M | 66 | Currently in office | 10 | N |
| Chen Cansong | Independent director | M | 47 | Currently in office | 10 | N |
| Yan Zesong | Director、GM | M | 49 | Currently in office | 74.49 | N |
| Li Yiyan | Director、Deputy GM、Secretary of the Board | F | 53 | Currently in office | 103.67 | N |
| Lin Hong | Chairman of supervisory committee | F | 54 | Currently in office | 56.84 | N |
| Wang Huimin | Supervisor | F | 52 | Currently in office | 0 | Y |
| Luo Longxin | Staff supervisor | M | 58 | Currently in office | 46.29 | N |
| Qian Xiaojun | Deputy GM | M | 47 | Currently in office | 47.65 | N |
| Yao Xiaopeng | Deputy GM | M | 51 | Currently in office | 63.32 | N |
| Wang Zhiping | CFO | F | 48 | Currently in office | 73.33 | N |
| Liu Zhengyu | Director | M | 49 | Office-leaving | 0 | Y |
| Huang Yu | Director | M | 45 | Office-leaving | 0 | Y |
| Li Xinjian | Supervisor | M | 47 | Office-leaving | 0 | Y |
| Li Fang | Deputy GM | F | 45 | Office-leaving | 50.99 | N |
| Total | -- | -- | -- | -- | 642.78 | -- |
| Employee in-post of the parent Company(people) | 154 |
| Employee in-post of main Subsidiaries (people) | 942 |
| The total number of current employees(people) | 1,096 |
| The total number of current employees to receive pay (people) | 1,096 |
| Retired employee’ s expenses borne by the parent Company and main Subsidiaries(people) | 1 |
| Professional composition | |
| Category of professional composition | Numbers of professional composition (people) |
| Production personnel | 429 |
| Salesperson | 134 |
| Technicians | 86 |
| Financial personnel | 99 |
| Administrative personnel | 348 |
| Total | 1,096 |
| Education background | |
| Education | Numbers (people) |
| Postgraduate or above | 95 |
| Undergraduate | 337 |
| 3-years regular college graduate | 250 |
| Polytechnic school graduate | 87 |
| Senior middle school graduate or below | 327 |
| Total | 1,096 |
Section IX. Corporate governance
I. Brief introduction of corporate governance
During the reporting period, the Company constantly improved the corporate governance structure, improved thequality of corporate governance, and established a sound internal control system, strictly in accordance withcorporate governance requirements of normative documents released by the “Company Law“, ”Securities Law,Corporate Governance Guidelines“ and ”Standardize Operational Guidelines to Main Board Listed Companies ofShenzhen Stock Exchange. The Company continued to carry out the governance activities, improved the standardoperation level, and safeguarded the legitimate interests of the Company and investors.
(i) Accountability among Shareholders’ General Meeting, the Board of Directors and Supervisors were clear, westrictly implemented the rules from the "Articles of Association" during the reporting period as well as workregulations and other basic management system to ensure the effective implementation of the internal control system.
(ii) In reporting period, governance mechanism formulated and revised by the Company are as:
The Special Proposal of Article of Association Revision has deliberated and approved in AGM 2017 held on 15May 2018, found more in the Article of Association (May 2018) released on Juchao Website (www.cninfo.com.cn)dated 16 May 2018.
The Management System of Corporate Entrusted Finance has deliberated and approved in 17
th
session of 9
th
BODheld on 8 June 2018, found more in the Management System of Corporate Entrusted Finance released on JuchaoWebsite (www.cninfo.com.cn) dated 11 June 2018.
The Special Proposal of Article of Association Revision, Rules of Procedure of the Board Revision and Rules ofProcedure of Supervisory Committee Revision have deliberated and approved in Third Extraordinary shareholdersmeeting of 2018 held on 15 Nov. 2018, found more in the Article of Association (November 2018), Rules ofProcedure of the Board (November 2018) and Rules of Procedure of Supervisory Committee (November 2018)released on Juchao Website (www.cninfo.com.cn) dated 6 November 218.
The Special Proposal of Article of Association Revision has deliberated and approved in 24
th
session of 9
th
BODheld on 28 December 2018, found more in the Article of Association (December 2018) released on Juchao Website(www.cninfo.com.cn) dated 29 December 2018.
The Company received no relevant documents with administrative regulation concerned from supervisiondepartment in reporting period, and has no particular about rectification within a time limit. From point of the Board,corporate governance of the Company shows no difference to requirement from relevant documents with actual
condition.
Is there any difference between the actual condition of corporate governance and relevant regulations aboutcorporate governance for listed Company from CSRC?□ Yes √ NoThere are no differences between the actual condition of corporate governance and relevant regulations aboutcorporate governance for listed Company from CSRC.
II. Independence of the Company in aspect of business, personnel, assets, institute and financerelative to its controlling shareholder
By the end of the reporting period, Fude Capital is the actual controller of the Company with 63.79 percent sharesheld. The Company, in strict accordance with the governance rules of listed corporate and other relevantprovisions, completely separates from the controlling shareholders in business, finance, personnel, assets,organizations, and has independent full business and self management ability.1. Independent Business:
The business of the Company is independent from controlling shareholders and has complete business and selfmanagement ability and is mainly engaged in Grain & oil trading processing, Warehousing logistics service, production andsale of tea products, food and beverage products. It develops business alone, not depends on the shareholders andtheir affiliated enterprises, which has no competition with controlling shareholder and its subordinate enterprises.The controlling shareholder has no direct or indirect intervention in the Company business activities.
2. Independent Staff:
The Company has special organization to manage labor and payment, and has independent perfect personnel systemand collective management system. General manager of the Company as well s deputy GM, secretary of the Board,CFO and other senior executives are received remuneration from the Company, and are not received remunerationfrom shareholders’ unit and subordinate enterprises and holding the post except director or supervisor. All theCompany's directors, supervisors are elected through legal procedures. The general manager, deputy generalmanager, chief financial officer and the board secretary are appointed by the board meeting. The Company hasindependent power of appointment and removal of personnel.3. Independent Assets:
The Company has independent and integrity asset structure, has independent production system, auxiliaryproduction systems and supporting facilities, and has independent purchase and sales system. There is no controllingshareholder's non business occupation of money and the property.4. Independent Organization:
The Company has set up a sound organizational structure system and operates independently; owns production andbusiness operation place independent from the controlling shareholders; there is no mixed operation between theCompany and controlling shareholders.5. Financial Independent:
The Company, with independent financial department, has set up independent accounting system and financial
management system and makes financial decision independently. With independent bank accounts, tax payment,the Company strictly follows the financial system and has independent operation and standardized management.There is no intervention into financial and accounting activity by controlling shareholder.
III. Horizontal Competition
□ Applicable√Not applicable
IV. In the report period, the Company held annual general meeting and extraordinaryshareholders’ general meeting
1. Annual General Meeting in the report period
| Session of meeting | Type | Ratio of investor participation | Date | Date of disclosure | Index of disclosure |
| Annual General Meeting of 2017 | AGM | 0.19% | 2018-05-15 | 2018-05-16 | Disclosed at www.cninfo.com.cn on No. 2018-44 " resolutions Announcement to 2017 Annual General Meeting of Shenzhen Shenbao Industrial Co., Ltd. " on 16 May 2018 |
| First extraordinary general meeting of 2018 | extraordinary general meeting | 4.78% | 2018-06-27 | 2018-06-28 | Disclosed at www.cninfo.com.cn on No. 2018-57 " resolutions Announcement to First extraordinary general meeting of 2018 " on 28 June 2018 |
| Second extraordinary general meeting of 2018 | extraordinary general meeting | 0.00% | 2018-09-13 | 2018-09-14 | Disclosed at www.cninfo.com.cn on No. 2018-81 " resolutions Announcement to Second extraordinary general meeting of 2018 " on 14 September 2018 |
| Third extraordinary general meeting of 2018 | extraordinary general meeting | 0.06% | 2018-11-15 | 2018-11-16 | Disclosed at www.cninfo.com.cn on No. 2018-97 " resolutions Announcement to Third extraordinary general meeting of 2018 " on 16 November 2018 |
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable√Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and general meeting
| The attending of independent directors | |||||||
| Name of independent director | Times of Board meeting supposed to attend in the report period | Times of Presence | Times of attending by communication | Times of entrusted presence | Times of Absence | Absent the Meeting for the second time in a row (Y/N) | Times of attending shareholders’ meeting |
| Fan Zhiqing | 10 | 10 | 0 | 0 | 0 | N | 0 |
| Wu Shuping | 10 | 4 | 6 | 0 | 0 | N | 1 |
| Chen Cansong | 10 | 10 | 0 | 0 | 0 | N | 1 |
Directors” detailed in www.cninfo.com.cn on disclosure.
VI. Performance of Duties by Specialized Committees under the Board Meeting in theReporting Period1. Performance of Duties by the Auditing Committee
In the reporting period, totally three meetings are held by auditing committee for annual report of the Company,Annual Report 2017, First Quarterly Report of 2018, semi-annual report 2018, the financial report of 3
rd
quarterlyreport 2018 deliberation; and confirmed that the financial report satisfy requirement of Accounting rules and presenta fair and complete financial status, operation results and cash flow of the Company; examined the constructionprogress of internal control, carried a professional opinions for the auditing institution appointed outside theCompany, guarantee the Company finished auditing on schedule. Auditing committee of the Company earnestlyfollowing the principle of diligence, play a supervise role in full and protect the independency of the auditing.
2. Performance of Duties by the Remuneration and Appraisal CommitteeDuring the reporting period, the remuneration and appraisal committee has held one meeting to examine the 2017annual performance factor according to the regulation of performance management measures for the headquarters,and inspected the 2017 annual salary for the Company's directors, supervisors and senior managers, at the sametime, made confirmation for the operating performance indicators in 2018.
3. Performance of Duties by the Nomination CommitteeDuring the reporting period, the Nominations Commission of the Board of Directors convened a meeting whichreviewed the proposal on supplementing Mr. Wang Li and Ms. Ni Yue as the director of the Company and conductedexamination on their qualifications in accordance with the stipulations of the “Work Regulations on the NominationsCommission of the Board of Directors of the Company”.
4. Performance of Duties by the Strategy CommitteeDuring the reporting period, the strategy committee of the Board held four meetings and deliberated and approvedthe follow proposals as Shenzhen Shenbao Industrial Co., Ltd Issuing Shares to Purchase Assets and Plan of RelatedTransaction, The conditional Agreement on Share Issuance and Purchase of Assets signed by Fude Capital,Shenzhen Shenbao Industrial Co., Ltd Issuing Shares to Purchase Assets and Pre-Plan of Related Transaction andRevoke the Shantou Branch of Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd etc.
5. Performance of Duties by the Information Disclosure CommitteeDuring the reporting period, the Information Disclosure Commission of the Board of Directors held three meetingsand reviewed the Company’s periodic reports of 2017 and the first quarter of 2018, the semi-annual of 2018 and thethird quarter of 2018 in accordance with the “Implementation Rules of Information Disclosure Commission of the
Company”, and ensured that the information disclosure contents were true, accurate and complete without falserecords, misleading statements or major omissions.
VII. Works from Supervisory Committee
Whether the Company has risks or not in reporting period that found in supervisory activity from supervisorycommittee□ Yes √ No
VIII. Appraisal and incentive mechanism for senior executives
The personnel department of the Company is based on the Company's overall business performance andachievement of management index, the remuneration and appraisal committee under the board meeting of theCompany will carry on comprehensive evaluation in accordance with the headquarter performance managementmethod, take it as the basis for salary adjustment and rewards of senior management personnel and then implementafter the approval of the board meeting and general meeting. The Company will further explore the effectiveincentive mechanism to fully arouse the initiative and enthusiasm of management, promoting the sustainable andstable development of the Company.
IX. Internal control
1. Details of major defects in IC appraisal report that found in reporting period
□ Yes √ No
2. Self-appraisal Report of Internal Control
| Disclosure date of full internal control evaluation report | 2019-04-27 | |
| Disclosure index of full internal control evaluation report | Juchao information website (www.cninfo.com.cn) | |
| The ratio of the total assets of units included in the scope of evaluation accounting for the total assets on the Company's consolidated financial statements | 50.31% | |
| The ratio of the operating income of units included in the scope of evaluation accounting for the operating income on the Company's consolidated financial statements | 4.69% | |
| Defects Evaluation Standards | ||
| Category | Financial Reports | Non-financial Reports |
| Qualitative criteria | Major defects: Defect alone or together with other defects in a timely manner cause | Qualitative evaluation criteria for Identified internal control deficiencies |
| unpreventable or undetectable and uncorrectable material misstatement in the financial statements. The Company may indicate the presence of significant deficiencies in internal control over financial reporting if following circumstances: ① The directors, supervisors and senior management fraud; ②Enterprise corrected mistake which has been published in financial statements; ③ CPA found material misstatement in current financial statements, but internal control during operation failed to find the misstatements; ④Oversight of internal control by Corporate Audit Committee and the internal audit is invalid; ⑤ Particularly important or significant deficiencies found during internal control has not been rectified; ⑥The lack of business-critical system or invalid system. Important defect: defect alone or together with other defects in a timely manner cause unpreventable or undetectable and uncorrectable material misstatement in the financial statements, although not reach and exceed the level of importance, should lead to management attention misstatements. If the defect found meet any of the following, it should be identified as an important defect in the internal control of financial reports: ① The current financial report has important misstatement based on the above identification, the control activity fails to identify the misstatement; ② Although the misstatement hasn’t reached and exceeded the importance level, but in terms of nature, it should still cause the board of directors and management to pay attention to. General Defects: other internal defects do not pose a significant or important defect control deficiencies. | in non-financial reporting are as follows: the Company may indicate the presence of significant deficiencies related to non-financial reporting internal control if following circumstances: ①The lack of democratic decision-making process, such as the lack of decision-making on major issues, an important appointment and dismissal of cadres, major investment decisions, large sums of money using the decision-making process; ②Decision-making process is not scientific, such as major policy mistakes, resulting in significant property damage to the Company; ③ Serious violations of national laws and regulations; ④ Loss of key executives or loss of a large number of key talent; ⑤Negative media news are frequent. Other cases are determined by the degree of influence as an important general defect or common defects. |
| Quantitative standard | Qualitative criteria of financial reporting are as follows: General Defects: reported wrongly <0.5% of total capital or reported wrongly<0.5% of operating income; Important flaw: 0.5% of total assets ≤ reported wrongly <1% of total assets or 0.5% of operating income≤ misstatements <1% of revenue; Major flaw: misstatement ≥ 1% of total assets or misstatements ≥ 1% of revenue. | Qualitative evaluation criteria for Identified internal control deficiencies in non-financial reporting are as follows: General defects: the amount of direct property loss of 10 million (10 million) and ~ 1.5 million Yuan by the provincial (including provincial) government the following penalties but the Company disclosed in periodic reports on the negative impact; Important flaw: the amount of direct property loss of 1.5 million Yuan (including 1.5 million Yuan) ~ 3 million Yuan and punished by the state government but the Company disclosed in periodic reports on the negative impact; Major flaw: the amount of direct property loss of 3 million Yuan and above and have been officially disclosed outside the Company disclosed in periodic reports and adversely affected. |
| Amount of significant defects in financial reports | 0 | |
| Amount of significant defects in non-financial reports | 0 | |
| Amount of important defects in financial reports | 0 | |
| Amount of important defects in non-financial reports | 0 | |
| Deliberations in Internal Control Audit Report | |
| Dahua Certified Public Accountants (special general partnership) believes Shenshenbao Company was in accordance with the "basic norms of internal control" and the relevant provisions and maintained effective internal control of financial reporting in all material respects on 31 Dec 2018 | |
| Disclosure details of audit report of internal control | Disclosed |
| Disclosure date of audit report of internal control (full-text) | 2019-04-27 |
| Index of audit report of internal control (full-text) | Juchao Information Website (www.cninfo.com.cn) |
| Opinion type of auditing report of IC | Standard unqualified |
| Whether the non-financial report had major defects | No |
Section X Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date whenannual report approved for released or fail to cash in full on due□Yes √ No
ection XI. Financial Report
I. Audit Report
| Type of audit opinion | Standard unqualified opinion |
| Signing date of audit report | 2019-04-25 |
| Name of audit institute | Dahua Certified Public Accountants (Special General Partnership) |
| Document serial of audit report | [2019]No.: 005107 |
| Name of the CPA | Chen Baohua, Zhou Lingzhi |
III. Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of thefinancial statements of the current period. These matters were addressed in the context of our audit of the financialstatements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on thesematters.We identified the following key audit issues that need to be communicated in the audit report.
Inventory and inventory falling price reserves; andRevenue confirmation.(i) Inventory and inventory falling price reservesMatter description
Please refer to Note IV. (xii) and Note VI, Annotation 6. to the consolidated financial statements for the accountingpolicies and carrying amounts of the inventory and inventory falling price reserves.
As of December 31, 2018, the inventory book balance presented on the consolidated financial statements of SZCHCompany was 2,926,908,330.62 yuan, and the amount of inventory falling price reserves was 127,288,778.48 yuan.The book value of inventory is 2,811,802,600.19 yuan, accounting for 43.47% of total assets. Inventory is measuredat the lower one between the cost and the net realizable value, due to the large amount of money of inventory, themanagement needed to make significant judgments when determining the decrease in value of inventory, includingthe consideration of government reserve as grain & oil, food and vegetable oil included, that affected by futuresmarket, these important judgments have a significant impact on the valuation of inventory and provision forinventory depreciation at period-end; therefore, we determined the inventory and inventory falling price reserves askey audit matters.2. Audit responseThe main audit procedures we implemented for the inventory and inventory falling price reserves of SZCHCompany include:
(1) Understood, evaluated and tested the internal control design and implementation related to inventory fallingprice reserves of SZCH Company so as to evaluate whether the internal control of inventory falling price reserveswas compliant and effective;(2) We performed the inventory monitoring procedures for inventory, and checked the quantity, the validity periodof products quality of the inventory at end of the period etc.;(3) Acquired the calculation table of inventory falling price reserve, implemented the inventory impairment testprocedure, checked whether it was implemented according to the relevant accounting policies, and the changes ofinventory falling price in the previous year’s provision during the current period, and analyzed whether provisionfor inventory falling price reserves was sufficient.
(4) We obtained the year-end inventory age list of SZCH Company’s inventory, conducted an analytical review of
the inventory with long inventory age combine with the validity of products, and analyzed the need for separateprovision for inventory depreciation for long-term stocks.
(5) Review whether the estimated selling price of the inventory in the inventory depreciation reserve calculationtable of Shenzhen Cereals Holdings Co., Ltd. is reasonable through the implementation of on-site visits and onlinepublic inquiry of the market transaction price, etc.: For the tea products, we take some samples to visit and inquire;For grain and oil products, we publicly inquire the about the trading prices of grain and oil products by getting toknow the trend of grain and oil products futures market and through authoritative websites in the industries such as“China Grains Network”, “www.cofeed.com” and “JCI”;
(6) Understand and inquire about the main production technology process and cost accounting methods of theproduct, and check whether the cost accounting method matches the production technology process flow;
(7) We assessed the accounting treatment and disclosure of the management to inventory falling price reserves onDecember 31, 2018.Based on the executed audit procedures, we hold the opinion that the relevant judgments and estimates made bySZCH Company’s management on the inventory falling price reserves were reasonable.
(ii) Revenue confirmation1. Matter descriptionPlease refer to Note IV. (xxv) and Note VI. Annotation 35 to the consolidated financial statements for the accountingpolicies and carrying amounts of the inventory and inventory falling price reserves.SZCH Company achieved operating income of 10,758,782,838.14 yuan in 2018, of which the income grain and oilbusiness amounted to 10,303,178,984.95 Yuan, accounting for 95.77 percent of operating income. The income fromgrain and oil business has a significant impact on the financial statement, and it is one of the key index ofperformance of SZCH, which has a special risks in manipulation for achieving the predicted target, therefore, theidentify of operating income will be listed as the key auditing event.
2. Audit response
The main audit procedures we implemented for the inventory and inventory falling price reserves of SZCHCompany include:
(1) Understood, evaluated and tested the internal control design and implementation related to revenue recognitionof SZCH Company so as to evaluate whether the internal control of revenue recognition was compliant and effective;(2) Selected business contract samples and conduct interviews with management to assess whether SZCHCompany’s revenue recognition policies met the requirements of relevant accounting standards;(3) Implemented analytical procedures on operating income and operating costs, analyzed abnormal changes ingross profit margin, and reviewed the rationality of revenue;
(4) We adopted the sampling method and executed the following procedures for the operating revenue confirmedby SZCH Company:
① For the sales of domestic customers, select the important customers and check sales contracts, shippingdocuments, receipt/shipment transfer documents, accounting vouchers, current return fund flow receipts,reconciliation letters, etc., and combine with the implementation confirmation procedures of accounts receivable;② For the export sales, check sales contracts, customs declaration, bill of lading, accounting vouchers, currentreturn funds flow receipts, etc., at the same time, personally log in the customs declaration system and foreignexchange management system to obtain the import and export customs declaration data of Shenzhen CerealsHoldings Co., Ltd. in two systems and check with the accounting information, and combine with the implementationconfirmation procedures of accounts receivable;③Analyzed and selected important customer samples, and affirmed whether there was related relationship betweencustomers and SZCH Company through verification procedures such as network and business information andmanagement interviews;④ For the income from grain and oil storage services, we review the accuracy of the income from the grain and oilstorage services of Shenzhen Cereals Holdings Co., Ltd. based on various storage fee calculation standardsstipulated by the “Operational Procedures for Government Grain Storage All-in Cost of Shenzhen” and “OperationalProcedures for Edible Vegetable Oil Government Reserve All-in Cost of Shenzhen”, and the grain and oil reservesof Shenzhen Cereals Holdings Co., Ltd., the number of rotations, and other actual business data.⑤Performed cut-off tests to check the delivery notes, receipt forms/transfer of goods right, acceptance statements,export invoices, and other supporting documents of sales revenue and transaction before and after the balance sheetdate so as to assess whether the sales revenue was confirmed during the appropriate period.(5) Select some customers to implement the on-site visit procedure, understand the specific mode and authenticityof the business, and evaluate whether the income recognition policy of Shenzhen Cereals Holdings Co., Ltd. meetsthe requirements of relevant accounting standards;(6) Assessed whether the financial statement disclosure of the management to revenue was appropriate.Based on the executed audit procedures, we hold the opinion that the reporting and disclosure made by SZCHCompany’s management on the operating revenue were appropriate.IV. Other information
The management of SZCH Company is responsible for other information which includes the information coveredin the Company’s 2018 annual report excluding the financial statement and our audit report.The audit opinion issued by us for the financial statement has not covered other information, for which we do notissue any form of assurance opinions.
Considering our audit on financial statements, we are liable to read other information, during which, we shallconsider whether other information differs materially from the financial statements or that we understand duringour audit, or whether there is any material misstatement.Based on the works executed by us, we should report the fact if we find any material misstatement in otherinformation. In this regards, we have nothing to report.V. Responsibilities of management and those charged with governance for the financial statementsThe management of SZCH Company is responsible for the preparation of the financial statements in accordancewith the Accounting Standards for Enterprise to secure a fair presentation, and for the design, establishment andmaintenance of the internal control necessary to enable the preparation of financial statements that are free frommaterial misstatement, whether due to fraud or error.In preparing the financial statements, the management is responsible for assessing the Company’s ability to continueas a going concern (if applicable), disclosing matters related to going concern and using the going concernassumption unless the management either intends to liquidate the Company or to cease operations, or has no realisticalternative but to do so.Those charged with governance are responsible for overseeing the Company’s financial reporting process.
VI. Responsibilities of the auditor for the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free frommaterial misstatement, whether due to fraud or error, and to issue an audit report that includes our audit opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withthe CAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error andare considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of the financial statements.As part of an audit in accordance with the CAS, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for audit opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the management.Conclude on the appropriateness of the management’s use of the going concern assumption and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significantdoubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists,we are required by the CAS to draw users’ attention in audit report to the related disclosures in the financialstatements or, if such disclosures are inadequate, to modify audit opinion. Our conclusions are based on theinformation obtained up to the date of audit report. However, future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, andwhether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activitieswithin the Company to express audit opinion on the financial statements. We are responsible for the direction,supervision and performance of the group audit. We remain solely responsible for audit opinion.We communicate with those charged with governance regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control that we identifyduring our audit.We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and relevant countermeasures (if applicable).
From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the financial statements of the current period and are therefore the key audit matters. Wedescribe these matters in the auditor’s report unless law or regulation precludes public disclosure about the matteror when, in extremely rare circumstances, we determine that a matter should not be communicated in the auditor’sreport because of the adverse consequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
| Dahua Certified Public Accountants (Special General Partnership) | Chinese CPA: Chen Baohua |
| Beijing · China | (Engagement partner) |
| Chinese CPA: Zhou Lingzhi | |
| 25 April 2019 |
| Item | Balance at period-end | Balance at period-begin |
| Current assets: | ||
| Monetary funds | 631,638,339.68 | 544,440,739.45 |
| Settlement provisions | ||
| Capital lent | ||
| Financial assets measured by fair value and with variation reckoned into current gains/losses | 1,124,927.96 | 1,599,668.20 |
| Derivative financial assets | ||
| Note receivable and account receivable | 474,674,521.68 | 194,386,742.63 |
| Including: Note receivable | 1,027,635.04 | 658,942.50 |
| Account receivable | 473,646,886.64 | 193,727,800.13 |
| Accounts paid in advance | 83,696,870.07 | 45,027,535.78 |
| Insurance receivable | ||
| Reinsurance receivables | ||
| Contract reserve of reinsurance receivable | ||
| Other account receivable | 33,803,428.45 | 45,626,470.91 |
| Including: Interest receivable | 561,500.00 | |
| Dividend receivable |
| Buying back the sale of financial assets | ||
| Inventories | 2,811,802,600.19 | 2,938,467,812.31 |
| Assets held for sale | ||
| Non-current asset due within one year | ||
| Other current assets | 254,493,764.04 | 173,092,549.64 |
| Total current assets | 4,291,234,452.07 | 3,942,641,518.92 |
| Non-current assets: | ||
| Loans and payments on behalf | ||
| Finance asset available for sales | 57,500.00 | 57,500.00 |
| Held-to-maturity investment | ||
| Long-term account receivable | ||
| Long-term equity investment | 70,999,666.81 | 35,755,171.55 |
| Investment real estate | 282,622,184.92 | 319,023,095.62 |
| Fixed assets | 993,136,743.51 | 1,052,866,458.21 |
| Construction in progress | 186,586,135.06 | 70,735,978.49 |
| Productive biological asset | 407,078.92 | 416,771.28 |
| Oil and gas asset | ||
| Intangible assets | 569,997,392.08 | 406,996,071.53 |
| Expense on Research and Development | ||
| Goodwill | ||
| Long-term expenses to be apportioned | 21,799,899.80 | 27,816,292.79 |
| Deferred income tax asset | 50,174,590.98 | 53,734,757.40 |
| Other non-current asset | 1,936,149.72 | 984,108.52 |
| Total non-current asset | 2,177,717,341.80 | 1,968,386,205.39 |
| Total assets | 6,468,951,793.87 | 5,911,027,724.31 |
| Current liabilities: | ||
| Short-term loans | 91,600,000.00 | 169,800,000.00 |
| 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 | ||
| Derivative financial liability | ||
| Note payable and account payable | 472,738,283.80 | 558,480,197.44 |
| Accounts received in advance | 205,428,594.16 | 178,385,275.20 |
| Selling financial asset of repurchase | ||
| Commission charge and commission payable | ||
| Wage payable | 135,709,423.52 | 118,146,310.62 |
| Taxes payable | 24,969,718.58 | 19,396,227.75 |
| Other account payable | 280,689,548.29 | 307,932,958.30 |
| Including: Interest payable | 1,571,297.90 | |
| Dividend payable | 2,909,182.74 | 2,909,182.74 |
| Reinsurance payable | ||
| Insurance contract reserve | ||
| Security trading of agency | ||
| Security sales of agency | ||
| Liability held for sale | ||
| Non-current liabilities due within one year | 55,090,793.79 | 40,642,777.63 |
| Other current liabilities | 219,151,968.63 | 219,151,968.63 |
| Total current liabilities | 1,485,378,330.77 | 1,611,935,715.57 |
| Non-current liabilities: | ||
| Long-term loans | 516,687,791.66 | 195,647,403.88 |
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual capital securities | ||
| Long-term account payable | 15,690,202.08 | 15,626,357.76 |
| Long-term wages payable | ||
| Accrual liability | ||
| Deferred income | 100,608,203.01 | 101,474,523.26 |
| Deferred income tax liabilities | 12,988,434.77 | 13,520,836.95 |
| Other non-current liabilities |
| Total non-current liabilities | 645,974,631.52 | 326,269,121.85 |
| Total liabilities | 2,131,352,962.29 | 1,938,204,837.42 |
| Owner’s equity: | ||
| Share capital | 1,152,535,254.00 | 496,782,303.00 |
| Other equity instrument | ||
| Including: preferred stock | ||
| Perpetual capital securities | ||
| Capital public reserve | 1,422,892,729.36 | 2,063,164,702.12 |
| Less: Inventory shares | ||
| Other comprehensive income | ||
| Reasonable reserve | 154.21 | 70,395.63 |
| Surplus public reserve | 327,140,910.28 | 327,140,910.28 |
| Provision of general risk | ||
| Retained profit | 1,269,933,487.26 | 961,602,454.82 |
| Total owner’s equity attributable to parent company | 4,172,502,535.11 | 3,848,760,765.85 |
| Minority interests | 165,096,296.47 | 124,062,121.04 |
| Total owner’s equity | 4,337,598,831.58 | 3,972,822,886.89 |
| Total liabilities and owner’s equity | 6,468,951,793.87 | 5,911,027,724.31 |
| Item | Balance at period-end | Balance at period-begin |
| Current assets: | ||
| Monetary funds | 168,900,586.84 | 239,662,344.24 |
| Financial assets measured by fair value and with variation reckoned into current gains/losses | 1,124,927.96 | 1,599,668.20 |
| Derivative financial assets |
| Note receivable and account receivable | 42,441,119.07 | 53,950,930.37 |
| Including: Note receivable | ||
| Account receivable | 42,441,119.07 | 53,950,930.37 |
| Accounts paid in advance | 2,000.00 | |
| Other account receivable | 159,677,969.59 | 163,404,561.75 |
| Including: Interest receivable | ||
| Dividend receivable | ||
| Inventories | 8,806,338.26 | 4,963,517.93 |
| Assets held for sale | ||
| Non-current asset due within one year | ||
| Other current assets | 50,068,745.74 | |
| Total current assets | 431,019,687.46 | 463,583,022.49 |
| Non-current assets: | ||
| Finance asset available for sales | ||
| Held-to-maturity investment | ||
| Long-term account receivable | ||
| Long-term equity investment | 4,212,554,063.36 | 921,506,982.37 |
| Investment real estate | 17,929,684.70 | 18,401,275.03 |
| Fixed assets | 31,417,912.54 | 32,560,534.94 |
| Construction in progress | ||
| Productive biological asset | 407,078.92 | 416,771.28 |
| Oil and gas asset | ||
| Intangible assets | 6,663,692.30 | 7,264,135.59 |
| Expense on Research and Development | ||
| Goodwill | ||
| Long-term expenses to be apportioned | 409,621.50 | 623,337.06 |
| Deferred income tax asset | 5,630,538.80 | 3,395,295.39 |
| Other non-current asset | ||
| Total non-current asset | 4,275,012,592.12 | 984,168,331.66 |
| Total assets | 4,706,032,279.58 | 1,447,751,354.15 |
| Current liabilities: |
| Short-term loans | 10,000,000.00 | |
| Financial liability measured by fair value and with variation reckoned into current gains/losses | ||
| Derivative financial liability | ||
| Note payable and account payable | 73,705,646.54 | 65,683,781.46 |
| Accounts received in advance | 124,945.74 | 194,269.96 |
| Wage payable | 6,448,561.16 | 6,577,772.01 |
| Taxes payable | 2,702,655.24 | 2,832,009.17 |
| Other account payable | 232,109,084.76 | 228,533,713.45 |
| Including: Interest payable | ||
| Dividend payable | ||
| Liability held for sale | ||
| Non-current liabilities due within 1 year | ||
| Other current liabilities | ||
| Total current liabilities | 315,090,893.44 | 313,821,546.05 |
| Non-current liabilities: | ||
| Long-term loans | ||
| Bonds payable | ||
| Including: preferred stock | ||
| Perpetual capital securities | ||
| Long-term account payable | ||
| Long-term wages payable | ||
| Accrual liability | ||
| Deferred income | 46,129.96 | 47,239.24 |
| Deferred income tax liabilities | 10,965.46 | 129,650.53 |
| Other non-current liabilities | ||
| Total non-current liabilities | 57,095.42 | 176,889.77 |
| Total liabilities | 315,147,988.86 | 313,998,435.82 |
| Owner’s equity: | ||
| Share capital | 1,152,535,254.00 | 496,782,303.00 |
| Other equity instrument | ||
| Including: preferred stock | ||
| Perpetual capital securities |
| Capital public reserve | 3,018,106,568.27 | 382,444,482.45 |
| Less: Inventory shares | ||
| Other comprehensive income | ||
| Reasonable reserve | ||
| Surplus public reserve | 54,736,482.14 | 54,736,482.14 |
| Retained profit | 165,505,986.31 | 199,789,650.74 |
| Total owner’s equity | 4,390,884,290.72 | 1,133,752,918.33 |
| Total liabilities and owner’s equity | 4,706,032,279.58 | 1,447,751,354.15 |
| Item | Current period | Last period |
| I. Total operating income | 10,758,782,838.14 | 10,793,693,156.79 |
| Including: Operating income | 10,758,782,838.14 | 10,793,693,156.79 |
| Interest income | ||
| Insurance gained | ||
| Commission charge and commission income | ||
| II. Total operating cost | 10,431,315,508.14 | 10,442,404,669.95 |
| Including: Operating cost | 9,693,634,274.21 | 9,847,347,198.65 |
| 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 | ||
| Tax and extras | 15,369,523.52 | 15,044,134.96 |
| Sales expense | 255,021,072.54 | 275,025,028.88 |
| Administrative expense | 246,543,836.47 | 193,136,022.27 |
| R&D expense | 10,979,464.64 | 9,827,707.76 |
| Financial expense | 10,131,313.25 | -3,335,527.31 |
| Including: Interest expenses | 20,410,885.62 | 8,569,062.23 |
| Interest income | 8,364,388.05 | 9,080,593.99 |
| Losses of devaluation of asset | 199,636,023.51 | 105,360,104.74 |
| Add: other income | 10,901,858.13 | 5,371,651.13 |
| Investment income (Loss is listed with “-”) | 1,724,353.15 | 3,015,274.81 |
| Including: Investment income on affiliated company and joint venture | -1,755,504.74 | -490,760.14 |
| Income from change of fair value (Loss is listed with “-”) | -474,740.24 | -1,651,270.40 |
| Exchange income (Loss is listed with “-”) | ||
| Income from assets disposal (Loss is listed with “-”) | 1,601,802.27 | -22,935.33 |
| III. Operating profit (Loss is listed with “-”) | 341,220,603.31 | 358,001,207.05 |
| Add: Non-operating income | 1,390,434.84 | 11,382,742.99 |
| Less: Non-operating expense | 3,266,448.43 | 7,681,898.18 |
| IV. Total Profit (Loss is listed with “-”) | 339,344,589.72 | 361,702,051.86 |
| Less: Income tax expense | 18,488,865.34 | 10,826,403.68 |
| V. Net profit (Net loss is listed with “-”) | 320,855,724.38 | 350,875,648.18 |
| (i) net profit from continuous operation (Net loss is listed with “-”) | 320,855,724.38 | 350,875,648.18 |
| (ii) net profit from discontinued operation (Net loss is listed with “-”) | ||
| Net profit attributable to owner’s of parent company | 308,331,032.44 | 359,174,263.44 |
| Minority shareholders’ gains and losses | 12,524,691.94 | -8,298,615.26 |
| 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 gain/loss | ||
| 1.Re-measurement of the change of defined benefit plan | ||
| 2.Other comprehensive income unable transfer to gain/loss under equity method | ||
| (II) Other comprehensive income items which will be reclassified subsequently to profit or loss | ||
| 1.Other comprehensive income able to transfer to gain/loss under equity method | ||
| 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 | 320,855,724.38 | 350,875,648.18 |
| Total comprehensive income attributable to owners of parent Company | 308,331,032.44 | 359,174,263.44 |
| Total comprehensive income attributable to minority shareholders | 12,524,691.94 | -8,298,615.26 |
| VIII. Earnings per share: |
| (i) Basic earnings per share | 0.2675 | 0.3116 |
| (ii) Diluted earnings per share | 0.2675 | 0.3116 |
| Item | Current period | Last period |
| I. Operation income | 165,407,623.24 | 163,863,447.98 |
| Less: Operating cost | 156,886,817.06 | 154,883,304.80 |
| Tax and extras | 602,255.26 | 458,784.42 |
| Sales expense | 4,021,042.93 | 4,003,107.93 |
| Administrative expense | 35,236,050.22 | 24,115,186.64 |
| R&D expense | ||
| Financial expense | -2,863,136.69 | -2,224,430.38 |
| Including: Interest expenses | -490,845.99 | 222,398.34 |
| Interest income | 2,208,205.46 | 2,622,809.23 |
| Losses of devaluation of asset | 8,940,973.64 | 425,880.76 |
| Add: other income | 201,109.28 | 201,109.28 |
| Investment income (Loss is listed with “-”) | 1,035,169.17 | 2,399,716.48 |
| Including: Investment income on affiliated company and joint venture | -367,955.83 | -306,318.47 |
| Income from change of fair value (Loss is listed with “-”) | -474,740.24 | -1,651,270.40 |
| Income from assets disposal (Loss is listed with “-”) | -4,685.34 | 12,532.09 |
| II. Operating profit (Loss is listed with “-”) | -36,659,526.31 | -16,836,298.74 |
| Add: Non-operating income | 21,985.04 | 113,065.05 |
| Less: Non-operating expense | 51.64 | 10,261.85 |
| III. Total Profit (Loss is listed with “-”) | -36,637,592.91 | -16,733,495.54 |
| Less: Income tax expense | -2,353,928.48 | -519,662.78 |
| IV. Net profit (Net loss is listed with “-”) | -34,283,664.43 | -16,213,832.76 |
| (i) net profit from continuous operation (Net loss is listed with “-”) | -34,283,664.43 | -16,213,832.76 |
| (ii) net profit from discontinued operation (Net loss is listed with “-”) | ||
| V. Net after-tax of other comprehensive income | ||
| (i) Other comprehensive income items which will not be reclassified subsequently to gain/loss | ||
| 1.Re-measurement of the change of defined benefit plan | ||
| 2.Other comprehensive income unable transfer to gain/loss under equity method | ||
| (iii) Other comprehensive income items which will be reclassified subsequently to profit or loss | ||
| 1.Other comprehensive income able to transfer to gain/loss under equity method | ||
| 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 | -34,283,664.43 | -16,213,832.76 |
| VII. Earnings per share: | ||
| (i) Basic earnings per share | ||
| (ii) Diluted earnings per share |
| Item | Current period | Last period |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 10,864,668,383.48 | 11,281,130,280.47 |
| Net increase of customer deposit and interbank deposit | ||
| Net increase of loan from central bank | ||
| Net increase of capital borrowed from other financial institution | ||
| Cash received from original insurance contract fee | ||
| Net cash received from reinsurance business | ||
| Net increase of insured savings and investment | ||
| Net increase of 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 | 2,149,482.32 | 653,832.01 |
| Other cash received concerning operating activities | 149,070,552.32 | 189,283,484.98 |
| Subtotal of cash inflow arising from operating activities | 11,015,888,418.12 | 11,471,067,597.46 |
| Cash paid for purchasing commodities and receiving labor service | 10,062,803,459.79 | 10,821,296,678.67 |
| 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 | 266,944,869.84 | 234,102,630.87 |
| Taxes paid | 76,069,566.39 | 98,489,346.34 |
| Other cash paid concerning operating activities | 310,966,886.52 | 300,120,249.70 |
| Subtotal of cash outflow arising from operating activities | 10,716,784,782.54 | 11,454,008,905.58 |
| Net cash flows arising from operating activities | 299,103,635.58 | 17,058,691.88 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | 190,000,000.00 | 339,350,000.00 |
| Cash received from investment income | 3,029,857.89 | 3,014,946.35 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 2,130,835.56 | 3,037,636.88 |
| Net cash received from disposal of subsidiaries and other units | 800,000.00 |
| Other cash received concerning investing activities | 450,000.00 | |
| Subtotal of cash inflow from investing activities | 195,610,693.45 | 346,202,583.23 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 382,839,107.07 | 202,207,266.94 |
| Cash paid for investment | 287,000,000.00 | 437,245,000.00 |
| 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 activities | 669,839,107.07 | 639,452,266.94 |
| Net cash flows arising from investing activities | -474,228,413.62 | -293,249,683.71 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | 24,500,000.00 | 49,640,000.00 |
| Including: Cash received from absorbing minority shareholders’ investment by subsidiaries | 24,500,000.00 | 49,640,000.00 |
| Cash received from loans | 537,740,181.56 | 279,456,993.25 |
| Cash received from issuing bonds | ||
| Other cash received concerning financing activities | 10,000,000.00 | |
| Subtotal of cash inflow from financing activities | 562,240,181.56 | 339,096,993.25 |
| Cash paid for settling debts | 280,451,777.62 | 177,321,004.68 |
| Cash paid for dividend and profit distributing or interest paying | 21,982,183.52 | 101,543,094.66 |
| Including: Dividend and profit of minority shareholder paid by subsidiaries | ||
| Other cash paid concerning | 3,897,916.29 |
| financing activities | ||
| Subtotal of cash outflow from financing activities | 302,433,961.14 | 282,762,015.63 |
| Net cash flows arising from financing activities | 259,806,220.42 | 56,334,977.62 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | 2,516,157.85 | 4,719,173.14 |
| V. Net increase of cash and cash equivalents | 87,197,600.23 | -215,136,841.07 |
| Add: Balance of cash and cash equivalents at the period -begin | 544,440,739.45 | 759,577,580.52 |
| VI. Balance of cash and cash equivalents at the period -end | 631,638,339.68 | 544,440,739.45 |
| Item | Current period | Last period |
| I. Cash flows arising from operating activities: | ||
| Cash received from selling commodities and providing labor services | 203,489,969.79 | 178,586,945.42 |
| Write-back of tax received | 1,607,071.98 | 433,663.93 |
| Other cash received concerning operating activities | 25,144,907.85 | 46,894,665.69 |
| Subtotal of cash inflow arising from operating activities | 230,241,949.62 | 225,915,275.04 |
| Cash paid for purchasing commodities and receiving labor service | 179,055,497.17 | 158,845,824.76 |
| Cash paid to/for staff and workers | 20,901,002.07 | 21,540,904.44 |
| Taxes paid | 1,852,958.66 | 16,886,190.92 |
| Other cash paid concerning operating activities | 40,674,668.54 | 82,836,968.40 |
| Subtotal of cash outflow arising from operating activities | 242,484,126.44 | 280,109,888.52 |
| Net cash flows arising from operating activities | -12,242,176.82 | -54,194,613.48 |
| II. Cash flows arising from investing activities: | ||
| Cash received from recovering investment | 339,350,000.00 | |
| Cash received from investment income | 953,125.00 | 3,014,946.35 |
| Net cash received from disposal of fixed, intangible and other long-term assets | 3,026.17 | 31,000.00 |
| Net cash received from disposal of subsidiaries and other units | ||
| Other cash received concerning investing activities | 90,450,000.00 | |
| Subtotal of cash inflow from investing activities | 91,406,151.17 | 342,395,946.35 |
| Cash paid for purchasing fixed, intangible and other long-term assets | 18,200.00 | 260,849.80 |
| Cash paid for investment | 335,500,000.00 | |
| Net cash received from subsidiaries and other units obtained | ||
| Other cash paid concerning investing activities | 140,000,000.00 | |
| Subtotal of cash outflow from investing activities | 140,018,200.00 | 335,760,849.80 |
| Net cash flows arising from investing activities | -48,612,048.83 | 6,635,096.55 |
| III. Cash flows arising from financing activities | ||
| Cash received from absorbing investment | ||
| Cash received from loans | 10,000,000.00 | |
| Cash received from issuing bonds | ||
| Other cash received concerning financing activities | ||
| Subtotal of cash inflow from | 10,000,000.00 |
| financing activities | ||
| Cash paid for settling debts | 10,000,000.00 | 5,000,000.00 |
| Cash paid for dividend and profit distributing or interest paying | 28,710.00 | 23,045,545.47 |
| Other cash paid concerning financing activities | 97,916.29 | |
| Subtotal of cash outflow from financing activities | 10,028,710.00 | 28,143,461.76 |
| Net cash flows arising from financing activities | -10,028,710.00 | -18,143,461.76 |
| IV. Influence on cash and cash equivalents due to fluctuation in exchange rate | 121,178.25 | -112,531.04 |
| V. Net increase of cash and cash equivalents | -70,761,757.40 | -65,815,509.73 |
| Add: Balance of cash and cash equivalents at the period -begin | 239,662,344.24 | 305,477,853.97 |
| VI. Balance of cash and cash equivalents at the period -end | 168,900,586.84 | 239,662,344.24 |
| Item | Current period | ||||||||||||
| Owners’ equity attributable to parent company | Minority interests | Total owner’s equity | |||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus public reserve | Provision of general risk | Retained profit | |||||
| Preferred stock | Perpetual capital securities | Other | |||||||||||
| I. Balance at the end of the last year | 496,782,303.00 | 2,063,164,702.12 | 70,395.63 | 327,140,910.28 | 961,602,454.82 | 124,062,121.04 | 3,972,822,886.89 | ||||||
| Add: Changes of accounting policy | |||||||||||||
| Error correction of the last period | |||||||||||||
| Enterprise combined under the same control | |||||||||||||
| Other | |||||||||||||
| II. Balance at the beginning of this year | 496,782,303.00 | 2,063,164,702.12 | 70,395.63 | 327,140,910.28 | 961,602,454.82 | 124,062,121.04 | 3,972,822,886.89 | ||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 655,752,951.00 | -640,271,972.76 | -70,241.42 | 308,331,032.44 | 41,034,175.43 | 364,775,944.69 | |||||||
| (i) Total comprehensive income | 308,331,032.44 | 12,524,691.94 | 320,855,724.38 | ||||||||||
| (ii) Owners’ devoted and decreased capital | 655,752,951.00 | -640,271,972.76 | 28,509,483.49 | 43,990,461.73 | |||||||||
| 1．Common shares invested by owners | 655,752,951.00 | 5,219,793,489.96 | 24,500,000.00 | 5,900,046,440.96 | |||||||||
| 2．Capital invested by holders of other equity instruments | |||||||||||||
| 3．Amount reckoned into owners equity with share-based |
| payment | |||||||||||||
| 4．Other | -5,860,065,462.72 | 4,009,483.49 | -5,856,055,979.23 | ||||||||||
| (III) Profit distribution | |||||||||||||
| 1．Withdrawal of surplus reserves | |||||||||||||
| 2．Withdrawal of 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．Change amount of defined benefit plans that carry forward retained earnings | |||||||||||||
| 5．Other |
| (v) Reasonable reserve | -70,241.42 | -70,241.42 | |||||||||||
| 1. Withdrawal in the report period | 846,741.24 | 846,741.24 | |||||||||||
| 2. Usage in the report period | -916,982.66 | -916,982.66 | |||||||||||
| (vi) Other | |||||||||||||
| IV. Balance at the end of the report period | 1,152,535,254.00 | 1,422,892,729.36 | 154.21 | 327,140,910.28 | 1,269,933,487.26 | 165,096,296.47 | 4,337,598,831.58 |
| Item | Last period | ||||||||||||
| Owners’ equity attributable to parent company | Minority interests | Total owner’s equity | |||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus public reserve | Provision of general risk | Retained profit | |||||
| Preferred stock | Perpetual capital securities | Other | |||||||||||
| I. Balance at the end of the last year | 451,620,276.00 | 367,172,017.79 | 54,736,482.14 | 158,239,612.94 | 17,970,173.99 | 1,049,738,562.86 | |||||||
| Add: Changes of accounting policy | |||||||||||||
| Error correction of the last period | |||||||||||||
| Enterprise | 1,983,538, | 70,395.63 | 220,182,03 | 345,637,80 | 56,969,191 | 2,606,397, | |||||||
| combined under the same control | 117.01 | 3.38 | 6.25 | .41 | 543.68 | ||||||||
| Other | |||||||||||||
| II. Balance at the beginning of this year | 451,620,276.00 | 2,350,710,134.80 | 70,395.63 | 274,918,515.52 | 503,877,419.19 | 74,939,365.40 | 3,656,136,106.54 | ||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 45,162,027.00 | -287,545,432.68 | 52,222,394.76 | 457,725,035.63 | 49,122,755.64 | 316,686,780.35 | |||||||
| (i) Total comprehensive income | 359,174,263.44 | -8,298,615.26 | 350,875,648.18 | ||||||||||
| (ii) Owners’ devoted and decreased capital | -287,545,432.68 | 52,222,394.76 | 227,150,376.41 | 57,421,370.90 | 49,248,709.39 | ||||||||
| 1．Common shares invested by owners | 49,640,000.00 | 49,640,000.00 | |||||||||||
| 2．Capital invested by holders of other equity instruments | |||||||||||||
| 3．Amount reckoned into owners equity with share-based payment | |||||||||||||
| 4．Other | -287,545,432.68 | 52,222,394.76 | 227,150,376.41 | 7,781,370.90 | - | ||||||||
| (III) Profit distribution | 45,162,027.00 | -128,599,604.22 | -83,437,577.22 |
| 1．Withdrawal of surplus reserves | |||||||||||||
| 2．Withdrawal of general risk provisions | |||||||||||||
| 3．Distribution for owners (or shareholders) | 45,162,027.00 | -128,599,604.22 | -83,437,577.22 | ||||||||||
| 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．Change amount of defined benefit plans that carry forward retained earnings | |||||||||||||
| 5．Other | |||||||||||||
| (v)Reasonable reserve | |||||||||||||
| 1. Withdrawal in the report period | |||||||||||||
| 2. Usage in the report period |
| (vi)Other | |||||||||||||
| IV. Balance at the end of the report period | 496,782,303.00 | 2,063,164,702.12 | 70,395.63 | 327,140,910.28 | 961,602,454.82 | 124,062,121.04 | 3,972,822,886.89 |
| Item | Current period | ||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus public reserve | Retained profit | Total owner’s equity | |||
| Preferred stock | Perpetual capital securities | Other | |||||||||
| I. Balance at the end of the last year | 496,782,303.00 | 382,444,482.45 | 54,736,482.14 | 199,789,650.74 | 1,133,752,918.33 | ||||||
| Add: Changes of accounting policy | |||||||||||
| Error correction of the last period | |||||||||||
| Other | |||||||||||
| II. Balance at the beginning of this year | 496,782,303.00 | 382,444,482.45 | 54,736,482.14 | 199,789,650.74 | 1,133,752,918.33 | ||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 655,752,951.00 | 2,635,662,085.82 | -34,283,664.43 | 3,257,131,372.39 | |||||||
| (i)Total comprehensive income | -34,283,664.43 | -34,283,664.43 | |||||||||
| (ii) Owners’ devoted and decreased capital | 655,752,951.00 | 2,635,662,085.82 | 3,291,415,036.82 | ||||||||
| 1．Common shares invested by owners | 655,752,951.00 | 5,219,793,489.96 | 5,875,546,440.96 | ||||||||
| 2．Capital invested by holders of other equity instruments | |||||||||||
| 3．Amount reckoned into owners equity with share-based payment | |||||||||||
| 4．Other | -2,584,131,404.14 | -2,584,131,404.14 | |||||||||
| (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 reserve | |||||||||||
| 4．Change amount of defined benefit plans that carry forward retained earnings | |||||||||||
| 5．Other | |||||||||||
| (v)Reasonable reserve | |||||||||||
| 1. Withdrawal in the report period | |||||||||||
| 2. Usage in the report period | |||||||||||
| (vi)Other | |||||||||||
| IV. Balance at the end of the report period | 1,152,535,254.00 | 3,018,106,568.27 | 54,736,482.14 | 165,505,986.31 | 4,390,884,290.72 |
| Item | Last period | ||||||||||
| Share capital | Other equity instrument | Capital public reserve | Less: Inventory shares | Other comprehensive income | Reasonable reserve | Surplus public reserve | Retained profit | Total owner’s equity | |||
| Preferred stock | Perpetual capital securities | Other | |||||||||
| I. Balance at the end of the last year | 451,620,276.00 | 382,444,482.45 | 54,736,482.14 | 283,746,524.30 | 1,172,547,764.89 | ||||||
| Add: Changes of accounting policy | |||||||||||
| Error | |||||||||||
| correction of the last period | |||||||||||
| Other | |||||||||||
| II. Balance at the beginning of this year | 451,620,276.00 | 382,444,482.45 | 54,736,482.14 | 283,746,524.30 | 1,172,547,764.89 | ||||||
| III. Increase/ Decrease in this year (Decrease is listed with “-”) | 45,162,027.00 | -83,956,873.56 | -38,794,846.56 | ||||||||
| (i) Total comprehensive income | -16,213,832.76 | -16,213,832.76 | |||||||||
| (ii) Owners’ devoted and decreased capital | |||||||||||
| 1．Common shares invested by owners | |||||||||||
| 2．Capital invested by holders of other equity instruments | |||||||||||
| 3．Amount reckoned into owners equity with share-based payment | |||||||||||
| 4．Other | |||||||||||
| (III) Profit distribution | 45,162,027.00 | -67,743,040.80 | -22,581,013.80 | ||||||||
| 1．Withdrawal of surplus reserves | |||||||||||
| 2．Distribution | 45,16 | - | - |
| for owners (or shareholders) | 2,027.00 | 67,743,040.80 | 22,581,013.80 | ||||||||
| 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 reserve | |||||||||||
| 4．Change amount of defined benefit plans that carry forward retained earnings | |||||||||||
| 5．Other | |||||||||||
| (v)Reasonable reserve | |||||||||||
| 1. Withdrawal in the report period | |||||||||||
| 2. Usage in the report period | |||||||||||
| (vi)Other | |||||||||||
| IV. Balance at the end of the report period | 496,782,303.00 | 382,444,482.45 | 54,736,482.14 | 199,789,650.74 | 1,133,752,918.33 |
III. Basic situation of Company
1. The history of the companyShenzhen Cereals Holdings Co., Ltd. (original name Shenzhen Shenbao Industrial Co., Ltd., hereinafter referred toas “Company” or “the Company” ), formerly named Shenzhen Shenbao Canned Food Company, obtained approval(Document (1991) No.978) from Shenzhen Municipal People’s Government to change to the present name as on 1August 1991.Then with the approval (Document (1991)No.126) from People’s Bank of China, the Company beganto list on Shenzhen Stock Exchange. The certificate for uniform social credit code: 91440300192180754J
The Company initially issued 107,312,935 shares in the stock exchange. In 1992, one bonus share was dispatchedfor each 10 shares held by its shareholders, thus totally 10,731,290 shares were increased. In 1993, one bonus shareand one allotted share were dispatched for each 10 shares held by its shareholders, thus totally 20,878,845 shareswere increased. Subsequently, one bonus share was dispatched for each 10 shares held by shareholders upon thebasis of total share capital as at the end of 1996, and capitalizing of capital reserves was carried out at one to tenbasis, thus totally 27,784,614 shares were increased. In 2001, based on the total share capital as at the end of 1999,three shares were allotted for each 10 shares held by shareholders, and totally 15,215,404 shares were allotted. Theregistered capital of the Company amounts to 181, 923,088 yuan.
On 22 June 2011, the Company privately offering 68,977,066 shares of RMB ordinary share (A share) to targetinvestors with issuing price of 8.70 yuan each while book value of 1.00 yuan. Total monetary capital 600,100,474.20yuan was raised. Change procedures of industrial and commerce has completed on 12 July 2011. Register capitalof the Company changed as 250,900,154.00 yuan.
On 9 April 2014, the equity allocation plan was deliberated and approved by Annual General Meeting of 2013.Based on 250,900,154 shares dated 31
st
December 2013, increase 2 shares by each 10 shares transferring to allshareholders. Share capital increased to 301,080,184 shares after transferring.
On 17 May 2016, the equity allocation plan was deliberated and approved by Annual General Meeting of 2015.Based on 301,080,184 shares dated 31
st
December 2015, increase 5 shares by each 10 shares transferring to allshareholders. Share capital increased to 451,620,276 shares after transferring.
On 15 May 2017, the equity allocation plan was deliberated and approved by Annual General Meeting of 2016.Based on 451,620,276 shares dated 31
st
December 2016, distributed 0.50 Yuan (tax included) for every 10 sharesheld by all shareholders with one bonus shares (tax included), no capitalization from public reserves. Shares capitalincreased to 496,782,303 shares after bonus stock distributed.
On October 15, 2018, the Company received the “Reply on the Approval of Shenzhen Cereals Holdings Co., Ltd.to Issue Shares to Shenzhen Fude State-owned Capital Operation Co., Ltd. (hereinafter referred to as Fude Capital)to Purchase Assets” (ZJXK [2018] No. 1610) from the China Securities Regulatory Commission, agreed theCompany to issue 655,752,951 shares of restricted ordinary shares to Fude Capital to acquire 100.00% equity of
Shenzhen Cereals Group Co., Ltd. held by Fude Capital.On October 18, 2018, 100.00% equity of Shenzhen Cereals Group Co., Ltd. completed the transfer procedures andrelated industrial and commercial change registration. After the completion of this major asset reorganization, theCompany’s share capital increased to 1,152,535,254 shares. This share capital change was examined by JontenCertified Public Accountant (Limited Liability Partnership) who issued the capital verification report Jonten [2018]YZ No. 90066 on October 22, 2018.End as December 31, 2018, the total share capital of the company was 1,152,535,254.00 shares, registered capitalamounted to 1,152,535,254.00 yuan.
Register address of the Company: 8/F, Tower B, No.4 Building, Software Industry Base, South District, Science &Technology Park, Xuefu Rd., Yuehai Street, Nanshan District, Shenzhen
On 30 January 2019, the Company hold a Second Extraordinary Shareholders Meeting of 2019 to deliberated andapproved the proposal of “Change the Name and Stock Short Name of the Company ”, agreed to change the nameof the Company from “Shenzhen Shenbao Industrial Co., Ltd.” to “Shenzhen Cereals Holdings Co., Ltd.”, stockshort name change from “Shen Shenbao A, Shen Shenbao B” to “SZCH, Shenliang B”. On 18 February 2019,registration procedures on industrial and commercial has completed and obtained the new Business License fromShenzhen Market Supervision and Administration.(ii) Business nature and main operation activitiesThe Company belongs to the grain, oil food and beverage industry.Main products of the Company including grain and oil trading and processing, grain and oil reserve service, militaryfood supplies, food beverage of tea and tea products.Business scope: production of tea, tea products, extract of tea and natural plant, canned food, beverage and nativeproducts ( business license for the production place should apply separately); technology development andtechnology service of tea, plant products, soft beverage and foods; info tech development and supporting service;on-line trading; investment, operation, management and development of tea plantation; investment in industrialprojects (apply separately for detail projects); domestic trading(excluding special sales, specific control andexclusive commodity); import and export business; engaged in real estate development and operation in the landlegally obtained; lease and sales of the self-owned property and property management.” (as for the projects subjectto examination and approval regulated by the state laws, administrative regulations and state council, approvalshould be obtained before operation). Business in license: wholesale of prepackaged food (excluding reheatingprepackaged food) (in non-physical way).In the reporting period, under the way of issuing shares to Fude Capital for purchasing 100 percent equity ofShenzhen Cereals Group Co., Ltd, on basis of production, research and development and sales of food raw materials(ingredients) centered on intensive processing of tea and natural plants, main business of the Company increasedgrain and oil reserve, grain & oil trading, circulation of grain and oil such as grain and oil processing, and grain andoil reserve service. Therefore, on 18 February 2019, relevant business scope of the Company was changed as:
general operation items: acquisition and sales of grain & oil, grain and oil reserves; management and processing of
grain & oil and their products; production of tea, tea products, extract of tea and natural plant, canned food, beverageand native products ( business license for the production place should apply separately); management and processingof feed (outsourcing); grain and oil logistics, feed logistics, investment, operation and development for the projectsof tea garden; sales of feed and tea; storage service; grain distribution services; modern grain supply chain service;technical development and services of grain and oil, tea, plant products, soft drinks and food; E-business andinformation construction, IT development and supporting services; investment in industrial projects (applyseparately for detail projects); domestic trading; import and export business; engaged in real estate developmentand operation in the land legally obtained; development, operation, leasing and management of the owned property;property management; providing management services for hotels. (as for projects mentioned above that are requiredto be submitted for examination and approval by the laws, administrative regulations and decision of the statecouncil, approval and examination shall be required before operated). Business in license: wholesale of prepackagedfood (excluding reheating prepackaged food) (in non-physical way); information services business (internetinformation services business only); general freight transportation and professional transportation (refrigeration andfresh-keeping)
(iii) Report approval for the financial statementThe statement has been approved by BOD of the company for reporting on 25 April 2019.
II. Consolidated financial statement scope
Totally 36 subsidiaries are included in consolidate financial statement, mainly including:
| Subsidiary | Type | Level | Shareholding ratio (%) | Voting rights ratio (%) |
| Shenzhen Shenbao Huacheng Science and Technology Co.,Ltd(hereinafter referred to as Shenbao Huacheng) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Ju Fang Yong Tea Industry Co., Ltd. in Wuyuan County(hereinafter referred to as Wuyuan Ju Fang Yong) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Shenzhen Shenbao Sanjing Food & Beverage Development Co., Ltd.(hereinafter referred to as Shenbao Sanjing) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Huizhou Shenbao Science & Technology Co., Ltd.(hereinafter referred to as Shenbao Science & Technology ) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Shenzhen Shenbao Properties Management Co., Ltd. (hereinafter referred to as Shenbao Properties) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Shenzhen Shenbao Industrial & Trading Co., Ltd.(hereinafter referred to as Shenbao | Wholly-owned subsidiary | First grade | 100 | 100 |
Industrial & Trading)Hangzhou Ju Fang Yong Holding Co.,Ltd.(hereinafter referred to as Hangzhou JuFang Yong)
| Hangzhou Ju Fang Yong Holding Co., Ltd.(hereinafter referred to as Hangzhou Ju Fang Yong) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Shenzhen Shenbao Technology Center Co., Ltd.(hereinafter referred to as Shenbao Technology Center ) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Shenzhen Shenshenbao Investment Co., Ltd. (hereinafter referred to as Shenshenbao Investment) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Yunnan Shenbao Pu’er Tea Supply Chain Management Co., Ltd(hereinafter referred to as Yunnan Supply Chain ) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Huizhou Shenbao Food Co., Ltd.(hereinafter referred to as Huizhou Shenbao Food ) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Yunnan Pu’er Tea Trading Center Co., Ltd.(hereinafter referred to as Pu’er Tea Trading Center ) | Controlling subsidiary | First grade | 55 | 55 |
| Mount Wuyi Shenbao Rock Tea Co., Ltd. (hereinafter referred to as Shenbao Rock Tea ) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Hangzhou Fuhaitang Tea Ecological Technology Co., Ltd.(hereinafter referred to as Fuhaitang Ecological ) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Hangzhou Chunshi Network Technology Co.,Ltd. (hereinafter referred to as Chunshi Network) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Shenzhen Shenshenbao Tea Culture Management Co., Ltd. (hereinafter referred to as Shenshenbao Tea Culture) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Hangzhou Ju Fang Yong Trading Co., Ltd. (hereinafter referred to as Ju Fang Yong Trading) | Controlling subsidiary | Second grade | 60 | 60 |
| Shenzhen Shenbao Tea-Shop Co., Ltd. (hereinafter referred to as Shenbao Tea-Shop ) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Hangzhou Fuhaitang Catering Management chain Co., Ltd.(hereinafter referred to as Fuhaitang Catering ) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Shenzhen Cereals Group Co., Ltd(hereinafter referred to as SZCG ) | Wholly-owned subsidiary | First grade | 100 | 100 |
| Shenzhen Flour Co., Ltd(hereinafter referred to as Shenzhen Flour) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Shenzhen Hualian Grain & Oil Trade Co., ltd. | Wholly-owned | Second | 100 | 100 |
| (hereinafter referred to as Hualian Grain & oil trading ) | subsidiary | grade | ||
| Hainan Haitian Aquatic Feed Co., Ltd(hereinafter referred to as Hainan Haitian) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| SZCG Quality Inspection Co., Ltd. (hereinafter referred to as SZCG Quality Inspection) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| SZCG Doximi Business Co., Ltd. (hereinafter referred to as SZCG Doximi) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| SZCG Cold-Chain Logistic Co., Ltd.(hereinafter referred to as SZCG Cold-Chain Logistic) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| SZCG Big Kitchen Food Supply Chain Co., Ltd.(hereinafter referred to as SZCG Big Kitchen) | Controlling subsidiary | Second grade | 70 | 70 |
| SZCG Real Estate Development Co., Ltd. (hereinafter referred to as SZCG Real Estate Development) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| SZCG Property Management Co., Ltd. (hereinafter referred to as SZCG Property) | Wholly-owned subsidiary | Third grade | 100 | 100 |
| SZCG Storage (Yingkou) Co., Ltd.(hereinafter referred to as SZCG Storage (Yingkou) ) | Wholly-owned subsidiary | Second grade | 100 | 100 |
| Dongguan SZCG Logistics Co., Ltd.(hereinafter referred to as Dongguan Logistics) | Controlling subsidiary | Second grade | 51 | 51 |
| Dongguan International Food Industrial Park Development Co., Ltd.(hereinafter referred to as Dongguan Food Industrial Park) | Controlling subsidiary | Third grade | 51 | 51 |
| Dongguan SZCG Oil & Food Trade Co., Ltd. (hereinafter referred to as Dongguan Food Trade) | Controlling subsidiary | Third grade | 51 | 51 |
| Dongguan Golden Biology Tech. Co., Ltd. (hereinafter referred to as Dongguan Golden) | Controlling subsidiary | Third grade | 51 | 51 |
| Shuangyashan SZCG Zhongxin Cereals Base Co., Ltd. (hereinafter referred to as Shuangyashan SZCG Zhongxin) | Controlling subsidiary | Second grade | 51 | 51 |
| Heilongjiang Hongxinglong Nongken Shenxin Cereals Industrial Park Co., ltd. (hereinafter referred to as Hongxinglong Nongken Industrial Park ) | Controlling subsidiary | Third grade | 51 | 51 |
Subsidiary newly included in consolidate scope
| Name | Reasons for change |
| Shenzhen Cereals Group Co., Ltd | Enterprise combined under the same control |
| Shenzhen Flour Co., Ltd(Note 1) | Enterprise combined under the same control |
| Shenzhen Hualian Grain & Oil Trade Co., ltd. (Note 1) | Enterprise combined under the same control |
| Hainan Haitian Aquatic Feed Co., Ltd(Note 1) | Enterprise combined under the same control |
| SZCG Quality Inspection Co., Ltd. (Note 1) | Enterprise combined under the same control |
| SZCG Doximi Business Co., Ltd. (Note 1) | Enterprise combined under the same control |
| SZCG Cold-Chain Logistic Co., Ltd.(Note 1) | Enterprise combined under the same control |
| SZCG Big Kitchen Food Supply Chain Co., Ltd.(Note 1) | Enterprise combined under the same control |
| SZCG Real Estate Development Co., Ltd. (Note 1) | Enterprise combined under the same control |
| SZCG Property Management Co., Ltd. (Note 1) | Enterprise combined under the same control |
| SZCG Storage (Yingkou) Co., Ltd.(Note 1) | Enterprise combined under the same control |
| Dongguan SZCG Logistics Co., Ltd.(Note 1) | Enterprise combined under the same control |
| Dongguan International Food Industrial Park Development Co., Ltd.(Note 1) | Enterprise combined under the same control |
| Dongguan SZCG Oil & Food Trade Co., Ltd. (Note 1) | Enterprise combined under the same control |
| Dongguan Golden Biology Tech. Co., Ltd. (Note 1) | Enterprise combined under the same control |
| Shuangyashan SZCG Zhongxin Cereals Base Co., Ltd. (Note 1) | Enterprise combined under the same control |
| Heilongjiang Hongxinglong Nongken Shenxin Cereals Industrial Park Co., ltd. (Note 1) | Enterprise combined under the same control |
| Name | Reasons for change |
| Zhanjiang Haitian Aquatic Feed Co., Ltd | Stripped without compensation from state-owned shares. (fond more in (ii) of Note VII) |
3. Subsidiary excluded in consolidated financial statement
(1) Shenzhen Shenbao (Liaoyuan) Industrial Company has established for a long time without normal operation,Industry and Commerce Bureau has canceled the business license of the company, the long-term equityinvestment for the company has been accrual for impairment totally. Financial statement of the company is outof the consolidation range.
(2) Shenzhen Shenbao Manan Biotechnology Co., Ltd. Change its name as Huizhou Shenbao Manan BiotechnologyCo., Ltd on 21 May 2018, it is a subsidiary of the Company, set up by Huizhou Shenbao Technology and GuangzhouShen Guangsheng biotechnology limited liability company, according to the contract signed by both parties onMarch 28, 2014, Huizhou Shenbao Technology does not have the right to manage this company, thus it is accountedby the equity method.
(3) Shenzhen Shichumingmen Restaurant Management Co., Ltd. set up by a subsidiary of the CompanyShenshenbao tea culture and Shenzhen Investment Co., Ltd. F. according to Articles of Association, the Board ofDirectors to vote by one vote one person. Attendees to the board of directors should be more than 2/3 of the wholenumber of directors, and all participants approve the resolution thus it is effective. The Company only accountedfor 3/5 of the voting rights in Shichumingmen Company, control can not be reached, so it is accounted for by theequity method.
IV. Basis of preparation of financial statements
1. Basis of preparation(i) basis of preparation of financial statement
Based on continuing operation, the Company conducts recognition and measurement according to actual occurrenceof transactions and issues, pursuant to the accounting principles for enterprise-basic rules and specific accountingprinciple as well as the application guidance for the accounting principles for enterprise, interpretation to theaccounting principles for enterprise and other related requirements (hereinafter referred to as Enterprise AccountingPrinciples) issued by the ministry of finance, on that basis, combining the Information Disclosure Preparation Rulesfor Company Public Issuing Securities No.15-General Rules for Financial Report (amended in 2014) of the CSRCfor statement preparation.
2. Going concern(ii) Going concernThe Company was evaluated on continued viability of 12 months for the reporting period and found to have no
significant doubt. Accordingly, the financial statements have been prepared on the basis of going concernassumptions.
V. Major accounting policy, accounting estimation
Does the Company need to comply with disclosure requirements of the special industry?No
Specific accounting policies and estimation attention:
Nil1. Statement for observation of Accounting Standard for EnterpriseThe financial statements prepared by the Company are in accordance to requirements of Accounting Standard forEnterprise, which truly and completely reflect the information related to financial position, operational results andcash flow of the Company.
2. Accounting periodCalendar year is the accounting period for the Company, that is falls to the range starting from 1 January to 31December.
3. Operating cycleOperating cycle of the Company was 12 months, and the operating cycle is the determining criterion for liquidityof assets and liabilities.
4. Standard currencyThe 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 samecontrol1. If the terms, conditions, and economic impact of each transaction involved in business combinationachieved in stages fall within one or more of the following situations, such transactions will be accounted foras 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 controlThe assets and liabilities the Company acquired in a business combination shall be measured in accordance withbook value of assets, liabilities (including the ultimate controlling party of goodwill acquired by the merging partiesand the formation of) stated in combined financial report of the ultimate controlling party on the merger date. Thenet book value of assets and the payment of the merger consideration in the merger book value (or nominal valueof shares issued) shall be adjusted in the share premium of reserve capital. the share premium in capital reserve isnot enough for deducting, retained earnings .
If the capital reserve is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.In case there is existence of contingent consideration which needs to confirm projected liabilities or assets, then thedifference between the projected liabilities or assets and settlement amount for consequent contingent considerationis utilized to adjust capital reserve (capital premium or equity premium); in case of insufficient capital reserve,adjust retained earnings.
As for business combination realized through numbers of transactions, and if these transactions belong to a bundleof transactions, then each of them shall be accounted as a transaction to acquire controlling right; and if not belongto a bundle of transactions, then the difference between the initial investment cost of the long term equity investmentas of the date on which the Company obtains controlling right and the carrying value of the long term equityinvestment prior to combination plus the carrying value of the new consideration paid for further acquisition ofshares as of the combination date shall be used to adjust capital reserve; in case of insufficient capital reserve, adjustretained earnings. For equity investment held prior to the combination date, the other comprehensive incomerecognized due to calculation by equity method or based on recognition and measurement principles for financialinstruments would not be accounted for temporarily until the Company disposes of this investment on the samebasis as the investee directly disposes of relevant assets or liabilities; other changes of owners’ equity in the netassets of investee as recognized under equity method, except for net profit or loss, other comprehensive income andprofit distribution, shall not be accounted for until being transferred to current profit or loss when this investment isdisposed of.
3. Business combination not under the same controlPurchase date refers to the date on which the Company actually obtains control over the acquiree, that is, the datewhen the acquiree’s net assets or control of production and business decisions are transferred to the Company. Whensatisfying the following conditions at the same time, the Company generally believes that the transfer of controlrights has been achieved:
① The business merger contract or agreement has been approved by the Company’s internal authority.
② Business merger matters need to be approved by the relevant national competent authority, and approval has
been obtained.③ The necessary procedures for the transfer of property rights have been completed.④ The Company has paid most of the merger cost and has the ability and plan to pay the remaining amount.⑤ The Company has actually controlled the finance and operating policies of the acquiree, and enjoyscorresponding benefits and assumes corresponding risks.
Assets paid and liabilities taken for business combination on the acquisition date shall be measured at fair value.The difference between the fair value and book value is recognized in profit or loss.
Goodwill is realized by the Company as for the difference between the combination cost and the fair value of therecognizable net assets of the acquiree acquired by acquirer in such business combination. In case that the abovecost is less than the above fair value even with re-review, then the difference shall be recorded in current gains andlosses.
As for the business combination not under the same control realized through several exchange transactions step bystep, part of the package deal, than carrying accounting treatment on transactions with controlling rights obtainedthrough vary transactions; as for non-package: for equity investment held prior to combination date which iscalculated under equity method, the sum between carrying value of the equity investment prior to acquisition dateand cost of additional investment made on the acquisition date is deemed to be the initial investment cost of thisinvestment. Other comprehensive income recognized for equity investment held prior to combination date underequity method shall be accounted for when the Company disposes of this investment on the same basis as theinvestee directly disposes of relevant assets or liabilities. In case that equity investment held prior to combinationdate is calculated based on recognition and measurement principles for financial instruments, then the fair value ofthis 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 fairvalue movements as originally recorded in other comprehensive income shall be all transferred to investmentincome of the period in which the combination date falls.
4. Expenses related to the mergerAudit, legal, consulting services, and other intermediary costs and other expenses directly related to the businesscombination, shall be included in current profit or loss in the event; any transaction fee for issuing equity securitiesfor business combination which can be directly attributable to the equity transaction shall be deducted from equity.
6. Methods for preparation of consolidated financial statements1. Merger scope
The consolidation scope of the consolidated financial statements of the Company is fixed on the basis of control,and all subsidiaries have been consolidated.
2. Merger procedureThe Company edits the consolidated financial statements based on its own financial statements and the subsidiaries’,as well as other relevant information. The consolidated financial statements hold the enterprise group as a wholeaccounting entity. It is recognized in accordance with relevant Accounting Standards, measurement and presentationrequirements. Uniform accounting policies reflect the overall financial position of the Group's business, operatingresults and cash flow.
The accounting policies and accounting period adopted by the subsidiaries taken into account of the consolidationscope are in line with the Company. If it is not the same as the Company, necessary adjustments will be made whenpreparing consolidated financial statements according to the accounting policy and accounting period of theCompany.
Internal transactions between the Company and its subsidiaries and between subsidiaries to each other shall putimpact on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement, theconsolidated shareholders' equity. The impact shall be offset when combing financial statements. If it is not thesame when you stand Enterprise Group and the angle of the Company or its subsidiaries as the accounting entityidentified on the same transaction, the business point of view shall be adjusted to the Group's transactions.
Subsidiary's equity, current net profits or losses and current comprehensive income belonging to minorityshareholders shall be listed respectively under item of owners’ equity in the consolidated balance sheet, item of netprofit in profit sheet and item of total comprehensive income. Current loss minority shareholders of a subsidiaryexceed the minority shareholders in the subsidiary's opening owners' equity share and the formation of balance,offset against minority interests.
For the subsidiaries acquired through business combination under common control, its assets and liabilities(including goodwill formed from ultimate controlling party acquiring the subsidiary to) shall be adjusted based onthe book value in the financial statements of the ultimate controlling party.
For the subsidiaries acquired through business combination under uncommon control, financial statements shall beadjusted based on the fair value of the identifiable net assets on acquiring date.
(1) Increase of subsidiary or businessDuring the reporting period, the merger of the enterprises under the same control results in additional subsidiariesor business, then adjust the opening amount of consolidated balance sheet; income, expenses and profit of thesubsidiaries or business from beginning to the end of the reporting shall be included in the consolidated profit
statement; cash flows of the subsidiaries or business from beginning to the end of reporting period shall be includedinto the consolidated cash flow statement. And relevant comparative items of comparable statement shall be adjustedsince reporting entity is controlled by the ultimate controller.
If additional investment and other reasons can lead investee to be controlled under the same control, all parties shallbe adjusted at the beginning when the ultimate controlling party starts control. Equity investments made beforeobtaining controlling right, relevant gains and losses and other comprehensive income as well as other changes innet assets confirmed during the latter date between point obtaining original equity and merger and mergered underthe same control day to the combined day, shall be offset against the retained earnings or profit or loss of thecomparative reporting period.
During the reporting period, opening amount of consolidated balance sheet shall not be adjusted since enterpriseunder different control combine or increase holding of subsidiary or business; the income, expense and profit of thesubsidiaries or business from the acquisition date to the end of reporting period shall be included in the consolidatedprofit statement; while cash flows shall be included into the consolidated cash flow statement.
Equity held from investee before acquisition date shall be measured at fair value of acquisition date if additionalinvestment and other reasons can lead investee to be controlled under the same control. Difference between the fairvalue and the book value is recognized as investment income. other comprehensive income and other owners' equityexcept for net profit or loss, other comprehensive income and the distribution of profits related to equity held frominvestee before acquisition date, as well as relevant other comprehensive income associated with all other bychanges in equity shall be included in current investment income, except for other comprehensive income arisingfrom change of net assets or net liabilities redefined by investee.
(2) Disposal of subsidiaries or business1) The general approachDuring the reporting period, the Company carry out disposal of subsidiaries or business, revenue, expense and profitof the subsidiary or business included in the consolidated profit statement from the beginning to the disposal date;while the cash flow into cash flow table.
If losing controlling right to investee due to disposal of partial equity, the remaining equity after the disposal shallbe re-measured at fair value at the date when control is lost. Price of equity disposal plus fair value of the remainingequity, then subtracting net assets held from the former subsidiary from the acquisition date or combination dateinitially measured in accordance with original stake and goodwill, the difference shall be included in investmentincome of the period losing controlling right. other comprehensive income and other owners' equity except for netprofit or loss, other comprehensive income and the distribution of profits related to equity held from investee beforeacquisition date, as well as relevant other comprehensive income associated with all other by changes in equity shallbe included in current investment income, except for other comprehensive income arising from change of net assets
or net liabilities redefined by investee.
2) Step disposal of subsidiariesAs multiple transactions over disposal of the subsidiary's equity lead to loss of controlling right, if the terms of thetransaction, situation and economic impact subject to one or above of the following conditions, usually it indicatesrepeated transactions should be accounted for as a package deal:
A. These transactions are made considering at the same time or in the case of mutual impact;B. These transactions only reach a complete business results when as a whole;C. A transaction occurs depending on the occurrence of at least one other transaction;D. Single transaction is not economical, but considered together with other transactions it is economical.If disposal of equity in subsidiaries lead the loss of control and the transactions can be seen as a package deal, theCompany will take accounting treatment of the transaction; however, before the loss of control the differencebetween the disposal price and the corresponding net assets of the subsidiary, recognized as other comprehensiveincome in the consolidated financial statements, into current profit and loss at current period when losing controllingright.
If disposal of equity in subsidiaries lead the loss of control and the transactions doesn’t form a package deal, equityheld from subsidiary shall be accounted in accordance with relevant rules before losing controlling right, while inaccordance with general accounting treatment when losing controlling right.
(3) Purchase of a minority stake in the subsidiaryLong-term equity investment of the Company for the purchase of minority interests in accordance with the newlyacquired stake in the new calculation shall be entitled to the difference between the net assets from the acquisitiondate (or combination date) initially measured between the consolidated balance sheet adjustment capital balance ofthe share premium in the capital reserve share premium insufficient, any excess is adjusted to retained earnings.
(4) Disposal of equity in subsidiary without losing controlDisposal price and disposal of long-term equity investment without a loss of control due to partial disposal ofsubsidiaries and long-term equity investment made between the relative net assets from the purchase date or thedate of merger were initially measured at the difference between the subsidiary shall enjoy, the consolidated balancesheet adjustment in the balance of the share premium, capital balance of the share premium insufficient, any excessis adjusted to retained earnings.
7. Classification of joint venture arrangement and accounting for joint operations1. Classification of joint venture arrangementThe 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 meetsany of the following conditions as proven by obvious evidence and satisfies relevant laws and rules is grouped asjoint operation:
(1) The legal form of the arrangement shows that parties to the arrangement are entitled to and assume rights andobligations in respect of the relevant assets and liabilities.(2) It is agreed by the terms of the arrangement that parties to the arrangement are entitled to and assume rights andobligations 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 andobligations in respect of the relevant assets and liabilities. For instance, joint parties are entitled to almost all theoutput related to joint venture arrangement and settlement of the liabilities under the arrangement continues to relyon supports from the joint parties.
2. Accounting for joint operationsThe Company recognizes its proportion of interests in joint operation as related to the Company, and accounts forunder 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 itsproportion.
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 jointoperation before the joint operation is sold to any third party. In case those assets injected or disposed satisfy thecondition for asset impairment loss under Business Accounting Principle No.8-Assets Impairment, the Companyrecognizes this loss in full.
For acquisition of assets from joint operations (other than those assets constituting business operation), gain or lossarising from the transaction is only recognized to the extent it is attributable to other parties to the joint operationbefore the relevant assets are sold to any third party. In case that the acquired assets satisfy the condition for assetimpairment loss under Business Accounting Principle No.8-Assets Impairment, the Company recognizes relevantloss according to the proportion it assumes.
The Company exercises no common control over joint operations. If the Company is entitled to relevant assets ofthe joint operation and assure relevant liabilities, it shall be accounted for under the above principle, otherwise itwould be accounted for under the relevant business accounting principles.
8. Recognition standards for cash and cash equivalentsWhen preparing cash flow statement, the Company recognized the stock cash and deposits available for payment atany 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 statementFor the foreign currency business, the Company converts the foreign currency into RMB for book-keeping basedon spot exchange rate at date of trading occurred.
On balance sheet date, balance of foreign currency monetary items shall be converted based on the spot rate as atthe balance sheet date, and the arising exchange difference shall be recorded in current gains and losses other thanthose arising from the special foreign currency borrowings related to purchasing assets qualifying for capitalizationwhich is treated under the principle of borrowing expense capitalization. As for the foreign currency non-monetaryitems measured in historical cost, conversion is still conducted with the spot rate as at the transaction date, withoutany 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 exchangedifference shall be recorded in current gains and losses or capital reserve.
As for the foreign currency non-monetary items measured in fair value, conversion is conducted with the spot rateas at the date for determination of fair value, and the arising exchange difference shall be recorded in current gainsand losses or capital reserve.
10. Financial instrumentsFinancial instruments include financial assets, financial liabilities and equities instruments.1. Categories of financial instrumentsAccording to the contract terms of the financial instrument issued and economic substance reflects by suchinstrument, not only in form of law, combine with purposes held for financial assets and liabilities, the Companycategorizes financial assets and liability into different types: financial assets (or financial liabilities) at fair valuethrough 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 lossFinancial 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 objectiveevidence 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 inan active market and whose fair cannot be measured reliably and the settlement of which is conditional upon deliveryof the equity instrument.
Subject to satisfaction of any of the following conditions, financial assets or liabilities can be designated as financialassets or liabilities at fair value through profit or loss upon initial measurement:
1) The designation can eliminate or substantially eliminate the inconsistencies between profit and loss from thefinancial assets arising from different measurement basis;2) The portfolio of financial assets and liabilities in which the financial asset belongs to are designated as measuredat 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 embeddedderivatives does not have substantial effect on the cash flows of the hybrid instruments, or the embedded derivativesobviously should not be separated from relevant hybrid instruments;4) Hybrid instruments which contains embedded derivatives that should split, but cannot be measured separatelywhen acquired or on the subsequent balance sheet date.
The Company initially measures financial assets or liabilities at fair value through profit or loss at their fair valueswhen acquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond interestswhich is due for interest payment but not received), and the relevant transaction fee is included in current profit orloss. Interest or cash dividend acquired during the holding period shall be recognized as investment income, andmovement of fair value at the end of period is included in current profit or loss. Upon disposal, the differencebetween its fair value and initial accounting amount shall be recognized as investment income, with correspondingadjustment to gains and losses from movement of fair value.
(2) Account receivables
Account receivable refers to the non-derivative financial assets without price in active market and with amount tobe fixed or to be determinedThe contract price charged to the buyers shall be recognized as initial value for those account receivables whichmainly comprise the receivable creditor’s right caused by the sale of goods and providing of labor service to externalcustomers 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 intocurrent profit or loss on its recovery or disposal.
(3) Held-to-maturity investmentThe non-derivative financial assets with maturity date, fix return amount or amount able to determined, and theCompany 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 notreceived) and related transaction fee as initial recognition amount in respect of held-to-maturity investment uponacquisition of the investment. During the holding period, the Company recognizes interest income at amortized costand effective interest rate which is included in investment income. The effective interest rate is determined uponacquisition of the investment and remains unchanged for the expected continuous period or appropriate shorterperiod. 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 amountis 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 immediatelyfollowing such disposal or reclassification. On the reclassification date, difference between the carrying value andfair value of the investment is included in other comprehensive income and is transferred out into current profit orloss when the available-for-sale financial assets experience impairment or derecognition. However, the followingsare 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 valueof 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 notto occur repeatedly and which are difficult to predict reasonably.
(4) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale uponinitial 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 whenacquiring the assets or liabilities (after deducting cash dividend already declared but not paid or bond interests whichis due for interest payment but not received) and the relevant transaction fee. Interest or cash dividend acquiredduring 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 arisingfrom foreign currency monetary financial assets. When disposing available-for-sale financial assets, the Companyincludes the difference between the acquired price and carrying value of the financial assets into investment profitor loss. Meanwhile, accumulated fair value movement attributable to the disposed part which is originally directlyincluded 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 reliablymeasured, and derivative financial assets which are linked to the equity instrument and whose settlement isconditional upon delivery of the equity instrument, they are stated at cost by the Company.
(5) Other financial liabilitiesInitial recognition amount is determined at the sum of fair value and relevant transaction fee. Subsequentmeasurement is conducted at amortized cost.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 risksand 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 ofsuch financial assets have almost been retained.
When judging whether or not the aforesaid terminal recognition condition for financial assets is arrived at fortransfer of financial assets, the Company generally adopts the principle that substance overweighs format. TheCompany divides such transfer into entire transfer and part transfer. As for the entire transfer meeting condition fordiscontinued 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 originallyrecorded in owners’ equity directly (applicable when financial assets involved in transfer belong to financial assetsavailable for sale).
As for the part transfer meeting condition for discontinued recognition, entire carrying value of financial assets intransfer is shared by discontinued recognition part and continued recognition part, in light of their respective fairvalue. 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 toaccumulative movements of fair value originally recorded in owners’ equity directly (applicable when financialassets 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 discontinuedrecognition. And consideration received is recognized as financial liability.
4. De-recognition condition for financial liabilityAs for the financial liabilities with its whole or part present obligations released, the company shall de-realize suchfinancial liabilities or part of it. if the company enters into agreement with its creditor to substitute for the existingfinancial liabilities by means of assuming new financial liabilities, then the company shall de-realize the existingfinancial liabilities and realize the new financial liabilities provided that the contract clauses of the new and theexisting 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 amendmentto its clauses shall be realized as new financial liabilities.
In case of derecognizing of financial liabilities in whole or part, the difference between the carrying value of suchde-realized financial liabilities and consideration paid (including the non-cash assets exchanged or new financialliabilities 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 thecontinuing recognition part and the derecognizing part, the company shall allocate the carrying value of the financialliabilities in whole on the repurchase date. Difference between the carrying value allocated to the derecognizingpart and the consideration paid (including the non-cash assets exchanged or new financial liabilities assumed) shallbe recorded in current gains and losses.
5. Determination method for fair value of financial assets and financial liabilitiesAs for the financial assets or financial liabilities with an active market, the fair value is determined by the offer ofthe active market; the offer of the active market includes the offers of underlying assets or liabilities easily andregularly obtained from the exchange, the dealer, the broker, the industry group, the pricing institution or theregulatory body, which can represent the market transactions actually and frequently occur on the basis of fair trade.
The initial acquisition or financial assets or financial liabilities assumed, market transaction price to determine thefair value basis.
There is no active market for a financial asset or financial liability, the valuation techniques to determine its fairvalue. At the time of valuation, the Company adopted applicable in the present case and there is enough availabledata and other information technology to support valuation, assets or liabilities of feature selection and marketparticipants in the trading of the underlying asset or liability considered consistent input value and priority as therelevant observable inputs. Where relevant observable inputs can not get or do not get as far as practicable, the useof unobservable inputs.
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 thechange thereof is recorded in current gains and losses) on the balance sheet date, if there is objective evidenceshowing impairment of the financial assets, it shall provide impairment reserve.
Objective evidence that a financial asset is impaired includes the following observable events:
1. Significant financial difficulty of the issuer or obligor;2. A breach of contract by the borrower, such as a default or delinquency in interest or principal payments;3. The creditor, for economic or legal reasons relating to the borrower’s financial difficulty, granting a concessionto the borrower;4. It becoming probable that the borrower will enter bankruptcy or other financial reorganizations;5. The disappearance of an active market for that financial asset because of financial difficulties of the issuer;6. Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group offinancial assets since the initial recognition of those assets, although the decrease cannot yet be identified with theindividual 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 propertyprices for mortgages in the relevant area, or adverse changes in industry conditions that affect the borrowers in thegroup;7. Significant adverse changes in the technological, market, economic or legal environment in which the issueroperates, indicating that the cost of the investment in the equity instrument may not be recovered by the investor;8. 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 assetsThe Group has separately tested various available-for-sale equity instruments at the balance sheet date. It will bedefined 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 Groupwill take other factors such as price fluctuation into consideration to estimate whether the equity instrument hasimpaired or not.
Initial segment of the "cost" of the sale of equity instruments in accordance with available cost less any principalrepayment and amortization, impairment loss has been included in determining profit or loss; The fair value of theavailable-for-sale equity instrument investment without an active market is determined by the present valuedetermined on the basis of the current market return similar to financial assets versus the future discounted cash;the fair value of available-for-sale equity instrument investment with offers in the active market is determined bythe closing price of the stock exchange at the end of the period, unless this available-for-sale equity instrumentinvestment has a restricted stock trade period. For the presence of restricted investments in equity instrumentsavailable for sale, according to the end of the closing price of the stock exchange market participants by deductingthe risk equity instrument within a specified period cannot be sold on the open market and the requirements to obtain
compensation.
When an available-for-sale financial asset is impaired, the cumulative loss arising from decline in fair value thathad been recognized in other comprehensive income is reclassified to the profit or loss even though the financialasset has not been derecognized. The amount of the cumulative loss that is removed from equity is the differencebetween the acquisition cost (net of any principal repayment and amortization) and current fair value, less anyimpairment 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 itrelates to the matters happened after the impairment loss recognition, the impairment loss recognized shall bereversed and accounted in current profit or loss. Impairment losses recognized for equity instrument investmentsclassified as available-for-sale are reversed through equity. However, impairment loss occurred by equity instrumentinvestment which is not quoted in an active market and whose fair value cannot be measured reliably and derivativefinancial assets which are linked to the equity instrument and whose settlement is conditional upon delivery of theequity instrument, shall not be reversed.
(2) Impairment provision for held-to-maturity investmentFor held-to-maturity investment, if there is object evidence showing the investment is impaired, then impairmentloss 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 losscan be reversed and included in current profit or loss, provided that the reversed carrying value shall not exceed theamortized cost of the financial asset as at reversal date assuming no impairment provision had been made.
7. Offset of financial assets and financial liabilitiesFinancial assets and financial liabilities are stated in balance sheet separately without inner-offset. However, the netamount 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 financialliabilities.
11. Note receivable and account receivable(1) Account receivable with single significant amount and withdrawal single item bad debt provision
| Account with single significant amount | Amount of 10 million yuan above |
| Withdrawal method for bad debt provision of account receivable with single significant amount | Amount of 5 million yuan above |
(2) Accounts receivable whose bad debts provision was accrued by combination based on credit riskcharacteristics portfolio
| Portfolio | Bad debt provision accrual |
| Age analysis method | Age analysis method |
| Account age | Accrual ratio for account receivable | Accrual ratio for other account receivable |
| Within one year (one year included) | 1.00% | 1.00% |
| 1－2 years | 10.00% | 10.00% |
| 2－3 years | 30.00% | 30.00% |
| 3－4 years | 50.00% | 50.00% |
| 4－5 years | 50.00% | 50.00% |
| Over 5 years | 80.00% | 80.00% |
| Reasons for provision of bad debt reserve | There is objective evidence that the Company will not be able to recover the money under the original terms of receivables. |
| Provision method of bad debt reserve | Withdrawn according to the difference between present value of expected future cash flows and the book value of the receivables. |
Inventory carried initial measured by cost, including purchasing cost, processing cost and other costs. Theinventory in transit was valued by weighted average method.
3. Recognized standards of the net realizable value for inventory and withdrawal method on provision ofinventory
After inventory at period-end, the inventories are accounted depending on which is lower between the costand the net realizable value or adjusted the provision of inventory. The net realizable value of inventoryproducts and sellable materials, in normal business production, is measured as the residual value afterdeducting the estimated sales expense and related taxes and fees from the estimated selling price; the netrealizable value of an item of inventories subject to further processing, in normal business production, ismeasured as the residual value after deducting the sum of the estimated costs of completion, sales expenseand related taxes and fees from the estimated selling price of the sellable item. The net realizable value ofthe quantity of inventories held to satisfy firm sales or service contracts is based on the contract price. If thesales contracts are for less than the inventory quantities held, the net realizable value of the excess is basedon general selling prices.
An impairment allowance, if any, is generally individually recognized for each type of inventories at period-endexcept: For an individual impairment allowance, if any, is recognized for the whole category of inventories of lowvalue and large quantities; and for an individual impairment allowance, if any, is recognized for a group ofinventories, which are held for the production and sales of products of a single territory and for identical or similarusages or purposes, and which are indistinguishable from other types of inventories within the group.
If the previous factors resulting in deduction of inventories values disappear, then such deduction of value shall bereversed back from the original provision of inventory depreciation reserve, and turns to current gains and losses.
4. Inventory systemInventory system is the perpetual inventory system.
5. Amortization of low-value consumables and packaging materials(1) Low-value consumables adopts the method of primary resale;
(2) Packaging materials adopts the method of primary resale;(3) Other turnover materials adopts the method of primary resale.
13. Classified as assets held for sale1. The confirmation standards for classifying as available for saleThe Company recognizes the non-current assets or disposal groups that meet both of the following conditions as the
component of available for sale:
(1) According to the practice in similar transactions of selling such assets or disposal groups, it can be soldimmediately under current conditions;(2) The sale is very likely to occur, that is, the Company has already made a resolution on one sales plan and hasobtained a certain purchase commitment, and it is anticipated that the sale will be completed within one year.The confirmed purchase commitment refers to the legally binding purchase agreement signed between the Companyand other parties. The agreement contains important terms such as transaction price, time, and enough severepenalties for breach of contract, etc., so that it is very unlikely to make major adjustments or cancellations to theagreement.2. Accounting methods for available for saleThe Company does not calculate and distill depreciation or amortization for the non-current assets or disposal groupavailable for sale, if the book value is higher than the net amount after deducting selling cost from fair value, thebook value shall be written down to the net amount after deducting selling cost from fair value, the write-downamount is recognized as asset impairment loss and is included in the current gains and losses, and makes provisionfor impairment of available-for-sale assets at the same time.For the non-current assets or disposal group classified as available for sale at the acquisition date, compare the initialmeasurement amount with the net amount after deducting selling cost from fair value based on the assumption thatit is not classified as available for sale at the initial measurement, and measure by the lower amount.The above principles are suitable for all non-current assets, but not including the investment real estate that adoptsfair value model for follow-up measurement, or the biological assets that are measured at the net amount afterdeducting selling cost from fair value, or the assets formed by employee compensation, or the deferred income taxassets, or the financial assets regulated by the relevant accounting standards of financial instruments, or the rightsarising from the insurance contracts regulated by the relevant accounting standards of insurance contracts.
14. Long-term equity investment1. Recognition of investment cost
(1) As for the long-term equity investment formed from business combination under the same control,accounting policy found in (V) Accounting method for business combination (not) under the same controlof Note IV
(2) Long-term equity investment obtained by other meansFor long-term equity investments obtained through payment with cash, then the actual payment shall beviewed as initial investment cost. Initial investment cost including the expenses, taxes and other necessarycosts 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 suchsecurities shall be viewed as initial investment cost; for transaction expenses from issuing or own equityinstrument acquired, it can be deducted from the equity when such expenses attributable directly to equitytransaction.
Under the precedent condition that non-monetary assets exchanges are featured with commercial nature andfair values of exchange-in or exchange-out assets can be reliably measured, long-term equity investmentexchange-in through non-monetary assets exchange shall be recognized with initial investment cost on thebasis of the fair value of the assets exchange-out, unless there is obvious evidence showing that fair value ofexchange-in assets is more reliable; as for non-monetary assets exchanges not satisfying such precedentcondition, initial investment cost of exchange-in long-term equity investment falls to the carrying value ofexchange-out assets and relevant taxes payable.
For long-term equity investments obtained through debt reorganization, its initial investment cost isrecognized based on fair value.
2. Subsequent measurement and recognition of gains and losses
(1) Cost method
The long-term equity investment control by invested entity shall counted by cost method, and pricing on initialinvestment 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 inconsideration which has been declared while not granted yet, the Company recognizes investment incomeaccording 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. Forcertain equity investments in associates indirectly held through risk investment institutions, joint funds, trustcompanies or similar entities including investment linked insurance fund, the Company measures the investment atfair 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 ofthe 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 netassets at the time of acquisition, the difference is recognized in profit or loss for the period.
Return on investments and other comprehensive income is recognized respectively by shares of net gains and lossesrealized 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 investedcompany are to minus book value of the relative long-term investment. Book value of long-term investment isadjusted when changes occur other than net gains and losses, other comprehensive income and profit distributionof the invested company, and is to report in owners’ equity accordingly.
The Company should recognized net profit of invested unit after adjustment, based on fair value of vary identifiableassets of invested unit while obtained investment, while recognized net profit or net losses of invested units thatshould be enjoy by investment enterprise. the un-realized transaction gains/losses attributable to investmententerprise, internally occurred between the Company, affiliated units and joint-ventures should calculated byproportion 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 fordisposal: first of all, offset carrying value of long-term equity investment. Second, for long-term equityinvestment whose carrying value is not enough for offset, investment loss should be continued to recognizewithin the limit of carrying value of other long-term equity which substantially forms net investment toinvested units, to offset carrying value of long-term items receivable. At last, after the aforesaid treatment, ifenterprise still bears additional duties according to investment contract or agreement, projected liabilities arerecognized in accordance to the obligations which are expected to undertake, and then recorded in currentgains and losses.
In the event that the invested unit realizes profit in later periods, the Company will adopt disposal adverse tothe above order after deduction the unrecognized share of loss, i.e. write off the carrying value of therecognized projected liabilities, recover carrying value of long-term equity which substantially forms netinvestment to invested unit and long-term equity investment, and recognize investment income at the sametime.
3. Transfer of calculation for long term equity investment(1) Measure at fair value transfer to equity methodFor the equity investment originally held by the Company in which it has no control, common control or significantinfluence over the investee and which is accounted for under recognition and measurement principle as financialassets, in case that the Company becomes able to exercise significant influence or common control upon the investeedue to additional investment while no control is reached, the sum of fair value of the originally held equityinvestment as determined under Business Accounting Principles No.22- Recognition and Measurement Principle asFinancial Assets plus cost of the new investment shall be deemed as the initial investment cost upon calculationunder equity method.
If the originally held equity investment is classified as available for sale financial assets, the difference between itsfair 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 netidentifiable assets as of the date when additional investment is made as calculated based on the latest shareholdingproportion upon additional investment, carrying value of the long term equity investment shall be adjusted againstsuch 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 methodFor the equity investment originally held by the Company in which it has no control, common control or significantinfluence over the investee and which is accounted for under recognition and measurement principle as financialinstrument, or for long term equity investment originally held in associates or joint ventures, in case that theCompany 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 asthe 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 toacquisition date, when the Company disposes this investment, the aforesaid income shall be accounted for on thesame basis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities.
For equity investment held prior to acquisition date which is accounted for under Business Accounting PrinciplesNo.22- Recognition and Measurement of Financial Assets, the accumulated fair value movement which originallyincluded in other comprehensive income shall be transferred to current period gains and losses upon calculationunder cost method.
(3) Calculation under equity method transfer to fair value measurementIn case that the Company lost common control or significant influence upon investee due to disposal of part equityinvestment, 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 asof the date when the Company lost common control or significant influence shall be included in current period gainsand 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 samebasis as the investee would otherwise adopt when it directly disposes relevant assets or liabilities.
(4) Cost method transfer to equity methodIn case that the Company lost control upon investee due to disposal of part equity investment, and if the remainingequity 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 ithad been stated under equity method since the acquisition.
(5) Cost method transfer to fair value measureIn case that the Company lost control upon investee due to disposal of part equity investment, and if the remainingequity investment cannot exercise common control or significant influence over the investee, Business AccountingPrinciples No.22- Recognition and Measurement of Financial Assets shall be adopted for accounting treatment whenpreparing separate financial statement, and the fair value and carrying value as of the date when control is lost shallbe included in current period gains and losses.
4. Disposal of long term equity investmentDifference between carrying value and actual acquisition price in respect of disposal of long term equity investmentshall be included in current period gains and losses. For long term equity investment under equity method, theCompany shall adopt the same basis as the investee directly disposes relevant assets or liabilities when disposingthis investment, and account for the part originally included in other comprehensive income under appropriateproportion.
If the terms, conditions and economic impact of each transaction involved in the disposal by steps ofinvestment in subsidiaries fall into one or more of the following situations, such transactions will beaccounted 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 orotherwise, and therefore disqualify a package deal, should prepare the relevant accounting treatment indifferentiation with individual financial statements and consolidated financial statement:
(1) In separate financial statement, as for disposal of equity interest, difference between carrying value and actualacquisition price shall be included in current period gains and losses. In case that the remaining equity interests canexercise common control or significant influence over investee, it shall be stated under equity method in stead, andshall be adjusted as if the remaining equity interests had been stated under equity method since the acquisition. Incase that the remaining equity interests cannot exercise common control or significant influence over investee, itshall be accounted for under Business Accounting Principles No.22- Recognition and Measurement Principle ofFinancial Instruments, and the difference between its fair value and carrying value as of the date then the Companylost 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 dateshall be used to adjust capital reserve (equity premium), and if capital reserve is insufficient to offset, then it shalladjust retained earnings; when the Company lost control 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 equityand the fair value of remaining equity minus the share of net assets of original subsidiaries since the day of purchaseand based on its original shareholding ratio is credited into investment gain for the current period, and off-set thegoodwill at the same time. Other comprehensive income in relation to equity investments of original subsidiariesshould 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 intoa package deal, carrying accounting treatment on transaction of losing control rights and disposing thecompany, and should be accounted for accordingly in differentiation with individual financial statements andconsolidated financial statements:
(1) In consolidated financial statements, difference between each payment from disposal of an equity and the bookvalue of such long-term equity investment before the loss of control should be recognized as other comprehensiveincome 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 theshare of its net assets through investment before the loss of control should be recognized as other comprehensiveincome and at the time of loss of control, transferred to profit or loss for the current period.
5. Criteria for common control and significant influenceWhere the Company jointly controls an arrangement with other participators under agreed terms, and decisionswhich materially affect return of such arrangement can only exist when other participators unanimously agree onthe decisions, the Company is deemed to jointly control this arrangement with other participators, and thearrangement belongs to joint venture arrangement.
In case of a joint venture arrangement concluded through separate entity, when the Company is judged to be entitledto the net assets of the separate entity under relevant agreements, the entity shall be viewed as a joint venture underequity method. However, when the Company is judged to be not entitled to the net assets of the separate entity underrelevant agreements, the entity shall be viewed as a joint operation, in which case, the Company recognizes itemsrelating to its share of interests from the joint operation and accounts for according to relevant business accountingrules.
Significant influence refers to that investor has right to participate in making decisions relating to the financial andoperational policies of the investee, while not able to control or jointly control (with others) establishment of thesepolicies. The following one or more conditions are based to judge whether the Company has significant influenceover investee with consideration of all facts and situations: (1)has delegate in the board of directors or similarauthority 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 tothe investee.
15. Investment real estateMeasurementMeasured by costDepreciation or amortization methodInvestment 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. In addition, for the vacant buildings that the Company holds for operating leases, if the boardof directors makes written decisions and explicitly indicates to use for operating leases and the purpose ofmanagement is not to change in the short term, they are also reported as an investment real estate.
The investment property of the Company is accounted at its cost. Cost of investment property purchased from theexternal sources includes purchase payment, related taxes and other expenditures which can be directly attributableto such assets; Cost of investment property constructed by the Company comprise of the necessary expenditureoccurred during the construction for reaching the condition of planned use.
The Company adopts cost method for subsequent measurement of investment real estate. Depreciation oramortization of the buildings and land use rights according to their expected service life and net salvage value.Expected service life for the investment real estate, an rate of the net salvage value and annual amortization(depreciation) are as:
| Category | Expected service life (year) | Expected net salvage value | Annual amortization (depreciation) rate |
| Houses and buildings | 10-40 | 5% | 2.37%-9.50% |
16. Fixed asset
(1) Recognition
1. Recognition of fixed assets
Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providingservices, lease or for operation & management, and have more than one year of service life. Fixed assets should berecognized 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;(2) The cost of the assets can be measured reliably.2. Initial measurement of fixed assets
Fixed assets of the Company are measured initially by cost.
(1) The cost of outsourcing fixed assets includes the buying price, import tariff and other related taxes and fees, aswell as other expenses occurred before making the fixed assets reach the intended serviceable condition and canbe directly attributable to the assets.(2) The cost of self-constructed fixed assets consists of the necessary expenses occurred before reaching theintended serviceable condition by the construction of the assets.(3) The fixed assets invested by the investors take the value stipulated by investment contract or agreement as theentry value, but it should take the fair value as the entry value when the value stipulated by investment contract oragreement is not fair.(4) When the cost of purchasing fixed assets has a delay in payment exceeding the normal credit terms andsubstantially possesses financing, the cost of fixed assets is determined on the basis of the present value of thepurchasing price. The balance between the actual paid cost and the present value of purchasing price is reckonedin the current profits and losses in the credit period, except for the capitalization.
(2) Depreciation methods
| Category | Method | Years of depreciation | Scrap value rate | Yearly depreciation rate |
| Production buildings | Straight-line depreciation | 20-35 | 5 | 2.71-4.75 |
| Non-production buildings | Straight-line depreciation | 20-40 | 5 | 2.38-4.75 |
| Temporary dormitory,simple room etc. | Straight-line depreciation | 5-15 | 5 | 6.33-19 |
| Gas storage bin | Straight-line depreciation | 20 | 5 | 4.75 |
| Silo | Straight-line depreciation | 50 | 5 | 1.9 |
| Wharf and supporting facilities | Straight-line depreciation | 50 | 5 | 1.9 |
| Other machinery equipment | Straight-line depreciation | 10-20 | 5 | 4.75-9.5 |
| Warehouse transmission equipment | Straight-line depreciation | 20 | 5 | 4.75 |
| Electronic equipment | Straight-line depreciation | 2-5 | 5 | 19-47.5 |
| Transport equipment | Straight-line depreciation | 3-10 | 5 | 9.5-31.67 |
| Other equipment | Straight-line depreciation | 3-10 | 5 | 9.5-31.67 |
17. Construction in progress
Does the Company need to comply with disclosure requirements of the special industry?No
1. Initial measurement of constructions under progressSelf-constructed constructions under progress of the Company are carried at actual costs. Actual costs include thenecessary expenses for constructing such asset to the expected useable condition, including material costs for project,labor cost, related taxes and fees paid, borrowing expenses to be capitalized and indirect costs to be amortized.
2. Standard and point of time for Construction in progress carrying forward to fixed assets
Fixed asset is booked with the entire expenditures occurred in the Construction in progress till it arrives atpredicted state for use. For those constructions in process of fixed assets which have already arrived at thepredicted state for use, while still with absence of completion settlement, they shall be carried forward tofixed assets at the estimated value based on engineering budget, construction cost or actual cost commencingfrom the date of arrival of the predicted state for use. Meanwhile, they shall be also subject to the depreciationpolicies applicable to fixed assets of the Company for provision of depreciation. Once completion settlementis made, the original temporary estimated value shall be adjusted at the effective cost. However, the originalprovision of depreciation remains unchanged.18. Borrowing expenses1. Recognition of the borrowing expenses capitalization
Borrowing expenses that attributed for purchasing or construction of assets that are complying start to becapitalized and counted as relevant assts cost; other borrowing expenses, reckoned into current gains andlosses after expenses recognized while occurred.
Assets satisfying the conditions of capitalization are those assets of fixed, investment real estate etc. which need along 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 withinterest taken for purchasing, constructing or manufacturing assets that complying with capitalizingcondition;(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 periodfor borrowing expensed suspended excluded in the period.
If purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalizationreached 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 capitalizationcompleted projects and usable independently for part of the projects, borrowing expenses for this kind ofassts shall suspended capitalization.
If the assets have been completed in every part, but can be reached the useful status or sale-able status whilecompleted entirely, the borrowing expense shall be suspended for capitalization while the assets completelyfinished in whole.
3. Period of suspendedIf purchasing, construction, or manufacturing process of an asset satisfying the conditions of capitalization issuspended abnormally for over 3 months, capitalizing of borrowing expenses shall be suspended; the suspendedassets that satisfying the conditions of capitalization meets the necessary procedure of reaching predicted usablestatus or sellable status, capitalizing of borrowing expenses shall be resumed. The borrowing expenses occurredduring the period of suspended shall reckon into current gains and losses until the purchasing, construction, ormanufacturing process is resumed for capitalizing.
4. Calculation for capitalization amount
Interest expenses practically occurred at the current term of a special borrowing are capitalized afterdeducting 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 ofaccumulated asset expenses over the special borrowing assets multiply the capitalizing rate of common borrowingsadopted. 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 yearby effective interest method, than adjusted interest amount in every period.
19. Biological assetsClassification of biological assetsBiological assets of the Company refer to the productive biological assets. Productive biological assets includedtea tree.
Biological assets are recognized when the following three conditions are fully satisfied:
(1) An enterprise owns or controls such biological assets due to the past transactions or events；(2) It may result in the inflow of economic benefits or service potential in relation to such biological assets;(3) Cost of such biological assets can be reliably measured.
Initial recognition of Biological assetsThe biological assets will initially measured by cost while obtained. The cost of biological asset used for productionpurchased from the outside includes the purchase price, related taxes, transportation expense, insurance premiumand other charges directly attributable to the purchase of such asset. Biological asset used for production input byinvestors is stated at its entry value which is calculated based on the value as stipulated in the investment contractor agreement plus the related taxes payable. Where value stipulated in the contract or agreement is not fair, theactual cost is fixed at fair value.
Subsequent measurement of biological assets
(1) Follow-up expenses
The cost of productive biological assets constituted by the actual costs of self-cultivated and constructed productivebiological assets occurred before achieving the intended production and operation goals, and the follow-up expensessuch as management and protection occurred after achieving the intended production goals are included in thecurrent profits and losses.
(2) Depreciation of productive biological assetsBiological assets of the Company refer to the tea plants. For those productive biological assts that reached itspredicted productive purpose, withdrawal depreciation by average age method. The service life was determined bythe residual terms of the residual term of land use after deducting the un-maturity period (5-year) of the tea plantswith 5 percent salvage value calculated. Reviewing the service life, predicted salvage vale and depreciation methodat year-end, if there have difference between the predicted number and original estimated number or have majorchanges on way of profit earning, than adjusted the service life or predicted salvage value or depreciation methodas account estimation variation.
(3) Disposal of biological assets:
The cost of biological assets after the shift of use is stated at the carrying amount at the time of shift of use. Whensold, destroyed and inventory losses occurred, the disposal income of biological assets net of carrying amount andrelated taxes shall be charged to profit or loss for the current period.
Biological assets impairmentThe Company inspects the productive biological assets at least at the end of each year, conclusive evidence indicatesthat if the recoverable amount of productive biological assets are less than the book value due to natural disasters,
insect pests, animal diseases or changes in market demand, the Company make the provision for impairment ofbiological assets and include them in the current profits and losses according to the balance between the recoverableamount and the book value.The balance lower than the book value shall be calculated and accrued to falling price reserves or provision forimpairment of biological assets and included in the current profits and losses. Once the provision for impairment ofproductive biological assets is made, it cannot be reversed.
20. Oil and gas assets21. Intangible assets(1) Measurement, use of life and impairment testingAn intangible asset is an identifiable non-monetary asset without physical substance owned or controlled by theCompany, including land use right, technical know-how, forest tree use right, trademark use right, software useright and shop management right etc.
1. Measurement of intangible assetsFor those intangible assets purchased from outside, the purchase value, relevant taxes and other paymentsattributable to predicted purpose obtained should recognized as cost for this assts. For those purchased amount thatpaid overdue exceeded the normal credit condition, owns financing natures actually, the cost should be recognizedbased 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, thefair value of the intangible assets shall be based to determine the accounting value. The difference between thecarrying value of restructured debt and the fair value of the intangible assets use for settlement of debt shall berecorded in current gains and losses.
With the preceding conditions that non-monetary assets exchange has commerce nature and the fair value of theassets exchanged in or out can be measured reliably, the intangible assets exchanged in through non-monetary assetsexchange are accounted at the value based on the fair value of assets exchanged out, unless there is obvious evidenceshowing the fair value of assets exchanged in is more reliable; for non-monetary assets exchange not qualifying forthe preceding conditions, the carrying value of assets exchanged out and related taxes payable shall be viewed asthe cost of intangible assets exchanged in, without recognition of gains and losses.
Intangible assets obtained by means of enterprise combined under common control, recognized book-keeping valueby the book value of combined party; Intangible assets obtained by means of enterprise combined under differentcontrol, recognized book-keeping value by the its fair value.
For those cost of intangible assets development internally including: the used materials, labor cost andregister charge for development; amortization for other patent and concession used and interest expensesatisfying the capitalization condition during process of development; other directly expense before reachedits predated useful purpose.
2. Subsequent measurementAnalysis and determined the service life for intangible assets while obtained. And classified into intangible assetswith limited useful life and assets without certain service life.
(1)Intangible assets with limited useful lifeThose intangible assets with limited useful life are evenly amortized on straight basis from the date whenthey become usable to the end of expected useful life. Particular about the estimation on intangible assetswith limited service life:
| Item | Predicted useful life | Basis |
| Land use right | Amortized the actual rest of life after certificate of land use right obtained | Certificate of land use right |
| Proprietary technology | 20-year | Actual situation of the Company |
| Trademark use right | 10-year | Actual situation of the Company |
| software use right | 5-8 years | Protocol agreement |
| forest tree use right | Service life arranged | Protocol agreement |
| Shop management right | Service life arranged | Protocol agreement |
(2) Internal accounting policies relating to research and development expenditures1. Detail standard for classification on research stage and exploitation stageResearch stage: stage of the investigation and research activities exercising innovative-ness for new science ortechnology knowledge obtained and understanding.
Exploitation stage: stage of the activities that produced new or material advance materials, devices and productsthat by research results or other knowledge adoption in certain plan or design before the commercial production orusage.
The expenditure of the research stage in R&D project internally shall reckon into current gains and losses whileoccurred.
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;(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 amarket 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 intangibleassets and has the ability for used or for sale;(5) The expenditure attributable to the exploitation stage for intangible assets could be measured reliably.
Expenditure happened in development phase not satisfying the above conditions is included in current periodgains and losses when occurs. Development expenditure previously included in gains and losses in previousperiods will not be re-recognized as assets in later periods. Capitalized development expenditure is stated inbalance sheet as development expenditure, and is transferred to intangible assets when the project is readyfor planned use.
22. Impairment of long term assetsLong term asset is judged whether for which there is indication of impairment on balance sheet date. If there isindication of impairment, the Company would estimate its recoverable amount based on single asset; if it is difficultto estimate the recoverable amount of single asset, then the assets group which the single asset belongs to is basedto 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 itspredicted 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 recognizedas impairment loss which is included in current period gains and losses, meanwhile, asset impairment provisionshall be made accordingly. Once recognized, asset impairment loss would not be reversed in future accountingperiod.
Once an asset is recognized for impairment loss, its depreciation or amortization expense would be adjusted infuture periods, so as to systematically allocate the adjusted asset carrying value (after deduction of predicted netresidual value) during the remaining useful life.
Goodwill arising from business combination and intangible assets with indefinite useful life shall be tested annuallyfor impairment whether or not there is indication of impairment.
When goodwill impairment testing comes, book value of goodwill is allocated to asset group or combination benefitfrom the synergies of the business combination. When conducting impairment test for relevant asset group withinclusion of goodwill, in case that there is indication of impairment for such asset group, impairment test would befirstly conducted in respect of the asset groups without inclusion of goodwill. Then, it shall calculate the recoverableamount and determine the corresponding impairment loss as compared to its carrying value. Second, asset groupwith inclusion of goodwill would be tested for impairment. If it is found after comparison between the carryingvalue and recoverable amount of the asset group that the recoverable amount is less than carrying value, theCompany would recognize impairment loss for goodwill.
23. Long term prepaid expenseLong term prepaid expense represents the expense which the Company has occurred and shall be amortized in thecurrent and later periods with amortization period exceeding one year. Long term prepaid expense is amortizedduring the beneficial period under straight line method.
24. Staff remuneration
(1) Short term remuneration
Employee remuneration refers to the various forms of remuneration or compensation given by the Company toobtain the services provided by the employees or to terminate the labor relations. Employee remuneration includesshort-term remuneration, after-service benefits, dismissal benefits and other long-term employee benefits.
Short term remuneration refers to all the staff remuneration payable by the Company to its staff within 12 monthsafter 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 accountingperiod during which staff provides services, and includes in cost and expense of relevant asset according to thebeneficial parties of such services.
(2) Post office benefits
Post office benefits refer to kinds of remuneration or benefits granted by the Company to staff for their provision ofservice upon retirement or release of employment, other than short term remuneration and dismissal benefits.
Post benefit plan is categorized as defined withdraw plan.
Defined withdraw plan under post office benefit mainly represents participation into social basic pension insuranceand unemployment insurance operated by labor and social security authorities. In addition to social basic pensioninsurance and unemployment insurance, employees who meet the requirements of the Enterprise Annuity Schemeof Shenzhen Cereal Group Co., Ltd. can apply to participate in the annuity plan established by the company. Duringthe accounting period when employee provides services for the Company, the contribution calculated under definedwithdraw plan would be recognized as liabilities and included in current gains and losses or relevant asset cost.
Other than periodic payment of the aforesaid amounts in compliance with national standards, the Company is notobliged to make other payment.
(3) Dismissal benefit
Dismissal benefit represents compensation paid to employees for release of employment before expiration or ascompensation for their willing of cut, Liabilities arising from dismiss benefit shall be included in current profit andloss when the company cannot unilaterally withdraw from the termination plan or take redundancy offer and whenreorganize the payment of termination benefits related to the cost.The Company provides early retirement benefits to employees who accept early retirement arrangements. Earlyretirement benefits refer to the wages paid to employees who have not reached the retirement age specified by thestate but voluntarily quit from the operating posts after approved by the management of the Company, and the socialinsurance premiums paid for them. The Company pays early retirement benefits to early retired employees from thedate of the early retirement arrangement until the employees reaches the normal retirement age. For the earlyretirement benefits, the Company will perform accounting treatment in accordance with the termination benefits,and will recognize the wages to be paid to the early retired employees and the social insurance premiums to be paidduring the period from the date ceasing service to the normal retirement date as liabilities and include in the currentprofit and loss in one lump sum. Changes in actuarial assumptions of early retirement benefits and the differencecaused by adjustment of welfare standards are included in profit or loss when incur.
(4) Other long term staff benefitsOther long term staff benefits refers to all the other staff benefits except for short term remuneration, post officebenefit and dismissal benefit.
For other long term staff benefits satisfying conditions under defined withdraw plan, the contribution payables shallbe recognized as liabilities and included in current gains and losses or relevant asset cost during the accountingperiod in which the staff provides services to the Company.
25. Accrual liability1. Recognition standards for accrual liabilityResponsibilities connected to contingent issues and satisfied all of the following conditions are recognized as accrualliabilities:
The responsibility is a current responsibility undertaken by the Company;Fulfilling of the responsibility may lead to financial benefit outflow;The responsibility can be measured reliably for its value.
2. MeasurementAccrual liabilities shall conduct initial measurement by best estimation of expenditures needed by fulfillment ofcurrent responsibilities.
While determined the best estimation, take the risks, uncertainty and periodic value of currency that connected tothe contingent issues into consideration. For major influence from periodic value of currency, determined bestestimation after discount on future relevant cash out-flow.
Treatment for best estimation:
If the expenditure has a continuous range, and with similar possibility within the range, the best estimation shoulddetermined by the middle value within the range, that is the average amount between the up and low limit.
If the expenditure has no continuous range, or has a continuous range but with different possibility within the range,the possibility amount shall determined as the best estimation while single events involved by contingency; if manyevents were involved by contingency, the best estimation shall be determined by various results and relevantprobability.
If the expenses for clearing of predictive liability is fully or partially compensated by a third party, and thecompensated amount can be definitely received, it is recognized separated as asset. Though the compensated amountshall not greater than the book value of the predictive liability
26. Share-based payment27. Other financial instrument of preferred stocks and perpetual bond28. Revenue
Does the Company need to comply with disclosure requirements of the special industry?No
1. Sales of goodsWhen main risks and rewards attached to the ownership of goods have been transferred to the buyer, reserved neithercontinuous 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, salesincome of goods is recognized.The product sales of the Company include domestic sales and export sales, the sales revenue of domestic sales isrecognized after the goods is delivered and conforms to the relevant causes of the contract; the sales revenue ofexport sales is recognized after the goods is sent out and declared, and conforms to the relevant causes of the contract.
2. Provide labor servicesIf the results of the labor service transaction on the balance sheet date can be reliably estimated, the labor serviceincome will be recognized by the percentage of completion method. The completion schedule of the labor servicetransaction is determined based on the measurement of the completed work.The results of the labor service transaction can be reliably estimated, which means it can meet the followingconditions:
(1) The amount of income can be reliably measured;(2) The relevant economic benefits are likely to flow into the enterprise;(3) The completion schedule of the transaction can be reliably determined;(4) The costs incurred and to be incurred in the transaction can be reliably measured.The total amount of labor service income is determined by the received or receivable contract or agreement price,except that the contract or agreement price received or receivable is not fair. On the balance sheet date, the currentlabor service income is determined by the amount that the total labor service income multiplies by the completionschedule and deducts the accumulated labor income from the previous accounting period. At the same time, thecurrent labor cost is carried forward by the amount that the total labor service cost multiplies by the completionschedule and deducts the accumulated labor cost from the previous accounting period.
If the results of the labor service transaction on the balance sheet date cannot be reliably estimated, they shall bedisposed as follows:
(1) If the labor costs incurred is estimated to be compensated, the labor service income shall be determined accordingto the amount of labor costs incurred, and the labor costs shall be carried forward at the same amount.(2) If the labor costs incurred is estimated not to be compensated, the labor costs incurred shall be included in thecurrent profit and loss, and the labor service income shall not be recognized.When the contract or agreement signed by the Company with other enterprises includes the sale of goods and therendering of labor services, if the parts of the sales of goods and the parts of the rendering of labor service can bedistinguished and can be separately measured, treat the part of the sales of goods as the sales of goods, and treat thepart of the rendering of labor services as rendering of labor services. If the parts of the sales of goods and the partsof the rendering of labor service cannot be distinguished, or can be distinguished but cannot be separately measured,treat the part of the sales of goods and the parts of the rendering of labor service both as the sales of goods.Recognize revenue for the grain and oil dynamic storage and rotation services provided by the Company for theShenzhen Municipal Government when the relevant labor service activities occur. Specifically, monthly calculateand recognize the government service income based on the actual storage grain and oil quantity and the storageprice stipulated by “Operational Procedures for Government Grain Storage All-in Cost of Shenzhen” and“Operational Procedures for Edible Vegetable Oil Government Reserve All-in Cost of Shenzhen”.3. Recognition of the right to use the transferred assetsFinancial benefit attached to the contract is possibly inflow to the company; Overall income of the contract can bemeasured reliably. Determined the use right income for transaction assets respectively as followed:
(1) Amount of interest income: determined by the time and effective interest rate of the currency capital used byother people.(2) Amount of income from use: determined by the charge time and calculation method agreed in the relevantcontract or agreement.(3) For the income from real estate, dock warehouse and other property leasing and terminal docking business,calculate and determine the rental income and warehousing logistics income according to the chargeable time andmethod as stipulated in the contract or agreement.
29. Government Grants1. TypesGovernments grants of the Company refer to the monetary and non-monetary assets obtained from government forfree, and are divided into those related to assets and others related to revenues.
Government grants related to assets refer to those obtained by the Company and used for purchase or constructionof or otherwise to form long-term assets. Government subsidies related to revenue refer to those other thangovernment subsidies related to assets.2. Recognition of government grants
At end of the period, if there is evidence show that the Company qualified relevant condition of fiscal supporting
polices and such supporting funds are predicted to obtained, than recognized the amount receivable as governmentgrants. After that, government grants shall recognize while actually received.
Government grants in the form of monetary assets are stated at the amount received or receivable.Government grants in the form of non-monetary assets are measured at fair value; if fair value cannot beobtained, a nominal amount (one yuan) is used. Government grants measured at nominal amount isrecognized immediately in profit or loss for the current period.
3. Accounting treatmentBased on the nature of economic business, the Company determines whether a certain type of government subsidybusiness should be accounted for by using the total amount method or the net amount method. In general, theCompany only chooses one method for similar or similar government subsidy services, and this method isconsistently applied to the business.
| Item | Calculation content |
| Based on gross method | All business of government grants |
30. Deferred income tax assets and deferred income tax liabilitiesDeferred income tax assets and liabilities are measured and recognized based on the difference (temporarydifference) between the taxation bases of the assets and liabilities and their carrying value. As of the balance sheetdate, deferred income tax assets and liabilities are measured at the tax rate applicable during the period in which theassets are recovered or liabilities are settled.
1. Reference for recognition of deferred income tax assets
Deferred income tax asset arising from deductible temporary difference is recognized to the extent ofassessable income which is likely to acquire to offset deductible temporary difference and for whichdeductible losses and tax credit for subsequent years can be carried forward. However, deferred income taxassets arising from initial measurement of assets or liabilities in transactions with the followingcharacteristics would not be recognized: (1) the transaction is not business combination; (2)occurrence ofthe transaction would neither affect accounting profit nor affect assessable income or deductible loss.
For deductible temporary difference relating to investment in associates, the Company would recognizedeferred income tax assets accordingly if the following conditions are met: temporary difference is likely tobe reversed in foreseeable future and it is likely to acquire assessable income against which deductibletemporary difference is utilized.
2. Basis for determination of deferred income tax liabilitiesAssessable temporary difference which should be paid while not paid yet for the current and previous periodsis recognized as deferred income tax liabilities, excluding:
(1) Temporary difference arising from initial measurement of goodwill;(2) Transaction or issue arising from non business combination, and its occurrence would neither affectaccounting profit, nor affect temporary difference arising from assessable income (or deductible loss);(3) For assessable temporary difference relating to investments in subsidiary or associate, timing for reversalof the temporary difference can be controlled and it is likely that the difference would not be reversed inforeseeable 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 periodby net amount;
(2) They relate to income taxes levied by the same tax authority on either the taxable entity has a legally enforceableright or set off current income tax assets against current income tax liabilities, and different taxable entities whicheither intend to settle the current income tax liabilities and assets on a net basis, or to realize the assets and settlethe liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assetsare expected to be settled or recovered.
31. Lease(1) Accounting for operating leaseIf the lease terms substantially transfer all risks and rewards related to the ownership of leased asset to the lessee,the lease is a finance lease and the other leases are operating leases.Accounting for operating lease(1) Assets lease-in by Operating:
The rental fee paid for renting the properties by the company are amortized by the straight-line method and reckonedin the current expenses throughout the lease term without deducting rent-free period. The initial direct costs relatedto the lease transactions paid by the company are reckoned in the current expenses.
When the lessor undertakes the expenses related to the lease that should be undertaken by the company, the companyshall deduct the expenses from the total rental costs, share by the deducted rental costs during the lease term, andreckon in the current expenses.
(2) Operating leased assets:
Rental obtained from assets leasing, during the whole leasing period without rent-free period excluded, shall beamortized by straight-line method and recognized as leasing revenue. The initial direct costs paid with leasingtransaction concerned are reckoned into current expenditure; the amount is larger is capitalized when incurred, andaccounted for as profit or loss for the current period on the same basis as recognition of rental income over the entirelease period.
When the company undertakes the expenses related to the lease that should be undertaken by the lessor, the companyshall deduct the expenses from the total rental income, and distribute by the deducted rental costs during the leaseterm.
(2) Accounting for financing leaseAccounting for financing lease(1) Assets lease-in by financing: On the beginning date of the lease, the entry value of leased asset shall be at thelower of the fair value of the leased asset and the present value of minimum lease payment at the beginning date ofthe lease. Minimum lease payment shall be the entry value of long-term accounts payable, with differencerecognized as unrecognized financing expenses.
The basis, valuation and depreciation method of financing lease assets see Note IV-(XVI) Fixed Assets.
Unrecognized financing expenses shall be reckoned in financial expenses and amortized and using effective interestmethod during the leasing period.
(2) Finance leased assets: on the lease commencement date, the company affirms the balance among the financelease receivables, the sum of unguaranteed residual value and its present value as the unrealized financing income,and recognizes it as the rental income during the period of receiving the rent. For the initial direct costs related tothe rental transaction, the company reckons in the initial measurement of the finance lease receivables, and reducesthe amount of income confirmed in the lease term.
32. Other important accounting policy and estimation
Production Safety FeeThe production safety fees drawn by the company in accordance with the provisions of the State shall be included in the cost of relatedproducts or current profits and losses, and also in the subject of "special reserve". If the use of the extracted safety production coststime and belongs to expenditure, the special reserve shall be directly reduced. If a fixed asset is formed, the expenditure incurred bythe project under construction shall be collected and recognized as a fixed asset when the safety project is completed to its intendedusable state; meanwhile, the special reserve shall be deducted according to the cost of forming the fixed asset, and the accumulateddepreciation of the same amount shall be confirmed. The fixed assets are no longer depreciated in the later period.
33. Changes of important accounting policy and estimation(1) Changes of major accounting policies
□Applicable √Not applicable
(2) Changes of important accounting estimate
√Applicable □Not applicable
| Content & reasons | Approval procedure | The time when changes in accounting estimate begin to apply | Note |
| Identification standards for account receivable with significant single amount, classification of credit risk portfolio and change of percentage of provision for bad debts in age portfolio; Depreciable life of investment real estate and unification of residual value rate ; | The change has deliberated on 24th session of 9th BOD and no need to deliberated in shareholder general meeting | 2018-12-29 |
Depreciable life of fixedassets and unification ofresidual value rate ;Unification of amortizationperiod for intangible assets
Explanation:
The Company purchase 100 percent equity of Shenzhen Cereals Group Co., Ltd held by Fude Capital through issuing shares, SZCGcomes to wholly-owned subsidiary of the Company. Main business of the Company has increased grain and oil reserves, grain and oiltrading and processing etc. on the basis of the original tea and tea products business. In order to reflect the Company’s financial statusand operation results objectively, truthfully and fairly, the Company, according to the business scale and industry characteristics afterreorganization, and reference to relevant accounting estimates of comparable listed companies in the same industry, organizing andchange part of the original accounting estimate of the Company.In line with the regulation of “Accounting Standards for Business Enterprise No. 28- Change of Accounting policy, accounting estimateand errors correction”, the change in accounting estimates is treated by the future applicable method without retrospective adjustmentof the disclosed financial reports, and it will not affect the previous financial status and operation results. Main impact on the financialstatement for year of 2018 including: make changes and reduction of Account receivable to 6,514,050.72 yuan, and other receivableas4,645,425.95 yuan; make changes and increase the assets impairment loss to 11,159,476.67 yuan.
34. Other
VI. Taxes
1. Type of tax and rate for main applicable tax
| Taxes | Basis | Rate |
| VAT | Service income from goods sales and taxable sales | 16%( original was 17%), 10%(original was 11%) , 6%, 5%, 3% |
| Urban maintenance and construction tax | Turnover tax payable | 7%, 5% |
| Enterprise income tax | Taxable income | 25%, 15%, 0% |
| Educational surtax | Turnover tax payable | 5% |
| Taxpaying body | Rate of income tax |
| The Company | 25% |
| Shenbao Huacheng | 15% |
| Including:Shantou Branch of Shenbao Huacheng | 25% |
| Wuyuan Ju Fang Yong | 15% |
| Shenbao Sanjing | 25% |
| Huizhou Shenbao Science & Technology | 25% |
| Huizhou Shenbao Food | 25% |
| Shenbao Propertie | 25% |
| Shenbao Industrial & Trading | 25% |
| Hangzhou Ju Fang Yong | 25% |
| Shenbao Technology Center | 25% |
| Fuhaitang Ecological | 25% |
| Chunshi Network | 25% |
| Shenshenbao Investment | 25% |
| Shenshenbao Tea Culture | 25% |
| Yunnan Supply Chain | 25% |
| Ju Fang Yong Trading | 25% |
| Shenbao Rock Tea | 25% |
| Pu’er Tea Trading Center | 25% |
| Shenbao Tea-Shop | 25% |
| Fuhaitang Catering | 25% |
| SZCG | 25%, tax exemption for some businesses |
| SZCG Real Estate Development | 25% |
| Shenzhen Flour | Tax free |
| SZCG Quality Inspection | 25% |
| Hualian Grain & oil trading | 25% |
| SZCG Cold-Chain Logistic | 15% |
| SZCG Doximi | 25% |
| Hainan Haitian | 25% |
| Dongguan Logistics | 25% |
| SZCG Big Kitchen | 15% |
| SZCG Storage (Yingkou) | 25% |
| SZCG Property | 25% |
| Dongguan Food Industrial Park | 25% |
| Dongguan Food Trade | 25% |
| Dongguan Golden | 25% |
| Shuangyashan SZCG Zhongxin | 25% |
| Hongxinglong Nongken Industrial Park | 25% |
According to the “Notice of the Ministry of Finance and the State Administration of Taxation on the IssuesConcerning the VAT Collection and Exemption of Grain Enterprises (CSZ [1999] No. 198)” and “Shenzhen TaxService, State Taxation Administration and Shenzhen Finance Bureau SGSF (SCF [1999] No.428)”, confirming thatSZCG, the Company’s subsidiary, and its subsidiaries, are state-owned grain purchase and sale enterprises thatundertake grain collection and storage tasks for Shenzhen, the grain sold is subject to tax-free declaration by ruleand enjoys the exemption from VAT. In addition, according to the stipulation of the “Announcement of StateAdministration of Taxation on Relevant Management Matters After Clarifying the Cancellation of the Approval ofSome VAT Preferential Policies” (SAT Announcement 2015 No. 38), the approval for exemption from VAT and theinvolved tax review and approval procedures for the state-owned grain enterprises that undertake grain collectionand storage tasks, other grain enterprises that operate tax-free projects and enterprises that have edible vegetable oilsales business for government reserves are cancelled and changed to record management. The taxpayer does notchange the content of the record materials during the period of tax exemption can be put on a one-time record. InDecember 2013, SZCG obtained the notice of the VAT preferential record (SGSFJBM [2013] No.2956) fromShenzhen Futian State Administration of Taxation. In the case of no change in policy, this limited filing periodstarted on January 1
st
, 2014.The VAT input tax amount of the preferential item was separately accounted for, and the input VAT calculationmethod cannot be changed within 36 months after the selection. As of December 31, 2018, the tax exemption policyhas been in effect since its filing in 2014, and the company’s VAT input tax has not changed since it was accountedfor separately in 2014, so the company continues to enjoy the tax preference.
2. Stamp duty, house property tax, and urban land use tax preferencesAccording to the stipulations of “Notice of the Ministry of Finance and the State Administration of Taxation on theRelevant Tax Policies Concerning Some National Reserved Commodities (CS [2013] No. 59)”, the “Notice of theMinistry of Finance and the State Administration of Taxation on the Relevant Tax Policies Concerning SomeNational Reserved Commodities (CS [2016] No. 28)”, and “Notice of Shenzhen Financial Committee and ShenzhenLocal Taxation Bureau on Issuing the List of Shenzhen Reserve Commodity Management Companies and ReserveEnterprises (SCF [2016] No. 26)”, confirming that the fund account book of SZCG, the Company’s subsidiary, andits direct depots is exempt from stamp duty, confirming that the written purchase and sale contracts of SZCG in theprocess of undertaking the commodity reserve business are exempt from stamp duty, and confirming that SZCG’shouse property and land used for the commodity reserve business are exempt from house property tax and urbanland use tax. The execution time limit for this tax preference policy is up to December 31, 2018.3. Corporate income tax(1) Shenbao Huacheng, a subsidiary of the Company, obtained the “High-tech Enterprise Certificate” (Certificatenumber is GR201744203462) jointly issued by Shenzhen Science and Technology Innovation Committee, ShenzhenFinancial Bureau, Shenzhen Tax Service, State Taxation Administration and Shenzhen Local Taxation Bureau onOctober 31, 2017, which is valid for three years. According to the relevant preferential policies of the state for high-tech enterprises, the qualified high-tech enterprises shall pay the corporate income tax at a reduced income tax rateof 15% within three years from the year of the determination, and Shenbao Huacheng enjoys the tax preferentialpolicy from 2017 to 2019.
(2) The Company’s subsidiary, Wuyuan Jufangyong, obtained the “High-tech Enterprise Certificate” (Certificatenumber is GR201836000703) jointly issued by the Science and Technology Department of Jiangxi Province, theFinance Department of Jiangxi Province, and Jiangxi Provincial Tax Service, State Taxation Administration onAugust 13, 2018, which is valid for three years. According to the relevant preferential policies of the state for high-tech enterprises, the qualified high-tech enterprises shall pay the corporate income tax at a reduced income tax rateof 15% within three years from the year of the determination, and Wuyuan Jufangyong enjoys the tax preferentialpolicy from 2018 to 2020.(3) According to the “Notice on the Issues Concerning the Treatment of Corporate Income Taxes for Fiscal Fundsof Special Purposes of the Ministry of Finance and the State Administration of Taxation (CS [2009] No. 87), thegovernment service income obtained by SZCG, the Company’s subsidiary, and its subsidiaries from thegovernment’s grain reserve business is a special-purpose fiscal fund, which can be used as non-taxable income ifeligible and is deducted from the total income when calculating the taxable income. The expenses arising from theabove-mentioned non-taxable income for expenditure shall not be deducted when calculating the taxable income;the calculated depreciation and amortization of the assets formed by non-taxable income for expenditure shall notbe deducted when calculating the taxable income.(4) Shenzhen Flour, a subsidiary of the Company, is a flour primary processing enterprise, according to thestipulations of the “Notice on Issuing the Scope (Trial) of Primary Processing of Agricultural Products Applicableto the Corporate Income Tax Preferential Policy (CS [2008] No. 149)” and the “Supplementary Notice on the Scopeof Primary Processing of Agricultural Products Applicable to the Corporate Income Tax Preferential Policy of theMinistry of Finance and the State Administration of Taxation” (CS [2011] No. 26), the wheat primary processing isexempt from income tax.(5) According to the Article one of the “Notice of the Ministry of Finance and the State Administration of Taxationon the Corporate Income Tax Preferential Policies and Preferential Catalogue for Guangdong Hengqin New District,Fujian Pingtan Comprehensive Experimental Zone, and Shenzhen Qianhai Shenzhen-Hong Kong Modern ServiceIndustry Cooperation Zone” (CS [2014] No.26), levy the corporate income tax at a reduced income tax rate of 15%for the encouraged industrial enterprises located in Hengqin New District, Pingtan Comprehensive ExperimentalZone and Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. The Company’s subsidiaries,SZCG Cold Chain Logistics and SZCG Big Kitchen, are registered in Shenzhen Qianhai Cooperation Zone andmeet the preferential tax conditions, according to the relevant policies in the Cooperation Zone, their income taxenjoys a tax preference of 15%, and this preferential tax policy shall be up to 2020.3. Other
VII. Annotation to main items of consolidated financial statements
1. Monetary fund
RMB/CNY
| Item | Ending balance | Opening balance |
| Cash on hand | 282,322.45 | 555,961.15 |
| Cash in bank | 631,190,032.12 | 543,565,898.62 |
| Other monetary fund | 165,985.11 | 318,879.68 |
| Total | 631,638,339.68 | 544,440,739.45 |
| Item | Ending balance | Opening balance |
| Tradable financial assets | 1,124,927.96 | 1,599,668.20 |
| Equity investment | 1,124,927.96 | 1,599,668.20 |
| Total | 1,124,927.96 | 1,599,668.20 |
| Item | Ending balance | Opening balance |
| Note receivable | 1,027,635.04 | 658,942.50 |
| Account receivable | 473,646,886.64 | 193,727,800.13 |
| Total | 474,674,521.68 | 194,386,742.63 |
| Item | Ending balance | Opening balance |
| Bank acceptance bill | 1,027,635.04 | 658,942.50 |
| Total | 1,027,635.04 | 658,942.50 |
2)Notes receivable already pledged by the Company at the end of the period
RMB/CNY
| Item | Amount pledge at period-end |
| Item | Amount derecognition at period-end | Amount not derecognition at period-end |
| Item | Amount transfer to account receivable at period-end |
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Ratio | Amount | Accrual Ratio | Amount | Ratio | Amount | Accrual Ratio | |||
| Account receivable with single significant amount and withdrawal bad debt provision separately | 10,455,627.54 | 1.80% | 10,455,627.54 | 100.00% | 10,455,627.54 | 2.95% | 10,455,627.54 | 100.00% | ||
| Account receivable withdrawal bad debt provision by group of credit risk characteristics | 479,058,935.68 | 82.60% | 7,165,979.50 | 1.50% | 471,892,956.18 | 196,674,001.52 | 55.42% | 2,946,201.39 | 1.50% | 193,727,800.13 |
| Account receivable with single minor amount but withdrawal bad debt provision for single item | 90,465,251.52 | 15.60% | 88,711,321.06 | 98.06% | 1,753,930.46 | 147,764,754.39 | 41.64% | 147,764,754.39 | 100.00% | |
| Total | 579,979,814.74 | 100.00% | 106,332,928.10 | 18.33% | 473,646,886.64 | 354,894,383.45 | 100.00% | 161,166,583.32 | 45.41% | 193,727,800.13 |
Account receivable with single significant amount and withdrawal bad debt provision separately at period end:
√Applicable □Not applicable
RMB/CNY
| Account receivable (by enterprise) | Ending balance | |||
| Account receivable | Bad debt provision | Accrual Ratio | Accrual causes | |
| Guangzhou Jinhe Feed Co., Ltd | 10,455,627.54 | 10,455,627.54 | 100.00% | Slightestly possibly taken back |
| Total | 10,455,627.54 | 10,455,627.54 | -- | -- |
| Account age | Ending balance | ||
| Account receivable | Bad debt provision | Accrual Ratio | |
| Subitem of within one year | |||
| Subtotal of within one year | 435,983,012.92 | 4,342,575.39 | 1.00% |
| 1-2 years | 1,082,033.98 | 108,203.40 | 10.00% |
| 2-3 years | 311,445.72 | 93,433.72 | 30.00% |
| 3-4 years | 1,057,518.76 | 528,759.39 | 50.00% |
| 4-5 years | 277,613.73 | 138,806.87 | 50.00% |
| Over 5 years | 2,442,750.91 | 1,954,200.73 | 80.00% |
| Total | 441,154,376.02 | 7,165,979.50 | 1.62% |
| Enterprise | Amount collected or switch back | Collection way |
| Item | Amount charge off |
| Enterprise | Nature of account receivable | Amount charge off | Cause of charge-off | Charge-off procedures | Resulted by related transaction (Y/N) |
| Enterprise | Ending balance | Proportion in total receivables at ending balance(%) | Bad debt provision accrual |
| Customer 1 | 81,183,967.20 | 14.00 | 811,839.67 |
| Customer 2 | 43,481,868.90 | 7.50 | 434,818.69 |
| Customer 3 | 41,762,119.25 | 7.20 | 417,621.19 |
| Customer 4 | 16,163,634.14 | 2.79 | 161,636.34 |
| Customer 5 | 15,745,925.73 | 2.71 | 157,459.26 |
| Total | 198,337,515.22 | 34.20 | 1,983,375.15 |
| Account age | Ending balance | Opening balance | ||
| Amount | Ratio | Amount | Ratio | |
| Within one year | 83,282,051.24 | 99.50% | 44,409,114.54 | 98.63% |
| 1-2 years | 70,556.78 | 0.09% | 128,246.97 | 0.28% |
| 2-3 years | 7,670.34 | 0.01% | 369,435.97 | 0.82% |
| Over 3 years | 336,591.71 | 0.40% | 120,738.30 | 0.27% |
| Total | 83,696,870.07 | -- | 45,027,535.78 | -- |
| Enterprise | Ending amount | Ratio in total account paid in advance(%) | Time | Unsettled reasons |
| Supplier 1 | 46,447,200.02 | 55.49 | Within one year | The contract is being carried out |
| Supplier 2 | 14,134,554.06 | 16.89 | Within one year | The contract is being carried out |
| Supplier 3 | 9,558,800.00 | 11.42 | Within one year | The contract is being carried out |
| Supplier 4 | 3,351,363.64 | 4.00 | Within one year | The contract is being carried out |
| Supplier 5 | 2,060,220.80 | 2.46 | Within one year | The contract is being carried out |
| Total | 75,552,138.52 | 90.26 |
| Item | Ending balance | Opening balance |
| Interest receivable | 561,500.00 | |
| Other account receivable | 33,241,928.45 | 45,626,470.91 |
| Total | 33,803,428.45 | 45,626,470.91 |
(1) Interest receivable
1)Category of interest receivable
RMB/CNY
| Item | Ending balance | Opening balance |
| Fixed deposits | 561,500.00 | |
| Total | 561,500.00 |
| Borrower | Ending balance | Overdue time | Overdue reason | Whether has impairment occurred and judgment basis |
| Item(or invested enterprise) | Ending balance | Opening balance |
| Item(or invested enterprise) | Ending balance | Account age | Cause of um-collectible | Whether has impairment occurred and judgment basis |
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Ratio | Amount | Accrual Ratio | Amount | Ratio | Amount | Accrual Ratio | |||
| Other account receivable with single major amount and | 48,305,895.94 | 36.81% | 45,711,329.62 | 94.63% | 2,594,566.32 | 47,869,231.61 | 36.14% | 36,963,097.32 | 77.22% | 10,906,134.29 |
| withdrawal bad debt provision for single item | ||||||||||
| Other account receivable withdrawal bad debt provision by group of credit risk characteristics | 38,039,075.02 | 28.99% | 7,391,712.89 | 19.43% | 30,647,362.13 | 35,958,405.37 | 27.15% | 1,238,068.75 | 3.44% | 34,720,336.62 |
| Other account receivable with single minor amount but withdrawal bad debt provision for single item | 44,887,199.60 | 34.20% | 44,887,199.60 | 100.00% | 48,616,556.19 | 36.71% | 48,616,556.19 | 100.00% | ||
| Total | 131,232,170.56 | 100.00% | 97,990,242.11 | 74.67% | 33,241,928.45 | 132,444,193.17 | 100.00% | 86,817,722.26 | 65.55% | 45,626,470.91 |
| Other account receivable (by enterprise) | Ending balance | |||
| Other account receivable | Bad debt provision | Accrual Ratio | Accrual causes | |
| Changzhou Shenbao Chacang E-commence Co., Ltd. (hereinafter referred to as"Changzhou Shenbao Chacang Co.,") | 20,413,947.34 | 17,819,381.02 | 87.29% | Allowance for bad debt provision based on the difference between present value of estimated future cash flow and its book value |
| Shenzhen Gaojian Food Joint Venture Co., Ltd | 8,326,202.63 | 8,326,202.63 | 100.00% | Slightestly possibly taken back |
| Shenzhen Sha Tau Kok Import & Export Corporation | 8,285,803.57 | 8,285,803.57 | 100.00% | Slightestly possibly taken back |
| Shenzhen Changjiang Development Company | 5,677,473.59 | 5,677,473.59 | 100.00% | Slightestly possibly taken back |
| Tongyu Shengda Grain & oil trading Co., Ltd | 5,602,468.81 | 5,602,468.81 | 100.00% | Slightestly possibly taken back |
| Total | 48,305,895.94 | 45,711,329.62 | -- | -- |
| Account age | Ending balance | ||
| Other account receivable | Bad debt provision | Accrual Ratio | |
| Subitem of within one year | |||
| Subtotal of within one year | 9,103,752.94 | 91,037.53 | 1.00% |
| 1-2 years | 4,038,032.96 | 414,959.80 | 10.28% |
| 2-3 years | 947,859.87 | 284,387.96 | 30.00% |
| 3-4 years | 112,539.37 | 56,269.69 | 50.00% |
| 4-5 years | 11,153,403.05 | 5,576,701.53 | 50.00% |
| Over 5 years | 1,210,445.48 | 968,356.38 | 80.00% |
| Total | 26,566,033.67 | 7,391,712.89 | 27.82% |
| Enterprise | Amount switch back or collected | Collection way |
| Taizhong Agricultural Co., Ltd | 3,707,930.42 | Amount collected |
| Total | 3,707,930.42 | -- |
| Item | Amount charge off |
| Enterprise | Nature of other account receivable | Amount charge off | Cause of charge-off | Charge-off procedures | Resulted by related transaction (Y/N) |
Bad debt provision accrual of 15,176,680.06 yuan in the period; switch back for bad debt provision of 3,730,121.41yuan, bad debt provision of 274,038.80 yuan charge off in the period
4)Nature of other receivables
RMB/CNY
| Nature | Ending book balance | Opening book balance |
| Margin and deposit | 11,160,677.29 | 8,987,464.69 |
| Export tax rebate | 312,364.06 | 733,709.16 |
| Intercourse funds and other | 119,759,129.21 | 122,723,019.32 |
| Total | 131,232,170.56 | 132,444,193.17 |
| Enterprise | Nature | Ending balance | Account age | Ratio in total ending balance of other receivables | Ending balance of bad debt reserve |
| Changzhou Shenbao Chacang Co., | Intercourse funds | 20,413,947.34 | *1、1-4 years or more | 15.56% | 17,819,381.02 |
| Shenzhen Yixin Investment Co., Ltd | Intercourse funds | 10,431,232.87 | 4-5 years | 7.95% | 5,215,616.44 |
| Shenzhen Gaojian Food Joint Venture Co., Ltd | Intercourse funds | 8,326,202.63 | Over 5 years | 6.34% | 8,326,202.63 |
| Shenzhen Sha Tau Kok Import & Export Corporation | Intercourse funds | 8,285,803.57 | Over 5 years | 6.31% | 8,285,803.57 |
| Ying Kou Port Group Corp. | Intercourse funds | 5,769,342.85 | Within one year | 4.40% | 57,693.43 |
| Total | -- | 53,226,529.26 | -- | 40.56% | 39,704,697.09 |
| Enterprise | Government grants | Ending balance | Ending account age | Time, amount and basis for collection predicted |
The amount of provision for bad debts, is 15,176,680.06 yuan in the current period, the amount of provision for return of bad debts is3,730,121.41 yuan in the current period, and the amount of provision for write-off of bad debts is 274,038.80 yuan in the currentperiod
7. Inventory
Whether the company need to comply with the disclosure requirements of the real estate industryNo
(1) Category of inventory
RMB/CNY
| Item | Ending balance | Opening balance | ||||
| Book balance | Falling price reserves | Book value | Book balance | Falling price reserves | Book value | |
| Raw materials | 63,928,125.50 | 19,906,198.09 | 44,021,927.41 | 77,403,549.46 | 4,385,924.31 | 73,017,625.15 |
| Goods in process | 23,840,568.24 | 68,371.10 | 23,772,197.14 | 28,703,483.15 | 264,169.09 | 28,439,314.06 |
| Finished goods | 2,827,653,415.87 | 101,081,767.83 | 2,726,571,648.04 | 2,919,447,932.76 | 98,944,435.66 | 2,820,503,497.10 |
| Revolving materials | 7,368,801.19 | 941,939.14 | 6,426,862.05 | 6,294,851.99 | 6,294,851.99 | |
| Goods in transit | 7,410,407.72 | 7,410,407.72 | 5,475,723.52 | 5,475,723.52 | ||
| Materials processed on commission | 5,415,695.35 | 5,290,502.32 | 125,193.03 | 6,404,294.66 | 5,290,502.32 | 1,113,792.34 |
| Wrappage | 3,474,364.80 | 3,474,364.80 | 3,623,008.15 | 3,623,008.15 | ||
| Total | 2,939,091,378.67 | 127,288,778.48 | 2,811,802,600.19 | 3,047,352,843.69 | 108,885,031.38 | 2,938,467,812.31 |
| Item | Opening | Current amount increased | Current amount decreased | Ending balance |
| balance | Accrual | Other | Switch back/ Written off | Other | ||
| Raw materials | 4,385,924.31 | 15,653,641.26 | 133,367.48 | 19,906,198.09 | ||
| Goods in process | 264,169.09 | 36,565.15 | 232,363.14 | 68,371.10 | ||
| Finished goods | 98,944,435.66 | 165,230,977.79 | 8,364,258.42 | 154,729,387.20 | 101,081,767.83 | |
| Revolving materials | 941,939.14 | 941,939.14 | ||||
| Materials processed on commission | 5,290,502.32 | 5,290,502.32 | ||||
| Total | 108,885,031.38 | 181,863,123.34 | 8,364,258.42 | 155,095,117.82 | 127,288,778.48 |
| Item | Amount |
| Item | Ending book value | Fair value | Expected disposal costs | Estimated disposal time |
| Item | Ending balance | Opening balance |
| Item | Ending balance | Opening balance |
| Enterprise income tax paid in advance | 394,677.16 | 2,862.87 |
| VAT input tax ready for deduction | 88,918,809.39 | 73,043,492.31 |
| Financial products held to maturity within one year | 160,000,000.00 | 100,000,000.00 |
| Other | 5,180,277.49 | 46,194.46 |
| Total | 254,493,764.04 | 173,092,549.64 |
| Item | Ending balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Equity instrument available for sale: | 17,537,500.00 | 17,480,000.00 | 57,500.00 | 17,537,500.00 | 17,480,000.00 | 57,500.00 |
| Measured by cost | 17,537,500.00 | 17,480,000.00 | 57,500.00 | 17,537,500.00 | 17,480,000.00 | 57,500.00 |
| Total | 17,537,500.00 | 17,480,000.00 | 57,500.00 | 17,537,500.00 | 17,480,000.00 | 57,500.00 |
| Category of available-for-sale financial assets | Equity instrument available for sale | Debt instrument available for sale | Total |
| The invested entity | Book balance | Depreciation reserves | Ratio of share-holding in | Current cash dividend | ||||||
| Period-beginnin | Current increase | Current decrease | Period-end | Period-beginnin | Current increase | Current decrease | Period-end | |||
| g | d | d | g | d | d | invested entity | ||||
| Shenzhen Sanjiu Weitai Capsules Co., Ltd. | 2,480,000.00 | 2,480,000.00 | 2,480,000.00 | 2,480,000.00 | 0.95% | |||||
| Shenzhen Tianji Photoelectric Industrial Co., Ltd(original named"Shenzhen Tianji Photoelectric Technology Industrial Co., Ltd.") | 15,000,000.00 | 15,000,000.00 | 15,000,000.00 | 15,000,000.00 | 3.77% | |||||
| Beijing Tiantan Co., Ltd. | 57,500.00 | 57,500.00 | ||||||||
| Total | 17,537,500.00 | 17,537,500.00 | 17,480,000.00 | 17,480,000.00 | -- |
| Category of available-for-sale financial assets | Equity instrument available for sale | Debt instrument available for sale | Total |
| Equity instrument available for sale | Investment cost | Ending fair value | Decline range of fair value compare with the cost | Times continued to declined (Month) | Amount accrual for impairment | Reasons for un-accrual |
| Item | Ending balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Bond | Face value | Coupon rate | Actual rate | Maturity date |
| Item | Ending balance | Opening balance | Discount rate interval | ||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | ||
14. Long-term equity investment
RMB/CNY
| The invested entity | Opening balance | Current changes (+,-) | Ending balance | Ending balance of depreciation reserves | |||||||
| Additional investment | Capital reduction | Investment gains recognized under equity | Other comprehensive income adjustment | Other equity change | Cash dividend or profit announced to issued | Impairment accrual | Other | ||||
| I. Joint venture | |||||||||||
| II. Associated enterprise | |||||||||||
| Shenzhen Shenbao (Xinmin) Foods Co., Ltd*1 | 2,870,000.00 | 2,870,000.00 | 2,870,000.00 | ||||||||
| Changzhou Shenbao Chacang E-commence Co., Ltd. *2 | |||||||||||
| Shenzhen Shenbao (Liaoyuan) Industrial Co., Ltd*1 | 57,628.53 | 57,628.53 | 57,628.53 | ||||||||
| Shenzh | 1,054,9 | - | 1,050,1 | ||||||||
| en Shenbao Manan Bio-technology Co., Ltd. | 48.13 | 4,831.56 | 16.57 | ||||||||
| Shenzhen Shichumingmen Restaurant Management Co., Ltd.*2 | |||||||||||
| Guangzhou Shenbao Mendao Tea Co., Ltd. | 4,193,681.53 | -367,955.83 | 3,825,725.70 | ||||||||
| Zhuhai Hengxing Feed Industrial Co., Ltd. | 27,079,470.80 | 2,431,300.31 | 29,510,771.11 | ||||||||
| Zijin Jinzhen Rice Industry Co., Ltd. *3 | 1,750,000.00 | 1,750,000.00 | |||||||||
| Shenzhen Duoxi | 3,427,071.09 | 587,554.36 | 4,014,625.45 |
| Equity Investment Fund Management Co., Ltd. | |||||||||||
| SZCG Intelligent Wulian Equity Investment Fund (Shenzhen) Partnership Enterprise (Limited) | 25,000,000.00 | -1,894,337.51 | 23,105,662.49 | ||||||||
| Shenzhen Shenyuan Data Tech. Co., Ltd | 12,000,000.00 | -2,507,234.51 | 9,492,765.49 | ||||||||
| Subtotal | 40,432,800.08 | 37,000,000.00 | 1,750,000.00 | -1,755,504.74 | 73,927,295.34 | 2,927,628.53 | |||||
| Total | 40,432,800.08 | 37,000,000.00 | 1,750,000.00 | -1,755,504.74 | 73,927,295.34 | 2,927,628.53 |
| The invested entity | Opening balance | Opening balance of depreciation reserves | Current changes (+,-) | Ending balance | Ending balance of | |||||||
| Additional inves | Capital reduction | Investment gains/losses recognized | Other comprehensive | Other equity change | Cash dividend or profit announced to | Provision | Other | |||||
| tment | by equity | income adjustment | issued | for impairment | depreciation reserves |
| Other enterprise | ||||||||||||
| Taizhong Agricultural Co., Ltd*3 | 21,136,950.00 | 21,136,950.00 | --- | 21,136,950.00 | --- | --- | --- | --- | --- | --- | --- | --- |
| Buji Processing factory 区*3 | 250,000.00 | 250,000.00 | --- | 250,000.00 | --- | --- | --- | --- | --- | --- | --- | --- |
| Daya Bay Office*3 | 4,866,700.00 | 4,866,700.00 | --- | 4,866,700.00 | --- | --- | --- | --- | --- | --- | --- | --- |
| Huapeng Feed Co., Ltd*3 | 340,000.00 | 340,000.00 | --- | 340,000.00 | --- | --- | --- | --- | --- | --- | --- | --- |
| Subtotal | 26,593,650.00 | 26,593,650.00 | --- | 26,593,650.00 | --- | --- | --- | --- | --- | --- | --- | --- |
| Item | House and building | Land use right | Construction in | Total |
| progress | ||||
| I. Original book value | ||||
| 1.Opening balance | 628,385,235.60 | 628,385,235.60 | ||
| 2.Current amount increased | 224,440.16 | 224,440.16 | ||
| (1) Outsourcing | 224,440.16 | 224,440.16 | ||
| (2) Inventory \Fix assets\Construction in progress transfer-in | ||||
| (3) Increased by combination | ||||
| 3.Current amount decreased | 61,447,342.02 | 61,447,342.02 | ||
| (1) Disposal | 61,447,342.02 | 61,447,342.02 | ||
| (2) Other transfer-out | ||||
| 4.Ending balance | 567,162,333.74 | 567,162,333.74 | ||
| II. accumulated depreciation and accumulated amortization | ||||
| 1.Opening balance | 309,362,139.98 | 309,362,139.98 | ||
| 2.Current amount increased | 23,194,573.04 | 23,194,573.04 | ||
| (1) Accrual or amortization | 23,194,573.04 | 23,194,573.04 | ||
| 3.Current amount decreased | 48,016,564.20 | 48,016,564.20 | ||
| (1) Disposal | 48,016,564.20 | 48,016,564.20 | ||
| (2) Other transfer-out | ||||
| 4.Ending balance | 284,540,148.82 | 284,540,148.82 |
| III. Depreciation reserves | ||||
| 1.Opening balance | ||||
| 2.Current amount increased | ||||
| (1) Accrual | ||||
| 3. Current amount decreased | ||||
| (1) Disposal | ||||
| (2) Other transfer-out | ||||
| 4.Ending balance | ||||
| IV. Book value | ||||
| 1.Ending book value | 282,622,184.92 | 282,622,184.92 | ||
| 2.Opening book value | 319,023,095.62 | 319,023,095.62 |
| Item | Book value | Reasons for without the property certification |
| House and buildings | 8,766,123.97 | In progress |
16. Fix assets
RMB/CNY
| Item | Ending balance | Opening balance |
| Fix assets | 993,136,743.51 | 1,052,866,458.21 |
| Total | 993,136,743.51 | 1,052,866,458.21 |
| Item | House and buildings | Machinery equipment | Transport equipment | Electronic and other equipment | Total |
| I. Original book value | |||||
| 1.Opening balance | 930,123,138.37 | 491,462,875.75 | 20,103,647.93 | 60,816,228.49 | 1,502,505,890.54 |
| 2.Current amount increased | 10,227,405.27 | 1,803,562.83 | 809,851.72 | 2,763,729.18 | 15,604,549.00 |
| (1) Purchase | 6,710,137.48 | 1,803,562.83 | 809,851.72 | 1,560,162.13 | 10,883,714.16 |
| (2) Construction in progress transfer-in | 3,517,267.79 | 1,203,567.05 | 4,720,834.84 | ||
| (3) Increased by combination | |||||
| 3.Current amount decreased | 25,348,402.14 | 9,278,261.43 | 1,812,515.24 | 3,558,718.44 | 39,997,897.25 |
| (1) Disposal or scrap | 25,348,402.14 | 9,278,261.43 | 1,812,515.24 | 3,558,718.44 | 39,997,897.25 |
| 4.Ending balance | 915,002,141.50 | 483,988,177.15 | 19,100,984.41 | 60,021,239.23 | 1,478,112,542.29 |
| II. accumulated depreciation | |||||
| 1.Opening balance | 167,205,153.02 | 231,062,533.02 | 13,784,230.73 | 31,943,274.01 | 443,995,190.78 |
| 2.Current amount increased | 26,158,511.81 | 21,367,151.33 | 1,554,716.53 | 7,335,203.97 | 56,415,583.64 |
| (1) Accrual | 26,158,511.81 | 21,367,151.33 | 1,554,716.53 | 7,335,203.97 | 56,415,583.64 |
| 3.Current amount decreased | 12,394,652.83 | 8,995,066.29 | 1,425,859.32 | 2,745,676.69 | 25,561,255.13 |
| (1) Disposal or scrap | 12,394,652.83 | 8,995,066.29 | 1,425,859.32 | 2,745,676.69 | 25,561,255.13 |
| 4.Ending balance | 180,969,012.00 | 243,434,618.06 | 13,913,087.94 | 36,532,801.29 | 474,849,519.29 |
| III. Depreciation reserves | |||||
| 1.Opening balance | 1,355,290.18 | 4,288,951.37 | 5,644,241.55 | ||
| 2.Current amount increased | 442,416.31 | 3,918,078.86 | 93,411.42 | 28,131.35 | 4,482,037.94 |
| (1) Accrual | |||||
| 3.Current amount decreased | |||||
| (1) Disposal or scrap | |||||
| 4.Ending balance | 1,797,706.49 | 8,207,030.23 | 93,411.42 | 28,131.35 | 10,126,279.49 |
| IV. Book value | |||||
| 1.Ending book value | 732,235,423.01 | 232,346,528.86 | 5,094,485.05 | 23,460,306.59 | 993,136,743.51 |
| 2.Opening book value | 761,562,695.17 | 256,111,391.36 | 6,319,417.20 | 28,872,954.48 | 1,052,866,458.21 |
| Item | Original book value | Accumulated depreciation | Depreciation reserves | Book value | Note |
| Item | Original book value | Accumulated depreciation | Depreciation reserves | Book value |
| Item | Ending book value |
| Item | Book value | Reasons for without the property certification |
| House and buildings | 327,066,214.37 | In progress |
| House and buildings | 107,813,704.91 | |
| House and buildings | 15,977,151.09 | |
| House and buildings | 16,350,394.59 | Simple buildings etc, unable to handle property certification |
| Total | 467,207,464.96 |
| Item | Ending balance | Opening balance |
| Item | Ending balance | Opening balance |
| Construction in progress | 186,586,135.06 | 70,735,978.49 |
| Total | 186,586,135.06 | 70,735,978.49 |
| Item | Ending balance | Opening balance |
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Shenbao Plaza project | 3,842,333.64 | 3,842,333.64 | 3,842,333.64 | 3,842,333.64 | ||
| Dongguan grain storage and wharf matching project | 91,924,086.19 | 91,924,086.19 | 46,965,389.14 | 46,965,389.14 | ||
| Deep processing of Dongguan Industry and Trading Food | 39,276,418.03 | 39,276,418.03 | 6,271,930.17 | 6,271,930.17 | ||
| CDE storage of Dongguan Food Industrial Park and wharf mating projects | 43,391,511.05 | 43,391,511.05 | 6,031,872.49 | 6,031,872.49 | ||
| Storage and processing project of SZCG | 6,621,284.40 | 6,621,284.40 | 6,298,750.44 | 6,298,750.44 | ||
| Grain Supply Related Supporting Engineering Projects | 2,020,328.00 | 2,020,328.00 | ||||
| Workshop transformation of Flour Company | 711,487.37 | 711,487.37 | 982,180.17 | 982,180.17 | ||
| Other | 5,564,537.76 | 903,189.74 | 4,661,348.02 | 3,068,717.82 | 903,189.74 | 2,165,528.08 |
| Total | 191,331,658.44 | 4,745,523.38 | 186,586,135.06 | 75,481,501.87 | 4,745,523.38 | 70,735,978.49 |
| Projects | Budget | Opening balance | Current amount increased | Transfer-in fixed assets | Other decreased in the Period | Ending balance | Proportion of project investment in budget | Progress | Accumulated capitalization of interest | Including: amount of capitalization of interest in Period | Interest capitalization rate in Period | Capital resources |
| Dongguan grain storage and wharf matching project | 46,965,389.14 | 48,475,964.84 | 3,517,267.79 | 91,924,086.19 | ||||||||
| Deep processing of Dongguan Industry and Trading Food | 6,271,930.17 | 33,004,487.86 | 39,276,418.03 | |||||||||
| CDE storage of Dongguan Food Industrial Park and wharf mating projects | 6,031,872.49 | 37,359,638.56 | 43,391,511.05 | |||||||||
| Total | 59,269 | 118,84 | 3,517, | 174,59 | -- | -- | -- |
| ,191.80 | 0,091.26 | 267.79 | 2,015.27 |
| Item | Provision amount | Reasons of accrual |
| Item | Ending balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Item | Plant | Livestock | Forestry | Fisheries | Total |
| Tea tree | |||||
| I.Original book value | |||||
| 1.Opening balance | 416,771.28 | 416,771.28 | |||
| 2.Current amount increased | |||||
| (1)Outsourcing | |||||
| (2)self-cultivate | |||||
| 3.Current amount decreased | |||||
| (1)Disposal |
| (2)Other | 9,692.36 | 9,692.36 | |||
| 4.Ending balance | 407,078.92 | 407,078.92 | |||
| II. accumulated depreciation | |||||
| 1.Opening balance | |||||
| 2.Current amount increased | |||||
| (1) Accrual | |||||
| 3.Current amount decreased | |||||
| (1)Disposal | |||||
| (2)Other | |||||
| 4.Ending balance | |||||
| III. Depreciation reserves | |||||
| 1.Opening balance | |||||
| 2.Current amount increased | |||||
| (1) Accrual | |||||
| 3.Current amount decreased | |||||
| (1)Disposal | |||||
| (2)Other | |||||
| 4.Ending balance | |||||
| IV. Book value | |||||
| 1.Ending book value |
| 2.Opening book value |
| Item | Land use right | Patent | Un-patent tech | Other | Total |
| I.Original book value | |||||
| 1.Opening balance | 417,581,033.74 | 46,264,718.89 | 8,370,977.87 | 29,500,867.72 | 501,717,598.22 |
| 2.Current amount increased | 184,916,393.77 | 1,200.00 | 1,934,971.62 | 2035360.75 | 188,887,926.14 |
| (1) Purchase | 184,916,393.77 | 1,200.00 | 1,934,971.62 | 2,035,360.75 | 188,887,926.14 |
| (2) internal R&D | 0.00 | 0.00 | 0.00 | 0.00 | |
| (3) Increased by combination | 0.00 | 0.00 | 0.00 | 0.00 | |
| 0.00 | 0.00 | 0.00 | 0.00 | ||
| 3.Current amount decreased | 7,846,273.16 | 0.00 | 7,846,273.16 | ||
| (1) Disposal | 7,846,273.16 | 0.00 | 7,846,273.16 | ||
| 0.00 | 0.00 | 0.00 | 0.00 | ||
| 4.Ending balance | 594,651,154.35 | 46,265,918.89 | 10,305,949.49 | 31,536,228.47 | 682,759,251.20 |
| II. accumulated depreciation | 0.00 | 0.00 | 0.00 | 0.00 |
| 1.Opening balance | 59,933,429.04 | 22,367,888.26 | 2,475,996.62 | 6,944,368.88 | 91,721,682.80 |
| 2.Current amount increased | 13,261,998.56 | 1,973,952.91 | 1,233,969.38 | 1,537,661.71 | 18,007,582.56 |
| (1) Accrual | 13,261,998.56 | 1,973,952.91 | 1,233,969.38 | 1,537,661.71 | 18,007,582.56 |
| 0.00 | 0.00 | 0.00 | 0.00 | ||
| 3.Current amount decreased | 3,688,748.40 | 0.00 | 0.00 | 0.00 | 3,688,748.40 |
| (1) Disposal | 3,688,748.40 | 0.00 | 0.00 | 0.00 | 3,688,748.40 |
| 0.00 | 0.00 | 0.00 | 0.00 | ||
| 4.Ending balance | 69,506,679.20 | 24,341,841.17 | 3,709,966.00 | 8,482,030.59 | 106,040,516.96 |
| III. Depreciation reserves | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1.Opening balance | 1,869,502.01 | 1,130,341.88 | 0.00 | 2,999,843.89 | |
| 2.Current amount increased | 3,683,781.53 | 37,716.74 | 0.00 | 3,721,498.27 | |
| (1) Accrual | 3,683,781.53 | 37,716.74 | 0.00 | 3,721,498.27 | |
| 0.00 | 0.00 | 0.00 | 0.00 | ||
| 3.Current amount decreased | 0.00 | 0.00 | 0.00 | 0.00 | |
| (1) Disposal | 0.00 | 0.00 | 0.00 | 0.00 | |
| 0.00 | 0.00 | 0.00 | 0.00 | ||
| 4.Ending balance | 5,553,283.54 | 1,168,058.62 | 0.00 | 6,721,342.16 | |
| IV. Book value | 0.00 | 0.00 | 0.00 | 0.00 | |
| 1.Ending book value | 525,144,475.15 | 16,370,794.18 | 5,427,924.87 | 23,054,197.88 | 569,997,392.08 |
| 2.Opening book value | 357,647,604.70 | 22,027,328.62 | 4,764,639.37 | 22,556,498.84 | 406,996,071.53 |
| Item | Book value | Reasons for without the property certification |
| Land use right | 43,229,515.30 | In progress |
| Land use right | 7,849,990.00 | Collective land, no property rights certificate can be processed |
| Total | 51,079,505.30 |
| Item | Opening balance | Current amount increased | Current amount decreased | Ending balance |
| The invested entity or matters forming goodwill | Opening balance | Current increased | Current decreased | Ending balance | ||
| Pu’er Tea Trading Center | 673,940.32 | 673,940.32 | ||||
| Total | 673,940.32 | 673,940.32 | ||||
| The invested entity or | Opening balance | Current increased | Current decreased | Ending balance |
| matters forming goodwill | ||||||
| Pu’er Tea Trading Center | 673,940.32 | 673,940.32 | ||||
| Total | 673,940.32 | 673,940.32 |
| Item | Opening balance | Current amount increased | Current amortization | Other decreased | Ending balance |
| Decoration fee | 10,601,610.34 | 410,036.30 | 3,895,891.33 | 2,565,005.10 | 4,550,750.21 |
| Improve expenditure for investment real estate | 9,292,485.82 | 586,379.92 | 8,706,105.90 | ||
| Improve expenditure for fix assets | 2,692,209.58 | 739,526.46 | 1,039,820.39 | 6,824.31 | 2,385,091.34 |
| Affiliated project of resident area in Wuyuan Ju Fang Yong | 389,956.00 | 353,581.53 | 36,374.47 | ||
| Other | 4,840,031.05 | 2,637,922.71 | 866,744.68 | 489,631.20 | 6,121,577.88 |
| Total | 27,816,292.79 | 3,787,485.47 | 6,742,417.85 | 3,061,460.61 | 21,799,899.80 |
24. Deferred income tax assets and deferred income tax liability(1) Deferred income tax assets without offset
RMB/CNY
| Item | Ending balance | Opening balance | ||
| Deductible temporary differences | Deferred income tax assets | Deductible temporary differences | Deferred income tax assets | |
| Impairment provision for assets | 200,997,551.38 | 49,759,336.40 | 214,181,782.83 | 52,720,473.30 |
| Unrealized profits in internal transactions | 1,348,710.60 | 337,177.65 | 2,518,115.64 | 629,528.91 |
| Deductible loss | 1,097,482.28 | 274,370.57 | ||
| Deferred income | 312,307.72 | 78,076.93 | 441,538.48 | 110,384.62 |
| Total | 202,658,569.70 | 50,174,590.98 | 218,238,919.23 | 53,734,757.40 |
| Item | Ending balance | Opening balance | ||
| Taxable temporary differences | Deferred income tax liability | Taxable temporary differences | Deferred income tax liability | |
| Asset evaluation increment of enterprise combine under different control | 51,909,877.24 | 12,977,469.31 | 53,564,745.68 | 13,391,186.42 |
| Change of fair value | 43,861.84 | 10,965.46 | 518,602.12 | 129,650.53 |
| Total | 51,953,739.08 | 12,988,434.77 | 54,083,347.80 | 13,520,836.95 |
| Item | Trade-off between the deferred income tax assets and liabilities | Ending balance of deferred income tax assets or liabilities after off-set | Trade-off between the deferred income tax assets and liabilities at period-begin | Opening balance of deferred income tax assets or liabilities after off-set |
| Deferred income tax assets | 50,174,590.98 | 53,734,757.40 | ||
| Deferred income tax liability | 12,988,434.77 | 13,520,836.95 |
(4) Details of uncertain deferred income tax assets
RMB/CNY
| Item | Ending balance | Opening balance |
| Deductible loss | 112,864,728.90 | 130,083,839.90 |
| Impairment provision for assets | 172,615,170.87 | 204,828,441.48 |
| Deferred income | 10,097,899.20 | |
| Total | 295,577,798.97 | 334,912,281.38 |
| Year | Ending amount | Opening amount | Note |
| Item | Ending balance | Opening balance |
| Prepaid for equipment | 866,378.12 | 484,108.52 |
| Prepaid for engineering | 1,069,771.60 | 500,000.00 |
| Total | 1,936,149.72 | 984,108.52 |
| Item | Ending balance | Opening balance |
| Secured loans | 30,000,000.00 | 100,000,000.00 |
| Guarantee loan | 30,000,000.00 | 40,000,000.00 |
| Loan in credit | 31,600,000.00 | 29,800,000.00 |
| Total | 91,600,000.00 | 169,800,000.00 |
the balance of the above loan contract was RMB 31.60 million.(2) Dongguan Logistics, a subsidiary of the Company, signed a liquidity loan contract “Yue DG 2017NJZ No.5” with Bank ofCommunications Co., Ltd., Dongguan Branch. According to the contract, the Bank of Communications Dongguan Branch provided acirculating loan amount of RMB 30 million to Dongguan Logistics, and the borrowing rate is 5.22%, the length of maturity for eachloan under the contract is no longer than 12 months, and the maturity date of all loans is no later than April 11, 2019. As of December31, 2018, the balance of the above loan contract was RMB 30 million. Shenzhen Cereals Group and Dongguan Fruit Vegetable Non-staple Food Trading Market Co., Ltd. provide the guarantee with maximum amount for the loan, the maximum amount of claimsguaranteed by the guarantors was respectively RMB 15.30 million and RMB 14.70 million.(3) The Company’s subsidiaries, Shenzhen Flour, Dongguan Logistics, Hualian Grain and Oil Trade, SZCG Duoximi, SZCG BigKitchen, and SZCG Cold Chain signed the bank credit contract of credit number CN11002181808/160714, and the credit review andmodification contract CN11002181808-170727 with HSBC, Dongguan Logistics has obtained HSBC’s multi-currency circulating loanwith maximum credit limit of not more than RMB 100 million, and the interest rate is 100% of the benchmark interest rate for loan ofthe central bank or other rates that is determined on the credit use date or before the renewal date of the loan and has been written onthe service application and renewal notice of the loan. As of December 31, 2018, Dongguan Logistics had obtained a loan balance ofRMB 30 million from HSBC Huizhou Zhongkai Sub-branch. The above loans were guaranteed by Shenzhen Cereals Group, and allaccounts receivable of seven approved customers of Dongguan Logistics (1. Dongguan Yihai Kerry Grain and Oil Food Industry Co.,Ltd.; 2. Shenzhen Shekou Lamsoon Flour Mills Co., Ltd.; 3. Guangdong Guangliang Group; 4. Shenzhen Kingsino Feed Co., Ltd.; 5.Shenzhen Kondarl (Group) Co., Ltd.; 6. Hong Kong Maxim’s Caterers Limited; 7. Beingmate Group Co., Ltd.) were taken as pledges,the pledge period was from July 9, 2015 to July 9, 2020. As of December 31, 2018, there was no balance in the accounts receivable ofDongguan Logistics and the seven customers above.
(2) Overdue short-term loans without payment
RMB 0 short-term loans over due without paid at period-end, including follow major amount:
RMB/CNY
| Borrower | Ending balance | Loan rate | Overdue time | Overdue interest |
| Item | Ending balance | Opening balance |
| Item | Ending balance | Opening balance |
| Account payable | 472,738,283.80 | 558,480,197.44 |
| Total | 472,738,283.80 | 558,480,197.44 |
| Category | Ending balance | Opening balance |
| Item | Ending balance | Opening balance |
| Trade accounts payable | 438,618,768.51 | 461,677,059.15 |
| Account payable for engineering | 31,922,123.90 | 95,399,963.57 |
| Other | 2,197,391.39 | 1,403,174.72 |
| Total | 472,738,283.80 | 558,480,197.44 |
| Item | Ending balance | Reasons of outstanding or carry-over |
| Item | Ending balance | Opening balance |
| Account for goods received in advance | 204,866,040.96 | 174,812,618.27 |
| Other | 562,553.20 | 3,572,656.93 |
| Total | 205,428,594.16 | 178,385,275.20 |
| Item | Ending balance | Reasons of outstanding or carry-over |
(3) Projects that settle without completed from construction contract at period-end
RMB/CNY
| Item | Amount |
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| I. Short-term compensation | 107,603,918.95 | 249,557,323.70 | 235,778,894.13 | 121,382,348.52 |
| II. After-service welfare-defined contribution plans | 9,882,391.67 | 21,171,621.19 | 20,789,853.27 | 10,264,159.59 |
| III. Dismissed welfare | 660,000.00 | 13,779,037.85 | 10,376,122.44 | 4,062,915.41 |
| Total | 118,146,310.62 | 284,507,982.74 | 266,944,869.84 | 135,709,423.52 |
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| 1. Wage, bonus, allowance and subsidy | 101,078,818.33 | 218,102,208.89 | 205,573,357.37 | 113,607,669.85 |
| 2. Employees’ welfare | 10,704,530.40 | 10,704,530.40 | ||
| 3. Social insurance charges | 45,896.14 | 6,137,166.84 | 6,083,464.17 | 99,598.81 |
| Including:medical insurance premium | 40,399.73 | 5,399,740.97 | 5,347,327.60 | 92,813.10 |
| Industrial injury insurance premiums | 748.17 | 312,873.46 | 313,316.71 | 304.92 |
| Maternity insurance premiums | 4,748.24 | 424,552.41 | 422,819.86 | 6,480.79 |
| 4. Housing public reserve | 23,823.11 | 8,476,422.98 | 8,500,246.09 | |
| 5. Trade union fee and education fee | 6,455,381.37 | 6,136,994.59 | 4,917,296.10 | 7,675,079.86 |
| Total | 107,603,918.95 | 249,557,323.70 | 235,778,894.13 | 121,382,348.52 |
(3) Defined contribution plans
RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| 1. Basic endowment insurance premiums | 291,876.52 | 12,502,212.35 | 12,557,113.25 | 236,975.62 |
| 2. Unemployment insurance premiums | 4,130.14 | 300,217.11 | 299,777.50 | 4,569.75 |
| 3. Enterprise annuity | 9,586,385.01 | 8,369,191.73 | 7,932,962.52 | 10,022,614.22 |
| Total | 9,882,391.67 | 21,171,621.19 | 20,789,853.27 | 10,264,159.59 |
| Item | Ending balance | Opening balance |
| VAT | 9,493,004.93 | 3,796,564.24 |
| Enterprise income tax | 9,219,053.50 | 9,372,029.64 |
| Personal income tax | 1,927,699.20 | 1,634,001.67 |
| Urban maintenance and construction tax | 640,819.28 | 137,679.29 |
| House property tax | 1,725,020.41 | 2,103,322.08 |
| Use tax of land | 574,505.73 | 973,641.12 |
| Stamp tax | 246,056.29 | 226,636.89 |
| Educational surtax | 483,228.46 | 105,464.48 |
| Other | 660,330.78 | 1,046,888.34 |
| Total | 24,969,718.58 | 19,396,227.75 |
| Item | Ending balance | Opening balance |
| Interest payable | 1,571,297.90 | |
| Dividend payable | 2,909,182.74 | 2,909,182.74 |
| Other account payable | 277,780,365.55 | 303,452,477.66 |
| Total | 280,689,548.29 | 307,932,958.30 |
| Item | Ending balance | Opening balance |
| Long-term borrowing interest for installment | 932,028.11 | |
| Interest payable for short-term loans | 639,269.79 | |
| Total | 1,571,297.90 |
| Borrower | Overdue amount | Overdue reason |
| Item | Ending balance | Opening balance |
| Unmanaged shares | 218,212.60 | 218,212.60 |
| Shenzhen Investment Management Co., Ltd | 2,690,970.14 | 2,690,970.14 |
| Total | 2,909,182.74 | 2,909,182.74 |
| Item | Ending balance | Opening balance |
| Engineering quality retention money and fund of tail | 3,191,037.22 | 1,847,714.46 |
| Deposit and margin | 151,049,170.31 | 198,233,816.14 |
| Intercourse funds and other | 100,749,160.89 | 75,815,708.43 |
| Drawing expenses in advance | 22,790,997.13 | 27,555,238.63 |
| Total | 277,780,365.55 | 303,452,477.66 |
RMB/CNY
| Item | Ending balance | Reasons of outstanding or carry-over |
| Zhanjiang Changshan (Shenzhen) Ecological Aquaculture Co., Ltd | 7,967,662.50 | Intercourse funds not yet mature |
| Shenzhen Yulunfa Investment Development Co., Ltd | 4,936,804.06 | Intercourse funds not yet mature |
| Total | 12,904,466.56 | -- |
| Item | Ending balance | Opening balance |
| Item | Ending balance | Opening balance |
| Long-term loans due within one year | 55,090,793.79 | 40,642,777.63 |
| Total | 55,090,793.79 | 40,642,777.63 |
| Item | Ending balance | Opening balance |
| Subsidies for grain reserve services | 219,151,968.63 | 219,151,968.63 |
| Total | 219,151,968.63 | 219,151,968.63 |
| Bonds | Face value | Issuance date | Bonds term | Amount issued | Opening balance | Issued in the period | Accrual interest by face value | Premium and discount amortization | Paid in the period | Ending balance |
Committee in the previous year of which the income is unrecognized. Due to the government-related audit and its settlement procedures,the Company has not cleared and settled the accumulated grain and oil reserve service payments. According to the agreement on majorasset restructuring of the Company’s issuance of shares to purchase 100 equity of SZCG, the Company no longer recognizes the incomefor the balance, which is settled by Fude Capital and relevant government units.
37. Long-term loans(1)Category of long-term loans
RMB/CNY
| Item | Ending balance | Opening balance |
| Mortgage loan | 462,449,380.03 | 143,905,785.42 |
| Guarantee loan | 109,329,205.42 | 92,384,396.09 |
| Less: Long-term loans due within one year | -55,090,793.79 | -40,642,777.63 |
| Total | 516,687,791.66 | 195,647,403.88 |
2015 (Shen) Zi No. 0023 with China Agricultural Development Bank, with a total loan amount of 273 million yuanand an annual interest rate of 5.4%, the interest rate is adjusted year by year from the actual withdrawal date basedon the adjustment of benchmark interest rate for loan of the People's Bank of China, and the loan period is fromJuly 31, 2015 to July 12, 2023. As of December 31, 2018, the balance under the above contract was RMB178,866,000., of which the non-current liabilities due within one year were RMB 36,021,700. Shenzhen CerealsGroup has provided guarantee for the loan, and taken Dongguan Logistics’ land “DFGY(2014) DT No. 6” at No.32, Jianshe Road, Masan Village, Machong Town, Dongguan City and the above-ground buildings and structuresto be built in the future as mortgages, of which the land assessment value is 51.21 million yuan.2.Ending balance of long-term loans increased 321,040,387.78 yuan over that of period-beginning with 164.09percent up, mainly because subsidiary Dongguan Logistics increased the loans for engineering requirement in theperiod
Other explanation, including interest rate range:
38. Bonds payable
(1) Bonds payable
RMB/CNY
| Item | Ending balance | Opening balance |
| Outstanding financial instrument | Period-beginning | Current increased | Current decreased | Period-end | ||||
| Amount | Book value | Amount | Book value | Amount | Book value | Amount | Book value | |
| Item | Ending balance | Opening balance |
| Special account payable | 15,690,202.08 | 15,626,357.76 |
| Total | 15,690,202.08 | 15,626,357.76 |
| Item | Ending balance | Opening balance |
| Item | Opening balance | Current increased | Current decreased | Ending balance | Causes |
| Depreciation fund for grain deposits | 15,626,357.76 | 63,844.32 | 15,690,202.08 | Note1 | |
| Total | 15,626,357.76 | 63,844.32 | 15,690,202.08 | -- |
| Item | Ending balance | Opening balance |
| Item | Current Period | Last Period |
| Item | Current Period | Last Period |
| Item | Current Period | Last Period |
Major actuarial assumption and sensitivity analysis:
Other explanation
41. Accrual liability
RMB/CNY
| Item | Ending balance | Opening balance | Causes |
| Item | Opening balance | Current increased | Current decreased | Ending balance | Causes |
| Government grant with assets concerned | 99,879,427.55 | 5,100,000.00 | 4,949,770.34 | 100,029,657.21 | See table below for details |
| Government grant with income concerned | 1,595,095.71 | 1,016,549.91 | 578,545.80 | See table below for details | |
| Total | 101,474,523.26 | 5,100,000.00 | 5,966,320.25 | 100,608,203.01 | -- |
| Liability | Opening balance | New grants in the Period | Amount reckoned in non-operation revenue | Amount reckoned in other income | Cost reduction in the period | Other changes | Ending balance | Assets-related/income related |
| (1) Base of further processing for tea and nature plants | 1,375,000.00 | 275,000.00 | 1,100,000.00 | Assets-related | ||||
| (2) Enterprise technology center is a municipal R&D center. Subsidies | 2,191,325.64 | 204,024.47 | 1,987,301.17 | Assets-related |
| for industrial technological advancement | ||||||||
| (3) Project grants for years for agricultural district, Xihu Zone | 441,538.48 | 129,230.76 | 312,307.72 | Assets-related | ||||
| (4) Key technology research and development for the preparation of high-quality aroma extracts based on the use of tea aroma precursors | 524,800.00 | 283,476.42 | 241,323.58 | Income related | ||||
| (5) Key technology research and development for the preparation of high-quality aroma extracts based on the use of tea aroma precursors | 250,000.00 | 6,766.38 | 243,233.62 | Assets-related | ||||
| (6) | 1,070,295. | 733,073.49 | 337,222.22 | Income |
| Finance Discount | 71 | related | ||||||
| (7) Industrialization of direct preparation of instant tea powder | 2,280,582.54 | 196,445.87 | 2,084,136.67 | Assets-related | ||||
| (8) Subsidy for research and industrialization of key technology of instant tea powder | 167,256.22 | 14,245.01 | 153,011.21 | Assets-related | ||||
| (9) Fund for Development of Strategic Emerging Industries in Shenzhen of plant deep processing technology engineering in Shenzhen (SFG [2013] No.1601) | 3,890,101.98 | 351,209.03 | 3,538,892.95 | Assets-related | ||||
| (10) Construction amount for 50 tons for clearly | 625,000.00 | 125,000.00 | 500,000.00 | Assets-related |
| processing for Mingyou tea | ||||||||
| (11)Subsidy for tea seeding of New Tea Garden in Wangkou | 47,239.24 | 1,109.28 | 46,129.96 | Assets-related | ||||
| (12) Subsidy for supply system construction of agricultural products | 950,000.00 | 200,000.00 | 750,000.00 | Assets-related | ||||
| (13) Grain storage project of Dongguan SZCG Logistics Co., Ltd. - Storage A | 8,501,697.32 | 259,279.49 | 8,242,417.83 | Assets-related | ||||
| (14) Phase II of grain storage project of Dongguan SZCG Logistics Co., Ltd.- Storage B | 34,000,000.00 | 1,031,300.48 | 32,968,699.52 | Assets-related | ||||
| (15) Grain, oil and food headquarters and innovative public | 18,000,000.00 | 18,000,000.00 | Assets-related |
| service platform of Dongguan SZCG Logistics Co., Ltd. | ||||||||
| (16) Fund for intelligent Upgrading and Renovation of Grain Depots in "Grain Safety Project" in 2017 | 5,100,000.00 | 5,100,000.00 | Assets-related | |||||
| (17) Construction of 450000 ton silos and 60000 ton film silos -CDE warehouse. Gas storage bin | 17,700,000.00 | 208,235.29 | 17,491,764.71 | Assets-related | ||||
| (18) Special fund for agricultural development in Shenzhen - subsidy for agricultural product quality and safety testing capacity- | 240,000.00 | 240,000.00 | Assets-related |
| building project | ||||||||
| (19) Special fund for agricultural development of 2016- agricultural product safety testing project- capacity building of the third party inspection institution expansion evaluation | 656,000.00 | 164,000.00 | 492,000.00 | Assets-related | ||||
| (20) Agricultural product safety testing project of the special fund for agricultural development of 2016 - Central investment fund | 1,368,000.00 | 342,000.00 | 1,026,000.00 | Assets-related | ||||
| (21) Construction of O2O community sales service system for high | 1,827,987.24 | 38,576.04 | 1,789,411.20 | Assets-related |
| quality grain and oil based on B2C E-commerce platform | ||||||||
| (22) Industrialization of Doximi E-commerce platform | 3,712,698.89 | 899,014.88 | 2,813,684.01 | Assets-related | ||||
| (23) Commercial circulation development project funding for year of 2017 | 655,000.00 | 131,000.00 | 524,000.00 | Assets-related | ||||
| (24) Intelligent management of grain depot based on mobile internet | 1,000,000.00 | 133,333.36 | 866,666.64 | Assets-related | ||||
| 101,474,523.26 | 5,100,000.00 | 5,233,246.76 | 733,073.49 | 100,608,203.01 |
43. Other non-current liability
RMB/CNY
| Item | Ending balance | Opening balance |
| Opening balance | Increased (decreased) in this year +,- | Ending balance | |||||
| New shares issued | Bonus shares | Shares converted from public reserve | Other | Subtotal | |||
| Total shares | 496,782,303.00 | 655,752,951.00 | 655,752,951.00 | 1,152,535,254.00 | |||
| Outstanding financial instrument | Period-beginning | Current increased | Current decreased | Period-end | ||||
| Amount | Book value | Amount | Book value | Amount | Book value | Amount | Book value | |
46. Capital reserves
RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Capital premium (Share capital premium) | 2,054,313,934.84 | 5,219,793,489.96 | 5,860,111,077.30 | 1,413,996,347.50 |
| Other capital reserve | 8,850,767.28 | 45,614.58 | 8,896,381.86 | |
| Total | 2,063,164,702.12 | 5,219,839,104.54 | 5,860,111,077.30 | 1,422,892,729.36 |
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Item | Opening balance | Current Period | Ending balance | ||||
| Account before income tax in the year | Less: written in other comprehensive income in previous period and carried forward to gains and losses in current period | Less : income tax expense | Belong to parent company after tax | Belong to minority shareholders after tax | |||
49. Reasonable reserve
RMB/CNY
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Production safety fee | 70,395.63 | 846,741.24 | 916,982.66 | 154.21 |
| Total | 70,395.63 | 846,741.24 | 916,982.66 | 154.21 |
| Item | Opening balance | Current increased | Current decreased | Ending balance |
| Statutory surplus reserves | 327,140,910.28 | 327,140,910.28 | ||
| Total | 327,140,910.28 | 327,140,910.28 |
| Item | Current period | Last period |
| Retained profit at the end of the previous year before adjustment | 961,602,454.82 | 503,877,419.19 |
| Total retained profit at the beginning of the previous year before adjustment | 961,602,454.82 | 503,877,419.19 |
| Add: net profit attributable to shareholder of parent company | 308,331,032.44 | 359,174,263.44 |
| Common Stock dividends payable | (128,599,604.22) | |
| Add: Others | 227,150,376.41 | |
| Retained profit at period-end | 1,269,933,487.26 | 961,602,454.82 |
52. Operating income and operating cost
RMB/CNY
| Item | Current Period | Last Period | ||
| Income | Cost | Income | Cost | |
| Main business | 10,747,576,698.29 | 9,686,779,830.78 | 10,787,535,959.58 | 9,842,943,493.15 |
| Other business | 11,206,139.85 | 6,854,443.43 | 6,157,197.21 | 4,403,705.50 |
| Total | 10,758,782,838.14 | 9,693,634,274.21 | 10,793,693,156.79 | 9,847,347,198.65 |
| Item | Current Period | Last Period |
| Urban maintenance and construction tax | 2,165,312.82 | 1,683,109.99 |
| Educational surtax | 1,629,329.96 | 1,256,505.73 |
| Property tax | 8,050,618.18 | 7,921,136.10 |
| Land use tax | 2,524,108.37 | 2,825,504.21 |
| Stamp tax | 959,970.44 | 1,230,617.22 |
| Other | 40,183.75 | 127,261.71 |
| Total | 15,369,523.52 | 15,044,134.96 |
| Item | Current Period | Last Period |
| Labor and social security benefits | 64,382,900.10 | 63,469,840.24 |
| Rental | 8,600,847.41 | 14,320,121.12 |
| Utilities and office expenses | 4,423,846.48 | 5,756,170.62 |
| After-sale services | 5,381,877.15 | 7,324,378.18 |
| Logistics transportation fee | 60,230,906.69 | 64,964,942.16 |
| Travel expenses | 3,385,483.21 | 2,683,069.45 |
| Equivalent loss for low value perishable goods | 7,201,541.87 | 7,887,133.24 |
| Depreciation and amortization of long-term assets | 11,154,844.42 | 11,094,475.80 |
| Business hospitality | 1,575,490.94 | 2,174,720.93 |
| Advertisement charge | 547,154.17 | 1,342,122.12 |
| Sales commission | 3,323,497.22 | 143,530.31 |
| Port terminal charges | 69,833,224.80 | 75,823,886.10 |
| Property insurance premium | 1,070,556.38 | 571,307.80 |
| Other | 13,908,901.70 | 17,469,330.81 |
| Total | 255,021,072.54 | 275,025,028.88 |
| Item | Current Period | Last Period |
| Labor and social security benefits | 150,406,024.19 | 123,481,675.10 |
| Communication fee | 1,570,816.01 | 1,812,464.25 |
| Vehicle usage fee | 2,306,678.91 | 2,943,286.58 |
| Low-value consumables | 481,089.89 | 233,764.48 |
| Repair cost | 823,967.71 | 888,476.18 |
| Depreciation and amortization of long-term assets | 32,279,753.91 | 25,916,762.95 |
| Travel expenses | 3,200,086.74 | 2,926,642.86 |
| Business hospitality | 3,338,547.23 | 3,504,046.80 |
| Office expenses | 7,879,468.54 | 4,365,615.28 |
| Rental | 2,142,501.24 | 2,457,513.00 |
| Intermediary fees | 14,370,730.10 | 9,633,452.02 |
| Relocation and shutdown costs | 4,908,709.05 | |
| Other | 22,835,462.95 | 14,972,322.77 |
| Total | 246,543,836.47 | 193,136,022.27 |
| Item | Current Period | Last Period |
| Labor and social security benefits | 8,050,749.76 | 5,984,184.93 |
| Depreciation cost | 1,369,522.27 | 1,612,761.29 |
| Office expenses | 778,680.36 | 55,978.70 |
| Travel expenses | 212,282.20 | 178,096.03 |
| Logistics consumption | 95,614.49 | 67,205.66 |
| Intermediary fees | 527,105.99 | |
| Maintenance and inspection fee | 92,759.15 | 219,619.34 |
| Other | 379,856.41 | 1,182,755.82 |
| Total | 10,979,464.64 | 9,827,707.76 |
| Item | Current Period | Last Period |
| Interest expenditure | 20,410,885.62 | 8,569,062.23 |
| Less: Interest income | 8,364,388.05 | 9,080,593.99 |
| Exchange loss | -2,516,157.85 | -4,151,068.77 |
| Bank commission charge | 600,973.53 | 1,327,073.22 |
| Other | ||
| Total | 10,131,313.25 | -3,335,527.31 |
| Item | Current Period | Last Period |
| I. Bad debt losses | 17,933,622.38 | 8,361,980.13 |
| II. Inventory falling price loss | 173,498,864.92 | 93,324,340.40 |
| VII. Impairment loss of fixed assets | 4,482,037.94 | |
| XII. Impairment loss of intangible assets | 3,721,498.27 | 2,999,843.89 |
| XIII. Impairment loss of goodwill | 673,940.32 | |
| Total | 199,636,023.51 | 105,360,104.74 |
Asset impairment loss in the period increased 94,275,918.77 yuan over that of lasts period with 89.48 percent up,mainly because the inventory Falling price reserves accrual in the period increased.59. Other income
RMB/CNY
| Income sources | Current Period | Last Period |
| Amortization of deferred income | 4,949,770.34 | 3,436,655.59 |
| Amortization of deferred income | 283,476.42 | 25,200.00 |
| Special funds supporting project for the independent innovation industry development in Nanshan District (funding for modern agricultural development) | 200,000.00 | 200,000.00 |
| Industrial development subsidy for Xihu Longjing Tea | 80,000.00 | 150,000.00 |
| Subsidy for Zhejiang Tea Industry Technology Project (demonstration and promotion of green prevention and control of longjing tea in Xihu and production technology of weight reduction and drug reduction) | 150,000.00 | |
| Leading funds for industrial development | 425,763.00 | |
| Employment subsidy | 201,886.98 | |
| Projects to support leading agricultural enterprise in capacity improvement | 300,000.00 | 5,133.68 |
| Special fund for industrial development in Futian District (annual quarterly growth supporting- headquarters recognition and operation supporting - E-commerce sales operation supporting) | 2,749,600.00 | |
| Incentive plan for the scale of E-commerce trading platform for year of 2017 | 1,000,000.00 | |
| Steady post subsidy | 96,450.23 | 131,661.86 |
| Supporting funds for energy saving and emission reduction for voluntary cleaner production projects | 150,000.00 | |
| Certification award of the provincial | 100,000.00 |
| enterprise technology center of 2016 from Wuyuan ICC | ||
| Special funds for the development of service industry in E-commerce | 717,000.00 | |
| Special funds supporting project for the independent innovation industry development in Nanshan District- funds for the economic development | 200,000.00 | |
| Special fund for maintenance of the construction of food emergency system (capacity construction of grain quality inspection) from CEIT | 100,000.00 | |
| Other | 464,911.16 | 156,000.00 |
| Total | 10,901,858.13 | 5,371,651.13 |
| Item | Current Period | Last Period |
| Long-term equity investment gains recognized under equity method | -1,755,504.74 | -490,760.14 |
| Investment income from disposal of long-term equity investment | 800,000.00 | |
| Earnings from financing products | 3,029,857.89 | 2,706,034.95 |
| Other | 450,000.00 | |
| Total | 1,724,353.15 | 3,015,274.81 |
| Income resources | Current Period | Last Period |
| Financial assets measured by fair value and with its variation reckoned into current gain/loss | -474,740.24 | -1,651,270.40 |
| Total | -474,740.24 | -1,651,270.40 |
62. Asset disposal income
RMB/CNY
| Source of asset disposal income | Current Period | Last Period |
| Profit or loss for the disposal of fixed assets | 1,601,802.27 | -22,935.33 |
| Item | Current Period | Last Period | Amount included in the current non-recurring profit and loss |
| Donation accepted | 1,240,000.00 | ||
| Government grants without daily activity concerned | 5,000.00 | 105,133.68 | 5,000.00 |
| Compensation fro breach of contract | 431,861.50 | 120,300.00 | 431,861.50 |
| Other | 953,573.34 | 9,917,309.31 | 953,573.34 |
| Total | 1,390,434.84 | 11,382,742.99 | 1,390,434.84 |
| Grants | Issuing subject | Issuing cause | Property type | Whether the impact of subsidies on the current profit and loss | Whether special subsidies | Amount of this period | Amount of last period | Assets related/Income related |
| Item | Current Period | Last Period | Amount included in the current non-recurring profit |
| and loss | |||
| External donations | 99,485.68 | 2,580,210.27 | 99,485.68 |
| Loss of scrap from non-current assets | 393,959.39 | 139,848.40 | 393,959.39 |
| Fine expenditure (and liquidated damages) | 1,071.89 | 3,850.00 | 1,071.89 |
| Tax delay charge | 23,243.76 | 140,138.96 | 23,243.76 |
| Compensation | 2,257,706.50 | 4,186,199.54 | 2,257,706.50 |
| Other | 490,981.21 | 631,651.01 | 490,981.21 |
| Total | 3,266,448.43 | 7,681,898.18 | 3,266,448.43 |
| Item | Current Period | Last Period |
| Current income tax expenses | 15,461,101.10 | 17,979,927.26 |
| Deferred income tax expenses | 3,027,764.24 | -7,153,523.58 |
| Total | 18,488,865.34 | 10,826,403.68 |
| Item | Current Period |
| Total profit | 339,344,589.72 |
| Income tax expenses calculated by statutory tax rate | 84,836,147.43 |
| Impact from different tax rate apply with the subsidiary | -1,891,579.89 |
| Impact from previous income tax adjusted | 1,660,845.67 |
| Impact of non-taxable income | -137,966,143.31 |
| Impact on cost, expenses and losses that unable to deducted | 35,960,373.72 |
| Effect of deductible losses of deferred tax assets unconfirmed at | -1,289,340.25 |
| the earlier stage of use | |
| Impact on deductible temporary differences or losses deductible which was un-recognized as deferred income tax assets | 37,178,561.97 |
| income tax expenses | 18,488,865.34 |
| Item | Current Period | Last Period |
| Intercourse funds and deposit | 129,048,838.74 | 171,613,144.84 |
| Government grants | 10,773,611.37 | 7,514,980.36 |
| Interest income | 7,802,888.05 | 8,736,862.48 |
| Other | 1,445,214.16 | 1,418,497.30 |
| Total | 149,070,552.32 | 189,283,484.98 |
| Item | Current Period | Last Period |
| Intercourse funds and deposit | 94,186,178.56 | 38,539,679.43 |
| Operational daily expenses | 213,908,218.92 | 259,271,280.27 |
| Other | 2,872,489.04 | 2,309,290.00 |
| Total | 310,966,886.52 | 300,120,249.70 |
| Item | Current Period | Last Period |
| Performance compensation | 450,000.00 | |
| Total | 450,000.00 |
| Item | Current Period | Last Period |
| Item | Current Period | Last Period |
| Loans | 10,000,000.00 | |
| Total | 10,000,000.00 |
| Item | Current Period | Last Period |
| Fund borrowing from related party | 3,800,000.00 | |
| Relevant expenses for bonus paid | 97,916.29 | |
| Total | 3,897,916.29 |
| Item | Current period | Last period |
| 1. Net profit adjusted to cash flow of | -- | -- |
| operation activities: | ||
| Net profit | 320,855,724.38 | 350,875,648.18 |
| Add: Impairment provision for assets | 199,636,023.51 | 105,360,104.74 |
| Depreciation of fixed assets, consumption of oil assets and depreciation of productive biology assets | 79,619,849.04 | 72,225,381.71 |
| Amortization of intangible assets | 18,007,582.56 | 13,765,799.33 |
| Amortization of long-term pending expenses | 6,742,417.85 | 8,524,320.63 |
| Loss from disposal of fixed assets, intangible assets and other long-term assets (income is listed with “-”) | -1,601,802.27 | 22,935.33 |
| Losses on scrapping of fixed assets (income is listed with “-“) | 393,959.39 | 139,848.40 |
| Loss from change of fair value (income is listed with “-“) | 474,740.24 | 1,651,270.40 |
| Financial expenses (income is listed with “-”) | 18,627,801.26 | 3,849,889.09 |
| Investment loss (income is listed with “-”) | -1,724,353.15 | -3,015,274.81 |
| Decrease of deferred income tax assets (increase is listed with “-”) | 3,560,166.42 | -6,453,503.83 |
| Decrease of deferred income tax asset( (increase is listed with “-”) | -532,402.18 | -700,019.75 |
| Decrease of inventory (increase is listed with “-”) | -46,833,652.80 | -464,147,408.66 |
| Decrease of operating receivable accounts (increase is listed with “-”) | -308,973,425.11 | -90,591,903.90 |
| Increase of operating payable accounts (decrease is listed with “-”) | 10,851,006.44 | 25,551,605.02 |
| Net cash flow arising from operating activities | 299,103,635.58 | 17,058,691.88 |
| 2. Material investment and financing not involved in cash flow | -- | -- |
| 3. Net change of cash and cash equivalents: | -- | -- |
| Balance of cash at period end | 631,638,339.68 | 544,440,739.45 |
| Less: Balance of cash at year-begin | 544,440,739.45 | 759,577,580.52 |
| Net increasing of cash and cash | 87,197,600.23 | -215,136,841.07 |
equivalents
(2) Net cash paid for obtaining subsidiary in the Period
RMB/CNY
| Amount | |
| Including: | -- |
| Including: | -- |
| Including: | -- |
| Amount | |
| Including: | -- |
| Including: | -- |
| Including: | -- |
| Item | Ending balance | Opening balance |
| Ⅰ. Cash | 631,638,339.68 | 544,440,739.45 |
| Including:Cash on hand | 282,322.45 | 555,961.15 |
| Bank deposit available for payment at any time | 631,190,032.12 | 543,565,898.62 |
| Other monetary fund available for payment at any time | 165,985.11 | 318,879.68 |
| Ⅲ. Balance of cash and cash equivalent at period-end | 631,638,339.68 | 544,440,739.45 |
69. Notes of changes of owners’ equity
Explain the name and adjusted amount in “Other” at end of last period:
Nil
70. Assets with ownership or use right restricted
RMB/CNY
| Item | Ending book value | Reasons for restriction |
| Intangible assets | 47,406,749.48 | According to the long-term loan mortgage contract signed by Dongguan Logistics, a subsidiary of the Company, and Agricultural Development Bank, Dongguan Logistics mortgaged the land (DFGY (2014) DT No. 6) of No. 32, Jianshe Road, Masan Village, Machong Town, Dongguan City and the grain storage and terminal facilities to be built and other buildings and structures on the ground to Agricultural Development Bank as collateral for the loan. |
| Fix assets | 377,777,105.09 | According to the long-term loan mortgage contract signed by Dongguan Logistics, a subsidiary of the Company, and Agricultural Development Bank, Dongguan Logistics mortgaged the land (DFGY (2014) DT No. 6) of No. 32, Jianshe Road, Masan Village, Machong Town, Dongguan City and the grain storage and terminal facilities to be built and other buildings and structures on the ground to Agricultural Development Bank as collateral for the loan. |
| Construction in progress | 39,276,418.03 | According to the long-term loan mortgage contract signed by Dongguan Logistics, a subsidiary of the Company, and Agricultural Development Bank, Dongguan Logistics mortgaged the land (DFGY (2014) DT No. 6) of No. 32, Jianshe Road, Masan Village, Machong Town, Dongguan City and the grain storage and terminal facilities to be built and other buildings and structures on the |
| ground to Agricultural Development Bank as collateral for the loan. | ||
| Intangible assets | 36,339,192.71 | According to the loan contract of “Guangdong DG 2017 NGDZ No. 006” signed by Dongguan Food Industry Park, a subsidiary of the Company, and Bank of Communications Guangdong Branch, Dongguan Food Industry Park mortgaged its two pieces of lands (DFGY (2009) DT No. 190) and (DFGY (2012) DT No. 152) to Bank of Communications Guangdong Branch as collaterals for the borrowing. |
| Total | 500,799,465.31 | -- |
| Item | Ending foreign currency balance | Convert rate | Ending RMB balance converted |
| Monetary fund | -- | -- | |
| Including:USD | 1,457,449.54 | 6.8632 | 10,002,767.68 |
| EURO | |||
| HKD | 248,629.03 | 0.8762 | 217,848.76 |
| Account receivable | -- | -- | |
| Including:USD | 213,994.44 | 6.8632 | 1,468,686.64 |
| EURO | |||
| HKD | 1,502,845.97 | 0.8762 | 1,316,793.64 |
| Long-term loans | -- | -- | |
| Including:USD | |||
| EURO | |||
| HKD | |||
Nil
(2) Explanation on foreign operational entity, including as for the major foreign operational entity, disclosedmain operation place, book-keeping currency and basis for selection; if the book-keeping currency changed,explain reasons
□Applicable √Not applicable
72. Hedging
Disclosed hedging items and relevant hedging instrument based on hedging’s category, disclosed qualitative and quantitativeinformation for the arbitrage risks:
Nil
73. Government grants
(1) Government grants
RMB/CNY
| Category | Amount | Item | Amount booked in current gain/loss |
| Base of further processing for tea and nature plants | 1,375,000.00 | Deferred income | 275,000.00 |
| Enterprise technology center is a municipal R&D center. Subsidies for industrial technological advancement | 2,191,325.64 | Deferred income | 204,024.47 |
| Project grants for years for agricultural district, Xihu Zone | 441,538.48 | Deferred income | 129,230.76 |
| Key technology research and development for the preparation of high-quality aroma extracts based on the use of tea aroma precursors | 524,800.00 | Deferred income | 283,476.42 |
| Key technology research and development for the preparation of high-quality aroma extracts based on the use of tea aroma precursors | 250,000.00 | Deferred income | 6,766.38 |
| Finance Discount | 1,070,295.71 | Deferred income |
| Industrialization of direct preparation of instant tea powder | 2,280,582.54 | Deferred income | 196,445.87 |
| Subsidy for research and industrialization of key technology of instant tea powder | 167,256.22 | Deferred income | 14,245.01 |
| Fund for Development of Strategic Emerging Industries in Shenzhen of plant deep processing technology engineering in Shenzhen (SFG [2013] No.1601) | 3,890,101.98 | Deferred income | 351,209.03 |
| Construction amount for 50 tons for clearly processing for Mingyou tea | 625,000.00 | Deferred income | 125,000.00 |
| Subsidy for tea seeding of New Tea Garden in Wangkou | 47,239.24 | Deferred income | 1,109.28 |
| (12) Subsidy for supply system construction of agricultural products | 950,000.00 | Deferred income | 200,000.00 |
| Grain storage project of Dongguan SZCG Logistics Co., Ltd. - Storage A | 8,501,697.32 | Deferred income | 259,279.49 |
| Phase II of grain storage project of Dongguan SZCG Logistics Co., Ltd.- Storage B | 34,000,000.00 | Deferred income | 1,031,300.48 |
| Grain, oil and food headquarters and innovative public service platform of Dongguan SZCG Logistics Co., Ltd. | 18,000,000.00 | Deferred income | |
| Fund for intelligent Upgrading and Renovation of Grain Depots in "Grain Safety Project" in 2017 | 5,100,000.00 | Deferred income | |
| Construction of 450000 ton silos and 60000 ton film silos -CDE warehouse. Gas storage bin | 17,700,000.00 | Deferred income | 208,235.29 |
| Special fund for agricultural | 240,000.00 | Deferred income | 240,000.00 |
| development in Shenzhen - subsidy for agricultural product quality and safety testing capacity-building project | |||
| Special fund for agricultural development of 2016- agricultural product safety testing project- capacity building of the third party inspection institution expansion evaluation | 656,000.00 | Deferred income | 164,000.00 |
| Agricultural product safety testing project of the special fund for agricultural development of 2016 - Central investment fund | 1,368,000.00 | Deferred income | 342,000.00 |
| Construction of O2O community sales service system for high quality grain and oil based on B2C E-commerce platform | 1,827,987.24 | Deferred income | 38,576.04 |
| Industrialization of Doximi E-commerce platform | 3,712,698.89 | Deferred income | 899,014.88 |
| Commercial circulation development project funding for year of 2017 | 655,000.00 | Deferred income | 131,000.00 |
| Intelligent management of grain depot based on mobile internet | 1,000,000.00 | Deferred income | 133,333.36 |
| Special funds supporting project for the independent innovation industry development in Nanshan District (funding for modern agricultural development) | 200,000.00 | Other income | 200,000.00 |
| Industrial development subsidy for Xihu Longjing Tea | 80,000.00 | Other income | 80,000.00 |
| Subsidy for Zhejiang Tea Industry Technology Project (demonstration and | 150,000.00 | Other income | 150,000.00 |
| promotion of green prevention and control of longjing tea in Xihu and production technology of weight reduction and drug reduction) | |||
| Leading funds for industrial development | 425,763.00 | Other income | 425,763.00 |
| Employment subsidy | 201,886.98 | Other income | 201,886.98 |
| Projects to support leading agricultural enterprise in capacity improvement | 300,000.00 | Other income | 300,000.00 |
| Special fund for industrial development in Futian District (annual quarterly growth supporting- headquarters recognition and operation supporting - E-commerce sales operation supporting) | 2,749,600.00 | Other income | 2,749,600.00 |
| Incentive plan for the scale of E-commerce trading platform for year of 2017 | 1,000,000.00 | Other income | 1,000,000.00 |
| Steady post subsidy | 96,450.23 | Other income | 96,450.23 |
| Other | 464,911.16 | Other income | 464,911.16 |
| Granary Zero Distance Activity Subsidy Income | 5000.00 | Non-operating income | 5000.00 |
| Total | 112,248,134.63 | 10,906,858.13 |
VIII. Changes of consolidation range
1. Enterprise merger not under the same control(1) Enterprise merger not under the same control
RMB/CNY
| Acquiree | Time point for equity obtained | Cost of equity obtained | Ratio of equity obtained | Acquired way Equity obtained way | Purchasing date | Standard to determine the purchasing date | Income of acquiree from purchasing date to period-end | Net profit of acquiree from purchasing date to period-end |
| Combination cost |
| Fair value on purchasing date | Book value on purchasing date | |
(5) On purchasing date or period-end of the combination, combination consideration or fair value ofidentifiable assets and liability for the acquiree are un-able to confirm rationally
(6) Other explanation
2. Enterprise combined under the same control(1) Enterprise combined under the same control in the Period
RMB/CNY
| Acquiree | Equity ratio obtained in combination | Basis of combined under the same control | Combination date | Standard to determine the combination date | Income of the combined party from period-begin of combination to the combination date | Net profit of the combined party from period-begin of combination to the combination date | Income of the combined party during the comparison period | Net profit of the combined party during the comparison period |
| SZCG | 100.00% | Controlled by the same controller | 2018-10-31 | See other instructions below. | 7,746,037,670.53 | 374,880,023.05 | 10,477,930,448.44 | 413,268,399.67 |
so the date of combination was determined to be October 31, 2018.
(2)Combination cost
RMB/CNY
| Combination cost | |
| --Face value of the equity securities issued | 655,752,951.00 |
| On purchasing date | At end of last period | |
| Assets: | 5,310,332,674.24 | 4,840,641,503.76 |
| Monetary fund | 600,553,591.10 | 288,479,089.04 |
| Account receivable | 206,050,714.46 | 117,193,674.60 |
| Inventory | 2,683,227,764.79 | 2,783,161,703.37 |
| Fix assets | 711,961,434.07 | 732,143,993.78 |
| Intangible assets | 370,256,397.21 | 219,674,825.10 |
| Accounts paid in advance | 40,012,538.83 | 33,240,102.96 |
| Other account receivable | 49,419,662.13 | 22,314,871.24 |
| Other current assets | 93,208,387.32 | 170,334,054.65 |
| Long-term equity investment | 67,666,579.60 | 30,506,541.89 |
| Investment real estate | 268,241,078.37 | 300,621,820.59 |
| Construction in progress | 162,969,025.13 | 70,601,059.58 |
| Long-term expenses to be apportioned | 13,077,987.49 | 16,679,524.99 |
| Deferred income tax asset | 42,720,013.74 | 48,210,182.26 |
| Other non-current asset | 967,500.00 | 500,000.00 |
| Liability: | 1,872,640,365.65 | 1,830,971,947.13 |
| Loan | 159,800,000.00 | 159,800,000.00 |
| Account payable | 332,603,307.36 | 534,934,123.29 |
| Accounts received in advance | 285,807,551.08 | 175,518,986.59 |
| Wage payable | 77,107,216.24 | 103,760,977.72 |
| Taxes payable | 37,208,501.33 | 12,791,041.31 |
| Other account payable | 276,459,853.57 | 272,210,836.95 |
| Non-current liabilities due within one year | 49,783,468.21 | 40,642,777.63 |
| Other current liabilities | 219,151,968.63 | 219,151,968.63 |
| Long-term loans | 320,730,897.34 | 195,647,403.88 |
| Deferred income | 86,542,499.92 | 88,821,434.54 |
| Long-term account payable | 15,457,410.48 | 15,416,306.67 |
| Deferred income tax liabilities | 11,987,691.49 | 12,276,089.92 |
| Net assets | 3,437,692,308.59 | 3,009,669,556.63 |
| Less:minority’s equity | 146,277,271.77 | 107,829,368.11 |
| Net assets obtained | 3,291,415,036.82 | 2,901,840,188.52 |
6. Other
IX. Equity in other entity
1. Equity in subsidiary(1) Constitute of enterprise group
| Subsidiary | Main operation place | Registered place | Business nature | Share-holding ratio | Acquired way | |
| Directly | Indirectly | |||||
| Shenbao Huacheng | Shenzhen | Shenzhen | Manufacturing | 100.00% | Establishment | |
| Wuyuan Ju Fang Yong | Shangrao | Shangrao | Manufacturing | 100.00% | Establishment | |
| Shenbao Sanjing | Huizhou | Shenzhen | Manufacturing | 100.00% | Establishment | |
| Huizhou Shenbao Science & Technology | Huizhou | Huizhou | Comprehensive | 100.00% | Establishment | |
| Shenbao Properties | Shenzhen | Shenzhen | Property management | 100.00% | Establishment | |
| Shenbao Industrial & Trading | Huizhou | Shenzhen | Wholesale business | 100.00% | Establishment | |
| Hangzhou Ju Fang Yong | Hangzhou | Hangzhou | Comprehensive | 100.00% | Establishment | |
| Shenbao Technology Center | Shenzhen | Shenzhen | Development, consultant and transfer of technology | 100.00% | Establishment | |
| Fuhaitang Ecological | Hangzhou | Hangzhou | Tea planting, production and sales | 100.00% | Acquisition | |
| Chunshi Network | Hangzhou | Hangzhou | Wholesale business | 100.00% | Establishment | |
| Shenshenbao Investment | Shenzhen | Shenzhen | Investment management | 100.00% | Establishment | |
| Shenshenbao Tea Culture | Shenzhen | Shenzhen | Commerce | 100.00% | Establishment | |
| Ju Fang Yong Trading | Hangzhou | Hangzhou | Wholesale business | 60.00% | Establishment | |
| Yunnan Supply Chain | Pu’er | Pu’er | Wholesale business | 100.00% | Establishment | |
| Huizhou Shenbao Food | Shenzhen | Shenzhen | Wholesale business | 100.00% | Establishment | |
| Shenbao Rock Tea | Wuyishan | Wuyishan | Manufacturing | 100.00% | Establishment | |
| Pu’er Tea Trading Center | Pu’er | Pu’er | Service industry | 55.00% | Establishment | |
| Shenbao Tea-Shop | Shenzhen | Shenzhen | Commerce | 100.00% | Establishment | |
| Fuhaitang Catering | Hangzhou | Hangzhou | Catering | 100.00% | Establishment | |
| SZCG | Shenzhen | Shenzhen | Grain & oil trading | 100.00% | Control | |
| Shenzhen Flour | Shenzhen | Shenzhen | Flour processing | 100.00% | Control | |
| Hualian Grain & oil trading | Shenzhen | Shenzhen | Grain & oil trading | 100.00% | Control | |
| Hainan Haitian | Haikou | Haikou | Feed production | 51.00% | 49.00% | Control |
| SZCG Quality Inspection | Shenzhen | Shenzhen | Inspection | 100.00% | Control | |
| SZCG Doximi | Shenzhen | Shenzhen | E-commerce | 100.00% | Control | |
| SZCG Cold-Chain Logistic | Shenzhen | Shenzhen | Fresh food management on-line | 100.00% | Control | |
| SZCG Big Kitchen | Shenzhen | Shenzhen | Sales and processing of grain ,oil and products | 70.00% | Control | |
| SZCG Real Estate Development | Shenzhen | Shenzhen | Real estate development and property management | 100.00% | Control | |
| SZCG Property | Shenzhen | Shenzhen | Property management | 100.00% | Control |
| SZCG Storage (Yingkou) ) | Yingkou | Yingkou | Storage | 100.00% | Control | |
| Dongguan Logistics | Dongguan | Dongguan | Storage, logistics | 51.00% | Control | |
| Dongguan Food Industrial Park | Dongguan | Dongguan | Port operation, food production | 51.00% | Control | |
| Dongguan Food Trade | Dongguan | Dongguan | Food production | 51.00% | Control | |
| Dongguan Golden | Dongguan | Dongguan | Feed, biofertilizer | 51.00% | Control | |
| Shuangyashan SZCG Zhongxin | Shuangyashan | Shuangyashan | Construction of food base and development of related complementary facility | 51.00% | Control | |
| Hongxinglong Nongken Industrial Park | Shuangyashan | Shuangyashan | Construction of food base and development of related complementary facility | 51.00% | Control |
| Subsidiary | Share-holding ratio of minority | Gains/losses attributable to minority in the Period | Dividend announced to distribute for minority in the Period | Ending equity of minority |
| Dongguan Logistics | 49.00% | 14,683,652.64 | 130,536,444.85 |
(3) Main finance of the important non-wholly-owned subsidiary
RMB/CNY
| Subsidiary | Ending balance | Opening balance | ||||||||||
| Current assets | Non-current assets | Total assets | Current liability | Non-current liability | Total liability | Current assets | Non-current assets | Total assets | Current liability | Non-current liability | Total liability | |
| Dongguan Logistics | 634,938,480.46 | 920,908,724.11 | 1,555,847,204.57 | 679,025,611.19 | 610,420,685.53 | 1,289,446,296.72 | 536,661,737.83 | 791,383,307.99 | 1,328,045,045.82 | 855,485,584.89 | 286,125,191.12 | 1,141,610,776.01 |
| Subsidiary | Current Period | Last Period | ||||||
| Operating income | Net profit | Total comprehensive income | Cash flow from operation activity | Operating income | Net profit | Total comprehensive income | Cash flow from operation activity | |
| Dongguan Logistics | 2,067,066,711.86 | 29,966,638.04 | 29,966,638.04 | 225,829,600.00 | 2,102,238,819.75 | 11,063,614.89 | 11,063,614.89 | -287,996,900.00 |
3. Equity in joint venture and associated enterprise(1) Important joint venture or associated enterprise
| Joint venture or Associated enterprise | Main operation place | Registered place | Business nature | Share-holding ratio | Accounting treatment on investment for joint venture and associated enterprise | |
| Directly | Indirectly | |||||
| Zhuhai Hengxing Feed Industrial Co., Ltd. | Zhuhai | Zhuhai | Aquatic fee and animal fee | 40.00% | Equity | |
| Shenzhen Duoxi Equity Investment Fund Management Co., Ltd. | Shenzhen | Shenzhen | Trusted equity investment fund | 35.00% | Equity | |
| Shenzhen Shenyuan Data Tech. Co., Ltd | Shenzhen | Shenzhen | Design for information system, software development | 40.00% | Equity | |
| SZCG Intelligent Wulian Equity Investment Fund (Shenzhen) Partnership Enterprise (Limited) | Shenzhen | Shenzhen | Equity investment; investment consultant | 49.02% | Equity | |
| Changzhou Shenbao Chacang E-commence Co., Ltd. | Changzhou | Changzhou | Manufacturing | 33.00% | Equity | |
| Huizhou Shenbao Manan | Huizhou | Huizhou | Manufacturing | 51.00% | Equity | |
| Biotechnology Co., Ltd | ||||||
| Shenzhen Shichumingmen Restaurant Management Co., Ltd. | Shenzhen | Shenzhen | Catering | 51.00% | Equity | |
| Guangzhou Shenbao Mendao Tea Co., Ltd | Guangzhou | Guangzhou | Retail | 45.00% | Equity |
| Ending balance/Current Period | Opening balance/Last Period | |
| Ending balance/Current Period | Opening balance/Last Period | |
| Book value of equity investment in joint ventures | 70,999,666.81 | 35,755,171.55 |
| Net profit | -5,048,075.35 | -3,327,706.12 |
| Total comprehensive income | -5,048,075.35 | -3,327,706.12 |
| Ending balance/Current Period | Opening balance/Last Period | |
| Joint venture | -- | -- |
| Amount based on share-holding ratio | -- | -- |
| Associated enterprise | -- | -- |
| Amount based on share-holding ratio | -- | -- |
| Joint venture/Associated enterprise | Cumulative un-recognized losses | Un-recognized losses not recognized in the Period (or net profit enjoyed in the Period) | Cumulative un-recognized losses at period-end |
| Changzhou Shenbao Chacang E-commence Co., Ltd. | 8,115,908.90 | 252,041.17 | 8,367,950.07 |
| Shenzhen Shichumingmen Restaurant Management Co., Ltd. | 2,939,544.23 | 551,607.08 | 3,491,151.31 |
| Name | Main place of operation | Registration place | Business nature | Shareholding ratio/ shares enjoyed | |
| Directly | In-directly | ||||
6. Other
X. Disclosure of risks relating to financial instruments
Our business operation makes the Company exposed to various financial risks: credit risk, liquidity risk and marketrisk (mainly refers to exchange risk and interest risk). The general risk management policy of the Company is tominimize potential negative effects on our financial performance in view of the unforeseeable financial market.(i) Credit riskCredit risk refers to the risk of financial loss caused by the failure of the counterparty to perform its contractualobligations. The credit risk mainly arises from monetary capital, trade receivables and other receivables. Themanagement has established adequate credit policies and continues to monitor exposure of these credit risks.
The monetary funds held by the Company are mainly deposited in state-controlled banks and other large andmedium-sized commercial banks and other financial institutions. The management believes that these commercialbanks have high reputation and asset status and have no major credit risk, and won't create any major losses causedby the breach of contract of the opposite side.
For trade receivables and other receivables, the Company establishes relevant policies to control exposure of creditrisk. The Company appraises customers’ credit quality based on their financial position, possibility to obtainguarantee from third parties, credit history and other factors such as prevailing market conditions, and setcorresponding credit terms. Customers’ credit history would be regularly monitored by the Company. For thosecustomers who have bad credit history, the Company will call collection in written form, shorten credit term orcancel credit term to ensure its overall credit risk is under control.
Up to 31
st
December 2018, the top five client’s account receivable takes 34.20% in total account receivable of theCompany
The maximum credit risk exposure equals to the carrying value of each financial asset in balance sheet (includingderivative financial instrument). The Company has not provided any guarantee which would otherwise make theCompany exposed to credit risk except for the guarantee for financial carried in Note XI.
(ii) Liquidity riskLiquidity risk represents the possibility that the Company is not able to acquire sufficient fund to satisfy businessrequirement, settle debt when it is due and perform other obligation of payment.
The finance department continues to monitor capital requirement for short and long term, to ensure adequate cashreserve. In addition, it continues to monitor whether borrowing agreement is complied with, and seeks forcommitment from major financial institutions for provision of sufficient back-up fund, so as to satisfy capitalrequirement in a short and long term.
(iii) Market risk
Exchange riskThe major operation of the Company is located in the PRC, and its major operation is settled in Renminbi. However,there is also exchange risk in respect of the recognized foreign currency assets and liabilities and future foreigncurrency transactions which are mainly denominated in US dollar. Our finance department is responsible formonitoring scale of foreign currency assets and liabilities and foreign currency transactions, to minimize itsexposure to exchange risks. In reporting period, the Company did not sign any forward exchange contract ormonetary exchange contract.Interest riskOur interest risk mainly arises from bank borrowings. Financial liabilities at floating rate expose the Company tocash flow interest risk, and financial liabilities at fixed rate expose the Company to fair value interest risk. TheCompany determines the respective proportion of contracts at fixed rate and floating rate based on prevailing marketconditions.
The financial department of the Company continuously monitors the interest rate of the Company. The rise ininterest rates will increase the cost of new interest-bearing debts and the interest expense of the Company’s unpaidinterest-bearing debts with floating interest rates, management will make timely adjustments based on the latestmarket conditions.
Price riskThe Company purchases and sells products at market prices, therefore it is affected by fluctuation of these prices.
XI. Disclosure of fair value
1. Ending fair value of the assets and liabilities measured by fair value
RMB/CNY
| Item | Ending fair value | |||
| First-order | Second-order | Third-order | Total | |
| I. Sustaining measured by fair value | -- | -- | -- | -- |
| (I)Financial assets measured by fair value and with variation reckoned into current gains/losses | 1,124,927.96 | 1,124,927.96 | ||
| (2) Equity investment | 1,124,927.96 | 1,124,927.96 | ||
| II. Non-persistent | -- | -- | -- | -- |
measure
2. Recognized basis for the market price sustaining and non-persistent measured by fair value on first-order3. Valuation technique and qualitative and quantitative information on major parameters for the fair valuemeasure sustaining and non-persistent on second-order4. Valuation technique and qualitative and quantitative information on major parameters for the fair valuemeasure sustaining and non-persistent on third-order5. Adjustment information and sensitivity analysis of unobservable parameters for the fair value measuresustaining and non-persistent on third-order6. Sustaining items measured by fair value, as for the conversion between at all levels, reasons for conversionand policy for conversion time point7. Changes of valuation technique in the Period8. Financial assets and liability not measured by fair value9. Other
XII. Related party and related transactions
1. Parent company
| Parent company | Registration place | Business nature | Registered capital | Ratio of shareholding on the Company | Ratio of voting right on the Company |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | 深圳市 | Investing in industry, development, operation and management of the own property | 500 million | 63.79% | 63.79% |
verified by Jonten Certified Public Accountants (limited liability partnership) who issued the capital verification report Jonten [2018]YZ No. 90066 on October 22, 2018.Other explanation
2. SubsidiarySubsidiary of the Company found more in Note VIII-(I) equity in subsidiary3. Joint venture and associated enterpriseJoint Venture of the Company found more in Note VIII-(II) equity in joint Venture
Other cooperative enterprise and joint venture that have related transaction with the Company in the Period or occurred in previousperiod
| Joint venture/Associated enterprise | Relationship |
| Other related party | Relationship with the Enterprise |
| Shenzhen Agricultural Products Co., Ltd | Shareholder of the Company, Controlled by the ultimate controlling party |
| Zhanjiang Haitian Aquatic Feed Co., Ltd | Controlled by the ultimate controlling party |
| Dongguan Fruit and Vegetable Non-staple Food Market Co., Ltd | Minority shareholder of controlling subsidiary |
| Taizhong Agricultural Co., Ltd | Controlled by the ultimate controlling party |
| Shenzhen Investment Management Co., Ltd | Former shareholder of the Company, Controlled by the ultimate controlling party |
| Shenzhen Investment Holding Co., Ltd | Former shareholder of the Company, Controlled by the ultimate controlling party |
| Fujian Wuyishan Yuxing Tea Co., Ltd*1 | Minority shareholder of former controlling subsidiary |
| Shenzhen Fruits and Vegetables Trading Co., Ltd | Wholly-owned subsidiary of Shenzhen Agricultural Products Co., Ltd |
| Shenzhen Higreen International Agricultural Products Logistric Management Co., Ltd | Controlling subsidiary of Shenzhen Agricultural Products Co., Ltd |
| Zhanjiang Changshan (Shenzhen) Ecological Aquaculture Co., Ltd | Has the same parent company |
| Shenzhen Yixin Investment Co., Ltd | Controlled by the ultimate controlling party |
separated in 2016.
5. Related transaction(1) Goods purchasing, labor service providing and receiving
Goods purchasing/labor service receiving
RMB/CNY
| Related party | Related transaction content | Current Period | Approved transaction limit | Whether more than the transaction limit | Last period |
| Shichumingmen Company | Purchase of tea products | 927.50 |
| Related party | Related transaction content | Current Period | Last Period |
| Shenzhen Agricultural Products Co., Ltd | Sales of tea | 48,028.38 | |
| Shichumingmen Company | Income from activity service | 39,105.00 | |
| Shichumingmen Company | Sales of tea products | 246.15 | 11,222.23 |
| Shenzhen Fruits and Vegetables Trading Co., Ltd | Sales of tea | 2,794.87 | |
| Shenzhen Higreen International Agricultural Products Logistric Management Co., Ltd | Sales of tea | 13,974.36 |
| Client/Contract-out party | Commissioned party/Contractor | Type of assets | Starting date | Maturity date | Pricing principle for earnings | Earnings recognized in the period |
| Client/Contract-out party | Commissioned party/Contractor | Type of assets | Starting date | Maturity date | Pricing principle for earnings | Earnings recognized in the period |
| Lessee | Assets type | Lease income in recognized in the Period | Lease income in recognized last the Period |
| Shichumingmen Company | Management site | 1,006,451.61 | 819,000.00 |
| Lesser | Assets type | Lease income in recognized in the Period | Lease income in recognized last the Period |
| Shenzhen Investment Holding Co., Ltd | Management site | 2,311,760.06 | 1,880,242.71 |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Warehouse leasing | 28,434,200.00 | 7,108,550.00 |
| Shenzhen Fude State-owned Capital Operation Co., Ltd. | Venue of working | 345,210.00 | 0.00 |
(4) Related guarantee
As guarantor
RMB/CNY
| Secured party | Guarantee amount | Guarantee start date | Guarantee expiry date | Whether the guarantee has been fulfilled |
| Shenbao Huacheng | 30,000,000.00 | 2018-07-26 | Two years after the expiration of the term of performance of each specific credited obligation under the main contract | N |
| Guarantor | Guarantee amount | Guarantee start date | Guarantee expiry date | Whether the guarantee has been fulfilled |
| Dongguan Fruit and Vegetable Non-staple Food Market Co., Ltd | 14,700,000.00 | 2017-06-08 | No later than 2019-4-11 | N |
| Dongguan Fruit and Vegetable Non-staple Food Market Co., Ltd | 53,571,310.66 | 2016-12-27 | 2021-12-27 | N |
| Dongguan Fruit and Vegetable Non-staple Food Market Co., Ltd | 138,955,864.84 | 2018-7-27 | 2032-08-29 | N |
rate is 5.22%, the length of maturity for each loan under the contract is no longer than 12 months, and the maturitydate of all loans is no later than April 11, 2019. Shenzhen Cereals Group and Dongguan Fruit Vegetable Non-stapleFood Market Co., Ltd. provide the guarantee with maximum amount for the loan, the maximum amount of claimsguaranteed by the guarantors was respectively RMB 15.30 million and RMB 14.70 million. The guarantee periodshall be calculated according to the maturity period of each principal obligation stipulated in the principal contract(under the bank acceptance draft/letter of credit/letter of guarantee, according to the date of advance payment bycreditors). The guarantee period under each principal obligation shall be two years after the expiration date of theperformance period of the obligation (or the date of advance payment by the creditor) and the expiration date (orthe date of advance payment by the creditor) of the final maturity of the principal obligation under all the principalcontracts.
3. According to the bank credit contract of credit No. CN11002181808-160714-SCDGTML2 signed by DongguanLogistics, a subsidiary of the Company, and HSBC, HSBC will provide a loan credit of not exceeding 200 millionyuan to Dongguan Logistics, the applicable interest rate for each loan at each interest period is 90% of the centralbank loan benchmark interest rate applicable on the fixed interest date of the interest period, the borrowing date isfrom December 27, 2016 to December 27, 2021. As of December 31, 2018, the balance of the loan principalachieved by Dongguan Logistics from HSBC was 109,329,205.42 yuan, and the Company’s subsidiaries, SZCGand Dongguan Fruit Vegetable Non-staple Food Trading Market Co., Ltd., provided joint liability guarantee for theloans, the amount guaranteed by Dongguan Fruit Vegetable Non-staple Food Trading Market Co., Ltd. was53,571,310.66 yuan, and the amount guaranteed by SZCG was 55,757,894.76 yuan.4. According to the loan contract “Yue DG 2017 NGDZ No. 006” signed by Dongguan Food Industry Park, asubsidiary of the Company, and Bank of Communications Dongguan Branch, the current loan principal isrespectively RMB 49.80 million, RMB 3,783,400, RMB 30 million and RMB 200 million, the loan period is fromSeptember 27, 2018to August 29, 2032. The loan interest rate of RMB 200 million is calculated by the benchmarkinterest rate for loan of the People’s Bank of China on the loan entry date, which is 4.90%; the other three arecalculated by the benchmark interest rate of the People’s Bank of China on the loan entry date after rising by 15%,which is 5.635%. The Company’s subsidiaries, SZCG and Dongguan Fruit Vegetable Non-staple Food TradingMarket Co., Ltd., provide joint liability guarantee for the loans, the amount guaranteed by Dongguan Fruit VegetableNon-staple Food Trading Market Co., Ltd. is 138,955,864.84 yuan, and the amount guaranteed by SZCG is144,627,532.80 yuan.（1）Guarantees between subsidiaries of the CompanyRMB
| Guarantor | Name of the Company guaranteed | Guarantee amount | Guarantee start date | Guarantee expiry date | Whether the guarantee has been fulfilled | Note |
| Shenzhen Cereals | Dongguan SZCG | 15,300,000.00 | 2017-6-8 | No later than 2019-4-11 | N | Note 1 |
| Guarantor | Name of the Company guaranteed | Guarantee amount | Guarantee start date | Guarantee expiry date | Whether the guarantee has been fulfilled | Note |
| Group Co., Ltd | Logistics Co., Ltd. | |||||
| Shenzhen Cereals Group Co., Ltd | Dongguan SZCG Logistics Co., Ltd. | 30,000,000.00 | 2018-6-8 | 2019-6-7 | N | Note 2 |
| Shenzhen Cereals Group Co., Ltd | Dongguan SZCG Logistics Co., Ltd. | 55,757,894.76 | 2016-12-27 | 2021-12-26 | N | Note 3 |
| Shenzhen Cereals Group Co., Ltd | Dongguan SZCG Logistics Co., Ltd. | 178,865,982.39 | 2015-7-31 | 2023-7-12 | N | Note 4 |
| Shenzhen Cereals Group Co., Ltd | Dongguan International Food Industrial Park Development Co., Ltd. | 144,627,532.80 | 2018-7-27 | 2032-8-29 | N | Note 5 |
| Total | 424,551,409.95 |
| Related party | Borrowing amount | Starting date | Maturity date | Note |
| Borrowing | ||||
| Lending | ||||
| Related party | Related transaction content | Current Period | Last Period |
| Item | Current Period | Last Period |
| Type | Related party | Current Period | Last Period | Note |
| Diverstiture profits | Fude Capital | 11,912,956.78 | 6,014,906.08 |
| Total | 11,912,956.78 | 6,014,906.08 |
According to the major asset restructuring agreement on the Company’s issuance of shares to purchase 100% equity of SZCG, the“General Agreement on Major Asset Restructuring of Shenzhen Cereals Group Co., Ltd.” and the “Agreement on Free Transfer of RealEstate Assets and Equity of Shenzhen Cereals Group Co., Ltd.” signed by SZCG and Fude Capital on June 6, 2018, SZCG wouldtransfer part of the assets with flaws in property rights to Fude Capital free of charge, the profits and losses of these assets (from October1, 2017 to Stripping Day) were17,927,862.86yuan, the Company was required to pay the equity of this part to Fude Capital accordingto the agreement.
6. Receivable and payable of related party
(1) receivable item
RMB/CNY
| Projects | Related party | Ending balance | Opening balance | ||
| Book balance | Bad debt provision | Book balance | Bad debt provision | ||
| Other account receivable | Shenzhen Yixin Investment Co., Ltd | 10,431,232.87 | 5,215,616.44 | 10,431,232.87 | |
| Other account receivable | Changzhou Shenbao Chacang Co., | 20,413,947.34 | 17,819,381.02 | 19,977,283.01 | 9,071,148.72 |
| Other account receivable | Shichumingmen Company | 1,429,898.28 | 275,978.87 | 1,870,811.75 | 53,585.30 |
| Other account receivable | Shenzhen Agricultural Products Co., Ltd | 1,060.00 | 159.00 | ||
| Other account receivable | Shenzhen Investment Holding Co., Ltd | 433,469.10 | 319,129.94 | 31,743.34 | |
| Projects | Related party | Ending book balance | Opening book balance |
| Dividend payable | Shenzhen Investment Management Co., Ltd | 2,690,970.14 | 2,690,970.14 |
| Other account payable | Huizhou Shenbao Manan Biotechnology Co., Ltd | 1,131,864.44 | |
| Other account payable | Shenzhen Fruits and Vegetables Trading Co., Ltd | 245,714.59 | |
| Other account payable | Shenzhen Fude State-owned Capital Operation Co., Ltd. | 53,470,612.86 | 13,123,456.08 |
| Other account payable | Shenzhen Duoxi Equity Investment Fund Management Co., Ltd. | 41,486.00 | |
| Other account payable | Zhanjiang Changshan (Shenzhen) Ecological Aquaculture Co., Ltd | 7,967,662.50 | 7,946,370.83 |
| Other account payable | Shichumingmen Company | 184,275.00 | |
| Other account payable | Shenzhen Nongdimei Investment Management Co., Ltd | 1,478,800.00 | |
| Other account payable | Shenzhen Investment Management Co., Ltd | 3,510,297.20 | 3,510,297.20 |
4. Modification and termination of share-based payment5. Other
XIV. Commitment or contingency
1. Important commitments
(i) Important commitments
The Company has no important commitments that need to disclosed up to 31
st
December 20182. Contingency(1) Contingency on balance sheet date(ii) Contingency on balance sheet date
Contingencies arising from pending litigation or arbitration and its financial impact
(1) Disputes over the loan contracts between Changzhou Shenbao Chacang E-commence Co., Ltd., the Companyand Shenzhen Agricultural Products Financing Guarantee Co., Ltd.
On July 15, 2016, Shenzhen Agricultural Products Financing Guarantee Co., Ltd. (“Agricultural Products GuaranteeCompany” for short) submitted a “Civil Appeal” to the People’s Court of Futian District, Shenzhen, requestingChangzhou Shenbao Chacang Company to repay the loan principal amount of RMB 5,000,000.00, the interest ofRMB 389,968.52, and the interest penalty of RMB 3,200,271.79 (the interest penalty was temporarily calculated toJune 30, 2016, which shall be actually calculated to the date of the full repayment of the borrowing); and pay thecompensation of RMB 100,000.00 (5 million Yuan × 2%); two items in total were RMB 8,690,240.31; the Companyundertook joint liability for the loan of RMB 5,000,000.00.
\On May 31, 2017, Shenzhen Futian District Court made the first-instance judgment and ruled Changzhou ShenbaoChacang Company to repay the loan principal of RMB 5 million and the interest and interest penalty, the Companydid not need to undertake joint liability for the loan of RMB 5 million of Changzhou Shenbao Chacang Company.On July 4, 2017, the Agricultural Products Guarantee Company filed an appeal, on October 13, 2017, and ShenzhenIntermediate People’s Court held the second instance hearing. As of the date of approval of the financial statements,the case has been in the process of hearing, and the Shenzhen Intermediate People's Court has not yet made a finaljudgment in this case.(2) Contract disputes between the Company’s subsidiaries, Wuyishan Shenbao Rock Tea Co., Ltd. (hereinafterreferred to as Wuyishan Rock Tea Company) and Hangzhou Jufangyong Holdings Co., Ltd. (hereinafter referred toas Jufangyong Company), and Wuyishan Jiuxing Tea Co., Ltd. (hereinafter referred to as Jiuxing Company), FujianWuyishan Yuxing Tea Co., Ltd. (hereinafter referred to as Yuxing Company), Xingjiu Tea Co., Ltd., Chen Yuxing,Chen Guopeng
On September 22, 2017, Jufangyong Company, Xingjiu Tea Co., Ltd., Yuxing Company, Chen Yuxing and ChenGuopeng signed an “Formal Agreement on the Separation of Fujian Wuyishan Shenbao Yuxing Tea Co., Ltd.”,according to the separation agreement: the original Shenbao Yuxing Company was separated, after the separation,Jufangyong Company held 100% equity of the newly established company (i.e. Shenbao Rock Tea Company), andYuxing Company and Xingjiu Tea Company jointly held 100% equity of the surviving company (Jiuxing Company);Shenbao Rock Tea Company got receivables of RMB 7,273,774.01, which was guaranteed by JiuxingCompany to achieve RMB 2 million within one year after separation and the remaining amount would be returnedwithin 2 years. Chen Yuxing and Chen Guopeng, as the actual controllers of Jiuxing Company, Yuxing Companyand Xingjiu Tea Company, assumed joint responsibility for the joint guarantee to Shenbao Rock Tea Company andJufangyong Company for all the obligations and responsibilities stipulated in the “Separation Agreement”.As of September 22, 2018, the time limit stipulated in the “Separation Agreement” for the realization of fourreceivables had expired, and Shenbao Rock Tea Company still had 5,212,301.40 yuan unrecovered. On December6, 2018, Shenbao Rock Tea Company and Hangzhou Jufangyong Company applied for arbitration to ShenzhenCourt of International Arbitration (Shenzhen Arbitration Commission) for the above matters, and requested JiuxingCompany to pay RMB 5,272,934.01 to Shenbao Rock Tea Company, and requested Yuxing Company, Xingjiu TeaCompany, Chen Yuxing and Chen Guopeng to assume joint liability. As of the date of approval of the financialstatement, Shenzhen Arbitration Commission has not yet determined the arbitrator and the date of the trial. As ofDecember 31, 2018, the Company accumulatively accrued 3,458,370.94 yuan of bad debts provision.(3) Disputes on mung bean business between Shenzhen Cereals Group and Jilin Tongyu County Shengda CompanyIn August 2007, Shenzhen Cereals Group and Tongyu County Shengda Grain and Oil Trading Co., Ltd. (hereinafterreferred to as Shengda Company) signed the “Mung Bean Entrusted Acquisition, Processing and Storage Contract”,from October 2007 to May 2008, totally 4,918.00 tons of mung beans were acquired, the Company paid paymentfor goods of 30 million yuan. According to the contract, after the completion of the entrusted acquisition, ShengdaCompany has the obligations to assist in the sale of goods and buy-back. Shengda Company did not fully fulfill itsobligations, and Shenzhen Cereals Group also carried out various forms of collection. In September 2010, ShenzhenCereals Group sued Shengda Company for repayment of its arrears and interest. The two parties reached anaccommodation during the court trial, and Futian District People’s Court of Shenzhen issued a “Paper of CivilMediation”, but Shengda Company did not fully fulfill the repayment obligation, Shenzhen Cereals Group hasapplied to the court for enforcement. As of December 31, 2018, the book receivables amounted to RMB5,602,468.81, and the execution of remaining funds has large uncertainties. The Company has fully made provisionfor bad debts of RMB 5,602,468.81.(4) Contract disputes between Flour Company and Shenzhen Fujin Food Industry Co., Ltd.On May 31, 2013, Shenzhen Fujin Food Industry Co., Ltd. (hereinafter referred to as Fujin Company) signed a“Purchases and Sales Contract” with Flour Company, agreed that Flour Company would supply the moon caketailored flour and the tailored wheatmeal for cakes and pastries to Fujin Company. Later, Fujin Company sued FlourCompany, it said that the lipase (a processing aid) in the flour supplied by Flour Company to Fujin Company wasactive, causing the “acid value” of the moon cakes and fillings made from it exceed the food safety standards, which
caused huge losses to Fujin Company, so it advocated that Flour Company should bear the corresponding liabilityfor compensation, and compensate for the property loss of Fujin Company of 9,784,485.55 yuan; the litigation costsshould be borne by Flour Company.On November 29, 2014, the Nanshan District People’s Court of Shenzhen made the first-instance judgment ([2014]SNFMYCZ No.45), and considered that Fujin Company failed to prove that its so-called problem product with toohigh “acid value” was caused by the lipase activity of the flour supplied by Flour Company, it has not been proventhat the raw materials of the problem food were supplied by Flour Company; secondly, the relevant standards of theMinistry of Health allow the addition of active lipase to the flour raw material, therefore, the court ruled that allclaims of Shenzhen Fujin Food Industry Co., Ltd. were rejected.On June 5, 2015, the Shenzhen Intermediate People’s Court made a ruling ([2015] SZFMZZ No. 563), consideringthat the court of first instance could not find out what standards should be applied to the quality of the flour productsinvolved in the case, nor could it found that the obligation to remove processing aids in flour should be attributedto the flour supplier or the food producer. Therefore, the civil judgment [2014] SNFMYCZ No.45 was revoked andsent back to the Nanshan District People’s Court for retrial.As of December 31, 2018, the case was still in the first instance stage of retrial, and the court has not yet made aretrial judgment.(5) Contract disputes among Shenzhen Cereals Group, Hualian Grain and Oil, Guangzhou Jinhe Feed Co., Ltd. andHuangxianning Import AgentFrom October 2005 to January 2007, Shenzhen Cereals Group, Hualian Grain and Oil, and Guangzhou Jinhe FeedCo., Ltd. (hereinafter referred to as Guangzhou Jinhe Company) signed 20 “Import Agent Contracts”, agreed thatShenzhen Cereals Group and Hualian Grain and Oil agent Guangzhou Jinhe Company to import Peruvian fishmeal.In August 2007, Hualian Grain and Oil, Guangzhou Jinhe Company and Huangxianning signed the “GuaranteeContract”, agreed that Huangxianning would guarantee that all payables of Guangzhou Jinhe Company under thetrade contracts signed by Hualian Grain and Oil and Guangzhou Jinhe Company would be paid on time. Later, dueto Guangzhou Jinhe Company’s insufficient payment of goods and import agency fees, Shenzhen Cereals Groupand Hualian Grain and Oil filed a lawsuit to Futian District People’s Court of Shenzhen.On February 16, 2015, the Futian District People’s Court of Shenzhen made the first-instance judgment ([2014]SFFMECZ No. 786), and sentenced Guangzhou Jinhe Company to pay RMB 10,237,385.74 to Shenzhen CerealsGroup and Hualian Grain and Oil, and bear the case acceptance fee of 83,224.00 yuan; Huangxianning does notneed to bear the joint and several liability.As Guangzhou Jinhe Company refused to accept the above first-instance judgment, it lodged an appeal to theShenzhen Intermediate People’s Court, claiming that the prosecution of Shenzhen Cereals Group and Hualian Grainand Oil had exceeded the time limit for litigation. On March 30, 2017, the Shenzhen Intermediate People’s Courtmade the second-instance judgment (Civil Judgment [2015] SZFSZZ No.1767), and the judgment rejectedGuangzhou Jinhe Company’s appeal and upheld the original judgment.The case is still in enforcement, and the other party has not paid any money, Shenzhen Cereals Group has made
provision for bad debts in proportion to 100% of the accounts receivable of 10,455,600 yuan of Guangzhou JinheCompany.According to the Letter of Commitment of Shenzhen Fude State-owned Capital Operation Co., Ltd.. concerning thepending lawsuit of Shenzhen Cereals Group Co., Ltd., Shenzhen Fude State-owned Capital Operation Co., Ltd..will make any claim, compensation, loss or expenditure to Shenzhen Fude State-owned Capital Operation Co., Ltd.for the dispute between Shenzhen Cereals Group Co., Ltd. and its holding subsidiaries over the contract forinternational sale of soybeans with Guangzhou Jinhe Co., Ltd. and Huangxianning Import Agent， Shenzhen FudeState-owned Capital Operation Co., Ltd will undertake the compensation or loss caused by the lawsuit on behalf ofShenzhen Fude State-owned Capital Operation Co., Ltd.
(6) Contract disputes between Hualian Grain and Oil Company and Zhuhai Doumen Huabi Feed FactoryOn December 9, 2004, Hualian Grain and Oil Company signed a purchases and sales contract with Zhuhai DoumenHuabi Feed Factory to sell 2,000.00 tons of corn, with payment for goods of 2,396,300 yuan, but the payment hasnot been taken back. In April 2005, Hualian Grain and Oil Company discovered that Zhuhai Doumen Huabi FeedFactory had basically stopped production and the goods were transferred, the legal representative, Liang Dongxing,had fled. On July 2, 2005, the public security organ arrested Liang Dongxing. Hualian Company has prosecutedhim and won in the lawsuit, and the lawsuit has been settled and in enforcement.As of December 31, 2018, Hualian Grain and Oil Company had received RMB 2,396,300 from Zhuhai DoumenHuabi Feed Factory, Hualian Grain and Oil Company had made 100% of bad debt provision for this amount.(7) Contract disputes between Hualian Grain and Oil Company and Foshan Huaxing Feed FactoryIn August and October 2007, Hualian Grain and Oil Company sold goods to Foshan City Shunde District HuaxingFeed Factory, and received a total of 2,958,600 yuan of commercial acceptance bills. Due to the company’s overduepayment, Hualian Grain and Oil Company filed a lawsuit with the People’s Court of Shunde District, Foshan Cityon October 29, 2007, requesting Foshan City Shunde District Huaxing Feed Factory to repay the payment for goodsand pay the corresponding interests. From June to July 2011, totally took back the company’s bankruptcy propertysettlement of 1,638,900 yuan. As of December 31, 2018, Hualian Grain and Oil Company had receivables of RMB1,319,700 from Foshan City Shunde District Huaxing Feed Factory, and it had made 100% of bad debt provisionfor this amount.(8) Contract disputes on the international sales transactions of soybeans between Shenzhen Cereals Group and NobleResources Pte. Ltd,1. Main facts of the caseOn March 3, 2004, Shenzhen Cereals Group and Noble Resources Pte. Ltd. (hereinafter referred to as NobleCompany) signed a contract stipulating that Shenzhen Cereals Group Co., Ltd. would purchase 55,000 tons ofArgentine or Brazilian soybeans from Noble Company under CFR conditions. .
On May 10, 2004, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) issueda notice that a shipload of Brazilian soybeans exported to Xiamen, China by Noble Company in April 2004 wasfound to be mixed with seed-coating soybeans, thus Noble Company was suspended to export Brazilian soybeansto China.On June 25, 2004, after the cargo ship arrived in Qingdao Port, the cargo was inspected by Qingdao CommodityInspection and Quarantine Bureau who found the cargo contained seed-coating soybeans, and the cargo was sealedup according to law.On July 22, 2004, the two parties signed a supplementary agreement on the above-mentioned soybean sales contract,stipulating that the demurrage incurred as the cargo could not be unloaded due to seed-coating soybeans shall beborne by Noble Company, and agreed that the disputes under the contract shall be governed by Chinese courtsaccording to Chinese law.② Arbitration application of Noble CompanyIn July 2004, Noble Company submitted the case to the Hong Kong International Arbitration Center for arbitration,requesting Shenzhen Cereals Group Co., Ltd. to undertake cargo ship detainment, Hong Kong demurrage, losscontingencies, and so on, totaling seven claims. Shenzhen Cereals Group Co., Ltd. filed a jurisdictional objection,the Hong Kong International Arbitration Center ruled on December 14, 2006 that two claims have the right ofjurisdiction, i.e. demurrage of Noble ship in Hong Kong and loss contingencies, other claims were rejected.In July 2011, Noble Company applied to Shenzhen Intermediate People’s Court for enforcement of extraterritorialeffective ruling. On March 30, 2015, Shenzhen Intermediate People’s Court made a civil ruling ([2011] SZFMSCZNo. 270), ruling that as the soybean sales contract supplemental agreement signed by the two parties agreed that thedemurrage incurred as the cargo could not be unloaded due to seed-coating soybeans shall be borne by NobleCompany and agreed that the disputes under the contract shall be governed by Chinese courts according to Chineselaw, Hong Kong International Arbitration Center has no jurisdiction over the case, therefore the application forenforcement of Noble Company was rejected.On September 3, 2014, Noble Company submitted the “Application for Further Claims Arbitration” to the HongKong International Arbitration Center, requesting Shenzhen Cereals Group Co., Ltd. to pay Noble CompanyUS$7.45 million in compensation for the freighter’s lessor - Bunge Limited, and the corresponding litigation andarbitration fee.On November 1, 2016, the arbitrator of Hong Kong International Arb itration Center wrote to Noble Company,requesting it to initiate the arbitration at the end of 2016, otherwise, the arbitral tribunal will take measures to closethe case, but so far, Noble Company has not initiated arbitration.③ Case progressAt present, the arbitration of the “Request for Further Claims Arbitration” submitted by Noble Company to theHong Kong International Arbitration Center due to the above-mentioned soybean sales contract is suspended.According to the Letter of Commitment of Shenzhen Fude State-owned Capital Operation Co., Ltd.. concerning the
pending lawsuit of Shenzhen Cereals Group Co., Ltd., Shenzhen Fude State-owned Capital Operation Co., Ltd..will make any claim, compensation, loss or expenditure to Shenzhen Fude State-owned Capital Operation Co., Ltd.for the dispute between Shenzhen Cereals Group Co., Ltd. and its holding subsidiaries over the contract forinternational sale of soybeans with Noble Resources Pte. Ltd, Shenzhen Fude State-owned Capital Operation Co.,Ltd will undertake the compensation or loss caused by the lawsuit on behalf of Shenzhen Fude State-owned CapitalOperation Co., Ltd.(9) Contract disputes between Shenzhen Cereals Group and Beijing Zhongwang Food Co., Ltd.On August 22, 2007, Beijing Zhongwang Food Co., Ltd. defaulted on the payment for goods of 1,911,200.00 yuanto Shenzhen Cereals Group. Beijing Zhongwang Food Co., Ltd. was in bankruptcy proceedings, Shenzhen CerealsGroup has reported claims and interests of 2,473,400 yuan to the bankruptcy administrator, and the confirmedordinary creditor’s rights are 2,128,300 yuan. It is estimated that the bankruptcy property repayment amount is about50,000 yuan, as the specific amount of losses still cannot be estimated, Shenzhen Cereals Group has made provisionfor bad debts of 1,873,886.58 yuan at a 100% ratio.2. Contingency arising from the provision of external debt guarantee and their impacts on financialThe guarantee for related parties found more in the (v) of Note XIEnded as 31
st
December 2018, the Company has no guarantees provided for non-related parties3. Except for the above mentioned contingency, up to 31
st
December 2018, the Company has no other majorcontingency that should be disclosed
(2) If the Company has no important contingency need to disclosed, explain reasons3. Other
XV. Events after balance sheet date
1. Important non adjustment matters
RMB/CNY
| Item | Content | Impact on financial status and operation results | Reasons of fails to estimate the impact |
3. Sales return4. Other events after balance sheet date
XVI. Other important events
1. Previous accounting errors collection(1)Retrospective restatement
RMB/CNY
| Content | Treatment procedure | Items impact during vary comparative period | Accumulated impact |
| Content | Approval procedure | Reasons |
| Item | Revenue | Expenses | Total profit | Income tax expenses | Net profit | Profit of discontinuing operation attributable to owners of parent company |
6. Segment(1) Recognition basis and accounting policy for reportable segment(2) Financial information for reportable segment
RMB/CNY
| Item | Offset between segment | Total |
shall be borne by the Fude Capital.therefore, SZCG did not recognized relevant rental on 30 September 2017 andbefore
As an asset management unit entrusted by State-owned Assets Supervision and Administration Commission ofShenzhen, Fude Capital signed the “Overall Rental Agreement of Shenzhen Grain Reserve Depot (i.e. “PinghuGrain Depot”)” with Shenzhen Cereals Group on October 17, 2018, the lease term is from October 1, 2017 toDecember 31, 2019, it was agreed to pay an annual total rent of RMB 28,434,000 based on market prices. SinceOctober 1, 2017, the Company has accrued the rental costs of Pinghu Grain Depot for September-December 2017and 2018 in accordance with the agreed rental price. At the same time, the Company has confirmed the income fromgrain and oil storage services between October 1, 2017 and December 31, 2018 according to the storage service feestandard for externally rented warehouses, which increased the company’s 2017 annual grain and oil storage serviceincome of RMB 6,774,030.00, and increased the company’s 2018 annual grain and oil storage service income ofRMB 26,445,279.00.(ii) Pension planMain content of pension plan and major changes can be found in relevant explanation of Wages payable- Definedcontribution plans in 21 of Note VIXVII. Principle notes of financial statements of parent company1. Note receivable and account receivable
RMB/CNY
| Item | Ending balance | Opening balance |
| Account receivable | 42,441,119.07 | 53,950,930.37 |
| Total | 42,441,119.07 | 53,950,930.37 |
| Item | Ending balance | Opening balance |
| Item | Amount pledge at period-end |
| Item | Amount derecognition at period-end | Amount not derecognition at period-end |
4)The notes transferred to account receivable because the drawer has failed to perform the contract atperiod-end
RMB/CNY
| Item | Amount transfer to account receivable at period-end |
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Ratio | Amount | Accrual Ratio | Amount | Ratio | Amount | Accrual Ratio | |||
| Account receivable withdrawal bad debt provision by group of credit risk characteristics | 42,869,954.13 | 99.93% | 428,835.06 | 1.00% | 42,441,119.07 | 53,950,930.37 | 99.95% | 53,950,930.37 | ||
| Account receivable with single minor amount but withdrawal bad debt provision for single item | 28,453.08 | 0.07% | 28,453.08 | 100.00% | 28,453.08 | 0.05% | 28,453.08 | 100.00% | ||
| Total | 42,898,407.21 | 100.00% | 457,288.14 | 1.07% | 42,441,119.07 | 53,979,383.45 | 100.00% | 28,453.08 | 0.05% | 53,950,930.37 |
| Account age | Ending balance | ||
| Account receivable | Bad debt provision | Accrual Ratio | |
| Subitem of within one year | |||
| Subtotal of within one year | 42,869,954.13 | 428,835.06 | 1.00% |
| Total | 42,869,954.13 | 428,835.06 | 1.00% |
| Enterprise | Amount collected or switch back | Collection way |
| Item | Amount charge off |
| Enterprise | Nature of account receivable | Amount charge off | Cause of charge-off | Charge-off procedures | Resulted by related transaction (Y/N) |
| Enterprise | Ending balance | Proportion in total receivables at ending balance(%) | Bad debt provision accrual |
| Shanghai Yihe Food Technology Co., Ltd. | 12,589,370.00 | 29.35 | 125,893.70 |
| Xiangpiao Food Co., Ltd. | 5,271,399.00 | 12.29 | 52,713.99 |
| Hohhot Yihe Xingye Trading Co., Ltd. | 4,439,226.61 | 10.35 | 44,392.27 |
| Unilever (China) Co., Ltd. | 3,884,634.00 | 9.06 | 38,846.34 |
| Shenzhen Yichong Trading Co., Ltd. | 2,301,665.00 | 5.37 | 23,016.65 |
| Total | 28,486,294.61 | 66.42 | 284,862.95 |
| Item | Ending balance | Opening balance |
| Other account receivable | 159,677,969.59 | 163,404,561.75 |
| Total | 159,677,969.59 | 163,404,561.75 |
| Item | Ending balance | Opening balance |
| Borrower | Ending balance | Overdue time | Overdue reason | Whether has impairment occurred and judgment basis |
| Item(or invested enterprise) | Ending balance | Opening balance |
| Item(or invested enterprise) | Ending balance | Account age | Cause of un-collectible | Whether has impairment occurred and judgment basis |
| Category | Ending balance | Opening balance | ||||||||
| Book balance | Bad debt provision | Book value | Book balance | Bad debt provision | Book value | |||||
| Amount | Ratio | Amount | Accrual Ratio | Amount | Ratio | Amount | Accrual Ratio | |||
| Other account receivable with | 19,783,947.34 | 10.83% | 17,315,381.02 | 87.52% | 2,468,566.32 | 19,347,283 | 10.87% | 9,008,148.72 | 46.56% | 10,339,134.29 |
| single major amount and withdrawal bad debt provision for single item | .01 | |||||||||
| Other account receivable withdrawal bad debt provision by group of credit risk characteristics | 157,286,825.40 | 86.08% | 77,422.13 | 0.05% | 157,209,403.27 | 153,106,793.92 | 86.05% | 41,366.46 | 0.03% | 153,065,427.46 |
| Other account receivable with single minor amount but withdrawal bad debt provision for single item | 5,641,249.52 | 3.09% | 5,641,249.52 | 100.00% | 5,472,398.91 | 3.08% | 5,472,398.91 | 100.00% | ||
| Total | 182,712,022.26 | 100.00% | 23,034,052.67 | 12.61% | 159,677,969.59 | 177,926,475.84 | 100.00% | 14,521,914.09 | 8.16% | 163,404,561.75 |
| Other account receivable (by enterprise) | Ending balance | |||
| Other account receivable | Bad debt provision | Accrual Ratio | Accrual causes | |
| Changzhou Shenbao Chacang E-commence Co., Ltd. (hereinafter referred to as"Changzhou Shenbao Chacang Co.,") | 19,783,947.34 | 17,315,381.02 | 87.52% | Allowance for bad debt provision based on the difference between the current value of future cash flow and its book value |
| Total | 19,783,947.34 | 17,315,381.02 | -- | -- |
| Account age | Ending balance | ||
| Other account receivable | Bad debt provision | Accrual Ratio | |
| Subitem of within one year | |||
| Subtotal of within one year | 192,272.87 | 1,922.73 | 1.00% |
| 1-2 years | 69,491.56 | 7,068.20 | 10.17% |
| Over 5 years | 85,539.00 | 68,431.20 | 80.00% |
| Total | 347,303.43 | 77,422.13 | 22.00% |
| Enterprise | Amount switch back or collected | Collection way |
| Item | Amount charge off |
| Enterprise | Nature of other account receivable | Amount charge off | Cause of charge-off | Charge-off procedures | Resulted by related transaction (Y/N) |
| Nature | Ending book balance | Opening book balance |
| Margin and deposit | 119,089.00 | 265,665.63 |
| Export tax rebate | 312,364.06 | 733,709.16 |
| Intercourse funds and other | 182,280,569.20 | 176,927,101.05 |
| Total | 182,712,022.26 | 177,926,475.84 |
| Enterprise | Nature | Ending balance | Account age | Ratio in total ending balance of other receivables | Ending balance of bad debt reserve |
| Huizhou Shenbao Science & Technology Co., Ltd. | Intercourse funds | 118,400,009.26 | Within one year | 64.80% | |
| Shenzhen Shenbao Sanjing Food & Beverage Development Co., Ltd. | Intercourse funds | 26,190,645.20 | Within one year | 14.33% | |
| Shenzhen Shenbao Labor Service Company | Intercourse funds | 2,107,109.09 | Over 3 years | 1.15% | 2,107,109.09 |
| Changzhou Shenbao Chacang Co., | Intercourse funds | 19,783,947.34 | Over 3 years | 10.83% | 17,315,381.02 |
| Shenzhen Shenbao Technology Center Co., Ltd. | Intercourse funds | 10,987,963.15 | Within one year | 5.60% | |
| Total | -- | 177,469,674.04 | -- | 96.71% | 19,422,490.11 |
| Enterprise | Government grants | Ending balance | Ending account age | Time, amount and basis for collection predicted |
| Item | Ending balance | Opening balance | ||||
| Book balance | Depreciation reserves | Book value | Book balance | Depreciation reserves | Book value | |
| Investment for subsidiary | 4,208,728,337.66 | 4,208,728,337.66 | 917,313,300.84 | 917,313,300.84 | ||
| Investment for associates and joint venture | 6,753,354.23 | 2,927,628.53 | 3,825,725.70 | 7,121,310.06 | 2,927,628.53 | 4,193,681.53 |
| Total | 4,215,481,691.89 | 2,927,628.53 | 4,212,554,063.36 | 924,434,610.90 | 2,927,628.53 | 921,506,982.37 |
(1) Investment for subsidiary
RMB/CNY
| The invested entity | Opening balance | Current increased | Current decreased | Ending balance | Current impairment accrual | Ending balance of depreciation reserves |
| Shenbao Properties | 2,550,000.00 | 2,550,000.00 | ||||
| Shenbao Industrial & Trading | 5,500,000.00 | 5,500,000.00 | ||||
| Shenbao Sanjing | 80,520,842.36 | 80,520,842.36 | ||||
| Shenbao Huacheng | 168,551,781.80 | 168,551,781.80 | ||||
| Huizhou Shenbao Science & Technology | 60,000,000.00 | 60,000,000.00 | ||||
| Wuyuan Ju Fang Yong | 280,404,134.35 | 280,404,134.35 | ||||
| Hangzhou Ju Fang Yong | 176,906,952.42 | 176,906,952.42 | ||||
| Shenbao Technology Center | 54,676,764.11 | 54,676,764.11 | ||||
| Shenshenbao Investment | 50,000,000.00 | 50,000,000.00 | ||||
| Yunnan Supply Chain | 20,000,000.00 | 20,000,000.00 | ||||
| Pu’er Tea Trading Center | 18,202,825.80 | 18,202,825.80 | ||||
| SZCG | 3,291,415,036.82 | 3,291,415,036.82 | ||||
| Total | 917,313,300.84 | 3,291,415,036.82 | 4,208,728,337.66 |
| investm | Openin | Current changes (+,-) | Ending | Ending |
| ent company | g balance | Additional investment | Capital reduction | Investment gains recognized under equity | Other comprehensive income adjustment | Other equity change | Cash dividend or profit announced to issued | Impairment accrual | Other | balance | balance of depreciation reserves |
| I. Joint venture | |||||||||||
| II. Associated enterprise | |||||||||||
| Shenzhen Shenbao (Liaoyuan) Industrial Company | 57,628.53 | 57,628.53 | 57,628.53 | ||||||||
| Shenzhen Shenbao (Xinmin) Foods Co., Ltd | 2,870,000.00 | 2,870,000.00 | 2,870,000.00 | ||||||||
| Changzhou Shenbao Chacang | |||||||||||
| Guangzhou Shenbao Mendao Tea Co., Ltd. | 4,193,681.53 | -367,955.83 | 3,825,725.70 | ||||||||
| Subtotal | 7,121,310.06 | -367,955.83 | 6,753,354.23 | 2,927,628.53 | |||||||
| Total | 7,121,310.06 | -367,955.83 | 6,753,354.23 | 2,927,628.53 |
| Item | Current Period | Last Period | ||
| Income | Cost | Income | Cost | |
| Main business | 165,407,623.24 | 156,886,817.06 | 163,863,447.98 | 154,883,304.80 |
| Total | 165,407,623.24 | 156,886,817.06 | 163,863,447.98 | 154,883,304.80 |
| Item | Current Period | Last Period |
| Investment income of long-term equity based on equity | -367,955.83 | -306,318.47 |
| Financial products revenue | 953,125.00 | 2,706,034.95 |
| Other | 450,000.00 | |
| Total | 1,035,169.17 | 2,399,716.48 |
| Item | Amount | Statement |
| Gains/losses from the disposal of non-current asset | 1,207,842.88 | |
| Governmental subsidy calculated into | 8,311,158.51 |
| current gains and losses(while closely related with the normal business of the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified national standard) | ||
| Capital occupancy expense, collected from non-financial enterprises and recorded in current gains and losses | 490,289.86 | |
| Profit and loss of assets delegation on others’ investment or management | 1,984,446.92 | |
| Current net gains and losses occurred from period-begin to combination day by subsidiaries resulting from business combination under common control | 374,880,023.05 | |
| Held transaction financial asset, gains/losses of changes of fair values from transaction financial liabilities, and investment gains from disposal of transaction financial asset, transaction financial liabilities and financial asset available for sales, exclude the effective hedging business relevant with normal operations of the Company | -474,740.24 | |
| Other non-operating income and expense other than the above mentioned ones | -4,434,126.83 | |
| Gains/losses satisfied definition of the non-recurring gains/losses | 450,000.00 | |
| Less: Impact on income tax | 3,210,576.33 | |
| Affect on minority equity | 48,116.44 | |
| Total | 379,156,201.38 | -- |
| Profits during report period | Weighted average ROE | Earnings per share | |
| Basic EPS (Yuan/share) | Diluted EPS (Yuan/share) | ||
| Net profits belong to common stock stockholders of the Company | 7.70% | 0.2675 | 0.2675 |
| Net profits belong to common stock stockholders of the Company after deducting nonrecurring gains and losses | -1.77% | -0.0615 | -0.0615 |
| Net profit | Net assets | |||
| Current Period | Last Period | Ending balance | Opening balance | |
| Chinese GAAP | 308,331,032.44 | 359,174,263.44 | 4,172,502,535.11 | 3,848,760,765.85 |
| Items and amount adjusted by IAS | ||||
| Adjustment for other payable fund of stock market regulation | 1,067,000.00 | 1,067,000.00 | ||
| IAS | 308,331,032.44 | 359,174,263.44 | 4,173,569,535.11 | 3,849,827,765.85 |
Section XII. Documents available for Reference
1. Text of financial statement with signature and seals of legal person, person in charge of accounting works andperson in charge of accounting institution;2. Original audit report with seal of accounting firms and signature and seals of CPA;3. Original and official copies of all documents which have been disclosed on Securities Times, China SecuritiesJournal, and Hong Kong Commercial Daily in the report period;4. Original copies of 2018 Annual Report with signature of the Chairman.