大东海B:2019年半年度财务报告(英文版)

Hainan Dadonghai Tourism Centre
(Holdings) Co., Ltd.




Financial Report & State ment




Semi-Annual 2019




1
Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.


        Financial Report & Financial Statement
                     (1 January 2019 to 30 June 2019)




                        Content                         Page


I    Financial statement


     Balance Sheet                                              3-6


     Profit Statement                                           7-8


     Statement of Cash Flow                                    9-10


     Statement of Changes in Owners’ Equity               11-14


II   Notes to Financial State ment                         15-47




                                     2
                            Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                        Consolidated Balance Sheet
                                          (Expressed in Renminbi unless otherwise stated)

                                      Item                                                  2019-6-30      2018-12-31

Current assets:

     M onetary funds                                                                  16,110,895.95      15,364,355.30

     Transactional financial assets

     Notes receivable

     Accounts receivable                                                                    155,986.88     426,434.87

     Receivables Financing

     Advance payment                                                                        396,882.60

     Insurance receivable

     Other receivables                                                                  1,242,181.64       458,242.73

     Including: Interests receivable

                   Dividends receivable

     Inventories                                                                            191,693.57     221,390.19

     Non-current assets maturing within one year

     Other current assets                                                               2,125,619.16      1,846,219.79

Total current assets                                                                  20,223,259.80      18,316,642.88

Non-current assets:

     Finance asset available for sales

     Held-to-maturity investment

     Long-term account receivable

     Long-term equity investments

     Investment property                                                                8,147,218.65      8,384,480.43

     Fixed assets                                                                     34,997,520.16      36,497,869.65

     Construction in progress

     Intangible assets                                                                21,799,055.46      22,205,249.04

     Goodwill

     Long-term deferred expenses                                                        2,240,879.25      2,792,876.07

     Other non-current assets

Total non-current assets                                                              67,184,673.52      69,880,475.19

Total assets                                                                          87,407,933.32      88,197,118.07


Legal Representative: Yuan Xiaoping                    Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren



                                                                3
                             Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                      Consolidated Balance Sheet (Cont’)
                                         (Expressed in Renminbi unless otherwise stated)

Current liabilities:                                                                       2019-6-30        2018-12-31

     Short-term borrowings

     Transactional financial liability

     Notes payable

     Accounts payable                                                                  1,077,017.43        1,607,835.81

     Account received in advance                                                           779,681.12      1,291,293.05

     Employee compensation payable                                                     1,827,967.06        2,841,262.35

     Taxes and surcharges payable                                                          745,943.66       450,861.87

     Other account payable                                                             2,942,968.71        2,727,483.66

     Including: Interest payable

     Other current liabilities

Total current liabilities                                                              7,373,577.98        8,918,736.74

Non-current liabilities:

     Long-term borrowings

     Bonds payable

     Long-term payables

     Long-term employee compensation payable

     Estimated liabilities                                                             1,489,685.04        1,489,685.04

     Deferred income

Total non-current liabilities                                                          1,489,685.04        1,489,685.04

Total liabilities                                                                      8,863,263.02      10,408,421.78

Owners 'equity:

     Share capital                                                                  364,100,000.00      364,100,000.00

     Other equity instrument

     Capital reserves                                                                54,142,850.01       54,142,850.01

     Surplus reserves

     Undistributed profit                                                          -339,698,179.71      -340,454,153.72

Total equity attributable to owners of parent company                                78,544,670.30       77,788,696.29

     M inority’s equity

Total owners 'equity                                                                 78,544,670.30       77,788,696.29

Total liabilities and owners 'equity                                                 87,407,933.32       88,197,118.07


Legal Representative: Yuan Xiaoping                   Accounting Principal: Fu Zongren



                                                               4
The Accounting Firm’s Principal: Fu Zongren
                            Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                   Balance sheet of parent company
                                          (Expressed in Renminbi unless otherwise stated)

                                      Item                                                  2019-6-30      2018-12-31

Current assets:

     M onetary funds                                                                   15,610,097.59     14,864,055.73

     Transactional financial assets

     Notes receivable

     Accounts receivable                                                                    155,986.88     426,434.87

     Receivables Financing

     Advance payment                                                                        396,882.60

     Insurance receivable

     Other receivables                                                                  1,242,181.64       458,242.73

     Including: Interests receivable

                   Dividends receivable

     Inventories                                                                            191,693.57     221,390.19

     Non-current assets maturing within one year

     Other current assets                                                               2,125,619.16      1,846,219.79

Total current assets                                                                   19,722,461.44     17,816,343.31

Non-current assets:

     Finance asset available for sales

     Held-to-maturity investment

     Long-term account receivable

     Long-term equity investments                                                       1,000,000.00      1,000,000.00

     Investment property                                                                8,147,218.65      8,384,480.43

     Fixed assets                                                                      34,997,520.16     36,497,869.65

     Construction in progress

     Intangible assets                                                                 21,799,055.46     22,205,249.04

     Goodwill

     Long-term deferred expenses                                                        2,240,879.25      2,792,876.07

     Other non-current assets

Total non-current assets                                                               68,184,673.52     70,880,475.19

Total assets                                                                           87,907,134.96     88,696,818.50


Legal Representative: Yuan Xiaoping                    Accounting Principal: Fu Zongren



                                                                5
The Accounting Firm’s Principal: Fu Zongren
                             Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                 Balance sheet of parent company (Cont’)
                                         (Expressed in Renminbi unless otherwise stated)

Current liabilities:                                                                       2019-6-30        2018-12-31

     Short-term borrowings

     Transactional financial liability

     Notes payable

     Accounts payable                                                                  1,077,017.43        1,607,835.81

     Account received in advance                                                           779,681.12      1,291,293.05

     Employee compensation payable                                                     1,827,967.06        2,841,262.35

     Taxes and surcharges payable                                                          745,943.66       450,861.87

     Other account payable                                                             3,442,669.14        3,226,952.36

     Including: Interest payable

     Other current liabilities

Total current liabilities                                                              7,873,278.41        9,418,205.44

Non-current liabilities:

     Long-term borrowings

     Bonds payable

     Long-term payables

     Long-term employee compensation payable

     Estimated liabilities                                                             1,489,685.04        1,489,685.04

     Deferred income

Total non-current liabilities                                                          1,489,685.04        1,489,685.04

Total liabilities                                                                      9,362,963.45      10,907,890.48

Owners 'equity:

     Share capital                                                                  364,100,000.00      364,100,000.00

     Other equity instrument

     Capital reserves                                                                54,142,850.01       54,142,850.01

     Less: Inventory shares

     Other comprehensive income

     Surplus reserve

     Retained profit                                                               -339,698,678.50      -340,453,921.99

Total owner’s equity                                                                78,544,171.51       77,788,928.02

Total liabilities and owner’s equity                                                87,907,134.96       88,696,818.50




                                                               6
Legal Representative: Yuan Xiaoping                    Accounting Principal: Fu Zongren

The Accounting Firm’s Principal: Fu Zongren
                            Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                       Consolidated Profit State ment
                                          (Expressed in Renminbi unless otherwise stated)

                                      Item                                      Semi-annual of 2019       Semi-annual of 2018

I. Total operating income                                                             14,241,961.04             16,173,929.32

     Including: Operating income                                                      14,241,961.04             16,173,929.32

                 Interest income

II. Total operating const                                                             13,646,017.49             14,891,558.76

     Including: Operating cost                                                          5,514,477.93             6,000,063.36

                Taxes and surcharges                                                        383,479.50            716,520.90

                Sales expenses                                                          2,809,991.94             2,800,956.10

                Administrative expenses                                                 5,071,800.21             5,356,455.21

                Financial expenses                                                          -133,732.09             17,563.19

                Including: Interest expenses

                            Interest income                                                 152,697.12              22,729.87

          Add: Investment income (Loss is listed with “-”)

          Losses of devaluation of asset (Loss is listed with “-”)

III. Operating profits ("-" for losses)                                                     595,943.55           1,282,370.56

     Plus: non-operating income                                                             160,030.46                273.00

     Less: non-operating expenses                                                                                     477.98

IV Total profits ("-" for total losses)                                                     755,974.01           1,282,165.58

     Less: income tax expenses

V Net profit (Net loss is listed with “-”)                                                755,974.01           1,282,165.58

  (i) Classify by business continuity

     1.continuous operating net profit (net loss listed with ‘-”)                         755,974.01           1,282,165.58

  (ii) Classify by ownership

     1.Net profit attributable to owner’s of parent company                                755,974.01           1,282,165.58

VI. Net amount of other comprehensive income after-tax

VII. Total comprehensive income                                                             755,974.01           1,282,165.58

     Total comprehensive income attributable to owners of parent
                                                                                            755,974.01           1,282,165.58
company

     Total comprehensive income attributable to minority

VIII. Earnings per share:

     (i) Basic earnings per share                                                               0.0021                0.0035



                                                                  7
     (ii) Diluted earnings per share                                                              0.0021                0.0035



Legal Representative: Yuan Xiaoping                      Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                             Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                   Profit statement of parent Company
                                            (Expressed in Renminbi unless otherwise stated)

                                       Item                                        Semi-annual of 2019      Semi-annual of 2018

I. Operating income                                                                      14,241,961.04            16,173,929.32

     Less: Operating cost                                                                13,645,516.28            14,891,558.76

           Taxes and surcharges                                                               383,479.50            716,520.90

           Sales expenses                                                                 2,809,991.94             2,800,956.10

           Administrative expenses                                                        5,071,800.21             5,356,455.21

           Financial expenses                                                                 -133,233.30             17,563.19

                Including: interest expenses

                             Interest income                                                  151,938.33              22,729.87

     Add: other income

           Investment income (Loss is listed with “-”)

           Losses of devaluation of asset (Loss is listed with “-”)

II. Operating profits ("-" for losses)                                                        595,444.76           1,282,370.56

     Plus: non-operating income                                                               160,030.46                273.00

     Less: non-operating expenses                                                                                       477.98

III. Total profits ("-" for total losses)                                                     755,475.22           1,282,165.58

     Less: income tax expenses

IV Net profit ("-" for net loss)                                                              755,475.22           1,282,165.58

     (i) continuous operating net profit (net loss listed with ‘-”)                         755,475.22           1,282,165.58

V Net amount of other comprehensive income after-tax

     (i) Other comprehensive income items which will not be reclassified
subsequently to profit of loss

              1.Changes of the defined benefit p lans that re-measured

              2.Other comprehensive income under equity method that
cannot be transfer to gain/loss

       (ii) Other comprehensive income items which will be reclassified
subsequently to profit or loss

              1.Other comprehensive income under equity method that can
transfer to gain/loss

              2.Change of fair value of other debt investment


                                                                  8
             3.gain/loss of fair value changes for available-for-sale
financial assets

VII. Total comprehensive income                                                             755,475.22           1,282,165.58

VII. Earnings per share:

     (i) Basic earnings per share                                                               0.0021                0.0035

     (ii) Diluted earnings per share                                                            0.0021                0.0035


Legal Representative: Yuan Xiaoping                    Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                           Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                                    Consolidated Cas h Flow Statement
                                          (Expressed in Renminbi unless otherwise stated)

                                    Item                                        Semi-annual of 2019       Semi-annual of 2018

I. Cash flows from operating activities

     Cash received from sale of goods and rendering of services                       14,988,120.25             17,460,137.72

     Cash received from other operating activities                                      1,105,441.88              684,152.64

Sub-total of cash inflows from operating activities                                   16,093,562.13             18,144,290.36

     Cash paid for goods purchased and services received                                4,468,726.47             5,026,699.13

     Cash paid to and on behalf of employees                                            6,921,639.62             6,741,602.32

     Cash paid for taxes and surcharges                                                 1,139,283.59             1,590,739.15

     Cash paid for other operating activities                                           2,294,495.80             1,674,572.16

Sub-total of cash outflows from operating activities                                  14,824,145.48             15,033,612.76

Net cash flows from operating activities                                                1,269,416.65             3,110,677.60

II. Cash flows from investing activities

     Cash received from disposal of investments

     Net cash received from disposal of fixed, intangible and other
                                                                                             68,670.00
long-term assets

     Other cash received concerning investing activities

Sub-total of cash inflows from investing activities                                          68,670.00
     Cash paid to acquire and construct fixed assets, intangible assets and
                                                                                            591,546.00           1,040,626.12
other long-term assets

     Cash paid for other investing activities

Sub-total of cash outflows from investing activities                                        591,546.00           1,040,626.12

Net cash flows from investing activities                                                    -522,876.00         -1,040,626.12

III. Cash flows from financing activities

     Cash received from loans

Sub-total of cash inflows from financing activities




                                                                9
     Cash paid for settling debts

     Cash paid for other financing activities

Sub-total of cash outflows from financing activities

Net cash flows from financing activities

IV Effect of fluctuation on exchange rate on cash and cash equivalents

V Net increase in cash and cash equivalents                                               746,540.65           2,070,051.48

     Plus: balance of cash and cash equivalents at the beginning of the
                                                                                     15,364,355.30             9,681,607.16
period

VI. Balance of cash and cash equivalents at the end of the period                    16,110,895.95            11,751,658.64



Legal Representative: Yuan Xiaoping                    Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                           Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                               Cash flow statement of parent Company
                                       (Expressed in Renminbi unless otherwise stated)

                                    Item                                       Semi-annual of 2019      Semi-annual of 2018

I. Cash flows from operating activities

     Cash received from sale of goods and rendering of services                      14,988,120.25            17,460,137.72

     Cash received from other operating activities                                    1,104,683.09              684,152.64

Sub-total of cash inflows from operating activities                                  16,092,803.34            18,144,290.36

     Cash paid for goods purchased and services received                              4,468,726.47             5,026,699.13

     Cash paid to and on behalf of employees                                          6,921,639.62             6,741,602.32

     Cash paid for taxes and surcharges                                               1,139,261.99             1,590,739.15

     Cash paid for other operating activities                                         2,294,257.40             1,674,572.16

Sub-total of cash outflows from operating activities                                 14,823,885.48            15,033,612.76

Net cash flows from operating activities                                              1,268,917.86             3,110,677.60

II. Cash flows from investing activities

     Cash received from disposal of investments

     Net cash received from disposal of fixed, intangible and other
                                                                                           68,670.00
long-term assets

     Other cash received concerning investing activities

Sub-total of cash inflows from investing activities                                        68,670.00

     Cash paid to acquire and construct fixed assets, intangible assets and
                                                                                          591,546.00           1,040,626.12
other long-term assets

     Cash paid for other investing activities                                                                  1,000,000.00

Sub-total of cash outflows from investing activities                                      591,546.00           2,040,626.12

Net cash flows from investing activities                                                  -522,876.00         -2,040,626.12



                                                               10
III. Cash flows from financing activities

     Cash received from loans

Sub-total of cash inflows from financing activities

     Cash paid for settling debts

     Cash paid for other financing activities

Sub-total of cash outflows from financing activities

Net cash flows from financing activities

IV Effect of fluctuation on exchange rate on cash and cash equivalents

V Net increase in cash and cash equivalents                                               746,041.86             1,070,051.48

     Plus: balance of cash and cash equivalents at the beginning of the
                                                                                       14,864,055.73             9,681,607.16
period

VI. Balance of cash and cash equivalents at the end of the period                      15,610,097.59           10,751,658.64


Legal Representative: Yuan Xiaoping                    Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                           Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                           Consolidated State ment of Changes in Owne rs’ Equity
                                       (Expressed in Renminbi unless otherwise stated)

                                                                             Semi-annual of 2019

                                                       Equity attributable to owners of parent company

                                                       Othe                   O     G
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                                                       instr                Lc
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                                                                            sm Sa
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                                                        nt                  sp u l                                    r
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                                                    P                       rh l i
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               Item                                                             a                                          Total owner's
                                                      p                                                t
                                                    e            Capital
                                                                            an s k
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                                      Share capital f e                     ss r                       h   Subtotal           equity
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                                                      i                             s                                 y
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                                                    o
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                                                    c                              o
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                                                    k                              n
                                                      s
                                                         e


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                                                        c
                                                        u
                                                        r
                                                        i
                                                        t
                                                        i
                                                        e
                                                        s

                                        364,100,000.0                       -340,454,153.
                                                            54,142,850.01                   77,788,696.29   77,788,696.29
I. Balance as at the end of last year              0                                  72
         Plus: Changes in
accounting policies
              Error correction of the
last period
II. Balance as at the beginning of      364,100,000.0                       -340,454,153.
                                                            54,142,850.01                   77,788,696.29   77,788,696.29
year                                               0                                  72

III. Increases/decreases in the
                                                                              755,974.01      755,974.01      755,974.01
period

(i) Total comprehensive income                                                755,974.01      755,974.01      755,974.01
(ii) Capital contributed or reduced
by owners
1.Common shares         invested by
shareholders
2. Capital invested by holders of
other equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other

(III) Profit distribution

1. Withdrawal of surplus reserves
2. Withdrawal of general risk
provisions
3. Distribution for owners (or
shareholders)
(IV) Internal carry-forward of
owners' equity

1. Conversion of capital reserves
into paid-in capital (or share
capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
(V) Special reserves

1. Withdrawal in the period



                                                              12
2. Use in the period

(VI) Others

IV Balance as at the end of the         364,100,000.0                                       -339,698,179.
                                                                  54,142,850.01                                  78,544,670.30        78,544,670.30
period                                              0                                                   71

Legal Representative: Yuan Xiaoping                     Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                         Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                       Consolidated State ment of Changes in Owne rs’ Equity (Cont’)
                                         (Expressed in Renminbi unless otherwise stated)

                                                                                  Semi-annual of 2018

                                                        Equity attributable to owners of parent company

                                                        Othe                        O
                                                          r                         t
                                                                                    h
                                                        equit
                                                                                    e
                                                          y                         r
                                                                                          G
                                                        instr                       c
                                                                                    o     e
                                                        ume
                                                                                    m     n                                      M
                                                         nt                         p                                            i
                                                                                          e
                                                          P                       Lr
                                                                                          r                                      n
                                                          e                       ee
                                                                                                                                 o
                                                          r                       sh Sa
                                                                                      S
                                                          p                       se u l                                         r
                                                                                      p
                                                                                  :n r                                           i
                                                          e                           e r
                                                                                  ts p
                                                        t                             c                                          t
                                                      P                           r i l i
                                                        u                             i                      O
                Item                                  r                           ev us                                          y
                                                        a                             a                      t                        Total owner's
                                                      e             Capital       a e s k Undistributed                          ’
                                                                                      l
                                        Share capital f l                         s i r                      h     Subtotal              equity
                                                                    reserve           r      profit                              s
                                                        c                         un e
                                                      e                               e                      e
                                                        a                         r c s p                                        e
                                                      r       O                       s                      r
                                                        p                         yo e r                                         q
                                                      r       t                     me r
                                                        i                                                                        u
                                                      e       h                       r o
                                                        t                         se v
                                                      d       e                       v v                                        i
                                                        a                         t     e
                                                              r                       e
                                                                                  o     s i                                      t
                                                        l
                                                      s                           c
                                                        s                                 s                                      y
                                                      t                           k
                                                        e                                 i
                                                      o
                                                        c
                                                      c                                 o
                                                        u
                                                      k                                 n
                                                        r
                                                        i
                                                        t
                                                          i
                                                          e
                                                          s

                                        364,100,000.0                                       -341,107,435.
                                                                  54,142,850.01                                  77,135,414.10        77,135,414.10
I. Balance as at the end of last year               0                                                   91

          Plus: Changes in


                                                                    13
accounting policies
              Error correction of the
last period
II. Balance as at the beginning of      364,100,000.0                                 -341,107,435.
                                                              54,142,850.01                           77,135,414.10   77,135,414.10
year                                               0                                            91

III. Increases/decreases in the
                                                                                       1,282,165.58    1,282,165.58    1,282,165.58
period

(i) Total comprehensive income                                                         1,282,165.58    1,282,165.58    1,282,165.58
(ii) Capital contributed or reduced
by owners
1.Common shares           invested by
shareholders
2. Capital invested by holders of
other equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other

(III) Profit distribution

1. Withdrawal of surplus reserves
2. Withdrawal of general risk
provisions
3. Distribution for owners (or
shareholders)
(IV) Internal carry-forward of
owners' equity

1. Conversion of capital reserves
into paid-in capital (or share
capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
(V) Special reserves

1. Withdrawal in the period

2. Use in the period

(VI) Others

IV Balance as at the end of the         364,100,000.0                                 -339,825,270.
                                                              54,142,850.01                           78,417,579.68   78,417,579.68
period                                             0                                            33

Legal Representative: Yuan Xiaoping                     Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                             Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                               Change of owners’ equity of parent company
                                        (Expressed in Renminbi unless otherwise stated)

                   Item                                                       Semi-annual of 2019


                                                                14
                                                               Other                             Ot
                                                                                                  he
                                                              equity
                                                                                                   r
                                                            instrument                            co
                                                                  Pe                       Le     m
                                                                                                             Su
                                                                                           ss:    pr   Sp
                                                                  rp                                         rpl
                                                                                           tre    eh   eci
                                                                  etu
                                                                             Capital                          us Undistributed Ot Total owner's
                                                            Pr                             as     en    al
                                            Share capital          al                                        res               he
                                                            efe              reserve       ur    siv   res          profit           equity
                                                                  ca Ot                                       er               r
                                                            rre                             y      e    er
                                                                  pit he                                      ve
                                                             d                             sto   inc    ve
                                                                   al r                                        s
                                                            sto                            ck     o
                                                                 se                              me
                                                            ck
                                                                 cu
                                                                riti
                                                                 es

                                            364,100,000.0                                                        -340,454,153.
I. Balance at the end of the last year                                     54,142,850.01                                          77,788,696.29
                                                        0                                                                  72
         Add: Changes of accounting
policy
            Error correction of the last
period
          Other

II. Balance at the beginning of this 364,100,000.0                                                               -340,454,153.
                                                                           54,142,850.01                                          77,788,696.29
year                                             0                                                                         72
III. Increase/ Decrease in this year
                                                                                                                   755,475.22        755,475.22
(Decrease is listed with “-”)
 (i) Total comprehensive income                                                                                    755,475.22        755,475.22
 (ii) Owners’ devoted and decreased
capital
1.Common shares invested by
shareholders
2. Capital invested by holders of other
equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other

(III) Profit distribution

1. Withdrawal of surplus reserves
2.   Distribution     for    owners   (or
shareholders)
3. Other
(IV) Carrying        forward     internal
owners’ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss           with surplus


                                                                   15
reserve
(V) Reasonable reserve

1. Withdrawal in the report period

2. Usage in the report period

(VI)Others

IV Balance at the end of the report 364,100,000.0                                                                -339,698,678.
                                                                           54,142,850.01                                           78,544,171.51
period                                                    0                                                                50


Legal Representative: Yuan Xiaoping                     Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren

                           Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                          Change of owners’ equity of parent company (Cont’)
                                          (Expressed in Renminbi unless otherwise stated)

                                                                                 Semi-annual of 2018

                                                                Other                            Ot
                                                                                                  he
                                                               equity
                                                                                                   r
                                                              instrument                          co
                                                                Pe                         Le     m
                                                                                                             Su
                                                                                           ss:    pr   Sp
                                                                 rp                                          rpl
                                                                                           tre    eh   eci
                  Item                                          etu                                           us Undistributed Ot Total owner's
                                                            Pr               Capital       as     en    al
                                              Share capital      al                                          res               he
                                                            efe              reserve       ur    siv   res          profit           equity
                                                                 ca Ot                                        er               r
                                                            rre                             y      e    er
                                                                pit he                                        ve
                                                             d                             sto   inc    ve
                                                                 al r                                          s
                                                            sto                            ck     o
                                                                 se                              me
                                                            ck
                                                                 cu
                                                                riti
                                                                 es

                                              364,100,000.0                                                      -341,107,435.     77,135,414.1
I. Balance at the end of the last year                                     54,142,850.01
                                                          0                                                                91                 0
         Add: Changes of accounting
policy
            Error correction of the last
period
          Other

II. Balance at the beginning of this 364,100,000.0                                                               -341,107,435.     77,135,414.1
                                                                           54,142,850.01
year                                                      0                                                                91                 0
III. Increase/ Decrease in this year
                                                                                                                  1,282,165.58     1,282,165.58
(Decrease is listed with “-”)
 (i) Total comprehensive income                                                                                   1,282,165.58     1,282,165.58
 (ii) Owners’ devoted and decreased
capital
1.Common shares           invested       by
shareholders



                                                                   16
2. Capital invested by holders of other
equity instruments
3. Amount reckoned into owners
equity with share-based payment
4. Other

(III) Profit distribution

1. Withdrawal of surplus reserves
2. Distribution       for   owners   (or
shareholders)
3. Other
(IV)     Carrying    forward    internal
owners’ equity
1. Capital reserves conversed to
capital (share capital)
2. Surplus reserves conversed to
capital (share capital)
3. Remedying loss with surplus
reserve
(V) Reasonable reserve

1. Withdrawal in the report period

2. Usage in the report period

(VI)Others

IV Balance at the end of the report 364,100,000.0                                   -339,825,270.   78,417,579.6
                                                             54,142,850.01
period                                          0                                             33              8



Legal Representative: Yuan Xiaoping            Accounting Principal: Fu Zongren
The Accounting Firm’s Principal: Fu Zongren
                 Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd.
                       NOTES TO FINANCIAL STATEMENT
                               SEMI-ANNUAL 2019
1. Company basic information
1.1 Company Profile


       Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. (hereinafter referred to as “the Company”),
       was founded as a standardized LLC on April 26, 1993, reorganized and incorporated on the basis of
       the former Hainan Sanya Dadonghai Tourism Centre Development Ltd. and approved by the Hainan
       Provincial Stock System Experimentation Leading Team Office with a document of Qiong Gu Ban Zi
       [1993] No. 11. On May 6, 1996, the Company underwent a restructuring and a corresponding division
       under the approval of the Hainan Provincial Securities Administration Office with a document of
       Qiong Zheng Ban [1996] No. 58. On October 8, 1996 and January 28, 1997, the Company, with duly
       approval, went public by issuing 80 million shares of B stock and 14 million shares of A stock
       respectively on Shenzhen Security Exchange. On June 20, 2007, the Company experienced a reform

                                                       17
    of non-tradable shares, through which non-tradable share holders of the Company got circulating right
    of their shares by paying shares to tradable share holders, and tradable share holders got paid three
    shares for every ten of their shares. The Company operates business in the industry of tourism and
    catering services.


    As at 30 June 2019, the Company's accumulative total issued capital was 364.1 million shares and the
    Company's registered capital was RMB 364.1 million. Legal representative: Yuan Xiaoping. Unified
    social credit code: 91460000201357188U. Domicile: Dadongha i, Hedong District, Sanya. Business
    scope: Accommodation and catering industry (limited to branches); photography; flower bonsai,
    knitwear, general merchandise, hardware, chemical products (except franchised operations), daily
    necessities, industrial means of production (except franchised operations), metal materials, machinery
    equipment; sales of train, bus, vehicle tickets on an agent basis etc. The Company's largest
    shareholder is Luoniushan Co., Ltd.


1.2 Scope to the consolidated financial statements
        Scope of the consolidated financial statement for the period has no changes, the subsidiary
included into the Company's scope of consolidated financial statements is as follows:
                                Name                                 Relationship with the Company
        Hainan Wengao Tourist Resources Development Co., Ltd.          A wholly-owned subsidiary


        The financial statements were approved by the board of directors of the Company on 8 August
2019 for disclosure.


2. Basis of preparation of the financial statements
2.1. Preparation basis


Based on going concern and according to actually occurred transactions and events, the Company prepared
financial statements in accordance with the Accounting Standards for Business Enterprises — Basic
Standards and the specific accounting standards, Application Guidance to the Accounting Standards for
Bus iness Enterprises, the interpretation of the Accounting Standards for Business Enterprises and other
relevant provisions (hereinafter referred to collectively as the "Accounting Standards for Business
Enterprises"), as well as the disclosure provisions of the Rules for the Compilation and Submission of
Information Disclosure by Companies Offering Securities to the Public No.15 - General Requirements for
Financial Reports (Revised in 2014).



2.2. Going concern


The Company currently has sufficient working capital and normal operating conditions. It is estimated that
the operating activities of the Company will continue in the next 12 months.



                                                      18
3. Significant accounting policies and accounting estimates


Main accounting policies and accounting estimates have no changes in the period


3.1. Statement on compliance with the Accounting Standards for Business Enterprises


The financial statements prepared by the Company comply with the requirements of the Accounting
Standards for Business Enterprises, and truly and completely present the financial position, operating
results, cash flows of the Company and other related information.



3.2. Accounting period


The accounting year is from January 1 to December 31 in calendar year.


3.3. Operating cycle
The Company's operating cycle is 12 months.


3.4. Reporting currency


The Company adopts RMB as its reporting currency.


3.5. Scope of consolidation (aggregation) of financial statements
As of 30 June 2018, the scope of consolidation (aggregation) of financia l statement including the
independent accounting of the non-legal person - South China Grand Hotel of Hainan Dadonghai Tourism
Centre (Holdings) Co., Ltd



3.6. Recognition criteria of cash and cash equivalents


For the purpose of preparing the statement of cash flows, the term “cash” refers to the cash on hand and
the unrestricted deposit. The term “cash equivalents” refers to short-term (maturing within three months
from acquisition) and highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of change in value.


3.7. Foreign currency transactions and conversion for statement in foreign languages


Foreign currency transactions are converted into RMB for recording purpose at the spot exchange rate on
the date when the transaction occurs.


                                                      19
Balances of foreign currency monetary items are measured at the spot exchange rate on the balance sheet
date. The exchange difference arising wherefrom shall be included in the current profit and loss, except
that those exchange differences arising from the special borrowings of foreign currency related to the
acquired and constructed assets qualified for capitalization shall be dealt with according to the principle of
borrowing cost capitalization. Foreign currency non-monetary items measured at historical costs shall still
be converted at the spot exchange rates on the date when the transactions occur, and the amount in
functional currency shall remain unchanged. Foreign currency non-monetary items measured at fair value
shall be translated at the spot exchange rates on the date when the fair value is determined. The exchange
difference arising wherefrom shall be included in the current profit and loss or capital reserves.


3.8. Financial instruments


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


1) Classification of financial instruments

Financial assets and liabilities are classified into the following categories according to the purpose of
acquisition: financial assets or financial liabilities measured at fair value and whose variation is included in
the current profit and loss, including financial assets or financial liabilities held for trading and financial
assets or financial liabilities directly designated to be measured at fair value through current profit and loss,
held-to-maturity investments, accounts receivables, available-for-sale financial assets and other financial
liabilities, etc.

2) Recognition basis and measurement method of financial instruments


1) Financial assets (financial liabilities) measured at fair value and whose variation is included in the
current profit and loss
Financial assets (financial liabilities) are initially recorded at fair values when acquired (deducting cash
dividends that have been declared but not distributed and bond interests that have matured but not been
drawn). Relevant transaction expenses are included in the current profit and loss.


The interests or cash dividends to be received during the holding period are recognized as investment
income. Change in fair values is included in the current profit and loss at the end of the period.


Difference between the fair value and initial book-entry value is recognized as investment income upon
disposal; meanwhile, adjustment is made to gains or losses from changes in fair values.


2) Held-to-maturity investments
Held-to-maturity investments are initially recorded at fair values plus the related trade expenses when
acquired (deducting bond interests that have matured but not been drawn).


                                                       20
The interest revenue calculated at amortization cost and effective interest rate (nominal interest rate is
adopted when the difference between the actual interest rate and the nominal interest rate is minor) during
the holding period is recognized as investment income. Effective interest is recognized when obtained, and
remains unchanged in the predictable holding period or applicable shorter period.


The difference between the amount received and the book value of the investment is included in the
investment profit and loss upon disposal.


3) Accounts receivable
For creditor’s rights receivable arising from external sales of goods or rendering of service by the
Company and other creditor's rights of other enterprises (excluding liability instruments quoted in an
active market) held by the Company, including accounts receivable, other receivables, notes receivable
and prepayments, etc., the initial recognition amount shall be the contract price or agreement price
receivable from purchasing party. Accounts receivable with financing nature are initially recognized at
their present values.


The difference between the amount received and the book value of the accounts receivable is included in
the current profit and loss upon recovery or disposal.


4) Available-for-sale financial assets
Available-for-sale financial assets are initially recorded at fair values plus the related trade expenses when
acquired (deducting cash dividends that have been declared but not been paid or bond interests that have
matured but not been drawn).


The interests or cash dividends to be received during the holding period are recognized as investment
income. It is measured in fair value at the end of the period and change in fair values is included in other
comprehensive income at the end of the period. However, the equity instrument investments unquoted in
an active market and whose fair value cannot be measured reliably, and the derivative financial assets
which are connected with the said equity instrument and must be settled by delivering the said equity
instrument shall be measured on the costs basis.


The difference between the amount received and the book value of the financial asset is included in the
investment profit and loss upon disposal. Meanwhile, the corresponding part of fair value accumulated
change accounted as other comprehensive income is transferred into investment profit or loss.


5) Other financial liabilities
Other financial liabilities are initially recognized at the sum of fair value and transaction expenses and
subsequently measured at amortized costs.

                                                     21
3) Recognition basis and measurement method of transfer of financial assets


When transfer of financial assets occurs, if nearly all of the risks and rewards of ownership of the financial
assets have been transferred to the transferee, the Company derecognizes the financial assets; if nearly all
of the risks and rewards of ownership of the financial assets are retained, the Company shall not
derecognize the financial assets.


The principle of substance over form is adopted to determine whether the transfer of a financial asset
satisfies the criteria as described above for derecognition of a financial asset. The Company shall classify
the transfer of a financial asset into the entire transfer and the partial transfer of financial asset. If the entire
transfer of financial asset satisfies the criteria for derecognition, the difference between the amounts of the
following two items shall be included in the current profit and loss:
1) The book value of the transferred financial asset;
2) The sum of the consideration received from the transfer and the accumulated amount of the changes in
fair value originally and directly included in owners’ equity (the situation where the financial asset
transferred is an available-for-sale financial asset is involved in)


If the partial transfer of financial asset satisfies the criteria for derecognition, the entire book value of the
transferred financial asset shall be split into the derecognized and recognized part according to their
respective fair value and the difference between the amounts of the following two items shall be included
in the current profit and loss:
1) The book value of derecognized part;
2) The sum of the consideration for the derecognized part and the portion of derecognition corresponding
to the accumulated amount of the changes in fair value originally and directly included in owners’ equity
(the situation where the financial asset transferred is an available-for-sale financial asset is involved in).


If the transfer of financial assets does not meet the derecognition criteria, the financial assets shall continue
to be recognized, and the consideration received will be recognized as a financial liability.

4) Derecognition criteria of financial liabilities


A financial liability shall be totally or partly derecognized if its present obligations are totally or partly
dissolved. Where the Company enters into an agreement with a creditor so as to substitute the existing
financial liabilities with any new financial liability, and the new financial liability is substantially different
from the contractual stipulations regarding the existing financial liability, it shall derecognize the existing
financial liability, and shall at the same time recognize a new financial liability.


Where substantial revisions are made to some or all of the contractual stipulations of the existing financial


                                                         22
liability, the Company shall derecognize the existing financial liability totally or partly, and at the same
time recognize the financial liability with revised contractual stipulations as a new financial liability.


Upon total or partial derecognition of financial liabilities, the difference between the book value of the
financial liabilities derecognized and the consideration paid (including non-cash assets surrendered or new
financial liabilities assumed) shall be included in the current profit and loss.


Where the Company redeems part of its financial liabilities, it shall, on the redemption date, allocate the
entire book value of whole financial liabilities according to the comparative fair value of the part that
continues to be recognized and the de-recognized part. The difference between the book value allocated to
the derecognized part and the considerations paid (including non-cash assets surrendered and the new
financial liabilities assumed) shall be included in the current profit and loss.



5) Method of determining the fair value of financial assets and financial liabilities


For financial instruments with active market, their fair values are determined with quoted market price.
For financial instruments without active market, their fair values are determined by using valuation
technique. During the valuation, the Company use valuation techniques that are appropriate in the
circumstances and for which sufficient data and other information are available to measure fair value,
select inputs that are consistent with the characteristics of the asset or liability that market participants
would take into account in a transaction for the asset or liability, and give priority to the use of relevant
observable inputs. Unobservable inputs are only adopted when relevant observable inputs cannot be
obtained or are impracticable to obtain.



6) Providing of impairment provision on financial assets (exclude receivable accounts)


The Company performs inspection on the book value of financial assets apart from those financial assets
measured at fair value through current profit and loss on the balance sheet date. Impairment provision is
required if objective evidences of impairment occurs to the financial assets.


1) Impairment provision of available-for-sale financial assets:
If there is a serious decline in fair value of the available-for-sale financial assets at the end of the period, or
such decline is not temporary after considering various factors, the impairment shall be confirmed, the
accumulated losses due to decreases in fair value previously included in owner’s equity shall be reversed,
and the impairment loss shall be recognized.


If, in a subsequent period, the carrying amount of available-for-sale debt instruments investments increases


                                                        23
and the increase can be related objectively to an event occurring after the impairment was recognized, the
previously recognized impairment losses are reversed, included in current profit or loss.


The impairment losses of available-for-sale equity instruments cannot be reversed through profit or loss.


2) Impairment provision of held-to-maturity investment:
Measurement of held-to-maturity investment impairment loss is governed by measurement of account
receivables impairment loss.
3.9. Account receivable
1) Account receivable with individually significant amount and with bad debt provision accrual
independently
                Basis and standard for "individually Top 5 accounts receivable and other receivables by individual
                significant"                            amount at the end of the year

                                                        The Company will separately conduct an impairment test on an
                                                        individual basis and the allowance for bad debts will be made at the
                                                        lower of the present value of the expected future cash flow and the
                M ethods for provision for bad debts book value thereof and included in current profit and loss. Those do
                of receivables with individually        not impair after the separate test shall be included into
                significant amount:                     corresponding portfolio for provision for bad debts. If separate test
                                                        indicates that there is impairment of receivables, they shall not be
                                                        included the receivables portfolio with similar risk credit
                                                        characteristics for an impairment test.


               2) Receivables with bad debt provision accrual by credit portfolio:
                            Portfolio                                M ethods for provision for bad debts

                 Receivables provided for bad
                                                   Aging analysis
                 debts on a portfolio basis

                               Aging                Provision ratio for receivables     Proportion ratio for other receivables

                Within 1 year (inclusive)                                     0.00%                                    0.00%

                1-2 years                                                     5.00%                                    5.00%

                2-3 years                                                   15.00%                                    15.00%

                3-4 years                                                   25.00%                                    25.00%
                4-5 years                                                   50.00%                                    50.00%
                Over 5 years                                               100.00%                                  100.00%



              3) Accounts receivable with individually insignificant amounts and individual
              allowance for bad debt



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                                                              At the end of the year, there are objective evidences showing
                                                              that the individual balances below top five are impaired; for
                Reasons for separate provision of allowance
                                                                example, the debtor is dissolved, bankrupts or dies, and
                for bad debts
                                                                 therefore the receivables cannot be recovered after the
                                                                       bankruptcy property or the estate is repaid.

                                                                 if there is an objective evidence that the impairment on
                                                              receivables has occurred, such receivables shall be separated
                                                              from relevant portfolio to conduct impairment test separately,
                Provision method of allowance for bad
                                                                 based on which the impairment losses are recognized.
                debts
                                                                  Receivables other than accounts receivable and other
                                                              receivables are subject to impairment provision by using the
                                                                             specific identification methods.

3.10. Inventories
1) Classification
Inventories are classified into: raw materials, stock commodities, low -cost consumables, good materials,
fuel, etc.

2) Valuation method of inventories dispatched
Stock commodity is accounted for at the selling price and the difference between the purchase and sale
prices are adjusted on a monthly basis by using the integrated price difference rate. The purchase and
storage of all materials of inventories is measured at actual cost, and by using the first-in first-out method
when applied for use. Low-cost consumables are amortized at lump-sum method when applied for use.
3) Determining basis of the net realizable value of inventories and method for inventory impairment
provision
After the comprehensive inventory count at the end of the period, provisions for inventory depreciation reserve
are made or adjusted at the lower of their costs or net realizable values.
For merchandise inventories for direct sale, including stock commodities, goods in progress and materials
for sale, during normal operations, their net realizable values are recognized at the estimated selling prices
minus the estimated selling expenses and the relevant taxes and surcharges; for material inventories held
for production, their net realizable values are recognized at the estimated selling prices of finished goods
minus estimated costs until completion, estimated selling expenses and relevant taxes and surcharges.
The provisions for inventory depreciation reserve are made on an individual basis at the end of the period;
for inventories with large quantities and relatively low unit prices, the provisions for inventory
depreciation reserve are made on a category basis. For inventories related to the product portfolios
manufactured and sold in the same area, and of which the final usage or purpose is identical or similar
thereto, and which is difficult to separate from other items for measurement purposes, the provisions for
inventory depreciation reserve are made on a portfolio basis.
Where the previous factors affecting the written-down of the value of inventory have disappeared, the
amount of write-down shall be resumed and be reversed from the original provis ion for inventory
devaluation with the reversal being included in current profit and loss.



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4) Inventory system
The perpetual inventory system is adopted for accounting.

5) Amortization methods for low-cost consumables and packaging materials
1) Low-cost consumables are amortized at lump-sum method;
2) Packaging materials: lump-sum write-off method.
3.11. Long-term equity investments


1) Judgment criteria for common control and significant influence
Joint control refers to the control shared over an arrangement in accordance with the relevant stipulations,
and the decision-making of related activities of the arrangement should not be made before the party
sharing the control right agrees the same. Where the Company exercises joint control over the investee
together with other parties to the joint venture and enjoys the right on the investee's net assets, the investee
is a joint venture of the Company.
Significant influence refers to the power to participate in making decisions on the financial and operating
policies of an enterprise, such as appointing representative to the board of directors or similar organs of
authority of the investee, but not the power to control the investee, or jointly control, the formulation of
such policies with other parties. Where an investor is able to have significant influences on an investee, the
investee shall be the Company's associate.

2) Determining of initial investment cost
1) Long-term equity investment acquired from business combination
Bus iness combination under the common control: if the Company pays a consideration to the combinee in
cash, by transferring non-cash assets or by assuming debts, the share of book value of its owners' equity in
the combinee in the consolidated financial statements of the ultimate controlling party shall be regarded,
on the merger date, as the initial investment cost of the long-term equity investment. If there is a difference
between the initial investment cost of the long-term equity investment and the total of book values of the
paid cash, transferred non-cash assets and of assumed debts as well as the face value of issued share, the
difference shall be used to adjust the share premium in the capital reserve; and if the share premium in the
capital reserve is insufficient to be offset, retained earnings shall be adjusted.
In case the Company can exercise control over the investee under common control for additional
investment or other reasons, the initial investment cost of long-term equity investments is recognized at
the share of book value of net asset of the acquiree after the combination in the consolidated financial
statements of the ultimate controller on the combination date. The stock premium should be adjusted at the
difference between the initial investment cost of long-term equity investments on the combination date and
the book value of long-term equity investments before the combination plus the book value of
consideration paid for additional shares; if there is no sufficient stock premium for write-downs, the
retained earnings are adjusted.




                                                        26
Bus iness combination not under the common control: the Company recognizes the combination cost
determined on the combination date as the initial cost of long-term equity investments. Where the
Company can control the investee not under common control from additional investments, the initial
investment cost should be changed to be accounted for under the cost method and recognized at the sum of
the book value of equity investments originally held and newly increased investment cost. Under business
combination not under the common control, the auditing, legal services, consulting and other intermediary
fees and other related administrative expenses for business combination will be included into current profit
and loss upon occurrence; the transaction costs for the issuance of equity securities or debt securities shall
be included into the initial recognition amount of equity securities or debt securities.

2) Long-term equity investments obtained by other means
For long-term equity investments acquired from making payments in cash, the initial cost is the actually
paid purchase cost.
For long-term equity investments acquired from issuance of equity securities, the initial investment cost is
the fair value of the issued equity securities.
If the exchange of non-monetary assets has commercial substance and the fair values of assets traded out
and traded in can be measured reliably, the initial cost of long-term equity investment traded in with
non-monetary assets are determined based on the fair values of the assets traded out and the relevant taxes
and surcharges payable unless there is any conclusive evidence that the fair values of the assets traded in
are more reliable; if the exchange of non-monetary assets does not meet the above criteria, the book value
of the assets traded out and the relevant taxes and surcharges payable are recognized as the initial cost of
long-term equity investment traded in.
For long-term equity investment acquired from debt restructuring, the initial cost is determined based on
the fair value.
3. Subsequent measurements and recognition of gain or loss
1) Long-term equity investment under cost method

Long-term equity investments in subsidiaries are accounted for under the cost method. Except for the
actual price paid for acquisition of investment or the cash dividends or profits contained in the
consideration which have been declared but not yet distributed, the Company recognizes the investment
income in the current year at the cash dividends or profits declared by the investee.


2) Long-term equity investment accounted for in the equity method

The Company's long-term equity investments in associates and joint ventures are accounted for by using
the equity method. If the initial cost is more than the share of the fair value of the investee' identifiable net
asset to which the Company shall be entitled when investing, the initial cost of the long-term equity
investment will not be adjusted. If the initial cost of a long-term equity investment is less than the share of
the fair value of the investee's identifiable net asset to which the Company shall be entitled when investing,
the difference shall be included in the current profit or loss.




                                                       27
The Company respectively recognizes the investment income and other comprehensive income according
to the shares of net profit or loss and other comprehensive income realized by the investee that should
enjoyed or assumed by the Company, and adjusts the book value of long-term equity investment;
according to the profit declared to be distributed by the investee or the part shall be enjoyed cash dividends
calculation, to reduce the book value of long-term equity investment correspondingly; for other changesin
owners' equity excepting for ex all profit or loss of the investee, other comprehensive income and profit
distribution, the book value of long-term equity investment shall be adjusted and included in the owners'
equity.


When recognizing the share of net profit or loss of the investee that the Company shall enjoy, based on fair
value of various identifiable assets and others of the investee on acquisition and according to accounting
policies and accounting periods of the Company, the Company shall recognize such share after making
adjustments to net profit of the investee. When holding the investment, the investee should prepare the
consolidated financial statements, it shall account for the investment income based on the net profit, other
comprehensive income and the changes in other owner's equity attributable to the investee.
The Company shall write off the part of incomes from internal unrealized transactions between the
Company and associates and joint ventures which are attributable to the Company according to the
corresponding ratio and recognize the profit and loss on investments on such basis. Where the losses from
internal transactions between the Company and the investee fall into the scope of assets impairment loss,
the full amount of such losses should be recognized. For transactions on investments or sales of assets
between the Company and associates and joint ventures, where such assets constitute business, they should
be accounted for according to the relevant policies.


When the Company recognizes its share of loss incurred to the investee, treatment shall be done in the
following sequence: firstly, the book value of the long-term equity investment shall be reduced; secondly,
where the book value thereof is insufficient to cover the share of losses, investment losses are recognized
to the extent of book value of other long-term equities which form net investment in the investee in
substance and the book value of long term receivables shall be reduced. Finally, after all the above
treatments, if the Company is still responsible for any additional liability in accordance with the provisions
stipulated in the investment contracts or agreements, provisions are recognized and included into current
investment loss according to the obligations estimated to undertake. An investing party shall recognize the
net loss incurred by the invested entity until the book value of the long-term equity investment and other
long-term interests which substantially form the net investment in the invested entity are reduced to zero,
unless the investing party is obliged to undertake extra losses. If the invested entity realizes any net profit
later, the investing party shall, after the amount of its attributable share of profits offsets its attributable
share of the unrecognized losses, resume recognizing its attributable share of profits.


3) Disposal of long-term equity investments


                                                       28
For disposal of long-term equity investments, the difference between the book value and the actual price
shall be included into the current profit or loss.


Where a long-term equity investment is accounted for under the equity method, accounting treatment
should be made on the part which is originally included in other comprehensive income according to
corresponding ratio by using the same basis for the investee to directly dispose of the relevant assets or
liabilities when the investments are disposed of. Owner's equity recognized from the investee's changes in
other owner's equity other than net profit or loss, other comprehensive income and profit distribution
should all transferred to the current profit and loss in proportion.


In case the joint control or significant influence over the investee is lost for disposing part of equity
investments or other reasons, the remaining equity will be changed to be accounted for according to the
recognition and measurement principles of financial instruments. The difference between the fair value
and the book value on the date of the loss of joint control or significant influence should be included in the
current profit and loss. As to other comprehensive income recognized based on measurement of the
original equity investment under the equity method, accounting treatment shall be made on the same basis
as would be required if the investee had directly disposed of the assets or liabilities related thereto when
measurement under the equity method is terminated. Owner's equity recognized from the investee's
changes in other owner's equity other than net profit or loss, other comprehensive income and profit
distribution should all transferred to the current profit and loss when the equity method confirmed is no
longer adopted.


Where the Company loses the control over the investee due to disposal of partial equity investments or
other reasons, when it prepares separate financial statements, the remaining equity after disposal that can
jointly control or have significant influence on the investee will be measured at the equity method, and the
remaining equity should be deemed to have been adjusted at equity method on acquisition;

If the remaining equity after disposal cannot exercise joint control or significant influence on the investee,
such investments should be accounted for according to the provisions on the recognition and measurement
of financial instruments and the difference between fair value and book value on the date of loss of the
control should be included in the current profit and loss.


Where the disposed equities are acquired by the enterprise combination due to the reasons such as
additional investment, the remaining equities after the disposal are calculated based on the cost method or
equity method in preparing the individual financial statements, and other comprehensive income and other
owners' equity recognized because of the equity method adopted for the calculation of the equity
investment held prior to the purchase date are carried forward in proportion; the remaining equities after
the disposal are changed to be made in accordance with the relevant provisions in the recognition and
measurement criteria of financial instruments while other comprehensive income and other owners' equity

                                                       29
are carried forward in full.


3.12. Investment property
M easurement mode
M easured by cost method

Depreciation or amortization method


Investment properties are properties to earn rentals or for capital appreciation or both. Examples include
land leased out under operating leases, land held for long-term capital appreciation, buildings leased out
under operating leases, (including buildings that have been constructed or developed for future lease out
under operating leases, and buildings that are being constructed or developed for future lease out under
operating leases).


The Company measures the existing investment properties by using the cost model. For investment
property measured by using the cost model, the buildings for lease shall be depreciated by using policies
the same as used for fixed assets of the Company, and the land use rights for lease shall be amortized by
using the same policies as applicable to intangible assets.


3.13. Fixed assets

1) Recognition criteria of fixed assets


Fixed assets refer to the tangible assets held for the purpose of producing commodities, rendering services,
renting or business management with useful lives exceeding one year. Fixed assets are recognized when
they simultaneously meet the following conditions:
(1) It is probable that the economic benefits relating to the fixed assets will flow into the Company; and
(2) The costs of the fixed asset can be measured reliably.


                2) Depreciation method of fixed assets


                                                                   Year for       Residual Yearly depreciation
                        Asset type        Depreciation method
                                                                 depreciation    value rate        rate

                Houses and buildings    Straight-line method        20-40            5         4.75-2.37
                M echanical equipment   Straight-line method        8-20             5         11.87-4.75
                Entertainment equipment Straight-line method        5-16             5          19-5.93
                Transportation
                                        Straight-line method        7-12             5         13.57-7.91
                equipment

3.14. Construction in progress

The book-entry values of the fixed assets are stated at total expenditures incurred before reaching working
condition for their intended use. For construction in progress that has reached working conditions for its

                                                        30
intended use but for which the completion of settlement has not been handled, it shall be transferred into
fixed assets at the estimated value according to the project budget, construction price or actual cost, etc.
from the date when it reaches the working conditions for its intended use. The fixed assets shall be
depreciated in accordance with the Company’s policy on fixed asset depreciation. Adjustment shall be
made to the originally and provis ionally estimated value based on the actual cost after the completion of
settlement is handled, but depreciation already provided will not be adjusted.



3.15 Borrowing costs
1) Recognition principles of capitalization of borrowing costs
Borrowing costs include the interest of borrowings, the amortization of discount or premium, auxiliary
expenses, exchange differences incurred by foreign currency borrowings, etc.
The borrowing costs incurred to the Company and directly attributable to the acquisition and construction
or production of assets eligible for capitalization should be capitalized and recorded into relevant asset
costs; other borrowing costs should be recognized as costs according to the amount incurred and be
included into the current profit and loss.
Assets eligible for capitalization refer to fixed assets, investment property, inventories and other assets
which may reach their intended use or sale status only after long-time acquisition and construction or
production activities.
Borrowing costs may be capitalized only when all the following conditions are met at the same time:
1) Asset disbursements, which include those incurred by cash payment, the transfer of non-cash assets or
the undertaking of interest-bearing debts for acquiring and constructing or producing assets eligible for
capitalization, have already been incurred;
2) Borrowing costs have already been incurred;
3) Purchase, construction or manufacturing activities that are necessary to prepare the assets for their
intended use are in progress.

2) Capitalization period of borrowing costs
Capitalization period refers to the period from commencement of capitalization of borrowing costs to its
cessation; period of suspension for capitalization is excluded.
Capitalization of borrowing costs should cease when the acquired and constructed or produced assets
eligible for capitalization have reached the working condition for their intended use or sale.
When some projects among the acquired and constructed or produced assets eligible for capitalization are
completed and can be used separately, the capitalization of borrowing costs of such projects should be
ceased.
If all parts of the acquired and constructed or produced assets are completed but the assets cannot be used
or sold externally until overall completion, the capitalization of borrowing costs should be ceased at the
time of overall completion of the said assets.

3) Period of suspension for capitalization


                                                      31
If the acquisition and construction or production activities of assets eligible for capitalization are
abnormally interrupted and such condition lasts for more than three months, the capitalization of
borrowing costs should be suspended; if the interruption is necessary procedures for the acquired,
constructed or produced assets eligible for capitalization to reach the working conditions for its intended
use or sale, the borrowing costs continue to be capitalized. Borrowing costs incurred during the
interruption are recognized as the current profit and loss and continue to be capitalized until the acquisition,
construction or production of the asset restarts.
4) Calculation of capitalization amount of borrowing costs
As for special borrowings borrowed for acquiring and constructing or producing assets eligible for
capitalization, borrowing costs of special borrowing actually incurred in the current period less the interest
income of the borrowings unused and deposited in bank or return on temporary investment should be
recognized as the capitalization amount of borrowing costs.
As for general borrowings used for acquiring and constructing or producing assets eligible for
capitalization, the interest of general borrowings to be capitalized should be calculated by multiplying the
weighted average of asset disbursements of the part of accumulated asset disbursements exceeding special
borrowings at end of each month by the capitalization rate of used general borrowings. The capitalization
rate is calculated by weighted average interest rate of general borrowings.
As for borrowings with discount or premium, the to-be-amortized discount or premium in each accounting
period should be recognized by effective interest rate method, and the interest for each period should be
adjusted.
3.16. Intangible assets
1) Valuation method of intangible assets
1) The Company initially measures intangible assets at cost on acquisition;
The costs of externally purchased intangible assets include purchase prices, relevant taxes and surcharges
and other directly attributable expenditures incurred to prepare the assets for their intended use. If the
payment for an intangible asset is delayed beyond the normal credit conditions and it is of the financing
nature, the cost of the intangible asset shall be determined on the basis of the current value of the purchase
price.
For an intangible asset obtained in debt restructuring by a debtor for the settlement of relevant liability, the
book-entry value shall be initially recognized based on the fair value of the intangible asset. Difference
between the book value of restructured debts and the fair value of the intangible asset used for debt off -set
shall be included in the current profit or loss;
On the premise that non-monetary assets trade is of commercial nature and the fair value of the assets
traded in or out can be measured reliably, the intangible assets traded in with non-monetary assets should
be recognized at the fair value of the assets traded out, unless any unambiguous evidence indicates that the
fair value of the assets traded in is more reliable; as to the non-monetary assets trade not meeting the
aforesaid premise, the book value of the assets traded out and related taxes and surcharges payable should
be recognized as the cost of the intangible assets, with gains or losses not recognized.




                                                      32
For intangible assets acquired from business combination under common control, the initial book value are
initially recognized at the book value of the combinee; for intangible assets acquired from business
combination not under common control, the initial book value are initially recognized at the fair value.

Costs of intangible assets developed internally and independently include: the costs of materials and labor
services used to develop the intangible assets, the registration fee, the amortization of other patents and
franchise used in the process of development, the interest expenses meeting the condition for capitalization,
and other direct expenses for preparing the intangible assets for their intended use.


2) Subsequent measurement
The useful lives of the intangible assets are analyzed and determined on their acquisition.
For intangible assets with definite useful lives, the Company shall adopt the straight-line method for
amortization within the period during which they can bring economic benefits to the Company; where the
period during which they can bring economic benefits to the Company cannot be forecast, those intangible
assets shall be deemed as assets with indefinite lives and no amortization will be made.
2) Estimates of useful lives of intangible assets with definite useful lives


                                  Item                       Estimated useful lives              Basis

               Land use rights                                     50 years             Use term for the land use
                                                                                               right title


3) Judgment basis for intangible assets with indefinite useful lives
As at the balance sheet date, the Company has no intangible assets with indefinite useful lives.

3.17. Impairment of long-term assets
For the long-term equity investments, investment properties, fixed assets, construction in progress,
intangible assets, and other long-term assets measured at cost model, if there are signs of impairment, an
impairment test will be conducted on the balance sheet date. If impairment test results indicate that the
recoverable amounts of the assets are lower than their book value, the provision for impairment is made
based on the differences, which are recognized as impairment losses. The recoverable amounts of
intangible assets are the higher of their fair values less costs to sell and the present values of the future
cash flows expected to be derived from the assets. The assets impairment provision is calculated and made
on an individual basis. If it is difficult for the Company to estimate the recoverable amount of the
individual asset, the recoverable amount of an asset group to which the said asset belongs to will be
determined. Asset group is the minimum combination of assets that can independently generate cash
inflows.
After the losses from asset impairment are recognized, they are not reversed in subsequent periods.
3.18. Long-term deferred expenses

Long-term deferred expenses refer to various expenses which have been already incurred but will be born
in the reporting period and in the future with an amortization period of over one year.



                                                      33
1) Amortization method
Long-term deferred expenses are evenly amortized over the beneficial period
2) Amortization period

                                            Item                                Amortization period

                Hotel exterior decoration                                              4-year
                Fire stairs renovation                                                 4-year
                C FLOOR ROOM RENOVATION                                                5-year
                Villa renovation                                                       5-year
                Swimming pool renovation                                               5-year
3.19. Employee compensation

1) Accounting method for short-term compensation


During the accounting period when employees serve the Company, the actual short-term compensation is
recognized as liabilities and included in current profit and loss or costs associated with assets.

The appropriate amount of employee compensation payable will be determined during the accounting
period when the employees provide services for the Company based on the medical insurance, work injury
insurance and maternity insurance and other social insurance and housing fund paid by the Company for
employees, as well as trade union funds and employee education funds withdrawn according to provisions
at the accrual basis and accrual ratio.
The employee benefits in the non-monetary form shall be measured at fair value.
2) Accounting method for post-employment benefits
The Company will pay basic old-age insurance and unemployment insurance in accordance with relevant
provisions of the local government for employees. During the accounting period when they provide
services for the Company, the amount payable will be calculated at the basis and proportion specified by
local authorities, recognized as a liability and charged into current profit and loss or costs associated with
assets.

3) Accounting method for dismiss welfare
Where the Company cannot unilaterally withdraw the dismissal welfare offered in view of the cancellation
of the labor relation plan or the layoff proposal, or recognizes the cost or expenses as to the restructuring
involving the payment of dismissal welfare (whichever is earlier), the employee compensation arising
from the dismissal welfare should be recognized as the liabilities and charged to the current profit or loss.

3.20. Estimated liabilities

When the Company is involved in litigation, debt guarantees, loss-making contract, reorganization matters,
if such matters are likely to be satisfied by delivery of assets or provision of services in the future and the
amount can be measured reliably, they shall be recognized as estimated liabilities.



1) Recognition criteria for estimated liabilities
When an obligation relating to a contingency meets all the following conditions at the same time, it is

                                                      34
recognized as an estimated liability:
1) Such obligation is a present obligation of the Company;
2) The performance of such obligation may well cause outflows of economic benefits from the Company;
and

3) The amount of such obligation can be measured reliably.

2) Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured as the best estimate of expenses required
for the performance of relevant present obligations.
When the Company determines the best estimate, it should have a comprehensive consideration of risks
with respect to contingencies, uncertainties and the time value of money. If the time value of money is
significant, the best estimates will be determined after discount of relevant future cash outflows.
The best estimates shall be treated as follows in different circumstances:
If there is continuous range (or interval) for the necessary expenses, and probabilities of occurrence of all
the outcomes within this range are equal, the best estimates will be determined at the average amount of
upper and lower limits within the range.
If there is no continuous range (or interval) for the necessary expenses, or probabilities of occurrence of all
the outcomes within this range are unequal despite such a range exists, in case that the contingency
involves a single item, the best estimate shall be determined at the most likely outcome; if the contingency
involves two or more items, the best estimate should be determined according to all the possible outcomes
with their relevant probabilities.
When all or part of the expenses necessary for the settlement of estimated liabilities of the Company are
expected to be compensated by a third party, the compensation shall be separately recognized as an asset
only when it is virtually certain to be received. The compensation recognized shall not exceed the book
value of the estimated liabilities.
3.21. Revenue

1) Recognition and measurement principles for revenues from sale of goods
1) General recognition and measurement principles for revenue from sales of goods
Income from sales of goods is recognized when the Company has transferred to the buyer the significant
risks and rewards of ownership of the goods; the Company retains neither continuous management rights
associated with ownership of the goods sold nor effective control over the goods sold; the relevant amount
of income can be measured reliably; it is highly likely that the economic benefits associated with the
transaction will flow into the Company; and the relevant amount of cost incurred or to be incurred can be
measured reliably.
2) Recognition criteria and time of revenue from sale of goods of the Company
In the provision of hotel housing services at the same time, the Company provides goods to customers and
will prepare daily sales list after confirming with the Rooms Department and the hotel front desk. Based
on the sales list, the finance department confirms that the major risks and rewards of ownership of the
goods have been transferred to the customer and then the sales revenue is recognized.

                                                       35
2) Recognition and measurement principles of revenue from rendering of service
1) For the hotel rooms, catering (breakfast) and other services to be provided by the Company, after they
are provided, and the Company checks with the sales department and the front check, the Company will
prepare the daily sales reports and accounts receivable list to the finance department, which will review the
same, after which, the revenue will be recognized.
2) For the revenue from restaurants and venues contracted out, they will be recognized in accordance with
the period stipulated in the contract or agreement and the collection timing.

3) Recognition basis for revenue from transfer of right to use assets
When the economic benefit related to the transaction is probably to flow into the Company and the
relevant revenue can be reliably measured, the revenue from transfer of the asset use right is determined as
follows: the revenue from transferring use right of assets shall be recognized based on the following
circumstances:
1) The amount of interest income is determined based on the time and effective interest rate for others to
use the monetary funds of the Company.
2) The amount of revenue from usage is determined based on the charging time and method as agreed in
relevant contract or agreement.

3.22. Government subsidies

1) Judgment criteria and accounting method for government subsidies related to assets


Set off the book value of related assets or be recognized as deferred income. Government subsidies related
to assets are recognized as deferred income to be evenly distributed over the useful lives of the relevant
assets and shall be recorded in current profit or loss by stages in a reasonable and systematic manner.
Government subsidies measured in nominal amounts, are directly included in current profits and losses.
Where relevant assets are sold, transferred, scraped or damaged before the end of their lives, balance of the
unallocated deferred income is transferred to the current profit and loss on asset disposal.



2) Judgment criteria and accounting method for government subsidies related to income


1) To be used as compensation for future costs, expenses or losses are recognized as deferred income and
are recorded in current profits and losses or used to write off the related costs where the relevant costs,
expenses or losses are recognized.
2) To be used to compensate the related costs, expenses or losses incurred by the Company are directly
included in current profit and loss or used to write off the related costs.
3) Accounting treatment will be conducted for government subsidies that at the same time include those
associated with assets and income by different parts: if it is difficult to distinguish, they will be deemed as
government subsidies associated with income.



                                                       36
3.23. Major accounting policies and estimates changes
The Company’s major accounting policies and estimates have no changes in the period

4. Taxation

                 Major tax types and tax rates applicable to the Company


                  Taxation type                      Basis of tax assessment                              Tax rate

                                     Output VAT is calculated based on taxable sales revenue
                                     and service revenue calculated in accordance with tax
                Value added tax
                                     laws and VAT payable or taxable sales revenue shall be         5%、6%、9%、13%
                (VAT)
                                     the difference after deducting the input VAT deductible
                                     in the same period

                Urban
                maintenance and      Levied based on VAT payable                                             7%
                construction tax

                Education surtax     Levied based on VAT payable                                             3%

                Local educational
                                     Levied based on VAT payable                                             2%
                surcharge

                                     Remaining value after deducting 30% from the original
                Housing property
                                     value of the house (including the occupied land price)             1.2%、12%
                tax
                                     and rental income

                Land use tax         Land area

                Enterprise income
                                     Levied based on taxable income                                         25%
                tax



5. Notes to the items of financial state ments

(The monetary unit refers to RMB/CNY unless specified)
5.1 Monetary fund
                                   Item                                 Ending balance               Beginning balance

        Stock cash                                                                 476,191.77                      347,782.65

        Bank Deposit                                                            15,634,704.18                15,016,572.65

        Other monetary fund

        Total                                                                   16,110,895.95                15,364,355.30

5.2 Accounts receivable
        1) Accounts receivable by type

                                              Ending balance                                  Beginning balance
                Type                             Provision for                                     Provision for      Book
                               Book balance                        Book value    Book balance
                                                  bad debts                                          bad debts        value


                                                              37
                                    Pro                                                 Pro
                                                     Accru                                                Accru
                                    port                                                port
                        Amount             Amount      al                   Amount             Amount       al
                                    ion                                                 ion
                                                     ratio                                                 ratio
                                     %                                                  %

Accounts
receivable with
significant single
amount subject to
provision for bad
debts on a single
basis

Accounts
receivable with
                                    100 74,075.6 32.20                                  100. 74,075.6 14.80 426,434.8
provision for bad      230,062.48                               155,986.88 500,510.47
                                     .%         0           %                             %           0          %          7
debts based on
portfolios

Accounts
receivable with
insignificant single
amount but
accrued for
provision of bad
debt on a single
basis

                                    100 74,075.6 32.20                                  100. 74,075.6 14.80 426,434.8
Total                  230,062.48                               155,986.88 500,510.47
                                     .%         0           %                             %           0          %          7


Accounts receivable accrued for provision of bad debt by aging analysis method in portfolio:

                                                                                      Ending balance
                             Aging                                      Accounts        Provision for
                                                                                                            Accrual ratio
                                                                        receivable       bad debts

Within 1 year                                                            139,108.68

1-2 years                                                                    566.00               28.30                5.00%

2-3 years                                                                    785.00              117.75               15.00%

3-4 years                                                                 18,633.00             4,658.25              25.00%

4-5 years                                                                  3,397.00             1,698.50              50.00%

More than five years                                                      67,572.80            67,572.80             100.00%

Total                                                                    230,062.48            74,075.60              20.47%
2) Top five accounts receivable in terms of ending balance collected by the debtor

                     Name                           Relationship      Book balance            Aging         Proportion in


                                                       38
                                                      with the                                     total accounts
                                                     Co mpany                                      receivable (%)
        Shanghai Hecheng International Travel Non related          35,788.40      Within 1 year       15.56%
        Service Co., Ltd.                              party
        Yangpu    Huayu       Road    and    Bridge Non related    18,633.00      More than five       8.10%
        Technology Co., Ltd.                           party                          years
        Guangzhou Institute of Design               Non related    38,980.00      More than five      16.94%
                                                       party                          years
        Shenzhen Tenpay Technology Co., Ltd.        Non related    46,621.46      Within 1 year       20.26%
                                                       party
        Tianjin Watermelon Touris m Limited         Non related    24,414.82      Within 1 year       10.61%
        Liability Co mpany                             party
                            Total                                  164,437.68                         71.47%

5.3 Advance payment、
       1)Disclosure of advance payment by account age

                                                          Ending balance               Beginning balance
                            Aging
                                                      Amount       Proportion        Amount          Proportion

        Within 1 year                                 396,882.60       100.00%        39,960.01          100.00%

        Total                                         396,882.60       100.00%        39,960.01          100.00%

       2) Top five advances payment in terms of the ending balance collected by the prepaid object

                                                                                              Proportion in total
                                     Unit                            Ending balance
                                                                                               ending balance
        Shenzhen J&J Space Design Co., Ltd.                                     213,592.23         53.82%
        Sanya Shengxiang Mechatronics Engineering Co., Ltd.                     110,415.00         27.82%
        Hainan Hao long Fire Engineering Co., Ltd.                               58,925.37         14.85%
        Sanya Xingcai Electrical Co., Ltd.                                       13,230.00          3.33%
        Business Daily of International Touris m Island                            720.00           0.18%
                                     Total                                      396,882.60


5.4 Other receivable

                                     Item                            Ending balance           Beginning balance

        Interest receivable

        Div idend receivable

        Other account receivable                                           1,242,181.64                458,242.73

        Total                                                              1,242,181.64                458,242.73

       1) Other account receivable disclosed by nature



                                                       39
                                                                                             Opening book
                          Nature                                Ending book balance
                                                                                                  balance

Utility b ills                                                               206,254.34              185,368.69

Petty cash                                                                   838,955.14              133,411.23

Attorney fee                                                                  77,534.25               77,534.25

Court cost                                                                    62,970.00

Social insurance and housing provident funds                                  57,803.91               63,264.56

Deposit                                                                         600.00                      600.00

Total                                                                     1,244,117.64               460,178.73

2) Other receivables with provision for bad debts made by aging analysis method

                                                                               Ending balance
                          Aging                                  Accounts       Provision for
                                                                                                  Accrual ratio
                                                                receivable       bad debts

Within 1 year                                                   1,241,881.64

1-2 years

2-3 years

3-4 years

4-5 years                                                            600.00            300.00           50.00%

More than five years                                                1,636.00         1,636.00          100.00%

Total                                                           1,244,117.64         1,936.00

3) Top five other accounts receivable in terms of ending balance collected by the debtor

                                                                                Proportion in Ending balance
                                                      Ending
                 Name              Nature                         Aging          total other       of provision
                                                      balance
                                                                                 receivables      for bad debts

Wen Ping                       Petty cash       710,000.00 Within 1 year              57.07%

Hainan New Concept Law
                              Attorney fee       77,534.25 Within 1 year                  6.23%
Firm

Peng Guo xing                  Utility b ills    70,422.98 Within 1 year                  5.66%

Sanya Suburbs People’s
                               Court cost        62,970.00 Within 1 year                  5.06%
Court

Guo Yubo                       Petty cash        60,369.61 Within 1 year                  4.85%

Total                                           981,296.84                            78.88%




                                                 40
5.5 Inventories
        1) category of inventories
                                                Ending balance                              Beginning balance

                                                  Provision                                     Provision
                  Item                Book                                         Book
                                                   for price      Book value                    for price    Book value
                                     balance                                      balance
                                                   decline                                       decline

        Raw materials               836,342.72 683,941.58 152,401.14 870,043.52 725,731.58 144,311.94

        Fin ished goods              22,771.38     11,102.41       11,668.97       22,771.38     11,102.41      11,668.97

        Food and beverage            12,526.82                     12,526.82       43,935.10                    43,935.10

        Fuel                         15,096.64                     15,096.64       21,474.18                    21,474.18

                  Total             886,737.56 695,043.99 191,693.57 958,224.18 736,833.99 221,390.19

        2) Provision for inventory depreciation

                                                   Increase in the period         Decrease in the period
                                    Beginning                                                                   Ending
                  Item                                                           Reversal or
                                     balance       Accrual          Others                       Others         balance
                                                                                  write-off

        Raw materials               725,731.58                                     41,790.00                  683,941.58

        Fin ished goods              11,102.41                                                                  11,102.41

                  Total             736,833.99                                     41,790.00                  695,043.99

5.6 Other current assets

                                      Item                                   Ending balance          Beginning balance

        Enterprise income tax paid in advance                                       1,702,702.80             1,702,702.80

        Input tax to be deducted                                                      385,035.78              103,556.98

        Prepaid pending expenses                                                       37,880.58                39,960.01

        Total                                                                       2,125,619.16             1,846,219.79

5.7 Investment property

                                                                   Houses and
                                   Item                                              Land use rights           Total
                                                                     buildings

        I. Original book value

               1.Beginning balance                                  18,856,504.44       5,662,740.59        24,519,245.03

               2.Increase in the period

               3.Decrease in the period

               4.Ending balance                                     18,856,504.44       5,662,740.59        24,519,245.03

        II. Accumu lated depreciation and accumulated
        amort ization


                                                             41
             1.Beginning balance                                       10,607,583.54        2,219,726.45         12,827,309.99

             2.Increase in the period                                      209,091.78            28,170.00          237,261.78

             (1) Accrual or amort izat ion                                209,091.78            28,170.00          237,261.78

             4.Ending balance                                          10,816,675.32        2,247,896.45         13,064,571.77

        III. Provision for impairment

             1.Beginning balance                                         1,404,400.47       1,903,054.14          3,307,454.61

             2.Increase in the period

             3、Decrease in the period

             4.Ending balance                                            1,404,400.47       1,903,054.14          3,307,454.61

        IV. Book value

             1.Ending book value                                         6,635,428.65       1,511,790.00          8,147,218.65

             2.Opening book value                                        6,844,520.43       1,539,960.00          8,384,480.43



5.8 Fixed assets



                                   Houses and        M echanical Transportatio      Electronic       Other
                   Item                                                                                              Total
                                    buildings        equipment       n equipment    equipment      equipment

        I. Original book value

                                   136,789,501. 11,033,550.5                                                      154,759,107.5
        1.Beginning balance                                          2,345,074.91 2,664,528.39 1,926,451.84
                                                82               4                                                           0

        2.Increase in the period                                                      20,635.87      20,101.94       40,737.81

                     1) Purchase                                                      20,635.87      20,101.94       40,737.81

        3.Decrease in the
                                                     1,420,474.00                    619,394.00     193,633.45     2,233,501.45
        period

           1) Disposal or scrap                      1,420,474.00                    619,394.00     193,633.45     2,233,501.45

                                   136,789,501.                                                                   152,566,343.8
        4.Ending balance                             9,613,076.54 2,345,074.91 2,065,770.26 1,752,920.33
                                                82                                                                           6

        II. Accumulated
        depreciation

                                   72,499,344.5
        1.Beginning balance                          7,970,060.88 1,587,022.54 1,938,853.10 1,224,791.47 85,220,072.49
                                                 0

        2.Increase in the period   1,087,717.44       143,758.48        82,783.92     87,864.93      87,053.97     1,489,178.74

                       1)Accrual 1,087,717.44         143,758.48        82,783.92     87,864.93      87,053.97     1,489,178.74

        3.Decrease in the
                                                     1,008,698.30                    595,910.37     173,760.82     1,778,369.49
        period

           1) Disposal or scrap                      1,008,698.30                    595,910.37     173,760.82     1,778,369.49


                                                              42
                                   73,587,061.9
        4.Ending balance                          7,105,121.06 1,669,806.46 1,430,807.66 1,138,084.62 84,930,881.74
                                             4

        III. Provision for
        impairment

                                   31,072,788.1
        1.Beginning balance                       1,968,377.19                                         33,041,165.36
                                             7

        2.Increase in the period

        3.Decrease in the
                                                   403,223.40                                             403,223.40
        period

             1) Disposal or
                                                   403,223.40                                             403,223.40
        scrap

                                   31,072,788.1
        4.Ending balance                          1,565,153.79                                         32,637,941.96
                                             7

        IV Book value

                                   32,129,651.7
        1.Ending book value                        942,801.69    675,268.45   634,962.60    614,835.71 34,997,520.16
                                             1

                                   33,217,369.1
        2.Opening book value                      1,095,112.47   758,052.37   725,675.29    701,660.37 36,497,869.65
                                             5




5.9 Intangible assets

                                   Item                          Land use rights      Patent right        Total

        I. Original book value

             1.Beginning balance                                     81,653,137.15                     81,653,137.15

             2.Increase in the period

                 (1) Purchase

                 (2) Internal research and development

                 (3) Increase from business combinations

          3.Decrease in the period

                 (1)Disposal

             4.Ending balance                                        81,653,137.15                     81,653,137.15

        II. Accumulated amortization

             1.Beginning balance                                     32,007,051.27                     32,007,051.27

             2.Increase in the period                                   406,193.58                        406,193.58

                 (1)Accrual                                            406,193.58                        406,193.58

             3.Decrease in the period

                 (1)Disposal


                                                            43
            4.Ending balance                                        32,413,244.85                          32,413,244.85

       III. Provision for impairment

            1.Beginning balance                                     27,440,836.84                          27,440,836.84

            2.Increase in the period

               (1)Accrual

            3.Decrease in the period

            (1)Disposal

            4.Ending balance                                        27,440,836.84                          27,440,836.84

       IV Book value

            1.Ending book value                                     21,799,055.46                          21,799,055.46

            2.Opening book value                                    22,205,249.04                          22,205,249.04




5.10 Long-term deferred expenses

                                              Beginning       Increase in   Amortization        Other        Ending
                          Item
                                               balance        the period    in the period      decreased     balance

       M aintenance fee for main engine
                                                                50,116.50                                     50,116.50
       system of the central AC

       Renovation of guest rooms in
                                               486,974.57                     292,184.70                     194,789.87
       Building-B

       Fire stairs renovation in Building-A     45,695.20                       8,567.82                      37,127.38

       Renovation of guest rooms in
                                              2,260,206.30                    301,360.80                   1,958,845.50
       Building-C, villa and swimming pool

                          Total               2,792,876.07      50,116.50     602,113.32                   2,240,879.25


5.11 Accounts payable

                                   Item                                     Ending balance           Beginning balance

       Payment fo r purchase                                                    170,266.19                  687,690.30

       Accounts payable provisionally estimated                                 660,218.61                  534,359.35

       Service charges                                                                                      155,368.88

       Payment for projects                                                      14,274.10                  134,274.10

       Elevator maintenance fee                                                  31,670.00                   31,670.00

       Advertisement fees                                                        30,500.30                   31,195.28

       Consignment sales                                                                                     22,335.90

       Other                                                                        1,093.00                 10,942.00

       Water rate                                                                52,428.54


                                                         44
        Natural gas fee                                                            23,398.40

        Washing charge                                                             93,168.29

                                    Total                                     1,077,017.43                1,607,835.81

5.12 Account received in advance
       1) Presentation of account received in advance
                                    Item                                 Ending balance            Beginning balance

                          Roo m and meal charge                                779,681.12                 1,291,293.05

                                    Total                                      779,681.12                 1,291,293.05



2) Significant account received in advance with aging more than one year



                                                                                               Reasons for failu re of
                                    Item                                 Ending balance            repayment or
                                                                                                   carry-forward

        Guangzhou Nanbu Ho liday International Travel
                                                                               101,244.00              Unsettled
        Service Co., Ltd. Sanya Branch

        Hainan Xiangyuan Tourism Development Co., Ltd.                             39,851.00           Unsettled

        PEGAS Zheng Qingbo                                                         32,243.02           Unsettled
        Hainan Qiongzhong Ecological Investment Guarantee Co.,
                                                                                   22,926.00           Unsettled
        Ltd.

        Sanya City Public Security Fire Brigade                                    19,420.88           Unsettled

        Total                                                                  215,684.90


5.13 Employee compensation payable


1) Presentation of employee compensation payable



                                                  Beginning      Increase in the     Decrease in the
                             Item                                                                       Ending balance
                                                   balance           period              period

        1. Short-term employee benefits           2,841,262.35    6,031,396.03        7,044,691.32        1,827,967.06

        2. Post-employment benefits - defined
                                                                    547,368.99          547,368.99
        contribution plans

        3. Termination benefits

        4. Other benefits due within one year

        Total                                     2,841,262.35    6,578,765.02        7,592,060.31        1,827,967.06


                                                      45
       2) Short-term employee benefits

                                                   Beginning      Increase in the     Decrease in the
                           Item                                                                          Ending balance
                                                    balance           period              period

       1.Salary, bonus, allowance and subsidy      1,762,269.70    4,759,360.01        5,722,074.66          799,555.05

       2.Employee welfare                                            759,981.75          759,981.75

       3.Social insurance premium                                    255,539.72          255,539.72

            Of which: including: medical
                                                                     236,205.39          236,205.39
       insurance expenses

       Work injury insurance expenses                                   4,568.36            4,568.36

       M aternity insurance                                            14,765.97          14,765.97

       4.Housing provident funds                                       90,050.00          90,050.00

       5.Labor     union      expenditures   and
                                                   1,078,992.65      166,464.55          217,045.19        1,028,412.01
       employee education expenses

       6.Short-term paid absences

       7. Short-term profit sharing plan

                           Total                   2,841,262.35    6,031,396.03        7,044,691.32        1,827,967.06

       3) Details of defined contribution plans

                                                   Beginning      Increase in the      Decrease in
                           Item                                                                         Ending balance
                                                    balance           period           the period

       1.Basic endowment insurance expenses                          532,614.48          532,614.48

       2.Unemployment insurance expenses                               14,754.51          14,754.51

                           Total                                     547,368.99          547,368.99


5.14 Tax payable

                                    Item                                    Ending balance              Beginning balance

       Value added tax (VAT)                                                   565,131.47                    146,863.56

       Individual income tax                                                        25,850.99                      -0.02

       Urban maintenance and construction tax                                        2,108.62                     761.67

       Housing property tax                                                         97,050.95                194,101.69

       Land use tax                                                                 54,295.47                108,590.92

       Education surtax                                                               903.68                      326.42

       Local education surtax                                                         602.48                      217.63


                                                       46
       Total                                                           745,943.66                   450,861.87

5.15 Other account payable

                                    Item                            Ending balance         Beginning balance

       Interest payable

       Div idend payable

       Other account payable                                         2,942,968.71              2,727,483.66

       Total                                                         2,942,968.71              2,727,483.66

       1) Presentation of other account payable by nature

                                    Item                            Ending balance         Beginning balance

       Employee dormitory rental fees, etc.                            975,525.11                   971,723.12

       M argin                                                          20,000.00                   890,958.75

       Audit fee                                                       285,003.21                   285,003.21

       Quality guarantee deposit for projects                          204,180.90                   190,344.00

       Employee deposit                                                 86,520.00                   165,700.90

       Payment for projects                                            161,111.03                   162,569.78

       Funds collected and remitted                                    793,268.57                    36,408.47

       Individual current amounts                                        1,315.34                     1,364.00

       Electric charges withheld                                        24,494.55                    23,411.43

       Announcement fee                                                391,550.00

                                    Total                            2,942,968.71              2,727,483.66




       2) Other significant account payable with aging of over one year

                                                                                     Reasons for failu re of
                                    Item                       Ending balance            repayment or
                                                                                        carry-forward

       Yangpu Jinyu Industrial Co., Ltd.                               627,000.00          Unsettled

       Hong Kong Deloitte & Touche LLP                                 285,003.21          Unsettled

       Sanya Shuxin Housing Waterproof Engineering Co., Ltd.           170,000.00          Unsettled

       China Building Decoration Company Hainan Branch                 161,111.03          Unsettled

       Total                                                         1,243,114.24              --



                                                      47
5.16 Estimated liabilities

                       Item                    Ending balance             Beginning balance                 Reasons

        Offering guarantee external

        Pending action

                                                                                                    Provisions for arrears of
        Other                                           1,489,685.04                 1,489,685.04
                                                                                                        electricity tariffs

                       Total                            1,489,685.04                 1,489,685.04

          Other note:


          On M ay 26,2016,the Company received lawyer’s letter of Hainan Yunfan law firm which is entrusted by

          Hainan Power Grid Co., LTD Sanya Power Supply Bureau (hereinafter referred to as the "Sanya Power Supply

          Bureau"), the letter claims that Sanya Power Supply Bureau found that the Company’s subsidiary South China

          Grand Hotel of Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd’s the amount of CT is d ifferent with its

          marketing management system record. The inconformity time is July, 2006, and the hotel’s CT is changing on

          April, 2016. Therefore, undercounted electricity consumption amount is 10,313,373.00 kilowatt-hours, and

          estimated cost is 7,200,165.75 Yuan as various electricity prices and charges.

          According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute between South China

          Grand Hotel and Sanya Power Supply Bureau” issued by Beijing Junhe (Haikou) Law Firm on December 20,

          2016, which claims that Sanya Power Supply Bureau has responsibility for CT to purchase, install, enseal,

          unseal and change, therefore, the responsibility of the guilty party for undercounted electricity consumption of

          South China Grand Hotel is Sanya Power Supply Bureau. According to the one hundred and thirty -five item of

          “General Rule of Civil Law”, this item claims that limitation of action is two years if accuser request people's

          court’s protection, except situations provided by law. The Company has withheld the undercounted electricity

          consumption cost in 2016 which is about 1,489,685.04 Yuan during the period from April, 2014 to April, 2016.

5.17 Share capital

                                                                 Increase or decrease (+, -)
                                                                               Public
                Item             Beginning balance                  Share
                                                      Issuance of             reserve    Other Sub-tot Ending balance
                                                                    donati
                                                      new shares           transferred to s      al
                                                                      on
                                                                               shares

        Total shares                 364,100,000.00                                                           364,100,000.00


5.18 Capital reserves

                                                        Beginning       Increase in the   Decrease in the
                              Item                                                                           Ending balance
                                                         balance            period            period

        Capital premium (share premium)                33,336,215.58                                            33,336,215.58


                                                            48
        Other capital reserves                         20,806,634.43                                       20,806,634.43



        Total                                          54,142,850.01                                       54,142,850.01


5.19 Undistributed profits

                                    Item                                   Current period             Last period

        Undistributed profits at the end of last year before
                                                                                -340,454,153.72        -341,107,435.91
        adjustment

        Total undistributed profit at beginning of the adjustment
        period (+ for increased, - for decreased)

        Undistributed profits at the beginning of the year after
                                                                                -340,454,153.72        -341,107,435.91
        adjustment

        Plus: net profit attributable to owner of parent company in
                                                                                    755,974.01             1,282,165.58
        Period

        Less: appropriation of statutory surplus reserves

             Appropriation of discretionary surplus reserve

             Appropriation of general risk reserve

             Ordinary share dividends payable

             Ordinary share dividends transferred to share capital

        Undistributed profit as at the end of the period                        -339,698,179.71        -339,825,270.33


5.20 Operating income and operating cost

                                                               Current period                     Last period
                           Item
                                                        Income              Cost             Income             Cost

        M ain business                               14,241,961.04       5,514,477.93    16,173,929.32     6,000,063.36

        Other business

                           Total                     14,241,961.04       5,514,477.93    16,173,929.32     6,000,063.36


5.21 Taxes and surcharges

                                    Item                                    Current period            Last period

        Consumption tax

        Urban maintenance and construction tax                                        31,410.84                 37,515.65

        Education surtax                                                              22,436.31                 26,796.89

        Resource tax



                                                               49
        Housing property tax                                            215,587.50         431,174.78

        Land use tax                                                    108,590.94         217,181.82

        Vehicle and vessel use tax                                        5,220.00            3,669.06

        Stamp tax                                                           233.91                 182.70

        Total                                                           383,479.50         716,520.90




5.22 Sales expenses

                                     Item                           Current period         Last period

        Staff wages and benefits                                      1,834,677.00       1,841,236.40

        Social workers insurance expenses                               302,950.00         285,734.45

        Depreciation                                                    259,401.60         256,486.12

        Utility b ills                                                   99,980.13           84,101.36

        Repair charges                                                   95,930.17           58,716.18

        Other expenses                                                  217,053.04         274,681.59

        Total                                                         2,809,991.94       2,800,956.10


5.23 Administrative expenses

                                     Item                       Current period       Last period

        Staff wages and benefits                                      2,789,891.55       2,809,454.64

        Social workers insurance expenses                               321,053.70         266,303.18

        Entertainment expenses                                          219,787.57         496,075.07

        Travelling expenses                                             149,081.98           68,678.82

        Amortization for the depreciation and land use right            567,140.44         550,590.01

        Announcement fee and agency charge                              655,420.00         656,245.72

        Other expenses                                                  369,424.97         509,107.77

        Total                                                         5,071,800.21       5,356,455.21

5.24 Financial expenses

                                     Item                       Current period       Last period

        Handling charges                                                 18,965.03           40,293.06

        Less: interest income                                          -152,697.12          -22,729.87

        Total                                                          -133,732.09           17,563.19


                                                           50
5.25 Non-operating income

                                                                                       Amount included in
                     Item                Current period       Last period            non-recurring profit and
                                                                                     loss in the current period

        Other                                   160,030.46                  273.00                 160,030.46

                     Total                      160,030.46                  273.00

5.26 Non-operating expenses

                                                                                     Amount included in
                     Item                Current period      Last period         non-recurring profit and
                                                                                 loss in the current period

        Loss from disposal of
                                                                      477.98
        non-current assets

        Total                                                         477.98


5.27 Notes to statement of cash flow
        1) Other cash receipts related to operating activities
                                 Item                        Current period                Last period

       Interest income                                                152,697.12                     22,729.87

       Other                                                          952,744.76                    661,422.77

       Total                                                        1,105,441.88                    684,152.64


       2) Cash paid for other operating activities

                                 Item                        Current period                Last period

       Social intercourse fees                                       221,362.57                   497,075.07

       Intermediary audit fee                                        400,000.00                   400,000.00

       Announcement fee                                              238,420.00                   220,000.00

       Travelling expenses                                           151,940.09                     72,159.01

       Promotion fee                                                  92,705.15                   109,649.14

       Repair charges                                                211,454.36                   163,503.73

       Other expenses                                                978,613.63                   212,185.21

       Total                                                       2,294,495.80                 1,674,572.16

5.28 Supplementary information to statement of cash flows
       1) Supplementary information to statement of cash flows

                                  Item                         Current period               Last period


                                                    51
(1) Net profit adjusted to cash flows from operating activities    --                  --


Net profit                                                              755,974.01    1,282,165.58

Plus: provision for asset impairment

Depreciation of fixed assets, gas and oil assets and
                                                                   1,726,440.52       1,799,584.50
productive biological assets

Amortization of intangible assets                                       434,363.58     434,363.58

Amortization of long-term deferred expenses                             602,113.32     609,770.58

Loss on disposals of fixed assets, intangible assets and other
long-term assets

Loss on write-off of fixed assets ("-" for gains)                                           477.98

Losses from the changes in fair value ("-" for gains)

Financial expenses ("-" for gains)

Investments loss ("-" for gains)

Decrease in deferred income tax assets ("-" for increases)

Increase in deferred income tax liabilities ("-" for decreases)

Decrease in inventories ("-" for increases)                              29,696.62      -37,615.58

Decrease in operating receivables ("-" for increases)               -513,490.92        -326,357.40

Increase in operating payables ("-" for decreases)                -1,765,680.48        -651,711.64

Others

Net cash flows from operating activities                           1,269,416.65       3,110,677.60

2. Significant investing and financing activities not involving
                                                                   --                  --
cash receipts and payments

Conversion of debt into capital

Convertible corporate bonds maturing within one year

Fixed assets under financial lease

3. Net changes in cash and cash equivalents                        --                  --


Ending balance of cash                                            16,110,895.95      10,751,658.64

Less: Beginning balance of cash                                   15,364,355.30       9,681,607.16

Plus: Ending balance of cash equivalents

Less: Beginning balance of cash equivalents


                                                       52
         Net increase in cash and cash equivalents                                       746,540.65                  1,070,051.48




2) Breakdown of cash and cash equivalents

                                                                                                                     In RM B/CNY

                                     Item                                       Ending balance             Beginning balance

         1. Cash                                                                    16,110,895.95                  15,364,355.30

         Including: Stock cash                                                           476,191.77                    347,782.65

         Bank deposit available for payment at any time                             15,634,704.18                  15,016,572.65

         Other monetary funds available for payment at any time

         Deposits in the central bank available for payment

         Deposits with banks and other financial institutions

         Loans to banks and other financial institutions

         2. Cash equivalents

         Including: Bond investment due within three months



         3. Ending balance of cash and cash equivalents                             16,110,895.95                  15,364,355.30
6. Changes of consolidation range



Enterprise consolidation under the same control

6.1. Enterprise consolidation under the same control in current period
                                                                                                                     In RM B/CNY

                                                                                                           Net                 Net
                                                                                             Income
                                                                                                         profit of Incom profit
                                                                                              of the
                                                                                                           the        e of    of the
                                                                                             combine
                                                                                                         combine       the    comb
                                                                                 Standard d party
                                         Equity                                                          d party     combi ined
                                                         Basis of                   to        from
                                            ratio                                                         from        ned     party
                                                         combined    Combinati determin period-b
          Combined party               obtained in                                                       period-b party       durin
                                                         under the    on date      e the     egin of
                                       combinatio                                                        egin of     during g the
                                                     same control                combina combina
                                             n                                                           combina       the    comp
                                                                                 tion date tion to
                                                                                                          tion to compa ariso
                                                                                               the
                                                                                                           the        rison     n
                                                                                             combina
                                                                                                         combina period perio
                                                                                             tion date
                                                                                                         tion date              d

                                                     A               8 June      Establish
Hainan Wengao Tourist Resources           100.00%                                                0.00      498.79      0.00    0.00
                                                     wholly-owne 2018            ment


                                                              53
Development Co., Ltd.                         d subsidiary            date


6.2 Combined cost

                              Combined cost
--Cash                                                                                               500,798.36

--Book value of the non-cash assets                                                                  499,700.43




6.3 Book value of the assets/liabilities from combined party at date of combination


                                                                                             Period-end of last
                                      Item                               Combining date
                                                                                                  period

Assets:

M onetary Fund                                                                  500,798.36         1,000,000.00

Account receivable                                                              499,700.43

Net assets                                                                    1,000,498.79         1,000,000.00

Less: minority’s interest

Net assets obtained                                                           1,000,498.79         1,000,000.00


7.Risks relating to financial instruments


The Company faces a variety of financial risks in business process: credit risk, market risk and liquidity
risk. The Company’s Board of Directors is overall responsible for risk management objectives and
determining policies, and bears the ultimate responsibility for risk management objectives and policies, but
the board has authorized the Company’s enterprise management department to design and executive the
procedure which could guarantee the effective implementation of risk management objectives and policies.
The Company’s internal auditors will audit the policies and procedures of risk management as well, and
will report the discovery to Audit Committee.


The overall objective of the Company’s risk management is to set the risk management policies to reduce
risks as possible without giving excessive influence to competitiveness and strain capacity of the
Company.


7.1 Credit risk


Credit risk is the risk of financial loss on one party of a financial instrument due to the failure of another
party to meet its obligations. The Company mainly faces credit risk generated from customers through
credit sales. The Company will understand and assess the credit risk of the new customer before signing

                                                      54
the new contract. The Company makes credit rating for existing customers and aging analysis of accounts
receivable to ensure the Company’s overall credit risk falls within a controllable range.


7.2 Market risk
Market risk is the risk of financial instruments’ fair value and future cash flow fluctuating due to change of
market price, including currency risk, interest risk and other pricing risk.

7.3 Liquidity risk
Liquidity risk is the risk that an enterprise may encounter deficiency of funds in fulfilling the obligations
when paying cash or settle in way of other financial assets. The policy of the Company is to ensure there
are enough cash to pay back mature debts. The liquidity risk is centralized controlled by the Company’s
accounting department. The accounting department ensures the Company to possess enough cash to pay
back the debts in all reasonable foreseeable circumstances through monitor the balance of cash, monitor
the securities that can be converted into cash at any time and rolling forecasts of future cash flows in
twelve months.



8. Related parties and related party transactions

8.1 Parent company

                                                                                                                Voting ratio
                                                                                               Shareholding
                                                                                  Registered
                                                 Registered      Nature of                                          in the
                     Parent company                                                             ratio in the
                                                   place         Business      Capital
                                                                                                                 Company
                                                                             (RM B 0’000) Company (%)
                                                                                                                    (%)
                                                                 Plant and
         Luoniushan Co., Ltd.                   Haikou City                    115,115.00              17.55%        19.80%
                                                                 culturing

           Note: As of 30 June 2019, Luoniushan Co., Ltd. (hereinafter referred to as Luoniushan) and its wholly -owned
           subsidairy Hainan Ya’anju Property Service Co., Ltd. holds 72,091,780 shares of the Company under A-stock,
           totally takes 19.80% in total share capital of the Compamy, and it is the first largest shareholder of the
           Company.
8.2. Related party transactions
8.2.1 Transaction with goods purchasing, labor service offering/receiving concerned

                                                               Contents of related
                                Related party                                             The Period            Last period
                                                               party transactions

                                                                   Housing &
            Luoniushan Co., Ltd.                                                         125,150.00            176,779.00
                                                                 catering costs

                                    Total                                                125,150.00            176,779.00




                                                          55
          2) Receivables and payables of related parties


                                                                Ending balance            Beginning balance

                  Name                Related party                       Bad debt                   Bad debt
                                                           Book balance               Book balance
                                                                          provision                  provision

          Account receivable       Luoniushan Co., Ltd.       6,387.00                  13,153.00


9. Commitment and contingency
9.1 Important commitments
The Company has no commitments that need to disclosed up to balance sheet date
2. Contingencies
Major contingency on balance sheet date
             On 26 May 2016, the Company received lawyer’s letter of Hainan Yunfan law firm which is
             entrusted by Hainan Power Grid Co., LTD Sanya Power Supply Bureau (hereinafter referred
             to as the "Sanya Power Supply Bureau"), the letter claims that Sanya Power Supply Bureau
             found that the Company’s subsidiary South China Grand Hotel of Hainan Dadonghai
             Tourism Centre (Holdings) Co., Ltd’s the amount of CT is different with its marketing
             management system record. The inconformity time is July 2006, and the hotel’s CT is
             changing on April 2016. Therefore, undercounted electricity consumption amount is
             10,313,373.00 kilowatt-hours, and estimated cost is 7,200,165.75 Yuan as various electricity
             prices and charges.
             According to the file “Law Advisory Opinion about Retroactive Power (Charge) Dispute
             between South China Grand Hotel and Sanya Power Supply Bureau” issued by Beijing
             Junhe (Haikou) Law Firm on December 20, 2016, which claims that Sanya Power Supply

             Bureau has responsibility for CT to purchase, install, enseal, unseal and change, therefore,
             the responsibility of the guilty party for undercounted electricity consumption of South
             China Grand Hotel is Sanya Power Supply Bureau. According to the one hundred and

             thirty-five item of “General Rule of Civil Law”, this item claims that limitation of action is
             two years if accuser request people's court’s protection, except situations provided by law.
             The Company has withheld the undercounted electricity consumption cost in 2016 which is
             about 1,489,685.04 Yuan during the period from April, 2014 to April, 2016. The event has no

             further progress up to 30 June 2019.

10. Event after balance sheet date
The Company has no major events after balance sheet date up to balance sheet date

11. Notes to other significant events
         1. Correction of accounting errors in previous period
         1) Retrospective restatement method


                                                      56
         There is no correction of accounting errors using retrospective restatement method in previous
         period.

          2) Prospective application method
         There is no correction of accounting errors using prospective application method in previous period


          2. Others


In accordance with the requirements of the Regulatory Guidelines of Listed Companies No. 4 - Actual
Controller, Shareholders, Related Parties, Purchaser and Commitments and Fulfillment of Listed
Companies (CSRC Announcement No. [2013] 55) of China Securities Regulatory Commission, on June 7,
2014, Luoniushan Co., Ltd. (hereinafter referred to as “Luoniushan”) sent out the Letter about Changing
the Commitments of Luoniushan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd. to
the Company, and made commitments that Luoniushan shall actively seek reorganization party to
reorganize the assets of Dadonghai within three years from the date the Company’s general meeting of
shareholders considered and approved this commitment. The above matters have been considered and
approved by the general meeting of shareholders of Dadonghai on June 27, 2014.


On February 22, 2017, the Co mpany received fro m Luoniushan a Letter on Progress in the Planning of
Co mmit ment Imp lementation, in wh ich Luoniushan intended to transfer 100% o f the equity it held in the
Industrial Co mpany, a wholly-o wned subsidiary (specifically, the Industrial Co mpany will first be transferred
with part of financial assets equity held by Luniushan and of 6.91% equity of Sanya Rural Co mmercial Bank
Co., Ltd.) to the Co mpany, the transaction was made in cash with transaction amount of about RMB300 million.
The proposal was not adopted at the 11th extraord inary meeting of the eighth board of directors of the Co mpan y
due to the Company's lack of sufficient debt repayment ability.


On June 23, 2017, Luoniushan issued to the Company a Letter on Change in Term of Commitment by
Luoyunshan Co., Ltd. to Hainan Dadonghai Tourism Centre (Holdings) Co., Ltd., extending Luoniushan's
performance period of the above restructuring commitment of the Company by 6 months, whichmeans the
deadline for the fulfillment of reorganization commitment was changed to December 27, 2017.As the
reorganization would take a certain amount of time, on November29, 2017, Luoniushan again applied to
extend the performance period of the reorganization commitment for two years, that is, the performance
deadline of the reorganization commitment was changed from December 27, 2017 to December 26, 2019,
which was not approved at the fourth extraordinary general meeting of shareholders of the Company in
2017.




                                                           57
12. Note on financial statement of pare nt company

1、Accounts receivable
        1) 、Accounts receivable by type

                                              Ending balance                                 Beginning balance

                                                 Provision for                                      Provision for
                            Book balance                                        Book balance
                                                  bad debts                                           bad debts
                 Type                                                                                                    Book
                                         Pro                                                 Pro
                                                           Accru Book value                                   Accru
                                         port                                                port                        value
                             Amount             Amount      al                   Amount             Amount     al
                                         ion                                                 ion
                                                           ratio                                              ratio
                                          %                                                  %

         Accounts
         receivable with
         significant
         single amount
         subject to
         provision for
         bad debts on a
         single basis

         Accounts
         receivable with
                                         100 74,075.6 32.20                                  100 74,075.6 14.80 426,434.8
         provision for      230,062.48                               155,986.88 500,510.47
                                           %           0         %                             %          0         %            7
         bad debts based
         on portfolios

         Accounts
         receivable with
         insignificant
         single amount
         but accrued for
         provision of bad
         debt on a single
         basis

                                         100 74,075.6 32.20                                  100 74,075.6 14.80 426,434.8
         Total              230,062.48                               155,986.88 500,510.47
                                           %           0         %                             %          0         %            7


        Released by account age

                                                Aging                                                         Ending balance

         Within 1 year (inclusive)                                                                                    139,108.68

         1-2 years                                                                                                       566.00

         2-3 years                                                                                                       785.00


                                                              58
          3-4 years                                                                                           18,633.00

          4-5 years                                                                                            3,397.00

          More than five years                                                                                67,572.80

          Total                                                                                              230,062.48

          2)Provision, reversal or recovery of provision for bad debts in the period

                                                                     Amount changed in the period
                                              Beginning                                                      Ending
                         Type                                                   Reversal or
                                               balance             Accrual                    Charge off    balance
                                                                                switch-back

          Based on portfolios                      74,075.60                                                  74,075.60

          Total                                    74,075.60                                                  74,075.60
          3) Top five accounts receivable in terms of ending balance collected by the debtor

                                                    Relationship                                            Proportion in
                                                      with the                                              total amount
                           Name                      Company                  Book balance      Aging       of accounts
                                                                                                             receivable
                                                                                                                (%)

          Shanghai     Hecheng     International Non related                     35,788.40     Within 1       15.56%
          Travel Service Co., Ltd.                 party                                          year

          Yangpu Huayu Road and Bridge              Non related                  18,633.00 More than           8.10%
          Technology Co., Ltd.                         party                                   five years

                                                    Non related                  38,980.00 More than          16.94%
          Guangzhou Institute of Design
                                                       party                                   five years
          Shenzhen Tenpay Technology Co.,           Non related                  46,621.46     Within 1       20.26%
          Ltd.                                         party                                      year

          Tianjin     Watermelon         Tourism    Non related                  24,414.82     Within 1       10.61%
          Limited Liab ility Co mpany                  party                                      year

                           Total                                                164,437.68                    71.47%


2. Other account receivable

                                      Item                                   Ending balance        Beginning balance

          Interest receivable

          Div idends Receivable

          Other account receivable                                                 1,242,181.64              458,242.73

          Total                                                                    1,242,181.64              458,242.73

          1) Other account receivable disclosed by nature

                                     Nature                            Ending book balance            Opening book


                                                       59
                                                                                               balance

Utility b ills                                                          206,254.34                  185,368.69

Petty cash                                                              838,955.10                  133,411.23

Attorney fee                                                              77,534.25                  77,534.25

Court cost                                                                62,970.00

Social insurance and housing provident funds                              57,803.91                  63,264.56

Deposit                                                                      600.00                      600.00

Total                                                                 1,244,117.64                  460,178.73


2) Released by account age


                            Aging                                          Ending balance

Within 1 year (inclusive)                                                                          1,241,881.64

1-2 years

2-3 years

3-4 years

4-5 years                                                                                                600.00

More than five years                                                                                  1,636.00

Total                                                                                              1,244,117.64

3) Provision, reversal or recovery of provision for bad debts in the period

                                                          Amount changed in the period
                                       Beginning                                                    Ending
                 Type                                              Reversal or
                                        balance        Accrual                    Charge off        balance
                                                                   switch-back

 Based on portfolios                        1,936.00                                                  1,936.00

 Total                                      1,936.00                                                  1,936.00


 4) Released by account age

                                                                                   Proportion in     Provision
                                                                                  total amount of     for bad
                                                       Ending
                 Name                   Nature                       Aging        other accounts       debts
                                                       balance
                                                                                   receivable at      Ending
                                                                                    period-end        balance

Wen Ping                            Petty cash         710,000.00 Within 1 year           57.16%

Hainan New Concept Law Firm         Attorney fee        77,534.25 Within 1 year            6.23%

Peng Guoxing                        Utility bills       70,422.98 Within 1 year            5.66%



                                                 60
          Sanya Suburbs People’s Court         Court cost           62,970.00 Within 1 year                5.06%

          Guo Yubo                              Petty cash           60,369.61 Within 1 year                4.85%

          Wen Ping                              Petty cash          710,000.00 Within 1 year               57.16%

          Total



3. Long-term equity investment



                                                    Ending balance                               Beginning balance
                      Item                            Impairment                                    Impairment
                                      Book balance                   Book value    Book balance                    Book value
                                                      provision                                      provision

          Investment for subsidiary    1,000,000.00                  1,000,000.00 1,000,000.00                    1,000,000.00

          Total                        1,000,000.00                  1,000,000.00 1,000,000.00                    1,000,000.00


          Investment for subsidiary


                                                                                                    Impairment       Ending
                                       Beginning      Increase in    Decrease in       Ending        provision     balance of
             Invested enterprise
                                          balance     the period     the period        balance       in current    impairment
                                                                                                      period        provision
          Hainan Wengao Tourist
          Resources Development        1,000,000.00                                1,000,000.00
          Co., Ltd.

          Total                        1,000,000.00                                1,000,000.00


4. Operating income and cost

                                                             Current period                           Last period
                             Item
                                                      Income                Cost                 Income              Cost

          M ain business                            14,241,961.04       5,514,477.93       16,173,929.32          6,000,063.36

          Other business

                           Total                    14,241,961.04       5,514,477.93       16,173,929.32          6,000,063.36


13. Supple mentary information

1. Details of current non-recurring profits and losses



                                      Item                                    Amount                       Note

                                                                                           Clean up the long-term unpaid
          Other income                                                    160,030.46
                                                                                           payable



                                                             61
                                     Total                             160,030.46


2. Return on net assets and earnings per share


                                                                         Weighted         Earnings per share (RM B)

                                                                       average return                      Diluted
                       Profit during the reporting period                               Basic earnings
                                                                       on net assets                     earnings per
                                                                                          per share
                                                                            (%)                             share

          Net profits attributable to ordinary shareholders of the
                                                                               0.97%            0.0021         0.0021
          Company

          Net profits attributable to ordinary shareholders of the
                                                                               0.76%            0.0016         0.0016
          Company after deduction of non-recurring profits or losses



3. Accounting difference between IFRS and CAS


        There are no accounting differences between IFRS and CAS.

  (No text)


                                                    HAINAN DADONGHAI Tourism Centre (HOLDINGS ) CO., LTD

                                                                                    8 August 2019




                                                            62

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