大冷B:2017年年度审计报告(英文版)

Auditors’ Report
                         (English Translation for Reference Only)
 To the shareholders of Dalian Refrigeration Company Limited
      1. Opinion
 We have audited the financial statements of Dalian Refrigeration Company Limited
 (“Dalian Refrigeration Company”), which comprise the Company’s balance sheet as
 at 31 December 2017, the Company’s income statement, the Company’s cash flow
 statement and the Company’s statement of changes in shareholders’ equity for the
 year then ended, and the related notes to the financial statements.
 In our opinion, the accompanying financial statements of Dalian Refrigeration
 Company present fairly, in all material respects, the Company’s financial position as
 at 31 December 2017, the Company’s results of operations and cash flows for the year
 then ended in accordance with Accounting Standards for Business Enterprises.
      2. Basis for Opinion
 We conducted our audit in accordance with China Standards on Auditing for Chinese
 Certified Public Accountants. Our responsibilities under those standards are further
 described in the “Auditor’s Responsibilities for the Audit of the Financial Statements”
 section of our report. We are independent of Dalian Refrigeration Company in
 accordance with the Code of Ethics for Chinese Certified Public Accountants, and we
 have fulfilled our other ethical responsibilities of the code. We believe that the audit
 evidence we have obtained is sufficient and appropriate to provide a basis for our
 audit.
      3. Key Audit Matters
 Key audit matters are those matters that we consider, in our professional judgment,
 were of most significance in our audit of the financial statements of the current period.
 These matters were addressed in the context of our audit of the financial statements as
 a whole and, in forming our audit opinion thereon, and we do not express a separate
 opinion on these matters.
1. Revenue recognition
    Key Audit Matter                 How the matter was addressed in the audit
Revenue of Dalian    Refrigeration The main audit procedures carried out for
Company and its subsidiaries addressing the key audit matters are as follows:
mainly come from sales of products 1. Understand and evaluate effectiveness of
and installation. The key concern design and operation of the management ‘s
about the sales revenue is due to the internal control over revenue
large sales quantities and any 2. Carried out analytical review and evaluate
potential misstatements existing in the reasonableness of sales income and gross
the revenue recognition within the profit margin by segmenting the business and
appropriate accounting period. sales in conjunction with industry development
Key concern about installation and actual situation of Dalian Refrigeration
income is because the accounting Company.
involved by significant accounting 3. Sampling test the sales contracts, identify the
estimate and judgment. Having clause and terms in respect to the risk and
considered these matters, we reward transfer of the ownership. Evaluate the
recognized revenue recognition as recognition timing of revenue whether is in line
key audit matters.                    with the accounting standards.
                                      4. Sampling select product sales revenue
                                      record, reconcile to sales invoice, contracts,
                                      dispatch note, acceptance note; Sampling select
                                      installation sales revenue record, reconcile to
                                      invoice, installation contracts and completion
                                      report and Evaluate the recognition of revenue
                                      whether is in line with the accounting standards
                                      5. Obtain the system data and reconcile to the
                                      data from accounting system so to ensure the
                                      consistence.
                                      6. Sampling select the transactions before and
                                      after the balance sheet date, test the dispatch
                                      note and other supporting documents so to
                                      ensure whether the transaction is recorded into
                                      the appropriate accounting period.
      4. Other Information
 The management of Dalian Refrigeration Company (hereinafter referred to as the
 “Management”) is responsible for the other information. The other information
 comprises the information included in the Dalian Refrigeration Company 2017 annual
 report, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read
the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material
misstatement of the other information, we are required to report that fact. We have
nothing to report in this regard.
   5. Responsibilities of the Management and Those Charged with
Governance for the Financial Statements
The Management is responsible for the preparation of the financial statements in
accordance with Accounting Standards for Business Enterprises to achieve fair
presentation; and designing, implementing and maintaining internal control which is
necessary to enable that the financial statements are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing
Dalian Refrigeration Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless the Management either intends to liquidate Dalian Refrigeration
Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible to overseeing Dalian Refrigeration
Company’s financial reporting process.
    6.   Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are generally considered
material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial
statements.
During the course of audit in accordance with auditing standards, we exercise
professional judgment and maintain professional skepticism. We also carry out the
following works:
(1)          Identify and assess the risks of material misstatement of the financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our audit. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
(2)        Obtain an understanding of internal control relevant to the audit in order
to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of its internal control (this
sentence would be deleted in circumstance when we are also responsible to issue an
opinion on the effectiveness of internal control in conjunction with the audit of the
financial statements).
(3)        Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
Management.
(4)          Conclude on the appropriateness of the Management’s use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant
doubt on Dalian Refrigeration Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements in accordance
with the auditing standards or, if such disclosures are inadequate, we shall modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause Dalian
Refrigeration Company to cease to continue as a going concern.
(5)        Evaluate the overall presentation, structure and content of the financial
statements, including the disclosures, and also whether the financial statements
represent the underlying transactions and events in a manner that achieves fair
presentation.
(6)         Obtain sufficient and appropriate audit evidence of financial information
from Dalian Refrigeration Company and express our opinion. We are responsible for
directing, monitoring and implementing the group audit and take full responsibility
for audit opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings etc., including
any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have
complied with those relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be
thought to bear on our independence and related safeguards, where applicable.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the financial statements of
the current period and are therefore the key audit matters. We describe these matters
in our auditor’s report unless law or regulation prohibited public disclosure about the
matter or when, in rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such
communication.
ShineWing Certified Public Accountants        CICPA:Sui Guojun           (Audit Partner)
LLP
                                             CICAP:Wang Dong
             China, Beijing                  April 20, 2018
                                         Consolidated Balance Sheet
                                                         December 31, 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                   Amount Unit:RMB
                                 Items                                 Note    At the end of year    At the beginning of year
Current Assets:
  Monetary funds                                                      Ⅵ、1        394,809,694.11           715,215,638.54
  Settlement fund
  Outgoing call loan
  Fair value through P&L assets
  Derivative financial assets
  Notes receivable                                                    Ⅵ、2        172,818,176.20           126,408,249.59
  Accounts receivable                                                 Ⅵ、3       1,036,255,895.79          807,109,959.54
  Prepayments                                                         Ⅵ、4        140,808,375.21           108,033,313.10
  Insurance receivables
  Reinsurance Receivable
  Provision of reinsurance contract reserve receivable
  Interest receivable                                                 Ⅵ、5           1,871,783.33               723,955.56
  Dividend receivable                                                 Ⅵ、6              33,450.00                39,025.00
  Other receivables                                                   Ⅵ、7          52,049,009.83            57,257,456.57
  Financial assets purchased under agreement to resell
  Inventories                                                         Ⅵ、8        352,279,664.64           349,538,424.06
  Held for sale assets
  Non-current assets due within 1-year
  Other current assets                                                Ⅵ、9        114,907,269.33             43,254,044.92
                          Total Current Assets                                    2,265,833,318.44         2,207,580,066.88
Non-Current Assets:
  Loan and payment on other's behalf disbursed
  Available-for-sale financial assets                                 Ⅵ、10       515,783,193.99           545,565,116.64
  Held-to-maturity investments
  Long-term receivables
  Long-term equity investment                                         Ⅵ、11      1,568,255,738.12         1,292,912,901.49
  Investments properties                                              Ⅵ、12       103,861,275.27             28,605,652.94
  Fixed assets                                                        Ⅵ、13       890,874,647.40           511,008,545.87
  Construction in process                                             Ⅵ、14         82,999,382.90          321,646,676.78
  Engineer material
  Disposal of fixed assets
  Productive biological assets
  Oil-gas assets
  Intangible assets                                                   Ⅵ、15       143,918,516.87           154,714,212.52
  R&D expenses
  Goodwill                                                            Ⅵ、16          1,750,799.49             1,750,799.49
  Long-term deferred expenses                                         Ⅵ、17         14,431,131.01             4,448,719.77
  Deferred tax asset                                                  Ⅵ、18         31,913,497.18            27,753,747.94
  Other non-current assets
                        Total Non-current Assets                                  3,353,788,182.23         2,888,406,373.44
                              Total Assets                                        5,619,621,500.67         5,095,986,440.32
Legal representative: Ji Zhijian        Chief Financial Officer:Ma Yun           Financial Manager :Mao Chunhua
                                 Consolidated Balance Sheet (continued)
                                                   December 31, 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                       Amount Unit:RMB
                                     Items                                 Note    At the end of year    At the beginning of year
Current Liabilities:
  Short-term borrowings                                                   Ⅵ、19       349,801,300.00             45,000,000.00
  Loans from central bank
  Deposits received and hold for others
  Call loan received
  Fair value through P&L liabilities
  Derivative financial liabilities
  Notes payable                                                           Ⅵ、20       260,443,167.67           194,562,734.79
  Accounts payable                                                        Ⅵ、21       889,964,317.63           863,552,643.26
  Advance received                                                        Ⅵ、22       147,172,195.05           150,098,892.29
  Financial assets sold under agreements to repurchase
  Fees and commissions payable
  Employee pay payables                                                   Ⅵ、23         46,751,562.36            50,256,392.86
  Taxes and duties payable                                                Ⅵ、24         29,992,558.62            18,405,089.48
  Interest payable                                                                          379,085.53
  Dividend payable                                                        Ⅵ、25            863,516.60               863,516.60
  Other payables                                                          Ⅵ、26         67,674,829.07          109,493,520.02
  Amount due to reinsurance                                               Ⅵ、27
  Insurance contract provision
  Entrusted trading of securities
  Entrusted selling of securities
  Liability held for sale
  Non-current liabilities due within 1-year
  Other current liabilities
                         Total Current Liabilities                                    1,793,042,532.53         1,432,232,789.30
Non-current Liabilities:
  Long-term borrowings                                                                 160,000,000.00           160,000,000.00
  Bonds Payable                                                           Ⅵ、28
   Including: Preference shares
               Perpetuity bonds
  Long-term payables
  Long-term employee benefit payables
  Special payables
  Provisions
  Deferred income                                                         Ⅵ、29       100,336,504.07             57,396,619.00
  Deferred Tax liabilities                                                Ⅵ、18         71,429,566.31            75,683,681.95
  Other non-current liabilities
                      Total Non-current Liabilities                                    331,766,070.38           293,080,300.95
                              Total Liabilities                                       2,124,808,602.91         1,725,313,090.25
Owners Equity(or Shareholders Equity):
  Share capital                                                           Ⅵ、30       856,487,181.00           611,776,558.00
  Other equity instrument
   Including: Preference shares
               Perpetuity bonds
  Capital reserve                                                         Ⅵ、31       757,532,081.34          1,046,321,716.85
  Less: Treasury stock                                                    Ⅵ、32         23,305,370.40            67,615,856.00
  Other comprehensive income                                              Ⅵ、33       407,269,002.11           431,639,323.52
  Chartered reserve                                                       Ⅵ、34
  Surplus reserves                                                        Ⅵ、35       668,150,375.30           620,578,847.52
  Provision for general risk
  Undistributed profit                                                    Ⅵ、36       750,397,795.56           658,387,158.97
          Equity attributable to equity holders of the Company                        3,416,531,064.91         3,301,087,748.86
  Minority interest                                                                      78,281,832.85            69,585,601.21
                               Total Equity                                           3,494,812,897.76         3,370,673,350.07
                      Total Liabilities and Equity                                    5,619,621,500.67         5,095,986,440.32
Legal representative: Ji Zhijian             Chief Financial Officer:Ma Yun          Financial Manager :Mao Chunhua
                                    Balance Sheet of Parent Company
                                                      December 31, 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                  Amount Unit:RMB
                                 Items                                Note    At the end of year    At the beginning of year
Current Assets:
  Monetary funds                                                                  234,655,092.14           496,417,106.54
  Fair value through P&L assets
  Derivative financial assets
  Notes receivable                                                                  57,455,446.82            90,509,540.07
  Accounts receivable                                               XVII、1       356,557,956.93           117,575,405.74
  Prepayments                                                                       33,125,666.30            96,269,883.15
  Interest receivable                                                                1,871,783.33               723,955.56
  Dividend receivable
  Other receivables                                                 XVII、2          2,822,798.03             4,368,505.07
  Inventories                                                                     149,549,915.80           151,230,744.47
  Held for sale assets
  Non-current assets due within 1-year
  Other current assets                                                            102,402,409.84             30,563,139.06
                          Total Current Assets                                    938,441,069.19           987,658,279.66
Non-Current Assets:
  Available-for-sale financial assets                                             514,468,051.49           544,249,974.14
  Held-to-maturity investments
  Long-term receivables
  Long-term equity investment                                       XVII、3      2,044,438,551.88         1,713,412,501.09
  Investments properties                                                          114,812,363.92             28,605,652.94
  Fixed assets                                                                    658,637,271.68           274,262,264.28
  Construction in process                                                           80,314,961.09          320,329,247.78
  Engineer material
  Disposal of fixed assets
  Productive biological assets
  Oil-gas assets
  Intangible assets                                                                 71,715,598.15            88,113,279.88
  R&D expenses
  Goodwill
  Long-term deferred expenses                                                       12,737,555.16             3,658,276.80
  Deferred tax asset                                                                 5,815,160.93             6,751,619.50
  Other non-current assets
                        Total Non-current Assets                                 3,502,939,514.30         2,979,382,816.41
                              Total Assets                                       4,441,380,583.49         3,967,041,096.07
Legal representative: Ji Zhijian        Chief Financial Officer:Ma Yun          Financial Manager :Mao Chunhua
                            Balance Sheet of Parent Company (continued)
                                                   December 31, 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                      Amount Unit:RMB
                                     Items                                 Note   At the end of year    At the beginning of year
Current Liabilities:
  Short-term borrowings                                                               260,000,000.00
  Fair value through P&L liabilities
  Derivative financial liabilities
  Notes payable                                                                       119,034,784.44             85,834,371.87
  Accounts payable                                                                    385,076,569.09           340,987,669.38
  Advance received                                                                      61,450,463.91            74,949,113.25
  Employee payables                                                                     11,445,665.15             9,796,460.53
  Taxes and duties payable                                                               1,274,710.89             1,234,137.19
  Interest payable                                                                         379,085.53
  Dividend payable                                                                         533,156.00               533,156.00
  Other payables                                                                        30,346,173.96            74,954,775.74
  Liability held for sale
  Non-current liabilities due within 1-year
  Other current liabilities
                         Total Current Liabilities                                    869,540,608.97           588,289,683.96
Non-current Liabilities:
  Long-term borrowings                                                                160,000,000.00           160,000,000.00
  Bonds Payable
   Including: Preference shares
               Perpetuity bonds
  Long-term payables
  Long-term employee benefit payables
  Special payables
  Provisions
  Deferred income                                                                       56,890,504.07            12,836,619.00
  Deferred Tax liabilities                                                              71,429,566.31            75,683,681.95
  Other non-current liabilities
                     Total Non-current Liabilities                                    288,320,070.38           248,520,300.95
                              Total Liabilities                                      1,157,860,679.35          836,809,984.91
Owners Equity(or Shareholders Equity):
  Share capital                                                                       856,487,181.00           611,776,558.00
  Other equity instrument
   Including: Preference shares
               Perpetuity bonds
  Capital reserve                                                                     802,034,176.17          1,036,115,161.54
  Less: Treasury stock                                                                  23,305,370.40            67,615,856.00
  Other comprehensive income                                                          406,306,901.44           430,413,556.77
  Chartered reserve
  Surplus reserves                                                                    668,150,375.30           620,578,847.52
  Undistributed profit                                                                573,846,640.63           498,962,843.33
                               Total Equity                                          3,283,519,904.14         3,130,231,111.16
                     Total Liabilities and Equity                                    4,441,380,583.49         3,967,041,096.07
Legal representative: Ji Zhijian             Chief Financial Officer:Ma Yun         Financial Manager :Mao Chunhua
                                                     Consolidated Income Statement
                                                                          For the year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                                                Amount Unit:RMB
                                              Item                                                  Note             Current year                       Last year
Ⅰ、Total operating revenue                                                                                            2,079,715,105.37                 1,893,200,939.64
   Including: Operating revenue                                                                    Ⅵ、37              2,079,715,105.37                 1,893,200,939.64
     Interest income
     Earned premiums
     Fees and commission income
Ⅱ、Total cost of operation                                                                                            2,045,840,192.64                 1,888,674,681.05
  Including: Cost of operation                                                                     Ⅵ、37              1,643,653,442.93                 1,536,531,442.08
     Interest expenses
     Fees and commission expenses
     Payments to surrenders of insurance contracts
     Net amount of insurance claims expenses
     Net charges of provision for insurance contracts
     Dividends policy expenses
     Reinsurance expenses
     Business taxes and surcharges                                                                 Ⅵ、38                  19,553,933.04                   17,932,226.42
     Selling and distribution expenses                                                             Ⅵ、39                113,422,315.47                    91,678,326.90
     Administrative expenses                                                                       Ⅵ、40                231,345,591.57                   219,270,065.31
     Financial expenses                                                                            Ⅵ、41                  10,855,836.96                     2,378,038.61
     Loss on impairment of assets                                                                  Ⅵ、42                  27,009,072.67                   20,884,581.73
Add: Gain arising from the changes in fair value (loss listed with\"-\")
      Investment income (Loss listed with \"-\")                                                     Ⅵ、43                180,132,262.51                   172,600,178.47
 Including: income from investments in associates and joint ventures (Loss listed with \"-\")                              140,904,557.45                   128,967,171.76
      Exchange gain (Loss listed with \"-\")
      Gain on asset disposal(Loss listed with \"-\")                                                 Ⅵ、44                     552,588.02                   -21,565,350.43
      Other income                                                                                 Ⅵ、45                   1,771,176.72
Ⅲ、Operating profit (Loss listed with \"-\")                                                                              216,330,939.98                   155,561,086.63
    Add: Non-operating income                                                                      Ⅵ、46                   2,330,234.97                   38,222,022.99
      Less: Non-operating expenses                                                                 Ⅵ、47                     187,380.52                       285,318.73
Ⅳ、 Total profit (Loss listed with \"-\")                                                                                 218,473,794.43                   193,497,790.89
      Less: Income tax expenses                                                                    Ⅵ、48                  13,917,742.62                     7,966,473.68
Ⅴ、Net profit (Net loss listed with \"-\")                                                                                204,556,051.81                   185,531,317.21
    (I) Category in accordance with operation continuity                                                                 204,556,051.81                   185,531,317.21
      1、Net profit from continuing operation                                                                            204,556,051.81                   185,531,317.21
      2、Net profit from discontinuing operation
   (II) Category in accordance with ownership                                                                            204,556,051.81                   185,531,317.21
      1、 Net profit attributable to equity holders(shareholders) of the Company                                         200,759,820.17                   182,234,151.73
      2、Minority interest                                                                                                  3,796,231.64                     3,297,165.48
Ⅵ、 Other comprehensive income net off tax                                                                               -24,370,321.41                 -158,348,794.53
Total comprehensive income net off tax attributable to parent Company                                                     -24,370,321.41                 -158,348,794.53
   (Ⅰ)Items that may not be reclassified subsequently to the income statement                                                          -                                -
   1.Change in net asset/liability from remeasurment on defined benefit plan
   2.Under equity method, proportionate share of other comprehensive income in
invested company that may not be reclassified subsequently to the income
statement
   (Ⅱ)Items that may be reclassified subsequently to the income statement                         Ⅵ、33                 -24,370,321.41                 -158,348,794.53
   1.Under equity method, proportionate share of other comprehensive income
                                                                                                   Ⅵ、33                     -263,666.08                        -3,160.87
invested company that may be reclassified subsequently to the income statement
   2.Avaliable-for-sale financial assets fair value movements                                      Ⅵ、33                 -24,106,655.33                 -158,345,633.66
   3.Profit/loss on reclassification from held to maturities to avaliable-for-sale
financial assets
   4.Cash flow hedges effective portion
   5.Foreign currency translation difference
   6. Others
Total comprehensive income net off tax attributable to minority interests
Ⅶ、Total comprehensive income                                                                                           180,185,730.40                    27,182,522.68
  Total comprehensive income attributable to parent Company                                                              176,389,498.76                    23,885,357.20
  Total comprehensive income attributable to minority interest                                                             3,796,231.64                     3,297,165.48
Ⅷ、 Earnings per share
   (Ⅰ)Basic earnings per share                                                                                                        0.23                            0.22
   (Ⅱ)Diluted earnings per share                                                                                                      0.23                            0.22
The business combination under the common control during this year, the net profit achieved by the acquiree is___Yuan. Net profit achieved by acquiree last year is ___Yuan.
Legal representative: Ji Zhijian               Chief Financial Officer:Ma Yun                       Financial Manager :Mao Chunhua
                                               Income Statement of Parent Company
                                                                         For the year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                           Amount Unit:RMB
                                            Item                                                 Note         Current year         Last year
Ⅰ、Operating revenue                                                                           XVII、4          616,759,880.66     558,404,871.04
Less: Cost of operation                                                                         XVII、4          507,660,774.60     468,526,965.90
    Business taxes and surcharges                                                                                  7,988,392.84        5,674,459.53
    Selling and distribution expenses                                                                                891,189.19        1,292,587.98
    Administrative expenses                                                                                      112,247,954.40     109,136,561.08
    Financial expenses                                                                                             4,027,140.72         350,400.16
    Loss on impairment of assets                                                                                     321,626.33       -5,320,922.94
Add: Gain arising from the changes in fair value (loss listed with\"-\")
     Investment income (Loss listed with \"-\")                                                   XVII、5          198,438,477.12     187,574,249.05
 Including: income from investments in associates and joint ventures (Loss listed with \"-\")                      141,879,121.47     131,022,957.13
     Gain on asset disposal(Loss listed with \"-\")                                                                  1,851,943.49      -21,377,966.78
     Other income                                                                                                    128,650.51
Ⅱ、Operating profit (Loss listed with \"-\")                                                                      184,041,873.70     144,941,101.60
  Add: Non-operating income                                                                                          527,565.75        3,084,214.94
  Less: Non-operating expenses                                                                                                            60,000.00
Ⅲ、 Total profit (Loss listed with \"-\")                                                                         184,569,439.45     147,965,316.54
       Less: Income tax expenses                                                                                     936,458.57        1,924,168.07
Ⅳ、Net profit (Net loss listed with \"-\")                                                                        183,632,980.88     146,041,148.47
    (I) Net profit from continuing operation                                                                     183,632,980.88     146,041,148.47
    (II) Net profit from discontinuing operation
Ⅴ、 Other comprehensive income net off tax                                                                      -24,106,655.33    -158,345,633.66
  (Ⅰ)Items that may not be reclassified subsequently to the income statement                                                -                  -
  1.Change in net asset/liability from remeasurment on defined benefit plan
   2.Under equity method, proportionate share of other comprehensive income in
invested company that may not be reclassified subsequently to the income
statement
   (Ⅱ)Items that may be reclassified subsequently to the income statement                                       -24,106,655.33    -158,345,633.66
   1.Under equity method, proportionate share of other comprehensive income
invested company that may be reclassified subsequently to the income statement
  2.Avaliable-for-sale financial assets fair value movements                                                     -24,106,655.33    -158,345,633.66
   3.Profit/loss on reclassification from held to maturities to avaliable-for-sale
financial assets
  4.Cash flow hedges effective portion
  5.Foreign currency translation difference
  6. Others
Ⅵ、Total comprehensive income                                                                                   159,526,325.55      -12,304,485.19
Legal representative: Ji Zhijian             Chief Financial Officer:Ma Yun                    Financial Manager :Mao Chunhua
                                                 Consolidated Cash Flow Statement
                                                       For the year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                                    Amount Unit:RMB
                                  Item                                      Note                                     Current year            Last year
1. Cash flows from operating activities:
  Cash received from sales of goods and rendering of services                                                        1,490,364,517.50       1,635,367,200.41
  Net increase in deposits from customers and inter-banks deposits
  Net increase in loans from central bank
  Net increase in loans from other financial institutions
  Cash receipts of premium of direct insurance contracts
  Net cash received from reinsurance contracts
  Net increase in deposits from insurance policy holders and investment
 Net increase in disposal of financial assets measured in fair value and through P&L
 Cash receipts of interest, fees and commission
 Net increase in placement from banks and other financial institution
 Net increase in sales and repurchase operations
 Cash received from taxes refund                                                                                        13,249,610.37          15,004,822.89
 Cash received relating to other operating activities                                                 Ⅵ、50            99,140,045.44          73,923,003.04
              Sub-total of cash inflows from operating activities                                                    1,602,754,173.31       1,724,295,026.34
  Cash paid for goods and services                                                                                   1,208,906,954.40       1,130,198,716.81
  Net increase in loans and disbursement to customers
  Net increase in deposit with central bank and inter-banks
  Cash paid for claims of direct insurance contracts
  Cash paid for interest, fee and commission
  Cash paid for dividends of insurance policies
  Cash paid to and on behalf of employees                                                                              328,550,494.59         320,358,728.02
  Payments of taxes and surcharges                                                                                      97,569,294.79         119,059,997.71
  Cash paid relating to other operating activities                                                    Ⅵ、50           174,953,280.75         161,284,653.77
             Sub-total of cash outflows from operating activities                                                    1,809,980,024.53       1,730,902,096.31
    Net cash flows from operating activities                                                          Ⅵ、50          -207,225,851.22          -6,607,069.97
2. Cash flows from investment activities:
   Cash received from withdraw of investments                                                                            1,500,000.00           1,500,000.00
   Cash received from investments income                                                                               124,960,986.95         109,727,833.19
  Net cash received from disposal of fixed assets, intangible assets and other long-term assets                            359,391.02             533,855.77
   Net cash received from disposal of subsidiaries and other business units
   Cash received relating to other investing activities
              Sub-total of cash inflows from investing activities                                                      126,820,377.97         111,761,688.96
   Cash paid to acquire fixed assets, intangible assets and other long-term assets                                     121,653,422.49         339,787,389.83
   Cash paid for investments                                                                                           221,950,000.00          57,404,907.59
   Net increase in pledged deposits
   Net cash paid to acquire subsidiaries and other business units                                     Ⅵ、50            56,150,000.00         -19,888,482.90
   Cash paid relating to other investing activities                                                   Ⅵ、50            76,000,000.00
              Sub-total of cash outflow from investing activities                                                      475,753,422.49         377,303,814.52
    Net cash flows from investing activities                                                                          -348,933,044.52        -265,542,125.56
3. Cash flows from financing activities
   Cash received from investment absorption                                                                              4,900,000.00         639,016,550.34
   Including: Cash received by subsidiaries from investment absorpotion of non-controlling interest                      4,900,000.00           5,390,000.00
   Cash received from loans granted                                                                                    467,829,700.00         312,380,000.00
   Cash received from issue of bonds
   Cash received relating to other financing activities                                               Ⅵ、50            22,976,815.56          25,795,827.68
              Sub-total of cash inflows from financing activities                                                      495,706,515.56         977,192,378.02
   Cash paid for settlement of borrowings                                                                              162,890,000.00         201,480,000.00
   Cash paid for dividends, profits appropriation or payments of interest                                               71,104,725.59          42,474,168.02
   Including: Dividens and profits paid to non-controlling interest                                                                             1,078,000.00
   Cash paid relating to other financing activities                                                   Ⅵ、50            29,714,920.43          26,956,882.67
             Sub-total of cash outflows from financing activities                                                      263,709,646.02         270,911,050.69
    Net cash flows from financing activities                                                                           231,996,869.54         706,281,327.33
4. Effect of changes in foreign exchange rate on cash and cash equivalents                                               -2,383,390.47          1,724,849.71
5. Net increase in cash and cash equivalents                                                          Ⅵ、50          -326,545,416.67         435,856,981.51
  Add: Cash and cash equivalents at beginning of year                                                                  691,238,822.98         255,381,841.47
6. Cash and cash equivalents at end of year                                                           Ⅵ、50             364,693,406.31       691,238,822.98
Legal representative: Ji Zhijian     Chief Financial Officer:Ma Yun                                          Financial Manager :Mao Chunhua
                                       Cash Flow Statement of Parent Company
                                                       For the year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                              Amount Unit:RMB
                                            Item                                                  Note         Current year            Last year
1.Cash flow from operating activities
  Cash receipts from sale of goods or rendering of services                                                      466,954,711.78        573,989,576.16
  Refunds of taxes
  Other cash receipts in operating activities                                                                     67,958,978.50            43,293,827.34
              Sub-total of cash inflows from operating activities                                                534,913,690.28        617,283,403.50
   Cash payments for goods and services acquired                                                                 503,456,875.87        417,926,957.89
   Cash payments to and on behalf of employees                                                                   125,201,385.18        126,059,533.97
   Tax and duties payments                                                                                         9,617,239.24            18,159,382.86
   Other cash payments for operating activities                                                                   25,669,693.09            38,988,406.65
             Sub-total of cash outflows from operating activities                                                663,945,193.38        601,134,281.37
                    Net cash flows from operating activities                                                    -129,031,503.10            16,149,122.13
2.Cash flows from investing activities
   Cash received from withdraw of investments                                                                      1,500,000.00             4,170,375.54
   Cash receipts from investments income                                                                         134,921,961.95        119,993,684.77
  Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets                       46,000.00             1,328,170.00
   Net cash receipts from disposal of subsidiaries and other businesses
  Other cash receipts in investing activities
              Sub-total of cash inflows from investing activities                                                136,467,961.95        125,492,230.31
  Cash payments for acquired fixed assets, intangible assets and other long-term assets                          107,072,028.97        328,899,717.16
   Cash payments for investment                                                                                  221,950,000.00        168,990,635.74
   Net cash payments for acquisition of subsidiaries and other businesses                                         56,150,000.00            21,535,918.03
   Other cash payments in investing activities                                                                    76,000,000.00
              Sub-total of cash outflows from investing activities                                               461,172,028.97        519,426,270.93
                    Net cash flows from investment activities                                                   -324,704,067.02        -393,934,040.62
3.Cash flows from financing activities
  Cash received from capital injection                                                                                                 633,626,550.34
  Cash receipts from borrowings                                                                                  320,000,000.00        240,000,000.00
  Cash receipts from issuing bond
  Other cash receipts in financing activities                                                                      1,200,000.00              720,332.73
              Sub-total of cash inflows from financing activities                                                321,200,000.00        874,346,883.07
  Cash paid for settlement of borrowings                                                                          60,000,000.00        107,600,000.00
  Cash paid for dividends, profits appropriation or payments of interest                                          68,187,672.87            37,733,665.57
  Other cash payments in financing activities                                                                                               3,430,000.00
              Sub-total of cash outflows from financing activities                                               128,187,672.87        148,763,665.57
                       Net cash flows from financing activities                                                  193,012,327.13        725,583,217.50
4.Effect of changes in foreign exchange rate on cash and cash equivalents                                            161,228.59               -20,326.62
5.Net increases in cash and cash equivalents                                                                    -260,562,014.40        347,777,972.39
Add: the beginning balance of cash and cash equivalent                                                           495,217,106.54        147,439,134.15
6.The ending balance of cash and cash equivalent                                                                 234,655,092.14        495,217,106.54
Legal representative: Ji Zhijian                Chief Financial Officer:Ma Yun                         Financial Manager :Mao Chunhua
                                                                                                      Consolidated Statement of Changes in Shareholer's Equity
                                                                                                                                                   For the Year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                                                                                                                                                                               Amount Unit:RMB
                                                                                                                                                                                        Current year
                                                                                                                                              Equity attributable to the equity holders of the Company
                                                                                        Other equity instrument
                               Item
                                                                    Share capital                                                                                                                                                                                            Minority interests     Total equity
                                                                                     Preference Perpetuity            Capital reserves   Less: Treasury shares   Other comprehensive income Special reserves Surplus reserves General risk provision Undistributed profits
                                                                                                           Others
                                                                                       share      bond
1. Balance at end of last year                                      611,776,558.00                                    1,046,321,716.85          67,615,856.00                   431,639,323.52                         620,578,847.52                      658,387,158.97      69,585,601.21      3,370,673,350.07
  Add: Changes in accounting policies                                                                                                                                                                                                                                                                              -
       Correction of prior periods errors                                                                                                                                                                                                                                                                          -
       Business combination under the same control                                                                                                                                                                                                                                                                 -
       Others                                                                                                                                                                                                                                                                                                      -
2. Balance at beginning of current year                             611,776,558.00         -           -          -   1,046,321,716.85          67,615,856.00                   431,639,323.52                  -      620,578,847.52             -        658,387,158.97      69,585,601.21      3,370,673,350.07
3. Increase/ Decrease for current year (Decrease listed with \"-\")244,710,623.00            -           -          -    -288,789,635.51          -44,310,485.60                  -24,370,321.41                  -       47,571,527.78             -         92,010,636.59        8,696,231.64      124,139,547.69
 (Ⅰ)Total of comprehensive income                                                                                                                                            -24,370,321.41                                                             200,759,820.17        3,796,231.64      180,185,730.40
 (Ⅱ)Capital contribution and reduction                                       -          -           -          -     -44,079,012.51          -44,310,485.60                              -                   -                 -               -                    -         4,900,000.00         5,131,473.09
  1.Ordinary share                                                                                                      -56,150,000.00          -44,310,485.60                                                                                                                   4,900,000.00        -6,939,514.40
  2.Capital contributed by other equity instrument holders                                                                                                                                                                                                                                                         -
  3.Share-based payments charged to equity                                                                              12,070,987.49                                                                                                                                                               12,070,987.49
  4.Others                                                                                                                                                                                                                                                                                                         -
 (Ⅲ)Profit appropriations                                                    -          -           -          -                -                        -                               -                   -       47,571,527.78             -        -108,749,183.58                 -        -61,177,655.80
  1.Appropriation of surplus reserves                                                                                                                                                                                   47,571,527.78                       -47,571,527.78                                         -
  2.Appropriation to general risks provision                                                                                                                                                                                                                                                                       -
  3.Distribution to equity holders (or shareholders)                                                                                                                                                                                                        -61,177,655.80                          -61,177,655.80
  4.Others                                                                                                                                                                                                                                                                                                         -
 (Ⅳ)Shareholders interests internally transfered                 244,710,623.00         -           -          -    -244,710,623.00                      -                               -                   -                 -               -                    -                   -                       -
  1.Transfer of capital reserve to capital (share capital)          244,710,623.00                                     -244,710,623.00                                                                                                                                                                             -
  2.Transfer of surplus reserves to capital (share capital)                                                                                                                                                                                                                                                        -
  3.Surplus reserves making up of losses                                                                                                                                                                                                                                                                           -
  4.Others                                                                                                                                                                                                                                                                                                         -
 (Ⅴ)Provision and utilisation of special reserves                            -          -           -          -                -                        -                               -                   -                 -               -                    -                   -                       -
  1.Provision for special reserve                                                                                                                                                                      2,016,809.74                                                                                   2,016,809.74
  2.Utilisation of special reserve                                                                                                                                                                     -2,016,809.74                                                                                 -2,016,809.74
 (Ⅵ)Others                                                                                                                                                                                                                                                                                                      -
4、Balance at end of current year                                   856,487,181.00         -           -          -    757,532,081.34           23,305,370.40                   407,269,002.11                  -      668,150,375.30             -        750,397,795.56      78,281,832.85      3,494,812,897.76
Legal representative: Ji Zhijian                  Chief Financial Officer:Ma Yun                         Financial Manager :Mao Chunhua
                                                                                                      Consolidated Statement of Changes in Shareholer's Equity
                                                                                                                                                   For the Year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                                                                                                                                                                                Amount Unit:RMB
                                                                                                                                                                                         Last year
                                                                                                                                              Equity attributable to the equity holders of the Company
                                                                                        Other equity instrument
                               Item
                                                                    Share capital                                                                                                                                                                                             Minority interests     Total equity
                                                                                     Preference Perpetuity            Capital reserves   Less: Treasury shares    Other comprehensive income Special reserves Surplus reserves General risk provision Undistributed profits
                                                                                                           Others
                                                                                       share      bond
1. Balance at end of last year                                      360,164,975.00                                     630,264,991.95           39,503,800.00                   589,988,118.05                          580,769,740.16                      525,925,066.25      66,257,548.71      2,713,866,640.12
  Add: Changes in accounting policies                                                                                                                                                                                                                                                                               -
       Correction of prior periods errors                                                                                                                                                                                                                                                                           -
       Business combination under the same control                                                                      23,634,942.60                                                                                                                        26,053,545.85                           49,688,488.45
       Others                                                                                                                                                                                                                                                                                                       -
2. Balance at beginning of current year                             360,164,975.00         -           -          -    653,899,934.55           39,503,800.00                   589,988,118.05                    -     580,769,740.16             -        551,978,612.10      66,257,548.71      2,763,555,128.57
3. Increase/ Decrease for current year (Decrease listed with \"-\")251,611,583.00            -           -          -    392,421,782.30           28,112,056.00                  -158,348,794.53                    -      39,809,107.36             -        106,408,546.87        3,328,052.50      607,118,221.50
 (Ⅰ)Total of comprehensive income                                                                                                                                           -158,348,794.53                                                              182,234,151.73        3,297,165.48       27,182,522.68
 (Ⅱ)Capital contribution and reduction                            71,529,096.00         -           -          -    572,504,269.30           28,112,056.00                                -                    -                -               -                    -         1,108,887.02      617,030,196.32
  1.Ordinary share                                                   71,529,096.00                                     560,231,963.55           28,112,056.00                                                                                                                     1,108,887.02      604,757,890.57
  2.Capital contributed by other equity instrument holders                                                                                                                                                                                                                                                          -
  3.Share-based payments charged to equity                                                                              12,227,168.00                                                                                                                                                                12,227,168.00
  4.Others                                                                                                                   45,137.75                                                                                                                                                                    45,137.75
 (Ⅲ)Profit appropriations                                                    -          -           -          -                -                        -                                -                    -      39,809,107.36             -         -75,825,604.86      -1,078,000.00       -37,094,497.50
  1.Appropriation of surplus reserves                                                                                                                                                                                    39,809,107.36                       -39,809,107.36                                         -
  2.Appropriation to general risks provision                                                                                                                                                                                                                                                                        -
  3.Distribution to equity holders (or shareholders)                                                                                                                                                                                                         -36,016,497.50      -1,078,000.00       -37,094,497.50
  4.Others                                                                                                                                                                                                                                                                                                          -
 (Ⅳ)Shareholders interests internally transfered                 180,082,487.00         -           -          -    -180,082,487.00                      -                                -                    -                -               -                    -                   -                       -
  1.Transfer of capital reserve to capital (share capital)          180,082,487.00                                     -180,082,487.00                                                                                                                                                                              -
  2.Transfer of surplus reserves to capital (share capital)                                                                                                                                                                                                                                                         -
  3.Surplus reserves making up of losses                                                                                                                                                                                                                                                                            -
  4.Others                                                                                                                                                                                                                                                                                                          -
 (Ⅴ)Provision and utilisation of special reserves                            -          -           -          -                -                        -                                -                    -                -               -                    -                   -                       -
  1.Provision for special reserve                                                                                                                                                                        1,982,950.50                                                                                  1,982,950.50
  2.Utilisation of special reserve                                                                                                                                                                   -1,982,950.50                                                                                    -1,982,950.50
 (Ⅵ)Others                                                                                                                                                                                                                                                                                                       -
4、Balance at end of current year                                   611,776,558.00         -           -          -   1,046,321,716.85          67,615,856.00                   431,639,323.52                    -     620,578,847.52             -        658,387,158.97      69,585,601.21      3,370,673,350.07
Legal representative: Ji Zhijian                  Chief Financial Officer:Ma Yun                         Financial Manager :Mao Chunhua
                                                                                                 Statement of Changes in Equity of Parent Company
                                                                                                                                      For the Year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                                                                                                                              Amount Unit:RMB
                                                                                                                                                                        Current year
                                                                                          Other equity instrument
                               Item                                  Share capital
                                                                                      Preference   Perpetuity             Capital reserves     Less: Treasury shares    Other comprehensive income      Special reserves   Surplus reserves   Undistributed profits    Total equity
                                                                                                              Others
                                                                                        share        bond
1. Balance at end of last year                                       611,776,558.00                                      1,036,115,161.54              67,615,856.00                   430,413,556.77                        620,578,847.52        498,962,843.33     3,130,231,111.16
  Add: Changes in accounting policies                                                                                                                                                                                                                                                 -
       Correction of prior periods errors                                                                                                                                                                                                                                             -
       Others                                                                                                                                                                                                                                                                         -
2. Balance at beginning of current year                              611,776,558.00          -           -          -    1,036,115,161.54              67,615,856.00                   430,413,556.77                -       620,578,847.52        498,962,843.33     3,130,231,111.16
3. Increase/ Decrease for current year (Decrease listed with \"-\") 244,710,623.00             -           -          -     -234,080,985.37              -44,310,485.60                  -24,106,655.33                -        47,571,527.78          74,883,797.30     153,288,792.98
 (Ⅰ)Total of comprehensive income                                                                                                                                                   -24,106,655.33                                              183,632,980.88      159,526,325.55
 (Ⅱ)Capital contribution and reduction                                        -           -           -          -       10,629,637.63              -44,310,485.60                             -                  -                  -                       -       54,940,123.23
  1.Ordinary share                                                                                                           -1,441,349.86             -44,310,485.60                                                                                                   42,869,135.74
  2.Capital contributed by other equity instrument holders                                                                                                                                                                                                                            -
  3.Share-based payments charged to equity                                                                                  12,070,987.49                                                                                                                               12,070,987.49
  4.Others                                                                                                                                                                                                                                                                            -
 (Ⅲ)Profit appropriations                                                     -           -           -          -                  -                          -                               -                  -        47,571,527.78       -108,749,183.58       -61,177,655.80
  1.Appropriation of surplus reserves                                                                                                                                                                                         47,571,527.78         -47,571,527.78                    -
  2.Distribution to equity holders (or shareholders)                                                                                                                                                                                                -61,177,655.80      -61,177,655.80
  3.Others                                                                                                                                                                                                                                                                            -
 (Ⅳ)Shareholders interests internally transfered                  244,710,623.00          -           -          -     -244,710,623.00                         -                               -                  -                  -                       -                     -
  1.Transfer of capital reserve to capital (share capital)           244,710,623.00                                       -244,710,623.00                                                                                                                                             -
  2.Transfer of surplus reserves to capital (share capital)                                                                                                                                                                                                                           -
  3.Surplus reserves making up of losses                                                                                                                                                                                                                                              -
  4.Others                                                                                                                                                                                                                                                                            -
 (Ⅴ)Provision and utilisation of special reserves                             -           -           -          -                  -                          -                               -                  -                  -                       -                     -
  1.Provision for special reserve                                                                                                                                                                           2,016,809.74                                                 2,016,809.74
  2.Utilisation of special reserve                                                                                                                                                                         -2,016,809.74                                                 -2,016,809.74
 (Ⅵ)Others                                                                                                                                                                                                                                                                         -
4、Balance at end of current year                                    856,487,181.00          -           -          -      802,034,176.17              23,305,370.40                   406,306,901.44                -       668,150,375.30        573,846,640.63     3,283,519,904.14
Legal representative: Ji Zhijian                  Chief Financial Officer:Ma Yun                           Financial Manager :Mao Chunhua
                                                                                                 Statement of Changes in Equity of Parent Company
                                                                                                                                      For the Year of 2017
Name of Enterprise:Dalian Refrigeration Company Limited                                                                                                                                                                            Amount Unit:RMB
                                                                                                                                                                        Last year
                                                                                          Other equity instrument
                               Item                                  Share capital
                                                                                      Preference   Perpetuity             Capital reserves   Less: Treasury shares    Other comprehensive income      Special reserves   Surplus reserves   Undistributed profits    Total equity
                                                                                                              Others
                                                                                        share        bond
1. Balance at end of last year                                       360,164,975.00                                        640,764,783.03             39,503,800.00                 588,759,190.43                         580,769,740.16        428,747,299.72     2,559,702,188.34
  Add: Changes in accounting policies                                                                                                                                                                                                                                               -
       Correction of prior periods errors                                                                                                                                                                                                                                           -
       Others                                                                                                                                                                                                                                                                       -
2. Balance at beginning of current year                              360,164,975.00          -           -          -      640,764,783.03             39,503,800.00                 588,759,190.43                 -       580,769,740.16        428,747,299.72     2,559,702,188.34
3. Increase/ Decrease for current year (Decrease listed with \"-\") 251,611,583.00             -           -          -      395,350,378.51             28,112,056.00                 -158,345,633.66                -        39,809,107.36          70,215,543.61     570,528,922.82
 (Ⅰ)Total of comprehensive income                                                                                                                                                -158,345,633.66                                              146,041,148.47       -12,304,485.19
 (Ⅱ)Capital contribution and reduction                             71,529,096.00          -           -          -      575,432,865.51             28,112,056.00                             -                  -                  -                       -      618,849,905.51
  1.Ordinary share                                                    71,529,096.00                                        563,160,559.76             28,112,056.00                                                                                                  606,577,599.76
  2.Capital contributed by other equity instrument holders                                                                                                                                                                                                                          -
  3.Share-based payments charged to equity                                                                                  12,227,168.00                                                                                                                             12,227,168.00
  4.Others                                                                                                                      45,137.75                                                                                                                                  45,137.75
 (Ⅲ)Profit appropriations                                                     -           -           -          -                  -                        -                               -                  -        39,809,107.36         -75,825,604.86      -36,016,497.50
  1.Appropriation of surplus reserves                                                                                                                                                                                       39,809,107.36         -39,809,107.36                    -
  2.Distribution to equity holders (or shareholders)                                                                                                                                                                                              -36,016,497.50      -36,016,497.50
  3.Others                                                                                                                                                                                                                                                                          -
 (Ⅳ)Shareholders interests internally transfered                  180,082,487.00          -           -          -     -180,082,487.00                       -                               -                  -                  -                       -                     -
  1.Transfer of capital reserve to capital (share capital)           180,082,487.00                                       -180,082,487.00                                                                                                                                           -
  2.Transfer of surplus reserves to capital (share capital)                                                                                                                                                                                                                         -
  3.Surplus reserves making up of losses                                                                                                                                                                                                                                            -
  4.Others                                                                                                                                                                                                                                                                          -
 (Ⅴ)Provision and utilisation of special reserves                             -           -           -          -                  -                        -                               -                  -                  -                       -                     -
  1.Provision for special reserve                                                                                                                                                                         1,982,950.50                                                 1,982,950.50
  2.Utilisation of special reserve                                                                                                                                                                       -1,982,950.50                                                 -1,982,950.50
 (Ⅵ)Others                                                                                                                                                                                                                                                                       -
4、Balance at end of current year                                    611,776,558.00          -           -          -    1,036,115,161.54             67,615,856.00                 430,413,556.77                 -       620,578,847.52        498,962,843.33     3,130,231,111.16
Legal representative: Ji Zhijian                  Chief Financial Officer:Ma Yun                           Financial Manager :Mao Chunhua
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
I. General Information
  Dalian Refrigeration Company Limited (the “Company”) was reorganized and reformed from
  main part of former Dalian Refrigeration Factory. On December 8, 1993, the company went
  to the public as a listed company at Shenzhen Stock Exchange Market.        On March 20, 1998,
  the company successfully went to the public at B share market and listed at Shenzhen Stock
  Exchange Market with total share capital of RMB350,014,975Yuan.
  According to the 13th meeting of the 6th generation of board, extraordinary general meeting
  for 2015 fiscal year and ' Restricted share incentive plan (draft)' , the Company planned to
  introduce A ordinary shares to incentive objectives, which was 10,150,000 number of shares
  would be granted to 41 share incentive objectives at granted price of RMB5.56Yuan per share.
  Up to March 12th ,2015, the Company received new added share capital of
  RMB10,150,000Yuan and the share capital had been verified by DaHua Certified Public
  Accountants, and had been issued the capital verification report Dahuayanzi [2015]000086 on
  March12th , 2015.
  The general meeting for 2015 fiscal year held on 21st April 2016 approved the profit
  distribution policy for the year of 2015, which agrees the profit distribution based on the total
  360,164,975 number of shares as share capital, paid share dividend of 5 common shares for
  every 10 shares through capital reserve. The policy stated above was fully implemented on
  5th May 2016, and the registered capital was altered to 540,247,462.00Yuan.
  The 17thmeeting of the 6th generation of board was held on 4th June 2015 and the 2nd interim
  shareholders’ meeting was held on 24th June 2015, meeting deliberated and passed the
  proposal of non-public offering of ‘A shares’. China’s Securities Regulatory Commission
  issued SFC license [2015]3137 on 30th December, 2015, approving that new non-public
  offering cannot exceeded 38,821,954 number of shares. The company implemented the post
  meeting procedures for China’s Securities Regulatory Commission, which is regarding
  adjustment of bottom price and the number of the shares issued after the implementation of
  profit distribution policy of 2015 in May, 2016, and accordingly revised the upper limit of
  non-public offering of share to58,645,096 number of new ‘A shares’. The company issued the
  non-public offering of 58,645,096 number of ‘A shares’ to 7 investors, and as a result, the
  total number of shares of the company is changed to 598,892,558 shares, and the par value is
  1yuan per share and the total share capital is 598,892,558.00Yuan. The share capital stated
  above has been verified by DaHua Certified Public Accountants, and has been issued the
  capital verification report Dahuayanzi [2016]000457 on 31st May 2016.
  According to the ‘Restricted Share Incentive Plan(draft) of Dalian Refrigeration Company
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  Limited for the year of 2016’ and the ‘Proposal regarding the shareholders’ meeting
  authorized the board of directors to implement the Restricted Share Incentive Plan’ approved
  on the 3rdprovisional general meeting held on 13th September 2016, the 9th meeting of the 7th
  generation of board deliberated and passed the ‘Proposal about granting the restricted shares
  to incentive targets’ on September 20th, 2016 and set 20th September 2016 as share granted
  date, and granted 12,884,000 number of restricted shares to 188 incentive targets at granted
  price of 5.62Yuan per share. By 22ndNovember, 2016, the company has actually received the
  newly subscribed registered share capital of 12,884,000Yuan subscribed by incentive targets.
  The share capital stated above has been verified by DaHua Certified Public Accountants, and
  has been issued the capital verification report Dahuayanzi [2016]001138 on 23rdNovember,
  2016.
  On May 20th, 2017,        the general meeting for 2016 fiscal year was held and profit
  appropriation scheme for 2016 FY was approved, which was every 10 shares will be
  increased by 4 shares through capital reserve based on the total 611,776,558 number of shares.
  After the profit appropriation scheme, the registered               capital was changed to
  RMB856,478,181.00Yuan.
  The old address of the Company’s registered office as same as head office is No.888 Xinan
  Road, Shahekou District, Dalian, China. In 2017, the Company relocated to new factory and
  changed its address to No.16 East of Liao River RD, DDA, Dalian China as same as HQ’s
  address. The parent company of the Company is Dalian Bingshan Group Co., Ltd., and there
  is no ultimate controller regulated by the relevant law, regulations and rules.
  The company falls into industrial manufacturing sector, mainly engaged in industrial
  refrigeration, refrigerated and frozen food storage, and manufacture and installation of central
  air-conditioning and refrigeration equipment. The scope of business includes refrigeration
  equipment, valve, fixings refrigeration equipment, supported products processing and system
  design of air-conditioning. The company also offers technical consultation, technical services,
  commercial trade and material supply and marketing.
II. The scope of consolidation
  There are 15 entities included in the current consolidated financial statements, including:
                                                                  Proportion of
                                                                                    Proportion of
          Names of subsidiaries              Types       Level    shareholding
                                                                                    votes(%)
                                                                     (%)
Dalian Bingshan Group Engineering
                                          Subsidiary       2           100
Co., Ltd.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                                                 Proportion of
                                                                                 Proportion of
         Names of subsidiaries                Types      Level   shareholding
                                                                                 votes(%)
                                                                    (%)
Dalian Bingshan Group Sales         Co.,
                                            Subsidiary    2          100
Ltd.
Dalian      Bingshan     Air-conditioning
                                            Subsidiary    2           70
Equipment Co., Ltd.
Dalian Bingshan JiaDe Automation
                                            Subsidiary    2          100
Co., Ltd.
Dalian      Bingshan     Lingshe   Quick
                                            Subsidiary    2          100
Freezing Equipment Co., Ltd.
Wuhan New World Refrigeration
                                            Subsidiary    2          100
Industrial Co., Ltd.
Bingshan Technical Service(Dalian)
                                            Subsidiary    2          100
Co.,Ltd.
Dalian         Niweisi        LengNuan
                                            Subsidiary    2           55
Techonology Co., Ltd.
Dalian       Xinminghua        Electrical
                                            Subsidiary    2          100
Technology Co., Ltd
Dalian       Bingshan       International
                                            Subsidiary    2          100
Trading Co.,Ltd
Wuhan New World Air-conditioning              Sub-
                                                          3          100
Refrigeration Engineering Co., Ltd          subsidiary
Dalian Bingshan Security Leisure              Sub-
                                                          3          100
Industrial Engineering Co., Ltd             subsidiary
Ningbo Bingshan Air-conditioning              Sub-
                                                          3           51
Refrigeration Engineering Co., Ltd          subsidiary
Shanghai Bingshan Technical Service           Sub-
                                                          3           51
Co., Ltd                                    subsidiary
Chengdu       Bingshan      Refrigeration     Sub-
                                                          3           51
Engineering Co., Ltd.                       subsidiary
 This year, entities within the consolidation scope are changed comparing to last year. Because
 two more entities are added into the group, Chengdu Bingshan Refrigeration Engineering Co.,
 Ltd was newly invested and Dalian Bingshan International Trading Co.,Ltd was newly
 acquired.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
 For the specific information of entity change in the consolidation scope, see the notes of VII.
 The Change of Scope of Consolidation and VIII. The Equity in Other Entities.
III. Financial Statements Preparation Basis
  (1) Preparing basis
  The Company’s financial statements are prepared on the basis of going concern assumption,
  according to the actual occurred transactions and events and in accordance with ‘Accounting
  Standards for Business Enterprises’ and relevant regulations, and also based on the note IV
  “Significant Accounting Policies, Accounting Estimates”.
  (2) Going concern
   The company has the capacity to continually operate within 12 months at least since the end
   of report period, and hasn‘t the major issues impacting on the sustainable operation ability.
IV. Significant Accounting Policies and Accounting Estimates
  1. Declaration for compliance with accounting standards for business enterprises
  The financial statements are prepared by the Group according to the requirements of
  Accounting Standard for Business Enterprise, and reflect the relative information for the
  financial position, operating performance, cash flow of the Group truly and fully.
  2. Accounting period
  The Group adopts the Gregorian calendar year as accounting period from Jan 1 to Dec 31.
  3. Operating cycle
  Normal operating cycle refers to the duration starting from purchasing the assets for
  manufacturing up to cash or cash equivalent realization. The group sets twelve months for
  one operating cycle and as the liquidity criterion for assets and liability.
  4. Functional currency
  The Group adopts RMB as functional currency.
  5. Accounting for business combination under same control and not under same control
  As an acquirer, the assets and liabilities that The Group obtained in a business combination
  under the same control should be measured on the basis of their carrying amount in the
  consolidated financial statements on the combining date. As for the balance between the
  carrying amount of the net assets obtained by the combining party and the carrying amount of
  the consideration paid by it, the capital surplus shall be adjusted. If the capital surplus is not
  sufficient to be offset, the retained earnings shall be adjusted.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  For a business combination not under same control, the asset, liability and contingent liability
  obtained from the acquirer shall be measured at the fair value on the acquisition date. The
  combination cost shall be the fair value, on the acquisition date, of the assets paid, the
  liabilities incurred or assumed and equity securities issued by the acquirer in exchange for the
  control of the acquire, and sum of all direct expenses(if the combination is achieved in stages,
  the combination cost shall be the sum of individual transaction). The difference when
  combination cost exceeds proportionate share of the fair value of identifiable net assets of
  acquire should be recognized as goodwill. If the combination cost is less than proportionate
  share of the fair value of identifiable net assets of acquiree, firstly, fair value of identifiable
  asset, liability or contingent liability shall be reviewed, and so the fair value of non-monetary
  assets or equity instruments issued in the combination consideration , after review, still       the
  combination cost is less than proportionate share of the fair value of identifiable net assets of
  acquire, the difference should be recognized as non-operating income.
  6. Method of preparation of consolidated financial statements
  All subsidiaries controlled by the Group and structured entities are within the consolidation
  scope.
  If subsidiaries adopt different accounting policy or have different accounting period from the
  parent company, appropriated adjustments shall be made in accordance with the Group policy
  in preparation of the consolidated financial statements.
  All significant intergroup transactions, outstanding balances and unrealized profit shall be
  eliminated in full when preparing the consolidated financial statements. Portion of the
  subsidiary’s equity not belonging to the parent, profit, loss for the current period, portion of
  other comprehensive income and total comprehensive belonging to minority interest,              shall
  be presented separately in the consolidated financial statements under “minority interest of
  equity”, ”minority interest of profit and loss”, “other comprehensive income attributed to
  minority interest” and “total comprehensive income attributed to minority interest” title.
  If a subsidiary is acquired under common control, its operation results and cash flow shall be
  consolidated since the beginning of the consolidation period. When preparing the comparative
  consolidated financial statements, adjustments shall be made to relevant items of comparative
  figures as regarded that reporting entity established through consolidation has been always
  there since the point when the ultimate controlling party starts to have the control.
  If a business consolidation under common control is finally achieved in stages, consolidation
  accounting method shall be disclosed additionally for the period in which the control is
  obtained. For example, if a business consolidation under common control is finally achieved
  in stages, when preparing the consolidated financial statements, adjustments shall be made for
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  the current consolidation status as if consolidation has always been there since the point when
  the ultimate controlling party starts to control. In preparation of comparative figures, asset
  and liability of the acquiree shall be consolidated into the Group’s comparative financial
  statements, but to the extent no earlier than the point when the Group and acquiree are both
  under ultimate control and relevant items under equity in comparative financial statements
  shall be adjusted for net asset increased in combination. To avoid the duplicated computation
  of net asset of acquiree, for long-term equity investment held by the Group before the
  consolidation, relevant profit and loss, other comprehensive income and movement in other
  net asset, recognized for the period between the combination date and later date when original
  shareholding is obtained and when the Group and the acquiree are under common control of
  same ultimate controlling party, shall be respectively used for writing down the opening
  balance of retained earnings of comparative financial statements and profit and loss for the
  current period.
  If a subsidiary is acquired not under common control, its operation results and cash flow shall
  be consolidated since the beginning of the consolidation period. In preparation of the
  consolidated financial statements, adjustments shall be made to subsidiary’s financial
  statements based on the fair value of its all identifiable assets, liability or contingent liability
  on the acquisition date.
  If a business consolidation under non-common control is finally achieved in stages,
  consolidation accounting method shall be disclosed additionally for the period in which the
  control is obtained. For example, if a business consolidation not under common control is
  finally achieved in stages, when preparing the consolidated financial statements, the acquirer
  shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair
  value and recognize the resulting gain or loss as investment income for the current period.
  Other comprehensive income, under equity method accounting rising from the interest held in
  acquiree in relation to the period before the acquisition, and changes in the value of its other
  equity other than net profit or loss, other comprehensive income and profit appropriation shall
  be transferred to   investment gain or loss for the      period in which the acquisition incurs,
  excluding the other comprehensive income from the movement on the remeasurement of ne
  asset or liability of defined benefit plan.
  When the Group partially disposes of the long –term equity investment in subsidiary without
  losing the control over it, in the consolidated financial statements, the difference, between
  disposals price and respective disposed value of share of net assets in the subsidiary since the
  acquisition date or combination date, shall be adjusted for capital surplus or share premium,
  no enough capital surplus, then adjusted for retained earnings.
  When the Group partially disposes of the long –term equity investment in subsidiary and lose
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  the control over it, in preparation of consolidated financial statements, remaining share of
  interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share
  disposal consideration and fair value of remaining portion of shareholding minus the share of
  the net assets in the subsidiary held based on the previous shareholding percentage since the
  acquisition date or combination date,        the balance of above is recognized as investment
  gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive
  income relevant to share investment in subsidiary shall be transferred to investment gain /loss
  for the period on the date of losing control.
  When the Group partially disposes of the long –term equity investment in subsidiary and lose
  the control over it by stages, if all disposing transactions are bundled, each individual
  transaction shall be seen as a transaction of disposal of a subsidiary by losing control. The
  difference between the disposal price and       the share of the net assets in the subsidiary held
  before the date of losing control, shall be recognize as other comprehensive income until the
  date of losing control where it is transferred into investment gain/ loss for the current period.
  7. Joint arrangement classification and joint operation accounting
  The Group’s joint arrangement includes joint operation and joint venture. For joint operation,
  the Group as a joint operator shall recognize its own assets and its share of any assets held
  jointly, its liabilities and its share of any liabilities incurred jointly, its revenue from the sale
  of its share of the output arising from the joint operation, its share of the revenue from the
  sale of the output by the joint operation; and its expenses, including its share of any expenses
  incurred jointly. When an entity enters into a transaction with a joint operation in which it is a
  joint operator, such as a sale or contribution of assets, it is conducting the transaction with the
  other parties to the joint operation and, as such, the joint operator shall recognize gains and
  losses resulting from such a transaction only to the extent of the other parties’ interests in the
  joint operation.
  8. Cash and cash equivalent
  The cash listed on the cash flow statements of the Group refers to cash on hand and bank
  deposit. The cash equivalents refer to short-term (normally with original maturities of three
  months or less) and liquid investments which are readily convertible to known amounts of
  cash and subject to an insignificant risk of changes in value.
  9. Translation of foreign currency
  (1) Foreign currency transaction
  Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank
  of China (“PBOC”) on the 1st day of the month when the transactions incurred. Monetary
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  assets and liabilities in foreign currencies are translated into RMB at the exchange rate
  prevailing at the balance sheet day. Exchange differences arising from the settlement of
  monetary items are charged as in profit or loss for the period. Exchange differences of
  specific borrowings related to the acquisition or construction of a fixed asset should be
  capitalized as occurred, before the relevant fixed asset being acquired or constructed is ready
  for its intended uses.
  (2) Translation of foreign currency financial statements
  The asset and liability items in the foreign currency balance sheet should be translated at a
  spot exchange rate at the balance sheet date. Among the owner’s equity items except
  “undistributed profit”, others should be translated at the spot exchange rate when they are
  incurred. The income and expense should be translated at spot exchange rate when the
  transaction incurs. Translation difference of foreign currency financial statements should be
  presented separately under the other comprehensive income title. Foreign currency cash flows
  are translated at the spot exchange rate on the day when the cash flows incur. The amounts
  resulted from change of exchange rate are presented separately in the cash flow statement.
  10. Financial assets and financial liabilities
  A financial asset or liability shall be recognized when the entity becomes a party to the
  contractual provisions of a financial instrument.
  (1) Financial assets
  1) Classification, recognition and measurement
  The Group classifies its financial assets in the following categories: at fair value through
  profit or loss, loans and receivables, held-to-maturity financial assets and available-for-sale.
  The classification depends on the purpose for which the financial assets were acquired.
  Management determines the classification of its financial assets at initial recognition.
  Financial assets at fair value through profit and loss include trading financial assets and those
  financial assets initially designated as fair value through profit and loss. When meeting one of
  the following conditions, the company shall classify the assets into trading financial asset:   it
  is acquired principally for the purpose of selling in the near term and is part of a portfolio of
  identified financial instruments that are managed together and for which there is evidence of a
  recent actual pattern of short-term profit-taking; it is a derivative(except for a derivative that
  is a designated and effective hedging instrument or a financial guarantee contract, or linked to
  the investments in equity instruments that do not have a quoted price in an active market, no
  fair value can be reliably measured and must be settled by delivery of such an equity
  instrument. When meeting one of the following conditions, the financial assets can be
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  classified as the assets initially designated as fair value through profit and loss: it eliminates
  or significantly reduces a measurement or recognition inconsistency that would otherwise
  arise from measuring assets or liabilities or recognising the gains and losses on them on
  different bases; or the financial instrument portfolio is managed and its performance is
  evaluated and provided internally on that basis to the entity’s key management personnel on a
  fair value basis, in accordance with a documented risk management or investment strategy;
  or it is a hybrid instrument embedded by one or more instruments except for a embedded
  derivate that does not significantly modify the cash flows or it is clear that separation of the
  embedded derivative(s) is prohibited; it is a hybrid instrument that is required to be separated
  but unable to be measured separately either at acquisition or at the end of a subsequent
  financial reporting period. They are measured at fair value subsequently. Change on fair value
  shall be recognized in the profit and loss. Interest or cash dividends received during the period
  in which such financial assets are held, are recognized as ‘Investment income’. On disposal,
  the difference between fair value of disposal and initial recorded amount are recognized as
  ‘Gain or loss on Investment’ and adjust the gain or loss from changes in fair value
  accordingly.
  Receivables are non-derivative financial assets with fixed or determinable payments that are
  not quoted in an active market. Receivables are subsequently measured at amortized cost
  using the effective interest method. The amortization, impairment and any gain or loss from
  derecognition shall be recognized in the profit and loss for the current year.
  Available-for-sale financial assets are non-derivative financial assets that are either
  designated in this category or not classified as financial assets of any other class at initial
  recognition. This category includes the derivative financial assets that linked to the
  investments in equity instruments without a quoted price in an active market, no fair value
  can be reliably measured and must be settled by delivery of such an equity instrument, and
  shall be measured at cost subsequently. Others have a quoted price in an active market or fair
  value can be measured reliably although no quoted price available, they shall be measured at
  fair value. Any change on fair value shall be recognized in other comprehensive income and
  subsequently be measured at fair value. Except impairment loss and exchange gain or loss
  arising from foreign currency monetary financial assets, changes in fair value of
  available-for-sale financial assets are directly recorded in shareholders’ equity until such
  financial assets is derecognized and the accumulated fair value adjustments previously
  recorded in equity are charged to profit or loss for the period.      Interests for the period in
  which the assets are held as investment in debt instrument is calculated using the effective
  interest method and is charged to profit or loss for the period as ‘Investment income’. Cash
  dividends declared by the investee company relating to available-for-sale equity instruments
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  are charged to profit or loss for the period as ‘Investment income’. Equity instruments that a
  quoted price is not applicable in an active market and no fair value can be reliably measured,
  shall be measured at cost.
 2)Recognition and measurement of transfer of financial assets
 A financial asset is derecognised when any one of the following conditions is satisfied: i) the
 rights to receive cash flows from the asset expire, ii) the financial asset has been transferred
 and the entity transfers substantially all risks and rewards relating to the financial assets to the
 transferee, iii) the financial asset has been transferred to the transferee, the entity has given up
 its control of the financial asset although the entity neither transfers nor retains all risks and
 rewards of the financial asset.
  Where an entity neither transfers nor retains substantially all risks and rewards of financial
  asset and does not give up the control over such financial asset, then the entity recognizes
  such financial asset to the extent of its continuous involvement and recognizes the
  corresponding liabilities.
  In the case where the financial asset as a whole qualifies for the derecognition conditions, the
  difference between the carrying value of transferred financial asset and the sum of the
  consideration received for transfer and the accumulated amount of changes in fair value that
  was previously recorded under other comprehensive income is charged into profit or loss for
  the period.
  In the case where only part of the financial asset qualifies for derecognition, the carrying
  amount of financial asset being transferred is allocated between the portions that to be
  derecognized and the portion that continued to be recognized according to their relative fair
  value. The difference between the amount of consideration received for the transfer and the
  accumulated amount of changes in fair value that was previously recorded in other
  comprehensive income of the part qualifies for derecognition and the above-mentioned
  allocated carrying amount is charged to profit or loss for the period.
  3) Impairment of financial assets
  The Group assesses the carrying amount of financial assets other than financial assets at fair
  value through profit or loss at each balance sheet date. If there is objective evidence that the
  financial asset is impaired, the Group shall determine the amount of any impairment loss
  accounts.
  The specific impairment provision methods of financial assets were as follows:
  1) Provision for impairment of available-for-sale financial assets:
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  On balance sheet date, the Company executes individually inspection on each
  available-for-sale financial statement, if the fair value of the equity instruments which is
  invested on the balance sheet date is lower than its initial investment cost for more than 50%
  (including 50%) or lower than its initial investment cost for the duration time for more than 1
  year (including 1 year), which indicates that it had occurred impairment; if the fair value of
  the equity instruments which invests on the balance sheet date is lower than its initial
  investment cost for more than 20% (including 20%) but not reaches at 50%, the Company
  will comprehensively considerate the other relevant factors such as the price volatility etc.
  and will judge the equity investment whether had occurred impairment.
  The aforesaid \"cost\" recognized in line with the initial investment cost of available for sale
  financial instrument deducting principal recovered, amount amortized and the impairment
  losses recorded into profits or losses. “fair value\" recognized through the closing price of
  Securities Exchange at period end unless the investment of available for sale equity
  instrument was in the restricted stock trade period. For investment of available for sale equity
  instrument was in the restricted stock trade period, recognized in line with the closing price of
  Securities Exchange at period end deducting the risk of market player cannot sell the equity
  instrument, thus, require compensation.
  If objective evidence shows that impairment for available-for-sale financial assets will occur,
  the cumulative loss arising from the decline in fair value that had been recognized directly in
  equity is removed from equity and recognized as impairment loss, although the financial
  assets are not derecognized. The accumulative losses that are transferred out shall be the
  balance obtained from the initially obtained costs of the financial asset after deducting the
  principals taken back and amortized amount, the current fair value and the impairment losses
  originally recorded into the profits and losses account.
  For an available for sale debt instrument, if there is objective evidence that the value of the
  financial asset recovered and the recovery can be related objectively to an event occurring
  after the impairment was recognized, the previously recognized impairment loss is reversed
  and the amount of reversal is recognized in income statement. For an available for sale equity
  instrument, if there is objective evidence that the value recovered and the recovery can be
  objectively related to an event occurring after the impairment loss recognized, the previously
  recognized impairment loss is reversed and directly recognized in equity. However, the
  impairment losses incurred to an equity instrument investment for which there is no quoted
  price in the active market and whose fair value cannot be reliably measured, or incurred to a
  derivative financial asset which is linked to the equity instrument and which shall be settled
  through the equity instrument, can not be reversed.
  2) Provision for impairment of held-to-maturity financial assets
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  If there is objective evidence that the value of a financial asset carried at amortized cost has
  impaired, the amount of loss is measured at the difference between the asset’s carrying
  amount and the present value of estimated future cash flows. If there is objective evidence
  that the value of the financial asset recovered and the recovery can be related objectively to an
  event occurring after the impairment was recognized, the previously recognized impairment
  loss is reversed and the amount of reversal is recognized in income statement, but to the
  extent where the reversed amount can not exceed the amortized cost on the reversing day if
  no impairment provided before.
   (2) Financial liabilities
   1) Classification, basis for recognition and measurement
       Financial liabilities of an entity are classified at initial recognition as “financial
       liabilities at fair value through profit or loss” and “other financial liabilities” on initial
       recognition
       Financial liabilities at fair value through profit or loss include financial liabilities held
       for trading and those designated as fair value through profit or loss on initial recognition
       (relevant basis for classification shall be disclosed by reference to financial assets).
       They are subsequently measured at fair value. The net gain or loss arising from changes
       in fair value, dividends and interest paid related to such financial liabilities are recorded
       in profit or loss for the period in which they are incurred.
       Other financial liability is measured at amortized cost by adopting the effective rate
       method.
   2) Financial liability derecognition
       A financial liability is derecognized when the underlying present obligations or part of
       it are discharged. Existing financial liability shall be derecognized and new financial
       liability shall be recognized when the entity sign the agreement with creditor to
       undertake the new financial liability in replacement of existing financial liability, and
       the terms of agreement are different in substance. Any significant amendment to the
       agreement as a whole or part o it is made, then the existing liabilities or part of it shall
       be derecognized and financial liability after terms amendment shall be recognized as a
       new financial liability. The difference between the carrying amount of the financial
       liability derecognized and the consideration paid is recognized in profit or loss for the
       period.
   3) Fair value measurement of financial asset and financial liability
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
    If there is an active market for the financial assets and liability measured at fair value,
    the fair value is measured at the quoted price in the active market; originally obtained or
    derived financial assets or liability is measured at market trade price. If no active market
    exists for the financial asset or liability, applicable valuation techniques is used for fair
    value measurement. When valuating, the price in the most advantageous market shall be
    used for fair value measurement and applicable valuation techniques which enough data
    is available for and supported by other information shall be adopted, and the group
    chooses the input with same characters of asset or liability as considered by market
    participant and try to give priority in use of observable input. Unobservable input shall
    be used when observable inputcan not be obtained or it is infeasible to be obtained.
  11. Provision for bad debts of receivables
  The Group shall review the carrying amount of receivables fully at the balance sheet date.
  The Group shall calculate the full provision for bad debts for the following receivables:
  debtor has been log-out, bankruptcy, minus net asset, significant poor cash flow and
  significant nature disaster leads to discontinue production and the debtors could not pay for
  the debts within the foreseeable time. Other solid evidences indicates that the receivables
  could not be paid or be of a slim chance.
  The allowance method is applied to the potential loss of bad debt. The Group should make the
  impairment test individually or group and accrue the bad debt provisions which shall be
  recorded into current profit or loss at the end of the period. If there is defined evidence for the
  receivables not to or not likely to be received, which shall be recognized as the loss of bad
  debt and write off the accrued bad debts provisions after going through the approval
  procedure of the Group.
  (1) Individually significant amounts of accounts receivable accrued bad debt provision as per
  portfolio
 Judgment basis or amount standards of        Top 5 of account receivables at year end
 individually significant amounts
 The accruing method of the receivables       The bad debt provisions shall be accrued based on
 with individually significant amounts        the difference between current value of future cash
                                              flow and the carrying amounts.
  (2) Accounts receivable accrued bad debt provision by credit risk portfolio
 The basis of portfolio
                                              Accounts receivable due from               subsidiaries
 Inter-company
                                              included in consolidated scope
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                            Other than accounts receivable due from
                                            subsidiaries included in consolidated scope and
 Accounting aging                           individual receivable with significant amount
                                            without impairment, use the accounting aging of
                                            the receivables
 The basis of bad debt provision
 Inter-company                              Individual identified method
 Accounting aging                           Age analysis method
The percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging                   Accrual percentage of the            Accrual percentage of
                                        receivables (%)                 other receivables (%)
Within 1 year                                   5
1-2 years                                      10
2-3 years                                      30
3-4 years                                      50
4-5 years                                      80
Over 5 years                                   100
   (3) Individually insignificant amount accounts receivable but accrued bad debt provision as
  per portfolio
                                            The individual amount is not significant, but the
Accrual reason                              accrued bad debt provision on the basis of portfolio
                                            can not reflect its risk characteristic
                                            The bad debt provisions should be accrued based on
Accrual method                              the difference between current value of future cash
                                            flow and the carrying amount.
  12. Inventories
  Inventories are materials purchasing, raw material, variance of cost materials, low-valuable
  consumable, materials processed on commission, working-in-progress, semi-finished goods,
  variance of semi-finished goods, and finished goods, engineering construction etc.
  The inventories are processed on perpetual inventory system, and are measured at their
  actual cost on acquisition. Weighted average cost method is taken for measuring the inventory
  dispatched or used. Low value consumables and packaging materials is recognized in the
  income statement by one-off method.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  After yearend thorough inventory check, at the balance sheet date inventory impairment
  should be provided or adjusted according to inventory category. For the finished goods, raw
  material held for sale etc which shall be sold directly, the net realizable value should be
  confirmed at the estimated selling price less estimated selling expenses and related tax and
  expenses. The raw material held for production, its realizable value should be confirmed at
  the estimated selling price of finished goods less estimated cost of completion, estimated
  selling expenses and related tax. The net realizable value of inventories held for execution of
  sale contracts or labor contracts shall be calculated based on the contract price. If the
  quantities of inventories in the Group are more than quantities if inventories subscribed in the
  sales contracts, the net realizable value of the excessive part of the inventories should be
  calculated based on the general selling price. When the impairment indicators disappear,
  impairment provision shall be reversed and
  13. Long-term equity investment
  Long term equity investments are the investment in subsidiary, in associated company and in
  joint venture.
  Joint control is the contractual agreement sharing of control over an economic activity by all
  participants or participants’ combination and decisions or policies relating to the operating
  activity of the entity require the unanimous consent of the parties sharing the control.
  Significant influence exists when the entity directly or indirectly owned 20% or more but less
  than 50% shares with voting rights in the investee company. If holding less than 20% voting
  rights, the entity shall also take other facts or circumstances into accounts when judging any
  significant influences. Factors and circumstances include: representation on the board of
  directors or equivalent governing body of the investee, participation in financial or operating
  activities policy-making processes, material transactions between the investor and the
  investee, interchange of managerial personnel or provision of essential technical information.
  When control exists over an investee, the investee is a subsidiary of an entity. The initial
  investment cost for long-term equity investment acquired through business combination
  under common control, is the carrying amount presented in the consolidated financial
  statements of the share of net assets at the combination date in the acquired company. If the
  carrying amount of net assets at the combination date in the acquired company is negative,
  investment shall be recognized at zero.
  If the equity of investee under common control is acquired by stages and business
  combination incurs in the end, an entity shall disclose the accounting method for long-term
  equity investment in the parent financial statement as a supplemental. For example, if the
  equity of investee under common control is acquired by stages and business combination
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  incurs in the end, and it’s a bundled transaction, the entity shall regard all transactions as a
  one for accounting. If it’s not a bundled transaction, the carrying amount presented in the
  consolidated financial statements of the share of net assets at the combination date in the
  acquired company since acquisition is determined as for the initial cost of long-term equity
  investment. The difference between the cost initially recognized and carrying amount of
  long-term equity investment prior to the business combination plus the newly paid
  consideration for further share acquired, and capital reserve shall be adjusted accordingly. If
  no enough capital reserve is available for adjustment, retain earnings shall be adjusted.
  If long-term equity investment is acquired through business combination not under common
  control, initial investment cost shall be the combination cost.
  If the equity of investee not under common control is acquired by stages and business
  combination incursion the end, an entity shall disclose the accounting method for long-term
  equity investment in the parent financial statement as a supplemental. If the equity investment
  of investee not under common control is acquired by stages and business combination
  incursion the end, and it’s a bundled transaction, the entity shall regard all transactions as a
  one for accounting. If it’s not a bundled transaction, the carrying amount of the equity
  investment held previously plus newly increased investment cost are taken as the initial
  investment cost under cost model. If equity investment is held under equity method before the
  acquisition date, other comprehensive income under equity method previously shall not be
  adjusted accordingly. When disposing of the investment, the entity shall adopt the same basis
  as the investee directly disposing of related assets or liability for accounting treatment. Equity
  held prior to acquisition date as available for sale financial assets under fair value model,
  accumulated change on fair value previously recorded in other comprehensive shall be
  transferred into investment gain/loss for the period.
  Apart from the long-term equity investments acquired through business combination
  mentioned above, the cost of investment for the long-term equity investments acquired by
  cash payment is the amount of cash paid. For long-term equity investment acquired by issuing
  equity instruments, the cost of investment is the fair value of the equity instrument issued. For
  long-term equity investment injected to the entity by the investor, the investment cost is the
  consideration as specified in the relevant contract or agreement.
  The Group adopts cost method to account for investment in subsidiary and equity method for
  investment in joint venture and affiliate.
  Long-term equity investment subsequently measured under cost model shall increase the
  carrying amount of investment by adjusting the fair value of additional investment and
  relevant transaction expenses. Cash dividend or profit declared by investee shall be
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  recognized as investment gain/loss for the period based on the proportion share in the
  investee.
  Long-term equity investment subsequently measured under equity method shall be adjusted
  for its carrying amount according to the share of equity increase or decrease in the investee.
  The entity shall recognize its share of the investee’s net profits or losses based on the fair
  value of the investee’s individual identifiable assets at the acquisition date, after making
  appropriate adjustments thereto in conformity with the accounting policies and accounting
  period, and offsetting the unrealized profit or loss from internal transactions entered into
  between the entity and its associates and joint ventures according to the shareholding
  attributable to the entity and accounted for as investment income and loss based on such
  basis.
  On disposal of a long-term equity investment, the difference between the carrying value and
  the consideration actually received is recognized as investment income for the period. For
  long-term investments accounted for under equity method, the movements of shareholder’s
  equity, other than the net profit or loss, of the investee company, previously recorded in the
  shareholder’s equity of the Company are recycled to investment income for the period on
  disposal.
  Where the entity has no longer joint control or significant influence in the investee company
  as a result of partially disposal of the investment, the remaining investment will be changed to
  be accounted for as available for sale financial assets, and the difference between the fair
  value of remaining investment at the date of losing joint control or significant influence and
  its carrying amount shall be recognized in the profit or loss for the year. Other comprehensive
  income recognized from previous equity investment under equity model shall be accounted
  for on the same basis as the investee directly disposing of related assets or liability when
  stopping using under equity model.
  Where the entity has no longer control over the investee company as a result of partially
  disposal of the investment, the remaining investment will be changed to be accounted for
  using equity method providing remaining joint control or significant influence over the
  investee company. The difference between carrying amount of disposed investment and
  consideration received actually shall be recognized in the profit and loss for the period as
  investment gain or loss, and investment shall be adjusted accordingly as if it was accounted
  for under equity model since acquisition. Where the entity has on longer joint control or
  significant influence in the investee as a result of disposal, the investment shall be changed to
  be accounted for as available for sale financial assets, and difference between the carrying
  amount and disposal consideration shall be recognized in profit and loss for the period, and
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  the difference between the fair value of remaining investment at the date of losing control and
    its carrying amount shall be recognized in the profit or loss for the year as investment gain or
    loss.
    If the entity loses its control through partially disposal of investment by stages and it’s not a
    bundled transaction, the entity shall account for all transactions separately. If it’s a bundled
    transaction, the entity shall regard all transactions as one disposal of subsidiary by losing
    control, but the difference between disposal consideration and carrying amount of the equity
    investment disposed prior to losing control, which arises from each individual transaction
    shall be recognized as other comprehensive income until being transferred into profit and loss
    for the period by the time of losing control.
    14. Investment property
The investment property includes property and building and measured at cost model
                                                                  Estimated
                                                                     net
                                               Useful life
Category                                                          residual     Annual depreciation rate
                                                    (years)
                                                                  value rate
                                                                     (%)
Housing and Buildings                                 40             3%                 2.43%
    15. Fixed assets
    Recognition criteria of fixed assets: defined as the tangible assets which are held for the
    purpose of producing goods, rendering services, leasing or for operation & management, and
    have more than one year of useful life.
    Fixed assets shall be recognized when the economic benefit probably flows into the Group
    and its cost can be measured reliably. Fixed assets include: building, machinery,
    transportation equipment, electronic equipment and others.
    All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are
    still being used and land is separately measured. Straight-line depreciation method is adopted
    by the Group. Estimated net residual value rate, useful life, depreciation rate as follows:
                                                                    Estimated net
                                               Useful life                                 Annual
    No      Category                                                residual value
                                                    (years)                           depreciation rate
                                                                       rate (%)
1           Housing and Buildings                         20-40      3%,5%,10%              2.25-4.85%
2           Machinery equipment                           10-22      3%,5%,10%               4.09-9.7%
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
3         Transportation equipment                      4-15    3%,5%,10%                  6-24.25%
4         Electronic equipment                            5     3%,5%,10%                  18-19.4%
5         Others equipment                             10-15    3%,5%,10%                     6-9.7%
    The Group should review the estimated useful life, estimated net residual value and
    depreciation method at the end of each year. If any change has occurred, it shall be regarded
    as a change in the accounting estimates.
    16. Construction in progress
    The criteria and time spot of constructions in progress’s being transferred to fixed assets:
    Constructions in progress are carried down to fixed assets on their actual costs when
    completing and achieving estimated usable status. The fixed assets that have been completed
    and reached estimated usable status but have not yet been through completion and settlement
    procedures are charged to an account according to their estimate values; adjustment will be
    conducted upon confirmation of their actual values. The Group should withdraw depreciation
    in the next month after completion.
    17. Borrowing costs
    The borrowing cost includes the interest expenses of the borrowing, amortization of
    underflow or overflow from borrowings, additional expenses and the foreign exchange profit
    and loss because of foreign currency borrowings. The borrowing costs incurred which can be
    directly attribute to the fixed assets, investments properties, inventories requesting over 1 year
    purchasing or manufacturing so to come into the expected condition of use or available for
    sale shall start to be capitalized when expenditure for the assets is being occurred, borrowing
    cost has occurred, necessary construction for bringing the assets into expected condition for
    use is in progress. The borrowing costs shall stop to be capitalized when the assets come into
    the expected condition of use or available for sale. The borrowing costs subsequently incurred
    should be recorded into profit and loss when occurred. The borrowing costs should
    temporarily stop being capitalized when there is an unusual stoppage of over consecutive 3
    months during the purchase or produce of the capitalized assets, until the purchase or produce
    of the asset restart.
    The borrowing costs of special borrowings, deducting the interest revenue of unused
    borrowings kept in the bank or the investment income from transient investment should be
    capitalized. The capitalized amount of common borrowings should be calculated as follows:
    average assets expenditure of the accumulated assets expenditure excess the special
    borrowing, multiplied by the capital rate. The capital rate is the weighted average rate of the
    common borrowings.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  18. Intangible assets
  The intangible assets of the Group refer to land use right and software. For acquired
  intangible assets, the actual cost are measured at actual price paid and relevant other expenses.
  The cost invested into intangible assets by investors shall be determined according to the
  stated value in the investment contract or agreement, except for those of unfair value in the
  contract or agreement.
  Land use right shall be amortized evenly within the amortization period since the remised
  date.ERP system software and other intangible assets are amortized over the shortest of their
  estimated useful life, contractual beneficial period and useful life specified in the law.
  Amortization charge is included in the cost of assets or expenses, as appropriate, for the
  period according to the usage of the assets. At the end of the year, for definite life of
  intangible assets, their estimated useful life and amortization method shall be assessed. Any
  change shall be treated as change on accounting estimate.
  19. Impairment of long-term assets
  The Group assesses at each balance sheet date whether there is any indication that long-term
  equity investments, investment property, fixed assets, construction in progress and intangible
  assets with definite useful life may be impaired. If there is any indication that an asset may be
  impaired, the asset will be tested for impairment.           Goodwill arising in a business
  combination and intangible asset with infinite useful life are tested for impairment annually
  no matter there is any indication of impairment or not.
  Estimate of recoverable amount is the higher of its fair value less costs to sell and the present
  value of the future cash flows expected to be derived from the asset.
  If the recoverable amount of an asset is less than its carrying amount, the carrying amount
  shall be impaired and the difference is recognised as an impairment loss and charged to profit
  or loss for the period. Once an impairment loss on the assets is recognised, it is not reversed
  in a subsequent period.
  After assets impairment loss is recognized, depreciation and amortisation of the impaired
  asset shall be adjusted in the following period so that the adjusted carrying amount(less
  expected residual value) can be depreciated and amortised systematically within the
  remaining life.
  When assessing goodwill for impairment, the carrying amount of goodwill shall be allocated
  evenly to the assets group or assets portfolio. When testing the assets group or assets portfolio
  including goodwill,     if there is any indication of impairment , ignoring the goodwill and
  testing the assets group or assets portfolio alone so to work out the recoverable amount and
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  comparing to its carrying amount and recognize the impairment loss. After that, testing the
  assets group or assets portfolio with goodwill together, comparing the carrying amount of the
  assets group or assets portfolio(including goodwill allocation) with      recoverable amount ,
  goodwill impairment shall be recognized when the recoverable amount is lower than its
  carrying amount.
  20. Long-term deferred expenses
  Long-term deferred expenses of the Group refer to leasing expenses, redecoration expense
  and others. The expenses should be amortized evenly over the beneficial period. If the
  deferred expense cannot take benefit for the future accounting period, the unamortized
  balance of the deferred expenses should be transferred into the current profit or loss. Leasing
  expenses will be amortized within 10 years and 30years;        redecoration expense and others
  will be amortized within 3 years.
  21. Employee benefits
  Employee’s benefit comprises short-term benefit, post-employment benefit, termination
  benefit and other long-term employee’s benefit.
  Short-term benefit includes salary, bonus, allowance, welfare, social insurance, housing funds,
  labour union expense, staff training expense, during the period in which the service rendered
  by the employees, the actually incurred short term employee benefits shall be recognized as
  liability and shall be recognized in P&L or related cost of assets based on benefit objective
  allocated from the service rendered by employees.
  Post-employment benefits include the basic pension scheme and unemployment insurance etc.
  Based on the risk and obligation borne by the Group, post-employment benefits are classified
  into defined contribution plan and defined benefit plan. For defined contribution plan, liability
  shall be recognized based on the contributed amount made by the Group to separate entity at
  the balance sheet date in exchange of employee service for the period and it shall be recorded
  into current profit and loss account or relevant cost of assets in accordance with beneficial
  objective.
  Termination benefits are employee’s benefit payable as a result of either an entity’s decision
  to terminate an employee’s employment before the contract due date or an employee’s
  decision to accept voluntary redundancy in exchange for those benefits. An entity shall
  recognize the termination benefits as a liability and an expense at the earlier date when the
  entity cannot unilateral withdraw the termination benefits due to employment termination
  plan or due to redundancy suggestion, or when the entity can recognize the restructuring cost
  or expense arising from paying termination benefits.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  Other long-term employee’s benefit refers to all other employee benefits other than short-term
  benefit, post-employment benefit and termination benefit.
  If other long-term employee’s benefit is qualified as defined contribution plan, contribution
  made shall be recognized as liabilities accordingly for the period in which the service are
  rendered by the employee and recognized in the profit or loss for the current period or
  relevant cost of assets. Except other long-term employee’s benefit mentioned above,
  obligation arising from defined benefit plan shall be recognized in the profit or loss for the
  current period or relevant cost of assets in accordance with the period when the service are
  rendered by the employee.
  22. Contingent liabilities
  When the company has transactions such as commitment to externals, discounting the trade
  acceptance, unsettled litigation or arbitration which meets the following criterion, provision
  should be recognized: It is the Company's present obligation; carrying out the obligation will
  probably cause the Company's economic benefit outflow; the obligation can be reliably
  measured.
  Provision is originally measured on the best estimate of outflow for paying off the present
  obligations, and to consider the risk, uncertainty, time value of monetary relevant to
  contingent items. If the time value of monetary is significant, the best estimate will be
  determined by discounted cash outflow in the future. At each balance sheet date, the book
  value of provision is reviewed and adjustment will be made on the book value if there is any
  change, in order to reflect the current best estimate.
  When compensation from the 3rd party is expected for full or partial contingent liability
  settlement, the compensation shall be recognized as an asset separately and measured at no
  more than the book value of contingent liability.
  23. Share based payment
  An equity-settled share-based payment in exchange for the employee’s services is measured
  at the fair value at the date when the equity instruments are granted to the employee. Such fair
  value during the vesting period of service or before the prescribed exercisable conditions are
  achieved is recognised as relevant cost or expense on a straight-line during the vesting period
  based on the best estimated quantity of exercisable equity instruments, accordingly increase
  capital reserve.
  A cash-settled share-based payment is measured at the fair value at the date at which the
  Group incurred liabilities that are determined based on the price of the shares or other equity
  instruments. If it is immediately vested, the fair value of the liabilities at the date of grant is
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  recognised as relevant cost or expense, and corresponding liabilities. If it is exercisable only
  when the vesting period of service is expired or the prescribed conditions are achieve, the fair
  value of liabilities undertaken by the Group are re-measured at each balance sheet date based
  on the best estimate of exercisable situation.
  The fair value of the liabilities is re-measured at each balance sheet date.   Any changes are
  recognised in the profit or loss for the year.
  If the granted equity instruments are cancelled within the vesting period, the equity
  instrument shall be treated as accelerated vesting and the balance linked to the remaining
  vesting period shall be recognized in the profit or loss account, accordingly be recognized in
  the capital reserve. If employees or other parties can choose but fail to satisfy non-vesting
  conditions during the vesting period, the Company sees this as cancellation of granted equity
  instruments.
  24. Principle of recognition of revenue
  The revenue of the Group is mainly from selling goods, providing labor services and
  abalienating the right of use assets and construction contracts. Recognition standards for
  revenue are as below:
  (1) The revenue from selling goods: Company has transferred all the significant risks and
  rewards of the ownership of the goods to the buyers, and retains neither continuing
  managerial involvement to the degree usually associated with ownership nor effective
  control over the goods sold. The relative sale proceeds have been reliably measured,
  respective economic benefit probably inflow to the company, and the incurred or incurring
  cost can be reliably measured, and then the revenue can be recognized.
  In the reporting period, revenue recognition point and principle: goods is dispatched from
  warehouse, client has no dispute on the quantity and quality of the goods, client collected or
  authorized the agent to collect the good and sales amount is confirmed, have collected or
  expected to collect the payment, cost of goods can be reliably measured, risk and reward is
  transferred so the revenue is recognized.
  Complete sets of engineering projects, if selling products and building installation part can
  be separated and can be measured separately, selling products will be treated as sales of
  products. Selling products and building installation will not be able to be distinguished, or
  can be distinguished but can't be separately measured, selling products and building
  installation will be all treated as building installation.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  (2) Income from a alienating the right of use assets is recognized when satisfying
  requirements related economic benefit flows in very possibly, income can be measured
  reliably.
  1)    Amount of interest income is calculated according to the time and actual interest rate
       of the monetary capital used by other party.
  2)   Income of using fee is calculated upon the charge period and calculation provided by
       the related contract or agreement.
  (3) The service revenue should be recognized when the outcome of the services can be
  estimated reliably.
  The outcome of the services can be estimated reliably means the following conditions must
  be satisfied at the same time:
  1)   Amount can be measured reliably
  2)   Relevant economic benefit probably flow into the company
  3)   The stage of completion of the service can be estimated reliably
  4)   Cost incurred or expect to incur in the transaction can be measured reliably
  Total service income shall be recognized according to the price agreed in the contract or
  agreement which has been settled or to be settled unless the price is not fair. Service revenue
  for the current period shall be recognized based on the figure worked out on the total income
  multiply by the percentage of completion of the service after deducting the service revenue
  recognized in the prior period at the balance sheet and accordingly recognized the cost based
  on the figure worked out on the total cost multiply by the percentage of completion of the
  service after deducting the service cost recognized in the prior period.
  At the balance sheet date, if outcome of the service can not be estimated reliably, the
  treatment shall apply respectively
  1)   Costs incurred may be probably recovered, revenue is recognized only to the extent of
       costs incurred that are expected to be recoverable, and costs shall be recognized as an
       expense in the period in which they are incurred
  2)   Costs incurred are not probable of being recovered, then these cost incurred are
       recognized as an expense immediately, no revenue shall be recognized.
       In the case that selling goods and rendering service are both included in the agreements
       or contracts, when selling products and rendering service part can be separated and can
       be measured separately, selling products will be treated as sales of products. Selling
       products and rendering service will not be able to be distinguished, or can be
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
       distinguished but can't be separately measured; selling products and rendering service
       will be all treated as rendering service.
  (4) Revenue from construction contract
  1)   When the result of the construction contract is able to be evaluated reliably at the
       balance sheet date, the income and cost of the contract are recognized on completion
       percentage basis.
  The result of the fixed price of construction contract can be estimated reliably means the
  following conditions must be satisfied at the same time:
  ① Amount can be measured reliably
  ② Relevant economic benefit probably flow into the company
  ③ Cost actually incurred can be well distinguished and measured reliably
  ④ The stage of completion and the cost expected to incur for the completion of the
       contract can be estimated reliably
  The result of the cost plus of construction contract can be estimated reliably means the
  following conditions must be satisfied at the same time:
  ① Relevant economic benefit probably flow into the company
  ② Cost actually incurred can be well distinguished and measured reliably
  Total construction contract income shall be recognized according to the price agreed in the
  contract or agreement which has been settled or to be settled unless the price is not fair.
  Construction contract income for the current period shall be recognized based on the figure
  worked out on the total contracted income multiply by the percentage of completion of the
  construction after deducting the revenue recognized in the prior period at the balance sheet
  and accordingly recognized the cost based on the figure worked out on the total expected
  cost multiply by the percentage of completion of the construction after deducting the
  construction e cost recognized in the prior period. Construction contract income is
  recognized to the extend where the change of the contract, claim for compensation and bonus
  can bring the income and can be measured reliably.
  2)   If the result of the construction contract is not able to be evaluated reliably, the
       treatment shall apply respectively
  ① If contract cost maybe recovered, the income is recognized at the cost actually
       recovered, and the cost of the contract is recognized as contract expenses of the current
       period when it is occurred.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  ② If contract cost may not be recovered, the cost of the contract shall be recognized as
       contract expenses when incurred, and no contract revenue shall be recognized.
  3)    In case the expected total cost is greater than the total income, the expected loss will be
       recognized as expense of the current period immediately.
  .25. Government grants
   A government grant shall be recognized when the company complies with the conditions
   attaching to the grant and when the company is able to receive the grant.
   Assets-related government grant is the government fund obtained by the company for the
   purpose of long-term assets purchase and construction or establishment in the other forms.
   Income-related grants are the grant given by the government apart from the assets-related
   grants. If no grant objective indicated clearly in the government documents, the company
   shall judge it according to the principle mentioned above.
   Where a government grant is in the form of a transfer of monetary asset, it is measured at the
   amount received. Where a government grant is made on the basis of fixed amount or
   conclusive evidence indicates relevant conditions for financial support are met and expect to
   probably receive the fund, it is measured at the amount receivable. Where a government
   grant is in the form of a transfer of non-monetary asset, it is measured at fair value. If fair
   value cannot be determined reliably, it is measured at a nominal amount of RMB1 Yuan.
   Assets-related government grants are recognized as deferred income ore directly offsetting
   the book value of the asset, and Assets-related government grants recognized as deferred
   income shall be evenly amortized to profit or loss over the useful life of the related asset.
   Any assets are sold, transferred, disposed off or impaired earlier than their useful life expired
   date, the remaining balance of deferred income which hasn’t been allocated shall be carried
   forward to the income statement when the assets are disposed off.
   Income-related government grants that is a compensation for related expenses or losses to be
   incurred in subsequent periods are recognized as deferred income and credited to the
   relevant period when the related expense are incurred. Government grants relating to
   compensation for related expenses or losses already incurred are charged directly to the
   profit or loss for the period. Government grants related to daily business, shall be recognized
   as other income in accordance with business nature, otherwise, shall be recognized as
   non-operating expenses.
   If any government grant already recognized needs to be returned to the government, the
   accounting shall be differed according to the following circumstances:
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
   1)   originally recognized as offsetting of related assets' book value, assets book value shall
    be adjusted
   2)   if any deferred income, book value of deferred income shall be offset, excessive portion
    shall be accounted into income statement
   3)   Other situation, it shall be accounted into income statement directly.
  26. Deferred tax assets and deferred tax liabilities
  The deferred income tax assets or the deferred income tax liabilities should be recognized
  according to the differences (temporary difference) between the carrying amount of the assets
  or liabilities and its tax base. Deferred tax assets shall be respectively recognized for
  deductible tax losses that can be carried forward in accordance with tax law requirements for
  deduction of taxable income in subsequent years. No deferred tax liabilities shall be
  recognized for any temporary difference arising from goodwill initially recognition. No
  deferred tax assets or liabilities shall be recognized for any difference arising from assets or
  liabilities initial recognition on non-business combination with no effect on either accounting
  profit or taxable profit (or deductible tax loss). At the balance sheet date, deferred tax assets
  and deferred tax liabilities are measured at the tax rates that are expected to apply to the
  period when the asset is realized or liability is settled.
  Deferred tax assets are recognized to the extent that it is probable that future taxable profit
  will be available to offset the deductible temporary difference, deductible loss and tax
  reduction.
  27.Lease
  The Company’s leasing business is operating lease.
  As a leasee, the lease premium shall be recognized in the cost of asset based on straight line
  method within the the period or directly to income statement.
  28.Held for sale
  (1) Any non-current assets or disposal group shall be classified as held for sale if the
  following criteria are met: ⑴ according to the similar transactions for selling such assets or
  disposal group in practice, the assets must be available for immediate sale under current
  condition. ⑵The sale is highly probable with decision made on a probable selling proposal
  and the firm purchase commitment has been obtained, the sale is expected to be completed
  within one year. Certain regulations request that approvals must be given by relevant
  authority or supervision regulator before the assets can be sold. Prior to the assets initially
  classified as held for sale or disposal group, the carrying amounts of the asset(or all the assets
  and liabilities in the disposal group) shall be measured in accordance with applicable
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  accounting standards. The Company shall recognize an impairment loss and account it in to
  income statement for the current period, for any initial or subsequent write- down of the
  asset(or disposal group) to its fair value less costs to sell if the carrying amount is higher than
  its fair value less costs to sell. In the meantime, provision for assets impairment shall be
  made.
  (2) The company acquires a non-current asset(or disposal group) exclusively with a view
  to its subsequent resale, it shall be classified as held for sale at the acquisition date only if the
  condition of “expected sale can be completed within one year” can be met and also other
  conditions of classified as held for sale can highly probably be met within a short period
  following the acquisition(usually with three months). When measuring a newly acquired
  asset(or disposal group) meeting the criteria to be classified as held for sale, it shall be
  measured at the lower of its carrying amount had it not been so classified and fair value less
  costs to sell. Except the non-current assets or disposal group acquired as part of a business
  combination, the difference between its fair value less costs to sale and initial carrying
  amount is recognized in the income statement.
  (3) The Company that loss of control of a subsidiary due to a sale plan of its investment
  shall classify its subsidiary planned for sale as a whole as held for sale in the single financial
  statement of the parent only if the investment in subsidiary meets the criteria of held for sale,
  regardless of whether the Company will retain a proportion of equity interest in its former
  subsidiary after sale, and classify all assets and liabilities of the subsidiary as held for sale in
  the consolidated financial statements
  (4) The Company shall recognize a gain for any subsequent increase in fair value less
  costs to sell of an asset and shall reverse the impairment to the extent that previously
  recognized when being classified as held for sale, the revisable amount is recognized in the
  income statement for the period. Any impairment from the period when the assets are not
  classified as held for sale can not be reversed.
  (5) The impairment loss recognised for a disposal group shall reduce the carrying amount
  of goodwill of disposal group first, and then reduce the carrying amount of the non-current
  assets based on its proportion on the book.
  The Company shall recognize a gain for any subsequent increase in fair value less costs to sell
  of a disposal group and shall reverse the impairment to the extent that previously recognized
  when being classified as held for sale, in accordance with applicable measuring standards, the
  revisable amount is recognized in the income statement for the period. Any impairment from
  the period when the assets are not classified as held for sale and reduced goodwill can not be
  reversed.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  For any subsequently reversed amount, after the impairment loss is recognized for held for
  sale disposal group, the Company shall increase the carrying amount of disposal group based
  on the proportion of carrying amount of non-current assets excluding goodwill.
  (6) Non-current assets classified as held for sale or disposal group shall not be depreciated
  or amortized, interest and other expenses attributable to the liabilities of a disposal group
  classified as held for sale shall continue to be recognized.
  (7) When held for sale assets or disposal group can not meet the criteria for held for sale
  classification so that they are not recognized as held for sale or non-current asset will be
  removed from disposal group, they shall be measured at the lower of the following amounts:
  ⑴carrying amount of assets prior to it classified as held for sale, which is the amount after
  depreciation, amortization or impairment adjustment as it had not been classified as held for
  sale ; ⑵recoverable amount.
  When the Company derecognizes the held for sale assets or disposal group, the remaining
  unrecognized gain or loss shall be accounted in the income statement.
  29. Discontinued operation
  When meeting any one of the following criteria and the component can be identified
  separately and the component has already been disposed off or classified as held for sale: ⑴
  the component represents one independent main business or one single main business area;
  ⑵the component plans to be part of the related plan which represents one independent main
  business or one single main business area; ⑶the component was specially acquired for resale
  30. Other significant accounting policies, accounting Estimates
  When preparing the financial statements, the management needs to use accounting estimate
  and assumption, which will have effect on the application of accounting policy and amount of
  asset, liability, income and expense. The actual circumstance maybe differs from the estimates.
  The management needs to continuously assess the key assumption involved by estimate and
  the judgment on uncertainty. Effect on the accounting estimate shall be recognized during the
  period when estimate is changed and in future.
  The following accounting estimate and key assumption will trigger the significant risk of
  significant adjustment on the book value of asset and liability during the period of future.
  (1) Impairment of receivable
  Receivable is measured at amortized cost at the balance sheet date and assessed for any
  impairment indicator and the acutely amount of impairment. Objective evidence for
  impairment includes judgmental data of indicating significant decline of future cash flow of
  individual or group of receivable, indicating significant negative financial performance of
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  debtors. Had receivable is recovered with certain proof, and in fact, it is relevant to the the
  matters subsequent to the the loss recognition, the impairment recognized before shall be
  reversed.
  (2) Provision of inventory impairment
  Inventory is periodically evaluated at the net realizable value and any cost higher than NRV
  shall be recognized as inventory impairment loss. When evaluating the NRV, net realizable
  value is determined by deducting the expected selling expense and relative tax from the
  estimated selling price. When actual selling price or cost differs from the previous estimates,
  management will make adjustment on NRV. Therefore, the results based on the present
  experience may differ from the actual results, which caused the adjustment on the carrying
  amount of inventory in the book. Provision for inventory impairment may vary with the
  above reasons. Any adjustment on provision for inventory impairment will affect the income
  statement.
  (3) Provision of goodwill impairment
  Each year, goodwill shall be assessed for any impairment.        Recoverable amount of assets
  group or asset portfolio including goodwill shall be the present value of future cash flow,
  which needs estimates for calculation.
  If management adjust the gross profit margin adopted by the present value of future cash flow
  calculation of assets group or asset portfolio, adjusted gross profit margin is lower than the
  margin applied, the impairment is required.
  If management adjust the discounting rate before tax applied by the present value of future
  cash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax is
  higher than the rate applied, the impairment is required.
  If actual profit margin or discounting rate before tax is higher or lower than management’s
  estimate, any impairment recognized before can not be reversed.
  (4) Provision of fixed asset impairment
  At the balance sheet date, the management shall implement impairment test on buildings,
  plant and machinery etc which has any impairment indicator. The recoverable amount of FA
  is the higher of PV of future cash flow and net value of fair value after disposal cost, the
  calculation needs accounting estimate.
  If management adjust the gross profit margin adopted by the present value of future cash flow
  calculation of assets group or asset portfolio, adjusted gross profit margin is lower than the
  margin applied, the impairment is required.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  If management adjust the discounting rate before tax applied by the present value of future
  cash flow calculation of assets group or asset portfolio, adjusted discounting rate before tax is
  higher than the rate applied, the impairment is required.
  If actual profit margin or discounting rate before tax is higher or lower than management’s
  estimate, any impairment recognized before can not be reversed.
  (5) Recognition of deferred tax assets
  Estimate on deferred tax assets needs making estimation of taxable income and applied tax
  rate in the following years in future. Whether deferred tax asset can be realized depends on
  the enough probable taxable profit obtained in future. Tax rate change in future and the timing
  of temporary difference reverse may also affect the income tax expense(income)and the
  balance of deferred tax. Any change of estimate described here will cause the deferred tax
  adjustment.
  (6) Useful life span of fixed assets and intangible assets
  At least every year end, the management shall review the useful life of FA and intangible
  assets. Expected useful life is based on the management’s experience on the same class of
  assets, with reference to the estimate applied in the industry in conjunction with expected
  technology development. When previous estimate significantly changed, depreciation and
  amortization in the future shall be adjusted accordingly.
  31. Changes in Accounting Policies, Accounting Estimates
  (1)       Change in significant accounting policies
Changes on accounting policy and reasons                          Approval progress       Memo
 In 2017, the Ministry of Finance announced or
amended and implemented “Accounting Standards for
Business Enterprises No.42-Held for Sale non-current
assets, disposal group and discontinued operation\".              The        accounting
Since May 28th, 2017, any held for sale non-current              policy   change    has
assets, disposal group and discontinued operation                been approved by the
existing on the implementation date shall be applied to          20th meeting of the
prospective application. When preparing the financial            seventh generation of
statements for 2017FY, the policy has been adopted               board.
and the accounting has been done in accordance with
this standard.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
 Changes on accounting policy and reasons                   Approval progress            Memo
 . Updated standard shall be applied since June
 12th,2017. Any government existing on January
 1at,2017 shall be applied to prospective application. The                accounting
 Any new government grant obtained between January              policy   change    has
 1at,2017 and implementation date shall be adjusted in          been approved by the
 line with this standard too. When preparing the                20th meeting of the
 financial statements for 2017FY, the policy has been           seventh generation of
 adopted and the accounting has been done in                    board.
 accordance with this standard.
 In 2017, the Ministry of Finance announced or
 amended and implemented “Financial Statements
 Format ”(Caikuai[2017]No.30)
 Gain/loss on non-current assets disposal and on
                                                                The       accounting
 non-monetary assets exchange presented under
                                                                policy   change    has
 “non-operating income/expense”is changed to “Gain
                                                                been approved by the
 on asset disposal”. This accounting policy change shall
                                                                20th meeting of the
 be retrospectively adjusted. Non-operating income in
                                                                seventh generation of
 2016shall be decreased by 1,186,397.77Yuan, and
                                                                board.
 expense   shall    be   decreased   by   22,751,748.20Yuan
 respectively. Gain on asset disposal shall be adjusted by
 -21,565,350.43Yuan. No effect on sum of asset and net
 profit.
  (2)         Changes in accounting estimate
   None
V. Taxation
 1. The main applicable tax and rate to the Group as follows:
Tax                                            Tax base                           Tax rate
Value-added tax (VAT)         Sales revenue or Purchase                  17%,13%,11%,6%,5%
City construction tax         Value-added tax payables, business tax                7%
Education surcharge           Value-added tax payables, business tax                3%
Local education surcharge     Value-added tax payables, business tax                2%
Enterprise income             Current period taxable profit                    15%,25%
tax(EIT)
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                               70% of cost of own property or revenue
Real estate tax                                                                 1.2% or 12%
                               from leasing property
Land use tax                   Land using right area                          Fixed amount per
                                                                                square meter
Other tax                                                                    According to the
                                                                          relevant provisions of
                                                                            the state and local
Notes for tax entities with different EIT rate
Tax entities                                                                    EIT rate
Dalian Refrigeration Company                                                        15%
Dalian Bingshan Group Engineering Co., Ltd.                                         25%
Dalian Bingshan Group Sales      Co., Ltd.                                          25%
Dalian Bingshan Air-conditioning Equipment Co., Ltd.                                15%
Dalian Bingshan JiaDe Automation Co., Ltd.                                          15%
Dalian Bingshan Lingshe Quick Freezing Equipment Co., Ltd.                          25%
Wuhan New World Refrigeration Industrial Co., Ltd.                                  15%
Bingshan Technical Service (Dalian) Co.,Ltd.                                      15%
Dalian Niweisi LengNuan Techonoligy Co., Ltd.                                       15%
Dalian Xinminghua Electrical Technology Co., Ltd                                    15%
 2. Tax preference
 The company obtained the qualification of high and new technology enterprises on 29th
 November, 2017 approved by Dalian Science Technology Bureau, Dalian Finance Bureau,
 Dalian State Tax Bureau and Local tax Bureau.The Certificate No is GR201721200306, and
 the validity duration is three years. According to the tax law, the company can be granted for
 the preferential tax policy of enterprise income tax rate of 15% in three years.
 The company’s subsidiary, Dalian Bingshan JiaDe Automation Co., Ltd. obtained the
 qualification of high and new technology enterprises on 21st September, 2015 approved by
 Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
 Local tax Bureau.The Certificate No is GR201521200115, and the validity duration is three
 years. According to the tax law, the company can be granted for the preferential tax policy of
 enterprise income tax rate of 15% in three years.
 The company’s subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd obtained the
 qualification of high and new technology enterprises on 28th October, 2015 approved by Hubei
 Science Technology Bureau, Hubei Finance Bureau, Hubei State Tax Bureau and Hubei Local
 tax Bureau.The Certificate No is GR201542000772, and the validity duration is three years.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
 According to the tax law, the company can be granted for the preferential tax policy of
 enterprise income tax rate of 15% in three years
 The company’s subsidiary, Dalian Xinminghua Electrical Technology Co., Ltd obtained the
 qualification of high and new technology enterprises on 29th November, 2017 approved by
 Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
 Local tax Bureau. The Certificate No is GR2201721200301, and the validity duration is three
 years. According to the tax law, the company can be granted for the preferential tax policy of
 enterprise income tax rate of 15% in three years.
 The company’s subsidiary, Dalian Niweisi LengNuan Techonoligy Co., Ltd. obtained the
 qualification of high and new technology enterprises on 29th November, 2017 approved by
 Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
 Local tax Bureau. The Certificate No is GR2201721200108, and the validity duration is three
 years. According to the tax law, the company can be granted for the preferential tax policy of
 enterprise income tax rate of 15% in three years.
 The company’s subsidiary, Bingshan Technical Service (Dalian) Co., Ltd. obtained the
 qualification of high and new technology enterprises on 29th November, 2017 approved by
 Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and
 Local tax Bureau. The Certificate No is GR2201721200155, and the validity duration is three
 years. According to the tax law, the company can be granted for the preferential tax policy of
 enterprise income tax rate of 15% in three years.
The company’s subsidiary, Dalian Bingshan Air-conditioning Equipment Co., Ltd. obtained the
qualification of high and new technology enterprises on 29th November, 2017 approved by
Dalian Science Technology Bureau, Dalian Finance Bureau, Dalian State Tax Bureau and Local
tax Bureau. The Certificate No is GR2201721200279, and the validity duration is three years.
According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
VI. Notes to Consolidated Financial Statements
 The following disclosure date on this financial statement without special indication, “opening”
 refers to January 1, 2017; “closing” refers to December 31, 2017; “current period” refers to the
 period from January 1, 2017to December 31, 2017; and “last period” refers to the period from
 January 1, 2016 to December 31, 2016; with the currency unit RMB.
  1. Cash and cash in bank
Item                                                  Closing Balance          Opening Balance
Cash on hand                                                    62,880.11                 83,511.72
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item                                                  Closing Balance          Opening Balance
Cash in bank                                              364,630,526.20           686,615,661.42
Other cash and cash equivalents                            30,116,287.80              28,516,465.40
Total                                                     394,809,694.11           715,215,638.54
  Including: sum of deposits overseas
Note: other monetary funds is restricted, including deposit for bank acceptance notes of
25,559,515.54Yuan,       guarantee   deposit   of     3,556,772.26Yuan,     migrant    deposit   of
1,000,000.00Yuan, total of 30,116,287.80 Yuan.
  2. Notes receivable
  (1) Category of notes receivable
Items                                               Closing Balance           Opening Balance
Bank     acceptance    notes                             59,496,684.07                41,906,247.02
Commercial acceptance       notes                       113,321,492.13                84,502,002.57
Total                                                   172,818,176.20             126,408,249.59
  (2) Pledged notes receivable up to December 31, 2016.
Items                                                           Closing pledged amount
Bank     acceptance    notes                                                          16,110,843.93
Commercial acceptance       notes
Total                                                                                 16,110,843.93
  (3) Notes receivable endorsed or discounted but not mature at the end of year
Item                                 Closing amount no more               Closing amount still
                                           recognized                         recognized
Bank     acceptance    notes                     251,658,051.71
Commercial            acceptance                    18,102,321.88
notes
Total                                            269,760,373.59
  (4) The closing balance of the notes receivable increased 36.71% compared with the opening
    balance because of the increasing notes received due to more note payment at the year
    end
  3. Accounts receivable
  (1) Category of accounts receivable
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                                         Closing Balance
    Items                Booking balance                    Provision                 Booking
                            Amount             %            Amount              %          balance
Accounts
receivable       with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
debt         provision
                         1,208,205,492.85   100.00         171,949,597.06      14.23   1,036,255,895.79
based      on      the
characters of credit
risk portfolio
Accounts
receivable       with
insignificant
individual amount
and separate bad
debt provision
    Total            1,208,205,492.85   100.00         171,949,597.06      14.23   1,036,255,895.79
(Continued)
                                                        Opening balance
    Items                Booking balance                  Provision
                                                                                    Booking balance
                            Amount             %           Amount           %
Accounts
receivable       with
significant
individual amount
and separate bad
debt provision
Accounts
receivable with bad
                           958,174,419.26   100.00       151,064,459.72    15.77       807,109,959.54
debt         provision
based      on      the
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
characters of credit
risk portfolio
Accounts
receivable        with
insignificant
individual amount
and separate bad
debt provision
    Total              958,174,419.26     100.00     151,064,459.72   15.77        807,109,959.54
  1) Accounts receivable with the bad debt provisions under accounting aging analysis method
                                                            Closing Balance
                Aging                    Accounts             Provision for       Drawing proportion
                                         receivable             bad debts                (%)
           Within1 year               816,596,983.71          40,829,849.18                        5.00
           1 to 2 years               181,236,517.36          18,123,651.75                     10.00
           2 to 3 years               102,726,564.39          30,817,969.30                     30.00
           3 to 4 years                41,876,278.00          20,938,139.02                     50.00
             4 to 5years               22,645,807.94          18,116,646.36                     80.00
         Over 5 years                  43,123,341.45          43,123,341.45                    100.00
                 Total                1,208,205,492.85        171,949,597.06              —
    2) Bad debt provision accrued and written-off (withdraw)
  The bad debt provision has been accrued at the amount of 27,221,131.52Yuan during the
  report period. Bad debt reversal or withdrawn incurred at the amount of 661,616.00 Yuan
  during the year.
   Including:Significant bad debt reversal or withdrawn in current period
                                         Received           Regained
Companies                                                                            Reasons
                                         amount               form
Shandong         Laiyang   Huasheng                                         judicial decision to
                                            293,092.00        lawsuit
Food Co., Ltd                                                               receive the debt
Beijing Taizinai Milk Biology                                               judicial decision to
                                            368,524.00        lawsuit
Development Co.,LTD                                                         receive the debt
Total                                       661,616.00
    3) Accounts receivable written off in current period
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item                                                              Written off amount
Receivable actually written off                                                         6,997,610.18
   (2) The top five significant accounts receivable categorized by debtors
                                                                                          Closing
                                                                      % of the
Company                       Closing Balance         Aging                              Balance of
                                                                      total AR
                                                                                         Provision
Guangzhou Fuli Estate
Co.,Ltd                         44,290,000.00 Within 1 year                   3.67       2,214,500.00
Panasonic     Cold-Chain                      Within 1 year,
(Dalian) Co., Ltd.              31,120,658.05 1-2 years                       2.58       1,591,317.35
Xinyi              Yuanda
construction          and                     Within 1 year,
Installation Engineering        27,709,087.18 1-2 years                       2.29       2,145,439.31
Co., Ltd.
Jilin           Changjitu
Development                     27,000,000.00 Within 1 year                   2.23       1,350,000.00
&Construction Co.,Ltd
CRECCL                          25,221,586.00 Within 1 year                   2.09       1,261,079.30
Total                          155,341,331.23                                12.86       8,562,335.96
4. Advances to suppliers
   (1) Aging of advances to suppliers
                                  Closing Balance                         Opening Balance
Items                        Amount             Percentage          Amount              Percentage
                                                   (%)                                     (%)
Within 1 year                96,449,107.72               68.50     91,708,963.35                 84.89
1 to 2 years                 43,020,607.78               30.55     15,856,969.05                 14.68
2 to 3 years                   871,279.01                 0.62        467,380.70                   0.43
Over 3 years                   467,380.70                 0.33
Total                       140,808,375.21            100.00      108,033,313.10              100.00
   Significant prepayment over 1 year
                                                Closing                        Unsettled Reasons
Company                                                           Aging
                                                Balance
Shenyang Debao Hongtai Agricultural                                            Contract is not fully
                                             15,252,880.00       1-2 years
Development Co., Ltd.                                                                implemented
Shenyang DebaoJiahong Agricultural              6,395,198.00     1-2 years     Contract is not fully
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Technology Co.,Ltd                                                               implemented
Shanghai      POMA          Automation                                        Contract is not fully
                                             6,125,000.00      1-2 years
Equipment Co.,ltd                                                                implemented
Total                                       27,773,078.00         —                   —
  (2) The top five significant advances to suppliers categorized by debtors
                                                                                   % of the total
Company                            Closing Balance               Aging              advances to
                                                                                     suppliers
Shenyang Debao Hongtai
Agricultural Development                 15,252,880.00 1-2 years                              10.83
Co., Ltd.
Dalian HOLLEY Coating                                  Within 1 year,
Equipment Co., Ltd.                      12,000,000.00 1-2 years                               8.52
Mitsubishi Heavy Industries
Air-conditioners(Shanghai)                9,236,000.00 Within 1 year                           6.56
Co.,Ltd
Dalian Ganghe Trading ltd                 8,444,300.00 Within 1 year                           6.00
Shenyang DebaoJiahong
Agricultural Technology                   6,395,198.00 W1-2 years                              4.54
Co.,Ltd
Total                                    51,328,378.00                                        36.45
(3) Note: The closing balance of the advances to supplier increased 30.34% comparing with the
opening balance because of the increasing advanced e payments at the year end.
  5. Interest receivable
  (1) Interest receivable
Items                                       Closing Balance                Opening Balance
Interest on Term deposits                              921,783.33                       723,955.56
Bank financial product                                 950,000.00
Total                                                1,871,783.33                       723,955.56
The closing balance of the interest receivable increased 158.55% comparing with opening
balance because of bank financial product interest increase.
  6. Dividends receivable
  (1) Dividends receivable
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Company                                            Closing Balance                       Opening Balance
Wuhan Steel and Electricity Co., Ltd.                              33,450.00                             39,025.00
Total                                                              33,450.00                             39,025.00
  7. Other receivables
  (1) The categories of other receivable
                                                                Closing Balance
Items
                                 Booking balance                       Provision                       Booking
                                Amount               %              Amount               %             balance
Other        receivables
with          significant
individual         amount                    -              -                      -           -                  -
and separate bad debt
provision
Other        receivables
identified bad debt
provision based on             59,207,829.92      100.00           7,158,820.09        12.09          52,049,009.83
the     characters      of
credit risk portfolio
Other        receivables
with          significant
individual         amount
and separate bad debt
provision
Total                          59,207,829.92      100.00           7,158,820.09        12.09          52,049,009.83
(Continued)
                                                            Opening Balance
Items                          Booking balance                       Provision
                                                                                                   Booking balance
                               Amount              %             Amount                %
Other       receivables
with         significant
individual      amount                   -             -                       -           -                      -
and     separate     bad
debt provision
Other       receivables      64,905,774.51       100.00         7,648,317.94           11.78          57,257,456.57
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
identified bad debt
provision based on
the     characters      of
credit risk portfolio
Other       receivables
with         significant
individual      amount
and     separate     bad
debt provision
Total                        64,905,774.51     100.00        7,648,317.94     11.78      57,257,456.57
1) Other receivables accrued the bad debt provisions under accounting aging analysis method
                                                               Closing Balance
               Aging                                             Provision for     Drawing proportion
                                     Other receivables
                                                                  bad debts                (%)
           Within 1 year                     27,188,467.00          1,359,423.37          5.00
             1-2 years                       27,220,604.77          2,722,060.50          10.00
             2-3 years                        1,708,062.82           512,418.85           30.00
             3-4 years                         785,711.21            392,855.61           50.00
             4-5 years                         664,611.80            531,689.44           80.00
           Over 5 years                       1,640,372.32          1,640,372.32         100.00
                Total                        59,207,829.92          7,158,820.09           —
      (2) Other receivables written off in current period
Item                                                                  Written-off Amount
Other receivables written off                                                                84,544.00
      (3) Other receivables categorized by nature
Nature                                        Closing Balance                    Opening Balance
Guarantee deposits                                    43,339,402.91                      34,372,184.48
Petty cash                                                7,879,896.91                    9,061,619.39
Accounts payable                                          5,520,797.71                   16,038,288.24
Others                                                    2,467,732.39                    5,433,682.40
Total                                                    59,207,829.92                   64,905,774.51
      (5)Other receivables from the top 5 debtors
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                                                             % of
                                                                                         Closing
                                                 Closing                     the
    Name               Category                             Aging                   Balance of
                                             Balance                         total
                                                                                        Provision
                                                                             OR
Shenyang       Debao
Hongtai Agricultural
                            Deposit        12,000,000.00 1–2years           20.27     1,200,000.00
Development      Co.,
Ltd.
Shenyang Debao
Jiahong Agricultural
                            Deposit        10,000,000.00 1–2years           16.89     1,000,000.00
Technology Co.,
Ltd.
Chengdu Silver low
Cold Chain Logistics        Deposit         3,800,000.00 1–2years            6.42      190,000.00
 Co., Ltd.
Dalian Delta HK&                                             Within 1year,
                            Deposit         2,830,000.00                      4.78      398,000.00
China Gas Co., Ltd.                                          3–4 years
National Tax office      Exporting tax
of Dalian                   refund          2,272,241.76 Within 1 year        3.84       113,612.09
Total                                      30,902,241.76                     52.20     2,901,612.09
  8. Inventories
  (1) Categories of inventories
                                                       Closing Balance
    Item
                             Book value            Provision for decline       Net book value
Raw materials                 93,097,749.58                 1,120,202.77              91,977,546.81
Working in progress           57,136,761.54                                           57,136,761.54
Finished goods               138,840,644.36                   358,460.00             138,482,184.36
Low-value                          141,351.31                                           141,351.31
consumable
Self-manufactured             32,879,154.10                                           32,879,154.10
semi-finished products
Constructing projects         27,778,087.73                                           27,778,087.73
Materials on                      3,884,578.79                                         3,884,578.79
consignment for
further processing
         Total               353,758,327.41                 1,478,662.77             352,279,664.64
(Continue)
                                                       Opening Balance
         Item
                             Book value            Provision for decline       Net book value
    Raw materials             68,988,506.23                 1,070,944.56              67,917,561.67
  Working in progress         88,255,287.69                                           88,255,287.69
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                                            Opening Balance
            Item
                                   Book value        Provision for decline             Net book value
     Finished goods                118,393,387.27                 320,000.00               118,073,387.27
 Low-value consumable                 209,949.86                                                  209,949.86
   Self-manufactured                31,999,705.01                                            31,999,705.01
 semi-finished products
  Constructing projects             40,729,017.13                                            40,729,017.13
      Materials on                   2,353,515.43                                                2,353,515.43
 consignment for further
       processing
          Total                    350,929,368.62               1,390,944.56               349,538,424.06
    (2) Provision for decline in the value of inventories
                                         Increase                        Decrease
                   Opening                                                                          Closing
    Item                                                       Reverse/          Others
                   Balance           Accrual        Other                                          Balance
                                                              Written- off    transferred
Raw materials      1,070,944.56     154,435.00                   105,176.79     1,120,202.77       154,435.00
Finished goods      320,000.00       38,460.00                                      358,460.00      38,460.00
    Total           1,390,944.56    192,895.00                   105,176.79     1,478,662.77       192,895.00
    (3) Accrual for provision for decline in the value of inventories
                                   Basis for net realizable value
Item                                                                     Reasons for reverse/write-off
                                             recognition
Raw materials                         Lower of cost and NRV                   Sold within the year
Finished goods                        Lower of cost and NRV                   Sold within the year
   9. Other current assets
Item                                         Closing Balance                   Opening Balance
Prepaid income tax presented
                                                          1,247,766.25                            734,482.13
at net amount after offsetting
VAT to be deducted                                     37,613,420.40                         42,164,041.41
Bank financial product                                 76,000,000.00
Prepaid expenses                                            46,082.68                             355,521.38
Total                                                 114,907,269.33                         43,254,044.92
The closing balance of the other current assets increased 165.66% comparing with the opening
balance because of bank financial product bought from ICBC bank.
   10. Available-for-sale financial assets
   (1) Available-for-sale financial assets
              DALIAN REFRIGERATION COMPANY LIMITED
              Notes to financial statements for the year ended December 31, 2017
              (The currency is in RMB Yuan except otherwise indicated)
              (English translation for reference only)
     Item                             Closing Balance                                     Opening Balance
                      Booking                            Carrying             Booking                          Carrying
                                         Provision                                            Provision
                       balance                            amount              balance                           amount
Available-f
or-sale
debt
instruments
Available-f
or-sale
                   520,850,268.15 5,067,074.16 515,783,193.99            550,711,039.12 5,145,922.48         545,565,116.64
equity
instruments
Measured
as        fair
                   503,296,003.65 1,424,468.25 501,871,535.40 533,156,774.62                1,503,316.57 531,653,458.05
value
method
Measured
as        cost      17,554,264.50 3,642,605.91          13,911,658.59     17,554,264.50 3,642,605.91          13,911,658.59
method
Others
     Total         520,850,268.15 5,067,074.16 515,783,193.99            550,711,039.12 5,145,922.48         545,565,116.64
                  (2) Available-for-sale financial assets measured at fair value method
                              Items                       Equity instruments available for sale            Total
       Cost                                                                       27,098,895.00           27,098,895.00
       Fair value                                                                501,871,535.40         501,871,535.40
       FV accumulated change recognized in other
       comprehensive income                                                      476,197,108.65         476,197,108.65
       Provision for impairment                                                    1,424,468.25            1,424,468.25
                 (3) Available-for-sale financial assets measured at cost method
                                            Proportion of                               Book Value
                   Investee                shareholding in
                                                                    Opening                                  Closing
                                           the investee(%)                       Increase    Decrease
                                                                    Balance                                  Balance
     Zibo traction motor co., ltd.                      0.76        849,000.00                                849,000.00
    DALIAN REFRIGERATION COMPANY LIMITED
    Notes to financial statements for the year ended December 31, 2017
        (The currency is in RMB Yuan except otherwise indicated)
        (English translation for reference only)
                                     Proportion of                             Book Value
            Investee                shareholding in
                                                              Opening                                 Closing
                                    the investee(%)                        Increase    Decrease
                                                              Balance                                 Balance
Liaoning Mike group Limited
                                                  5.57    1,020,000.00                               1,020,000.00
by Share Ltd
Guotai Junan investment
                                                  0.22    3,057,316.00                               3,057,316.00
management company
Cold      King       container
                                               17.80     11,207,806.00                              11,207,806.00
temperature control Co., Ltd.
Liaoning             enterprises
                                                  4.20        105,000.00                              105,000.00
Industrial Co., Ltd.
Wuhan steel electric Limited                      5.60    1,315,142.50                               1,315,142.50
Total                                                    17,554,264.50                              17,554,264.50
        (Continue)
                                                     Provision for impairment
                                                                                                        Cash
             Investee
                                       Opening                                        Closing         dividend
                                                         Increase   Decrease
                                        Balance                                       Balance
Zibo traction motor co., ltd.            849,000.00                                    849,000.00
Liaoning Mike group Limited
                                                                                                      310,000.00
by Share Ltd
Guotai  Junan   investment
                                       2,688,605.91                               2,688,605.91
management company
Cold      King       container
temperature control Co., Ltd.
Liaoning enterprises Industrial
                                         105,000.00                                   105,000.00
Co., Ltd.
Wuhan steel electric Limited                                                                           33,450.00
Total                                  3,642,605.91                               3,642,605.91        343,450.00
        (4)Provision for available-for-sale financial assets impairment
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                                         Debt
                               Equity instruments instruments
         Category                                                  Others         Total
                                available for sale   available for
                                                         sale
Beginning balance                    5,145,922.48                               5,145,922.48
Increased during current
year
  Including: transfer from
other comprehensive
income
Decreased during current               78,848.32                                   78,848.32
year
   Including: transfer from
fair value rising
Ending balance                      5,067,074.16                                5,067,074.16
      (5) Other explanatory on available-for-sale financial assets
Guotai Junan Securities Co., Ltd. was listed on Shanghai Stock Security Exchange on 26th June
2015, and until 31st December, 2017, the company held 27,098,895 numbers of shares of Guotai
Junan Securities Co., Ltd which was measured at fair value at the year end. The company
received cash dividend RMB 11,153,569.05Yuan.
    DALIAN REFRIGERATION COMPANY LIMITED
    Notes to financial statements for the year ended December 31, 2017
        (The currency is in RMB Yuan except otherwise indicated)
        (English translation for reference only)
    11.Long-term equity investments
                                                                                   Increase/Decrease
                                                                Gains and
                       Beginning                                   losses       Adjustment of Change   Cash bonus       Provision for                               Provision for
     Investee                                                   recognized          other       of      or profits     impairment of             Ending balance
                        balance         Increased   Decreased                                                                           Others                      impairment
                                                                 under the      comprehensive other    announced         the current
                                                                  equity           income     equity     to issue          period
                                                                  method
Associates
Panasonic
Appliances
Air-Conditioning       157,425,641.15                            5,991,975.67                           1,600,000.00                               161,817,616.82    157,425,641.15
and Refrigeration
(Dalian) Co.Ltd
Dalian        Honjo
Chemical Co., Ltd.       9,642,351.34                             912,160.07                            1,441,499.53                                 9,113,011.88      9,642,351.34
Panasonic
Cold-Chain             217,687,237.26                           14,163,570.31                           4,800,000.00                               227,050,807.57    217,687,237.26
(Dalian) Co., Ltd.
Keinin-Grand
Ocean       Thermal
Technology              52,952,413.79                           12,652,398.53                           8,000,000.00                                57,604,812.32     52,952,413.79
(Dalian) Co., Ltd.
Panasonic
Compressor             484,003,393.99                           44,000,847.56                          38,000,000.00                               490,004,241.55    484,003,393.99
(Dalian) Co., Ltd.
MHI        Bingshan
Refrigeration           13,018,792.05                             340,712.76                                                                        13,359,504.81     13,018,792.05
(Dalian) Co.,Ltd.
Beijing Huashang
Bingshan
Refrigeration and
Air-conditioning          769,463.27                              661,677.89                                                                         1,431,141.16       769,463.27
Machinery       Co.,
Ltd.
          DALIAN REFRIGERATION COMPANY LIMITED
          Notes to financial statements for the year ended December 31, 2017
          (The currency is in RMB Yuan except otherwise indicated)
          (English translation for reference only)
                                                                                           Increase/Decrease
                                                                       Gains and
                        Beginning                                         losses        Adjustment of Change   Cash bonus       Provision for                                Provision for
    Investee                                                       recognized           other       of      or profits     impairment of             Ending balance
                         balance           Increased       Decreased                                                                            Others                       impairment
                                                                        under the       comprehensive other    announced         the current
                                                                         equity            income     equity     to issue          period
                                                                         method
Dalian          Fuji
Bingshan Vending        160,787,194.81                                  26,894,028.83                           7,840,000.00                               179,841,223.64     160,787,194.81
Machine Co., Ltd.
Changzhou Jingxue
Refrigeration
Equipment       Co.,    151,527,707.42                                  14,564,351.32                                                                      166,092,058.74     151,527,707.42
Ltd.
Dalian Fuji Iceberg
Vending Machine           9,410,006.56                                   4,102,434.74                           1,470,000.00                                12,042,441.30       9,410,006.56
Sales Co., Ltd
Wuhan       Lanning
Energy      Science       6,132,033.33                                     -45,247.34                                                                        6,086,785.99       6,132,033.33
Co., Ltd.
Wuhan         Sikafu
Power       Control       6,156,369.01                                    -929,316.68                                                                        5,227,052.33       6,156,369.01
Equipment Co., Ltd
Panasonic       cold
Machine      System      23,400,297.51                                   4,424,366.91                                                                       27,824,664.42      23,400,297.51
(Dalian) Co., Ltd
Dalian     Bingshan
Metal Technology                          172,950,000.00                14,526,852.76                          24,360,221.29                               163,116,631.47
Co.,Ltd
Dalian     Bingshan
Group
Management and                             49,000,000.00                -1,356,255.88                                                                       47,643,744.12
Consulting Co.,ltd
Total                  1,292,912,901.49   221,950,000.00               140,904,557.45                          87,511,720.82                              1,568,255,738.12   1,292,912,901.49
           1、At the 1st general meeting in 2017, and 12th meeting of the 7th generation of board of directors approved Dalian Refrigeration Company to acquire 49% of
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
 shareholding of Dalian Bingshan Metal Technology Co., Ltd through Dalian Bingshan Group, and Beijing Zhongqihua Assets Valuation Co.,LTD was
 engaged to the thorough valuation of Dalian Bingshan Metal Technology Co., Ltd, valuation date is December 31st,2017. Based on the valuation results, the
 share transferring price is 17,295Yuan for 49% shareholding of Dalian Bingshan Metal Technology Co., Ltd held by Dalian Refrigeration Company.
2、The 11thmeeting of the 7th generation of board of directors was held on November 25th, 2016, and approved to jointly set up Dalian Bingshan Group
Management and Consulting Co.,ltd with Dalian Bingshan Group. Dalian Refrigeration Company will hold 49% shareholding of Dalian Bingshan Group
Management and Consulting Co.,ltd and Dalian Bingshan Group will hold 51%. JV, Dalian Bingshan Group Management and Consulting Co.,ltd will be
invested in the form of cash and subscribed capital is 0.49million Yuan and is fully subscribed by December 31st,2017.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
12. Investment property
(1) Investment property measured as cost method
                          Property&       Land-use-right   Construction in
    Item                                    s             progress           Total
                           Building
I. Initial Cost
1. Opening
                          30,031,254.35                      30,031,254.35    30,031,254.35
Balance
2. Increase           162,707,850.49       24,391,511.82    187,099,362.31   162,707,850.49
(1) Outsourcing
(2) Transferred
from Construction     162,707,850.49       24,391,511.82    187,099,362.31   162,707,850.49
in progress
3. Decrease
(1) Disposal
(2)Transferred to
other
4.   Closing
                      192,739,104.84       24,391,511.82    217,130,616.66   192,739,104.84
Balance
II. Accumulated
Depreciation
1. Opening
                           1,425,601.41                       1,425,601.41     1,425,601.41
Balance
2.   Increase         101,965,177.68        9,878,562.30    111,843,739.98   101,965,177.68
(1)Provision or
                           3,497,837.37       487,830.24      3,985,667.61     3,497,837.37
amortization
(2) Acquired from
business                  98,467,340.31     9,390,732.06    107,858,072.37    98,467,340.31
combination
3.   Decrease
(1) Disposal
(2) Transferred to
other
4.   Closing
                      103,390,779.09        9,878,562.30    113,269,341.39   103,390,779.09
Balance
III. Impairment
Reserve
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1. Opening
Balance
2.   Increase
(1)Provision or
amortization
3. Decrease
(1) Disposal
(2) Transferred to
other
4.   Closing
Balance
IV. Book Value
1. Closing book
                         89,348,325.75       14,512,949.52        103,861,275.27   89,348,325.75
value
2. Opening book
                         28,605,652.94                             28,605,652.94   28,605,652.94
value
Note: On 31st July,2014, the company signed supplemental rental contract with MHI Bingshan
Refrigeration (Dalian) Co.,Ltd., and rent out # 6 building of workshop located on No. 106
Liaohe East Rd, Dalian Economic and Technology Development Zone to MHI Bingshan
Refrigeration (Dalian) Co.,Ltd. The rental area is 15,259.04 square metres, and annual rent is
RMB 4.2 million with the expiry date on 16th July, 2029.
The 13th meeting of the 7th generation board was held on April 22, 2017, and approved to rent
out the old plant and land located in No888, South West RD, Shahekou Districit, Dalian to
Bingshan Huigu Company. The lease premium is 4.62million Yuan per annum and contract is
from April 1st, 2017 to December 31, 2036. The company has signed the “estate leasing
contract” with Dalian Bingshan Huigu Development Company based on the requirement of
utilization of old land and plant and new business foster plan.
On June 1st, 2017, the company’s subsidiary, Bingshan Lingshe, signed the leasing contract with
Dalian Jingxue Energy Saving Technology Co. LTD and rented out # 7 building of workshop
located on No.92, Tieshan West Rd, DDA, Dalian. The rental area is 3653.76 square metres, and
annual rent is RMB 840K with the contracted date between June 1st,2017 and May 31st,2022.
Bingshan Lingshe also rented out Room 201,       # 4 building located on No.92, Tieshan West Rd,
DDA, Dalian to Dalian Jingxue Energy Saving Technology Co. LTD . The rental area is
25square metres, and annual lease premium is RMB 15K with the contracted date between June
1st, 2017 and May 31st,2022
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
 (2) Investment property without owner’s certificates
                         Items                       Book value          Reasons
# 6 building of workshop on No. 106 Liaohe East Rd,
                                                    27,873,369.74 Deed is in the progress
Dalian Economic and Technology Development Zone
#7 plant of Dalian Bingshan Lingshe                  4,690,315.52 Deed is in the progress
                                                                32,563,685.26
     13. Fixed assets
     (1) Fixed assets detail
                                                          Transportati
                        Property&        Machinery                            Other
Item                                                           on           Equipment           Total
                        buildings        Equipment
                                                          Equipment
I. Initial Cost
1.       Opening
                        451,766,766.84   515,351,153.65     23,073,454.57   48,512,512.27   1,038,703,887.33
Balance
2. Increase             312,268,203.78   158,905,376.90       518,421.39    19,837,583.07    491,529,585.14
(1) Purchase             16,772,328.28    12,781,975.54       518,421.39     2,711,867.43     32,784,592.64
(2) Transferred
from
                        295,495,875.50   146,123,401.36                     17,125,715.64    458,744,992.50
construction-in
-progress
(3)     Acquired
from business
combination
3. Decrease              170,885,099.5    18,918,423.62      3,913,338.53    2,003,230.21    195,720,091.86
(1) Disposal             14,553,174.07    17,280,051.40      3,913,338.53    2,003,230.21     37,749,794.21
(2) Transferred
                        156,331,925.43     1,638,372.22                                      157,970,297.65
to other
4.         Closing                                                                          1,334,513,380.6
                        593,149,871.12   655,338,106.93     19,678,537.43   66,346,865.13
Balance
II.
Accumulated
Depreciation
1.       Opening
                        155,865,048.40   320,193,873.95     14,385,210.02   36,696,181.34    527,140,313.71
Balance
2.    Increase           12,781,020.11    24,929,359.24      1,775,250.71    3,436,982.94     42,922,613.00
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
                                                                Transportati
                         Property&           Machinery                              Other
Item                                                                 on           Equipment          Total
                         buildings           Equipment
                                                                 Equipment
(1)Accrued                12,781,020.11       24,929,359.24        1,775,250.71    3,436,982.94    42,922,613.00
3.     Decrease          104,572,515.02       16,789,146.76        3,286,181.24    2,293,669.98   126,941,513.00
(1) Disposal                  7,694,395.77    15,199,925.70        3,286,181.24    2,293,669.98    28,474,172.69
(2) Transferred
                          96,878,119.25        1,589,221.06                                        98,467,340.31
to other
4.         Closing
                          64,073,553.49      328,334,086.43       12,874,279.49   37,839,494.30   443,121,413.71
Balance
III.
Impairment
Reserve
1.        Opening
                                                555,027.75                                           555,027.75
Balance
2.     Increase
(1)Accrued
3.     Decrease                                   37,708.25                                            37,708.25
(1) Disposal                                      37,708.25                                            37,708.25
4.         Closing
                                                517,319.50                                           517,319.50
Balance
IV.          Book
Value
1.        Closing
                         529,076,317.63      326,486,701.00        6,804,257.94   28,507,370.83   890,874,647.40
book value
2.       Opening
                         295,901,718.44      194,602,251.95        8,688,244.55   11,816,330.93   511,008,545.87
book value
       (2) Fixed assets as pending certificate of ownership
                  Item                               Book value                     Reason for Pending
Office,Lianhe            #1        plant,
#2plant,Jiacu         plant          and                  264,114,617.95           Deed is in the progress
dormitory
Newly built plant                                             47,464,299.36        Deed is in the progress
         DALIAN REFRIGERATION COMPANY LIMITED
         Notes to financial statements for the year ended December 31, 2017
         (The currency is in RMB Yuan except otherwise indicated)
         (English translation for reference only)
                        Item                          Book value                   Reason for Pending
         Functional Lab plant                             17,091,610.37           Deed is in the progress
                                                                               Land is pledged and deed can
         Lianhe #3 plant                               42,023,144.41               not be granted
         Total                                           370,693,672.09
           14. Construction-in-progress
           (1) Construction in progress details
                                  Closing Balance                                    Opening Balance
    Item
                    Book Balance      Provision      Book Value       Book Balance       Provision      Book Value
Buildings
                     16,348,332.17                  16,348,332.17     250,913,095.82                   250,913,095.82
reconstruction
Improvement
                      1,633,725.79                   1,633,725.79      70,072,395.96                    70,072,395.96
of machinery
Official
                                                                          661,185.00                        661,185.00
furniture
Self-heating
circulation
equipment            65,017,324.94                  65,017,324.94
from mine air
return
Total                82,999,382.90                  82,999,382.90     321,646,676.78                   321,646,676.78
           (2) Change in the significant construction in progress
                                                                       Decrease
                        Opening                                                                       Closing
       Name                               Increase         Transfer to              Other
                        Balance                                                                       Balance
                                                          fixed assets             decrease
   Buildings
   reconstruction    250,913,095.82     65,986,306.15         295,813,516.96      4,737,552.84       16,348,332.17
   Improvement
   of machinery       70,072,395.96     92,130,914.62         160,569,584.79                          1,633,725.79
   Official
   furniture             661,185.00       1,700,705.75          2,361,890.75
   Software                               1,226,947.93                            1,226,947.93
   Green land of
   new factory                            5,405,405.40                            5,405,405.40
   Self-heating
   circulation
   equipment                            65,017,324.94                                                65,017,324.94
   from mine air
   return
         Total       321,646,676.78 231,467,604.79            458,744,992.50     11,369,906.17       82,999,382.90
                    DALIAN REFRIGERATION COMPANY LIMITED
                    Notes to financial statements for the year ended December 31, 2017
                    (The currency is in RMB Yuan except otherwise indicated)
                    (English translation for reference only)
                        (Continued)
                                                                Progress                               Including:
                                         Percent of                                                                      Interest
                                                                   of                Accumulated     Accumulated
                                        investment                                                                     capitalizatio    Source of
   Name                 Budget                                construction            capitalized      capitalized
                                          against                                                                           n             funds
                                                                                        interest     interest of the
                                        budget(%)                                                                        rate(%)
                                                                                                          year
Buildings
                                                                                                                                           Self
reconstructi         337,527,099.00                 95.16               95.16
on                                                                                                                                      financing
Improveme
                                                                                                                                        Loan/Self
nt of                167,000,000.00                 97.13               97.13
machinery                                                                                                                               financing
Official                                                                                                                                   Self
furniture              2,361,890.75             100.00                100.00
                                                                                                                                        financing
                                                                                                                                           Self
Software               1,226,947.93             100.00                100.00
                                                                                                                                        financing
Green land
of new                 8,921,154.88             100.00                100.00
factory
Self-heating
circulation
equipment            110,000,000.00                 59.11               59.11
from mine
air return
Total                      —                  —                  —                                                                      —
                       15. Intangible assets
                       (1) Intangible assets list
                                                            Land use
               Item                                                              Knowhow              Others              Total
                                                              right
               I. Initial Cost
               1. Opening Balance                     183,963,902.62                                15,695,674.72      199,659,577.34
               2. Increase                                                      11,800,000.00        1,711,943.66       13,511,943.66
               (1) Purchase                                                     11,800,000.00         484,995.73        12,284,995.73
               (2)       Transferred       from
                                                                                                     1,226,947.93        1,226,947.93
               construction-in-progress
               3. Decrease                              31,073,705.82                                 633,000.00        31,706,705.82
               (1) Disposal                                 6,682,194.00                              633,000.00         7,315,194.00
               (2) Transferred to other                 24,391,511.82                                                   24,391,511.82
               4.     Closing Balance                 152,890,196.80            11,800,000.00       16,774,618.38      181,464,815.18
               II.               Accumulated
               amortisation
     DALIAN REFRIGERATION COMPANY LIMITED
     Notes to financial statements for the year ended December 31, 2017
     (The currency is in RMB Yuan except otherwise indicated)
     (English translation for reference only)
                                       Land use
Item                                                   Knowhow           Others                Total
                                         right
1. Opening Balance                37,791,708.77                         7,153,656.05      44,945,364.82
2.    Increase                         3,128,513.95        294,999.99   1,477,572.91       4,901,086.85
(1)Accrued                             3,128,513.95        294,999.99   1,477,572.91       4,901,086.85
3.    Decrease                    12,041,338.36                          258,815.00       12,300,153.36
(1) Disposal                           2,650,606.30                      258,815.00        2,909,421.30
(2) Transferred to other               9,390,732.06                                        9,390,732.06
4.    Closing Balance             28,878,884.36            294,999.99   8,372,413.96      37,546,298.31
III. Impairment Reserve
1. Opening Balance
2.    Increase
(1)Accrued
(2) Others
3.    Decrease
(1) Disposal
(2) Transferred to other
4.    Closing Balance
IV. Book Value
1. Closing book value            124,011,312.44       11,505,000.01     8,402,204.42     143,918,516.87
2. Opening book value            146,172,193.85                         8,542,018.67     154,714,212.52
    16. Goodwill
       (1) Original cost of goodwill
                                                  Increased during       Decreased during
                                                    current year           current year
                              Opening                                                                  Closing
           Name                                  Enterprises
                              Balance                                                                  Balance
                                                   merger      Other    Disposal       Other
                                                  increase
     Dalian      Niweisi
     LengNuan
                             1,440,347.92                                                          1,440,347.92
     Techonoligy    Co.,
     Ltd.
     Dalian     Bingshan
     Security    Leisure
     Industrial                310,451.57                                                               310,451.57
     Engineering    Co.,
     Ltd
     DALIAN REFRIGERATION COMPANY LIMITED
     Notes to financial statements for the year ended December 31, 2017
     (The currency is in RMB Yuan except otherwise indicated)
     (English translation for reference only)
                                               Increased during     Decreased during
                                                 current year          current year
                                Opening                                                              Closing
            Name                              Enterprises
                                Balance                                                              Balance
                                                merger        Other Disposal    Other
                                               increase
            Total              1,750,799.49                                                         1,750,799.49
         (2) Goodwill impairment provision
     Goodwill calculation method:
     In the year 2015, the book value of equity investment of Dalian Niweisi LengNuan Technology
     Co., Ltd exceeds the fair value of the proportion of the acquired company’s identifiable net asset.
     The difference between the book value of equity investment of 48, 287,589.78 Yuan and the
     identifiable net asset’s fair value of Dalian Sanyo High-efficient Refrigeration System Co., Ltd
     of 46,847,241.86 Yuan on the acquisition date of July 31st     2015 is recognized as goodwill of
     1,440,347.92 Yuan on the group consolidated financial report at the end of the year.
     In the year 2016, the company purchases shares of Dalian BingshanBaoan Leisure Industry Co.,
     Ltd and gains control. The transferred price is based on the net asset of Dalian BingshanBaoan
     Leisure Industry Co., Ltd on June 30th 2016. Negotiated with Dalian BingshanBaoan Leisure
     Industry Co., Ltd’s shareholder Baoan Water Project (China) Limited Company, the transfer
     price is the combination cost on the purchasing date which is 5,359,548.42 Yuan, the fair value
     of proportion of Dalian BingshanBaoan Leisure Industry Company’s identifiable net asset is
     5,049,096.85 Yuan on the purchasing day, therefore, goodwill is 310,451.57Yuan on the
     purchasing date.
     The book value of goodwill from business combination of Dalian Niweisi LengNuan
     Technology Co., Ltd and Dalian BingshanBaoan Leisure Industry Co., Ltd which are not under
     same control shall be allocated into the relevant asset group using the reasonable method since
     acquisition date and taken impairment test on relevant asset group where the goodwill is
     included. The obvious impairment indication of the goodwill hasn’t been found. Thus no
     goodwill impairment provision has been made.
          17. Long-term repayments
                         Opening                                                Other            Closing
  Item                                    Increase          Amortization
                          Balance                                              Decrease          Balance
Employee’s
                         2,427,605.34                           138,478.32                      2,289,127.02
dormitory use right
Renovation       and
rebuilding                681,294.43         900,900.90         700,063.19                        882,132.14
Lease                     850,320.00                            106,290.00                        744,030.00
Membership fee for        489,500.00                             16,500.00                        473,000.00
    DALIAN REFRIGERATION COMPANY LIMITED
    Notes to financial statements for the year ended December 31, 2017
        (The currency is in RMB Yuan except otherwise indicated)
        (English translation for reference only)
                               Opening                                                 Other            Closing
  Item                                          Increase           Amortization
                               Balance                                                Decrease          Balance
Golf
Technology
entrance fee of cold                             1,867,125.00         280,068.75                       1,587,056.25
and heat machinery
Greenland of new
factory                                          8,921,154.88         520,400.70                       8,400,754.18
Warranty extension                                  94,339.62          39,308.20                          55,031.42
Total                         4,448,719.77      11,783,520.40       1,801,109.16                      14,431,131.01
           18. Deferred tax assets and deferred tax liabilities
           (1) Deferred tax assets without offsetting
    Item                            Closing Balance                          Opening Balance
                                   Deductible       Deferred tax             Deductible       Deferred tax
                               temporary difference    assets            temporary difference    assets
    Provision for
    impairment of              139,387,243.38      27,485,104.23        124,545,784.82       25,188,239.74
    assets
    Share option
    Incentiveexpense            13,881,215.49       2,082,182.32         17,103,388.00        2,565,508.20
    Unrealized profit
    from internal               15,641,404.17       2,346,210.63
    transaction
    Total                      168,909,863.04      31,913,497.18        141,649,172.82       27,753,747.94
               (2) Deferred tax liabilities without offsetting
    Item                                     Closing Balance                         Opening Balance
                                            Taxable        Deferred tax             Taxable       Deferred tax
                                          temporary          liabilities          temporary         liabilities
                                           difference                              difference
    Fair value change of the
    available-for-sale             476,197,108.65      71,429,566.31     504,557,879.67         75,683,681.95
    financial assets
    Total                          476,197,108.65      71,429,566.31     504,557,879.67         75,683,681.95
               (3) Unrecognized deferred tax assets details
    Item                                           Closing Balance                 Opening Balance
    Deductible temporary difference                          45,359,761.94                   44,617,762.47
    Deductible loss                                           6,173,430.97                   48,658,772.82
    Total                                                    51,533,192.91                   93,276,535.29
           (4) Unrecognized deductible loss of deferred tax assets expired years
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Year                         Closing Balance         Opening Balance           Notes
2017                                                          409,595.19
2018                                 1,196,797.80           2,044,154.14
2019                                                        1,843,026.73
2020                                 3,240,819.97         11,863,347.41
2021                                 1,735,813.20         32,498,649.35
2022
Total                                6,173,430.97         48,658,772.82
   19. Short-term loan
   (1) Category of short term loan
Loan category                        Closing Balance                  Opening Balance
Mortgage loan                                                                  45,000,000.00
Credit loan                                  349,801,300.00
Total                                        349,801,300.00                    45,000,000.00
   Note: Dalian Refrigeration Company borrowed 260million Yuan from bank and Bingshan
International Trading, a subsidiary of Dalian Refrigeration Company borrowed 980.13million
Yuan from bank , the other subsidiary, Wuhan New World Refrigeration Industrial Co., Ltd.
borrowed RMB80million from Dalian Refrigeration Company.
   20. Notes payable
Notes category                            Closing Balance              Opening Balance
Bank acceptance notes                           221,572,037.67                189,305,658.64
Commercial acceptance     notes                  38,871,130.00                  5,257,076.15
Total                                           260,443,167.67                194,562,734.79
At the year end, there is no unpaid notes payable which is due. Closing balance increased by
33.86% because the note has not been due yet.
   21. Accounts payable
   (1) Accounts payable
 Item                                   Closing Balance              Opening Balance
 Material payments                            593,418,202.00                 660,416,857.54
 Project payments                             244,492,384.60                 199,503,352.11
 Equipment payments                             48,813,078.50                  3,565,090.35
 Others                                          3,240,652.53                     67,343.26
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
 Item                                    Closing Balance                Opening Balance
 Total                                          889,964,317.63                    863,552,643.26
    (2) Accounts payable with age over 1 year
                                                               Reason of unpaid or not carried
           Name of company               Closing Balance
                                                                       forward
                                                          Project is uncompleted contract is
Dalian Yida Construction Company            24,639,904.38 not finished
                                                          Project is uncompleted contract is
Panasonic Cold Chain (Dalian)               13,045,170.70 not finished
Heilongjiang Longleng Technology                          Project is uncompleted contract is
                                             9,413,290.00 not finished
Co., Ltd
Binzhou Shanfu Refrigeration                              Project is uncompleted contract is
                                             9,069,804.92 not finished
Engineering Co., Ltd
Total                                       56,168,170.00
   22. Received in advance
   (1)     Received in advance
Item                                     Closing Balance                 Opening Balance
Advanced on sales                               147,172,195.05                    150,098,892.29
Total                                           147,172,195.05                    150,098,892.29
   (2)     Accounts received in advance aged over 1 year
Company                                   Closing Balance                    Reason
Hongtai International      Financing                              Unsettled contract payments on
lease(Tianjin) Co.,Ltd                        42,075,051.51                sets projects
                                                                  Unsettled contract payments on
Dandong Port                                    5,000,000.00               sets projects
Total                                         47,075,051.51
   23. Employee’s payable
   (1) Category of employee’s payable
Item                       Opening           Increase             Decrease            Closing
                           Balance                                                   Balance
Short-term
                         50,256,392.86     303,853,777.75        307,369,873.66     46,740,296.95
employee’s payable
Post-employment
benefit      –defined                      36,701,139.02         36,689,873.61         11,265.41
contribution plan
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item                           Opening          Increase         Decrease         Closing
                               Balance                                            Balance
Termination benefits                             129,745.88        129,745.88
Other welfare due
within 1 year
Total                        50,256,392.86    340,684,662.65   344,189,493.15   46,751,562.36
   (2) Short-term employee’s payables
 Item                          Opening          Increase         Decrease         Closing
                                Balance                                          Balance
 Salaries,       bonus,
 allowance,           and    33,496,485.39    239,928,455.13   237,741,088.17   35,683,852.35
 subsidy
 Welfare                     14,173,682.87     11,423,684.36    17,140,532.05    8,456,835.18
 Social insurance                              19,260,015.40    19,254,330.99        5,684.41
 Include:       Medical
                                               15,040,301.79    15,035,324.58        4,977.21
             insurance
 Supplemental
                                                  106,676.16      106,676.16
             insurance
               On-duty
                    injury                      2,335,004.77     2,334,709.70         295.07
              insurance
              Maternity
                                                1,778,032.68     1,777,620.55         412.13
              insurance
 Housing funds                 1,575,760.60    28,370,586.47    28,407,118.00    1,539,229.07
 Labor      union     and
                               1,010,464.00     4,527,777.08     4,483,545.14    1,054,695.94
 training expenses
 Short-term         leave
 with pay
 Short term profit
 share plan
 Others                                           343,259.31      343,259.31
 Total                       50,256,392.86    303,853,777.75   307,369,873.66   46,740,296.95
   (3) Defined contribution plan
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item                         Opening         Increase              Decrease         Closing
                             Balance                                                Balance
Pension                                     35,356,670.57      35,345,745.93          10,924.64
Unemployment
                                             1,134,468.45          1,134,127.68          340.77
insurance
Company           Annuity
                                               210,000.00           210,000.00
Plan
Total                                       36,701,139.02      36,689,873.61           11,265.41
The company joins the pension and unemployment plan in accordance with the state regulation,
and therefore, the company makes monthly contribution and bears no any other obligation other
than the monthly contribution. Accordingly the contribution will be recorded in the profit and
loss or the cost of assets when incurs.
   (4) Other explanatory of the employee’s payable
There was no amount delay paid at the end of the current period.
   24. Tax payable
 Item                                          Closing Balance             Opening Balance
 Value-added tax                                       12,550,353.23               7,442,531.84
 Enterprise income tax                                 13,418,675.14               7,007,154.72
 Individual income tax                                   628,015.54                 494,374.71
 City maintenance and construction tax                   907,478.69                 520,432.62
 Real estate tax                                         882,771.72                 542,956.99
 Land use tax                                            553,224.98                 553,224.98
 Education surcharge                                     613,577.67                 371,260.24
 River toll fee                                                                     965,963.53
 Safeguard fund for disables                                 480.00                 202,031.38
 Stamp duty                                              437,981.65                 305,158.47
 Total                                                 29,992,558.62              18,405,089.48
    25. Interest payable
   Item                                            Closing Balance         Opening Balance
   Interest on short term loan                            379,085.53
   Total                                                  379,085.53
    26. Dividend payable
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
   Item                                          Closing Balance   Opening Balance
   Ordinary share dividend                                  863,516.60              863,516.60
   Total                                                    863,516.60              863,516.60
    27. Other accounts payable
    (1) Other payables categorized by payments nature
 Payments nature                              Closing Balance               Opening Balance
 Restricted share buy back                            21,026,106.00                67,615,856.00
 Loan from non-financial institutes                    6,320,000.00                  6,700,000.00
 Cash pledge and security deposit                     10,842,115.56                  8,601,269.21
 Apply for reimbursement and
 unpaid                                               13,699,458.65                11,486,092.78
 Cash from related parties                                934,995.17                  566,240.01
 Receipts under custody                               12,572,889.29                12,237,893.26
 Others                                                2,279,264.40                  2,286,168.76
 Total                                                67,674,829.07               109,493,520.02
    (2) Significant other payables with age over 1 year
                                                                       Reason of unpaid or not
 Name of company                           Closing Balance
                                                                      carried forward
                                                               Not reach the return condition
 Restricted share buy back                       21,026,106.00 of contract
 Total                                           21,026,106.00
    28. Long-term loan
    (1) Category of long-term loan
 Category                                        Closing Balance             Opening Balance
 Guarantee loan                                       160,000,000.00              160,000,000.00
 Total                                                160,000,000.00              160,000,000.00
     CDBDevelopment fund give support to the company’s intelligent and green equipment of
cold chain and service industry base project and provide special fund to the company’s holding
shareholder, Bingshan Group. The fund is 0.16billion Yuan with 10year’s expiration at 1.2%
rate. Once the fund arrived, Bingshan Group gave it to the company at the same rate of 1.2% in
lump sum. The above fund needed to be warranted by the company.             The guarantee seems to
be given for the holding shareholder, but it is for the company itself in fact.
              DALIAN REFRIGERATION COMPANY LIMITED
              Notes to financial statements for the year ended December 31, 2017
              (The currency is in RMB Yuan except otherwise indicated)
              (English translation for reference only)
                     29. Deferred income
                     (1) Category of deferred income
           Item                 Opening           Increase           Decrease             Closing       Formation
                                 Balance                                                  Balance          Basis
           Asset
                              57,396,619.00    45,654,706.85         2,714,821.78      100,336,504.07
           related
           Revenue
                                               10,639,876.15        10,639,876.15
           related
           Total              57,396,619.00 56,294,583.00           13,354,697.93      100,336,504.07        —
                   (2) Government subsidy project
                                                              Recorded into                                         Related
                              Opening                                non              Other          Closing         with
   Government
                                               Increase
   subsidy item                Balance                         -operation            Change          Balance         asset/
                                                                 income                                             equity
Subsidy fund for
                                                                                                                     Asset
highly effective heat
pump and related               3,152,624.00                                           551,672.00     2,600,952.00   related
system
Contribution    to                                                                                                   Asset
subsidiary company            44,560,000.00                     1,114,000.00                        43,446,000.00   related
relocation
Application            of
NH3       and        CO2
instead       of     R22                                                                                             Asset
                               9,683,995.00   16,601,133.00                         10,352,900.06   15,932,227.94   related
screw refrigerating
machine combined
condensing unit
Compressor IC                                                                                                        Asset
                                               4,170,000.00                              3,548.33    4,166,451.67   related
system
Ultrasonic                                                                                                           Asset
intelligent        defrost                     4,000,000.00                                          4,000,000.00   related
technology
Eco       Compressor                                                                                                 Asset
                                              31,000,000.00                           809,127.54    30,190,872.46   related
project
             DALIAN REFRIGERATION COMPANY LIMITED
             Notes to financial statements for the year ended December 31, 2017
             (The currency is in RMB Yuan except otherwise indicated)
             (English translation for reference only)
Research           centre                                                                                                   Income
and        key       lab                           500,000.00                              500,000.00                       related
subsidy
                                                                                                                            Income
Patent bonus                                        20,000.00                                  20,000.00                    related
                                                                                                                            Income
Patent subsidy                                          3,450.00                                3,450.00                    related
                                                                                                                            Income
Total                          57,396,619.00     56,294,583.00         1,114,000.00     12,240,697.93      100,336,504.07   related
                    Asset related grant shall be offset the cost or expense within the asset’s useful life; income
             related grant shall be booked into other income or offset cost or expense if it is relevant to
             daily activity, otherwise it shall be booked into non-operating expense.
                    30. Share capital
                                                           Increase/decrease(+、-)
                                        New
                    Opening                                        Transfer from                                      Closing
   Item                                 share       Share                                           Subtotal
                     balance                                          capital         others                          balance
                                        issued    dividend
                                                                      reserve
   Total
   share         611,776,558.00                                    244,710,623.00                 244,710,623.00    856,487,181.00
   capital
             On May 20th, 2017,            the general meeting for 2016 fiscal year was held and profit appropriation
             scheme for 2016 FY was approved, which was every 10 shares will be increased by 4 shares
             through capital reserve based on the total 611,776,558 number of shares. The plan has been
             implemented completely by May 31st, 2017. After the profit appropriation scheme, the registered
             capital was changed to RMB856, 478,181.00Yuan.
                    31. Capital reserves
           Items                             Opening                 Increase             Decrease          Closing Balance
                                              Balance
           Share premium                   962,071,905.05           15,115,549.49       300,860,623.00         676,326,831.54
           Other capital reserves           84,249,811.80           12,070,987.49        15,115,549.49          81,205,249.80
           Total                         1,046,321,716.85           27,186,536.98       315,976,172.49         757,532,081.34
                 (1) Statement of share premium decrease
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
  1) This year mainly due to the reserve transfer to share capital of 244,710,623.00Yuan, refer to
       note VI.30 share capital for details.
  2) Dalian Refrigeration Company acquired Bingshan International Trading company’s
       controlling shareholding through business combination under same control. As the
       share acquisition, Dalian Refrigeration Company has restated the prior year’s
       financial statements and adjusted the opening balance of capital reserve of
       23,634,942.60Yuan and capital reserve decreased by 56,150,000.00Yuan during the
       year for the same reason.
  (2) Other capital reserve is the expense for share incentive plan amortization and decrease is
       the other capital reserve to be recognized during elimination period when restricted share
       comes to unlock condition.
   32. Treasury Share
                         Opening               Increase            Decrease              Closing
      Items
                          Balance                                                        Balance
Share    incentive
buy-back                67,615,856.00          2,279,264.40          46,589,750.00 23,305,370.40
Total                   67,615,856.00          2,279,264.40          46,589,750.00 23,305,370.40
The company implements restricted share incentive plan in 2016 and recognizes buy-back obligation
as liability. At the year end, treasure stock is recognized based on the numbers of restricted share in
the vesting period and buy back price agreed in the share incentive plan.
          DALIAN REFRIGERATION COMPANY LIMITED
          Notes to financial statements for the year ended December 31, 2017
          (The currency is in RMB Yuan except otherwise indicated)
          (English translation for reference only)
              33. Other comprehensive income
                                           Opening                             Less:Previously                                                               Closing
                Items                                                                                                                      After-tax
                                           Balance         Amount for the     recognized in profit                   After-tax attribute                      Balance
                                                                                                     Less:income                          attribute   to
                                                            period before       or loss in other                     to     the  parent
                                                                                                         tax                               minority
                                                             income tax         comprehensive                        company
                                                                                                                                           shareholder
                                                                                    income
I.Later can’t reclassified into
profit and loss of other
comprehensive income
II. Later reclassified into profit and
loss of other comprehensive income        431,639,323.52        -758,134.26       27,730,686.01      -4,118,498.86       -24,370,321.41                     407,269,002.11
Proportional other comprehensive
income of investee which is
reclassified into income statement          2,765,125.85                              263,666.08                            -263,666.08                       2,501,459.77
under equity method
Changes in fair value recognized in
gains     and     losses     of     the   428,874,197.67        -758,134.26       27,467,019.93      -4,118,498.86       -24,106,655.33                     404,767,542.34
available-for-sale financial assets
Other comprehensive income
total                                     431,639,323.52        -758,134.26       27,730,686.01      -4,118,498.86       -24,370,321.41                     407,269,002.11
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
       34. Special Reserve
                                      Opening                                              Closing
             Items                                      Increase         Decrease
                                       Balance                                             Balance
Safety production cost                                 2,016,809.74     2,016,809.74
              Total                                    2,016,809.74     2,016,809.74
    35. Surplus reserves
Item                                   Opening                                             Closing
                                                          Increase           Decrease
                                        Balance                                            Balance
Statutory surplus reserve            299,882,056.06     18,363,298.09                   318,245,354.15
Discretionary surplus reserve        320,696,791.46     29,208,229.69                   349,905,021.15
Total                                620,578,847.52     47,571,527.78                   668,150,375.30
The company made profit distribution within the reporting period. According to the 2016 annual
meeting, 20% of net profit in the 2016 fiscal annual report is provided for discretionary surplus
reserve of 29,208,229.69 Yuan. In the meanwhile, 10% of net profit of parent company is
provided for statutory surplus reserve of 18,363,298.09 Yuan.
    36. Undistributed profits
Item                                                                  2017
Closing balance of 2016                                            658,387,158.97       525,925,066.25
Add: Adjustments to the opening balance of
       undistributed profits
    Including: additional retrospective adjustments
    according to the new accounting standards
       Change on accounting policy
       Correction of prior period significant errors
       Change on combination scope under same
                                                                                         26,053,545.85
       control
       Other factors
Opening balance of 2017                                            658,387,158.97       551,978,612.10
Add: net profit attributable to shareholders of
                                                                   200,759,820.17       182,234,151.73
parent company         in the year
Less: Provision for statutory surplus reserves                      18,363,298.09        14,604,114.85
    Provision for any surplus reserves                          29,208,229.69        25,204,992.51
    Provision of general risk
    Dividends payable for common shares                         61,177,655.80        36,016,497.50
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
         Share dividends
Closing balance of 2017                                              750,397,795.56       658,387,158.97
    Note: opening balance of last year has been adjusted due to the business combination under
           same control which triggered consolidation scope change. Opening balance of last year
           has been affected by 26,053,545.85Yuan.
     37. Operating revenue and cost
Items                                      2017
                           Sales revenue          Cost of sales       Sales revenue         Cost of sales
Revenue from
                        2,043,986,956.70      1,625,595,014.87        1,872,949,269.50    1,526,065,621.80
principle operation
Revenue from
                            35,728,148.67          18,058,428.06          20,251,670.14      10,465,820.28
other operation
Total                   2,079,715,105.37      1,643,653,442.93        1,893,200,939.64    1,536,531,442.08
     38. Operating taxes and surcharges
Items                                                              2017
City construction tax                                              3,872,117.40              5,529,542.02
Education surcharge                                                2,670,598.37              3,887,028.44
Property tax                                                       6,132,613.95              2,845,708.77
Land use tax                                                       4,900,926.20              3,267,248.67
Vehicle and vessel tax                                                32,024.47                    4,177.44
Stamp duty                                                         1,718,435.64              1,599,703.98
Others                                                               227,217.01               798,817.10
Total                                                             19,553,933.04             17,932,226.42
     39. Selling expenses
Items                                                             2017
Official business expense                                         16,172,326.40             13,793,965.40
Employee benefit                                                  37,798,487.92             31,495,022.77
Depreciation expense                                                334,486.58                405,097.18
Transportation expense                                            18,548,242.98             15,026,756.52
Business entertaining expense                                     12,056,961.89              7,767,799.36
Travel expense                                                    13,229,495.33              9,582,123.03
Maintenance and repair expense                                    12,791,435.69             11,027,691.87
Advertisement and bids expense                                     2,184,356.83              1,173,168.59
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other expense                                               306,521.85       1,406,702.18
Total                                                113,422,315.47         91,678,326.90
    40. Administrative expenses
Items                                                2017
Official expense                                   22,474,616.19            15,680,641.20
Employee benefit                                  138,811,457.97           131,643,380.51
Depreciation expense                                8,182,795.40             9,169,896.40
Transportation expense                               171,491.59               175,434.61
Business entertaining expense                       3,512,217.30             4,206,418.37
Travel expense                                      7,530,675.32             7,822,881.36
Maintenance and repair expense                      6,536,885.81             6,046,582.07
Advertisement expense                                287,869.52               258,533.47
Other taxes and fee                                 1,524,590.51             5,882,445.29
Insurance expense                                     910,211.97             1,460,517.16
Technology development expense                     20,480,936.70            16,843,552.24
Long-term assets amortization                       5,546,087.90             4,874,233.44
Design consultant and test service expense         10,015,427.50             6,866,858.60
Safety production cost                              3,979,165.98             5,683,421.94
Other expense                                       1,381,161.91             2,655,268.65
Total                                             231,345,591.57           219,270,065.31
    41. Financial expenses
Items                                                       2017
Interest expenses                                        10,526,056.47       5,379,674.13
Less: Interest income                                       4,865,429.43     3,026,398.66
Add: Exchange loss                                          2,458,197.49    -1,992,684.34
Add: Others expenditure                                     2,737,012.43     2,017,447.48
Total                                                    10,855,836.96       2,378,038.61
    42. Assets impairment losses
Items                                                       2017
Loss of bad debts                                        26,816,177.67      20,884,581.73
Provision for inventory impairment                            192,895.00
Total                                                    27,009,072.67      20,884,581.73
    43. Investment income
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Items                                                       2017
Long-term equity investment gain under
equity method                                               140,904,557.45          128,967,171.76
Gain from disposing long-term equity
investment                                                      263,666.08                  3,160.87
Gain from holding of financial assets
available for sale                                           11,497,019.05           16,000,450.40
Gain from disposal financial assets available
for sale                                                     27,467,019.93           27,629,395.44
Total                                                       180,132,262.51          172,600,178.47
    44. Gain on assets disposal
                                                                             Amounts recognized
                                                                                 into current
              Item                         2017
                                                                             non-recurring profit
                                                                                    or loss
Gains on disposal of non-current
                                           552,588.02     -21,565,350.43                552,588.02
assets
    Gain on non-current
assets disposal income not                 552,588.02     -21,565,350.43                552,588.02
classified as held for sale
Incl: gain on fixed assets
                                           552,588.02     -21,565,350.43                552,588.02
disposal
Total                                      552,588.02     -21,565,350.43                552,588.02
    45. Other income
Items                                                       2017
VAT refund                                                      657,176.72
Grant given     by     the    government    for
relocation                                                    1,114,000.00
Total                                                         1,771,176.72
    46. Non-operating income
(1)    Non-operating income list
                                                                             Amounts recognized
                                                                             into   non-recurring
              Item                          2017
                                                                             profit or loss for the
                                                                                     year
Gain on debts restructuring                                   229,833.00
Government grant                           1,473,958.00     6,395,714.51              1,473,958.00
Others                                      856,276.97     31,596,475.48                856,276.97
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Total                                     2,330,234.97   38,222,022.99           2,330,234.97
Non-operating expense this year increased 1,982.77% due to increased disposal of fixed assets
in the old factory.
(2)    Government grant details
             Item                        2017               2016          With asset/income
 Taxes refund                                              1,330,480.25
 New wall materials specific
 fund                                     305,038.00
Contribution to subsidiary
                                                           1,114,000.00    Income related
company relocation
Fostering fund in 2015                    300,000.00
 International         market
 development fund in 2016                 247,200.00
 Finance support                            52,000.00       337,200.00
 Service policy implemented
 fund in 2016                               13,200.00
                                                                           Income related
Exporting incentive fund                    22,000.00
Liaoning self-owned brand                                                  Income related
development project                                         270,000.00
Innovation in technology                                    283,000.00     Income related
Small        and       medium                                              Income related
enterprises     in    Liaoning
province        \"specialization                              30,000.00
special\" product project
Stabilization subsidy                                      2,474,362.26    Income related
Patent subsidy                              14,520.00         5,000.00     Income related
Subsidy fund for highly                                                     Asset related
effective heat pump and                                     551,672.00
related system
City research centre and key                                               Income related
lab fund                                  500,000.00
Patent bonus                                20,000.00                      Income related
Total                                   1,473,958.00       6,395,714.51
(3)    Non-operating income statement
Non-operating income decreased by 92.30% in comparison with last year, mainly because of the
acquisition of Dalian Xinminghua shareholding last year and 30,334,841.93 Yuan was
recognized as non-operating income which was the combination cost lower than proportion of
shareholding of fair value of identifiable assets.
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
    47. Non-operating expenses
                                                                          Amounts recognized
                                                                           into    non-recurring
                Item                          2017
                                                                           profit or loss for the
                                                                                     year
Outward donation                              10,000.00       60,000.00                     10,000.00
Others                                       177,380.52      225,318.73                   177,380.52
Total                                        187,380.52      285,318.73                   187,380.52
    48. Income tax expenses
    (1) Income tax expenses
Items                                                 2017
Current income tax expenses                           19,032,298.13                 12,405,225.52
Deferred income tax expenses                          -5,114,555.51                  -4,438,751.84
Total                                                 13,917,742.62                  7,966,473.68
    (2)   Adjustment process of accounting profit and income tax expense
Items
Consolidated total profit this year                                                 218,473,794.43
Income tax expenses at applicable tax rate                                           32,771,069.16
Effect on subsidiary applied to different tax rate                                       2,437,403.18
Effect on prior period income tax                                                          -26,163.10
Effect on non-taxable income                                                        -21,135,683.62
Effect on non-deductible cost ,expense and loss                                          3,123,890.95
Effect on use of deductible loss from unrecognized deferred
tax assets in the prior period                                                           -185,487.87
Effect on temporary difference or deductible loss from
unrecognized deferred tax assets this year                                           -4,534,341.78
Tax rate adjustment caused the opening balance of deferred
tax assets /liability change                                                             1,467,055.70
Income tax expense                                                                   13,917,742.62
    49. Other comprehensive income
Refer to the note VI.33 other comprehensive income for details.
    50. Notes to cash flow statement
    (1) Cash receipt/payment of other operating/investing/financing activities
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
   1) Other cash received relating to operating activities
 Items                                                        2017
 Government grants                                           58,192,890.84     13,740,935.17
 Received travel expense refund                               2,648,675.53      3,070,900.72
 Deposit given back                                          30,740,218.26     49,845,835.40
 Receivable from relate party                                    28,355.16      2,184,788.63
 Interest   income                                            4,865,429.43      2,461,618.10
                     rd
 Receivable from 3 party                                      1,886,442.36         70,987.00
 Others                                                        778,033.86       2,547,938.02
 Total                                                       99,140,045.44     73,923,003.04
   2) Other cash paid relating to operating activities
 Items                                                         2017
 Business travel borrowing                                     6,831,117.22     6,075,257.80
 Deposit paid                                                 49,379,114.48    56,275,941.60
 Expenditure                                                 115,004,087.20    95,678,510.22
 Bank handling charges                                         1,718,011.38     1,722,380.37
 Others                                                        2,020,950.47     1,532,563.78
 Total                                                       174,953,280.75   161,284,653.77
3) Others cash received relating to financing activities
Items                                                          2017
Bank financial product                                        76,000,000.00
Total                                                         76,000,000.00
4) Others cash received relating to financing activities
Items                                                          2017
Collection of guarantee money at the year end                 22,976,815.56    20,665,689.93
Refund      fractional dividend                                                    45,137.75
Interests on discount of bill acceptance                                        5,085,000.00
Total                                                         22,976,815.56    25,795,827.68
5) Others cash played relating to financing activities
Items                                                          2017
Interests on discount of bill acceptance                                         295,067.11
Payment of guarantee money                                    29,116,287.80    21,576,815.56
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Note financing is due and is paid                                   598,632.63         5,085,000.00
Total                                                             29,714,920.43       26,956,882.67
   (2) Supplementary information of consolidated cash flow statement
Items                                                                    2017
1. Adjusting net profit into cash flows of operating                     ——              ——
activities:
Net profit                                                           204,556,051.81   185,531,317.21
Add: Provision for impairment of assets                               27,009,072.67    20,884,581.73
     Depreciation of fixed assets, Amortization of
                                                                      46,420,450.37    40,804,660.75
mineral resources, and biological assets
             Amortization of intangible assets                         5,388,917.09      4,997,057.34
             Amortization of long-term deferred expenses               1,801,109.16      1,408,785.18
     Losses on disposal of fixed assets, intangible assets, and
                                                                        -681,321.46     -1,179,307.59
     long-term assets (income listed with”-”)
     Losses on write-off of fixed assets (income listed
                                                                         128,733.44    22,748,252.08
     with”-”)
     Change of fair value profit or loss
Financial expense (income listed with”-”)                           13,508,079.57      3,161,368.74
Investment loss (income listed with”-”)                           -180,132,262.51   -172,600,178.47
Decrease of deferred tax assets(increase listed
                                                                      -4,159,749.24     -4,512,357.37
    with”-”)
Increase of deferred tax liabilities(decrease
    listed with”-”)
Decrease of inventories (increase listed with”-”)                   -2,828,958.79    -47,231,344.86
Decrease of operating receivables (increase listed
                                                                     -78,030,384.16       302,021.78
    with”-”)
 Increase of operating payables (decrease listed
                                                                    -252,691,001.17    -73,149,094.49
    with”-”)
           Others                                                     12,485,412.00    12,227,168.00
     Net cash flows arising from operating activities               -207,225,851.22     -6,607,069.97
2. Significant investment and financing activities
unrelated to cash income and expenses
    Liabilities transferred to capital
    Convertible bonds within 1 year
    Financing leased fixed assets
 DALIAN REFRIGERATION COMPANY LIMITED
 Notes to financial statements for the year ended December 31, 2017
 (The currency is in RMB Yuan except otherwise indicated)
 (English translation for reference only)
  3. Net increase (decrease) of cash and cash equivalent
  Closing balance of cash                                            364,693,406.31        691,238,822.98
  Less: Opening balance of cash                                      691,238,822.98        255,381,841.47
  Add: Closing balance of cash equivalent
  Less: Opening balance of cash equivalent
  Net increase of cash and cash equivalent                           -326,545,416.67       435,856,981.51
     (3) Net cash paid for acquiring subsidiaries
Items
Payment of Net cash and cash equivalent under the business merger                          56,150,000.00
during the year
Including:Dalian         Bingshan International   Trade Co., Ltd.                         56,150,000.00
Net cash paid for acquiring subsidiaries                                                   56,150,000.00
     (4) Cash and cash equivalents
 Items                                                                  2017
 Cash                                                            364,693,406.31        691,238,822.98
 Including: Cash on hand                                                 62,880.11             83,511.72
 Bank deposit used for paying at any moment                      364,630,526.20        691,155,311.26
 Other monetary fund for paying at any moment
 Deposit fund in central bank available for payment
 Cash equivalent
 Including: bonds investment with maturity in 3 months
 Closing balance of cash and cash equivalents                    364,693,406.31        691,238,822.98
 Cash and cash equivalents restricted in the parent
 company or subsidiary
    51.     The assets with the ownership or use right restricted
                  Items                            2017                          Reasons
 Monetary fund                                 30,116,287.80               Guarantee money
 Notes Receivable                              16,110,843.93                      Pledge
 Fixed assets                                  94,612,451.78                   Mortgage Loan
 Intangible assets                             51,222,206.00                   Mortgage Loan
                  Total                       192,061,789.51
 Dalian Niweisi LengNuan Techonoligy Co., Ltd. pledged the bank acceptance note to Bank o f
DALIAN REFRIGERATION COMPANY LIMITED
Notes to financial statements for the year ended December 31, 2017
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
China Dalian Gangxi Branch as guarantee for issuing the commercial acceptance note.
Wuhan New World Refrigeration Industrial Co., Ltd signed the “maximum pledge contract”
with GuangdaBank of China Wuhan branch on December 24, 2015. Property and land were
pledged and Wuhan New World Refrigeration Industrial Co., Ltd was granted for credit of
100million Yuan.
    52.       Monetary category of foreign currency
   (1)        Monetary category of foreign currency
Item                              Closing Balance           Exchange      Closing Balance
                                 (foreign currency)           Rate            (RMB)
Cash                                                   —            —        38,703,907.22
Including:USD                            5,913,472.10         6.5342          38,639,808.80
              Euro                              3,725.04       7.8023                 29,063.88
              GBP                                218.76        8.7792                  1,920.54
              JPY                           572,113.00       0.057883                 33,114.00
Accounts receivable                                    —            —        19,151,148.50
Including: USD                            2,814,574.35         6.5342          18,390,991.72
            GBP                                86,586.11       8.7792             760,156.78
Short term borrowing                                   —            —         9,801,300.00
              USD                         1,500,000.00         6.5342           9,801,300.00
Accounts payable                                       —            —         4,738,246.24
Including: USD                             564,054.40          6.5342           3,685,644.26
              JPY                       12,664,261.00        0.057883             733,045.42
            GBP                                36,399.28       8.7792             319,556.56
VII. Change of Consolidation Scope
       1.   Consolidation not under the same control
       None
       2.   Consolidation under same control
       (1)Consolidation under the same control during the year
   DALIAN REFRIGERATION COMPANY LIMITED
   Notes to financial statements for the year ended December 31, 2017
   (The currency is in RMB Yuan except otherwise indicated)
   (English translation for reference only)
                                                                                           Basis for
                               Percentage
                                                       Basis for                       combination date
                                (%)of                               Combination
Name of the acquiree                            combination under                         recognition
                               shareholding                               date
                                                   same control
                                acquired
                                                 Ultimately under                      Actually obtain
                                                   same control                        the control
Dalian Bingshan                                  before and after
International Trading              76                                     2017.3.31
Co., Ltd                                        acquisition and the
                                                  control    is not
                                                       temporary
                          Acquiree’s         Acquiree’s net
                                                                      Acquiree’s       Acquiree’s net
                        income from the       profit    from the
   Name of the                                                        income for           profit    for
                        beginning of year     beginning of year
     acquiree                                                         comparison           comparison
                        of combination to     of combination to
                                                                        period               period
                        acquisition date      acquisition date
Dalian Bingshan            63,072,226.20          1,866,671.32        272,122,356.93         4,738,804.59
International
Trading Co., Ltd
   Note:the 12th meeting of 7th generation of board held on February 15th, 2017 and 1st
   extraordinary shareholders meeting held on March 8th, 2017 approved to acquire 76%
   shareholding of Bingshan International Trading Company controlled by Bingshan Group in
   exchange of 56.15million Yuan cash. After share transfer, Dalian Refrigeration Company
   held 100% shareholding of Bingshan International Trading Company. Acquisition is
   ultimately under same control of Dalian Bingshan Group before and after acquistion and the
   control is not temporary, therefore, the combination is carried out under same control and the
   acquisition date is recognized as March 31st, 2017.
          (2) Cost of combination
   Item                                                                     Bingshan International
                                                                              Trading Company
   cash                                                                                 56,150,000.00
   Total of combination cost                                                            56,150,000.00
          DALIAN REFRIGERATION COMPANY LIMITED
          Notes to financial statements for the year ended December 31, 2017
          (The currency is in RMB Yuan except otherwise indicated)
          (English translation for reference only)
                (3) Book value of assets and liability of acquire on acquisition date
    Items                                                           Bingshan International Trading Company
                                                                   Acquisition date           Last year end
    Assets:                                                           171,176,925.72              160,177,923.59
    Monetary fund                                                       24,517,467.97              35,490,832.78
    Receivables                                                       111,266,853.98               92,080,339.05
    Inventory                                                           28,525,631.04              25,675,356.58
    Other current assets                                                  2,812,632.99              2,783,834.27
    Deferred tax assets                                                   1,493,126.82              1,586,347.99
    Liability                                                             2,561,212.92              2,561,212.92
    Payables                                                            99,191,859.74              90,059,528.93
    Net assets                                                          10,319,700.00
    Less: minority interest                                             88,872,159.74              90,059,528.93
    Acquired net assets                                                 71,985,065.98              70,118,394.66
                 3.   Other reason of change on consolidation scope
          In accordance with the board meeting of Bingshan Construction Company, a subsidiary of Dalian
          Refrigeration Company, Bingshan Construction Company and Chengdu New World Company
          jointly set up Chengdu Bingshan Refrigeration Engineering Co., Ltd. Bingshan Construction Company
          invested 5.1million Yuan cash holding 51% of shares. Up to December 31st, 2017, Chengdu Bingshan
          Refrigeration Engineering Co., Ltd’s business has been already formally running.
          VIII. Interest in other entity
                1.      Equity of subsidiaries
                (1)     Organization structure of group company
                                Main                                            Shareholding
                                             Registered         Business             (%)            Obtaining
  Name of subsidiaries         business
                                              address            nature                              method
                               address                                         Direct Indirect
Dalian Bingshan Group
                                Dalian           Dalian        Installation     100                 Establish
Engineering     Co., Ltd.
Dalian Bingshan Group
                                Dalian           Dalian         Trading         100                 Establish
Sales   Co., Ltd.
Dalian Bingshan
Air-conditioning                Dalian           Dalian   Manufacturing          70                 Establish
Equipment Co., Ltd.
Dalian Bingshan JiaDe           Dalian           Dalian   Manufacturing         100                 Establish
         DALIAN REFRIGERATION COMPANY LIMITED
         Notes to financial statements for the year ended December 31, 2017
         (The currency is in RMB Yuan except otherwise indicated)
         (English translation for reference only)
                                Main        Registered      Business    Shareholding   Obtaining
  Name of subsidiaries
                              business        address        nature         (%)         method
Automation Co., Ltd.           address
Dalian Bingshan Lingshe
Quick Freezing               Dalian       Dalian      Manufacturing      100            Establish
Equipment Co., Ltd.
Wuhan New World
Refrigeration Industrial    Wuhan         Wuhan       Manufacturing      100           Acquisition
Co., Ltd.
Bingshan Technical
Service (Dalian)           Dalian       Dalian           Services      100            Establish
Co.,Ltd.
Dalian Xinminghua
Electrical Technology        Dalian       Dalian          Electronic     100           Acquisition
Co., Ltd
Dalian Niweisi LengNuan
                             Dalian       Dalian      Manufacturing      55            Acquisition
Technology Co., Ltd.
Dalian Bingshan
International Trading        Dalian       Dalian            Service      100           Acquisition
Company
Wuhan New World
Air-conditioning
                            Wuhan         Wuhan           Installation          100     Establish
Refrigeration Engineering
Co., Ltd
Ningbo Bingshan
Air-conditioning
                            Ningbo        Ningbo          Installation          51      Establish
Refrigeration Engineering
Co., Ltd
Dalian Bingshan Baoan
Leisure Industrial           Dalian       Dalian          Installation          100    Acquisition
Engineering Co., Ltd
Shanghai Bingshan
Technical Service Co.,      Shanghai     Shanghai          Services             51      Establish
Ltd
Chengdu Bingshan
Refrigeration Engineering   Chengdu      Chengdu           Services             51      Establish
Co., Ltd.
         DALIAN REFRIGERATION COMPANY LIMITED
         Notes to financial statements for the year ended December 31, 2017
         (The currency is in RMB Yuan except otherwise indicated)
         (English translation for reference only)
              1) All the proportion of shareholding in subsidiaries were the same with voting right
              2)      The company held over 50% voting right in subsidiaries and could control these
              subsidiaries with over 50% voting right
              3)      Change on the shareholding of the subsidiaries is explained in the Note II.change on the
              combination scope
             (2)         There is no significant non-wholly-owned Subsidiary
             2.          Equity in joint venture arrangement or associated enterprise
                   (1) The important of joint ventures or affiliated companies
                                                                                   Shareholding (%)
                                      Main
 Name of joint ventures or                         Registered        Business                              Accounting
                                     business
   affiliated companies                             address           nature                                methods
                                     address
                                                                                       Direct   Indirect
Panasonic            Compressor                                                                              Equity
                                      Dalian         Dalian      Manufacturing
(Dalian) Co., Ltd                                                                                           method
Dalian      Fuji       Bingshan                                                                              Equity
                                      Dalian         Dalian      Manufacturing
Vending Machine Co., Ltd.                                                                                   method
         The company assumes the affiliated as significant party either when the investment income from
         investee presents 10% of the parent’s net profit or the proportion of shareholding of the investee’s net
         asset represents 10% of the parent’s shareholder equity.
         1) The company has the same percentage of shareholding and voting right in joint-venture or
             affiliated company.
         2) The company doesn’t have affiliated company which has significant influence although being held
             less than 20% voting rights.
         3) The company doesn’t have joint venture or affiliated companies which have no significant
             influence although being held 20% or more voting rights.
         (2)        The key financial information of affiliated companies
     Items
   DALIAN REFRIGERATION COMPANY LIMITED
   Notes to financial statements for the year ended December 31, 2017
   (The currency is in RMB Yuan except otherwise indicated)
   (English translation for reference only)
                                                 Panasonic Compressor                    Dalian Fuji Bingshan
                                                      (Dalian) Co., Ltd              Vending Machine Co., Ltd.
Current assets                                                1,561,263,338.96                       373,991,952.58
Including: Cash and cash equivalents                           222,958,963.14                         86,597,714.30
Non-current assets                                             330,137,817.56                        264,531,025.64
Total assets                                                  1,891,401,156.52                       638,522,978.22
Current liabilities                                            656,825,153.46                        185,438,746.74
Non-current liabilities                                                                               86,523,957.30
Total liabilities                                              656,825,153.46                        271,962,704.04
Minority interests
Equity to the parent company                                  1,234,576,003.06                       366,560,274.18
Proportions of net assets according to
                                                               493,830,401.22                        179,614,534.35
the&